Stay ConnectedWelcome to the #1 podcast for commerce teams, executives, and entrepreneurs.
Join host Stephanie Postles as she sits down with commerce leaders on the front lines of digital innovation. With guests from established enterprise companies to D2C start-ups barely out of infancy to everyone in between – you’ll get the inside scoop on what’s Up Next in Commerce.
New episodes come out every Tuesday and Thursday. Up Next in Commerce is created by Mission.org.
After more than two-and-a-half years and nearly 300 episodes of uninterrupted commerce content, we’re taking a brief pause. Stephanie and the team behind Up Next in Commerce is busy cooking up some fun and exciting ideas for our next season of the show, and while that’s happening, we’ll be pushing pause on releasing new episodes. But we’ll be back, and we want to hear from you about what you want to see and hear when we return! So get in touch by emailing info@mission.org. And in the meantime, you can keep up with Stephanie by listening to the Mission Daily podcast!
Mission.org is a media studio producing content for world-class clients. Learn more at http://www.mission.org.
Sustainability and consciousness are often seen as buzzwords coming from ecommerce companies. But for those who build their businesses around doing right in the world, these terms are nothing short of foundational. In this episode, Jeff Scult, founder of sustainable retailer One Golden Thread, discusses how his company gives more back to nature then it takes to create products in the company’s wildly popular clothing line.
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0:00 Episode start
6:51 The rise of consciousness among consumers
10:14 The origin of One Golden Thread
14:41 The inspiration for the company’s process and design
37:39 What it means to be truly sustainable
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Learn more at http://www.salesforce.com/commerce
Mission.org is a media studio producing content for world-class clients. Learn more at http://www.mission.org.
Although it may seem like Chomps has been an overnight success, behind the scenes there has been a lot of hard work, risky bets, and beneficial partnerships that has helped elevate the brand. On this episode, Pete Maldonado, the Co-founder and CEO of Chomps and Stacy Hartnett, the Vice President, E-Commerce & Marketing at Chomps, discuss how the company was bootstrapped, and how it has scaled through both retail and online platforms.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Learn more at http://www.salesforce.com/commerce
Mission.org is a media studio producing content for world-class clients. Learn more at
Before she became the VP of Ecommerce and Marketing at Pharmaca, Elizabeth Garry cut her teeth in the digital and marketing world at brands such as Wayfair, Walmart, and Camping World. In this episode, Liz shares with us the lessons she’s learned along the way, including how to vet a potential manager to see whether they have your best interests at heart, and what it looks like to create success as a team.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Learn more at http://www.salesforce.com/commerce
Mission.org is a media studio producing content for world-class clients. Learn more at
When a company is as large as AT&T and has a legacy that dates back nearly 150 years, you might think that it’s difficult for the brand to adapt and innovate. Maryanne Cheung, the VP of ecommerce at AT&T, is here to tell you you’re wrong. On this episode, she details all the ways that AT&T has been able to change with the times in order to serve today’s more digitally-focused customers.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Learn more at http://www.salesforce.com/commerce
Mission.org is a media studio producing content for world-class clients. Learn more at
The DTC world is forever shifting and evolving. Staying on top of changing trends and best practices takes work. We try to make that easier for you by sharing insights from experts throughout the industry. Today, we’re doubling our efforts by speaking with fellow podcast host Eric Dyck, who is the founder and CEO of DTC Newsletter and host of DTC Podcast. Eric shares his latest findings and gives some tips on how to win with newsletters and content marketing.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Learn more at http://www.salesforce.com/commerce
Mission.org is a media studio producing content for world-class clients. Learn more at
Shinola is a lifestyle brand that partners with family businesses and iconic brands to showcase a wide range of American-designed products. Which means the company has to know how (and where) to continually reach all segments of an ever-growing audience. Joel Layton, the VP, Head of Ecommerce, Digital & Marketing for Shinola discusses what that looks like.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Learn more at http://www.salesforce.com/commerce
Mission.org is a media studio producing content for world-class clients. Learn more at http://www.mission.org.
In an innovative move, Scott Lynn, CEO and Founder of Masterworks, democratized art investing by registering art pieces with the SEC and selling shares to investors. The first company of its kind, Masterworks is now a major art dealer with more than 600,000 investors on its platform. Scott dives into the future of art investing, the historical data the company analyzes, and how to determine which art pieces will perform.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Learn more at http://www.salesforce.com/commerce
Mission.org is a media studio producing content for world-class clients. Learn more at http://www.mission.org.
In an effort to fight off a debilitating autoimmune disorder that struck him years ago, Kevin McCray turned to a strict Paleo diet free of gluten, refined sugars, and soy. It was a decision that would spark a truly inspirational and wildly successful entrepreneurial mission. The President and Co-founder of the healthy prepackaged meal company Kevin’s Natural Foods joins us to talk about how his clean-eating lifestyle took him from the hospital bed to spearheading a brand that can now be found in some of the largest retail stores across the country.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Learn more at http://www.salesforce.com/commerce
Mission.org is a media studio producing content for world-class clients. Learn more at
What do Apple Pay, WhatsApp, and Crypto have in common? They are all preferred channels of payment and messaging that customers may prefer to use. Michael Affronti, Senior Vice President and General Manager of Payments and Messaging at Salesforce, shares his perspective on how companies should evolve their options for communication and payments to build better, more personalized relationships with their customers.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Learn more at http://www.salesforce.com/commerce
Mission.org is a media studio producing content for world-class clients. Learn more at
How do successful CPG companies build a following? Nick Saltarelli, Co-founder of Mid-Day Squares, shares how he and his partners “celebritized” themselves through an Instagram reality show to break into the chocolate industry. He dives into social media strategy, building a fanbase that asks grocery stores to stock their products, and fighting back against attacks.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Learn more at http://www.salesforce.com/commerce
Mission.org is a media studio producing content for world-class clients. Learn more at
On this special end-of-year crossover episode, the hosts from Up Next in Commerce, Marketing Trends, and IT Visionaries meet up again to discuss their biggest takeaways from their guests over the past year, and to make some predictions for what should be an exciting 2023 in marketing, tech, and ecommerce.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Learn more at http://www.salesforce.com/commerce
Mission.org is a media studio producing content for world-class clients. Learn more at http://www.mission.org.
As instant commerce becomes increasingly popular, how can consumers rely on products being in stock? Daniel Folkman, SVP of Business at Gopuff, explains that with more than 500 micro fulfillment centers, Gopuff can guarantee delivery of its stocked products as the customer builds their order. Listen to the episode to learn more about how Gopuff is leading experiments on sample feedback data for advertisers and how the company is staying ahead of its competitors.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Learn more at http://www.salesforce.com/commerce
Mission.org is a media studio producing content for world-class clients. Learn more at
How do you build a socially-conscious product business within a competitive market? Mike Beckham, CEO and Co-founder, Simple Modern, shares his experience as a founder, diving into finding and protecting white space in the market, building brand loyalty and creating a great culture.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Learn more at http://www.salesforce.com/commerce
Mission.org is a media studio producing content for world-class clients. Learn more at
How can an ecommerce brand serve middle to low-income African consumers, even those that are offline or lack access to technology? Tracey Turner, Founder and Chair of Copia Global, is bringing e-commerce to the mass market in Africa and dives into the details of their approach. She shares the logistics of their unique model, how they have built consumer trust and insights into the market across Africa.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Learn more at http://www.salesforce.com/commerce
Mission.org is a media studio producing content for world-class clients. Learn more at
What should companies be most concerned with in this era of commerce? Lena Korres, Co-Founder and CIO at KORRES, explains the importance of keeping production sustainable so consumers can feel good about the products they’re using. Tune in to learn more about how natural ingredients not only benefit the consumer, but also the companies that produce skincare.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Learn more at http://www.salesforce.com/commerce
Mission.org is a media studio producing content for world-class clients. Learn more at
With so many new commerce options available, what avenues can companies explore to reach more consumers? Vassil Mladjov, Board Member at Tallio, shares his thoughts on the growth of live stream shopping and how it is becoming a more prevalent way to purchase products online. Also, tune in to hear how collecting user data can help provide an optimal consumer experience, breaking boundaries within e-commerce opportunities.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Learn more at http://www.salesforce.com/commerce
Mission.org is a media studio producing content for world-class clients. Learn more at
How did an alcoholic beverage company manage to reach nationwide distribution without a single dollar spent on marketing? Nick Califano, the COO of the hard tea and canned cocktail maker Loverboy, joins us to discuss the unique journey that propelled the company from reality TV scene-stealer to retail shelves across the country.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Learn more at http://www.salesforce.com/commerce
Mission.org is a media studio producing content for world-class clients. Learn more at
Unconventional health treatments like cryotherapy and infrared sauna baths are not exactly known for their affordability. One rapidly growing company, however, is transforming the wellness landscape by democratizing access to such cutting-edge health services. With over 175 locations across the country, Restore Hyper Wellness is quickly bringing its holistic healthcare approach to the mainstream. Tune in to hear Restore CEO and Founder Jim Donnelly and CMO David Fossas discuss the joys and challenges of operating within a franchise model, and why they are committed to making health and wellness treatments safe, fun, and affordable.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Learn more at http://www.salesforce.com/commerce
Mission.org is a media studio producing content for world-class clients. Learn more at
How do you make a popular Asian product thrive in the U.S. market? Irvin Gunawan, Founder and CEO of Irvins, shares his experience building a snack food brand out of their restaurant in Singapore and later bringing these products to the U.S, introducing Americans to a new snacking sensation. Tune in to hear about the company’s backstory and what Irvin learned from this unique expansion.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Learn more at http://www.salesforce.com/commerce
Mission.org is a media studio producing content for world-class clients. Learn more at
Michael Ibrahim, Senior Vice President of Digital Product at Fox Corporation, has several patents under his belt and a skill for building successful teams; he is contributing to major success at Fox Corporation. He shares his insights into the world of digital, diving into the most important metrics for Fox and how they make themselves available to consumers wherever they want to access their media.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Learn more at http://www.salesforce.com/commerce
Mission.org is a media studio producing content for world-class clients. Learn more at http://www.mission.org.
With the holiday shopping season in full swing, how are businesses handling the busiest commerce period of the year? On this special crossover episode, the hosts from Mission.org podcasts, Up Next in Commerce, Marketing Trends and IT Visionaries join forces for the first time ever to discuss all things retail. Tune in to hear Stephanie, Jeremy, and Albert share their thoughts and expertise about the latest shopping technology, holiday cyber threats, and whether shifting consumer attitudes will make Black Friday a thing of the past.
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Mission.org is a media studio producing content for world-class clients. Learn more at http://www.mission.org.
How should companies think about AI? When should it be used? Should it be regulated? Dr. Athina Kanioura, Chief Strategy and Transformation Officer of PepsiCo, shares her expert insights and explains how AI increases efficiency at PepsiCo. She also dives into their cross-functional “digital hubs” and the bias problem with hiring algorithms.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Learn more at http://www.salesforce.com/commerce
Mission.org is a media studio producing content for world-class clients. Learn more at http://www.mission.org.
What are the benefits of having a passion project for a career? Rob Bossen, CEO of Grey Duck, shares that his passion for stand-up paddleboarding allows him to innovate within the niche spaces of outdoor water activities to bring solutions to consumers. Tune in to hear more about Rob’s transition from finance to outdoor water activities and what his experiences have taught him throughout his journey.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Learn more at http://www.salesforce.com/commerce
Mission.org is a media studio producing content for world-class clients. Learn more at
How does e-commerce completely alter the way alcohol businesses reach consumers? Derek Correia, President of ReserveBar, knows that B2C can widen the horizon for beverage sales across the country and provide curated, personalized experiences for customers. Tune in to hear how ReserveBar is changing the market through partnerships and a vision to optimize how people explore, learn about, and purchase premium wines, champagnes, and spirits.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Learn more at http://www.salesforce.com/commerce
Mission.org is a media studio producing content for world-class clients. Learn more at
How do you find white space in your market? And when you do, how should you time your product release? Ken Wegner, President of Jel Sert, and his son Gavin, Senior Brand Manager of subsidiary SLIQ Spirited Ice, share their approach at Jel Sert. They discuss their experience at this nearly 100-year-old family business, and how the company successfully transitioned into the competitive alcoholic beverage industry.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Learn more at http://www.salesforce.com/commerce
Mission.org is a media studio producing content for world-class clients. Learn more at
How can companies capture customer attention and spark interest in their brand? Hamid Saify, SVP of Digital Retail at Liquid Death Mountain Water, discusses the brand’s “tongue-in-cheek” approach and its “connection-first” marketing strategy. Tune in to learn about the company’s success stories and how to drive loyalty through merchandise.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Learn more at http://www.salesforce.com/commerce
Mission.org is a media studio producing content for world-class clients. Learn more at
How can a company stand out in an overpopulated market? Jasper Falluca, Director of Business Development at Palermo’s Pizza, shares innovation through ecommerce to create a new platform for DTC frozen pizzas. Tune in to learn more about Palermo’s Pizza and its accomplishments in the pizza business by building meaningful connections with customers and using data to create successful products.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Learn more at http://www.salesforce.com/commerce
Mission.org is a media studio producing content for world-class clients. Learn more at http://www.mission.org.
How do startups aim to disrupt the current market? Gabe Coyne, CEO of Stix Golf, explains that businesses need to create affordable options in the middle ground between bargain and luxury. Tune in to learn more about Gabe’s process for finding the right channels to showcase quality products for affordable prices.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Learn more at http://www.salesforce.com/commerce
Mission.org is a media studio producing content for world-class clients. Learn more at http://www.mission.org.
How should ecommerce brands be thinking about advertising strategy? What will work now and into the future? Alexa Kilroy, Head of Brand at Triple Whale, shares her hot takes based on the data and her industry experience. Tune in to hear her thoughts on the ad platforms that you should pay attention to and the return to some old-school ad strategies.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Learn more at http://www.salesforce.com/commerce
Mission.org is a media studio producing content for world-class clients. Learn more at
What is the recipe for exceptional customer experiences? Michael Bair, SVP of Customer Experience at FIGS, thinks the ingredients to create the best experiences is by listening to the customer, speaking the customer’s language, and asking for opinions. Listen in to hear more about Michael’s strategy for building the right team to ensure customer experience success.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Learn more at http://www.salesforce.com/commerce
Mission.org is a media studio producing content for world-class clients. Learn more at http://www.mission.org.
What strategies should retail steal from the tech startup world? David Ting, CTO of Zenni Optical, shares his experience moving from tech startups into DTC retail, outlining the big impact his team was able to make in their first two months and the details of how they did it. Tune in to hear his insights on building a best-in-class engineering team, a highly ranked mobile app, and more.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Learn more at http://www.salesforce.com/commerce
Mission.org is a media studio producing content for world-class clients. Learn more at http://www.mission.org.
It’s fair to say that Crocs has had its share of highs and lows. People have loved them and hated them, but there is no disputing that the shoes have become ubiquitous whether you like them or not. But what has it been like to be inside the Crocs car on this roller coaster ride and how has the company found ways to win over and over? Feliz Papich, VP of Digital Product and Consumer Experience at Crocs, discusses that and more on this episode.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Learn more at http://www.salesforce.com/commerce
Mission.org is a media studio producing content for world-class clients. Learn more at http://www.mission.org.
Meta has gone all-in on the metaverse but how do users and shoppers feel about this virtual future? Martin Gilliard, the Head of Meta Store at Reality Labs at Meta, is helping to make sure that those who step into the metaverse are leaving with a positive experience, and he’s got advice for brands on how to start experimenting and building for more virtual experiences in the future.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Learn more at http://www.salesforce.com/commerce
Mission.org is a media studio producing content for world-class clients. Learn more at http://www.mission.org.
How do you learn from your successes and failures to inform future innovation? Mark Edmonson, Chief Marketing Officer at GoGo squeeZ, gets honest and specific about what is going well, what could have gone better, and what he and his team are learning at GoGo squeeZ. Tune in to hear how he is navigating his new role as CMO, his thoughts on building great culture, and more.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Learn more at http://www.salesforce.com/commerce
Mission.org is a media studio producing content for world-class clients. Learn more at
There are lots of conflicting views on NFTs and Web3, as well as an onslaught of mixed messaging on the topic from the mainstream media. Avery Akkineni, President of Vayner3, shares her perspective on the NFT market today and how enterprises can navigate the complexities of this new frontier to build brand value.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Learn more at http://www.salesforce.com/commerce
Mission.org is a media studio producing content for world-class clients. Learn more at http://www.mission.org.
How do you overcome resistance when launching a company? Caleb Ulffers, Co-Founder and CEO of Haven Athletic, set out to design, manufacture, and sell “organized gym bags” after experiencing frustrations with his own outdated duffel. Tune in to hear how his team persevered to successfully pre-launch their product.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Learn more at http://www.salesforce.com/commerce
Mission.org is a media studio producing content for world-class clients. Learn more at
Because technology, platforms, and even customer expectations are changing so quickly, brands are in need of service and IT consulting firms like SoftServe. SoftServe has more than 450 clients around the world and across industries such as healthcare, manufacturing, software and more. Adam Gabrault is the President of Strategic Verticals & Industry Solutions, North America and on this episode, he details some of the challenges SoftServe’s clients are facing, and what kinds of solutions are on the table. Enjoy!
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Learn more at http://www.salesforce.com/commerce
Mission.org is a media studio producing content for world-class clients. Learn more at
Can a tech career lead to success in retail? Jenna Flateman Posner, a former professional rugby athlete, is a tech expert turned retailer who is now the Chief Digital Officer of SNIPES, a successful sneaker and streetwear company. Tune in to hear her unique perspective on how to win by utilizing technology in retail.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Learn more at http://www.salesforce.com/commerce
Mission.org is a media studio producing content for world-class clients. Learn more at
GOOD PLANeT Foods was established with a mission in mind, but how did that mission end up as products in the hands of consumers? On part two of this two-part episode, we welcome back David Israel, Founder and CEO at GOOD PLANeT Foods, who is joined by his Co-CEO, Bart Adlam, to fill us in on how they built the business and a partnership. Enjoy!
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Learn more at http://www.salesforce.com/commerce
Mission.org is a media studio producing content for world-class clients. Learn more at
David Israel has had an incredible journey to where he is now, serving as the Founder and CEO at GOOD PLANeT Foods. In part one of this special two-part episode of Up Next in Commerce, hear David’s backstory, including a long, drawn-out legal battle and creating a business from behind bars and growing it into a leader in the snack category. And tune into the next episode to hear more about GOOD PLANeT Foods.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Learn more at http://www.salesforce.com/commerce
Mission.org is a media studio producing content for world-class clients. Learn more at
In the ever-evolving world of ecommerce, brands are constantly looking for data and resources to help them carve out a path forward. Salesforce wants to be that font of information for brands, and it’s delivering valuable insights via the Second Edition State of Commerce Report. On this episode, Caila Schwartz, the Director of Industry Insights at Salesforce, digs into some of the report’s findings and provides some tips and predictions for how brands should handle the holiday season.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Learn more at http://www.salesforce.com/commerce
Mission.org is a media studio producing content for world-class clients. Learn more at http://www.mission.org.
Finding passionate customers and engaging with them regularly is like the quest for the holy grail for most brands. Soylent has been successful in its efforts, but it hasn’t always been easy. On this episode, Demir Vangelov, the CEO of Soylent, recalls the complete rebranding process the company went through and how it’s evolved since. Enjoy!
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Learn more at http://www.salesforce.com/commerce
Mission.org is a media studio producing content for world-class clients. Learn more at
Replatforming to increase ROI and the customer experience is often an essential task for an ecommerce business. Rob Johnson, Principal E-Commerce Technical Program Leader at Wyze, describes implementing this change at a business with a long history and a younger company. Also, tune in to learn about how Wyze is integrating software and hardware solutions with its products.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Learn more at http://www.salesforce.com/commerce
Mission.org is a media studio producing content for world-class clients. Learn more at http://www.mission.org.
After building brands, teams, and customer bases at companies like Ticketmaster and Saatchi Art, Sean Moriarty was the perfect person to lead Leaf Group as it amassed its portfolio of leading digital brands. On this episode, Sean discusses some of the lessons he’s learned and divulges how he’s helping Leaf Group’s brands experiment in an evolving digital world.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Learn more at http://www.salesforce.com/commerce
Mission.org is a media studio producing content for world-class clients. Learn more at http://www.mission.org.
As the CEO of Wine Access, Joe Fisch is constantly trying to solve hard problems… like predicting the weather? On this episode, Joe explains how he and his team have worked to address all kinds of issues, from customer retention to access to exclusive supply, to, yes, forecasting the weather to optimize the supply chain. Enjoy!
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Learn more at http://www.salesforce.com/commerce
Mission.org is a media studio producing content for world-class clients. Learn more at http://www.mission.org.
Finding the best visual companion to your content is often a tough task. Getty Images has been making it easier for brands and individuals for decades. On this episode, Grant Farhall, Chief Product Officer at Getty Images, dives into the predictive trends that can be found within its search tool, plus he answers questions about how the backend search engine actually works (without giving away too much of the secret sauce of course) and how Getty is prepping for a future that’s going all-in on video and the metaverse.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Learn more at http://www.salesforce.com/commerce
Mission.org is a media studio producing content for world-class clients. Learn more at http://www.mission.org.
SMS messaging is a valuable channel for brands that know how to use it. Attentive is helping them figure it out. Brian Long, the CEO and co-founder of Attentive, joins this episode to discuss some of the metrics that matter, best practices, and more that brands should know when going down the SMS road.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Learn more at http://www.salesforce.com/commerce
Mission.org is a media studio producing content for world-class clients. Learn more at
Is your business operating at its full potential? Pete Gibson, the former CIO of Friendly's and Johnny Rocket’s restaurants has built a reputation going from company to company improving overall functionality and increasing revenue. Learn how he uses technology and team-building strategies to maximize IT output and why his nearly 15-year military background has proven useful in his professional career.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Learn more at http://www.salesforce.com/commerce
Mission.org is a media studio producing content for world-class clients. Learn more at
With so much flux in the world, how can we guide workers and businesses through the chaos? Mary Lou Gardner, Associate Partner at Infosys Consulting, helps workers and companies see their way to desired outcomes. Tune in to hear more from Mary Lou on how businesses can think outside the box, shore up their supply chains, and succeed with nimble strategies.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Learn more at http://www.salesforce.com/commerce
Mission.org is a media studio producing content for world-class clients. Learn more at
Effective ecommerce strategies are crucial for just about every business these days. However, Felipe Zardo, SVP of Digital at Five Below, explains that they shouldn’t overshadow all the other methods brands use to connect to customers and satisfy their needs. On this episode, Felipe discusses how Five Below creates great experiences across all customer interactions with the brand and what new initiatives are coming soon.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Learn more at http://www.salesforce.com/commerce
Mission.org is a media studio producing content for world-class clients. Learn more at
When it comes to start-up acquisitions, Touraj Parang is in a class of his own. He has both helped companies exit and has been on the acquirer side of deals throughout his many years in Silicon Valley. On this episode, he talks about the lessons he’s learned along the way and gives acquisition advice to start-up founders who are just entering this playing field.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Learn more at http://www.salesforce.com/commerce
Mission.org is a media studio producing content for world-class clients. Learn more at http://www.mission.org.
Joining the podcast today is a very experienced leader in the food business, Bryan Freeman, whose previous posts include CEO at Better Bakery LLC and President of SnackWorks LLC. Now the Executive Chairman at the low-carb, high-protein frozen food maker Real Good Foods, Bryan talks about taking the company public and the recipe for lasting growth. Enjoy!
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Mentions:
Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Learn more at http://www.salesforce.com/commerce
Mission.org is a media studio producing content for world-class clients. Learn more at http://www.mission.org.
Buck Mason brings an enduring design flair to its products, but that’s not where its everlasting concepts end. Jim Davis, the Chief Customer Officer at Buck Mason, discusses how traditional marketing ideas like catalogs and direct mail can still be difference makers for DTC. Tune in as he also dives into what the future will hold for emerging brands.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Learn more at http://www.salesforce.com/commerce
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What if you learned what you thought was your career passion was not your heart’s desire? Brian Seewald, the SVP of eCommerce at Express, reset and found a true affinity for retail generally and, ultimately, ecommerce. Tune in to hear from Brian about how Express offers its customers “personalization, [an] omnichannel experience, styling and fit, and community.”
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Learn more at http://www.salesforce.com/commerce
Mission.org is a media studio producing content for world-class clients. Learn more at http://www.mission.org.
Ellis McCue has a long resume that has taken her through the world of ecommerce, supply chain, and venture capital. Now, she is the CEO of Territory Foods, where she is trying to make the world better one meal at a time. Hear all about it on this episode.
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The Faherty brand started as an idea in an essay, but twin brothers Alex and Mike Faherty turned it into a reality with strategic experience, experimental ideas, and through the power of storytelling. Alex joins the podcast today to take us through the entire journey. Enjoy!
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Hans Schrei and Luis Gramajo were told that the world didn’t need another cookie company, but they persevered and have found success with their brand, Wunderkeks. On this episode, they share how they went from Hans’ mother’s kitchen in Guatemala to exploding onto the scene in Austin, Texas, and becoming media and celebrity darlings.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Learn more at http://www.salesforce.com/commerce
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Fatma Collins and Julie Rogers met while they were pregnant with their first kids and when they found they were both struggling to find products and resources for their children, they decided to do something about it. They began Ten Little based on one central conviction: “Parenting is hard, but shopping for your child shouldn’t be.” How did they create a platform that simplified the buying experience for parents everywhere? Find out on this episode!
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Learn more at http://www.salesforce.com/commerce
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Sure, Mint Mobile benefits from having the star power of part-owner Ryan Reynolds in its back pocket, but Kenny Smithnanic, AVP, e-Commerce at Mint Mobile, explains how the brand’s success goes far beyond Ryan’s charm. Tune in to find out how Mint Mobile is achieving exponential growth, and what role consumer psychology plays in Kenny’s methods and strategies.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Learn more at http://www.salesforce.com/commerce
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Gushers in the metaverse and Dunkaroo NFTs? When it comes to DTC experiences, General Mills is not playing it safe. On this episode, Carter Jensen, the Senior Manager of Global eCommerce at General Mills, discusses how his small but mighty team is creating DTC experiences that go beyond simple transactions on a website.
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Big tech platforms like Amazon have been dominating the industry for a while, but what will the future hold? How can smaller B2B platforms and brands win and compete when monopolies are controlling the game? Alex Moazed, Founder & CEO of Applico and the co-author of the book, Modern Monopolies, breaks it down on this episode.
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Is a good idea or useful product enough to launch a company? Not according to David Rabie, the Founder and CEO of Tovala. He learned that lesson the hard way. From its humble beginnings to a top-ranked home-cooked meal delivery service, Tovala now ships more than 100,000 meals every month and is finding success on multiple platforms. What has David learned along the way? Find out on this episode!
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Amazon has been a giant in the ecommerce retail media world for years. Ideoclick is guiding brands through that landscape and Anne Zybowski, Vice President of Strategy and Client Development at Ideoclick, is helping lead the way. She explains it all on this episode.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Learn more at http://www.salesforce.com/commerce
Mission.org is a media studio producing content for world-class clients. Learn more at http://www.mission.org.
There has been buzz around web 3 and NFTs for a while, but are they useful for your brand? Roger Beaman of Novel, is the man with the answers! Novel is making web 3 accessible for brands everywhere. So if you’ve been waiting for a web 3 and NFT explainer, the wait is over, everything you need to know is right here!
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Marc Mathieu, the Co-Founder of Web3 Studio at Salesforce, discusses how web3 will change how brands acquire and interact with consumers. Plus, he explains the hype around NFTs and digital goods – whether they are trends to watch or fads that will fade – and the mindset shifts that need to happen to get the most out of them.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Learn more at http://www.salesforce.com/commerce
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There are many shipping solutions available to brands today, but are any of them truly easy to use, transparent, and scalable? Laura Behrens Wu couldn’t find one, so she and he business partner built it themselves. Now, their company, Shippo, is valued at more than $1 billion, has thousands of customers, and is making shipping easier for all kinds of brands. How? Find out on this episode.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Learn more at http://www.salesforce.com/commerce
Mission.org is a media studio producing content for world-class clients. Learn more at http://www.mission.org.
Retail is not dead, in fact, all signs point to the fact that retail is on the rise. But the retail experience isn’t going to be what it has always been in the past. The world of retail is evolving, and brands of all kinds are trying to find the best ways to give their customers what they want and need across channels, including in stores. Anjee Solanki, the National Retail Director for the USA at Colliers, has an inside look at what this next evolution will look like, and she shared her insights on this episode.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Learn more at http://www.salesforce.com/commerce
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The phrase “supply chain issues” has become a bit of a punchline, but very few people seem to know the real story of what’s going on behind the scenes. Anthony LaGrasso is one of them. As a veteran in the world of supply chain and in his current role as VP of Supply Chain at Levain Bakery, Anthony has had an insider's view of what’s going on… and what innovations are needed to get ahead. Hear all about it on this episode.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Learn more at http://www.salesforce.com/commerce
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Omnichannel operations are becoming more important than ever, especially for large companies like Mondelēz International, which owns some big-name brands that sell across channels. Wherever and however you’re buying Oreos or Sour Patch Kids or any of the dozens of other Mondelēz International brands, Francesca Hahn wants to make sure that the experience is the best it can be. How does she do it and where does social commerce enter the mix? Find out on this episode.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Learn more at http://www.salesforce.com/commerce
Mission.org is a media studio producing content for world-class clients. Learn more at http://www.mission.org.
Brands want to be everywhere all at once, but very few do that well. Chemical Guys has cracked the code on what it truly means to be an omnichannel brand, but the company has also uncovered some of the secrets of Amazon, franchise models, and growing a content platform across multiple channels. John Mansfield, the Chief Revenue Officer at Chemical Guys, takes us through all of that on this episode.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Learn more at http://www.salesforce.com/commerce
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Lee Hnetinka believed in the idea of having products delivered to customers in minutes, so he built the company and the platform to make it happen. That company is FastAF and since launching, Lee has been able to get some major brands onto the marketplace that offers one of the biggest differentiators in the game: speed. How? Find out on this episode.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Learn more at http://www.salesforce.com/commerce
Mission.org is a media studio producing content for world-class clients. Learn more at http://www.mission.org.
Businesses are built by all kinds of people who bring all different strategies to the table. Laura Xiao’s journey started in the sports world and from there she grew into an entrepreneur who is now the Founder and CEO of Henné Organics. What did Laura take from her experience as an athlete to help her grow her brand? And how is she overcoming obstacles now? Find out on this episode.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Learn more at http://www.salesforce.com/commerce
Mission.org is a media studio producing content for world-class clients. Learn more at http://www.mission.org.
Every second a new review comes into Trustpilot, the consumer review website that is helping brands and consumers harness the power of feedback. On this episode of Up Next in Commerce, Carolyn Jameson, the Chief Trust Officer at Trustpilot, discusses how the company is creating an open, holistic, transparent experience for everyone so that consumers can trust the brands they engage with, and brands can connect with their customers and improve their businesses using authentic feedback.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Learn more at http://www.salesforce.com/commerce
Mission.org is a media studio producing content for world-class clients. Learn more at http://www.mission.org.
The ecommerce world has gone through many evolutions, but there are certain industries that still remain woefully in the analog world. Healthcare is one of them, but Eric Kinariwala, CEO of Capsule, says that won’t be the case for long. Capsule has built an entirely new, digital-first way to make better decisions surrounding your health, and Eric says that was just the first step. Hear what’s next on this episode.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Learn more at http://www.salesforce.com/commerce
Mission.org is a media studio producing content for world-class clients. Learn more at http://www.mission.org.
Brand websites are often pretty similar — there are product pages, pictures, carousels, maybe even videos. That’s worked for a while, but Matt Gorniak, the CEO of Threekit, says it’s time to up the ante. Threekit is creating a whole new category for brands who want to get into visual commerce and bring 3D and AR into the fold. Matt talks about what that looks like on this episode.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Learn more at http://www.salesforce.com/commerce
Mission.org is a media studio producing content for world-class clients. Learn more at http://www.mission.org.
The world is changing at a pace that’s hard to keep up with. So, what a student learns to earn a degree is quickly becoming obsolete. That’s true unless you’re in Anika Sharma’s class. Anika is a professor of business and technology at NYU Stern School of Business, and she is also a General Manager and Global Client Partner for Mindtree. By having her feet in both worlds, Anika sees how Gen Z is changing in real-time and understands what brands are asking for on a day-to-day basis. She then shares that information in educational and business settings. She shared it with us, too, on this episode.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Learn more at http://www.salesforce.com/commerce
Mission.org is a media studio producing content for world-class clients. Learn more at http://www.mission.org.
Although you might think of TiVo as the DVR of days gone by, the brand is still having an impact. These days, TiVo is part of Xperi Corporation, and the data that the company gathers is making it possible for brands to understand their customers better as it relates to TV and streaming advertising. Fariba Zamaniyan, the Vice President, Advanced Media and Advertising at Xperi Corporation, discusses that and more on this episode.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Learn more at http://www.salesforce.com/commerce
Mission.org is a media studio producing content for world-class clients. Learn more at http://www.mission.org.
How you go about doing something is the greatest indicator of success. For Diana Haussling of Colgate-Palmolive, instituting the right mindset for all of her employees, partners, and vendors is step one in the recipe for success. Whether it’s upskilling your employees, hiring new talent, or partnering with agencies or vendors, Diana believes how you think about the situation and your approach to it will make all the difference.
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How did technology for a lawnmower operated by remote control end up leading to mobile robot stores? Dmitry Shevelenko, Co-Founder and President of Tortoise, explains how his company landed on creating an original product — a mobile vending machine — while concentrating on last-mile delivery. He also shares how his passion for anthropology and how people behave has been a key driver in understanding customers’ behaviors to increase revenue.
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People love their pets. That’s a universal truth that Nick James uses as his north star while working as the Senior Director of Consumer Experience at Blue Buffalo. That’s where the universality ends, though. Pet parents, just like consumers in all industries, are individuals with specific needs, and brands have to create experiences and implement technology to make every customer journey as personal as possible. Here, Nick explains what that personalization looks like at Blue Buffalo.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Learn more at http://www.salesforce.com/commerce
Mission.org is a media studio producing content for world-class clients. Learn more at http://www.mission.org.
When you think about quick-service restaurants like Chipotle, you might not always think they are on the cutting edge of innovation. But Nicole West, the VP of Digital Strategy & Product at Chipotle, says that’s not the case. In fact, Chipotle is making investments in robotics and AI in incredible ways to create the best possible experience in-store, online, and at all digital touchpoints. How? Find out on this episode.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Learn more at http://www.salesforce.com/commerce
Mission.org is a media studio producing content for world-class clients. Learn more at http://www.mission.org.
Delivering what your customers want and need seems like an obvious thing for a company to do. But when there is so much new technology to experiment with and alternate roads to go down, it’s easy to get off track. Jon Luciano, Director of Ecommerce for Lumen, discusses how Lumen stays the course, and how and why telcos and other industries can invest in new opportunities in a way that allows them to succeed.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Learn more at http://www.salesforce.com/commerce
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What’s the secret to building a $100-million-dollar brand? MaryRuth Ghiyam has done it, so she knows the answer pretty well. And it turns out, it’s pretty simple: make something people need and do it in a way that is sustainable. Easier said than done, right? Luckily, MaryRuth broke down what that entails on this episode
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In the same way that the pen is mightier than the sword, the omnichannel approach is superior to throwing all your eggs in either the digital or in-person baskets. At BIC, Jennifer Elmashni, Vice President, Global eCommerce and Digital Marketing, breaks down how the global brand is building community, engaging in B2B and D2C strategies, and experimenting anywhere and everywhere in order to stay on top, including exploring how other countries are using digital influencers and scaling last-mile delivery.
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Brands know that word of mouth is one of the most effective ways to acquire customers, but how do you create the kind of chatter you actually want? What do you need to do to find and use influencers, content creators and affiliate marketing in order to give your customers what they want most? Tyler Grooms, Director of Engagement Marketing at Sweetwater, provides answers on this episode.
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Can something as small as changing the color scheme on your website lead to exponential growth? Well, it’s not quite that simple, but according to Sheila Erickson, Vice President, Marketing and E-Commerce at Slumberland Furniture, making basic, obvious changes is the key to unlocking a much larger opportunity to grow in all areas.
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If I told you that you could get the Rolex of cookies delivered to your door, would you be interested in that? Matthew Jung certainly was, and that’s why he went to work for Last Crumb, and since he joined the company, it’s become one of the hottest DTC brands with a waitlist about a mile long. What was the secret to creating a massively in-demand product (other than delicious cookies of course)? Find out right here.
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The buzz around Web. 3.0, NFTs, and the metaverse is undeniable, but how much should brands actually be paying attention to? And where will brands and consumers actually get the most out of these trends? We asked Taylor Holiday, the CEO of Common Thread Collective, those questions and more on this episode.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Learn more at salesforce.com/commerce
Mission.org is a media studio producing content for world-class clients. Learn more at mission.org.
In this day and age, are ecommerce brands still making basic mistakes? Yes, and there are a lot of small ways to improve your business that are ignored in favor of the shiny new object. Drew Himel, the Founder and CEO of Consult PCR, is here to help you focus on what really matters, improve retention, reduce churn, and make your business more resilient.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Learn more at salesforce.com/commerce
Mission.org is a media studio producing content for world-class clients. Learn more at mission.org.
When Jim McKelvey and Jack Dorsey were building Square, they were met with legal issues, major challenges from Amazon, and more. But necessity is the mother of innovation, and anger is the fuel that kept Jim going. Hear the lessons Jim and Jack learned and where Jim thinks the world of content is headed on this episode.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Learn more at salesforce.com/commerce
Mission.org is a media studio producing content for world-class clients. Learn more at mission.org.
If it seems like DECIEM is a different type of beauty brand, that’s because it is. The company behind global powerhouses like “The Ordinary” is more focused on education than manipulation. On today’s episode, we talk with Jordanne Dyck, DECIEM’s Digital Director, about acquisitions, global expansion, and how the company has taken the skincare world by storm simply by telling it like it is.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Learn more at salesforce.com/commerce
Mission.org is a media studio producing content for world-class clients. Learn more at mission.org.
What is the metaverse? How should you be using the metaverse? What’s the future of the metaverse? If you’ve ever asked any of these questions, you’ll find your answers from Neha Singh, the Founder and CEO of Obsess, a company that is bringing the metaverse to life for brands and consumers everywhere.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Learn more at salesforce.com/commerce
Mission.org is a media studio producing content for world-class clients. Learn more at mission.org.
For the first decade of its digital journey, Crate & Barrel didn’t even sell furniture online. Obviously, times and customer expectations have changed, and Joan King, Sr. Vice President, eCommerce & International at Crate & Barrel, has been there for the entire ride. Hear how the company shifted its strategy in line with its customer’s digital evolution.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Learn more at salesforce.com/commerce
Mission.org is a media studio producing content for world-class clients. Learn more at mission.org.
According to Barry Hoffman, the Chief Strategy Officer of ZeroLight, we are right at the edge of a time when holograms and VR technology could become ubiquitous in our commerce activities. What do we have to do to get over the edge? Find out on this episode.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Learn more at salesforce.com/commerce
Mission.org is a media studio producing content for world-class clients. Learn more at mission.org.
You might not think that a 100-plus-year-old company would be leading the way when it comes to future thinking about Web 3 and the metaverse, but David Oksman of Samsonite is here to prove you wrong. Hear how ecommerce brands should be taking these developments into account when thinking about long-term strategies.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Learn more at salesforce.com/commerce
Mission.org is a media studio producing content for world-class clients. Learn more at mission.org.
Have you ever seen someone wearing a shirt that you just have to have? Or maybe come across a certain piece of furniture that would be absolutely perfect for your space? Now imagine being able to snap a picture of that item and within moments, being directly connected to the product. Ido Segev and his team at Syte are making all this and more possible by leveraging AI to revolutionize product discovery.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Learn more at salesforce.com/commerce
Mission.org is a media studio producing content for world-class clients. Learn more at mission.org.
Kara Goldin fought against an archaic beverage industry to bring her revolutionary product to market, and along the way she had a transformative encounter with Jeff Bezos and negotiated getting her product into Whole Foods the same day she gave birth to her son. Want the full story? Tune in to this episode.
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In China, live video shopping is a natural way of life. Why is that not the case in the west? Will western brands ever hop on the live video shopping bandwagon? Sophie Abrahamsson and Bambuser think so, and when they do, the potential return on investment could be huge. How huge? Find out on this episode.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Learn more at salesforce.com/commerce
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When you Google Chase Fisher, the CEO & Founder of Blenders Eyewear, you’ll see headlines touting a guy who turned a $2,000 loan into a $90 million dollar ecommerce brand. But Chase’s story goes way beyond those headlines. In my opinion, his thinking around ad strategies, supply chain, partial acquisitions, and more is more interesting and valuable to anyone who is looking for more than just a feel-good story. Chase got into all of those topics on this episode of Up Next in Commerce, and he took us behind the scenes of his supposed Cinderella story to tell us that it was much harder than it looked. Plus, we even touched on whether we’ll be seeing some Blenders glasses in the metaverse any time soon. Enjoy the episode!
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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For a full transcript of this interview, click here.
If there is one commonality between all of the guests I talk to, it’s that experimentation and constantly learning more is what makes a company grow and thrive. Andrew Goble, the co-founder and co-CEO of Jambys, preached that truth to me on this episode of Up Next in Commerce, and we were able to dissect some of his bigger experiments to draw out insights anyone could use. For example, how should you be thinking about inventory in turbulent times? What are some of the ways you could be utilizing TV ads? And why is it sometimes more important to lose a customer in the short term in order to build trust for the long term? Find out all of that and more on this episode.
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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For a full transcript of this interview, click here.
When was the last time you checked into the metaverse? It might be more recently than you think, and you’ve probably been doing it for longer than you realize. Personal commerce is one of the ways that the metaverse is being utilized right now, and Plazah is the platform that has been making it possible. Customers who shop online and are given personal recommendations from experts at a brand are engaging in real time in the metaverse, but they are also having a better overall shopping experience.
On this episode of Up Next in Commerce, I chatted with Roger Casals, the Co-Founder & CEO of Plazah, about how the company is not only bringing ecommerce to the next level, but helping brands improve LTV and build customer loyalty at the same time. Roger tells us about the future of personal commerce, why it’s different from social commerce, and what you should actually be thinking about when you are making personal commerce a part of your ecommerce strategy. Enjoy this episode!
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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For a full transcript of this interview, click here.
Unless you’ve been living under a rock, you’ve probably heard that ecommerce has had a bit of a boom in the last couple of years. But does that mean a bust just around the corner? Some people think so. And even if the industry doesn’t see a full implosion, there will certainly be rumbles and challenges every brand will have to deal with. Some of the inflated demand will fall away, and more and more competition will continue to creep in. Nate Kennedy has a plan to face the turbulent times ahead, and he broke them down for me on this episode of Up Next in Commerce. Nate is the VP of Global eCommerce and Customer Experience at Horizon Hobby, which is a corporation that manufactures and sells high-end, hobby-grade radio-controlled cars, planes, boats, and accessories. In the last few years, Horizon Hobby has re-platformed, invested in paid media, and saw the value of influencers. So what’s next? Tune in to find out!
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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For a full transcript of this interview, click here.
The buying experience is becoming more and more of a puzzle that comes together differently for every consumer. How they discover something might be different from how they purchase something and how they purchase it might be different from how it gets fulfilled. You can find something in a store, buy it online, and have it delivered via an app. Every part of the process is being uncoupled, and brand leaders have to build for that reality. Every touchpoint, every experience, every interaction has to be optimized. For Michal Geller, the President of eCommerce & Digital at Newell Brands, this is even more difficult because Newell’s portfolio of brands is massive, and well known — we’re talking about Sharpie, Crock Pot, Food Saver, Elmer’s Glue, Graco, and the list goes on. With so many brands, and so many potential touchpoints and opportunities for cross-promotion, how are Michal and his team approaching this challenge? On this episode of Up Next in Commerce, Michal and I talked about the ways that Newell is experimenting, using data, and taking advantage of new opportunities in order to bring the ecommerce experience — and every other aspect of the business — to the next level. Enjoy this episode and to learn more about Newell Brands, check out newellbrands.com, and Instagram/Twitter @newell_brands and Newell and Newell Brands on LinkedIn!
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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For a full transcript of this interview, click here.
If you ask Sean Frank, the future looks bleak. But if you go beyond that surface-level feeling of doom, you’ll actually find a guy who is thinking ahead and coming up with creative, innovative, and effective ways to build a durable business that can stand the test of time. Sean is the CEO of Ridge.com, a $100-million brand, which you might know for its popular Ridge Wallet, but it’s much more than that, and Sean has plans to keep the company growing. On this episode of Up Next in Commerce, Sean and I talked about how to stand out in the competitive world of ecommerce and what it means to have a good influencer and sponsor relationship. Plus, we go deep on what we think is coming down the pike in terms of inflation, supply chain, and more. Enjoy the conversation!
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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For a full transcript of this interview, click here.
The DTC revolution can’t be ignored. Everywhere you look there are companies old and new reimagining the commerce experience and bringing more choice directly to the consumer. This is happening in every industry, including one you might not always think about — the funeral industry. For decades, consumers had limited options when they were making arrangements for the death of a loved one. Funeral homes monopolized the experience and often overcharged those who had few other choices. Scott Ginsberg and Josh Siegel wanted to change that. With Titan Casket, they, with their other co-founder, Elizabeth Siegel, have built a DTC business that puts the power back into the hands of the consumer at one of the most trying times of their life. On this episode, we talked about how Scott and Josh used the DTC playbook to disrupt the funeral industry, and we explored some of the ways they are mastering distribution and partnerships as a way to elevate their brand. Enjoy this episode.
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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For a full transcript of this interview, click here.
In life and in business, there will always be times when you have to pivot. That can be hard, and it’s not unusual to struggle while you're going through the thick of change. For Amelia Wilcox, a pivot in all of our lives led to a pivot in her business.
Amelia had grown her company, Incorporate Massage, to more than 4,000 corporate clients across the country, but when the pandemic hit and offices shut down, the decline in the need for massage therapists meant that Amelia’s entire revenue stream was coming to a screeching halt. But rather than fold, Amelia decided to pivot, and find a new need in this changing world that she could fulfill. Amelia identified the mental struggles that employees everywhere were dealing with and the fact that corporations didn’t know how to help those employees, so she created a new platform that corporations could offer to employees that included all manner of mental health resources. She rebranded her business in a matter of weeks, and has now grown her new business, Nivati, in a similar manner as her previous company. Amelia and I talked all about how that pivot happened, and what it takes for a founder or CEO to scale a company. Enjoy this episode!
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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For a full transcript of this interview, click here.
It may seem like every company in the world has a DTC offering, but even now, there are businesses that are just entering the DTC space. Perdue Farms launched its DTC presence in January of 2020, and it has been go, go, go ever since. On this episode of Up Next in Commerce, David Zucker, the CMO and SVP Ecommerce at Perdue Farms, explained the steps he took to get this effort going and how the company is experimenting with the online customer experience. Plus, he explains how Perdue balances its DTC efforts with the relationship it has with retail partners, that may not always be happy with the idea of a company moving its product online. According to David, the key to making sure that you can succeed both online and in retail is to have transparency, communication, and a differentiation of offerings that will link both kinds of experiences, What does that look like exactly? Find out on this episode!
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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For a full transcript of this interview, click here.
Every company today is trying to become a media company, but few are actually succeeding. A Kids Company About is one of them. On this episode of Up Next in Commerce, I talked to Jelani Memory, the Founder and CEO of A Kids Company About, and I picked his brain on how exactly he went from writing and selling children’s books about tough topics, to overseeing a growing media empire. We talked about the need for authentic storytelling — in books or in your product or brand story — and how by trying to please everyone, you actually please no one. We also got into how to choose investors and what the future of media, particularly for kids, might look like. Enjoy this episode!
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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For a full transcript of this interview, click here.
This is a podcast about digital and ecommerce, so you already know we’re big fans of the internet. It’s a portal and a tool to give you direct access to consumers, information, and communication unlike anything that’s ever existed before. And if you’re living here in 2022 and expecting to thrive as a business owner, you better be tapping into every possible resource the internet has to offer. Alli Reed has known that for more than a decade, and her company, Stratia Skincare, got its start in large part thanks to the wealth of beauty and skincare knowledge Alli tapped into to turn an interest into a side hustle and then grow it into a multi-million dollar brand.
On this episode of Up Next in Commerce, I talked to Alli about how she turned her hours on Reddit into a brand that keeps growing, and we talked about all the ways to attract customers, differentiate yourself, and what it takes to educate the consumer beyond just knowing what your brand is, but also what it stands for and how it operates. Enjoy!
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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For a full transcript of this interview, click here.
Humans have needs, and cravings, and desires. Sometimes, they all align — like when my need for food matches my desire and craving for a spicy burrito. In business, you have to be in tune to your customers' needs, cravings, and desires, and meet them as much as possible. These days, across the board but especially in the QSR space, the consumers are craving better loyalty programs and more personalized experiences in every interaction with a brand. Zip Allen recognizes that, and as the Chief Digital Officer for Taco Bell, she’s satisfying those cravings. Yes, there are spicy burritos involved, but there are also unique spins on customer loyalty programs, a new subscription service for tacos, and an app experience that makes getting those spicy burritos — or whatever you’re in the mood for — a friction-free experience. We got into all of that on this episode of Up Next in Commerce and it was a delicious discussion. Enjoy!
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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For a full transcript of this interview, click here.
When you first start a company or launch a product, you always have big dreams. You picture the massive deals, the millions in revenue, the corner offices and hiring a huge team. But before any of that happens, you have to tamp down those dreams and live in the real world, doing the hard, often year-long work on the ground proving your concept, talking to anyone who is willing to give you feedback, and knocking on doors to try to make a single sale. Kelley Higney trodded that path — in fact, she got her start selling her product at her daughter’s bake sales. Her fellow moms were her beta testers and, but they were also the wellspring of feedback and proof of concept she needed to bring her product to the next level… and to those great heights most people dream of.
Kelley is the founder and CEO of Bug Bite Thing, a safe, chemical-free solution for stopping a reaction to bug bites in their tracks. Today, Bug Bite Thing is available in more than 25,000 stores and has the backing of Shark Tank shark, Lori Grenier (who even gave Kelley her famous “Golden Ticket” when Kelley appeared on the show). On this episode of Up Next in Commerce, Kelley broke down all of the hurdles she had to overcome to reach that point. She discusses the strategies she used to protect her brand before even going into distribution, and she talks about the importance of community and feedback. Plus, stick around to hear about how she and Lori work together. Enjoy this episode!
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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For a full transcript of this interview, click here.
If you’re tired of all the supply chain issues here’s an idea, create your own supply chain. Okay, that’s easier said than done, and it’s not actually feasible for a lot of companies. But, there are parts of your brand, your logistics, and your strategy that you can own 100%, and when you do, good things happen.
On this episode of Up Next in Commerce, I chatted with Erica Buxton, the President of Hello Bello, and Jessica Tennant, the senior vice president of marketing at Hello Bello, a brand that is making premium products available to everyone — especially parents and families. Hello Bello was cofounded by actors Kristen Bell and Dax Shepard, a couple who came from humble backgrounds and knew that access to good, safe, environmentally conscious products shouldn’t be granted only to those with means. As a result, everything at Hello Bello is made to connect with and be available to parents and families of all kinds. And as Erica and Jessica explained, this ethos shows up everywhere. They talked about how owning your story and your brand voice is key, especially when it comes to marketing. And they also touched on why having a strong omnichannel strategy from day one is critical. Plus, they do get into what it means to actually own the supply chain, and all the ways that can open up new opportunities for your business. Enjoy this episode.
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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For a full transcript of this interview, click here.
The customer should always be the guiding light for a brand. Who is your customer? What do they need? What do they want? Where do they live? How do they behave? These are all absolutely critical pieces of information upon which your entire business should be built. That’s Sarah Kleinman’s philosophy at least. Sarah is the Vice President of Digital Experience at The North Face, where she is constantly working to gather information about, understand, and then create experiences for North Face customers.
On this episode of Up Next in Commerce, Sarah guided me through how she thinks about creating an effective digital experience, and she explains the foundational elements that every brand should be using to ensure that they are set up for the present and can still build in the future. She talked about integration, enablement, loyalty programs, testing, why companies should be paring down their offerings, and so much more. This was a jam-packed episode, so I hope you love it!
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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For a full transcript of this interview, click here.
The newest diets and food fads are hard to keep up with, and some come and go without you even noticing. But there are some things that aren’t just passing trends. Cauliflower-based foods is one such thing, and no one in the category has done more for the movement than CAULIPOWER. Why? Because not only is CAULIPOWER gluten-free, it’s also absolutely delicious, which is what Gail Becker, the founder and CEO of CAULIPOWER, believes is the secret ingredient to success.
On this episode of Up Next in Commerce, I sat down with Gail for a fun chat about how she went from cooking a disastrous cauliflower pizza in her kitchen to running one of the fastest-growing frozen food brands around. She talked about how she got her foot in the door at Whole Foods, what her omnichannel strategy looks like, and why you should never let the copycats in your category get to you. Plus, stick around to hear the story of how a tiny pink house changed the course of Gail’s life forever. Enjoy!
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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For a full transcript of this interview, click here.
On Up Next in Commerce we’re always looking for what’s, well, up next. How should brands be thinking about their omnichannel strategies? What are some of the new platforms or channels top brands are testing out? How is the ecommerce and retail landscape evolving? With 2021 coming to a close, it’s time to look a little closer at all of those question and try to answer them for brands looking ahead to 2022.
On this episode, I was excited to welcome back Caila Schwartz, the senior manager of consumer insights and strategy at Salesforce, and we dug into some of the stats, data, and insights her team has gathered in order to give some tips and advice to brands that want to get ahead and stay ahead in 2022. We talked about supply chains, loyalty programs, and had a debriefing on the iOS update that’s causing brands across the board to shift their marketing strategies in more ways than one. There are tons of great nuggets in this one so enjoy, and cheers to a great 2022!
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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For a full transcript of this interview, click here.
As ecommerce has become more prevalent, customers are catching on to some of the more suspect aspects of product marketing. They’re starting to notice that when you look for something like furniture online, you’re seeing a lot of the same exact products just branded slightly differently. Companies are using the same materials, the same suppliers, and selling the same or only slightly differentiated products, so the question for brands is, what do you do to stand out? For, Jiake Liu, the co-founder and CEO of Outer, the answer was simple: actually do something different. Outer is the first sustainable consumer brand for outdoor living with a core focus on material science, which, according to Jiake, is only one of the ways that Outer is separating itself from the competition.
On this episode of Up Next in Commerce, Jiake and I talked about all the ways brands should be thinking outside the box, why problem-solving should be the number-one driver of product development, and how Outer is hoping to be part of the evolution of retail. Enjoy this episode.
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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For a full transcript of this interview, click here.
Stop me if you’ve heard this before: in business, you always need to keep the flywheel spinning. Okay, wait, don’t actually stop the podcast! I know it sounds cliche, but it’s true — to have a successful business, you need to be constantly churning out products, bringing in customers, making sales, lather, rinse, repeat. That’s the part we all know. What so many founders and business owners can’t quite figure out is how to actually get that wheel spinning at all, let alone continuously.
On this episode of Up Next in Commerce, I talked with Steven Borrelli, the CEO & Founder of CUTS, a lifestyle ecommerce fashion brand that celebrities, entrepreneurs, athletes, and everyday folks love. Steven has some firsthand experience in the struggles of getting his company off the ground and into the hands of consumers — and his story includes an early $20,000 loss and a nine-hour journey through China. But he also has some of the answers that brands are looking for when it comes to building an efficient and sustainable growing business. What is his secret sauce? And how do testing, YouTube, and NFTs play a role? We got into all of that and more on this episode. Enjoy!
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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For a full transcript of this interview, click here.
There are certain things many of us take for granted, including making purchases on our credit cards. It might surprise you to learn that 40% of the population is actually considered non-prime. This means they have either been turned down for a credit card, have bad credit or have no credit at all. These people are often denied the ability to make purchases, particularly on large goods, like appliances or furniture. But what if they could be given the opportunity to make those purchases? What if they were given the chance to make payments based on their own ability on their own schedule? That would not only open up a new customer pool for brands, but it would provide a way for a large group of people to build credit in a meaningful way.
Katapult is making all of that possible and on this episode of Up Next in Commerce, I spoke to Katapult’s CEO, Orlando Zayas= about how it all works. We talked about the difference between buy-now-pay-later and lease-to-own. We got into how new financing options lead to more incremental sales for brands. And we also dove into how to build a highly-functioning team and the challenges of going public. Enjoy this episode!
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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For a full transcript of this interview, click here.
To state the obvious, starting and growing a DTC brand is hard… even if you’ve been in the industry for years. Jese Pujji is the founder and CEO of Gateway X, a bootstrap venture studio that helps build businesses in the DTC space. Jesse has been working with and growing brands for years from the outside looking in. But even for him, when he tried to build a brand from the inside out, there were some real challenges and lessons learned.
On this episode of Up Next in Commerce, Jesse told me all about that first DTC venture, Poophoria, and the mistakes he made getting it off the ground. But he also talked about all the successes he’s had and the advice he’s been giving to the brands that come to him looking to take their companies to the next level. He talked about which channels to focus on, and why founders should really only hone in on one when they’re starting out. And he also gave us a peek into the future of mobile and why you should be looking at TikTok’s strategy as a benchmark for your own. Enjoy this episode.
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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For a full transcript of this interview, click here.
To state the obvious, in order to be a successful ecommerce brand, you have to be able to win across digital channels. But just because it’s obvious doesn’t mean it’s easy. DTC and ecomm companies big and small are coonstantly challenged to find new approaches in ever-changing online channels to engage customers and ultimately get them to hit that buy button. So how do you do it? Link Walls is the VP of digital marketing strategy for ChannelAdvisor, and it’s his job to answer that question. On this episode of Up Next in Commerce, Link and I discussed what kinds of strategies are working — and more importantly which ones aren’t — and he let us in on how he thinks about advising digitally-native brands that are considering a move to brick and mortar. Plus, he gives advice on how to navigate through the holiday season, why shoppable TV is going to be the dominant channel of the future for brands, and which niche channels you should keep your eye on. Enjoy this episode.
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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For a full transcript of this interview, click here.
The way you position your company in the eyes of your customers is the most make-or-break decision you can make. Who are you selling to? What problem are you solving for them? Why should a customer buy from you? All these questions need answers, and if they aren’t the right answers, it’s going to be a pretty rocky road.
So when you hear about a humidifier that’s being positioned as a beauty product, what do you think? Good idea or bad? Well, for the guys at Canopy, it turned out to be a great idea and we got into it on this special in-person roundtable episode of Up Next in Commerce.
Joining me in-studio here in Austin, Texas was Eric Neher, CMO at Canopy, Justin Seidenfeld, CEO at Doris Dev and Co-Founder of Canopy, and Lucas Lappe, Head of Product and Co-Founder at Doris Dev. We talked all things Canopy, but we also dove into Doris Dev, a product development agency that has helped scale companies like Blueland, Magic Spoon, BioLite, Supply, Lalo, and many more. During this epic chat, we touched on a little bit of everything -- from branding and logistical issues to product design and marketing, and beyond. I hope you have as much fun listening as I had hanging out with this lively trio.
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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For a full transcript of this interview, click here.
When you think about small businesses and local merchants, you know that they are the engine that fuels economies all over the world. This is true everywhere you look, including in Africa, where Anu Adasolum works as the founder and CEO at Sabi, a company that is helping informal merchants and businesses reach new heights. For too long, the tens of thousands of small, local merchants in Africa have operated without much help, credit, or access to technology. But while they have stayed the course, the world has moved forward toward a more digitally-focused future. To succeed long-term — in Africa and everywhere else — all businesses need access to opportunities to build credit, digitize their operations, and connect with suppliers and buyers everywhere. On this episode of Up Next in Commerce, Anu explains how Sabi provides those opportunities. She also discusses how B2B companies should be thinking about helping their clients succeed by focusing only on a narrow set of goals. Plus, she dives into what it takes to navigate through scaling a company. Enjoy this episode!
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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For a full transcript of this interview, click here.
Picture this: You’re driving down the road and you see a familiar sign that gets your stomach grumbling, so you quickly pull into the drive-through, place an order and, within minutes, you’re enjoying a tasty bite of what you were craving. That’s not a hard scenario to imagine. Odds are, we’ve all gone through that exact sequence of events in our lives. And that’s great for those businesses, and even for other stores where the foot traffic drives people in to shop. But that kind of customer isn’t the only one you should be relying on. Smart operators know that there are huge portions of the population who don’t often find themselves in those serendipitous moments when they can make that impulsive decision to buy something on the spot. Angelo Frigo is one of those smart operators, and as the head of customer experience at Burger King, he is trying to move beyond the drive-through and reach customers in new, exciting ways — particularly online and through Burger King’s digital app. On this episode of Up Next in Commerce, Angelo and I go into some of the ways businesses can think about targeting and engaging with customers outside of in-person and spur-of-the-moment experiences. Plus, we also dug into Angelo’s background, which is fascinating, and includes stops at McDonald’s, Feeding America, and even the White House. Enjoy this episode!
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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For a full transcript of this interview, click here.
Does the world really need another subscription box? Do parents really need to buy more things for their kids? Well, when we’re talking about Lovevery, the answer is yes and yes. In the crowded spaces of DTC subscription services and childrens products, Lovevery is making its presence known. On this episode of Up Next in Commerce, I talk to Rod Morris, the co-founder and president of Lovevery, who told me all about the development of the company’s amazing products, and, more importantly, how he and his team went about making them stand out among the rest. It takes a lot of hard work — but it all starts with a complete obsession with creating a brand that you believe in and products that fill a gap in the market. Rod took me behind the scenes of getting press and testimonials for Lovevery, he told me how they create social content that sees engagement that blows the competition out of the water, and we also dug into his tips for fundraising and what the upside is to going public. Enjoy this episode!
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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For a full transcript of this interview, click here.
The old saying goes that men are from Mars, women are from Venus. And while that’s not literally true, when it comes to marketing, men and women do seem like two different species. What resonates with a man is wildly different than what resonates with a woman. For instance, I love a good ingredients list and couldn’t care less about how much lather I get from my body wash. A lot of men apparently feel the exact opposite. These are the kinds of things that all businesses need to think of when it comes to targeting and sending the right message. And it’s a topic I went deep on in the episode of Up Next in Commerce with Matt Mullenax, the Co-Founder and CEO of Huron. Matt talked me through all the ways he had to test, poll, and iterate on his advertising to get his men’s body care brand off the ground. But when he found the right formula, all of a sudden it was like striking gold. We’re talking crazy click-through rates, plummeting CPAs, and a direct line into the messaging that men are aligned with. Do you want to know what it is? And are you interested in what other heavy lifts Matt is working on now for long-term payoffs? Find out on this episode!
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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For a full transcript of this interview, click here.
There are about a million different inspirational quotes about being your authentic self and how to bring authenticity to everything you do — including your business. Matthew Herman and his company, Boy Smells, brings those cliches to life in real and very cliche ways. Boy Smells produces candles, fragrances, and more that defy the traditional gendered lines that have been drawn for decades in favor of creating a genderful experience that allows all customers to bring a mix of masculinity and femininity to their lives as they see fit. On this episode of Up Next in Commerce, Matthew and I talked about what that looks like in practice, and we dove into how and why Boy Smells has pivoted from focusing on wholesale, to DTC and now to retail and partnerships.
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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For a full transcript of this interview, click here.
Every company will tell you it sells something that will make your life better, easier, or more efficient. But at the end of the day, how happy are consumers with all of the things they buy? Or, better yet, how happy are consumers in general? Hapbee is a company that is focused on both of those questions, and on this episode of Up Next in Commerce, I talked to the founder of Hapbee Technologies, Scott Donnell about how they find the best answers. Scott told me all about how he learned of the technology that powers Hapbee’s device, which sends out frequencies that give you the effect of certain drugs or chemicals without needing to ingest them. So if you’re looking for a kick of caffeine, or some melatonin to get to sleep, Hapbee creates what’s called blends to give you that effect just through low frequencies. It’s intense technology, and it takes a lot of consumer education and testimonials to get the word out. Scott told me how he went about doing that and building Hapbee into a company with a line of consumers just waiting to give it a try — and Scott explained how he’s meeting that demand in a time of supply chain issue galore. This was a really fun episode, I hope you enjoy!
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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For a full transcript of this interview, click here.
So much from the past is long gone — corded phones, the food pyramid, writing checks at the grocery store. But on the flip side, there are things from years gone by that have come back — mom jeans anyone? And then, there are the things that last the test of time. Traditions, styles, and yes, even businesses. Pioneer Linens is one of those companies that has stood strong for more than 100 years and sure, it has gone through its fair share of changes and pivots over the years, but as President, Penny Murphy, told me on this episode of Up Next in Commerce, the commitment to serving its customers has remained through it all. And today, Pioneer Linens is succeeding by giving customers the best experience not just in-store, but online as well. In fact, Pioneer moved into the ecommerce world way back in the 1990s, and Penny led the charge. We got into that story and dug into the company’s long history, the lessons Penny and her daughters have carried into running the business today, and where this century-old company is headed next. Enjoy this episode!
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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For a full transcript of this interview, click here.
Do you know where the shirt you’re wearing came from? Not the brand, the actual fabric. Do you know who constructed the shirt? If you’re a brand owner, do you truly know the conditions of the workers who you are sourcing goods from? Are they being paid fair wages? Do they have a safe environment to work in? For far too long, these questions were left not just unanswered, they weren’t even being asked. But in today’s world, the consumer is more aware of and cares about all aspects of their products, and they are voting with their dollars to support the brands that are doing things the right way. The problem is, though, that it’s often hard to know for sure which brands are true to their word when they say things like they are “ethically-sourced,” “fair trade,” “vegan,” or any of the other buzzwords that they have identified. That’s where Maisa Mumtaz-Cassidy comes into the picture. Maisa is the Founder and CEO of Consciously, a curated marketplace made for sustainable fashion. On this episode of Up Next in Commerce, I talked to Maisa about how she built her marketplace, what she looks for when she invites a brand onto the platform, and she gave some tips to sustainably-minded consumers on what questions they should be asking of the brands they want to support. Enjoy this episode!
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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For a full transcript of this interview, click here.
Starting a business is hard enough. Try launching and building an entirely new global sport. That’s one heck of a challenge. But when you have a good idea, a product, and an organic way to connect with people, it’s actually possible.
Chris Ruder is the CEO of Spikeball, and he initially thought his little business would be a fun side hobby. The company idea even started off with the age old question, “Wouldn’t it be cool if..?” But within five years, that little business with zero employees was earning $1.5 million in revenue and attracting attention around the world. That didn’t happen by magic, though, and on this episode of Up Next in Commerce, Chris and I dug into scaling a company by asking the questions you think are dumb — including to your own customers. For Chris, simply asking, “How did you find out about us?” was the turning point to finding an audience and then nurturing it so that it grows in the most organic way possible. He also gave the inside scoop on his Shark Tank experience, and why he encourages other entrepreneurs to take advantage of that opportunity if they are ever presented with it. Plus, Chris explains how he’s been navigating the supply chain issues, including by finding new ways to expand the company beyond just physical products. Enjoy this episode.
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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For a full transcript of this interview, click here.
It’s not every day that a car salesperson becomes a founder and CEO of a SaaS company that is revolutionizing the way companies do localized advertising. But that’s the path that Diana Lee followed, and on this episode of Up Next in Commerce, we went through the whole story… and dug into how her company, Constellation Agency, built a technology that helped marketers stop crying (literally) because it was so hard to create hyper-local advertising. We also dove into how to think about capturing data in a world without cookies, and we discussed why, if you’re going to be in the market for a car in the next year, you definitely need to be ordering one right now. Enjoy this episode!
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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For a full transcript of this interview, click here.
To say that Eli Weiss has taken an untraditional path to where he is today would be an understatement. Currently, Eli is the Director of Customer Experience at OLIPOP, but his roots are in a traditional orthodox Jewish household, his education does not include a college degree, and his first job in the industry came as a result of him doing a powerpoint presentation to the folks at an emerging luggage brand about why they were failing. Yeah, not what you’d expect. But Eli’s whole career is about going above and beyond expectations — consumer expectations. From that luggage brand to NUGGS Vegan Chicken Nuggets, and now with OLIPOP, Eli has become a master of building out the ultimate customer experience, and he took us behind the scenes on this episode of Up Next in Commerce. Plus, he told us about the job board he set up to help people like him — with skills but untraditional backgrounds — so that more awesome folks can work their magic in the CPG space. This was seriously one of my favorite interviews, so I hope you enjoy it!
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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For a full transcript of this interview, click here.
When you look down at your phone, do you see a little 5G symbol? Do you know what that means or what kind of service 5G is providing? To take it a step further, if you’re a business owner, are you connected to 5G? Is it helping your company move faster and operate more efficiently?
Whatever the answers to those questions are, the problem remains that many of us, consumers and business owners alike, are still mostly in the dark about what 5G truly is, how it’s different, and why we’re actually only just scratching the surface of what 5G is capable of.
On this roundtable episode of Up Next in Commerce, I dove deep into the mysteries of 5G with Geoff Coleman, Chief Product Officer at Gotransverse, Natasha Sachdeva VP Solutions Engineering at Mirakl, and Olivier Smith, Technology Lead from the Office of the CTO at Matrixx. We discussed what 5G is and is not, how it’s currently being utilized, and what kind of possibilities will be opened up when 5G is made available in a more widespread manner. But to get there, it’s going to take a lot of partnership with telecom companies, enterprise software businesses, and cloud, platform and marketplace providers, which is what brought my three guests together. It was a really interesting discussion, and I hope you enjoy it!
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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For a full transcript of this interview, click here.
Fraud has been a problem for centuries. And there have been bad actors and people with ill intent since the beginning of time. What’s different today is the tools and methods that fraudsters are using, particularly when it comes to perpetrating fraud online. Both consumers and brands are in a constant battle against hackers and fraudsters who are gaming and attacking their defenses and stealing hundreds of millions of dollars. So to protect themselves and their cus, brands are putting strategies in place to limit their exposure to risk and stop fraud before it starts. But not only will that defense not last long because fraudsters are always coming up with new ways to run their schemes, more often than not the defenses a company sets up create a bad user experience for the very customers they try to protect.
David Fletcher is the Senior Vice President at ClearSale International, and he and his team are helping to create better solutions, fight fraud, and help ecommerce companies process more orders while giving users excellent experiences. He told me all about it on this episode of Up Next in Commerce, and there are some great ideas for any brand to think about implementing. But even more than that, David and I went deep on some of the other hot topics in the fraud and privacy world, including the debate around two-factor authentication and what’s happening on the dark web. It was so interesting. Enjoy!
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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For a full transcript of this interview, click here.
Kornit Digital has always marketed itself as a developer of technology, which, in today’s world is pretty much what everyone says. In 2021, it seems like every company is either a tech company or a media company. So what is it that makes Kornit different from all the rest? Well, it starts with the fact that Kornit is creating technology that is more than just an app or a gadget: it’s developing tech to enable sustainable fashion production, which could have quite an effect on a $3 trillion industry. To achieve this end, though, means that brands have to start thinking and acting differently. Instead of supply and demand, it’s going to be all about demand then supply.
Currently, 30% of fashion inventory is going unused and unsold. That negatively affects not just a company’s bottom line, the resources wasted in producing and then eliminating those items has a massive negative impact on the environment. On this episode of Up Next in Commerce, Omer Kulka, the CMO of Kornit, explained to me all the ways the company is working to bring new technology, a new business model, and a whole new way of thinking to the industry to start turning those negatives into something better. And the change is coming sooner than you think, so if you want to be prepared, you’ll definitely want to pay close attention to this convo. Enjoy!
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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For a full transcript of this interview, click here.
On this show and so many others, you hear a lot about the success stories and the big companies doing new and exciting things. But the fact of the matter is that those tales of major profits and winning market share and scaling, they were almost always preceded by some really tough times and moments that have crippled many entrepreneurs who have tried to trod the same path.
Conor Lewis is right in the middle of those extremely tough times. Conor is the founder of Fort, a company that sells magnetic pillow forts for kids. It’s a brilliant idea, and that’s not just my opinion. Tens of thousands of backers on Kickstarter agreed, and they pledged more than $2 million to see Fort make its way into their living rooms. And yet, despite the buzz and the big raise, Conor is at a crossroads. He is on the cusp of success, but dealing with massive supply chain and logistics challenges that are also impacting companies around the world. Right now is where a company like Conor’s can launch into the stratosphere… or not. So on this episode of Up Next in Commerce, I was excited to talk to Conor and hear from him exactly what he’s going through, how he’s dealing with the challenges of a young CPG company, and where he thinks Fort can get to once he pulls the company through these rough early stages. This was a raw, honest, and interesting conversation that I think so many entrepreneurs and business folks will relate to. I hope you enjoy it!
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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For a full transcript of this interview, click here.
Throughout the years, Walmart has brought the idea of the superstore to life. Its name is ubiquitous, most Americans live within eight miles of a Walmart, and within the store, you can find everything from groceries to automotive services to custom paint production. Seriously, there is very little that you won’t find within a Walmart. And, on this episode of Up Next in Commerce, Cynthia Kleinbaum Milner told me about how that competitive edge is something that Walmart wanted to lean into as it evolved into the digital era. Cynthia is the VP of marketing for Walmart Plus, Online Grocery and Mobile App, and part of what she does is help Walmart use the power of its retail presence to engage with customers in an omnichannel way, this includes on mobile, which we touched on a lot in the interview. We also dove into Walmart Plus, and how Cynthia positioned Walmart Plus different from the competition, by getting the deepest understanding of what customers want and why. Plus we got into Cynthia’s own journey and how she has developed her skills as a marketer to land at one of the biggest global companies ever. This was such a fun episode, I hope you enjoy it!
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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For a full transcript of this interview, click here.
How new parents shop for their babies is unlike how anyone shops for anything else. I know, I’ve been there. You’re anxious, you’re thinking about all the things your baby will need, but you’re also thinking in stages of what you’ll need three months from now when your baby is in a completely different stage of development. It’s overwhelming and the brands in the baby market are mostly just selling products, and not selling how to have a better experience as a parent. Lalo is one of the unique brands that is putting the parent’s experience first, and that strategy has helped the company quickly grow into a favorite brand among moms and dads everywhere.
On this episode of Up Next in Commerce, I chatted with Michael Wieder, the co-founder of Lalo, about what it was like to create a new kind of shopping experience for parents, and how a little bit of light stalking went a long way to help Lalo figure out exactly what parents want and need. We talked about what it takes to bring a product to market with organic and authentic connections with influencers and consumers alike, and we got deep in the weeds of what strategies Lalo used to communicate with current and potential customers in order to improve not just the products, but the entire experience of buying products for your kids. Plus, we talked a bit about how Lalo has approached fundraising, which is a little bit controversial these days.
Enjoy the episode!
Main Takeaways:
For an in-depth look at this episode, check out the full transcript here: https://bit.ly/3zTMJOt
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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For a full transcript of this interview, click here.
What do eyeglasses, blockchain, and social media all have in common? If you answered nothing, then obviously you haven’t heard of Lucyd. On this episode of Up Next in Commerce, I sat down with Harrison Gross, the Co-founder and CEO of Lucyd, a smart eyewear company that is bringing hardware and software together in pretty incredible ways.
Harrison told me all about how the company was built on IP from research universities — an underutilized trove of crazy cool ideas — and how Lucyd’s crowdfunding backers became the perfect beta testers for the Lucyd Lyte glasses, which are glasses fitted with bluetooth technology that allow users to talk on the phone, listen to music, engage with Siri, and more, all without ever taking your phone out of your pocket. Smart glasses are not a new concept, so you may be wondering what makes Lucyd different. Harrison is developing an app to pair with the glasses that uses blockchain to create a social community where people can utilize tokens, buy and sell NFTS, and engage with people and brands -- all from their eyewear. It’s a whole new kind of commerce, and I’m excited to bring you today’s conversation with Harrison Gross!
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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For a full transcript of this interview, click here.
There is no shortage of ecommerce companies popping up everywhere you look, especially in the U.S, where the culture of having a side hustle is making more and more people into entrepreneurs. Most of those companies sell products, and a lot of them also create or sell merch. That’s where Printful comes into the picture. Printful offers on-demand printing and dropshipping so that companies of all shapes and sizes can design and deliver customized products all over the world. But, according to Raitis Purins, the Head of Marketing of Printful, that’s not the main aspect of the company that has allowed it to grow to a $1 billion valuation.
On this episode of Up Next in Commerce, Raitis explains that when it comes to serving burgeoning ecommerce brands, you have to do more than deliver products to them, you have to help educate them. Printful is only successful if the companies it serves survive and thrive, and so when 9 out of 10 new ecommerce businesses fail, that could spell trouble. Raitis explained that a lot of what Printful does is create content that not only helps the company rank on Google and bring in new customers, but also helps those customers figure out their footing in this crazy world of business. Enjoy this episode!
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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For a full transcript of this interview, click here.
I want to make money. Yep, I said it, and you should too, especially if you’re an entrepreneur or business owner. It seems obvious, but, as my guest today will explain, that idea and saying those words out loud is what holds so many people back.
Leslie Kuster is the founder and CEO of Back from Bali, an ecommerce fashion brand that she scaled from 50k to multiple millions in just a few years. She achieved most of that growth on Amazon, a platform that is always challenging but can work wonders for your business if you know the ins and outs. She does and she shared them with us, including how Amazon has been changing its terms of service around images, what kind of SEO strategies will work well, and what it takes to connect with customers even when facing certain restrictions. Plus, Leslie has a ton of advice for all kinds of entrepreneurs, and women in particular, about what it takes to turn something that was more of a hobby into a business worth millions. Enjoy this episode!
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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For a full transcript of this interview, click here.
If you’ve heard of Casper, the mattress-in-a-box brand, you unknowingly have heard of Terri Rockovich. Terri was one of the early employees at Casper and helped the company launch into the stratosphere. Today, she’s trying to do the same thing with her new company, Jinx, a DTC dog food brand committed to helping our furry friends live their best lives. So maybe it should actually be DTD? Direct to dog?
Anyway, as Terri told me, it’s hard to make magic happen twice, especially when you’re launching a brand in the middle of one of the biggest market shakeups in history. On this episode of Up Next in Commerce, Terri told me all about how Jinx had to pivot when its retail strategy fell to pieces when stores shut their doors in 2020, and she described how directing all of the company’s focus to digital fulfillment and creative partnerships with brands like Petco, Rover and Target landed Jinx in front of a national audience faster than they imagined. Plus, Terri and I got into how disruptive brands can build a moat against their major CPG competitors. And be sure to take note of when and where you might be seeing (and maybe smelling) some doggie billboards coming soon! Enjoy this episode!
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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For a full transcript of this interview, click here.
When you’re building a business, the stakes are always high. Now think about building a company based on a product that absolutely has to work 100% of the time and the other competitors in your category have been around for a century and own about 70% of the market. That might seem like a lot of pressure, and you maybe would assume that having to succeed under those circumstances would mean working in a pretty intense environment. But that’s not necessarily the case for P.S. Condoms. The young DTC brand launched its first product in early 2020 and has been steadily building a base of loyal customers ever since. And the co-founders. Rob Seo and Raja Agnani, have made sure to bring some fun and humor to the company along the way.
On this episode of Up Next in Commerce, I talked to Rob and Raja about what it’s been like to build P.S. Condoms and why creating a welcoming, open, and fun brand has been critical to the company’s success. Enjoy this episode!
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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For a full transcript of this interview, click here.
Catalogs and carpeting are two things that most people think went out of style in the 1990s. But those people are wrong, and FLOR is here to prove it.
James Pope is the General Manager at FLOR, and on this episode of Up Next in Commerce, he took me through all the ways that the company is making carpet cool again through their unique, easy-to-install, and beautiful carpet tiles. But, the first question? How to find new customers when your parent company has focused on B2B customers in the past such as office spaces or hotels. Well, as they say, what’s old is new again, and FLOR’s top-performing marketing programs and main entry point for customers is… a catalog. That catalog represents 70% of their consumer demand. Wild. James really dug into the details around how they think about designing their catalogs from front to back, to tracking offline to online attributions, why holdout testing is key, and why the 80/20 rule holds true for almost everything. Plus, stay tuned to hear about FLOR’s second-most successful marketing campaign which might just surprise you... Enjoy!
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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For a full transcript of this interview, click here.
Efficiency, transparency, trust. These are all things that both businesses and consumers crave, but don’t always achieve. Especially not all with one solution. But thanks to digital identities, and the technology that’s coming out of Avery Dennison, that’s about to change.
Avery Dennison, a Fortune 500 global materials science company, is taking digital identities past the point of simple QR codes and RFID tags, and into a place where brands and consumers will be able to do more with individual products than ever before. We’re talking about a world where you can track the tiniest details of a product in shipment, like its exact origins to its temperature. And brands will have the ability to create more sustainable, reusable products that can learn from consumers each time they use and scan the digital identifiers, making it possible to adapt to changing consumer behavior in real time. To learn more about this new circular economy, I invited Max Winograd to the show, who serves as the VP of Connected Products at Avery Dennison and one of the founders of atma.io. On this episode of Up Next in Commerce, Max and I talked about all the ways that digital identities are already being used today, and what the future holds in terms of the connected experience that digital identities provide for brands and consumers. There are so many possibilities and upsides to the technology that Max and his team are creating at Avery Dennison, so keep your ears perked up for this awesome conversation!
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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For a full transcript of this interview, click here.
Imagine this… it’s 1999, and you and your sibling decide to start an ecommerce company with just a phone line, a 14k modem, a ping pong table, and a credit card. You build a website, find a product that has unnecessary margins, and decide to just.. do it better yourself. Feeling bullish on this ending? Well we are. Because that’s exactly what Roger Hardy did when building his first company called Coastal Contacts, which grew to be the world’s largest omni channel eyewear retailer. The success couldn’t be ignored, and soon after, Coastal was acquired. But one part of that sibling duo, Roger Hardy, couldn’t stay away from the eyewear game forever. He re-entered the space in 2019 with his new company, Kits.com, and by the end of 2021 the business will have already eclipsed $100 million in revenue.
On this episode of Up Next in Commerce, Roger and I got to chat about some of his secrets to success in the D2C world of eyewear. We dove into the importance of vertical integration, what the link is between a company’s NPS and its valuation, and how to think about hiring if you want to go from 1 to 25 to 100 to 300 and beyond. Enjoy this episode!
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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For a full transcript of this interview, click here.
Crowdfunding has been around for centuries — all the way back to the 1700s when Alexander Pope was looking for resources to publish his book. So what did he do? He turned to the people! In return for their funding, his supporters were promised a shout out in the manuscript and would receive a printed copy. Thanks to the internet, crowdfunding has been taken to another level. With easy access to billions of people — and their wallets — young companies, inventors, and entrepreneurs have used sites like GoFundMe, Kickstarter, and others to get some wind in their sails. Dan Shapiro was one of them. Dan is now the Founder and CEO of Glowforge, but before that, he had a massively successful crowdfunding campaign for a board game he had invented for his kids. Through that experience, Dan realized that there were certain elements of crowdfunding that he described as “magic” and that he thought could translate to the world of ecommerce. For his next venture, he wanted to take the high-intent visitors to a crowdfunding site on his website and get them to start converting reliably on the brand’s landing page. He wanted to build a community, and to build excitement that would turn into a flywheel of referrals and inbound leads. Oh, and he wanted to build an inclusive, mission-driven internal culture at the same time.
Well guess what. He did just that with his next crowdfunding campaign. With $100K campaign goal that ended up being blown out of the water, hitting $27M in pre-orders, he launched his next endeavor. And we dove through all the details on this episode of Up Next in Commerce!
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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For a full transcript of this interview, click here.
What if I told you that a technology that has been around since the 1910s is the secret sauce to a company that was founded in 2020 and has completely exploded in the year since? And when I say exploded, I mean scaling from $0 to over $25 million in…. Less than a year. Well, that’s the story of R-Zero Systems, and it’s a great example of how, in today’s world, spotting an opportunity, moving fast, and being able to solve problems in real-time is what separates the winners from the losers in the business world. Whether you’re in CPG, retail, healthcare, or some combination of multiple verticals, the biggest problem a company has is the ability to sustainably scale. But R-Zero Systems is showing just how to do it well, and that’s not the only solution the company is bringing to the table.
On this episode of Up Next in Commerce, I sat down with Grant Morgan, the co-founder and CEO of R-Zero Systems, and he told me all about the wild ride the company has been on since its founding in spring of 2020. See, R-Zero is a biosafety technology company that, thanks to its innovative products, helps customers create safer spaces for its patients, employees, students, and anyone else entering an indoor space. It was created for the same reason as any other company — to solve a problem. The difference, though, was that Grant and his team were able to first, ramp up production at a time when few others could, and second, bring something critical to the very specific needs of the market that was already proven to be effective but wasn’t very accessible. Turns out, that’s the key to growing quickly is effectiveness and accessibility all at once, oh, and maybe a few other things too. Want to know what they are? Find out on this episode! Plus, listen closely to hear my epic UV product ideas that I know Grant is eager to add to his product roadmap, and some of the funniest product requests he has received to date.
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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For a full transcript of this interview, click here.
Okay, so sitting around trying to predict the future can be a pretty fun challenge. But for Phillip Jackson, the Chief Commerce Officer at Rightpoint and the Co-founder of Future Commerce, there’s no better way to spend a day — or an hour on a podcast.
On this episode of Up Next in Commerce, Phillip and I went deep down the rabbit hole of all the crazy trends we’re currently seeing in the ecommerce world, and where we expect the industry to head next. From spotting innovation in the gaming community, building the ecommerce metaverse, or working with disruptor brands on high-risk, high-reward ideas to grow a digital community, we touched on it all. Plus, if you think big retail is dead, tune in to hear Phillip’s interesting take on how that is anything but true, and how the D2C brands currently praised on Twitter are nothing in comparison to the private revolution happening in places like Target and Walmart. Just check out the GMV if you don’t believe him! This was such a fun interview, and I loved getting the chance to pick the brain of another smart, forward-thinking podcast host and ecommerce enthusiast! Hope you enjoy it as much as I did!
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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For a full transcript of this interview, click here.
Every business needs a website, and every website needs a landing page. These are universal truths. Where things become fuzzy is when you try to understand what makes a landing page good versus just good enough. The difference between having a landing page that is optimized versus one that just works could be huge: we’re talking more conversions, higher LTV, and, ultimately, more money headed toward your bottom line. So then why are brands still neglecting their landing pages? And what can they do to make them better?
I asked those exact questions to Raphel Paulin-Daigle, the founder and CEO of SplitBase, which is helping companies like L’Oreal, Diff Eyewear and more scale their websites in meaningful ways that impact their bottom line. Raphael walked me through some of the biggest mistakes companies are making when it comes to their websites, including the severe lack of patience most brands have for testing and failure. But, as Raphael explains, it’s in the experiments and failures that you learn the most. Tune in for all the insights and get ready to start running A/B tests once this episode is over!
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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For a full transcript of this interview, click here.
There is more to a company than just a really cool product or two. The best businesses are built on revolutionary products mixed with value-adding opportunities, marketing, partnerships, and leadership. Dome Audio has all of that in spades.
On this episode of Up Next in Commerce, I sat down with my friend Timothy Wright, a Super Bowl champion and the chief strategy officer of Dome Audio, a disruptive headphone technology that has the world’s first surround sound, bone conduction headphones. Tim breaks down what it took to build the patented bone conduction technology (sneak peak, just imagine a sketch, a cad file, and a 3d printer...). Plus, we dive into how they are thinking about licensing and IP partnerships and hint at a possibility for how they plan to utilize NFTs in the future. We also had a fun discussion that took us behind the scenes of his pro football journey with five NFL franchises that resulted in a Super Bowl XLIX ring, and lessons he has taken from the world of football and brought into his business ventures. Also, as a quick side note, I am an investor in Dome Audio, but this podcast is for purely informational purposes and not to be used to drive investment decisions. So with that, enjoy this episode with Tim Wright!
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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For a full transcript of this interview, click here.
Knowing your customer is the obvious first step to creating and selling products. But there are still companies that lose sight of who they should be targeting, where, and with what kind of content.
SCOUT is not one of those brands.
On this episode of Up Next in Commerce, Deb Waterman Johns, the Co-founder and Chief Creative Officer at SCOUT, took us behind the scenes of what it’s like to build a brand that is all about authenticity in its products, its partnerships, and its marketing efforts. Deb explains what it takes to not get pigeonholed in a certain category or vertical, and also talks us through why retail partnerships are going to be important to ecommerce brands in the years to come. Plus, she highlights how what's old is new again, not only in the world of fashion, but business too, and how their team is leaning back into some “old school” tactics to really connect with their customers in the most authentic way. And because she has been a color consultant to some of the largest brands, I had her reveal what color palettes are going to be trending in the upcoming year.
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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For a full transcript of this interview, click here.
Some products are new and cutting edge. They’re exciting and they make people rethink how they live or work. And then other products are … umbrellas. Don’t get me wrong, there’s nothing wrong with umbrellas, I just don’t find myself thinking about or buying them very often. And that’s one of the problems that Tyler Kupper says they are overcoming at Weatherman Umbrella.
Tyler is the Chief Revenue and Partner at Weatherman, and on this episode of Up Next in Commerce, he told me all about what it’s been like trying to disrupt an industry that hasn’t really seen any innovation in 50 years. The conversation was really interesting, especially because Weatherman isn’t just thinking about making a product that protects people from the elements, Weatherman has big plans that involve data, apps, partnerships, custom features, and more. Weatherman is thinking long-term, and it’s already working out great because the company has inked major partnerships in the golf world with Arnold Palmer and the Ryder Cup, and has gotten its foot in the door at big box stores such as DICKS and Golf Galaxy. And Tyler says there’s just the beginning! So grab your rain boots and prepare for an epic episode.
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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For a full transcript of the interview, click here.
In 2021, you’d think that just about everything has been digitized at this point, right? Wrong. In the world of banking, there are still local banks, credit unions, and other financial institutions that have been slow to hop on the digital bandwagon. NCR is here to help not just them, but their customers as well by providing all the technology necessary to make banking, digital payment, and other transactions possible on mobile, online, or anywhere you want. But that’s not all. As with everything from ecommerce to marketing, banking is about to get more personalized thanks to data and automation.
On this episode of Up Next in Commerce, Doug Brown, the President of NCR Digital Banking, explains it all and paints a picture of what banking will look like for the average consumer as well as businesses big and small. He also talks about how solutions can and should be implemented regardless of the business you’re in and who you should be asking to get a handle on what consumers actually need. And he dives into where and how crypto will evolve next. Enjoy this episode.
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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For a full transcript of the interview, clickhere.
Everything you put out as a brand should be interesting, it should be relevant to your consumer, and you and your employees should be proud of the final product. So why then are so many brands finding that the people who work so hard on and actually create the marketing materials aren’t sharing the end result?
Max Summit is a marketing consultant who has worked with some of the biggest brands in the world — Adidas, Lululemon, Athleta, the list goes on — and regardless of the brand, whether they sell online or in brick and mortar, Max knows that true connection with customers start with the connection to the internal employees. On this episode of Up Next in Commerce, Max discusses all the ways that brands should be doing internal pulse checks and reinventing their mission in order to make their marketing materials hit home with consumers. Plus, she explains how brands should be thinking about ways to become resources for customers beyond just being a provider of goods and services, and she gives examples from her days at Lululemon that any company can learn from and where VR and AR can come into play. Enjoy this episode!
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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One of the stats NBCUniversal likes to promote is that in any four weeks, NBCU content reaches 95% of homes in the U.S. It’s also the reason that in recent years, NBCU has started to focus more on creating shoppable content across all platforms to really take advantage of the audience it has at its disposal.
On this episode of Up Next in Commerce, I talked to Evan Moore, the Vice President of Commerce Partnerships at NBCUniversal, who explained all the ways that NBCU is connecting viewers with shopping experiences. And he told us how brands work with the company to target and attribute conversions on content of any kind. Whether consumers are reading a blog or streaming their favorite Bravo reality show, Evan says they are able to capture that already-engaged audience and bring a seamless interactive shopping experience straight to them. He also touches on what he sees as the future of shopping on connected devices, and how it isn’t just shopping, but is the future of entertainment. Plus, are you a brand thinking “how can I get on tv? I want to be part of this shoppable experience! Well tune in to hear how you can play in this world, no matter your company size.
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
With any new product, building brand awareness is key. But when your new product is something the world has never seen before, well, you need to do more than just make people aware, you have to educate them, too. As a DTC company, you might have a direct line to your consumers, but you still need to be able to show and teach them as much as possible, and then be there around the clock to answer their questions and hold their hand through the process.
It sounds like a lot of work, but when the product is changing the game completely, you have to be ready to get your hands dirty. And that’s just what Matt Wall and I chat about today, who is the co-founder of Principle Faucets. Principle Faucets is a DTC brand that has created the first fully-integrated foot pedal system which not only saves water, but is more hygienic and improves faucet functionality.
Matt dove into how he and his co-founders brought their foot-pedal faucet to the market, the amount of time it took to test and tweak to make it fit consumers needs, and then he goes into the process of what’s it’s been like to actually get it in front of people — a task made much harder when the pandemic caused them to shut down their mobile display unit. Here’s a sneak peak on what Wall had to say: it takes finding the right niche within the industry and then hyper-targeting your search and marketing terms toward that audience to be successful. Plus, Matt tells us how to market the environmental benefits of something like the Principle Faucet across all different geographies,who are experiencing various degrees of climate change. Enjoy this episode and use the code UPNEXT20 for 20% off on your order at Principle Faucets!
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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If you break down the supply chain in its simplest form, basically what you have is brands procuring products and then delivering them to customers where and when they need them. Sounds easy, right? But if you’ve listened to this show long enough, you know that’s not the case. We’ve heard countless guests tell us just how much the supply chain impacts their business, and they’ve described a number of challenges they have encountered thanks to supply chain disruptions. One thing they all had in common — they had no answers to the problems they were facing.
That changes now.
On this episode of Up Next in Commerce, I was so excited to finally get some insight on the supply chain from a couple of guys from Blue Yonder, Omar Akilah, GVP of Product in the commerce suite, and Eugene Amigud, GVP of Product Management and Architecture. Blue Yonder is an end-to-end supply chain platform that enables companies to tackle all the problems in the supply chain, and little side note, it’s currently on track to be acquired by Panasonic for a measly $7.1B. From planning to execution, to transportation management, to commerce, to promising a customer when they're going to get it and making sure that you fulfill those promises, these are just some of the things Eugene and Omar have insider knowledge of. They dug into all of those topics and more and they shared how they help brands solve issues at all stages of the supply and fulfillment process. Regardless of the issues at hand, Eugene and Omar have heard, seen, and solved for it all. They also see the trends evolving in real time, including how important same-day or next-day delivery will be in various verticals, how and where A.I. and ML are being implemented, and what kind of difference edge technology and data will have on the entire buying and shipping experience. Eugene and Omar explain it all in this awesome roundtable episode, enjoy!
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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What’s hot today might be out of the zeitgeist tomorrow. Are people still doing goat yoga? Are skinny jeans really the new mom jeans? There are so many trends to keep track of and so many “next big things,” it’s impossible to know what’s real and what’s just a passing fad. For a business, it’s important to understand the distinction, and it’s even more important to have products that will thrive regardless of the different cycles your industry will run through.
Lopa van der Mersch says she has that kind of product with her company, Rasa, which makes a coffee alternative with adaptogen blends. Lopa has a fascinating story, including inadvertently entering into a cult, navigating tricky co-founder relationships, and building up a business to more than $2M in revenue all from her garage.On this episode of Up Next in Commerce, Lopa explains why she believes that her product will be a game-changer regardless of societal trends, and she breaks down how to spot something phony or bad for you, whether it’s in a product or even in a partner or personal relationship. Enjoy this episode!
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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Most people probably know Cuisinart because of the company’s kitchen appliances like the food processor, air fryer, or coffee maker. Cuisinart’s products are everywhere — in kitchens around the world, in retail stores, and yes, online. In the last year or so, Cuisinart has put a much greater emphasis on the DTC part of the business -- walking the tightrope of being there for retail partners, while still making sure that there is enough inventory to meet the demand coming from online.
On this episode of Up Next in Commerce, Mary Rodgers, the Director of Marketing Communications for Cuisinart, explains the steps the company took to make the pivot to DTC without leaving retail partners in the lurch. Mary also talked about how the marketing and online pushes for products went from being planned out months in advance to changing from one day to the next. Enjoy this episode!
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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If it’s free, it’s for me — that’s one of my mottos. And that’s why I love free samples. But free samples are universally adored, and in recent years the customers getting the goods aren’t the only ones who are benefiting. Ecommerce companies and retailers alike are using samples as a way to raise awareness, convert more sales, and drive traffic to a product or webpage, and it’s working.
On this episode of Up Next in Commerce, guest host Albert Chow talked to Doug Guyer, the Co-founder and Director of Strategic Development at Brandshare, the company that brings many of those free samples to your door. Doug explains that sampling is a tool that any brand can take advantage of, and if they do, they could see 97% of people who get the sample try it out, and 32% of those folks actually convert into buyers. It’s a massive opportunity, but Doug also says that most brands out there don’t know that this is possible. How has Doug and the team gotten the word out — including the story of how they landed their very first campaign with Tylenol — and what should brands be thinking about when they engage in the sampling strategy? Find out on this episode!
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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Creating an influencer or affiliate program is a huge headache for most brands. Vetting the people you let in, assigning them links and promotions, keeping an eye on their posts. And then what about tracking performance and understanding conversions? Sounds like a nightmare But it doesn’t have to be.
Shibo Xu is the Co-Founder and COO of Refersion, which was built on the idea that you could completely flip that process on its head. Instead of the burden falling on the brands, influencers have to prove their worth. And rather than getting lost in vanity metrics or other out-of-date KPIs, place value only in a select few areas. These ideas helped launch Refersion to success and helped the brands that work with Refersion, like Puravida, Impossible, and 19,000 others remove some of the challenges of influencer marketing that have plagued them for years.
Shibo talks about all of that on this episode of Up Next in Commerce, which was guest-hosted by Albert Chou!
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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If you look on Twitter or do a quick Google search, you’ll find a ton of chatter about the foolproof DTC playbook. Everyone has ideas about the surefire ways that young DTC brands should be setting themselves up for success. Alex Kubo is here to tell you that those playbooks aren’t as written in stone as you might think.
Alex is the VP of ecommerce and digital marketing at Burrow, a DTC furniture brand, and on this episode of Up Next in Commerce, he explained how and why the Burrow team threw out the playbook when certain aspects of it fell flat. For example, Alex talks about the lessons they learned about the signals that pricing sends, and why it’s critical to put the right price on your product to attract the right customer even if that means pricing higher than the playbook says. Alex also dives into what it means to actually be customer centric and how Burrow stays in constant communication with customers. Plus, we discuss why marketing toward buying events or using a spray and pray strategy across a dozen channels is about as useful as setting your money on fire. Enjoy this episode!
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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In-store sales. Ordering for delivery. Buy online, pick-up in store. With so many buying options accessible to consumers, companies are now facing many different kinds of orders to manage and get right. In the restaurant industry specifically, there has been a huge upswing in the number of people ordering online, especially through apps such as Uber Eats, Grubhub, and Doordash. And that’s nothing compared to the number of point of sale systems that are being used. Moving orders from an app or online system into a physical point of sale is a process that’s prone to human error, but for so long that’s been the only way to do it. Zhong Xu and Deliverect want to change that.
On this episode of Up Next in Commerce, Zhong explains how an integrated, cloud-based platform is taking the pain out of managing multiple ordering and POS systems. Plus he discusses how the real world and virtual world will start to blend together more and more as brands invest in digital-focused capabilities. Enjoy this episode.
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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Business owners, operators, marketers, really anyone who works at any company is always aiming to do one thing: sell products. So when Nick Guillen and Nick Ajluni, the co-founders of Truff, say their strategy isn’t solely focused around this, it makes you sit up and listen. At least, that’s what I did when I heard what they had to say.
On this episode of Up Next in Commerce, the two Nicks explained how they built their truffle-infused sauce brand by reverse engineering products specifically to live and resonate on social media, and then why they decided to lean into creating epic content without attaching CTAs. It’s an interesting idea, and one that has worked pretty well for them, actually. After all, Truff is the No. 1 hot sauce brand on Amazon and was included on Oprah’s favorite things list two years in a row. So how is Truff creating content that brings people in without being transactional, and what platforms are the Nicks most excited about in the future? Tune in to find out!
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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From starting a hedge fund to owning the DTC beauty market in China is a career path you don’t hear too often. But that’s the winding road that Julian Reis has traveled and along the way he’s picked up some critical intel about the ecommerce world and Chinese trends that he shared with me on this episode of Up Next in Commerce.
There are a bevy of factors to take into account when entering the Chinese market. From the vast differences in the way consumers shop in China to the sheer volume of consumers that can make a huge boom in sales in a matter of moments, there is a lot to contend with. And how does a brand even get in front of a consumer without traditional ads or email marketing? And what about social media? Or regulations? Julian explains how to take all that information into account and build an ecommerce strategy that lets you win abroad. Plus, he dives into how his company, SuperOrdinary is working with top skincare brands to enter the Chinese market, and some of the experiences that can be expected when embarking on this new path. What a fascinating discussion that was so different than any interviews I have had so far, enjoy!
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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The future of commerce is being built all around us, and while so much of the industry changes on a daily basis, there are still some fundamental truths that anchor brands and allow them to find success in the digital and retail worlds. On this roundtable episode of Up Next in Commerce, I got to dig into exactly what those foundational elements are with Mike Black, the CMO of Profitero, and Diana Haussling, the VP and General Manager of Digital Commerce at Colgate-Palmolive.
This was such a great discussion that touched on so many different topics that brands big and small should be paying attention to. For example, what are the three key levers that influence ecommerce sales? How should you be developing KPIs that will actually mean something and lead to more profitability and growth? Why is omnichannel the way of the future and what channels should companies be investing in? Mike and Diana have the answers, which they have gathered through long and impressive histories in the ecommerce world — Mike worked at Staples and Nielsen, and Diana has held roles at places like Campbell’s, General Mills, and Hersheys. These two really know their stuff and they were so much fun to talk to. I hope you enjoy it as much as I did!
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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The best way to learn something is by doing, which is a lesson that Thomas Lotrecchiano’s father taught him early on. Thomas and his father started Omigo together in 2018 as an alternate route to Thomas going to school for an MBA, and in the years since, that lesson keeps cropping up.
Omigo is a DTC bidet company, and like many industry disruptors, its biggest challenge is educating the consumer base and converting skeptics into loyal customers. On this episode of Up Next in Commerce, Thomas explains how they have done exactly that by blending humor and educational content, building an infrastructure that allows them to ride the changing tides of demand, and by betting big on TV moving forward. Plus, Thomas shares some of the lessons he has learned from his father, who is an ecommerce gamechanger in his own right, having grown a small online business from a modest five employees to 250 in the early days of the industry.. Enjoy this episode!
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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The stores of the future are being built today, and according to David Wilkinson, President & General Manager of NCR Retail, they will not be the types of stores that currently come to mind. We are living in a time that blurs the lines between digital and physical, and retailers are working with NCR to make every experience as seamless as possible. David explains how on this episode of Up Next in Commerce.
He tells us how personalized shopping will be brought to the forefront through first-party branded apps that customize the shopping experience for you. And he details how retailers in all industries can start breaking free of the traditional shackles of standard point of sale technology and store designs. Plus, David and I nerd out about how cryptocurrency will be entering the mainstream sooner rather than later, and how retailers can prepare for what that will mean for their payments systems. Enjoy this episode!
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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There are very few industries that are growing as fast as the cannabis industry, which saw about $20 billion in sales in 2020, and that number is expected to double in the next five years. With that much potential profit and opportunity available, getting into the cannabis game is something that a lot of folks are starting to jump into. But as with any other industry, there is more to it than just the product itself. Manufacturing, distribution, expansion and regulation all play a role.
Liz Wald has experience in all of these areas, and she is putting them to use as the Chief Strategy and Digital Officer for Good Earth Organics. Liz has a long and impressive history in the digital world, having gotten her start at places like AOL, Etsy, and Indiegogo.
On this episode of Up Next in Commerce, she guides us through all of it, including the trials and tribulations of turning an ecommerce marketplace such as Etsy into an international player and what other companies can learn from that journey. Plus, she talks about building partnerships, expanding into new markets, and how all of that will happen in the cannabis space. Enjoy this episode. And as a special treat, from 6/23/21 - 7/7/21, enjoy 20% at checkout on Good Organics orders by entering the code UPNEXT20.
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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When Steph So joined the team at Shake Shack in 2019, she was excited for the opportunity to grow the digital side of the famous burger company. She had set high ambitions, hoping to grow their digital channels between 25 and 50%. So when COVID hit, and all of a sudden digital grew by 400%, you’d think that Steph would feel like she bit off more of that burger than she could chew.
Not so fast, because as Steph says, digital can scale, and much like you can uplevel your combo from a medium to a large, Shake Shack was able to handle the higher traffic while at the same time coming up with new, innovative ways to make the customer experience on digital even better.
On this episode of Up Next in Commerce, Steph explained how she and the team handled an influx of 1.8 million new customers within a year and how they created the most seamless digital experience possible. Steph says that the secret Shack sauce on top of the digital experience all comes down to choice. The success of the company depends on giving the customers everything they need to feel like they are getting the full Shake Shake experience however they want it, whether that’s in-store or online and nailing that omnichannel strategy is Steph’s holy grail. Hear how she’s nailing it right here! Enjoy.
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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The relationship between a brand and an influencer is a two-way street. And even though that sounds obvious, even the most successful brands and influencers are struggling to see ROI from their content.
Tessa Barton, AKA Tezza, has experiences on both sides of that spectrum. She is an influencer-turned-entrepreneur, whose company — also called Tezza — has seen its ups and downs in the five years she’s been working on it.
On this episode of Up Next in Commerce, Tezza explains how she went from cold reach outs to Urban Outfitters to leveraging a following of more than a million people to building a company all on her own. She discusses how both brands and influencers should be thinking about putting their best foot — and content — forward and what kind of creative and distribution process has had the most success. Plus, she talks about the lessons she learned when she launched her very first product expecting immediate success and then being able to count her orders on one hand. She turned things around, though, and you’ll learn how she did that and more on this episode!
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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Traditional retailers are facing different levels of competition from all these new ecommerce brands that have popped up recently, and are now being held to new customer expectations that many predicted wouldn’t occur for years. Because of the acceleration of digital platforms and online shopping over the last 18 months, brick and mortar stores are in a scramble to catch up or risk being kicked to the curb.
Helping retailers take charge of their digital transformation journey and get in on all of the online action is Sensormatic, which serves retailers with IoT technology to help them with things such as inventory intelligence and accuracy, gathering shopper insights, converting foot traffic, and more.
Subramanian Kunchithapatham (KS) is the Vice President of Engineering at Sensormatic and he’s been up close and personal with the brands as they implement the new technology that will allow them to compete in a digital world. On this episode of Up Next in Commerce, KS tells us what he’s been seeing in the world of retail and how he anticipates the industry changing in the coming months and years. For example, he gives us the scoop on how Sensormatic partnered with Intel to turn already-installed store cameras into an A.I.-powered Smart Hub — basically an intelligent store that can provide insights into occupancy, foot traffic, track inventory, and even provide a personalized experience for customers if they have opted in. Hear all about that solution and others on this episode!
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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That first online sale plus the first time a retailer agrees to carry your product are always exciting. But when you can’t meet the demand of your online customer base or your design process is slowed and shipments are delayed, that’s when the headaches come twofold.
But when your mission, and your product, is something you truly believe in and think can leave a lasting impact, you take all the good with the bad and keep on pushing forward.
For Stojo, a company that produces collapsible, leak-proof cups and containers, there have been wins and losses of every kind, and CEO Jurrien Swarts has been riding the waves as his company tries to get a piece of a $22 billion industry. On this episode of Up Next in Commerce, Jurrien takes us through what it has been like to design, launch, and distribute Stojo’s game-changing product. Plus, he guides us through how difficult it is to scale and market a business, and what it takes to make hard choices like laying off and rebuilding a staff. Enjoy this episode!
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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It’s not easy to keep a digital audience engaged. And it’s especially hard when the product you’re trying to engage them with is … produce. And yet, Avocados From Mexico has set a gold standard for what it means to build a funnel and engage an online audience and it has somehow found the secret recipe for success (and also guacamole).
On this episode of Up Next in Commerce, I was excited to talk to Ivonne Kinser, the Head of Digital Marketing and Ecommerce for Avocados From Mexico, and learn her many tales about how the company has used out-of-the-box ideas to take something that rarely gets marketing love — produce — and turn it into must-engage-with content. She took us behind the scenes of creating one of the top digital campaigns for multiple Super Bowls, and she dove into what the future of digital marketing looks like, including why Avocados From Mexico has been ahead of the trends when it comes to things like NFTs and blockchain. Enjoy this episode!
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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The online buying experience is always evolving, so it’s table stakes for companies to be on their toes and ready to adjust when the market tells them to. Especially when the company we are chatting about today was founded in 1948! But being prepared to adjust and actually making it happen are two different things.
At DICK’S Sporting Goods, its customers, who are referred to as “athletes” are truly running the show, and Scott Casciato, who serves as the VP of Omni Channel Fulfillment & Athlete Service at DICK'S, is the man who takes their needs and delivers a seamless experience to them via DICK’S ecommerce platform and throughout their 700 retail locations. And with their ecommerce sales increasing by 100% in 2020, Scott and his team have had to rethink many things like: how to scale up operations during peak seasons, why testing every iteration on the website is key, how to perfect the buy online pick up in-store experience, and determine how to take their athlete's feedback and transform it into a funnel for change. This episode brought back a lot of nostalgia for me, thinking about the days of wandering the aisles of Dick’s in my high school days looking for a new lacrosse stick or soccer shoes. So it was fun to hear about how much has changed, and what investments the company has been making lately in creating the best customer experience possible for its athletes. Also, tune in to the end to hear Scott discuss the importance of great vendor relationships, how to future proof logistics, and the new in-store experiences that Dick’s is betting big on. Enjoy!
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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It seems like selling a product that is designed to make you feel good should be a cake walk. But as we all know, business is never easy, especially when you’re breaking into the supplement and nutritional bar space, which is overcrowded with industry giants such as Clif bars and KIND. So what’s an upstart company with a solid product and good intentions to do?
On this episode of Up Next in Commerce, we found out when we talked to Chris Bernard, the co-founder, CEO and Chief Mood Officer for Mindright, the good mood superfood. As it turns out, there are a few ways that a small new company can make a splash, especially in the digital space. Chris explains how organic reach outs and authentic connections formed through his partnership with Rob Dyrdek has helped Mindright create an influencer and ambassador community that wins against influencer fatigue. Plus Chris, he digs into why a content strategy that blends humor and education is what gets the attention of the digital audience. Enjoy this episode.
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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Repeat customers are the heart and soul of just about every business. But when your product is something that you purchase maybe two or three times throughout your life, how do you create a repeat experience that will sustain your company long-term? That was one of the questions that Chip Malt had to answer when he co-founded Made In Cookware, a digitally-native kitchenware company that launched in September 2017 and is disrupting this $17B cookware industry.
And the solution he came up with was a good one: produce the highest quality products possible, have a deep understanding of the industry you’re entering into, deliver an all-around experience that goes beyond those products, then keep scaling to bring more must-haves to market.
This episode was such a fun one because we dove into the history of the cookware industry, long term partnerships they’ve set up in France (their knives are made from the great-great-great-granddaughter of a French knife maker who invented the modern chef knife in the middle of Central France), secret recipes for their cookware ingredients, the best cooking tip he ever learned, and more. Enjoy this episode.
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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Taking a company from $1 million to $100 million is no easy feat — especially when you have competition and copy cats coming at you from all angles. But Peak Design has fought off all those knock-offs — including a pretty blatant rip-off from AmazonBasics — and it has done it with humor and panache, which has only endeared the company more to its loyal customer base. Those customers are what took Peak Design from a simple camera utility bag company and turned it into a popular everyday bag and accessories outfitter for photography enthusiasts. Peak Design leaned into the idea of having a close relationship with its customers from the very beginning, by letting their customers have a say in their product line by way of crowdfunding and Kickstarter campaigns. And that, according to Elish Patel, the VP of Growth and Digital at Peak Design, has made all the difference.
On this episode of Up Next in Commerce, Elish explains how building that loyal customer base has helped the company stave off the blatant and more subtle competitors. And Elish talks about how Peak Design is using unique marketing and content strategies to take people from browsing to buying. Enjoy this episode!
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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Within the last five years, outdoor gear company Sherper’s has gone from less than one percent of its business revenue coming from ecommerce to now having a 50/50 split between in-store and online. And for this fourth-generation family business, that move to online has been both challenging and rewarding.
As an old-school mom and pop business, Sherper’s has always prided itself on building personal relationships with customers and providing a level of customer service you won’t find with the big guys or digitally-native companies. So finding a way to create a digital experience that allowed Sherper’s to scale its operation yet maintain a personal touch was a top priority for the company. Leading the way in that journey is Nathan Scherper, the President of Sherper’s, who has come a long way from those days of scrubbing toilets for the family business when he was just 12 years old.
On this episode of Up Next in Commerce, Nathan takes us behind the scenes of how Sherper’s built out its ecommerce platform, what its competitive edge is over the Amazons and Walmarts of the world, and how the Sherper’s online platform performed when the pandemic forced more people than ever before online and in search of outdoor goods to cure their cabin fever. Plus, Nathan provides some insights into what it takes to keep a family business running for multiple generations, and why hiring talent is less about skills and more about personality. Enjoy this episode!
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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Most people would think that a company in the Fortune 500 wouldn’t have much work to do to stay on top and compete against scrappy start-ups. But in the world of ecommerce, companies large, small, and in between are all on somewhat level playing fields, and oftentimes, the bigger, legacy companies are running behind the younger brands.
For Stanley Black & Decker, this was the case when it came to the company’s ecommerce business, which is why SBD announced a goal to double its online sales in order to re-establish itself as a leader in all areas.
Katherine Bahamonde Monasebian is the President and GM North America Commerce for Stanley Black & Decker, and she has been leading that charge since joining the company in early 2020. Katherine entered the world of retail, having cut her teeth at places such as Lululemon, Barney’s, and Juicy Couture, but she’s always loved a challenge, and going from the hardest-hit industry in the pandemic (apparel) to the top-performing vertical (DIY and home improvement goods), was one of the biggest career shifts she had ever made.
On this episode of Up Next in Commerce, Katherine explains why she made the decision to role up her sleeves and join Stanley Black & Decker, and how she has grabbed the company’s lofty ecommerce goals by the horns and got to work. Katherine discusses what it takes for a large company to experiment with new platforms, and how she measures ROI and attribution to assess risk, and she looks into the crystal ball to predict how ecommerce will continue to change, especially in terms of B2B innovations. Plus, we have a really meaningful conversation about how women are being brought into the fold at Stanley Black & Decker and elsewhere, and she explains why it’s so important for a company to practice what it preaches when it comes to its values. Enjoy this episode!
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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In the wild world of ecommerce, the status quo is always changing. New companies enter the market to disrupt the norms. Legacy brands pivot to get a piece of the pie. Successful niche businesses get acquired left and right. With so much happening all at once, it takes a lot of work for brands to not only keep up but to get out ahead and win.
Andrea Leigh and Melissa Burdick have made it their mission to stay on top of everything that’s happening and use their knowledge to help companies large and small make an impact in the market. Andrea, who you may remember from a previous episode where she discussed how to win on Amazon and the death of the category, is the VP of Strategy and Insights for Ideoclick, and Melissa is the Co-founder and CEO of Pacvue, a company that helps advertisers scale on big ecommerce platforms like Amazon, Walmart, and Instacart. A few customers of theirs include Unilever, Duracell, and Johnson & Johnson.
These ladies each spent 10 years at Amazon “back when ecommerce wasn’t cool,” as Melissa says. Today, at their current companies, they work with disruptors and major brands alike as they come to realize that ecommerce is not just a fad, but the way of the future. And that’s why I was so thrilled to invite them on this roundtable episode to talk about all the trends they’ve been seeing recently, and to get their take on where things are headed. How are major brands moving to digital? Why are companies investing more in shorter product life cycles? What is the future of dropshipping and ad platforms? I wanted to know, and they delivered the goods. So sit back and enjoy!
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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Mini malls, shopping centers, and large department stores all still exist and remain popular despite their digital counterparts
But online marketplaces are where more and more brands are gathering to not just sell goods, but to get a better 360 view of their customers, and gain access to sell products from other big name brands that fit their marketplace niche. On this episode of Up Next in Commerce, I explored that idea a bit more with Jason Wyatt, the Executive Chairman at Marketplacer, a business dedicated to creating marketplaces. We dove into the various ways that Jason has seen marketplaces evolve, especially in recent years. Plus, Jason talked about some of the incredible innovation that he’s seen take place thanks to marketplaces — including the birth of Providoor, an Australian marketplace for restaurants that was built as a reaction to COVID-19 and reached a $100 million run rate within 12 weeks. We talked about how the marketplace connections made that possible, and also how the B2B landscape can be revolutionized thanks to marketplaces. Enjoy this episode!
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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Lindsay McCormick knows a thing or two about pivoting. After all, she went from planning to live in a van and travel around the country selling her sustainable toothpaste bits to launching a transformative and still-growing company that has taken the internet by storm and has left the big brands shaking in their boots.
Bite Toothpaste Bits was the company Lindsay never meant to start, but a viral video helped launch her full-time into the world of ecommerce after she went from 6,000-lifetime sales to 200,000 in a single week. Needless to say she could no longer manufacture everything from her living room, and instead was thrown into the deep end trying to find production and shipping partners that could not only make her very specific products, but do so in a sustainable way that stayed true to Bite’s ultimate mission. There were challenges around every corner, but Lindsay navigated through them all, and on today’s episode, she shares that rollercoaster ride of a story . Plus, she explained why she thinks it’s so important to keep content creation in-house, the reason she’s always testing new channels and leaning into video content — I mean, it is what launched her company — and she reveals why she’s not scared at all about the big-name manufacturers making copy-cat products, in fact, she’s excited about it. Hear all that and more on this episode!
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
---
One of the hardest things to do in ecommerce is creating an online experience that truly showcases every aspect of a product. This is especially true in the world of luxury goods, where allowing customers to touch, feel and admire the craftsmanship of a product. And at the same time they are expecting an indulgent in-store experience which is tantamount to the story of the brand. Just the in-store experience can serve as the main selling point and create word of mouth like no other.
Throughout his career at places like Brunello Cucinelli and Boggi Milano, Fedele Sforza has had to meet that challenge head-on and figure out a way to create a luxury ecommerce experience that matches and works in tandem with the luxury in-store experience. On this episode of Up Next in Commerce, Fedele tells us exactly how he’s been able to do just that, and he explains why ecommerce leaders have to be evangelists within a traditionally retail-based environment. Plus, he details how to use data and technology as a window into the needs of your different customers, which you can then leverage to create personalized shopping experiences across channels. Enjoy this episode!
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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No digital transformation is the same, but when a massive B2B organization embarks on that journey, you better believe that there will be a lot of lessons learned that can be applied to any other company. That’s why we wanted to talk to former Chief Digital Officer at Univar Solutions, Ian Gresham, who led the digital transformation and ecommerce implementation at this $9 billion multinational industrial distribution business. Look around at the things around you, make up, dish soap, skincare, solvents for your car. Univar probably has a part to play in that.
On this episode of Up Next in Commerce, Ian tells us about the experience of bringing a massive organization into the world of digital commerce, and he reveals some of the biggest learnings from the experience that he is using now as an executive advisor to multiple businesses. For example, how should ecommerce leaders frame the building of a platform to get buy-in from the top down, and what kind of strategies should you implement to drive adoption of your platform? Interestingly, it’s a combination of moving fast but also taking it slow — tune in to learn what that means in practice. Plus, Ian shares more tips and discusses some of the insider details on the projects he’s currently working on. Enjoy!
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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Let’s be real, talking about sex makes people uncomfortable. But it shouldn’t! And that’s one of the driving principles behind Maude, a modern sexual wellness brand that is disrupting a taboo industry and making sexual health more a part of the overall health and wellness conversation.
On this episode of Up Next in Commerce, I chatted with the founder of Maude, Éva Goicochea about how she built her company with a combination of excellent content, a growing and vibrant community, and a go-to-market strategy with patience and empathy top-of-mind. Éva also gave us some insight into the lessons she’s learned from bringing Maude into the retail market, and how she goes about assessing customer acquisition and community engagement. Enjoy this episode!
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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The Beatles told us that All You Need Is Love. Howard Tiersky says the same thing — but he’s talking about brands, not the whole of human existence.
Howard is the CEO of FROM, The Digital Transformation Agency, which has helped brands such as Mattel, Barnes & Noble Education, Mall of America, NBC, Avis-Budget, and more transform to compete and win in a new digital world — and they succeed by getting customers to love the brands and everything they offer. Whether you’re a shiny new ecommerce start-up or a legacy brand with decades of history behind you, getting a consumer to actually love you is a multi-step process that is getting harder and harder as the digital landscape evolves.
On this episode of Up Next in Commerce, we dig into what the pyramid of brand love looks like and how companies should be working to climb their way to the top. Plus, he reveals the biggest mistake he sees companies making that causes potential customers to shop elsewhere, and he gives some strategies to rectify that situation and improve your bottom line. Enjoy!
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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Brands are facing fierce competition in this ever-evolving ecommerce landscape. More often than not, shoppers do a general product search on Google or Amazon, where hundreds, if not thousands, of brands fight for the sale. It’s a hard arena to win in, and every company is trying to find shortcuts and strategies to give them an edge.
You’ve probably seen some of those strategies — for example, the products with a bunch of random SEO words jammed into the title so that the item appears higher in search. There are plenty more wacky Amazon tricks of the trade that brands have tried. Goal Zero is one of those brands trying to figure out the secret sauce but approaching it in a much different manner. Patrick Keller, Head of Marketing and Ecommerce at Goal Zero, may have finally solved the mystery — but the answer is not what you might be expecting.
On this episode of Up Next in Commerce, Patrick tells us that there are a few key strategies to unlocking more conversions on Amazon, and how they view authenticity and increasing brand awareness.TLDR: it takes great messaging, some big bets, and a lot of long-term thinking. Oh, and some pretty cool products, too. Hear all the details on this episode!
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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Ecommerce has come a long way from its early days as a separate part of the company that you set up and just hope to see returns on. Now, ecommerce is pivotal for just about every organization — but there is one faction of businesses that still lags behind.
There are $17 trillion dollars worth of B2B payments made every year. Yes, trillion with a T. And half of those payments are still being made manually. Clearly, there is a massive shift that still needs to happen in the B2B space, and Deloitte Digital is helping make those digital transformations a reality.
Paul do Forno is the Managing Director at Deloitte Digital, and on this episode of Up Next in Commerce, he helped us understand the struggles B2B brands are facing and how moving them into the digital space could spell a massive change in the ecommerce industry. Paul also dives into some of the major trends he’s keeping an eye on in the ecommerce world, including how ecommerce continues to scale around the globe, most notably in Latin America. Plus, he shares some tips for businesses who are overwhelmed by the amount of channels and platforms they suddenly have to play in. Spoiler: he says do less. Tune in to hear more!
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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Word of mouth is still the best marketing tool, even in today’s digital world. And in this time of the ecommerce boom, brands are constantly working to build buzz for their products. Whether that’s through ratings, reviews, social posts, or unique ad campaigns. But there’s one highly coveted strategy that’s been bubbling to the top of the stack, and every ecommerce leader knows it is the way of the future. User generated content.
And a company called Yotpo is here to help with that. Yotpo is one of the top platforms that companies such as IKEA, 1-800-FLOWERS, Chubbies and more lean on to help them build communities, generate UGC, and create loyalty programs that yield the kind of engagement most brands only dream of.
On this episode of Up Next in Commerce, I asked the co-founder and CEO of Yotpo, Tomer Tagrin to give us an inside look at how Yotpo is generating 5X more engagement and content creation than is typical. Plus, we also dove into the future of loyalty programs and personalization. My one-sentence takeaway: definitely start leaning heavily into loyalty and maybe let off the gas a bit on personalization. Why? Tune in to find out!
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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The world of ecommerce is constantly changing — this last year being a prime example. How people shop in 2021 is radically different from how they shopped in early 2020, so forget about thinking about comparing today’s world to a decade ago. Although that is fun to see how much has changed. Now, it’s all about keeping up with your customers, which is why for our first official roundtable episode of Up Next in Commerce we wanted to bring on two people who have been on the cutting edge of the industry for years.
Ashima Sehgal is a Software Development Manager at Amazon Music and Jon Feldman, a Senior Marketing Leader for Salesforce Commerce Cloud. These two go way back to their days working together on ecommerce implementation at Restoration Hardware, which was a journey in and of itself, and while they remain close friends, they sit on the opposite side of the fence when it comes to certain aspects of the future of ecommerce. We get into all of it in this episode, including discussing whether shopping at the edge is the future of the industry or just a passing fad, and how to get buy-in when selling a new implementation. I hope you enjoy the conversation as much as I did!
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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Interacting with customers requires a level of finesse and talent that is beautiful when done well, and a tough sight when done poorly. There is give and take, and you have to flow through various movements and ups and downs to reach a satisfying end result. It’s like a dance. A tango if you will. At least, that’s how the folks over at LivePerson see it.
Alex Spinelli is the CTO and EVP of product, technology, and operations at LivePerson, and on this episode of Up Next in Commerce, he broke down what that dance should look like, and how A.I. is taking the lead.
As Alex explains, LivePerson is a set of tools, technologies and platforms that enable businesses to have conversations with customers through messaging channels, and to detect where customers may be getting stuck or frustrated. Then, with a small immediate intervention, LivePerson’s A.I. routes that customer to a human who can make the buying process easier. It is a way to get to a better end result more often, and it works. Businesses using LivePerson have seen double-digit-percentage-point improvement in conversions and higher NPS scores than ever. But the power of A.I. doesn’t end there, and Alex dives deep into where we are headed with A.I. as a tool in retail, including the blended in-person and virtual experiences that seem to be overlapping more than ever before. And Alex gets into the nitty-gritty of the ethics behind A.I. and how everyone will have to be more involved going forward when it comes to defining their limits, wants, and needs. Enjoy this episode!
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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By now we’ve all heard about the thousands of businesses that pivoted to ecommerce in the wake of the pandemic last year. What we haven’t heard as much are the lessons both companies and consumers have learned in the process.
On this episode of Up Next in Commerce, I was excited to dive into those lessons and more with Israel “Iz” Moreira, the co-CEO of Doughp, a company that sells edible (and delicious) cookie dough. Prior to 2020, Doughp relied heavily on its brick-and-mortar stores and the foot traffic they delivered. But Iz saw potential in expanding the company through ecommerce channels, and, luckily, laid the groundwork for the infrastructure for that pivot even before COVID-19 forced Doughp to shutter its retail doors. With a now fully-online company, Doughp has started to centralize and increase its shipping capabilities and has seen success, but it wasn’t a cake (or should I say, cookie dough) walk. Iz explains some of the hardships Doughp faced on its journey to ecommerce success, including how little information-sharing there still is in the business world when it comes to cold shipping. Plus he dives into the recent revelations he’s discovered about whether free shipping actually matters as much as you think it does. Enjoy this episode!
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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If done correctly, a two-headed strategy of driving sales on Amazon and your native website could yield huge dividends. But what does that kind of strategy look like, and how can you create a scenario where one builds off of another?
The answer lies in assortment and pathways into the brand experience. Ben Knox is a bit of an expert in this area and he’s here to share his expertise. Ben earned his stripes working on Red Bull’s ecommerce strategy, and now serves as the SVP of Digital at Super Coffee. According to Ben, brands need to come up with an assortment strategy that allows customers to get what they want, when and where they want it, but also leads them back to the type of brand experience you want them to have. He also details how beneficial a subscription model can be, if done right. Plus, he gives some tips on how to get the most out of your texting strategies and what is going on in the wild west of customer acquisition.
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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Innovation is risky business, especially if you’re a hardware startup. But it’s not just risky on the part of those inventing a new product. The early adopters of that product are putting a lot on the line, too. Which is why certain industries, like retail, have remained mostly the same for decades. Retailers only want to bring in something new if the operational cost of installing and using the innovation are minimal, and if it doesn’t require a massive overhaul of a retail space. This is exactly what Lindon Gao found out when he started exploring this space.
Lindon has been on a mission to disrupt retail since his first application for a smart security tag was accepted by Y Combinator, and while that hardware didn’t take off, Lindon kept going until he landed on an idea that stuck. Today, Lindon is the CEO of Caper, a company bringing smart cart technology into the retail space with increasing success. In fact, Caper’s tech could be coming to a store near you, as the company recently agreed to partner with America’s largest grocery retailer, Kroger, to bring smart carts into chains all over the nation.
On this episode of Up Next in Commerce, Lindon talks us through how Caper is finally bringing change into the world of grocery, and he explains how smart cart technology could have ripple effects on ecommerce, personalization, and the entire customer journey. Enjoy this episode!
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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When people scroll through Instagram these days, they can’t avoid the ads and the influencers pushing products. And that’s not a bad thing. In fact, more and more often, ecommerce is taking place in channels other than on a brand’s website, which is why so many companies are looking for ways to optimize how they execute commerce at the edge -- this means meeting customers where they are. Paloma has one way to do that, by turning messenger platforms into sales channels, which creates a more personalized shopping experience for customers, and a .5-to-10x higher conversion rate for brands.
On this episode of Up Next in Commerce, I was joined by Kelsey Hunter, the Co-Founder and CEO of Paloma, to give us the inside scoop on why brands should be investing in conversational commerce. In the last year, Paloma has helped partners convert $9 million in sales, and she explains how that happened by simply diverting ad traffic away from a website and into a chat instead. Plus, she discusses the future of conversational commerce and how the low barrier to entry into the ecommerce industry is forcing everyone to adjust quicker than ever before. Enjoy this episode!
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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Transcript:
Stephanie:
Welcome to Up Next in Commerce. This is your host, Stephanie Postals, co-founder and CEO at mission.org. Today we have Kelsey Hunter joining us. The founder and CEO of Paloma. Kelsey, welcome to the show.
Kelsey:
Thank you, Stephanie. It's so good to be here.
Stephanie:
We're excited to have you on. I was just thinking I'm like, "How do I know I'm actually talking to Kelsey and not a chatbot?" She's put up a virtual screen and it might not even be Kelsey back there. I'm not sure.
Kelsey:
I have a history of pretending to be a bot, so.
Stephanie:
I actually, I read that. I read that you spent a little bit six weeks pretending to be a chatbot to learn how they worked.
Kelsey:
True.
Stephanie:
That's fun jumping off point. Tell me a bit about being a chatbot. What's that life like?
Kelsey:
It is wild. Let's see, I was working at a startup in New York that we offered mobile commerce solution for brands and publishers. So I was really deep in the mobile commerce space when the messenger API opened up. And as we're getting side projects, of course then, decided that messenger would be a good place to try to test things out.
Kelsey:
And before even building anything, I pretended to be a bot just to see how it would work. That's what sparked all of this. It was like, "Oh wait, if you can talk to people directly, people will talk to you about themselves." I'm asking people questions, they're telling me way too much information. That was really the spark for me. Then I said, "Oh, why are we making assumptions online? We can just ask people and they will very happily tell you things to help figure out what they should buy and why."
Stephanie:
That's cool. So you were doing this at another company. And then you're like, this is the business in and of itself. And that's how you went to create Paloma?
Kelsey:
Yeah. It was a totally side project outside of the company that I was working with. But all of the pieces tied together for me. That company is called Button, and when I left Button, I did a little bit of other experimentation in the channel. Actually, worked with a team to build a open-source software, to help people call Congress on Facebook Messenger, which was one of the first software tools that was like a MailChimp for the space, which is really cool. But brought it all the way back around to commerce and launched Paloma at the end of 2017.
Stephanie:
Cool. So tell me a bit more about Paloma. What is it? What does it do?
Kelsey:
Paloma helps brands turn Facebook Messenger into a sales channel. Essentially, we work with a lot of D2C and ecom brands across every product, category, audience, price point, and we help them drive traffic into messenger instead of their website where their customers get a more personalized shopping experience, that's powered by our software. So what that might look like for a furniture brand would be, they're running Instagram and Facebook ads and they can set them to open up a Messenger conversation instead of opening up a website landing page.
Kelsey:
And once in Messenger, our conversation, we'll ask them questions like what room do you want to design? What are the colors in that room? Do you have cats, dogs? Any other kind of style preferences. And then we'll dynamically route the customer to the right products based off of what they've shared. By helping the customer make the purchase decision, we're effectively seeing anywhere from two to 10X increases in conversion rates. And that's a little bit of very cap on, on how that works.
Stephanie:
That's awesome. I feel like just thinking about, I follow all these influencers on Instagram and they're always selling stuff, which normally I'm like, I want a lot of this. But if you respond to them, they definitely can't keep up. If you're like, does that size, would it fit me? Is that Off-White? Is that Real-White? It seems like there's a lot of opportunity everywhere to have a chatbot set up that personalizes the experience and also helps it scale.
Kelsey:
Exactly. And what you just described is one of the reasons that we see so much opportunity in that space. And the reason why customers messaged in the first place is because when it comes to online shopping people don't shop on websites. That's just where they transact now. But they're making decisions by what you're talking about, watching influencers, DMing folks, talking to friends, watching YouTube videos, TikToks.
Kelsey:
So you're basically piecing together all these different parties to figure out, should I buy this? What's the right thing for me? Whereas if you walk into a storefront, for example, you can get all of that figured out in a matter of minutes. You can talk to an associate, they're going to ask questions. Everything that you just described can happen there. There's nowhere like that online. And that's where messaging channels open up that opportunity for the brand to be part of that purchase decision process. So instead of leaving it up to all the third parties, the brand can do it themselves and they can scale it through these kinds of automated conversations.
Stephanie:
Very cool. And how do you go about setting up the responsive? Is it very custom based on the product? Like, do you work with a brand early on to be like, here's probably what they're going to ask you or they're telling you. What does that look like behind the scenes?
Kelsey:
We definitely curated a lot to the brand, a lot to the product type and to their customer demographic. So for example, Facebook recently published a case study of the work that we do with Wallow, which is a brand that sells titers, strollers. Basically goods for families and their kids. So they're really great products, but it's actually not so much about having a lot of skews. They don't have a ton of skews. It's more about why should somebody buy this Wallow stroller and how is it going to fit into their family and lifestyle?
Kelsey:
So essentially what we do is we'll work with them, look at the products that they sell and try to understand their customer type. In their case, a lot of their customers will buy for themselves, but there's a pretty good chunk that are gifting. So for example, the first question we ask is, is this for you and your family, or is this for a gift? Who are you gifting for? And then as customers answer these questions, we can speak to how it will fit into their lifestyle. How old is your little one? Are they eating solids yet or not?
Kelsey:
We don't actually need the customer to ask questions because by us asking questions first, we can preemptively answer how the value prop works for them. How it fits into their life. So we can say, "Well, they're eating solids is getting very messy. This high chair is very easy to clean." And so you're effectively accomplishing both along the way. It's basically just a really good sales conversation.
Stephanie:
Yeah. I mean, that's really smart and I think it's a different mindset where a lot of times, when you think about chatbots, the consumer has to initiate the conversation. Has to think of the questions. And it makes me even think about when I'm hiring... I'm trying to think what I was hiring. But they're like, "Oh, do you have any more questions?" And I'm like, "Well, what do people normally ask you? Like, what's the normal questions because I don't know what to ask you."
Kelsey:
What should I ask. Yeah.
Stephanie:
If I'm buying a house or whatever it is, what are the top 10 questions you get? And so that's great being like, we'll do all the work for you. Here's some of the questions that we know will start a conversation. So it's actually less work and less cognitive load. Where you can get to the end point and still leave being like, I know what I'm talking about now with this product.
Kelsey:
Exactly. That's 100% right. And it's actually a really classic UX design issue. Which is actually my original background. Basically, when it comes to any digital interface or any interface at all, if you don't know where you can go, you're not really likely to do it. You're not going to walk up to a pitch black tunnel and be like, "Yeah, I feel confident walking into that."
Kelsey:
That's like an open free from bot conversation or like you get on a customer support call and it's like, "What can we help with?" And you're like, "Well, depending on what I answer, what's the likelihood you'll have any idea what I'm asking?" It's not great. So we find that structuring and providing a really clear interface for the customers to navigate also makes a huge difference.
Stephanie:
We talked about this a lot on the show that shopping is moving to the edge. Everyone is shopping on Social, they're shopping on Amazon, Walmart it's everywhere and not always on the website anymore. Do you think that websites are going to become like a secondary thing, where it's like, yeah, it's a nice to have. But people are actually on TikTok, Instagram, Facebook. Going directly to Amazon, they're not really going to always go right to your website.
Kelsey:
That's exactly right. It's going the way of retail. And that's not to say it's going to go away. It's just that it's not the primary anymore. We see a website as like the catalog and it's a transacting location. In a lot of cases that's useful, but it's not necessary anymore. And we see that with how new sellers are starting today. Especially with COVID, everything accelerates so rapidly. But one of the really interesting trends is, you've got new shops opening up just with Instagram pages and saying, "Hey, DM me for this product and I'll send you a PayPal link."
Kelsey:
I think those kinds of very low tech indicators of the fact that that's where the market is heading. And, I think you're 100% right. The website's really not necessary. And there are tons of great antique shops I follow in New York that are doing just well without it.
Stephanie:
Yeah. That's cool. So what other trends are you seeing among sellers right now? Maybe anything new popping up and you're like, pre-COVID we actually weren't really seeing this and now there's a big trend to just opening an Instagram page and selling through DMs. What other things like that are you seeing?
Kelsey:
I think that's huge. I think that I'm really interested in these future QVC type of models. But that's just because I grew up watching those. I don't know, did you ever watched the knife show?
Stephanie:
I did not watch that, but.
Kelsey:
The show was wild.
Stephanie:
Well, there's a [crosstalk].
Kelsey:
I think it was on a lot when I was in college. We'd always end up like late night. The knife show would end up on at very late hour and it was just like, "Hey, here's some knives and we're just going to cut all sorts of stuff with these knives." Like the silliest thing. It was so funny, but-
Stephanie:
[crosstalk] the Blender show. It wasn't called the Blender show, but where they [crosstalk] random things in the blender and I'm like, [crosstalk].
Kelsey:
Exactly. The same kind of stuff.
Stephanie:
How much time do we have on our hands apparently?
Kelsey:
It was so silly. It was like cutting shoes and weird things like that. The humor of it, I think it was really fun. And I think that online, we're seeing a lot of that, like humor come into commerce in a way that I think it's really fun. And that's really what it should be. So I like things like that. But I do think that the new selling methods are probably what some of the most interesting things to me is just, what's the version of opening a store today versus before. And like the barrier to entry is just so low now. It's pretty phenomenal. So I'm excited for that.
Stephanie:
Yeah. Cool. And how do you advise brands to being proactive when it comes to starting conversations versus being reactive and just taking the inbound? Because if I'm thinking like, I'm a new brand, I don't have any inbound. What's the way to be proactive and like reach out to people with your product?
Kelsey:
What's really nice is that these channels are often first, which I think is really important for there to be a great customer experience. If we want these channels to succeed, if we want these brands to succeed, we need to make sure that we're being really mindful of the consumer. But what's really, really nice about Facebook Messenger while it is tough to work on another platform, play by someone else's rules sometimes, but there's a ton of great benefits there.
Kelsey:
And one of them is the acquisition funnel. So brands are currently running ads from Facebook and Instagram and stories, all those normal places. And all they have to do is set up the exact same ads, but they can change the destination of the ad click to open a messenger conversation instead of a website. And so we're able to say, "Hey, we're basically giving you a new ad type that you can leverage. It's going to drive to a higher converting destination." And there's no reason not to try that.
Kelsey:
Basically, it's a win-win from the standpoint of, it's really easy to test. We can guarantee traffic and make sure that we're properly vetting it and controlling the volume. And you can compare it one-to-one to your ads that go your website. So it makes it really easy for brands to get started. And it makes it easy for the consumers because they're doing what they don't normally do, which is click on ads. So that's the most common way to start.
Kelsey:
There are other ways of getting customers into the channel and you can do it with short links, with QR codes, we'll link from an email, a pop-up on your website. There's a lot of different methods there. And we have partners that do all of what I just described, but ads is a really common format because again, it's just a very seamless acquisition funnel.
Stephanie:
Cool. And is there anything that brands are doing right now in messenger or Instagram DMs, where you're like, that's actually the wrong way to do it? Anything that you would advise brands not to do or have seen things going wrong?
Kelsey:
Yeah, that's a great question. I think not doing anything at all is what I would say is the worst thing. Because, whether that's Instagram DMs and you're just not responding to the people that message you there, and that's a huge, lost opportunity. We understand that it's really hard to scale responding to people individually, which is why platforms like ours can help. But I'm just not doing anything, you're losing customers every time you don't respond to them because they want to engage with you directly for a reason.
Kelsey:
And every time they do that, there's an opportunity for that to become either a customer or a recurring customer. So let's say that's probably the worst, but in terms of actually doing things that are, are wrong, I don't like any of the spammy stuff and I don't like any of the things where it's not clear to the customer what's going to happen. Those are the things that I find frustrating, but in terms of how to do that, well, there's not as much going on with that anymore because Facebook really did crack down on some of it. So I'll say what I didn't like before was, there was a trend where there's an opt-in check box that you could put on your website that basically said, "I'm opting into Facebook Messenger with a business."
Kelsey:
And that's still something that you can use today, but at the time you could actually put it on your website pre-checked. Oftentimes customers wouldn't necessarily notice it or see that it was there or see that they had opted into something. But what was even worse was there were lots of sites that were putting them behind the scenes. So it wasn't actually visible on the page at all. So a customer would add something to their cart. And by submitting that add to cart, it was opting them into messages without them knowing it.
Kelsey:
And then they would get messages later if they abandoned their purchase that were like, "Hey, here's the 10% off. Here's a whatever go buy that thing you were looking at." Which inherently is not a bad workflow, but to do that without letting the customer know that's what's going to happen, really not great. I'd say that's the worst thing I've seen in this space, but you can't do that anymore. And I'm grateful for it.
Stephanie:
Yeah. Well, that's good. How do you keep up with the changes that Facebook's going through? Because it seems like they've been definitely on like a roller coaster where very popular. And then, I feel like they kind of went through a trough where it's like, does anyone use it anymore? And now I feel like it's growing again. Even among my friends, it's like people are using the groups now and Messenger.
Kelsey:
The groups are huge.
Stephanie:
That's the only reason I go on there for the most part, but how do you keep up with what they're even doing behind the scenes and how the buying groups on there just changing. And then coming back and then leaving, and then there on TikTok. How do you keep up with that?
Kelsey:
I think it could be really easy to get distracted or feel like that's very volatile. The approach that we've taken is actually just been to have our own point of view that is rooted in something just so fundamental that it doesn't matter what the policy changes are really. We won't be disturbed by them essentially. So we've looked at Facebook Messenger as a sales channel since day one of the business. And we've been around just over three years now. And of the platforms that were popping up at the time were MailChimps for Messenger, were abandoned cart notifications and things like that.
Kelsey:
And that is really easy to get disrupted by policy changes. But if you're fundamentally saying, this is a place where you can more effectively get a conversion from a customer and have a better experience for them. There's actually not a lot that that Facebook could do that would really interfere with that in a way. Unless they just fully said, "Hey, you can't actually use the API at all anymore." They just shut the API down. Then it'd be like, okay, fine. But even if that were to happen, the US market for messaging is inherently multi-channel.
Kelsey:
Messenger's not being first or last for us. It's going to be one of many. So, that's the way that we approach it as yes, we keep up with the trends. We are a platform partner, so we're pretty in tune with the roadmap and what's going to be happening there. And that's really important. The relationship is really important to make sure that you can prepare for your business. But at the end of the day, I think having a really just underlying fundamental platform approach to what we're doing, enables us to avoid a lot of the mishaps that we've seen affect other business models.
Stephanie:
Yeah. Cool. And you just mentioned like messaging is just the first, are there other areas that you feel like there's a lot of opportunity that brands can be selling in right now. Or maybe it's not even ready yet, but in the future it's coming down the pike.
Kelsey:
Yeah. I think anywhere where consumers and brands can have a direct conversation, you're going to see things evolve for that. And it might depend on the platform, if the platform is incentivized towards it or interested in it. Facebook supports this because they believe in messaging as the future of consumer behavior. It's something that's been around since the beginning of the internet, we've been chatting. I don't think that's going anywhere, but Facebook is also really highly motivated to monetize on it. And so, there's opportunity there.
Kelsey:
But would someone like discord do something like this? I'm not sure. I'm not sure if they're like motivated towards that or if that's part of the business that they want to be building. But I really do see that any messaging channel where you can have that kind of interaction, there's no reason not to produce a better shopping experience there and tried to scale that. It's kind of infinite, I think.
Stephanie:
I wonder if chatbots on websites, like native chatbots have muddied up a bit. Where it's like, we've all had that bad experience with a chatbot where they're talking and you're like, "Get away, get away. You're not going to be able to help me. I already know it Verizon, stop." [crosstalk]. I wonder if that has hindered the market, with certain people being open to buying via chat bot when they've had experiences that are subpar on maybe certain websites.
Kelsey:
At the start of these platforms opening up and these APIs opening up, you had people making bots left and right. And they were very low quality. It tarnished it a little bit. I think tarnished it a bit for the consumer and for the brands, because, when things opened up, brands started testing things and they weren't getting performance results. It wasn't their fault. It's really hard. It's like launching your first website and then not working super well. It's like, well, yeah, this is a totally new... It's where the start of websites existing. It's like, yeah, that's tough. It's tough to figure it out. It's a whole new learning curve.
Kelsey:
So I think that in terms of, what can happen there. It is very easy to tarnish their reputation, but again, it's not going anywhere. So as long as again, you have an opportunity to drive a better experience. You should keep iterating on that. And again, it's like if you have customers that are willing to do directly, it's always an opportunity to do better and to turn them into a better customer for you as well. There is also really huge difference between like the customer support experiences like that, and these types of sales experiences. I think there's a pretty clear line between the two and a lot of that depends on the customer's intent.
Kelsey:
If you're coming from an ad to shop driver, for example, you know that's what you're doing and you know that that's what you're being helped to do. And it's pretty straightforward. But if you're going in with any level of support need, there's a lot of opportunity to get that wrong. So it's really tough.
Stephanie:
Someone's already coming in with a heated mindset and one wrong word from chatbot. Ooh, I'm hot.
Kelsey:
Exactly.
Stephanie:
The one thing I think about too is the payment piece and how to make sure that customer journey is frictionless because even when I hear, Oh, some brands have a PayPal link, which I think is great. Or like an MVP, get something out there. And also, show there like, do I even know my PayPal login? Like, Oh, I don't know.
Kelsey:
Exactly.
Stephanie:
How do you think about, making the checkout experience frictionless where it's not a million different options and people know it's very be fast and easy.
Kelsey:
Currently we actually drive to check out on the brand site and we find that works really well because it's the trusted destination. You have all of the tooling and UI that you need to be able to have a good seamless checkout experience. And that works really well. Checkout is on our roadmap to be able to process that and manage that. And we won't be like a payment processor. We have partners we're talking to on end, but in terms of the checkout, there's a lot of ways to handle that.
Kelsey:
And I think that there's been so much best practice learned from mobile shopping as it is, that can be leveraged there. And there's also a ton of testing opportunities, but we really do look to... We're not trying to reinvent wheels here.
Stephanie:
That whole space is evolving so quick and just talking to the team at fast and continuing to be here and see what they're doing with the one-click checkout. I'm like, it seems like there's such an opportunity to have that right. In every form of like, you've got your cart already loaded in like your Instagram DM, and you can just hit checkout and all your payment information save and drop onto the next Instagram site.
Kelsey:
[crosstalk].
Stephanie:
There also seems like there's a good opportunity for Amazon there. I always look at all those Q&A sections, where it seems like how much time do I spend looking at toothpaste? Is it fluoride-free? It's for my kids, is it fluoride free? Does it not have this, that, that. All these questions, but I'm actually going through the whole product page for a thing of toothpaste so much time wasted. But it would be really nice to have a Messenger on there where you could just say, "Hey, does this have this and this?" Instead of me trying to zoom in on the ingredient list, or like, look at all the reviews for something that's like $6 or whatever it may be.
Kelsey:
Yeah, exactly. I hope Amazon's listening. They should come talk to us. We haven't seen anything quite like that, but we have talked to brands that sell on Amazon and we have done experiences in Messenger that link to Amazon product. That is something that we've experimented with before. And I think that you have to your point, why scroll through a million questions and answers that aren't necessarily relevant to you? And one might be, when you could just have the brand get to know you better and then tell you what you need to know.
Stephanie:
Yeah, exactly. So when you're first starting to work with brands who are implementing chatbots, what kind of metrics do you maybe advise them to look at to see if it's going well or not? Because a lot of people I could see being new to this, not even knowing like, well, what should I expect for conversion? Or like, what's good. What's bad. Like, how do you advise them around that?
Kelsey:
That's a great question. So first and foremost, and I think this is a little bit of what might have gotten wrong in the early days of the channel. Businesses care about performance. They care about conversions and CACs and return, and all those things. So, we want to make sure we're mapping to that because if you don't then at the end of the day, they're going to be worth your time if it's not performing on those metrics? Probably not. So first and foremost, we can own conversion rate. That's the KPI that we really truly measure against. Because essentially we're saying if you drive traffic here, instead of your website, it's more likely to convert. That's our thesis. And so if that's true, that's what we're going to start measuring against. And we'll do that by looking at what's your conversion rate from a standard click to site ad.
Kelsey:
So purchases you're getting out of link clicks. And then when you run a click to Messenger ad, we'll do the exact same thing. How many purchases are you getting out of those ad clicks? And that should be able to tell us if it's a higher converting channel for you. Fundamentally we've seen anywhere from 50% increases to 10X increases in one case and anywhere in between. So it's not abnormal for that to be the initial result. But then in terms of the other things like captain role, as they should benefit from that better conversion rate. It shouldn't be approached necessarily differently than any other conversion tests that you're running.
Kelsey:
That being said, we have a ton of insight into the full funnel that we can leverage to optimize. And so, all of our partners start with at least a three month program because we know it takes time to warm up and we want to make sure we can iterate. And we do that on a weekly basis. So you might start with X result in month one, by the end of month three, it should be much better. And so the way that we can do that is looking at everything from a customer clicks on an ad, they land into Messenger. Do they respond to the first message, which basically ops them into the channel?
Kelsey:
Are they completing like a quiz? If there's a quiz or personal shopper? Are they clicking on products back to the website? And then are they adding to cart? And then are they purchasing? So we have a slightly different funnel. You're going to get your ad performance from ads manager and see the link clicks and add to carts and purchases. Paloma is going to see everything in between. So we'll be able to know exactly where people are off and why. And be able to iterate on that much more efficiently than if it were traffic going to a website, where are they clicking? How are they browsing? There's like a ton of more opaque data from a website side. From our end we can literally just see, okay, you have too much drop-off on the first question. So let's not ask that question. Or, Hey, everybody is answering the same way to this one question, that doesn't need to be there.
Kelsey:
Or, people are clicking on the products. Maybe we need different product batches or whatever that may be. So we'll be able to get a lot more of a finer detail on that. And we have benchmarks for each. We expect our partners to get at least a 30% opt-in rate, maybe percent completion on any type of quiz or personal shopper experience. And then at least 50% of traffic clicking back to the website. And then from there add to carts and purchases depends on what they would normally expect to see. It's kind of a lengthy answer.
Stephanie:
It's good to know metrics like that to aim for. How do you plug into a brand's inventory system and then also make matches. That will be something that I want to look at. I can just imagine me going in there and not knowing what I ever want being like, "I want a picture." And then someone's showing me something and maybe like, "Oh, not that one." How do you guys personalize it and show something I want, but also make sure that you're not tapping into inventory, that's like out of stock.
Kelsey:
So we basically can ingest inventory into our system, keep that up to sync, keep that availability up to sync. And so anytime that we're building experiences, you're able to make sure that it's the right things getting shown. In terms of what to show customers based on their selections. We have this like start matching dynamic product matching system where basically the customer's responses get associated with the inventory.
Kelsey:
So all of your boots are associated with like a boot selection or all of your things that come and break colors would get associated with like bright colors. If you were asking about color preference. And some of these qualities are not things that would normally be tagged onto your inventory. So we're basically expanding on that. So we make the association between the two and as customers make the selections, we basically just filter down and display all the things that would then relate.
Kelsey:
So like Andy swimwear, for example, if you chose one pieces and some coverage and a lot of support, you're only going to see the products that, apply to all of those qualities. And it's really simple for us to create those. Something like that can take like 10 minutes to build, whereas a quiz to put on a website can cost thousands of dollars and take two months. And so, that's kind of part of the magic and secret sauce of our software.
Stephanie:
Yeah, that's cool. I was just thinking about, okay, to even create that kind of filtering and navigation options and all that can take a long time. And tagging it and making sure that it's actually can be searchable. And then if you can just have it in a DM or Messenger, that's great game changing.
Kelsey:
Yeah. It's really fun. It's a very simple, we have like own drag and drop interface to just jag product on to the selection options. They're tagged with that in the future. And then as customers answer, we just know what to show them.
Stephanie:
Cool. Where do you see the future of commerce headed or chatbots and commerce intersecting. What does that look like to you maybe three to five years down the road? Where do you hope it looks?
Kelsey:
Really, again, I like to look to what people are doing now when they're just starting out and also at other markets. So really in terms of the future of commerce, we believe very strongly that it's on messaging channels, that that is the next door front. And so, what does that look like? It's customers going to DMs, it's brands driving traffic to DMs and customers just getting much better shopping experiences there, converting there, checking out there. And new stores not having to even open up a website. Again, I don't think website's going to necessarily totally go away, but it's just going to be a smaller part of the puzzle. If you look at what's gone on in other markets like China with Weechat, they're way ahead of the game. And that works really, really well.
Kelsey:
And it's a huge chunk of the commerce ecosystem out there. So we've been a little bit slower to that, but it is happening. It's happening a little bit more multichannel, and I think that's really interesting and that's a really fun challenge is that, we don't have the monolith app that will do it all. We have a lot of [crosstalk] apps. I think it's great because everyone likes to have their own different way. We're always getting new social networks and apps out there and it's fun. It's really fun. So basically, I'm not sure how many different tools there will be in the future, but we very strongly believe that messaging is the next channel and destination for commerce to happen. And we're effectively building the platform to power that.
Stephanie:
That's great. It definitely begs the question about keeping things organized when you're selling on so many different channels. And there's probably going to be dozens of messaging platforms that people are using. I'm just imagining a brand, trying to keep up where, they go from selling on their website and then maybe dabbling in Amazon, maybe on Walmart. And then all of a sudden it's now, you can sell on Pinterest and Instagram and Facebook and TikTok. How do you think a brand would be able to keep up or do you see anything right now? Like any innovations that are allowing brands to organize everything in one central place that they can keep track of what they're doing?
Kelsey:
There are definitely a lot of interesting tools. I think that what comes before the tools are just the people, expertise. I think that's what we're seeing, services and agencies that will help with coordinating all of those things or know how to best launch on Amazon. And then once you've launched on Amazon and all these other places, then you go, okay, well now I have everything in too many places I need a more scalable system. And that's when you start seeing softwares get put in place. And I don't think any come to mind immediately, but I think there's some really great tools that are coming up to try to glue things together and basically to piece together, all the different supply chain and logistics issues.
Kelsey:
And there's some really great things out there for that. But we're also seeing new commerce platforms that are inherently taking those things in mind. So we have a lot of commerce players that exist that are trying to catch up and trying to add on these different channels. But then you have new players that are from day one saying, "We know it's not just about one place." So you've got things like, headless commerce and no code tools and platforms like Paloma that will from day one say, "Hey, this isn't just about a single source of shopping. It's about a lot of things."
Stephanie:
Yeah. I completely agree. All right, well, let's shift over to the lightning round. Lightning round is brought to you by Salesforce commerce cloud. I'll ask a question and you have a minute or less to answer. Are you ready? You look a little nervous. Wow.
Kelsey:
I don't know, that's scary. It's a little daunting.
Stephanie:
No, it'll be fun. It'll be fun. What one thing will have the biggest impact on e-commerce in the next year. I have a feeling you're say message shopping and Messsenger.
Kelsey:
Obviously messaging. I'll just be repeating myself a little bit, but I think messaging is a bit. It's already been exploding pretty quickly and it's growing faster than ever. We drove almost 9 million in partner revenue last year. And that's just as a small, early stage team, so there's a lot ahead of us.
Stephanie:
Yeah. That's cool. What, one thing do you not understand today that you wish you did?
Kelsey:
Just so many people things. I find people so fascinating. I'm constantly seeing how people chat, but I would just love to talk to people about their experiences with all of these experiences and with all these different kind of shopping channels. And, I think that it's not something that I don't understand. It's just something that I'm always eager to understand people's behaviors more. So that'd probably be it. [inaudible].
Stephanie:
What's up next on your Netflix queue?
Kelsey:
I am so behind, I need to watch Bridgeton and literally everything else. I've been doing a Buffy rewatch. So I'm just like living in a very different time.
Stephanie:
What is a book that has really left a very big impression on you? You're like, "I always think back to this book for either business or life."
Kelsey:
Oh, that is a great question. I'd say, well, what are the ones that comes to mind, it's Italo Calvino. [crosstalk] is the author. And basically, it's a person telling stories about visiting a lot of different cities. And when I was younger, I found that it was just... When you're reading, it's all about picturing what's going on. And as someone who, if you didn't grow up being able to travel a lot, it stuck with me. I was like, I want to be able to do that someday, but also just being able to picture it from a book is really, really nice. I still have like the images in my head of different passages from that.
Stephanie:
Oh, that's cool. All right. And then the last one, what's the nicest thing anyone's ever done for you?
Kelsey:
Oh my gosh. I feel like people are so nice. What is the nicest thing anyone's ever done to me? Oh gosh, there's too many things.
Stephanie:
Wow. You must be a very... People are sending all this nice stuff you way. [crosstalk] people around you, can I have some?
Kelsey:
When you run a business, or when you start a business, it's all about getting help. That's the best way to be able to succeed is knowing what you don't know and how to get help. So I will say I'm very good at getting help, but what's like the biggest part of that is having people be really nice and great. And so, there are just a lot of people that have helped along the way that I literally would not be where I am without that. From little things like making the introductions, not everyone has access to the networks that you need. And so, the people that believed in me more than the business or more than anything else, that's really huge.
Kelsey:
And so, I've just got like some really great, great people that helped along the way. I can't pick a single thing, but I'd say like some of our investors, some of just the people I've worked with in the past and they're really just root for you. And will be there when you say, "I have no idea what I'm doing. How does this work?" Or, "I need some help."
Stephanie:
I thought so. Good answer. All right, Kelsey. Well, it's been a blast having you on the show. I love learning about Paloma and your story. Where can people find out more about you and Paloma?
Kelsey:
You can learn more about Paloma, getpaloma.com, G-E-T-P-A-L-O-M-A. And me I'm on Twitter, LinkedIn at Kelsey Hunter. I think it's usually Kelsey AH. So feel free to message me, check out the site, chat with us. We're always around.
Stephanie:
Amazing. Thanks so much.
Imagine this: it’s Black Friday, the biggest shopping day of the year and you’re a brand with customers on your website pushing the buy button, but instead of moving them down the funnel, you stop them and interrupt the buying process to ask them, “How are you feeling right now?”
Seems like a crazy thing to do right? Especially in a world that is dominated by closing sales and doing everything possible to get a consumer to hit buy. You’re literally pausing a conversion, making a customer examine his or her activity and second guess making a purchase. Nevertheless, that was the strategy Bearaby put into practice this past holiday season and the results might just surprise you.
On this episode of Up Next in Commerce, Kathrin Hamm, the Founder and CEO of Bearaby, tells us that that mindfulness experiment, while risky and not advised by her industry peers, paid off in big ways. Bearaby was able to gain insights into consumer behavior and gather data that helped predict whether or not a customer was likely to return a product or not. And, most importantly, Bearaby was able to build more trust with customers and foster a more authentic relationship centered around mental health and the customer’s well-being, which in today’s world goes a long way toward creating a loyal base of customers. Kathrin also explains why adding more mindfulness and behavioral queues into the customer journey could have a positive impact on return rates, overall customer satisfaction, and your NPS score.
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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Transcript:
Stephanie:
Hello everyone and welcome back to Up Next in Commerce. This is your host, Stephanie Postles, Co-Founder and CEO at Mission.org. Today on the show, we have Kathrin Hamm, the CEO and founder of Bearaby. Kathrin, welcome.
Kathrin:
Thanks so much for having me.
Stephanie:
Tell me a bit about Bearaby. I was looking at your website, I saw how amazing your weighted blankets look. They're knitted, they're awesome. I have a couple other weighted blankets, but they are nowhere near that, so tell me a little bit about the company and how you thought about creating it.
Kathrin:
The idea of creating Bearaby was really when I had sleep problems myself. I used to work for the World Bank as an economist, and I was just traveling a lot. I just had moved from Washington to the Middle East, and then from the Middle East to India, all within two years. I was traveling a lot and I was never a good sleeper, but this constant travel and jet lag really put me over the top. So I was just looking for a natural sleep solution. I tried many different things and at some point I came across this really simple concept of a heavy blanket that's supposed to be 10% of your body weight, that you put on top of you in an equal way, and it's supposed to help you calm, relax and sleep better.
Kathrin:
The concept itself is not new. Weighted blankets have been around for more than 60 years, especially for children that have sensory disorders. I ordered one of these blankets into India, and I tried it on a Saturday afternoon, and I napped for four hours. Which never happened to me before, and I was just sold on the idea. I'm like, "Okay, that's it. I can move on with my life, I just get this blanket and things will be good." The next night I woke up again and with the weighted blanket, but I was sweating and it was really hot.
Kathrin:
I think that's when I realized that all these weighted blankets are made with these artificial filling materials, so usually you find 20 pounds of plastic beads in it. Obviously it makes you hot, like an oven, but it's also really not good for the environment. At that point, I was really just searching for a product myself, and I realized there's nothing out there. Even though the product has been around for such a long time, somehow no one had really innovated on the concept. That's where the idea started to make something different and use innovation and design and at the same time try to come up with a product that's addressing these needs while being sustainable at the same time.
Stephanie:
That's awesome. So this was back in 2018 when you launched your company and you still had your day job and you launched it on Kickstarter, right?
Kathrin:
Yes.
Stephanie:
Tell me a little bit about that thought process. What was in your head when you were like, "Okay, I have a full-time job, I'm in India, and I'm going to go on Kickstarter."
Kathrin:
I think I'm naturally a risk-averse person. I know other entrepreneurs are like, I had my idea and I knew I always wanted to be an entrepreneur and I just went for it. I went the other way. I'm like, "Let's try it as a little side hustle and see it more of a project at the beginning." So I really mapped out in a business plan, so what do I need to have first? How do I think about the product? How do I think about the IP? And at some point you come to the funding, and when you do the numbers you realize that it actually takes a lot of money to launch a product or a brand, and you don't know in the early stages if people even will like it.
Kathrin:
It's when I realized that I think crowdsourcing is a good way to fail really fast or get feedback really fast. So we put together a short video, with the initial idea, and within a month, we had more than quarter million dollars already on the Kickstarter campaign. And the feedback I got from people is that this is just a product that more people are looking for, and I think that gave me then the next confidence boost to say, "Well, it might be not only a project, but this might be a real business idea that I can start exploring."
Stephanie:
That's very cool. So, what did it look like after you had that money in your Kickstarter account, and you're like, "Okay, this is real." What did it look like after that?
Kathrin:
Well, the money didn't last really long. So I actually emptied out my whole retirement funds. After I had had left my job. I think at that site, I really believed in the product and I knew I was onto something that I wanted to bring to the market. So the next step was the manufacturing. At that point, I had a prototype that I actually had developed together with my mom who's a really avid knitter. And we came up with the idea that instead of using any plastic or glass beads to make a product heavy, it's like a knitted rug. And if you use layers upon layers of fabric, you actually also get to a heavy blanket that comes up to 20 pounds.
Kathrin:
There was a small piece of a blanket. And then I went around and I just had a list of different manufacturers. I think I had a list of around 40, and I just picked up the phone and were talking to people. "This is my idea. Is it something that you could help me produce? Could you help me make this?" And I think one of the issues was that most people didn't know why do you even want to make a heavy blanket? We've been working in the industry since 30 years to make a light product, a light blanket. So I think that was an issue. Then I also obviously didn't have any credibility in the space where there's like, "Okay, even if we're trying to make this, how many units would you take?"
Kathrin:
And I'm like, "Maybe 100." And then I think they already hang up the phone.
Stephanie:
[crosstalk] thinks.
Kathrin:
So I got a lot of nos at the beginning. Yeah, I just realized that nobody had done this before, even with apparel that said we have similar we don't have these machines bedding, we don't have these machines. So I actually went back to the drawing board and without before I actually launched the Napa our product, I first had to come up with a machine to make the weighted yarn that we're using. I was working with a manufacturer in Germany, a machine maker. At first was creating the yarn to then go into the final production.
Kathrin:
So that took me quite some time to really figure out that supply chain piece. And yeah.
Stephanie:
I think most people would have given up when they found out they had to make their own machine. That's wild. What was your mom saying during that whole process?
Kathrin:
They thought I'm crazy. Because I left a pretty solid job that I studied for a very long time for. I have a PhD in economics. And then suddenly in my mid 30s I'm telling my parents, I'm leaving my job because I want to sell these heavy blankets that nobody had heard of on the internet. So, even my friends thought this is just a phase or maybe like a midlife crisis. And when you have these dinners with friends, where everyone is sharing like, "Oh, I got a promotion." Or, "I'm on to the next step." And I had for a very long time, I had nothing to share where I'm like, "I'm about to build a website. It's not there yet, just give me a couple of more month."
Kathrin:
And everyone was like, "Oh, yeah, that's very cute. Good luck with that Kathrin."
Stephanie:
Yeah.
Kathrin:
Yeah, it was sometimes not an easy time. Especially like the first year.
Stephanie:
Yeah I can imagine that's such a fun story. So now, you're partnering with big brands like West Elm. You've got celebrities who love your product. I saw Rachel Zoe and others love it. So how many blankets are you selling today? Yeah, I want to get into the partnership piece after that. But yeah, what does the world look like today?
Kathrin:
When we launched in December 2018, we just had our website, and we got an article on Fast Company. I think just five months later, where they were describing that this is the most sustainable weighted blanket in the market, and it was just a category that people got notice of and that was the time where it's like, this is a sleep solution and there are these weighted blankets and then we came already in a market where it was a product that was different, it was something you want to keep on the couch, something designed worthy and not something that you might want to hide in your bedroom.
Kathrin:
Then we got a call from West Elm just literally a week later. Actually first it was an email, and at that point I thought, "Probably it's not real. Maybe someone is scamming us." But I thought, "Well, doesn't hurt to just jump on the call and have a conversation." And yeah, I ended up speaking with the buyers and they were excited about the product, they were excited about a category, and we're looking into it also for some time and they liked the idea of having a sustainable option that also fits with their interior design. While they asked me where's your showroom, and at that point, we're like, "It's actually my living room. So we don't have a showroom yet."
Kathrin:
But they still took a chance. And we were a very small company at that point. And they helped us work through the process of getting on boarded with such a big partner very early on and working on the color collections. I think we learned a lot from a design perspective and that now we've expanded the partnership, we're now also in Pottery Barn Kids with our kids collection and it's turned out in a really beautiful partnership which I never had expected or hoped for that early in the stage of the company.
Stephanie:
That's amazing. Have you already sold some blankets? Were you doing DTC before West Elm approached you?
Kathrin:
Yeah. So we started B2C as a primary channel. That's just for the reason that I wanted to educate people around the product, because I felt a lot of people still didn't fully understand what are the medical benefits of the product? How do I choose a product? I also wanted to create something that's different from other weighted blankets where it's really [inaudible] and into something, it's healthy to talk and there is actually joy in napping. So this branded experience, I knew I could only establish on our own website. So we didn't think about any other channels at that stage.
Kathrin:
Really we're focusing on how do we communicate that we're different? And how do you communicate the heaviness of the product without people being able to touch it?
Stephanie:
Yeah, that's tough. So how did you show that value on the website?
Kathrin:
I think that's still one of the most asked questions that we're getting why people are figuring out what's the best choice for them. We came up actually with a customized quiz, where we work with a sleep scientist, where people just ... we didn't keep it too long. But just a couple of questions that give people a guidance. Were this is the right product, there's a recommendation that comes out at the end of it. And then we also have a detailed section that goes into the fabrics, the different options that we have and how it makes you feel.
Kathrin:
But I would say it's definitely an advantage for us to have West Elm as a partner because if people are still unsure on, we don't know what a weighted blanket feels like, I can tell them, why don't you hop on a bus and go into the next West Elm store and to see and test it out there on the couch there when you come and you can try it out, and most of the people actually really go right away and enjoy trying it out.
Stephanie:
Yeah, that's really cool. So how did you go from being DTC to then all of a sudden, you're going to be ... you have to expand your stock, you have to start selling nationally. What did you have to do behind the scenes to make it work with West Elm?
Kathrin:
It's really a process that we needed to prepare for from an operational standpoint, because when you are a smaller brand and let's say you have shorter planning cycles. So when we have an idea, we're saying, "Oh, we would like to come up with this color, we want to try this." It usually takes us more or less like two months to bring that style on our website, because we're very agile as we're producing in house. But now with a retailer, we had to see ... when we talk January, we're like, "Okay, let's talk March guys." And they're like, "We're already in March 2022."
Kathrin:
Like a year later we're like, "Oh, okay so, just the planning cycle and then adjusting the volume for it means that we need to have the analytics in place the inventory planning." It forced us to some extent to really look for the numbers and have our inventory planned out and the analytics on what are we selling and how are we converting on the website? And then how do we allocate the volume to West Elm? So that was one piece. The other piece is obviously supply chain that became in the beginning just much more difficult. So we had to onboard an additional warehouse to just fulfill the requirements ... coming from the labeling and the other requirements that we had to do.
Kathrin:
So it was a really ... I would say stressful time for the team. But I think having a partner who guides you through it was helpful too. And I think now we've done it and we really learned a ton in these couple of months. It also helped us I think we prospectively just be better as from a operational standpoint.
Stephanie:
Yep. So, what happened this past year when it came to COVID and holidays and Black Friday? Was there anything interesting there that you had either planned for or that you found out after the fact?
Kathrin:
Generally we saw an increase in demand, especially with people being at home. People were more looking for the product. People had struggle with sleep and anxiety levels went up. So, we've seen really a spike in demand, which we try to fulfill from our end from a supply chain perspective. Then again, on Black Friday there was another spike. But this Black Friday, we actually decided to go on a different road. Usually as you know, Black Friday is the biggest sales day of the year, and every brand is getting ready. What we actually did is we literally slept through Black Friday.
Kathrin:
We came out with a black blanket a black Nappa for Black Friday. And we wanted to introduce the concept of mindfulness around it, because our hypothesis was that mostly we're buying a lot of stuff at a discount that we don't really need, it ends up in landfills and it doesn't make us happy. So we wanted to see first of all how would it be if basically our website is shut down, and people are sleeping through Black Friday. And then if you still want to come back the next day, we're still making it difficult for you to get the product. So we had designed a website experience where you only were able to access the product when you actually slept on it.
Kathrin:
In addition, what we wanted to see and we worked with behavioral scientists on a component of feelings, so you're evaluating your feelings and how you are mindful when you purchase. We work with Duke University and the Advanced Center of Hindsight. And basically how it worked was you come to the website and before you click to purchase, another question box pops up that literally makes you pause and asks you how are you feeling right now. And not like the normal, how are you and then you move on but we wanted to have people reflect on it and ask people do you really need this product right now?
Kathrin:
And if yes, how are you feeling? Are you anxious? Are you calm? Do you feel lonely, sad, happy? And what we found is that, first of all people were really excited about this campaign, that it made them feel like maybe I don't need a second blanket. And what's most surprising for us was that people who were anxious, were five times more likely to return the product afterwards. But people who were calm, or people who felt grateful while buying the product, we had close to zero returns on that. So this is something which I was really fascinated because I think for us as brands as we move through the learnings that we had in the last years, I think people are more conscious about what we're buying.
Kathrin:
But I think for brands we also think this is now expected and what can we do actually to take the customer experience to the next level and as more and more brands are coming on to ecommerce, is how do you establish the trust actually as a brand? I think that aspect of mindfulness and not pushing people to buy, and if there's a business case that we actually can show this is not only good for the consumer, but it's also good for the brand to actually have more mindful purchases instead of driving people aggressively down the funnel, this is something I was very excited about the results.
Kathrin:
And we will pilot and test more and work with our community to see how we can actually bring mindfulness into the ecommerce purchasing experience.
Stephanie:
Wow, that's such an interesting test. So it's different than I guess a lot of brands right now who are so quick to just try and optimize for that sale, quick conversions. And sometimes, especially the earlier ones and now you're even thinking about the returns later on that are very expensive. How are you taking those learnings and applying that into your business going forward? What new tests are you doing? How are you thinking about things differently now?
Kathrin:
So one thing is definitely the returns for a product that on average is 20 to 25 pounds. Our shipping costs are quite high. So how can we actually optimize that we really have an experience for customers that it's a purchase decision that is well thought out through. And that we're actually helping people to guide them through the decision. One is the science of sleep science quiz that we have on the website, where we really educate people along the way to make the right decision on what product they should buy.
Kathrin:
But we will systematically also test in the next couple of months on what are different interventions that you can take before you click on the buy button that has a calming effect on people. Furthermore, one thing is obviously returns. But then, would that also help people to feel more satisfied overall? Is the net promoter score going up of people who basically were in a mindful state while buying and testing different interventions? And we work obviously closely with the behavioral science lab on that to find these different ways on inventing on the brand, and inventing on the consumer experience and not only having a mindful product that should bring a relaxing effect, but also how can this be a holistic experience for the brand?
Kathrin:
Because if I'm sending you three abandoned cart emails, you have to buy it now it's gone. It's just also contradicting for what we stand for as a brand. So I think that's really something where I want to look into how we can expand that experiment, and bring it across every touchpoint in the brand cycle.
Stephanie:
Yeah, what are some example tests that you're doing that you're like, "I'm not sure if this is going to work, but we're trying out this to see if we can convince the consumer to get into a more mindful state and then come back when they are." What kind of things are you testing out or are the behavioral scientists testing out right now? Or thinking about doing?
Kathrin:
One thing is obviously connection with people. So, if one thing is you being aware about what you're feeling right now, but then the latest is that there is a digital map where you actually can see, it opens up and then you can see close in your area, there are 10 other people at the moment that feel similar to you. So, elements of community and connection. And if it's just on a website, seeing and that makes you actually realize, it helps you realize your own feelings to a larger extent that you're not alone in front of this website and trying to buy something, but it puts things into context.
Kathrin:
The other things is gratefulness. So one of the things we found is that if you're feeling grateful, that increases your happiness and your satisfaction with the purchase. So how can we increase that through for example like giving back and giving consumers the option of choosing a giving back component while purchasing while checking out? That's the second thing. Another interesting approach that we already tried for Black Friday was a poem. We worked together with a poet who created a really beautiful poem that just came up before clicking to purchase.
Kathrin:
The topic was not generally about mindfulness, but really reflecting on who you are as a person, why are you buying this right now? And yeah, it's a very beautiful, stunning piece that Adria had developed for us. I think that emotional reaction of people really is something that was stunning from a results perspective.
Stephanie:
Yeah, that's really cool. That's ... like I said, just such a different mindset than what's happening right now with a lot of companies. And not only is it good for consumers, but it's good for business. So, how much did you see returns decrease compared to before when you weren't doing that? What savings was your company experiencing from now doing this and trying this out?
Kathrin:
My initial hypothesis was that conversion rate would go down, because if you're making it that difficult for people to get a product, you're asking them to wait, sleep on it and you're ask them ... Listen to a poem, take a breathing exercise, tell me how you're feeling and then take into a consent form before you then finally can buy the product. So I was actually expecting that we don't sell any of these blankets. I was telling the team that was working on it I'm like, "I think if we're selling two blankets that would be already a good result." And we were quite surprised that our conversion rate was double than to our regular conversion rate.
Kathrin:
Now our return rates again, have less than half the return rates than our usual process. And we had the project run for three months to really collect a robust set of data, and I think we're really onto something with this whole concept of calm buying, that goes a bit in the opposite direction of optimizing and driving people down the funnel of thinking if there are actually other ways more authentic and honest ways as a brand to communicate, and I think so far is what we see actually the numbers really speak for themselves.
Stephanie:
Mm-hmm (affirmative). Yeah, that's really fun. Such a different conversation that I've had so far on the show which is just really exciting. So what did your partners think about this test? Were you working with West Elm at the time? And if so, what did they say when you're like, "Conversions could go down to zero, but there's something better coming."
Kathrin:
So this was actually something we only tested on our website, because it's quite complex. So we couldn't roll it out. And I actually just got these results in last week.
Stephanie:
Got it.
Kathrin:
So everyone was like, "You guys go first." If we monitor and it's a nice idea. But let's see how that turns out for you guys. We were all nervous obviously. Black Friday is a big sales day and like having the potential that you are losing out on that day, definitely was making us uneasy. But our partners also said, "We're quite curious to see good luck with that." So I think that's why it's even more exciting now that we say, "Hey, we're actually onto something that we probably could build up on and maybe even share with the broader community of B2C brands." I know it's like a lot going on and there are a lot of shifts in what's happening and there's maybe an approach that ... yeah, we're happy to share the lessons learned that we have and maybe more people are coming on board and see if it works for them as well.
Stephanie:
Yeah you're reinventing the DTC playbook and thinking about it in a whole different way. Have you had other brands who are interested in trying this out or that you've talked to where you see an interest in the industry?
Kathrin:
I think the early conversations that we had especially brands that are focused on sustainability. That is, we had initial discussions where people are surprised that it really matters or it directly impact conversion and it impacts our return rates. So I think there is an opportunity to build that with a smaller group of friends and innovate on it. But yeah, it's early days, so I think we will work a bit more on getting some more findings and testing a bit more what works the best. And then obviously sharing it with everyone.
Stephanie:
Yeah, that's great. So where are you headed? What are you hoping to do with Bearaby over the next one to three years? What are you guys innovating on or looking into or trying out outside of the already cool work and behavior science that you're testing?
Kathrin:
Yeah for us, it's I think, looking into what consumers are expecting from us is definitely I think a lot of the things that happened during COVID will stay. People are expecting such deliveries from us, almost same day deliveries, so we were piloting on same day to our window delivery options. I think that's something where, how can we make it easy and comfortable for people to not leave their house yet, but still get their product in a timely basis? How do we set up from a infrastructure perspective that we're able to hold that pace? I think that's something that we're looking into. Then just generally, we're always interested in looking into new products and new product innovation in the wellness space.
Kathrin:
Obviously we launched last year the children's edition that we really also launched from a direct demand during COVID, what we heard from parents that were homeschooling children. And I think that just listening to our customers is one of the things that we also I think probably started. In crowdfunding you always stick to the principle. Whenever we have a new collection coming up or a early product idea. We have a small group of people from our loyal customers, we call them the Nappa hood club, that can try out products and where we get feedback and listen to it.
Kathrin:
And Instagram for example when it comes to color selection, we just discussed our fall colors that are coming out. And yeah at the end, we took two colors out that people on Instagram were not excited about and literally gave the whole vote to the community of the colors that they want to see. I think that's another interesting thing where obviously we always took feedback from people, but in a less systematic way, and now we're really putting the consumer first and the decisions that people are telling us and the colors we will put on the market. Even despite maybe some other designers that would go for other colors.
Kathrin:
And yeah, let's see how it goes.
Stephanie:
Yeah, that's great. How did you build up an audience on Instagram? Because I was reading it, quite a bit of it was organic and you were more interested in working on the supply chain stuff and sending out samples and get on people's radar. So how did you build up your Instagram now where people are actually commenting and giving you feedback?
Kathrin:
I think on the early days, I didn't have much experience on Instagram. So I really had to test and figure out what works. What I think what works well for us is one of the things is that, we're trying to be helpful for the community. So, instead of just us as a brand talking and sharing what we have new, especially during the last year, we realized a lot of the community is actually struggling with mental health anxiety. So what we did for example is that we used Instagram connect it to a SMS platform. Where usually you send SMS to inform people about the sales. But then we use it in a reverse way where we had actually an expert sitting on the other end of the line.
Kathrin:
Psychologist or this general mental health counselor where people could send in their questions that we got from Instagram but that also we got through SMS. So we connected both platforms and I think what the beauty of that was is that mental health often is a very personal issue, it's not something that you want to have on Instagram life, if you have a question. So that's why people could actually send the SMS question in privacy and there's an expert answering it expert from NAMI. I think that helpfulness and where people say, "Well, this is actually relevant content." And we're asking them, "So which expert do you want to speak to?"
Kathrin:
And ranging from people who have a longtime experience on how to homeschool children, now teaching people who just have to deal and have to get to learn how to get into that new mode. We brought all these experts and we had to message this community of helpfulness and chat. And I think that just sparked a natural conversation and I think then people stick on and want to see what else the brand is doing and I think if we listen to that and we are reciprocating and not shouting out but we're listening, it's just organically ... the community grows and is also excited about the brand.
Stephanie:
Yeah, and that's awesome. You're once again doing something in a reverse way. I love it. It's so contrarian but also yeah, amazing to hear how it's impacting the community. Would you take their questions or would the experts take them and answer them on Instagram Story or something so others could benefit from the questions coming in? Or were you making it more one-to-one where they were actually responding in a text to that person?
Kathrin:
So what we did at the beginning is like you're sending in a question and it's really a one-to-one answer. And then what we did for the community later is that we anonymized the questions and then have them on Instagram Stories for people to learn basically what the most common answers were. So you still have that one-on-one feeling especially for things that are personal, but then we're still making it available, and just routinely having these cycles where it's like, these are fixed dates where we announced this as the expert that we're having on the line. So people can share questions in advance. The experts can prepare for it because they have to take on a back end a lot of questions, because it's really this one-on-one conversations.
Kathrin:
But then making sure that we can scale it to a bigger community later so it's really helpful and it also stays there as a reference and as a helpful resource in the future.
Stephanie:
Awesome. I love that. All right. Well let's shift over to the lightning round. The lightning round is brought to you by our friends at Salesforce Commerce Cloud. This is where I'm going to send a question your way and you have a minute or less to answer. Are you ready Kathrin?
Kathrin:
Yes.
Stephanie:
All right. First, what one thing will have the biggest impact on ecommerce in the next year?
Kathrin:
I think the centralization of data. Where we have more different inputs from supply chain, from customization and customer journey and how do we actually get that centralized in one place and created experience for the consumer that's helpful and adapts to their needs.
Stephanie:
I love that. Have you seen anyone who is doing a good job in that space so far that you're watching?
Kathrin:
Generally I'm always looking at what Tesla has been doing. I think if you look at the example on how they really reinvented a space that no one thought it's doable, that you have no car dealers and that you actually have software on the car. I think just thinking about ideas that are a bit broader. So obviously we're watching what the latest trends are on B2C. But I think it's also really helpful to see in other industries that have been completely reinvented. And see what were the initial impetus that we can take as obviously as a smaller brand, we're not Tesla, but taking bits and pieces after thinking and put small bets and test what we can do to maybe reinvent the wheel at a small point and then scale it from there.
Stephanie:
Yeah, that's great. Yeah, Tesla's always a good one to watch. What's up next on your reading list?
Kathrin:
I'm just finishing up the No Rules Rules of Netflix, reinventing culture. I think now that we are getting bigger as a company, we're having a lot of similarities that I guess every startup is going through. You're a small group and everything is informed and you have no rules, and then suddenly you're more than 20 people, 25 people, and how do you actually keep the culture as it is without limiting people and the creativity and establishing artificial rules and too many approval processes? So how can we stay agile as a brand? Again, we're not Netflix, but I think there are a couple of things especially early on that you can take from the book.
Kathrin:
One is really the transparency that even if it's uncomfortable, if things are going wrong, is that we talk to everyone. So there's no hidden desk or anything with any documents, we keep our revenue information for example, for everyone visible on the board, so people can see how we're doing. So there are no secrets. And I think that just brings a level of accountability to the team, and without us having to establish rules that limits the strongest performance and people were actually most excited about driving things forward.
Stephanie:
Yep. Yeah that's great. That's a good book too. What's one thing that you don't understand today that you wish you did?
Kathrin:
I would say, some of the new channels TikTok is one of those where I wish I would be earlier to the game. I think there are a lot of interesting things going on, and I'm getting actually taught by people who are much younger than me. What's going on? So I think, for us going forward is like, how do we expand beyond the channels that we learned and we are good at and where we have an established community and how can we go about new things and finding out about it and placing small bets, trying something and see if it sticks? But yeah, I think that's something always good to be early to the party.
Stephanie:
Yep. Yeah, I agree. All right, Kathrin, this has been such a fun interview so different, which I loved. Thank you for coming on. Where can people find out more about you and Bearaby?
Kathrin:
Yes, you can find more about us on bearaby.com. And you can also find us on Instagram. And our handle is @mybearaby.
Stephanie:
Thanks so much for joining us. It was a pleasure.
Kathrin:
Thanks for having me.
Sometimes, it’s best to get back to the basics. Whether you are talking business or just general human interaction, it’s easy to get caught up in the whirlwind of overthinking things when really all you need to do is keep it simple.
Ellen Bennett knows this more than most, and she’s built her company, Hedley & Bennett into an undeniable success by sticking to that principle. Hedley & Bennett produces high-quality kitchen wear that has been featured in more than 4,000 restaurants and cafes, adopted by celebrity chefs like Martha Stewart and David Chang, and is used by hundreds of thousands of home chefs every day. But the story started much more modestly. Ellen began with a true grassroots approach, selling aprons out of her Mini Cooper, talking to and pitching every chef she knew, and working her connections to keep growing her business.
On this episode of Up Next in Commerce, Ellen shares the story of how she hustled to build Hedley & Bennett and all of the early struggles she had to work through to keep the train rolling. She gives advice to any young company dealing with production or shipping mishaps, and she explains how you can go about expanding through creative and authentic collaborations. Plus, she explains what it took to shift the company from exclusively selling B2B to now selling more than 80% DTC. Ellen brought a level of energy and ambition to the interview that didn’t disappoint, and I hope you enjoy it as much as I did.
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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Transcript:
Ellen Bennett:
Great. Hi guys. My name is Ellen Bennett and I'm the founder and CEO of Hedley and Bennett.
Stephanie Postles:
Hey everyone. And welcome back to Up Next in Commerce. This is your host, Stephanie Postles, co-founder and CEO at Mission.org. Today on the show, we have Ellen Bennett, the founder and CEO of Hedley and Bennett. Ellen, welcome to the show.
Ellen Bennett:
Thanks for having me.
Stephanie Postles:
Yeah, I'm very excited to have you on. You're the first person with a outfit change that we've had before getting on. So it's a good day to have a new thing occur on a podcast interview.
Ellen Bennett:
I love color and I brought a light yellow cat and I had a dark yellow hat. So I just changed to a dark yellow hat in case everyone's wondering, what the hell is she talking about?
Stephanie Postles:
Yep. This is working for me more now. So now I'm ready to get into it. So your company looks awesome. I saw that Hedley and Bennett, you guys are creating handcrafted aprons and you're in over 4,000 restaurants and coffee shops, which is wild and crazy. So your story seems like one that I want to go back to the early days. Like before, you're in all these restaurants and coffee shops, how did you start? How did you even get into this industry?
Ellen Bennett:
So I used to cook professionally. I worked at a two Michelin star restaurant, hated our uniforms, and I wanted to make them better. I wanted to make people feel empowered and awesome. And you hear, oh, she has an apron company and you might think frilly, curly aprons, but I need you to stop what you're doing right now, go to our website to hedleyandbennett.com and check it out because you'll understand pretty immediately that we are the polar opposite of that. We are a really awesome collection of colorful, very well-made, very high quality products, which are kitchens, gear and aprons.
Ellen Bennett:
And it began with this idea of just make a good apron for the restaurant world, make the perfect apron. And it quickly evolved into this giant community of chefs that also felt like they needed that same product. And it was just me out of my house, out of my mini Cooper, running to farmer's markets, talking to chefs, really doing a very grassroots marketing approach to everything because frankly, I didn't have any investors. I didn't have any outside capital. I had me, myself and I against the world and my product. So I began with that and just built off of it, reinvested every penny I made back into the business and grew it chunk by chunk brick by brick. And it took time, but I believe that the good things take time. So I've been happy with our journey. We are eight years in now.
Stephanie Postles:
Awesome. So for anyone who has not worked in the restaurant business, which I have but I've not been back in the kitchen. I was like server, bartender, shot girl, hey. What makes a bad apron and what did you hear when you're going out and interviewing people and kind of doing that market research to create what you have today, which is an awesome, but sturdy looking apron. I saw one on your website with really cool pockets, but it was very trendy, but also look [inaudible]. How did you get there and what were you wearing before we were like, this sucks?
Ellen Bennett:
Yeah, totally. So before Hedley and Bennett was born, aprons were very much just a commodity as something you didn't think about, you didn't look at, it was just a very, very thin piece of material probably made out of polyester with a strap that wrapped around your neck. And that hung probably below your boobs, like really not fitting on a man or a woman or whoever. And it also had like shoe lay strings around the waist. It didn't adjust in any way and that was it. There was nothing else to it. And what I did with Hedley and Bennett is we made it a whole world. We made it a community. We made it mean something. And from the get-go we had people like Martha Stewart and David Chang and Nancy Silverton. And if you watch any show on TV right now from Top Chef to any show on the food network you will see this little red and on the chest and that is the heavily amended apron.
Stephanie Postles:
Wow. Okay. You [inaudible] right to the crazy success story now. Now, [inaudible] how did you get in front of Martha Stewart? How did you secure all these partnerships like that, that's crazy.
Ellen Bennett:
Believe it or not. And this is the 80 year old within me. I always say I'm like an eighty year... I'm secretly an 80 year old man, because I do things the old school way sometimes. I believe in really high quality always. And from day one we made a product that really worked and I've always listened to our customers deeply. Do you know what an NPS score is?
Stephanie Postles:
Yeah.
Ellen Bennett:
Yes.
Stephanie Postles:
Net Promoter Score.
Ellen Bennett:
Yes. So our NPS score is 80. And that's very high above industry standard, which ranges in the 60 camp. And we are constantly at 80 plus. And the reason we're in that camp is because we've never skimped on the quality of details. The fabrics that we use are everything from Japanese denims, to Italian chambrays to materials that you can beat up again, and again, and again, and this thing is going to last you forever. So you have the craziest chefs out there in the world wearing our products for so many years. Believe me, I got feedback throughout the years. So these kinds of guys, they just love the quality. They loved that it had a point of view and that you could have your own vibe. You didn't just need to be wearing a white apron. Why not have yourself have an identity in the kitchen that was more than just strap a white apron on.
Stephanie Postles:
Yep. But how did you get in front of them? Did you send them free samples to try and show them quality? How did you even get in front of these top shows?
Ellen Bennett:
A lot of it was word of mouth. So one chef would take it to an event and another chef would see that little red patch on the chest and be like, "what is that?" And then they'd say, "oh, there's a girl, her name's Ellen." They would call me the quote unquote apron lady. "Oh, you got to contact Ellen. She's making awesome stuff. These were the early days of Instagram. And when I went and met with David Chang, for example, in New York, I was introduced to him by a chef I met in LA. The chef from LA was like, "if you're ever in New York, let me know." And I of course let him know. So I reached out before I showed up to New York and I was like, "chef, I'm coming to New York. I'm so excited to come see your spot."
Ellen Bennett:
I was very interested in what he was doing and I happen to have aprons with me. So I obviously was going to show him when I was in New York. And he said, "yeah, come by my restaurant." I stopped by, I showed him aprons. He bought some from me and then he's like, "well, how else can I help you?" I was like, "you know what, I'd love to meet a few other chefs who do you know?" And he's like, "oh, David Chang is a good friend." Like, "can you reach out to him right now for me? I'll come over today." And he was like, "yeah, sure." And so then that chef emailed David Chang. He responded in like an hour later. I was standing inside Momofuku, convincing David Chang to buy aprons from me. And David was like, "I don't know who you are."
Ellen Bennett:
He was really nice, but there was nothing about Hedley and Bennett that existed the way it does now in the industry. But I was so excited at the idea of getting him aprons that I was like, "all right, do you need it on consignment? Do you need net 60? What do you need? I'm going to give it to you, but I'm not walking out of here without you wearing Hedley and Bennett. Because, I promise you're going to love it." And I had enough conviction in my product that I knew once he actually had his team wearing it, they would love it. And sure enough, David Chang and his restaurants have worn Hedley and Bennett for six plus years now.
Stephanie Postles:
And did they buy that day when you-
Ellen Bennett:
They did. They ordered 50 aprons, custom aprons from me. And he's like, "I don't even know how you did that, but all right, I'm excited." And I was like, "yay." And then I took a picture with him, put it on Instagram. Just using what I had, honestly, it was like focused on what you have and not what you don't have. And I was like, I have myself, I have this great product and I have a new customer. I'm going to talk about it. It was very basic, but I kept doing that again and again and again. And the flywheel just started spinning.
Stephanie Postles:
Yeah. That's such a good reminder too, about asking your current customers or your network for referrals. I think a lot of people feel awkward and uncomfortable about doing that. Especially when you make a sale to someone to then be like, and now I'm going to ask for that extra thing. But I found that usually people always say yes, like "yes, I'll try and find someone else in my network to help you. Yes. There's someone else that I know," but they wouldn't think about offering that up right from the beginning. But when you ask it's like all these doors open, I think not enough people ask though.
Ellen Bennett:
I agree. And one of the things that I've always championed within our organization is never treating people like a transaction. So when you are being friends with people and you actually care about them, and you're not just caring about making that sale, people are willing and much more willing to help you. And also if you are excited about what you're doing and you genuinely are there because you're trying to help in some capacity, I've just found that everyone is willing to get on that bandwagon. Like when that chef reached out to David Chang, he's like "this girl she's got hustle. She's figuring out. She's got this business." They appreciate when people try. And so you just kind of want to help people that are out there going out of their comfort zones.
Stephanie Postles:
Yeah. I completely agree. So how did you go about, getting back to the earlier days, like you're not a designer, you didn't have background in that. What was it like getting into that industry and trying to figure out, how do I get a product manufactured? How do I pivot that when I have feedback? Somethings going wrong. What did that look like? And what were some of the lessons from those early days?
Ellen Bennett:
I had some orders go south very frequently at the beginning. And they were very expensive as a tiny, small business. One of them being Bryan Voltaggio he ordered the biggest order I'd ever gotten. I think it was 150 aprons. And we had a mishap in sewing land and the sewers just didn't get it done in time. And we were on them and we were hounding them and they had a restaurant opening. And so you can imagine delivering 150 aprons after the restaurant opens on the other side of the United States is not right. And we had to just suck it up and make it right. I refunded part of it. I overnighted stuff. I covered the cost of it. I called the assistant and spoke to her personally and said, "I'm so sorry. This is what occurred. It's on us. We really messed up and we're going to make it right." And just owning your mistakes, especially when you're a small business hiding behind emails, this is where my 80 year old man comes out, pick up the phone.
Ellen Bennett:
There's nothing like human contact, especially when things go South. Do not try and resolve a problem or a deeply rooted issue on an email, have the balls to call the person and fix it. And people really appreciate that. For as technologically savvy as we all are, human connection will never surpass an email. I mean the other way around. So, that was a lot of what I did at the beginning when things went South. I would pick up the phone and call people and be like, "tell me what happened. How can we make this right. We'll take care of it." And we bid it many times where we covered costs on stuff.
Stephanie Postles:
Is it usually delays type of issues that-
Ellen Bennett:
It was delays, or there were errors on the fabric, or maybe it was a new fabric we were testing. We didn't test because we didn't even know to test fabrics. And so it may be a bled on their clothes. You name it, it happened. And there were times when customers absolutely were like, nope, you ruined it. And we had to go out and find other customers. But overall we were always very humble about our mistakes and just listened, fixed and course corrected pretty immediately. So if there was an issue with one type of material and we had several customers, we would proactively reach out to the other customers and say, "hey, it turns out there's something wrong with this. We need to fix it. We'd like to recover those products. We'll send you other ones. Let's make it right."
Stephanie Postles:
Yep. Got it. So how do you go about ingesting feedback now that you're in the 4,000 plus restaurants and locations? How do you take feedback like you did in the early days, which was probably much more like, one-off where you're like, "oh, good tip. I'm going to change it." What are you doing now with everything coming in.
Ellen Bennett:
Right. Yeah. Back in the day I was the windshield to the business. So I could kind of take it all in every single bit. Now we have a pretty extensive set of meetings and spreadsheets from every part of the business. So our social team online is feeding information in from Instagram and TikTok and direct messages that we get. My platform at Ellen Marie Bennett is pretty front and center too. So people will reach out to me directly and say things. When things are wrong, you hear about it. So I funnel that over to our social team, and then they aggregate it all and have a weekly meeting like an interdepartmental meeting between marketing and sales and production to ensure that those things are getting changed or fixed.
Ellen Bennett:
You can put a lot of technology behind that and aggregate surveys and things of that nature too, which we do. But I've found that just getting the right people on a cadence of a phone call has been really helpful to ensure that our e-comm team is making corrections to the site where things are difficult for customers or our product team hears about that one trending topic where this one apron is wrinkling in a way that none of the other ones do, so then we start course correcting on that. One of our values as a company is never stop improving. So we are constantly tinkering, and fixing, and tweaking, and editing and adjusting. And because we're also controlling the supply chain, it's easy for us to do that. It's not like we product one year out and then we can't adjust it. We're constantly adapting it.
Stephanie Postles:
Yeah. That's really great. Controlling that entire process from start to finish. As you've started to scale and grow, and you bring on more executives onto the team, you've got a CFO, have you ever felt a pull to kind of sacrifice quality here and there in the pursuit of better margins, because that seems like something a lot of businesses struggle with as they get bigger. Sometimes there's a point where you're like, eh, I remember the early days it used to be this and now... Have you felt any of that pull yet? And if so, how do you think about that?
Ellen Bennett:
Such a great question. Honestly, I've found that because we have a bigger team, we are able to scale with more infrastructure. It's just easier. And we actually have time to negotiate and we actually have time to buy in bigger volume on raw materials. So it helps our margin in the long run. So we've actually been able to maintain a lot of the same suppliers we used from the get-go, but grow with them. And because I started with them with one roll of fabric, and now we're buying tens of thousands of rolls monthly it's a very different relationship and they really appreciate us. Because also, back to my being an 80 year old man days, I never had any debt and I always paid everybody on time. So our vendors really valued us and value us to this day, because we're not on net 60 terms or anything with them. We pay them every month with no delays. So, that creates a lot of partnership. They want to help you because you've always helped them.
Stephanie Postles:
Yep [crosstalk].
Ellen Bennett:
So I've actually found the margin has gone up as we've scaled versus gone down. There was a long time there in Hedley and Bennett that we sacrificed quite a lot of margin to hit the quality that we wanted. And we did it anyway because we believe in quality first and foremost.
Stephanie Postles:
Yeah. That's awesome. And such a good point, too, of like, if you're scaling and growing your margins should get better. You don't always have to sacrifice on quality, but especially leaning into that relationship with your partners can really work wonders which is great.
Ellen Bennett:
Exactly. And just because somebody's price, what they offer you is the price that they're offering you doesn't mean you can't have a conversation. Just like I asked that chef do you know anybody? It's like, hey guys, is there anything else we can do to get this down? Are there other costs that we can adjust to bring your costs down? Is there anything we can do on our end to help mitigate some of this? And you find ways of being collaborative and your partners tend to say, yes. It's not just the hard balling them and trying to squeeze a penny down, but really listening to them and listening to your needs and finding a happy medium, a solution.
Stephanie Postles:
Yeah. Awesome. So at what point did you start to think about introducing new products? When were you like now's the time to have a new product come live?
Ellen Bennett:
Yeah. When we first started everything was pretty much B2B. So business to business and the company, all of these restaurants that we were in, and chefs we were outfitting like that was our bread and butter. And it created a lot of great cashflow because we would take a deposit at the beginning and ship the product once it was made, collect the other half. And the business was able to grow in that way. Organically though, behind the scenes, our D2C our direct consumer business was growing because all these people were seeing us on Food Network or Top Chef, you'll see that little red square ampersand patch on the chest and say, what is that? Oh, my favorite chef is wearing, I want to wear it.
Ellen Bennett:
So we were building this like online presence without even meaning to in a way. And I wanted to make product that resonated with all of our newer customers online and make something special for our restaurant customers. So I thought collaborations, that's the best way to do it. And that's where I got our toes dabbled into the world of new product. And we started with I believe one of our early collaborations was with The Hundreds, which is a really cool street wear brand here in LA. Then we did something with Parachute home, we've since gone on to do a collaboration with Vans and Madewell. But every single one of those collaborations brought us new eyeballs, it brought us new community and it brought something really fun to talk about.
Ellen Bennett:
And we never did it with anyone we didn't actually believe was a good partnership. It's like when you see a brand team up with, I don't know, they could be something totally different. And they team up with like an airline. And you're like, what does that even mean? What are you guys doing? We never did that. It always had to be genuine. And that really helped us get into new products because we were able to test and see what people responded to. So we launched a line of chef socks with this one company called Richer Poorer and everyone was like, "chef socks. What do you even mean with that?" And, oh my God, these chefs socks to this day, we still sell them. And we have an ongoing partnership now where they make our socks.
Stephanie Postles:
What are chef socks? Is it just comfy or thicker.
Ellen Bennett:
So you could wear them. They have compression but they're super colorful because obviously Hedley and Bennett is a really colorful fun company. And they also have fun sayings at the bottom. So it'll say like wake up and fight or whatever. So you've got, put your socks on and get out there and like kick at life.
Ellen Bennett:
So, that was a way that we got to test a new product be resourceful. Because, we didn't have to go make our own supply chain to create SOPs. And then we were able to tap into their network of community and world.
Stephanie Postles:
What does the breakout of work look like when you're partnering with someone like Madewell, because maybe it's not a sock company. It's like, we'll make the socks you target them to your audience, we'll do our thing. What does it look like if it's more of a big brand or like a Vans where it's like, okay, you've got your designs and things like that. Like who's doing what work?
Ellen Bennett:
Yeah. Such a good question. So when we did our collab with Madewell, we created the aprons. We manufactured them and they manufactured all of the apparel. So we did a jumpsuit and shirts and bandanas and a few other items. So things like a 12 piece collection and all the aprons were made by us. The designs came from their design team, combined with our input and edits. And the way we did it was we brought the function and the core base. And then they brought the design elements that they wanted to kind of plug in from the world of Madewell, and those are the best collaborations. When you find somebody that does something that you don't do and vice versa.
Ellen Bennett:
So with Vans, it's like they make shoes we don't. We made aprons, they don't. With Madewell we make really high pro-grade, high function product that's really beautiful and lasts forever and they have great designs. So you bring those two together and you end up with a jumpsuit that's made out of a beautiful stretch denim that has a towel loop on the side for towels for when you're cooking. But its also snaps instead of buttons so you can get in and out of it because if you're going to go pee while you're cooking or whatever, you don't have time to sit there and unbutton 40 buttons. So just thinking about it from a function standpoint, it really ended up being a perfect collaboration.
Stephanie Postles:
Got it. And do they feel pretty similar or is it very one-off, like very different kinds of relationships because I'm even thinking about like how do you break up the sales or who gets what on the backend?
Ellen Bennett:
I think it's really important when people are doing collaborations to be very open at the beginning about what your end goal is. And for Madewell we really wanted to tap into their audience and they wanted to tap into ours. So it was like, "okay, we're going to go heavy into marketing." I also really wanted to make a jumpsuit. We had never done work wear in that capacity. And so they were like, "great, we'll make those products. You make the aprons, we'll hit that consumer from a home and pro angle, but with the same product" and it was a perfect split. So you work it out based on what everybody's needs are. And you kind of like lay out all your cards on the table. And if someone is a bigger company, typically the larger company will cover more of let's say the marketing costs.
Ellen Bennett:
So Madewell did a lot of the photo shoot for our collaboration or when we did our launch with Vans, we did a huge party with them. We had it at our 16,000 square foot factory in LA, but then they brought people from the strokes to perform. So it is-
Stephanie Postles:
Go Vans!
Ellen Bennett:
Go Vans! I mean, music is their world. So that is how it ends up being really effective. You have to both pull in and pitch in from both sides or else it's not really a collaboration, it's not really a partnership. You're inventing some false thing behind the scenes in marketing land for a good reason to talk to your audience, but everyone can smell through bullshit these days. Like if it isn't genuine, don't do it.
Stephanie Postles:
Yeah. Have you had any partnership fails? You don't have to say any of the names that have been like, oh, this didn't work out and here's maybe why or what I would avoid next time that this is why it didn't work out well.
Ellen Bennett:
Yeah. I love that you asked me that because truthfully at the early days of Hedley and Bennett, we did so many partnerships with so many people. And we said yes to everything because we were learning, we were exploring, we were trying things. And I found that a lot of times we had the kind of chutzpah and initiative to make it work and sometimes the other side didn't. And so we found that we were doing a lot of the work, a lot of times. Not in any of the partnerships I mentioned, but somebody would reach out and they'd say, "oh my gosh, we love your brand. We'd love to collaborate." And next thing you know, we're like throwing them a party and I'm like, "wait, why is our marketing department throwing a party for a brand that doesn't even have any of their people coming in to support or help."
Ellen Bennett:
So we kissed some frogs and learned what we needed to ask. And I don't fault anyone for it, but learning to say no is just as important to learn than to say yes. You need to be able to draw the line. But if our team hadn't done all those different events, I don't know that we would have learned that. So we learned it the hard way, but sometimes experience teaches you.
Stephanie Postles:
Yeah. I love that. And how long does a... I'm diving deep because I've not talked about partnerships a lot on the shows that's why I'm really going in.
Ellen Bennett:
Oh, yeah. Go for it.
Stephanie Postles:
When do you start seeing the ROI kind of trail off? At what point does the excitement die down and then you kind of are like, okay onto the next partnership or how long does it normally last?
Ellen Bennett:
Oh yeah. That's great. Let's say it depends on how much ramp up you make to the partnership or the collaboration, and then how quickly the product sells out. So I'll give you one example. We did a big print with a print collection with a company called Rifle Paper Company. I don't know if you know who that is, but if you Google that you will recognize the floral print.
Ellen Bennett:
So we did a print with them and we had a 40,000 person sign up waitlist for when the product launched. And that was done three weeks before the product launched. And so we were able to pull in all these people top of the funnel and bring them in and have them be excited about it. And we were hitting them with different emails, talking about the product and when it was going to land. And then once the product landed, it was pretty exciting for I'd say like about a month, it was that time. And that product sold very well and drove a lot of traffic for the entire period it was not sold out. So we had it up, I think for two and a half months. And this was three years ago.
Ellen Bennett:
Now everything feels so accelerated. It's like, you get a product up, it's cool. Then something happens. And then the United States implodes in some way. And then we're off to the races. Talk about that. And then something happens on Reddit and then it goes over there. So I don't know, I think the news cycle and everything else has sped up dramatically from 2017.
Ellen Bennett:
So, I'd say a good two-ish months is usually the range. And with them, we did lots of social media posts on both accounts. And so she was posting about it. We were posting about it and that helped just build the hype and momentum on it. And then once it sold out, it was gone and then people were bummed because they didn't get it. So when we brought it back, like almost a year later for a limited drop, it sold so fast. I think it was gone in a couple of weeks.
Stephanie Postles:
So I want to circle back a little bit to the B2B, to D2C transition and talk about, how did you guys think about your tech stack and your website, because when you're doing B2B orders, they're probably used to a different, sometimes archaic system of I'm used to logging in and making my purchase or talking to my guy at this location. How did you think about that switch? And did you really change the user interface and how customers were interacting or did you just let it go and see if they would adapt to your new D2C way of selling?
Ellen Bennett:
We have a pretty unique kind of split in our organization because you have one team managing two very, very different channels with very different customers. And when we were smaller, it was manageable and you could figure it out. But now that we've grown so much and that we are, we're now 80% direct to consumer, it's a dramatically different tech stack. It's a dramatically different backend.
Stephanie Postles:
80% because the pie just grew bigger. You still probably have a lot of those B2B ones the pie just got bigger. Yeah. Okay.
Ellen Bennett:
That's right. So it used to be 50/50, and now it's 80/20, but growth on all levels. To your point, the 80% D2C really surpassed the B2B. So we would blend everything, which was really painful. It was really hard because you had one customer service team servicing a chef who needed something for his opening and then you had Maria from Minnesota, calling in who needed a strap change on her apron. And you had two people helping both so that was a little confusing and convoluted, but we were too small to be able to do anything more and to resource it fully in a different way.
Ellen Bennett:
And now that the business has expanded, we actually broke out B2B and created its own P&L. It has its own P&L, it has its own team and its own sales force that... We've always had a separate salesforce, but it was blended into the rest of the company now it's fully broken out. And on the backend, we are automating it. So we're creating a portal where our B2B customers can go log on, get the discounts and have it be a little bit more easy and automated for them.
Stephanie Postles:
Yeah. So what portal are you finding success with? Because, I could see a lot of businesses wanting to go the other way. Like there's a ton of D2C right now. And B2B is sometimes where people also, they wish to be. So what backend, what tech are you using to make that easy from a log-in perspective versus consumer?
Ellen Bennett:
We have basically cloned our site and have done a wholesale site as a V1 and are working based off of that, seeing what works and what doesn't. I've also gone the polar opposite direction when we added new things on like last year, we built a brand new site from head to toe and everything was new and we tested nothing. And that was not great either. So we kind of, over-indexed on like, let's go really basic with the B2B portal and learn what is and isn't working and then build off of that with surveys and conversations with our B2B customers to learn what is working and what isn't.
Ellen Bennett:
Sometimes you don't have the resources. Sometimes you don't have the time. You have to find what works for your company. And perfect sometimes gets in the way of progress. So for B2B, we just said, let's do a portal. It'll be easier. It'll help our sales team. A lot of our leads are inbound because people just love our products, so they reach out to us and we have a way to have them just buy straight from inventory without talking to someone.
Stephanie Postles:
That's great. I always hate when it's like contact us and we'll let you know the pricing on things. I'm like, what if I just want to buy?
Ellen Bennett:
Exactly. And we got that feedback from our customers where they're like, "hey, I have a restaurant I'm working all day. I don't always have time, even though your staff is awesome. I don't have time to wait for Kate to get back to me. I need to just order this and be done with it." And so we thought, oh, okay, let's just do this online and take it from there. So that's how B2B has kind of evolved and began to stand on its own two feet next to D2C.
Stephanie Postles:
That's cool. And do you allow for customization within that platform.
Ellen Bennett:
Offline, online that would have cost us a $100,000 to build that feature and I'm just not sure that we're ready to make that commitment because we're still on V1, but we'll learn. We'll learn and see how much demand we get. We have an entire ERP system offline that you can do customization within Hedley and Bennett, but you do have to talk to a sales rep.
Stephanie Postles:
Yeah. That seems like a tricky place. I'm even thinking about companies like Swag.com which we've had on the show. And I've used them before and thinking about trying to even get this logo, I'm pointing to my hoodie that I'm wearing, like what's hard for... And there was many times back and forth and it was a [inaudible] they were like Steph that's like weirdly centered or that's like too big. It was actually helpful having someone tell me, that looks crappy let us help you.
Ellen Bennett:
Yeah. So it is definitely merging an old school industry that required a lot of hand holding to optimizing it in ways where people are willing to make a few concessions because they want to ease or they want the speed and they're like, "okay, fine. I won't talk to Kate, but I'll get to order it right now. Maybe I won't get embroidery, but I'll get the aprons by Monday." And so you just have those trade-offs and people are willing to make them.
Stephanie Postles:
Yep. All right. And the last thing I want to talk about before we happen to the lightning round is your facility in LA it's known, and it's kind of famous for its features. I think I read it had tree houses or zip lines. And after meeting you now, I'm actually not surprised at all, but tell me a little bit about how you thought about building your facility in LA and why you built it that way.
Ellen Bennett:
Yeah. So when we got the factory, about six years ago, it was an awful giant, ugly, ugly building. And my team thought she's lost it. What are we doing here in the middle of Vernon and next to downtown LA. So I thought, "no, guys, we're going to build a kitchen and we're going to add a zip line and there's going to be a slide and just tree houses, and it's going to be amazing and everything's going to be done here." None of that existed in the building, but I had a vision of how I wanted it to be.
Ellen Bennett:
And sure enough, we now have all of those pieces in here. And we teamed up with Samsung and built this gorgeous kitchen where we've hosted a lot of events. And it's been a really wild evolution of Hedley and Bennett going from this very chef oriented company to now this very home cook oriented business with so many more customers than just our restaurant customers. But at the heart of it, it's still a kitchen. And in our factory, the kitchen still brings our B2B and our D2C customers together.
Ellen Bennett:
Now we shoot videos for TikTok and social media and Instagram out of that kitchen. Yet we also used to host cookbook events for a chef that was launching a book. So kitchen is at our heart, no matter what we do and Hedley and Bennett land, whether it's B2B or D2C it will always be connected to that core which is empowering and inspiring people to cook.
Stephanie Postles:
That's awesome. Yeah. And such a good reminder too, of how to really get the most use of a space. So many people buy it for just one little small purpose and then when that purpose is gone, they're like, "oh, shoot, I shouldn't have maybe gotten that retail location," but for you, it's like you're using it for social, and video and events, which hopefully will come back soon. So yeah [inaudible].
Ellen Bennett:
Yeah, exactly. I think that's in Hedley and Bennett's DNA. We're all about multi-use, being resourceful and having everything have a dual function. Our aprons are not just for chefs they're also for home cooks, they are for potters and painters and designers can wear them to protect their clothes. So it's kind of for everyone, but built specifically with chefs in mind.
Stephanie Postles:
Awesome. All right, well, let's move over to the lightning round. The lightning round is brought to you by Salesforce Commerce Cloud. This is where I'm going to ask a question and you have 30 seconds or less now to answer.
Ellen Bennett:
Okay.
Stephanie Postles:
All right. First one, what one thing will have the biggest impact on e-commerce in the next year?
Ellen Bennett:
Ooh. The one thing in e-commerce. It's such a cliche word, but it's the truth. I do believe that authenticity and brands that are real brands, not just pretty packaging and then you get a shitty product inside the pretty packaging. I believe those are the brands that will survive. There are people that care about what they're actually making and they believe in that product having longevity in life and more than just one click and then your customer is upset because they bamboozled. So, quality and authenticity in the products that you are making are always going to be important in e-com. Next year and the year after.
Stephanie Postles:
Yes. I love that. What's the nicest thing anyone's ever done for you?
Ellen Bennett:
Every person that has said yes and no to me has always... I believe all the yeses and nos that I've ever gotten have been the nicest thing that I've ever gotten because they've opened and shut different doors along the way that have forced me to be resourceful. That have forced me to experience hardship and have forced me to experience amazing feelings. And when you have a robust set of life experiences, you can tackle more things, never think about, oh my God, woe is me. This happened to me. It's like, hell yes, that you got through that. And that you now have that notch on your life belt of experience. And I believe you got to live life and feel life and go through the ups and the downs of it to come out on the other side with that much more context. And then you have that much more to pull from.
Stephanie Postles:
[inaudible]. That is a good one. That's one of my favorite answer so far. What's up next on your reading list?
Ellen Bennett:
My book.
Stephanie Postles:
Tell me about it.
Ellen Bennett:
I wrote a book. It took me two and a half years and it launches in April.
Stephanie Postles:
Interesting.
Ellen Bennett:
Yes, it launches with Penguin Random House and it's called "Dream First Details Later: How to Quit Overthinking and Make It Happen."
Stephanie Postles:
[inaudible].
Ellen Bennett:
That's high up on my reading list. Also, I'm obsessed with the entire series of Lencioni books.
Stephanie Postles:
Okay. I actually don't know what that is.
Ellen Bennett:
It's very nerdy, but it's like "The Five Dysfunctions of a Team," "Death by Meetings," "The Advantage."
Stephanie Postles:
Oh, got it.
Ellen Bennett:
They're all these story telling books that are about business and they're digestible and easy read. So I make my entire leadership team read all of them when they join.
Stephanie Postles:
That's good. And I can't wait to read your book that also sounds really good. What's your favorite e-commerce tool that you're experimenting with right now or you're having success with?
Ellen Bennett:
So it's not directly e-comm, but it really helps it. And it's called Dash Hudson. And it is a really incredible social media tool that drives a ton of data and analytics and helps show your team how much... We have a hard time figuring out how much traffic is being driven from social and where and how many purchases are coming from it. So this has given us a heavy dose of visibility. You're more empowered if you have more data and you can track things. So I really love Dash Hudson.
Stephanie Postles:
Cool. I have to check that one out. All right. Ellen, well, it's been a blast having you on, obviously you're super fun. Your company is amazing. Where can people find out more about you and Hedley and Bennett?
Ellen Bennett:
Yes. They have to go to our website, www.hedleyandbennett.com. And that's H-E-D-L-E-Y. And then our Instagram and our TikTok is also Hedley and Bennett. And my personal account is Ellen Marie Bennett. Our TikTok is highly amazing and packed with great videos about tips and tricks for the kitchen and how to just make you a bad-ass when you're cooking, whether you like cooking or not. So go follow all of them. And I have a pet pig that's 200 pounds.
Stephanie Postles:
That's enough of a reason [inaudible].
Ellen Bennett:
That one's on Ellen Marie Bennett. So just go join our wild world on the internet and say hi and say you heard me on this podcast. And thank you so much for having me, Stephanie. This was so much fun.
Stephanie Postles:
Yeah, I agree. We'll have to have you back and then maybe you'll bring your pet pig and we'll call it like a round table with your pet. That's great.
Ellen Bennett:
With Oliver.
Stephanie Postles:
Oliver, that's my son's name, how perfect [crosstalk].
Ellen Bennett:
Oh, my Gosh. Amazing.
Stephanie Postles:
All right. Thank you so much, Ellen.
Ellen Bennett:
Thank you.
Moving into the DTC space after operating only in retail is a tricky tightrope to walk. You have already-established partnerships that you don’t want to jeopardize and a consumer base that you don’t want to cannibalize. But you also want to bring innovation and new products to your loyal customers, and you want to build more personal relationships with them along the way. So how do you win in all areas? Or can you win in all these areas?
Andy Judd is the CMO at Yasso, Inc., and finding the answer to that question is currently at the top of his todos. . Yasso sells frozen yogurt bars, which side note, are the most delicious thing I have ever tasted. Yasso just recently began its journey into the world of DTC. Ultimately, Andy knows that building a profitable DTC arm of the business is one of the toughest challenges in the ecommerce industry today, especially when shipping frozen goods, but he’s done it before, and his tapping into all his knowledge he’s built up from prior roles at companies like ONE brands and Campbell's soup!
On this episode of Up Next in Commerce, Andy tells us what the move to DTC has been like so far, including the added challenges to logistics when it comes to shipping frozen novelties, what strategies he’s been using to ensure transparency with retail and third-party partners, and why he wants everyone listening to understand that ROAS is not the same thing as ROI. Enjoy this episode … and maybe also a Yasso bar!
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Transcript:
Stephanie:
Hey, everyone. Welcome back to Up Next in Commerce. This is your host, Stephanie Postles, co-founder and CEO at mission.org. Today on the show, we have Andy Judd, the Chief Marketing Officer at Yasso. Andy, welcome.
Andy:
Thank you, Stephanie. Great to be here and look forward to today's discussion.
Stephanie:
Excited to have you here. Like I said, I am getting hungry now thinking about this conversation. My stomach actually just rumbled. I don't know if anyone heard that, but that's how I feel about this conversation today. It's going to be a good one.
Andy:
Yeah, no, I'm excited. I think we've got a lot of exciting things happening on the business that I think we can offer some interesting perspective to the community.
Stephanie:
Cool. So, I saw that you have been in the CPG space for over a decade, starting all the way back at good old Campbell's Soup, which I'm like, that's a good history there of really knowing what you're talking about.
Andy:
Yeah. I've been extremely blessed and fortunate to work with some great companies along the road, those large blue chip companies like Campbell's, down to smaller emerging businesses like Yasso today. Each of them is definitely different culturally, business model, go to market, marketing approaches, not only from the size of the businesses, but also what's taken place over time. I appreciate you said one decade. In that lead up, it is a bit longer than that, but-
Stephanie:
I think I said over, but I didn't put numbers.
Andy:
Over, yes. I appreciate you not going all the way to, but yeah, I've been very blessed to work at great companies, great, amazing teams and leaders that have shaped a lot of my thinking. And now I'm happy to hopefully give back some of whatever wisdom I've collected back to your community too.
Stephanie:
Cool. Well, to start, I want to hear, from a very high level, how do you view the food and beverage industry today compared to maybe even just a couple years ago? How has it changed and how did that lead you to creating Yasso?
Andy:
Yeah. The speed of change is definitely picking up pace, and I'm not even talking about the realities of the past year, because that's a whole different kind of situational change, but the speed of change has definitely changed a lot. When I started my career, there was a very set number of customers, and we had a lot of customer consolidation happening, but then really, the marketing landscape started to evolve. Obviously, around 2008, 2010, Facebook came on and just rewrote the playbook dramatically. It took a while to internalize that, particularly in the food space, I think we were a little slower to adaptation.
Andy:
Analytically, I don't think we were quite ready for that moment. But once we kind of got our feet underneath us as a space, it really took off, and now it's how fast can you run to the newest platform to get the most efficiency before the system goes, particularly as an emerging brand, finding those places where I can flank, get the most bang for my limited dollar set versus some of the larger spenders is really important. And I think it's bred a new capability set for today's marketing leaders, that is constant evolution. While, yes, I run, to some varying degrees, the same purchase funnel, the activity that's happened within it, wildly different.
Andy:
I gave a speech to my alma mater and some marketing students and walked them through like, "When I started my career, here's what we did. We ran TV commercials and a newspaper based FSI. Waited 18 months to see if it worked, and then probably made a decision before we even got the results to do it again, and it's just wildly different from how we activate today."
Stephanie:
Yeah, that's great. So, you have all this experience, I'm guessing you're starting to see opportunities. What led you to Yasso and what did that process look like?
Andy:
Sure. So, I joined the Yasso team a little over a year ago and had known the founders for a bit, and known our CEO for even longer. And like many moments where they recognize the step change from kind of the what got you here won't get you there, brought in a new management team to implement a double down on the growth strategy. So, great product. I won't talk too much about the product because you are hungry, but it is a fantastic product. Super creamy, super delicious, great nutritional, clean label, it really does have all the components. But really, it was a bit landlocked on the East Coast, founded and formed in Boston. And this team is rapidly building out that distribution footprint, investing and building the brand.
Stephanie:
Yeah. Also, how can you go wrong when the founders are kindergarten friends? I mean, that sold me right away.
Andy:
Absolutely. Yeah, Drew and Amanda, I will say this, have been just fantastic to work with, both in the principles they've set as an organization from a company culture perspective, and how we value employees, and what benefits we give them, to how we make an impact in our community. We do have a 501(c)(3) nonprofit organization called Game On! Foundation. That's a big part of it. And then just this amazing product. As a marketer, I love that moment where it's like, "Build a brand. Here's this amazing foundation."
Stephanie:
Yep. So, what did your first 90 days look like? Of course, you always come in and kind of study things, see how things are working, but then what did your first 90 days look like? What did your playbook look like to start solving some problems there?
Andy:
Sure. It was a busy first 90 days. I had just come off of another transaction and was one of the last management members to join the organization. And so marketing, to some extent, needed to catch up. We were also moving the company from Boston to Boulder in that moment, and so there was definitely a team rebuild that happened there. So, first 90 days was establishment of strategy, getting the structure identified and a lot of recruiting, whilst simultaneously starting to build the components of activation to get us to ice cream season in 2020, which I'm sure we'll talk a little bit about, the sheer pivot that took place.
Andy:
So, strategy, put the playbook in place, get the key components, the critical components lined up, get the right team.
Stephanie:
Cool. So, you were just mentioning old school close tactics. What are you talking about [crosstalk] for anyone [crosstalk]?
Andy:
Yeah. Literally, couponing. I mean, I'm not kidding. Now, that evolution of incentive based activation has changed, right? The platform in which you may do that today looks a lot different than the platforms that we used to do that a while ago on. But yeah, I think there's reality to finding consumers and giving them incentives into trial and activating that personal truth in retail. It is not our largest investment, but it's an important one as we think through that funnel, particular in a category like this where taste is so critical that if I can get someone to push past that by giving them a little bit of an incentive and then know that my product is just lights out, is a great way to do it.
Stephanie:
Yeah. And are these coupons digital? Are they emailing coupons out? How are you doing that?
Andy:
Yeah. It's a number of different... So, we definitely operate that on owned basis through CRM. So, we definitely give incentives through kind of consumers that we've got into our ecosystem. That is, by far, the most valuable ones, which is keeping those people moving. Then there is outreach programs like Ibotta, that we've used, Shipt, Instacart, which also have, obviously, a shopping mechanism to them to drive trial. I'm sure we'll get into that at some detail as we talk about our omnichannel applications.
Andy:
And then some in-store placements, tried and true, IRCs, at shelf, to draw the consumer our way. This is definitely a very open trial based category where y'all want to try new things, and I'm looking for options, and if I can grab a millisecond of that scan at shelf by violating that with a save, definitely can do that. So yeah, it's definitely all components digitally, organic and owned, as well as in retail.
Stephanie:
So, let's dive into omnichannel, which you mentioned a little bit ago. Tell me a bit about how you guys had to potentially pivot post COVID, how you worked with your retail partners. I mean, I know that we're talking about how it can get kind of tricky too when you're, I guess, overly heavy on retail, and then all of a sudden, you're maybe trying to shift to DTC, and you don't want to make your retail partner sad. How did you guys think about that and explore that, especially over the past year?
Andy:
Sure. So, this brand was, I don't want to say 100% retail when I joined, but for this purposes, let's say it was 100% retail. Very limited investment, even on concierge based programs like Instacart, or even no investment on your platforms like Fresh, or walmart.com, it was very limited in that regard, and there was no DTC at that moment. Some of that is driven by frozen temperature state, right? I don't think... no third party platform has fully figured out that last mile in full temperature state. Retailers are definitely getting their closer and closer, Fresh is definitely pushing the boundaries there and building out an incredible footprint now. And I think COVID has exacerbated or built a lot of momentum to figuring out that for refrigerated and frozen temperature state products.
Andy:
We already had that in our plan. I think that all indicators of the consumer behavior was headed that way. COVID just made that evolution go faster. So, per my earlier point on change is just getting faster, COVID made this change faster. And so the dramatic shift that we saw, we knew we had to run pretty quickly. So, we were already strategically aligned to what that would look like, and for us that is four primary components of omnichannel. One is obviously DTC, and we'll talk about the intricacies there. Two is the concierge based programming and making sure that we're actively engaged there. Three is third party, and four is partnership with retail, primarily through online pickup and delivery.
Andy:
And so when we think about DTC, that's one component, but given that we're frozen temperature state, we really have to think broadly because of logistical challenges of working through shipping individual frozen Greek yogurt bars to a consumer's home and making sure that it gets there and it's not a puddle of Froyo is really challenging, particularly in an environment where FedEx is flushed with volume, logistics providers still haven't fully come to terms with the incremental volume in the system. So, it's definitely not without its operational, logistical challenges, but four components for us as we thought through that strategy, and we're diligently building each of them up, some of them simultaneously, and some of them we've kind of said, "Hey, we'll come to that one in a bit because these are more critical to success in the short term."
Stephanie:
Yeah. So, before we get more into the four pillars and the omnichannel piece, I do want to maybe jump into the operations aspect of how did you figure out this frozen shipping in a way that maybe others haven't so far?
Andy:
Yeah. So, let's start with our product DNA first. We make frozen novelties in a bar shape, so there's no forgiveness in that delivery, and we have to be pretty flawless against that, unlike, let's say, frozen fruit or even frozen ice cream pints, right? That can have a little bit of give, and the pint carton will hold its shape and kind of refreeze, no different than when you come home from the store. Novelties does not have that. If I have a little bit of give, that's not going to refreeze in what I believe our brand lives up to from a taste and sensorial experience.
Andy:
So, first and foremost was, we did a ton of pressure testing through a pretty in-depth thermal testing program. We vetted a number of different logistics partners, different packaging constructs, weights of dry ice, amounts of dry ice, what happens in delays, because we saw a lot of delays on ground shipping, hey, should we ship in air freight and taking discounts until the volume's figured out. We did a ton of pressure testing. And each of our products is also different. We make frozen yogurt bars, we also make frozen yogurt ice cream sandwiches. So, we've got a lot of different forms, even within our portfolio, that require a lot of diligence.
Andy:
So, a ton of diligence upfront, because at the end of the day, when we're asking consumers to buy our product, it is not a small price point for us to get over the hurdle, the cost of that seamless experience, it's not small. So, our goal is definitely very, very low fail rates through that. So, a lot of operational diligence upfront, a lot of understanding of routes and what geographies we do. We have a retail sales rep that was in Phoenix, and he got a lot of product in those early days, because we use that as our... that's the worst case scenario. If we can survive to Phoenix in August, I think we'll be okay. So, a lot of upfront thermal testing.
Andy:
And then engineering on the actual platform was also a good amount of diligence, and we're still evolving that as you always should be. Your selling platform, in my opinion, should be a living platform, for lack of a better word. It should never get complacent with the architecture that devils in the details on winning the SEM game, winning how consumers work through your sites, winning on how you keep them in the fold and get to repeat levels. We have a really high repeat level. That's really important to us. So yes, diligence upfront operationally, diligence on making sure the platform works right. And then once you start activating, the worst case scenario would be having someone have an experience that's anything less than superb.
Stephanie:
Cool. So, what does, from a high level, that back end look like? We settled on dry ice, or we didn't. We settled on a really good cooler. I'm thinking about this one cooler that shipped breast milk, it stayed frozen for four days for me. I was like, "Wow, this cooler is like a Yeti," but sadly, there was nothing you could do with it afterwards. So, what did you guys land on and what does that behind the scenes process look like now?
Andy:
Yeah. And also sustainability was an important factor for us and making sure that whatever format we were delivering in, we didn't want to deliver a format that would have a negative footprint on the earth either. So yeah, we had that extra variable, both the products, sustainability, surviving... like what happens if there's a day delay, right? If there's a day delay on an ambient product, if there's a day delay, most consumers don't get terribly upset by that. If there's a day to lay on a frozen Greek yogurt bar, that is a melted product, because that dry ice won't last forever.
Andy:
So, for us, it was a lot of diligence. We settled in on a really good package. We do use that insulated foam that put water on it, and it will dissolve. And so it was important for us to get that right. But we're talking about nuances of a half of an inch of that insulation, nuances of two to three incremental pounds of extra dry ice to ensure that. It really was fairly detailed, and I hope if our third party partner is listening or ever does listen to this, they know, one, I'm appreciative, and two, we definitely put it through the ringer on getting those details right.
Stephanie:
Yeah. Awesome. Let's move over to the four pillars, because I think that's a really tricky balance where you were talking about DTC, third party, retail, concierge, and I want to hear how you balance all four of those in a way that keeps everyone, including you guys, happy.
Andy:
Yeah. And we think about them a little bit about who we want activating through each of those. For us, incremental reach and incremental consumers into the Yasso franchise is really important. I mean, each of them plays a little bit of a different role in who we're targeting. Our DTC business is primarily pretty deep loyals because it's a pretty big price point, as well as our current baseline standard pack is an eight count. It takes up a little bit of room in your freezer too, so you got to love Yasso bars, which as we launch, we found that wasn't a problem. We definitely found some people that love Yasso bars and could take that volume on. So, that was a deep loyalty pool. It enabled us to get long... some of our tail skews and smart fan favorites available to people, get innovation in their hands early, those things.
Andy:
Concierge, to us, was a big win, particularly in 2020 when a lot of consumers ran, and we were able to pivot some of our investment and marketing dollars over there quickly. We had played around on the platform, and then back to your 90 days question, I had brought on someone on our team that was able to get in there, get into the self service side of things, had experience with that on other platforms, able to work in partnership with partners like Instacart and Shipt and really build that up, and we started running dollars to that. I have a general principle of double and double and double and double until it breaks, right? You double until that ROAS really starts to decay at a rate, and then you know where your ceilings are.
Andy:
And so for us, that was a really important one, particularly in the present temperature state. We knew consumer behavior is rapidly changing, we knew we could activate because we have the structure and the people in place to do so, and really win, particularly on buy it again. We knew that as new consumers were coming to that platform... I don't remember the stat I heard. It was something like they'd anticipated 30 million new households for the year of 2020, and they achieved that by April. And so it was definitely a double down on those types of platforms.
Andy:
And then we had had some initial discussions with Fresh, but it really was at a pretty good standstill. And so we knew we weren't operating on that platform relative to how we operate a retail, and brought in a new partner to help us [inaudible] on the platform, begin doing some more focused work on our side for advertising and in building out detail pages, etc, and really getting to a much better landing place there. And that has been a really nice win for us.
Andy:
And then the last pillar is that retail piece. And that one I think is evolving, because I think customers... there were definitely some customers that were ahead of that curve more in general merchandising, though, than anything, and definitely in some food categories, but definitely not in frozen and refrigerated food. And we've seen a definite increase from the prioritization of customers wanting to ensure that their platforms are in a good place. And we've seen a lot more requests for dollars flowing to help them build those platforms out. And so right now what we're trying to balance is, how do I see each of those platforms or pillars working together, and how do I spend the dollars accordingly? A lot of analytical rigor to that.
Andy:
But it's important to be really ready and flexible and flow those dollars to where you can get to the lowest CPCs, the highest ROAS, highest incrementality of households. We have third party analytic partner that helps us to look at ROIs, because ROAS does not mean ROI. If I could impart any wisdom to marketers out there that haven't lived that yet. ROAS doesn't take into account incrementality. So, it is a complement of different analytical approaches to help us flex those dollars across each of those pillars.
Stephanie:
Yep, I completely agree. So, are there any good lessons or learnings from going onto all those platforms, figuring it out, trying to pull them together eventually, are there any good lessons from that that other people can take away and hopefully avoid?
Andy:
Sure. I'll give you an example, not necessarily from my Yasso days, but some prior learnings that I had at a previous company. It is a gray space. As much as we're operating in these environments, whether it's DTC or third party platforms, retailers are also operating in these, and a lot of the questions we get is like, "Are you going to be sourcing volume from my retail in order to sell on these platforms directly?" And I think having those conversations with particularly important retailer partners upfront is important to help them understand how you're targeting, why it's good to bring net incremental people into the total business, and that helps all boats rise, how you're going to work with them through pricing strategy, in particular, how you're going to work through them with promotional and merchandising that doesn't create overlap.
Andy:
I have an example on Black Friday from a couple of years ago. There was a retail partner that was a very important retail partner, it was protein bars, and they operated heavily on Amazon, we operated heavily on Amazon. They were going to have their Amazon push for Black Friday, we were going to have our Amazon push for Black Friday. And we didn't get far enough ahead with them to decide who's doing what and how that may collide at the buy box. And thankfully, we decided to start our promotion early on Tuesday, because if we'd started one day later, that collision would have happened and no one would have been in the office to try and rectify it.
Andy:
And so what happened is they ran kind of a site-wide promotion across a number of the different brands that they sell as a broad retailer, and that discount stole the buy box and eroded a lot of your media metrics, we had obviously, some inventory challenges lined up in that. But thankfully, we were able to work through that and get it cleaned up. It had some implication with Google Shopping as well, so it was a multifaceted problem. It also gave us the opportunity to use that case as a way to talk through that with that retailer in the future, about lining up merchandising collectively, not independently. And that's not to suggest that we were comparing pricing, it was just more about talking through our approaches and what the implications on their platforms would be, our platforms, Amazon as a platform overall. I thought it led to a really collaborative place overall, but it is sticky, right? It's a bit of a frenemy reality, right? They are competing, but they're also your partners in retail.
Andy:
And so establishing guardrails and being transparent we found has been very helpful. Because, again, I operate from positive intent, we're all here to do the same thing, which is to drive growth and to give the consumer the right product that they want at the right time.
Stephanie:
Yeah. So, how do you go about talking to your retail partner to explain the incrementality piece, and this is good for me everyone type thing. How would you go about doing that in a way that makes sense to everyone?
Andy:
Yeah. Luckily, in the last few years, I've worked on some great brands that do have great stories about bringing in higher value consumers into the fold and figuring out ways to create total value that they may not get. And some of that is, "Hey, you don't have this portion of the portfolio on your catalog for whatever site you may be selling to, that's something that we can have...": I talked earlier about innovation as a way to get ahead. If a retailer doesn't opt into that innovation, that's okay. We definitely want you to sell our core business and operate there, but we want to give our most loyal consumers our innovation. It's also use of proof cases that we can then go back to the retailer and say, like, "Hey, this is a platform that's a little more vetted and has been cleared by our consumer," that, "hey, it's got proof here. This is an opportunity now for you to take that set to new consumers.
Andy:
It's also important for us to draw clean mapping to that consumer persona. Who's shopping online, and who shopping and retail, what they're looking for. And we've been very diligent about keeping that cleans. And here's who this is on my platform, here's who this is on third parties, here's who this is in your store. And collectively, that is a really nice store. And that's, I think, why we've had some success recently on outpaced growth relative to the marketplace.
Stephanie:
Yeah. I mean, it seems like it'd be really tricky keeping track of those consumers, seeing the online versus offline, and where are they originating from, and who's attributing to what sale? How do you go about managing all that data and keeping track of it, especially since you're on so many platforms?
Andy:
Yeah. I mentioned it a bit earlier, but we do have a partner that does regression based marketing, real-time marketing mix analyses for us, and we use them as a way to delineate the incrementality. That gives us a broad view to our mix, but that also helps us to understand which platforms to bet on, one from the other. I think we're at 18 different variables in that modeling, and some of those variables are literally platform level variables, and some of those are different types of campaign level variables. And so it is not without a lot of rigor, but building the model upfront... and I apologize if I'm using some of those key words, but take the diligence to really think about what the data sets are that are going to come at you and establish what they really tell you, back to my comment ROAS is not ROI. It doesn't mean it's not important, but it's not. And having a data system, and a dashboarding approach, and an operational cadence by which you analyze those and bringing all partners into that for transparency, it clears the air.
Andy:
I think I worked with partners before that have given us feedback that, "Nobody ever tells us this," right? "And our objectives are never your objectives. They're always different." Right? And so getting alignment upfront and clarity of data flow I think is one of those pieces, no different than the diligence we talked about earlier on frozen fulfillment. A lot of diligence upfront pays off down the road, and actually enables a ton of flexibility. It's just really painful. If I could offer any guidance to winning in omnichannel, it's details, focus on details, because the more detailed oriented you are, the better your system will be and the better you'll understand implications of changes.
Stephanie:
Yeah. I could see partnerships being lost because of you guys maybe coming in there and being like, "Here's the data points we need. Here's kind of how things work," which maybe needs to be lost if someone doesn't want to do that. But what are the most important data points that you asked from a partner that maybe they weren't comfortable sharing at one point, but now many are on board with doing that? What do you go in saying like, "This is the requirements, here's what we need," and which ones were they maybe more hesitant to share?
Andy:
Yeah. The propensity or the default position of the retailers is not necessarily to share, and that's not, I don't think, in the spirit of not being a partner, it's in the spirit of, obviously, their goal is to build a category, not necessarily an individual brand, and they're trying to optimize the total pool of brands to elevate their entire category. And so obviously, they don't want to do anything that could be detrimental to the totality of that category growth or detrimental to other brand partners that they may have. Some of that is opting in, some of that is dollars and cents.
Andy:
There are a number of retailers that have really great platforms for data, and some of that is opting in to those. We've made it a purpose to be data centric in how we approach, not just our retail business or our ecommerce business, all of it. And that may lead to a little bit of a higher non-working/working ratio for what it may be. But that makes us a lot more efficient with all the working dollars in that. And so some of it is dollars and cents and opting into their platforms.
Andy:
Some of it is having a clarity of that strategy that I mentioned earlier, like, "Here's who I serve by platform," and almost drawing a line that says, "Here's how I view the world. How do you view the world?" And soliciting that. But sometimes it means going in with a point of view. And they may not share that point of view, but at least they'll declare, "I don't share this point of view." And so opt in, have a point of view, and then you'll share results. Also, I think it has to be a two-way street. If I'm unwilling to tell them, "Here's how I'm operating in a direct model," why would I ask them to then tell me what it looks like in an online pickup or delivery model? So, I think there has to be some reciprocity that comes along to that. So, don't be scared to buy data and be more data centric, be clear about your point of view, and then you'll have a partnership, and be okay with some transparency that you otherwise may be not wanting to do in the first place.
Stephanie:
Yeah, I love that. So, let's talk a little bit about customer acquisition. How are you guys acquiring customers and what are your most successful channels right now, or what are some big bets that you're making in new platforms or maybe you're like, "We weren't on TikTok before, but now we are"? What are you exploring right now?
Andy:
Yeah. Yes is the answer always. Our team has got a great, I think, pulse for that and a great flexibility for adapting to that. And sometimes it's not just new platforms, sometimes it's new activations on current platforms. I think Reels taught us all a good lesson this year. Obviously, TikTok was a great piece of the puzzle over the last couple of years. So yeah, organically, yeah, definitely continuing to build that out. I think from a paid perspective on new platforms for us, I would say the retail environment is definitely pretty evolving.
Andy:
Other retailers are pushing their platforms more and bringing on new media partners. Target had their big push. I think it was two years ago when they made their media change. So, yeah, I think retail is an ever evolving world because they're recognizing different to sundry, the Amazons of the world that they're both, yes, retailer, but they're also media marketplace. And if I can get a little more down funnel awareness, consideration and purchase, they're operating in that consideration bucket, because I'm already actively involved in food buying behavior. And so I think that's a really interesting place to be playing.
Andy:
Yasso in particular at this life stage, though, we are moving significantly in that top of funnel place. And so it isn't necessarily new platforms, but it's new to us because we're reaching growth levels, which is such an exciting moment for any brand, where we have the opportunity to make investments in larger platforms. And so this past year, we did a lot of betting on awareness based platforms that otherwise we wouldn't have probably bet on. But streaming audio was a big win for us in this past year. I think COVID definitely helped consumers even more so get into that space.
Stephanie:
Like podcasts, you mean?
Andy:
Yeah, like podcasts. Well done. Yes, like podcasts, and even just music as well. But I think those platforms have become a bigger play, which for traditional food, probably hasn't been top box consideration for media plays, but have done really well for us. And then OTT, I think, continues to build. And so those are not necessarily new platforms, but new to us. And when we think about where we are in our life stage, that gives us opportunities to rethink our total funnel, and that's really exciting, right? So, it's, hey, we have the availability to anchor to spending dollars that are scalable on some of these platforms that we otherwise probably wouldn't have been able to afford originally, and now really evolving our down funnel work with retailers in a different way. So, it's evolving, but it's pretty exciting, actually.
Andy:
I think that is one of the benefits I've seen from this past year, is it's moved our industry forward and our retailer partners forward. Obviously, it's not to suggest that they were at zero state by any means, but I think it's definitely built a lot of momentum.
Stephanie:
Yep. And when you're thinking about creating good creatives for these new platforms that you're on, how do you go about making something that really differentiates you guys? I mean, it feels like your space is pretty competitive now. How do you stand out? How do you make ads and audio content that really sets you apart from everyone else?
Andy:
Yeah. Since we came on, we've thought diligently about the balance of internal external creative capabilities, where we need a differential expertise, where we need flexibility internally, and again, diligence upfront, right? So, that declaration of your brand, what it stands for, what it looks like, being very clear with that, so that as you disseminate across the internal and external content creators, whether that's influencer based or UGC, or whatever it is, you know this is it and this is what it looks like so that your brand identity is well done.
Andy:
And then I think voice is an interesting place, and voice in two ways. One, is having perspective. I think brands that are able to separate themselves, to your point on the competitive environment, have a really clear voice and perspective on things, and they're willing to take a stand and say, "Here's what we believe." Because consumers, from an engagement perspective, are much more likely to go there. It could bring polarization components to it, definitely, that's a possibility, but it won't bring engagement, right? So, if you don't have voice, if you don't have a perspective, you won't have engagement. So, it's kind of one of those. So, perspective is one.
Andy:
And then, for us in particular, in our category, I think having a definitive sense of humor. It's a joyful snacking experience, right? I typically don't see a lot of people eating our food without the intention of elevating their mood.
Stephanie:
Yeah. You can't eat it with a sad face.
Andy:
No. I mean, you can. I mean, there's the old adage of the breakup with the ice cream-
Stephanie:
Okay. That's more ice cream.
Andy:
... but you're doing it to elevate yourself, right? So, most people don't enter that space without the intention of enjoying the experience. And so I think it's important for us to bring that levity and humor to our voice. So, having perspective, having a good sense of humor that's definitive and unique, and having clear sense of art direction is really important. And the last piece I would just say is contextual, right? So, not all creative is the same across. Our organic content team I think does a great job with, "Here's what works in Twitter, and here's what works in TikTok, and here's what works on stories, versus reels, versus feed," and bringing that to the game as well.
Stephanie:
Yeah, I agree based on some of the things I've seen. All right, let's move over to the Lightning Round. Lightning Round is brought to you by Salesforce Commerce Cloud. This is where I'm going to ask you a question and you have a minute or less to answer. Are you ready, Andy?
Andy:
Yes, I'm ready.
Stephanie:
I wish my knuckles cracked so I could do it.
Andy:
I can't do that either, but I'm ready.
Stephanie:
We tried. All right.
Andy:
Yes.
Stephanie:
First, what one thing will have the biggest impact on ecommerce in the next year?
Andy:
What one thing will have the biggest impact on ecommerce? I would say, for me, last mile. I think the last mile is going to take a big step forward this next year. I think a lot of companies got caught flat footed on it. They spent the better part of last year figuring it out, and I think you're going to see more retail platforms figuring out last mile and betting big on it.
Stephanie:
Yeah, I agree. That's a good one. What's the nicest thing anyone's ever done for you?
Andy:
I love the two words, to of my favorite words. Thank you. So, I will always take a thank you and I always try and give them just because everybody's working really hard right now, personally and professionally, and I just think the smallest thing you can do is just to say thank you. So, thank you for having me, Stephanie.
Stephanie:
Okay. Thank you for coming on the show, Andy. What one thing do you not understand today that you wish you did?
Andy:
What one thing do I not understand today that I wish I did? There's so many things that I don't understand. I think the biggest one I had a better feel for honestly was how to get ahead on new organic platforms. That's definitely one of the tougher ones. I think we've built a good flexible ability to adapt to evolutions within platforms, but which ones to bet on just because there's so many, I think that's one I wish I had a better gut feel for it, to be able to jump there faster. As an emerging brand, I feel like that's one of our core competencies, is the flank approach and not getting trapped in the big game. And I wish I had a better feel for emerging organic platforms.
Stephanie:
Yeah, that does seem tricky to stay on top of, to be the first one on there and to be the one that can organically grow, because it does always say there's a lot arbitrage to be had on platforms in the beginning, especially when they're trying to figure out their maybe advertising programs. I know TikTok for a while there, you can get really good maybe ROIs because the platform was so new, they're figuring out their program. Maybe that's gone now, but that's a good one.
Andy:
And that's the exact point, is that it does happen quickly too. And I have seen brands be very successful in getting there first and grabbing that attention.
Stephanie:
Yeah. What's up next on your reading list?
Andy:
Right now, what is next on my... I'm looking over at my books. It is... and I'll show it to you, here. It is Hello Darkness, My Old Friend, by Sandy Greenberg. This is a book recommended by my father-in-law about the story of Art Garfunkel's college friend who went blind in college and his journey. He's a lawyer, and it's just an incredible story. So, that is next on my reading list.
Stephanie:
Wow. I'm writing that down. So, what was it? Hello...
Andy:
Hello Darkness, My Old Friend by Sanford Greenberg, or Sandy Greenberg.
Stephanie:
All right. I'll get it [crosstalk].
Andy:
Foreword by Ruth Bader Ginsburg, by the way.
Stephanie:
Oh, sweet. Okay, now, I'm definitely checking it out.
Andy:
Yes.
Stephanie:
All right. And then the last one. What ecommerce tool or piece of tech are you experimenting or most bullish on right now?
Andy:
Yeah. I'm going to go back to our logistics because I'm bullish that there's going to be a lot of progress on sustainable packaging over the next coming years, and as I mentioned earlier, having sustainable frozen packaging is just fantastic. It makes us feel way better about continuing to grow in this space. But I think there's going to be a lot of technology in the packaging constructs. There's a ton of waste in this space. I think brands are getting way more savvy around designing their first rather than trying to re-architect the other retail packs and then doing the best they can. So, I'm excited to see what comes in kind of more the the operational side as much as anything. That's a personal passion for me, but I'm excited to see how that continues to evolve.
Stephanie:
Awesome. That's a good one. All right, Andy. Well, thank you for coming on our show and sharing your insights. Where can people learn more about you and Yasso?
Andy:
Yeah. So, you can find us at yasso.com, for sure. Instagram @Yasso, are the best places, and you can find me on LinkedIn, for sure.
Stephanie:
Amazing. Thanks so much for joining us.
Andy:
Absolutely. Thank you, Stephanie.
The world is moving toward being decentralized in every area from the internet to big business. What that means is that the way we do things will change, and in some cases, those things are already vastly different than the norm we all have grown accustomed to.
Funding and investments are one aspect of the business world that for a long time have operated in silos. But the tide is shifting, and David Koifman is helping to democratize the world of investment through his work at Kickfurther.
Kickfurther is an investment platform that uses the power of crowdfunding to help CPG companies fund their inventory and production runs. Most of the deals on Kickfurther are fully funded and closed within minutes, which proves there is an appetite for this kind of investment in the general market. On this episode of Up Next in Commerce, David explains the model and its benefits to both businesses and investors, and he explains how crowdfunding will continue to make an impact on ecommerce companies in the decentralized future.
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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Transcript:
Stephanie:
Welcome back to Up Next in Commerce. This is Stephanie Postles. And today we're talking to David Koifman, the head of growth at Kickfurther. David, welcome to the show.
David:
Hey Stephanie. Great to be on the show.
Stephanie:
I'm glad to have you. So I was looking through your background and I was hoping we could start there because I saw that you've been in sales and partnerships and business development, and it seems like you've had a wide ranging career. So I wanted to hear a little bit about what you did before Kickfurther, and what brought you here.
David:
Before Kickfurther? I was in marketing right out of college. And then I went into the world of startups in financial technology. I began as a sales rep and grew within a small organization to a much larger organization, led the team, and basically built out sales account management partnerships. And then we were getting to a stage of growth where I wasn't feeling the excitement that I initially felt and joined the team at Kickfurther to do it all over again. So I've been here three and a half years. It's been awesome. We've grown tremendously, and I'm very excited about the next few years to see where it will go.
Stephanie:
Awesome. So you've always, always had the startup bug, where you're looking for that crazy hectic environment, fast growth.
David:
Yeah. It's like I see myself as a sales guy who doesn't like just selling. What I like is building the sales process, building the team, understanding the customer. So a little bit more beyond just knowing individual customers and building a book of business.
Stephanie:
Yep. Got it. So tell me a bit about what Kickfurther does.
David:
So Kickfurther solves a unique problem that every consumer goods business faces in their early stages of growth. You'll see a lot of companies are funding on platforms like Kickstarter, Indiegogo. These are crowdfunding platforms where businesses raise money to fund their first production run. Production run is when a business is producing inventory. Inventory is the product that they sell. So as that business completes their crowdfunding campaign or determines that they have product market fit, they will need to come back and order more product. Sometimes, they're buying that product from a supplier, maybe a manufacturer in China or here in the U.S., somebody that produces a finished product, and then they receive it in their warehouse and they sell through it. Sometimes they're buying a bunch of raw materials and making a product themselves. Usually that's the case in food or some health and beauty applications.
David:
But the bottom line is that costs a lot of money, and the faster the business grows, the more they have to invest into inventory upfront. You have to pay for that inventory, it takes months to produce, and then you get it into a warehouse and then you start selling it to customers. And then your customers start paying you. So there could be a long amount of time from when you need to outlay that cash to produce the inventory until you're able to recoup that revenue and put it into the next production run. So as businesses grow, they encounter this cash flow pinch, and Kickfurther solves that pinch. We have developed a marketplace on kickfurther.com, where we will vet companies and structure deals. And then a community of users will come to those deals and participate in purchasing the inventory for that business. The business will then produce the inventory, sell it, and pay back Kickfurther and the users who participated in the deal; we'll make some money and get to do it all over again.
Stephanie:
Yeah. Very cool. It reminded me of, I saw quite a few real estate investment platforms like this too, where you get the fund, the next three or whatever it may be. So it seems like they're popping up in different ways to have a Kickstarter approach, but also getting people in the market who have the funds to be able to fund this inventory or investments or whatever it may be. So is that the main way that Kickfurther is different, where it's sourcing investment from the community instead of traditional lenders or actual investors?
David:
Yeah. So I mean, what we're doing is using the power of crowds rather than financial institutions. There's a lot of solutions out there that take money. They borrow money from banks and other financial institutions, and then present it to businesses and take a cut. And what we're doing is creating that opportunity for any individual on the internet, somebody who has money sitting in their bank account, and they want to use that money to make money by participating in a purchase of inventory for a consumer goods business. And so what we do is, it's not a loan. It's not an investment, it's actually a consignment agreement. So what we're doing is purchasing inventory for a business and consigning it to them to sell on our behalf. And as the business sells that inventory, then that triggers the consignment, and then we invoice them for it and they buy it back plus their cost of funding.
Stephanie:
Got it. Okay. So how do you make sure that you're bringing on companies onto your platform that won't make you nervous, where it's like, are you actually going to sell all this inventory? Because I'm not trying to cover that cost.
David:
Yeah. Well, there's a pretty thorough diligence process that we go through for every business that goes on the platform. We evaluate everything from their revenues to their supply chain, to how they distribute that product. And it's all verified through documentation. So it's not like anybody can come to us and say, Hey, we need money," and then just go up on the platform. There's a diligence process, just like there would be going to a bank or any other financial institution. I would say our uniqueness is we look at supply chain and distribution, and we assess risk in a very specific way. It's different from a bank. So some of our customers, everybody wants to go to a bank. Bank money is the cheapest. You want to go to a bank and get a line of credit and fund your business that way.
David:
However, if you're a small business, whether you're a restaurant or a clothing store, the bank looks at you the same. They say, how long have you been in business? Are you profitable? How much have you sold? Whereas we're looking at a very specific sector of small businesses that are consumer goods, businesses with supply chains. And we understand the intricacies of that supply chain and then how they get that product to their warehouse, get that product from the warehouse to the customers, and collect that money through their distribution channels. And so we use that information to determine who has access to capital on Kickfurther.
Stephanie:
Got it. Yeah, what's cool is that you guys are acting as like the trusted source, so that the community doesn't have to do as much due diligence, or I don't know if they do any at all, but you're acting as like the mediator, to be like, "We've done all the research. We know this company, and it's for the most part trustworthy," and then people can come in and fund that based off of your research and due diligence.
David:
We do verify all the information that's presented about the company. The individuals still do decide which deals they participate in. And that's based on what they read in the public profile. Some of them will go investigate more. Some of them will actually ask questions on the platform. So you have the ability as a participant to ask the owner or CEO questions before you participate, or during the deal, about distribution or how they're making products, or what if they're worried about competition? Any topic is welcome. There's a lot of additional diligence that an individual can conduct before they make the decision to participate.
Stephanie:
Cool. And is there a risk rating of, okay, this company is more of a startup one, this is going to be their first time raising money here; we're going to give them a risk rating of this? so maybe you have a higher payoff because of that if they end up selling all the inventory, or how do you guys think about the risk-based approach when it comes to getting investment?
David:
It's not as simple as just boiling it down to a one to 10 scale or something like that. But there's a lot of categories which each one of the customers that we fund will be shown in. And so you can look at how many years in business, what their revenue range is, how many different wholesale buyers they have, how many times they've gone through the supply chain and produced with their supplier. So there's a number of different elements that, that are categorized in terms of risk.
Stephanie:
Got it, cool. And what is the average return for someone? If I were to go in there and invest right now in a deal, is there an average range of what you make over one year or that a longer time horizon?
David:
So the deals range in duration from two to 10 months. So the way we compare deals is on a profit per month basis, and businesses will offer anywhere from one to two percent per month. And so you can annualize that in a way where, if you participate in a deal and then that money comes back to you, then you can redeploy it into another deal. And if you continue doing that, let's say 1.5% a month will translate to about 18% per year.
Stephanie:
Got it, cool. So what kind of struggles do you see ecommerce brands having right now when it comes to ... Obviously not having money to fund inventory is the high level problem, but maybe what kind of sticky situations do you see brands getting in by either waiting too long to get funding or not even thinking about it. What are some stories that you have around the whole inventory funding?
David:
Yeah, I think the biggest thing to do is to be proactive and understand what solutions are out there and how to use them before that need comes around. Because being desperate is the worst time to be looking. And if you've run out of inventory as a business owner, you're missing out on opportunities to sell. So like you could have a really successful Q4, and then you get to Q1 and people still want to buy your stuff, but you're all out. And then you placed an order with your supplier, and the supplier takes two months to produce. And then maybe you're in a position where you have to air freight instead of going on the water and you have to pay a lot more money to get it there faster. So there's all sorts of obstacles that come into play. And that's ecommerce.
David:
A lot of the businesses that we work with are multi-channel sales. So they're selling ecommerce and then they're selling to target or Best Buy or REI. And those companies will place orders, if you don't deliver those orders when you say you will, then you're probably going to lose that opportunity or at least jeopardize it in the future. So it's important to make sure that you have the inventory ready when you're going to need it. And you also don't want to have way too much. So if you buy a lot, and then you don't sell at the rate that you expected, you have a lot of cash sitting in the form of inventory in your warehouse. Sometimes it's going to go bad, if it's a crude product or it's just cash that you want to spend on advertising to sell the product, but you can't because you don't have it.
Stephanie:
Cool. So if I'm a new brand and I'm looking to crowdfund my inventory, what are some best practices that attract the investors in the crowd? What kind of things do you see connecting with people? How would I write up a good post right now to attract funding for someone to help with my inventory?
David:
The most important things are that you've done it before. So we don't work with businesses that are doing their first production run. We did in our very early days, and, as you can imagine, it's much higher risk. So we only work with businesses that have at least $150,000 in sales. And once they've demonstrated that, it's good to talk about how you work with your suppliers, what sort of things you do to ensure that you're going to receive the product that you want to receive within the timeframe that you plan on receiving it. So being conservative with time estimates, making sure that you have testing in place so that once your supplier says the product is ready, that somebody goes in and looks at it and you don't get a bunch of broken stuff.
David:
And then once it arrives, it's important that you have reliable distribution. People want to see good reviews. People want to see lots of reviews. And I would say, if there's somebody who's selling to a wholesale customer and they just have one customer who is placing large orders, that's pretty high risk. Because if that customer decides they don't want to buy anymore, who are they going to sell that product to? So those are the kinds of things that users on Kickfurther are taking a look at, reading through the profile, to decide if they're going to participate. One thing I will say that we haven't touched on is how fast these deals fund. So it's good for us at this point. It means that there's an imbalance in the marketplace in our favor. So the deal flow that we put up gets funded oftentimes in minutes.
Stephanie:
Yeah, I know. I noticed that, because I'm like, "Hmm, maybe let's see if I should investigate these deals." And I think it looked like everything was sold out, or it was all met to the limit. At least the two I was looking at. And it seemed like it happened really quick, where I'm like, "Hmm, this is competitive."
David:
Yeah. It's super competitive. So we have the ability to scale our deal flow pretty substantially without having a concern for deals funding fast enough. And as a user, if you're thinking about participating, you're going to get emails, you got to act on it fast. And so we put deals up. They have about 24 hours before they launch. And they always launch at 5:00 PM Eastern Standard Time. And if that, there's hundreds of people that are clicking, trying to get into deals like within a minute or two of 5:00 PM, when they usually fill up.
Stephanie:
Wild. I think you need more deals then for people to get in on.
David:
Yep. That's my job. I've been working hard on it. So we we've grown quite a bit. We have aggressive growth goals for 2021, and so far we're on track. It's early, but it's an exciting time to be at Kickfurther.
Stephanie:
That's great. So what brands are you trying to get on the platform right now? Who are you trying to convince to get on there?
David:
There's a lot of repeat customers, and we have really good retention. We average over four deals per customer, but they're all across the board. We're pretty product agnostic. We serve anybody who either buys or makes physical goods and then sells them with the exception of regulated things like alcohol, tobacco, firearms, THC, anything that's temperature controlled or perishable. Because of the consignment agreement nature of the contract, the inventory is our collateral in these deals. So we don't want it to go bad. And we want to make sure that it is available to anybody who participated in the consignment, they have to be able to purchase it.
Stephanie:
Yep. Oh, got it. So if the inventory doesn't sell out, you guys essentially have it in a warehouse, and me as an investor could be like, "I want one of those t-shirts then." Is that how to think about it?
David:
Yes, that is a way to think about it. So if the business is unable to sell the inventory, and they're unable to pay back Kickfurther and their users for the cost of it, then Kickfurther, based on our contract, will require a delivery of that inventory to us, at which point we'll attempt to sell it, and all the proceeds of that resale goes to the participants in that agreement.
Stephanie:
Have you had to do that yet?
David:
We have had to do that. We've been around for seven years. So it's happened, but these days it's very infrequent, and that's why these deals fund so fast as people who are participating on Kickfurther have great returns and they tell their friends about it and they the deals. So the performance, overall, is strong.
Stephanie:
Yeah, got it. So when I'm thinking about, as a business myself, getting credit and working with banks, you're building up your business credit worthiness. When you get traditional loans, I know we had to take on a couple of last year and it does help being like, "Oh yeah, we took on this size loan, we paid it off." How do you view crowdfunding in that kind of sense? Is it building up a business's credit worthiness or is it so siloed still at this point that it doesn't actually build up the financial view of the business
David:
In some ways, it does, and in some ways it doesn't. It isn't considered debt to them. So it doesn't operate the same as taking out a loan and paying it back. But there's a lot of transactions that still occur that show the business is selling and making money. So their business credit will improve as a result of that. But yeah, it's kind of a mixed situation.
Stephanie:
Yeah, yeah. That seems tricky. Because it seems like a really good avenue to not only help the businesses, but then also bring in a lot more players. It seems like it's much more decentralized, which is great. The whole world's moving in that way, but if you can't really use it, be like, "Oh, look at these three different loans I have right now, the market funded them." I feel like the world needs to move to that place, the more of that crowdfunding and the decentralized approach is coming to the forefront.
David:
Well, the world is moving in that direction, but what's really cool is Kickfurther moves in that direction with the clients themselves. So as we establish a relationship with a business and they come back for repeat deals, we increase their limits substantially. And they have access to lower rates. Basically, they're earning credibility with this community. So let's say they offer one and a half percent per month on their first deal and they complete on time, and then they come back, they can offer less. It's really in the hands of the business owner what they want to offer, and the community, the marketplace, will decided if that business has earned that rate and are able to fund it at a lower cost. So as a customer at Kickfurther, as your revenues grow, you'll be able to take on more funding with Kickfurther, buy more inventory, and do it at a lower cost.
Stephanie:
Got it, okay. So you're building up that credit worthiness, just in a different hub, but you're doing that by just performing well and, yeah, that makes more sense.
David:
We will work with businesses who are starting at 150,000 in annual sales, and all the way up to 30 million. So there's quite a range of growth in service by Kickfurther. There's businesses that, once they reach a certain stage, either they're not accelerating as much as they used to and they have the cash flows to fund their own inventory and continue producing, or there's other businesses that have been long and around long enough where they are now exciting to banks and other financial institutions that have very low cost lending.
Stephanie:
Yep. Is there any guidance or any point where you're like, "Oh, you should probably just reinvest revenue or profits instead of getting a loan." Do you ever give guidance on that? Because I could see a lot of businesses always being like, "Oh, at such a low rate, why don't I get loans?" But then quite a few businesses have a lot of cash on their balance sheet too, and they don't know how to fully deploy it, but they're just so used to getting low interest loans. Is there any point where you've actually advised a company like, "You guys are good. Maybe you should reinvest profits." Or do you even see it from that angle?
David:
I don't think anybody's coming to us if they don't want additional capital. And I am always very transparent with everybody, and [inaudible] make sure you know, what your options are. We don't make money off convincing you to do one deal. We want that long-term engagement [inaudible] coming back. But I think the reason people come to Kickfurther is they have an opportunity with a buyer, or sales are growing so fast and in a channel where they want to launch a new product, they just don't have the cash to be able to do that. And that's why they're looking for funding solutions. And maybe they go to their equity investor and they say, "Hey, I need some additional capital to be able to take advantage of this opportunity." And the VC says, "You know what, why don't you seek some non-dilutive capital for that? That's a much better use of, why give up five or 10% of your ownership just so you can produce the next run when you're going to have to do another one and another one and another one after that?"
Stephanie:
Yep, yeah. That makes sense. So, since you're deep in the crowdfunding space, I'm sure you just see opportunities all around. So much stuff could be crowd crowdfunded. Where do you see that world headed? What kind of new opportunities do you see popping up in that space? Or what do you think is missing right now, where crowd funding could be meeting a need?
David:
I think there's a lot of money and power in crowds. And there's the ability to cut out middlemen and big entities that have been around for a long time and empower individuals to help these business owners grow. It's also not just the money that's coming from them. Why are people deciding to participate in these deals? A lot of them believe that they have an advantage and they have the knowledge in the space. So maybe they want to help the business owner. I've had plenty of users come to me and say, "Hey, I actually work in this space. And I have a couple of distribution opportunities that I'd like to connect with your client about." And I'll make a direct introduction, and all of a sudden they acquire a new sales channel. Or somebody who's got a lot of money and they want to do a side deal. Yeah, I am looking for equity investors, let me connect these two people.
David:
So those kinds of things happen rather frequently. And that's not going to happen when you're working with a sales rep at a bank. Because everything's coming from the bank's bank account. And actually the money that the bank is using is just coming from account holders and their deposits. So if you're storing money in a bank, the bank is using that money to lend to businesses and whoever else. So we're cutting that out of the mix. And I think it's good for everybody involved.
Stephanie:
Yeah, I think it's a good reminder too, about diversifying investments and why finding opportunities. Yeah, you don't want to just keep your money in a bank and let inflation just wither it away to nothing. So, yeah. It's cool to hear about opportunities like this that are very different, but will definitely help diversify your portfolio.
David:
Yeah. And it's really fun, from our standpoint, to work with all these young business owners. I mean like the business is young, not the individuals per se, but some of them just started a few months ago and they've had some real success. Some of them, it's a family business that's been around for a couple of generations, and all of a sudden they're discovering that ecommerce is a way to skyrocket the business. They have a really good product; they just haven't put it in front of the right audience. And they're figuring out how to make this happen financially, and we're there to help them. And it's just really great to be side by side with them as a partner and see that growth.
Stephanie:
Yep. Yeah. It seems like there's also could be a lot of international opportunities. I know that's a lot more risky once you start going that route and finding people who are doing much smaller scale ventures and being able to help back that, then turn into a bigger thing. But I have read a few stories of finding people doing amazing things in other countries, but they just don't have any kind of funding. Or they can't buy inventory for even 10 things to sell. And yeah, it seems like there's a lot of opportunity around the world, but of course it'd be much more risky trying to vet those projects and companies.
David:
It is definitely a challenge. It's something that we're considering doing down the road. You probably start with Canada and some EU companies, but there's different regulations in different countries. And also, if we get into a bad situation with a client, we have to pursue them legally. So working in a foreign legal system is very costly, and we try to help businesses out, and so our margins are pretty slim. So being able to afford that kind of activity is probably a ways down the road for us.
Stephanie:
Yeah. So what are you guys looking forward to for the next, maybe, two to three years? What are you planning for? You said you were going to be growing really quickly this year. What kind of things are you putting in place right now and where do you want to be in the next couple of years with Kickfurther?
David:
I'd say we want to be a household name for inventory funding. A lot of people are starting their own businesses. And we want to create an opportunity for them to grow at the rate that they're able to grow and have access to capital. And so our goal is to put our name out there in a way where it becomes recognizable to all business owners who are in the right space for us.
Stephanie:
Yep. Very cool. Yeah, Amazon be a good space, but then sometimes those one-off products that are being sourced and sold on there. So maybe that's not the best space. I'm not sure
David:
Those people are business owners and growing too. So if you have one product that's selling really well, and that's what you want to focus on, sure, that's great.
Stephanie:
Cool. All right. Well, let's shift over to the lightning round. The lightning round is brought to you by Salesforce Commerce Cloud. This is where I'm going to ask you a question and you have a minute or less to answer. Are you ready, David?
David:
I'm ready.
Stephanie:
All right. What one thing will have the biggest impact on ecommerce in the next year?
David:
Probably the state of the world. So the ability that people have to shop and travel and continue to live their lives the way they did before lockdowns and quarantine.
Stephanie:
Yep. All right, cool. If you had a podcast, what would it be about, and who would your first guest be?
David:
I don't think I would have a podcast.
Stephanie:
What would you have then, a clubhouse? What would you have then?
David:
A clubhouse. I think that, honestly, I was a little bit foreign to this whole world of supply chain and inventory finance when it came to Kickfurther, and I've discovered a passion for helping these business owners. So I think the clubhouse that I would have would be one where business owners get together and talk about different solutions that help their business grow, and what vendors they use and what are best practices, just an exchange of information across business owners and vendors.
Stephanie:
I like that, because yeah, I think even thinking about, "What manufacturer should I use? And how do I even source those people?" Still always feels like a black box and it's referrals. Or you have to know someone and that'd be a good one.
David:
We make quite an effort to make those resources available to our customers. So, as we go through our diligence process, we cover a lot of topics, and oftentimes customers will identify pain points, and we will say, "If you're interested in these, this is a partner of ours, or we've got a few different options or people you can talk to, to learn more about the solutions in this space."
Stephanie:
Yep. Cool. What's up next on your reading list?
David:
Can't Hurt Me by David Goggins.
Stephanie:
Okay. Nice. Where are you traveling to next when it's easier to travel again?
David:
In two weeks, I'm traveling to Salt Lake City to go skiing, but that's a drive for me.
Stephanie:
Yeah.
David:
Big skier. And whenever the snow comes, I'm out there.
Stephanie:
I love that. All right. And then the last one, what is your favorite piece of tech that you're using right now? It can be personally or with the business.
David:
Don't hate me, but it's my iPhone 12 Pro.
Stephanie:
What's to hate? I have the same thing. It's my favorite. It has the best camera
David:
I bought it for the camera, but it's really fast. It's a computer in my pocket that does pretty much everything my actual computer does.
Stephanie:
Yeah.
David:
Super valuable piece of tech.
Stephanie:
Yep. I agree. All right, David, thanks so much for joining the show. Where can people find out more about you and Kickfurther?
David:
Kickfurther.com is the best place. You can find me on LinkedIn, David Koifman, and I look forward to connecting with anybody who's interested. Also, if you're a business owner listening and you're interested in funding with us, you can go to our website, fill out an application, or you can just email me david@kickfurther.com.
Stephanie:
Yeah.
David:
Thanks so much, Stephanie.
Stephanie:
Cool.
David:
It's good to be on here.
Stephanie:
Yeah, thanks, David. All right. See you.
David:
Take care.
What happens when you can’t own the direct relationship with your customer? In the ecommerce world, you would think that’s pretty rare, but companies in big and highly-regulated industries deal with this problem daily. Anheuser-Busch is one of those companies and its team has had to be innovative in the ways they gather insights and create relationships with customers. Arabella Watters leads Category Development and Insights for ecommerce at Anheuser-Busch, and she is helping bring creative solutions to understand exactly who AB’s customers are, how they shop, and what they’ll want in the future.
On this episode of Up Next in Commerce, Arabella dives into the roundabout ways that AB has had to gather data, and she explains how important it is to have a two-way relationship with retailers in order to share data that is useful to both parties. Plus, she explains why we can all learn a little bit from our international peers and what sorts of innovative approaches ecommerce brands can implement on their own right here in the U.S. Oh, and Arabella teases some exciting influencer content coming up soon that AB put together with Travis Scott that you’ll definitely want to check out. Enjoy this episode!
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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Transcript:
Stephanie:
Hey everyone, welcome back to Up Next in Commerce. This is your host, Stephanie Postles, co-founder and CEO at Mission.org. Today, we're chatting with Arabella Watters, the Head of ecommerce for Category and Insights at Anheuser-Busch. Arabella, welcome.
Arabella:
Thank you. Happy to be here.
Stephanie:
I'm excited to have you on here. Is it too early for a beverage? Or ...
Arabella:
Yeah, it's only 10:30, otherwise, I'd definitely would be having a seltzer next to me, for sure.
Stephanie:
Yeah. So speaking of seltzer, I was think that you're the perfect person to talk about all things D to C alcohol, not just because you're working at Anheuser-Busch, but because of a company that you actually started out of college that I saw you were taking an entrepreneurship class, and you actually took your project and ran with it, and I want to kind of start there because I thought that was really cool, and I was like that's impressive. Probably no one does that that I know of unless maybe you're at Stanford that's a little bit more normal, so tell me a little bit about that.
Arabella:
Yeah, definitely. I think it's a good segue into how I got to AB for sure. So I founded that company, Mojo, with my partner, exactly like you said, during college. So we were taking an entrepreneurship class, had this idea, and just decided to run with it because it felt like a really kind of rich and impactful idea that could actually go somewhere. I'd say it's super interesting when I think about how it kind of came to be and came to fruition. My partner and I at the time had both been studying abroad during our junior year. We actually were in South Africa, and had just a lot more exposure to kind of the alcohol and drinking culture in a less regulated place, which sounds really interesting and funny, but in South Africa, you can buy wine whenever, the drinking age is a little more relaxed and people are getting a bottle of wine, having a picnic, going for a hike, all of that.
Arabella:
Kind of more casual, outdoor, daytime drinking behavior. And we found it very, very, one, fun, and two just interesting and kind of something that was missing from the alcohol market in the US. So I've always liked wine. I grew up in California so it was something I was familiar with, but we kind of had the realization that wine in the US was very much so kind of stogy, a lot of different options without a lot of different differentiation, and the majority of the time it's very heavy red wines that make you fall asleep, and hard to drink.
Arabella:
So the insight that I kind of had was that there really was this growing opportunity for more easy to drink, lighter, social beverages that could be portable, you could take them on an adventure, you could drink during the day or during a more active activity. And I'd say so that was really kind of the thought that led to Mojo, which was basically a wine spritzer based off of this drink in Spain that was wine and Coca Cola. I think it actually was such an amazing experience to have and to dig into those insights and build that brand because now that was five years ago, but we're seeing that same trend of easily more portable, lighter, more sessionable drinks like seltzers or canned cocktails are really growing at such a huge speed. So I do feel validated that one, that was an insight that was definitely something that was a real trend that was growing, and two it really kind of exposed me to the alcohol biz early on.
Stephanie:
You were just ahead of your time. You're just a futurist.
Arabella:
I like to think of that too. It's funny though, now looking back when we were pitching it, it was kind of just this counter culture idea of oh you want to put wine and make it sparkling and you think people are going to drink wine outside during the day? And now people are chugging seltzers left and right during the day, so it's pretty much the same thing. So it's nice to feel validated now for sure.
Stephanie:
I'm sure that was a really good experience. So what ended up happening with that?
Arabella:
So I think the other less fun and more kind of realistic part of the experience was getting exposure to A, the legal landscape of alcohol in the US, so super challenging, a lot of barriers to entry whether it's getting permits, getting the ability to be registered as a wholesaler and selling to retailers and all of that stuff. So I'd say that in itself was challenging. We got through it, but the bigger challenge was just in order to really have the scale to get a beverage company off the ground, you need to have a lot of capital, and like you said we were pretty close out of college, had done a couple entrepreneurship pitch contests to get some funding and had gotten some funding through crowdfunding sites, but didn't have a huge amount of money at our disposal.
Arabella:
So I think what kind of is full circle for me is while we had to make the hard decision to not continue pushing on with it since it was so expensive to be getting a proof of concept, now I get to be at AB where it's such a huge scale operation where those things aren't a problem. So I like to think I can take some of those learnings and apply it to my job now.
Stephanie:
Yeah. I was actually just going to say you were in this kind of D to C world if you would have been fully launching and everything, and I'm sure Anheuser-Busch saw that and they're like that's exactly what we need, someone who was ready to start talking one to one to a consumer, like have the idea to do that. How was it when you transitioned to Anheuser-Busch and you're working on ecommerce for category and insights and all of the sudden you're like oh I actually can't talk to my consumer directly, it's like a roundabout three tiered system that I don't even know who I'm selling to really.
Arabella:
Yeah. You hit the nail on the head. It's definitely adjustment, it's definitely different. I think when I was thinking of joining the team, what I was really drawn to was exactly what you were saying, that there kind of was this gap in understand of who the ecommerce alcohol shopper was, and I love insights, that's definitely my passion point of my job. I love the whole job, but understanding the shopper really is what kind of gets me up and going in the morning. So yes I was drawn to this new channel that it was a new way people were shopping, that there really wasn't a huge amount of information available.
Arabella:
I think now being actually faced with it and not having access to direct sales data and to actual onsite metrics because we're working through the three tiered system with retailers definitely has been a challenge. Although I do think it's really kind of forced me to think creatively and think about how we can structure our research and our insights approach, and take directional insights that we have from in-store and take them to online and say what is similar here, what's different? It's pushed me to kind of go above and beyond to think about how to approach the problem of who the shopper is and that in itself has just been incredibly valuable.
Stephanie:
Yeah. I was thinking that too, you really have to get creative to get data in your industry, and I thought what AB is doing around merchandise and shops and all that is really interesting. I saw a quote where someone at your company said, yeah, we essentially launched these stores and we consolidated them so that we could get shopper data, because we really can't get that easily anywhere else on ecommerce. So tell me a bit about that approach and do you think the people buying merchandise are the same ones probably buying the alcohol in store?
Arabella:
Yeah. I mean it's super interesting to think of that. I don't know if it's the exact same shopper always, but what I do know is that anyone who's probably buying merchandise from us is definitely a brand loyalist, because you're not going to want to wear a Bud Light sweatshirt if you don't really love Bud Light and feel really strongly about the brand.
Stephanie:
But I saw a crop top in your store and I'm like that's cute. I don't know if I ever would have worn like a Busch branded T-shirt, but that crop top, it's something. I like it.
Arabella:
Yeah. You know what, the Bud Light merch is actually really fun. I have a beanie that I wear sometimes and I get endless teasing from my friends but I love it. So yeah, I mean I think it's definitely brand loyalists, or to your point, people who feel, each of the brands that are within AB have such strong brand voices and such legacy and such power pretty much in the market, and so I think the merchandise, while it doesn't directly relate to us selling beer, it does do I think some great work in furthering the brand awareness and people feeling like they're connected to the brand and want it to be something that's part of their day to day, and I think the ability for us to, I think where I'd love to do a little bit more work with the merch business is thinking about how we can kind of create more of a one stop shop experience, so how can we partner with retailers to get that Bud Light crop top paired with a Bud Light six pack and get it bundled together so we can merchandise and sell that in one fell swoop, because I think that sort of would be the ultimate goal that we can get the shopper having the actual product and also that brand loyalty experience.
Arabella:
But I know that's a huge, huge priority, because to your point, we can't capture the data, but I know with the merch biz, that's a big focus for our next year in 2021.
Stephanie:
Yeah. So what other creative ways are you all going about to find customer data so then you can personalize that experience in one way or another, like what are the things that you're trying out that you're having success with right now?
Arabella:
So we pretty simply just work as an insights-driven org to be bringing as much data that's specific to the retailers as we can.
Stephanie:
Yep. And how do you think about out of stock issues? So we just had a guest on from Intel where they were saying they're trying to work with all these retailers, he was from the internet of things group, and he was saying there's so much opportunity with retailers where they oftentimes don't understand their inventory, things can remain out of stock for an entire day and they'll say that they're on it but they actually had no idea, how do you handle that from a tracking perspective to make sure that your retailers are keeping your stuff in stock and it's being tracked properly?
Arabella:
Yeah. So that definitely has been one of my big goals for this year is to really get more of a data specific perspective on out of stocks, on how we're doing on the shelf online, everything that you're saying. So we actually just partnered with a digital shelf tracking company, Profitero, I feel like you guys maybe have heard the name before. So our big plan with them in the next year is basically to take on all those things you're saying and give it more of a data lens so we can be reporting out weekly and tracking what products are out of stock and what we should be communicating to the wholesalers to be getting them updated and fixed, because we know that from an ecommerce perspective, out of stocks are a huge, huge issue because in store, you're out of one pack of Bud Light, well the shelf is stocked in a way that Bud Light is a brand that has multiple SKUs, you could easily just grab the other one that's there and go on your way.
Arabella:
Online, when something is out of stock, a lot of retailers will simply remove it from the site so you don't even see it, so that recognition that we get with our brands is completely gone if the product doesn't even show up on the site, and then you see them moving to a different competitor or substituting in a different way. So I think that really it's a huge, huge piece, and it's especially huge with our pure play partners, so those who are only online retailers, because we're able to have a little bit more of a direct connection to them as well and work through those things.
Stephanie:
Got it. Cool. So the one thing I'm thinking about too is attribution around marketing campaigns and things like that. How do you think about seeing if something that you're doing out in the world is actually impacting sales, if once again you have to be like let's look at our retail partners and see what's happening, or how do you think about attribution in your industry?
Arabella:
Yeah. I mean it's definitely a challenge.
Stephanie:
[inaudible].
Arabella:
It's a challenge, it's a constant challenge. It's something that I'm always working on to try to, again, thinking creatively and outside of the box, I think one way that we are working on thinking about how our campaigns are performing is we track our placement on the shelf on retailers, so what percentage of the first page we have, what percentage of the first five spots we have, and the way that a lot of algorithms work with the retailers is that they're based on sales and conversions. So what you could do is sort of back into how a campaign or product is doing by looking at the change in where you're placed up on the site, and that's something that's like of course, it's definitely there's room for error there, but I think from a directional standpoint we're able to see, okay we ran a campaign on Michelob Ultra Seltzer all of January and it started at the bottom and now it's at the top. That means that if we were driving to that retailer, it worked. Right?
Arabella:
So it's a little bit more binary in that we're not able to get so, so granular, but that's one way I think from the category and the retailer perspective we're able to either check or not that something is working.
Stephanie:
Man, you're in a tough industry.
Arabella:
Yeah.
Stephanie:
I haven't had to ask questions like this on any of my episodes, but it makes me wonder, oh actually except for Haus, when I was talking to the Haus founder.
Arabella:
I listened to that one.
Stephanie:
Okay yeah, that was where I learned about the three tier-system, but it makes me wonder is a three tier system going to go away? Because it seems like there's companies right now who are kind of just working to get around that system, and once that starts happening it's like maybe that system's just broke, and with the move to D to C, why would it still be there then if everything else can have access to the consumer, it seems like this industry should too, with the proper protections.
Stephanie:
Yeah, that just feels so odd to me. Especially the world that we're in today, and just thinking that you can make something and then not be able to sell it on your own just feels very archaic in that you have to go through a retail location or whatever it may be.
Arabella:
Yeah.
Stephanie:
It just feels not very business friendly, but that's [crosstalk].
Arabella:
It's super interesting also to think about as marijuana is going to eventually I'd imagine be legal on a federal level, then how are they going to regulate that as well, because it's sort of a mirror industry to us, is that going to be something you also have to go through a wholesaler
Arabella:
But I think that's another probably will give us another opportunity to have the bigger conversation because it's sort of like if THC and marijuana is able to have this direct to consumer business relationship then why can't alcohol as well?
Stephanie:
Yeah. It sometimes seems like older industries are punished from the older times, where as you're new and up and coming, you move so quickly where it's like you can get much further ahead where it's hard to pull you back in when you're already like well now I'm out delivering everywhere in California.
Arabella:
No, it's so interesting. I think that's such a great point when you think about the Ubers or AirBnBs or the share economy of the world where they just absolutely turned old industries on their heads and didn't really think about the regulations, and then they're so big now that it's harder to go backwards.
Stephanie:
Yeah.
Arabella:
Exactly. And overturn those things.
Stephanie:
I think it's good sometimes. It's good to push the regulations forward and bring them up to the times.
Arabella:
Yeah, I agree.
Stephanie:
So the one space that a lot of guests have talked about is what's happening in China. And what was interesting is I saw that AB was looking at China now as kind of the market that they use to bring a lot of learnings from ecommerce back to the US. So what are you guys seeing there and what kind of learnings have you actually been able to bring back to the US and apply versus what have you been like whoa that's just such a different market, it's very different there and we kind of keep it siloed when it comes to what we're doing there versus in the US or in Brazil or all around the world?
Arabella:
I'll start off by saying that while I work on the North America business, we do have a global e-retail center of excellence where we meet frequently to talk about best practices and get inspiration, just like you're saying, from markets where while it may not be cookie cutter to our market, we're able to see what they're able to do and how it performs and think about how we could apply it to what we do. So China is definitely an amazing example. I'm always thinking about what they do kind of as the best case scenario for ecom, I think we have to always take it with a grain of salt just because there are legalities, to the convo we were just having, they can sell directly to shoppers at any point I believe in the shopper journey.
Arabella:
So that's amazing. And we've really been able to I think one of the things that struck me the most, we had the China team present to us last year on double 11, the singles day, and what they have been able to do with our brands there like Budweiser being one of the huge ones, and kind of just creating this huge omnichannel event where we're taking over every single possible touchpoint for the shopper, whether it's a vending machine, or the apps on their phone, or the actual grocery store, doing activations where there is a concert and then you can click the video and get your Budweiser delivered. Things that sort of feel to me like this crazy world of digital, physical connection that I think in the US we just don't have yet in general, and we definitely don't have for alcohol because it's so regulated. But I think that's something that we try to take inspiration from and think about okay, while we can't have a Budweiser delivered in three minutes from someone's cellphone, we can think about how important it is to take over from a branded perspective like multiple touch points from the shopper journey, and communicate with them not just during the shop on the retailer, but with a more interactive experience before.
Arabella:
I know our D to C team has done some awesome things like international beer fest which was I think in August, and then a New Years Eve concert festival series, those kinds of things, where we're getting shoppers on, they're interacting not only from a transaction point of view, but from just feeling close to the brands, having an experience in a time when we need them even more so, and those have been hugely successful. So I'd say that China is an amazing example. I would love to go over there and work, I think I would learn so much. It's kind of the pinnacle of not having to be regulated versus we're much more in that regulated space.
Stephanie:
Yeah. I was just chatting with a guest, Andrea, yesterday, where she said they brought an influencer from China to Harvard so the Harvard students could see it in live and action, so they pulled her screen up so they could see what was on her phone or something, and then she was selling Harvard shirts and sold like thousands of them in minutes. She's like that's when I realized that's crazy. And I don't know if that is the same thing that would happen here. You definitely see influencers driving sales, but I don't know if it's to that degree of and I have a pen, and now 10,000 of them just sold because I said I had a pen. I don't know if it's to that degree, but it's very interesting to watch.
Arabella:
Yeah. That's a great question. I know that influencers, they've been trying to make all the social platforms so much more shopable this year, and I feel like I don't have stats from Instagram, but I feel like it's not quite there yet to the point of what you're saying where an influencer can just be selling things and have this huge, huge power to be creating transactions. But I think another interesting thing about the whole China piece with that is that so much of their tech is just integrated in whether it's the social media, it's with your payment system, it's with the equivalent of Amazon, and so it's just a lot more seamless. But yeah, the power of, we certainly have people in the US who can sell things. Actually an amazing example would be we're doing a seltzer with Travis Scott that's launching in the next month or so, Cacti. I'm super, super excited for it, and I think that's a great example of he partnered with us to create it and he has such star power, so I think it will be incredibly fascinating to see how that does.
Stephanie:
That'd be cool to bring you back and hear how that campaign went, because I think a lot of people have been debating around do big names, of course they will drive sales, but at what point is it authentic versus not authentic? How do you structure the campaigns to make it, sometimes you'll see certain people being like oh I always use this teeth whitener, or I sure love this whatever it is, and you're like do you though? That's very inauthentic. So it'd be interesting to see how you guys create a campaign in a way that's a partnership instead of just a one off, like okay go put this ad on your Instagram and see what happens.
Arabella:
Yeah. It's a great point. I think there's so much influencer marketing that can be so disingenuous, exactly. It's like I love this product. Cool, that's great. It doesn't have any emotional resonance with me. I think with Travis Scott, what the team did was really, exactly what you're saying, partner with him. So he was so in lock step with the creative process and the brand building and the actual liquid itself, that when it came time to, we announced it about a month ago, when that was kind of coming to fruition, he was incredibly invested in having it be successful, and it feels really authentic to actually who he is, like the whole Cacti, Cactus Jack thing, and I think that definitely is part of the hopeful success of it, and yeah I'd love to give you guys an update when it launches in March. I think it's just going to be super, I know the initial stats that we've seen like on social media, it's already the top alcohol following of any brand that's out there.
Arabella:
It's really an amazing testament to how, to your point, how powerful people can be and what is it about Travis Scott that's so resonant with so many people. Is it he's incredibly creative? Is it the whole kind of eclectic side of his brand? Is it because he's Stormi's dad-
Stephanie:
Probably.
Arabella:
And Kylie's baby daddy.
Arabella:
But neither here nor there. He's incredibly powerful, and I think it will just be a good whether it is a smash hit or not, it's a good test to what you're saying about can a person really be the driving force behind a brand?
Stephanie:
Yeah. I would also like to see the lifetime value of that person, is it a one hit like I'm going to try this out? You obviously have to have a great product behind it, which it sounds like you invested heavily to make sure it was good in partnership with him, but how do you keep those people around after maybe the excitement is kind of dying down, how do you make that an everlasting brand and something that people actually come back to?
Arabella:
That really is, exactly, that's the special sauce, that's what's going to make people feel connected to it, and also that the liquid is filling some need for them that they actually like and want to continue drinking. Because there's only, I feel like with consumables, what's always kind of driven me to be interested in food and bev and alcohol is that while there is the branding and the specific need that it's filling, it's also there's a piece of it, you're eating it, you're drinking it, it has to be good, versus I think with a lot of the disruption with D to C brands across kind of industries, there's a lot of copycatting going on and things that are not product driven and really brand driven which is not always a bad thing, but there's not really room for us to do that because if it tastes bad nobody's going to re buy it.
Stephanie:
Yeah. Yep. Love that. So how are you thinking about maybe the next couple years in your industry? You guys had to shift really quickly, I'm especially imagining how big the company is, how maybe certain processes were maybe a little outdated, how did you shift really quickly to focus on ecommerce and where do you want to head over these next couple years?
Arabella:
Yeah. So I think we're in a really strong position because AB has felt like ecommerce has been something that's important for I believe the team started five or so years ago, so really when building the foundation for this channel for a while, but totally to your point, this year has completely transformed the way that we do business, just because the sheer volume of interest from players wanting to get online, the amount of people who are entering into the category online, so it's double the amount of households in the US of people who are buying alcohol online, and just the sheer simplicity of that and the size of the way the industry has grown, our category in the channel has grown, has definitely been a big change.
Arabella:
So I think we were set up for success going into it and it kind of was more of an accelerating and scaling everything that we were doing, so making sure we were supporting more regional partners versus just the Walmarts and the Amazons and the Instacarts of the world. Thinking about how to optimize what we were doing in a really fast way, so just like what we were talking about before, trying to track campaigns and get a green light or a red light on whether it is actually doing well. I think one thing that we worked on during COVID that was a big pivot and I'm very proud of is we created a site called buy beer online, and it is designed, basically during COVID huge boom but not everyone knew exactly where to go to find their alcohol online. We found that a lot of people were searching in Google beer delivery, how do I get beer delivered, buying beer online.
Arabella:
So we created this site that is designed to be bridging that gap and so it has all of our brands on it, and it also links to an ecommerce product locator. So you come on, you can find craft brand that you like, click it, and it will tell you where you can order it for delivery or pick up near you.
Stephanie:
That's smart, so you're optimizing on a new search trend which I know myself personally has been like how to get wine delivered, and being like where do I even start, and I have to download this app or this one, and this one's going to take four hours, that's too long for me.
Arabella:
Yeah. Oh totally. Exactly. We actually should have it where it's like 30 minutes or less.
Stephanie:
Yeah. Important. Sometimes you need it right when you need it.
Arabella:
It's true. I just actually saw a piece of research where it was like a quarter of people are immediately consuming right after, which makes sense. Sometimes, exactly, you need it. But yeah. So that was I'd say something we created like within a couple months during the beginning of COVID to make sure that we had a tool like that to be helping shoppers, and I'd say it's been really strong for paid search like we're saying, and then also for a lot of our craft brands that really relied on regionality and that on premise bar experience, brewery experience. During COVID it was sort of a big issue where shoppers didn't know where to get the craft brands that they loved, so we were able to in a way make our craft website, so a Goose Island, or a Karbach, we live in Austin, make those sites shoppable by linking out to buy beer online so you could get the shopper to an actual place where they could find the beer.
Arabella:
So that's been really impactful and very cool for us to be doing during COVID and I think the more we can do things like that where we're owning the full experience because to your point, we also capture all the data that comes through too. So it's like win-win on both sides.
Stephanie:
Yeah. I just love those stories because it really does highlight the creativity and innovative thinking at AB that maybe you wouldn't have done if you would have had it easier. Like if you would have had that easy one to one consumer relationship you wouldn't have had to think about what are other creative search terms we can go after and content we can create and ways to reach our consumer that a lot of brands don't really have to think like that, so it's really cool.
Arabella:
Yeah. It is really cool, and I think that's one reason I love AB is it's very creative and innovative place. Which I don't know if everyone knows that, but it really is. And I feel like if it was direct to consumer, there's also you can really kind of get caught up in the tactical pieces of things. So to your point, I would just be obsessed with the open rates on my marketing emails and how I'm converting people, which those things are amazing and important but I think we're forced to, like you said, think outside the box and figure out more about our shopper in a way that's kind of a little bit unorthodox.
Stephanie:
Yeah. That's cool. So the last piece I wanted to touch on before our lightning round is how does AB think about their tech stack for, because it's B to B to C, how did you guys have to adjust, if at all, to all the sudden be able to let all these retailers maybe order online in a fashion that was not happening before, like pre COVID, did you have to adjust your back end to make it simple for people to come on and order and make that an easy relationship or what did that look like?
Arabella:
Yeah. So luckily because we have the three-tiered system, we're not actively funneling any sales through our own tech side or back end. Actually what we try to do though is as a lot of retailers have come on in the last year or so is leveraging our knowledge and our partnerships to offer them the best connections. So whether it's connecting a grocery store with the best on demand delivery app, GrubHub or Drizly or whatever it is, and creating those relationships so that they can get on board I think is really what we look to do. I know that that's not a techy answer, but it's definitely what we try to optimize. And then also helping them with the payment platforms too, so helping them onboard with a Stripe, or an Apple Pay, or just at least giving them the tools and the information, it's something that they have to do on their side as the retailers, but we like to try to optimize and help them get to the strongest place to launch as possible.
Stephanie:
Yeah. Very cool. All right, let's move over to the lightning round. The lightning round is brought to you by our friends at Sales Force Commerce Cloud. This is where I'm going to ask you a question and you have a minute or less to answer. Are you ready?
Arabella:
I'm ready. Scared.
Stephanie:
Yeah. Dun-dun-dun. What one thing will have the biggest impact on ecommerce in the next year?
Arabella:
You know what I actually feel very strongly about is the presence basically, the fact that retailers and D to C companies are moving towards creating not just the shopping experience on their sites, but more of a content hub. And what I mean by content hub, not just to say buzzwords, is a place where not only are shoppers coming to buy your products, but maybe they're looking at recipes, maybe they're doing mixology, if it's retail, maybe you're giving them styling options or more information about your products. Really, I've seen more and more companies do this this year as I think it's a two fold thing. It's become the status quo is people know that shoppers love content and social media has been so big in the last few years. And then secondly, as people are more and more at home, more on their phones than ever before, and that's not a COVID answer, it's just true, that if you can capture someone's attention to actually get them engaged and interacting and making everything on your site shopable, I think that's really going to be kind of the bread and butter that can really change your experience or not. And I know that for us, for ecommerce with alcohol, that's especially huge because we're not quite there yet and I really want to get there.
Stephanie:
Yeah. I love that. All right, next question, what was your favorite virtual event that you did at AB in 2020 and how do you think about success for these virtual events that you're saying performed really well?
Arabella:
What a good question. Yeah, I think that the international beer fest that we did in August, so I wasn't leading that, but our general direct to consumer team was, and I think that was incredibly successful because it came at a time when people were A, really starved for that interaction and the feeling of connecting with people and doing something and having something to look forward to. And B it worked in a really strong way where it connected with our brands. So international beer fest had, there was music happening, a few artists who were sponsored by our brands, I think Post Malone did a thing, sang, so there was that element where it was a little more passive, it's encouraging you to crack open a beer and watch the concert. Super strong, but then also just other things, like I believe we had a cooking tutorial and a mixology thing, and trying to create something that is for everyone without stretching yourself too thin and also being true to the brand is super key, and what I know was also a great add to it is we were able to leverage buy beer online to also direct you during the event so that people could find places to shop for the products.
Stephanie:
What did the traffic look like going to the buy beer online during that event or afterwards, what kind of conversions did you see going to that?
Arabella:
Yeah, so I believe we actually saw a lot more conversion coming up to the event versus actually during it. Which is interesting for sure. I think we're in much more of a place where shoppers are still shopping for a little bit in advance, like planning ahead, like I saw this ad for this thing, I'm going to buy beer for this weekend to watch it, versus looking and saying I'm going to get drinks late in 20 minutes to get delivered. So we saw a lot of traffic leading up to it definitely and then a lot of live interaction during it, but not as much I think quick conversion onto those on demand platforms, which I think just speaks to the fact that click and collect and pickup is just a little bit stronger right now than the delivery aspect, but I think we'll probably see that grow as Uber just bought Drizly literally yesterday, so that's going to be a big game changer for scale.
Stephanie:
Yeah, everyone's trying to figure out last mile delivery and how to make it work. There's been quite a few interesting articles about why some of those companies like the DoorDashes need to expand. Very cool. What's up next on your Netflix queue?
Arabella:
Oh. What a good question. I am currently making my way through Grey's Anatomy. I've been watching it for so long, since it started, so it's kind of my comfort watch and after a long day with a little Zoom fatigue and talking on the phone all day it's nice to just relax to something that I know is reliably dramatic and juicy.
Stephanie:
That's great. If you were to have a podcast what would it be about and who would your first guest be?
Arabella:
Good question. I think, you know what, I'm kind of a fitness buff a little bit, and I've gotten really into it during COVID just as like a distraction and a thing to keep me sane. I love Pilates a whole lot. I find it very, very, it focuses my brain, it's challenging, I don't have to jump around. I don't love HIIT, it's not my fave. So I would love to do a podcast that kind of explores the relationship between human psychology and exercise and how those things are so entwined because I really believe they are. And I think as my first guest, I'd love to bring on someone, I actually just read a great book about endurance running and ultra marathons where they run like 200 miles-
Stephanie:
Wild.
Arabella:
I don't run [crosstalk]-
Stephanie:
Two miles sounds like, whew.
Arabella:
Yeah, exactly. I'm like one mile. I find it so, so fascinating how you really can push yourself. So I don't know a specific name but I'd like to bring on someone who's an endurance athlete to kind of pick their brain.
Stephanie:
Yeah. Very cool. Aright Arabella, it's been awesome having you on the show, such a fun conversation. Where can people find out more about you and Anheuser-Busch?
Arabella:
Yeah, definitely. So you can check out my LinkedIn I'd say if you want to find more info about me. And if you're curious, please check out buy beer online, we have a lot of info about the biz and all of our brands on there as well. And you can feel free, if you'd like to reach out to me, I don't know we can maybe put my email address somewhere, I'm happy-
Stephanie:
[inaudible].
Arabella:
Yeah, that say it's being risky, but I'm always happy to chat with people and connect. I think that's really kind of what is the bones of business and makes the world stronger. So shoot me an email.
Stephanie:
Amazing. Yeah, thanks so much for coming on the show.
Arabella:
Of course. Thank you.
If it seems like a new DTC brand is launching every day, that’s because it’s true. In every industry, across every vertical, on every channel, the next “big thing” is competing for your attention, your clicks and your cash. As a consumer, sifting through all that noise and filtering out which companies are worth your time can be a daunting task. And as a brand, it begs the question: how do you set yourself apart from the ever-growing pack?
One option is to find a trusted source to vouch for you. Matthew Hayes can be that source, and his new marketplace, The Fascination, is where he wants to lift up some of the most worthy DTC brands coming to market.
The Fascination is a product recommendation and reviews publication focused on emerging and purpose-driven direct-to-consumer brands, large and small. Users of the platform have the ability to filter through vetted brands, digest the company’s story, and even transact all in one place.
On this episode of Up Next in Commerce, Matthew dives into lessons he learned while building Leesa Sleep, why curation is so important in the rapidly expanding direct to consumer space, and gives his take on why the convergence of media and commerce will be the one thing that impacts ecommerce the most. Plus, I even pull out a few stories from his trip to Richard Branson’s Necker Island.
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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Transcript:
Stephanie:
Hey everyone. And welcome back to Up Next in Commerce. This is your host, Stephanie Postles, co-founder at mission.org. Today, I'm chatting with Matthew Hayes, the co-founder at The Fascination and previously on the founding team at Leesa Sleep. Matt, welcome to the show.
Matthew:
Thanks for having me.
Stephanie:
Yeah, I'm very glad to have you on. So I was hoping we could start with maybe Leesa Sleep. Because when I saw that I'm like, "Whoa, you were like an OG in the D-to-C space," and I thought they'd be a good jumping off point.
Matthew:
Yeah. So I was part of the founding team at Leesa. Yeah, we launched it back in 2014 before everything exploded. Right? So we were very early. We were one of the first BedInABox brands to get out there, Tuft & Needle came maybe, I don't know, six months to a year before us. Casper was literally right before us. And then we were out right around Thanksgiving of 2014 and that whole industry just exploded under our feet. We had the wind at our back for most of our tenure, especially our growth years. But things are a lot different now and t's a different ball game in terms of launch and growing a D-to-C brand in 2021.
Stephanie:
Good. Tell me a bit about the differences. I mean, obviously the world is very different and there's a lot of new trends coming out about what to expect over the next couple of years, but are there any lessons that you took away from Leesa that are still relevant or is the world just like in such a different place now?
Matthew:
No, I think it's still really relevant. I think a lot of the stuff that we were learning as we grew is incredibly relevant to the way that we launched The Fascination, the way that brand founders are thinking about things now. When we first launched in 2015, cost of acquisition were beautiful. Like all day we could scale the auctions across Facebook and Google, were very, maybe a fifth of what they are now just in terms of competitiveness. Just, I mean the mattress industry specifically there was 180 entrants after we launched, so a huge amount of volume coming into that space and just generally in D-to-C. So the cost of acquiring just pure play digital customers was going up and people were seeing the writing on the wall and starting to diversify into brick and mortar.
Matthew:
And so I think that was one of the things that we realized, is we've got to have a diverse channel mix. And so we struck the partnership with West Elm, we leaned more into Amazon. We looked more at international and we actually set up our own brick and mortar stores. So I think the combination of that brand awareness and exposure helped our brand tremendously. Whereas a lot of brands stuck it out, stayed pure plays and they learneD-to-Costly less and overspending on acquisition.
Stephanie:
Yeah, that's definitely the biggest thing that I see from the past couple of years or past decade is like before you could just focus on paid acquisition, like throw a bunch of money at it and one's really, they're going to come to you either way. And then now it seems like a lot of the, I guess the brands that are ahead are more media companies now, and there's a big spectrum between paying for people versus organic or versus starting a community and then launching a product to them. So it does feel like a definitely a different world than just like pay, and grow, and scale up as you go.
Matthew:
Yeah. I mean, we're seeing that a lot actually. And I think our notion of how to build a profitable business with The Fascination is quite a bit different. No, we're not a pure play own D-to-C brand selling our own products, we're essentially a marketplace, but what we've done is we've seen the success that media companies have had in building an audience that's super loyal whether that's The Hustle, or Morning Brew or The Scam, all of this audience aggregation and demand with these customer demos, there's so much that you can do with it. And so, we saw a bit of an opportunity and the fragmentation that was happening across D-to-C brand for popping up literally every day. And you start to become a little leery of, is this a good brand? Is this is a good product? Does this align with my values and tastes? And we saw this need for curation across all spectrums of D-to-C really. And we saw an opportunity to really create a media platform and a commercial platform around that.
Stephanie:
So let's dive into The Fascination a bit. So it's a marketplace. You guys are curating D-to-C brands. I saw you have filters focused on the product technical quality, also the soul of the company. Tell me a little bit more about The Fascination. How do you allow brands into the marketplace? Yeah. And any other details around the platform?
Matthew:
Yeah, so I mean, people are basically referring to it as a marketplace meets magazine, which I think is an accurate description. It's basically at its core, it's a product recommendation and reviews publication specifically focused on emerging and purpose-driven direct to consumer brands. So in much the same way that Wirecutter or the strategists reviews top products and writes those objective third-party reviews and recommendations, as a media publisher we're really doing that, but we're focusing in on a subset of these D-to-C brands that are new and emerging and have purpose driven values.
Matthew:
And the idea is to create a single platform where people can come and discover new brands, they can read reviews and research those brands and products, and they can shop deals all in one place. So it's a linear play from discovery all the way through to purchase.
Stephanie:
Yep. So who are some of your favorite brands on the platform right now?
Matthew:
There's so many good ones.
Stephanie:
[inaudible].
Matthew:
Yeah, I know I'm going to get in trouble for this. We've got badges across the site, which are really cool. The badges call out things like women and minority led businesses, or organic, or made in the USA. And so like Girlfriend Collective is one of our women and minority led brands. Haus is another-
Stephanie:
Even Haus on, yeah.
Matthew:
... Yeah, they deal the [inaudible] and great products, great brand story.
Stephanie:
Delicious.
Matthew:
Delicious. Yeah. I was just chatting with the founders of Huron, which is a men's skincare line. Awesome story. And then we've got the big names that you'd expect. Like we've got Allbirds on the platform. We've got Warby joining soon if they're not up already any day now. We've got UNTUCKit so, those it's a nice mix of the old school D-to-C incumbents with a lot of really cool emerging brands that honestly I'm intimately involved in direct consumer and a lot of these brands I hadn't heard of for the first time.
Matthew:
So if you think about like, as it broadens out the halo from the bulls-eye of our tightest demos, there's going to be so many people that are discovering these brands for the first time. And that's really what we want. We want some of these big names to attract people into the site, and then we want a lot of our awesome emerging brands and products to be discovered while you're there.
Stephanie:
Yeah. That's great. So how are you convincing these larger brands to join the platform? Because I'm thinking your space, I think also is very competitive. I mean, the world right now is headed to a place where everyone wants curated collections. I mean, they don't want to spend a bunch of time everywhere. They want it all in one place. We had the CEO of Fast on talking about, you need the one-click checkout and be able to allow people just to check out instantly and not have to bulk it into a cart. It seems like your space is very competitive too. How are you convincing the Warby Parkers? And the older brands who probably are approached by quite a few marketplace platforms to, "Oh, join us." Why are these brands going with you?
Matthew:
Well, I think we've really a ton on the story and the user experience and just the overall look and feel of our digital product and what we stand for. I think it's also in our favor that we have been D-to-C operators ourselves and we can really empathize to what these founders need. And we've been fortunate to be in the community for several years now. So we had a few close partners that our spring pad, if you will. Not to mention Nick Sharma as an advisor, who's great at pulling in brands.
Stephanie:
He was on our show too, man, I was just-
Matthew:
Yeah, I know.
Stephanie:
... fortunate.
Matthew:
And so yeah, between that, and we had some really amazing brands reach out the first day that just totally shocked us. We have a type form application that comes through and we had a couple of 100 brands, including some of the biggest names in the space on day one, which it was super exciting. And just a lot of founders getting really excited by seeing their brands mentioned in our round ups, or seeing products being shared. So I think that the validation that we're starting to provide, and really empathizing with what brand founders need is something that they're really clamoring for. And I think word it gets out fast.
Stephanie:
Yeah. That's great. So is there any trends you're seeing right now around what customers are most excited about? I mean, I'm guessing you have all this data now and you can see, okay, a bunch of people are coming on during quarantine and buying Haus. We need another type of Appertiff or something to offer that's similar because we see so much engagement there, any trends?
Matthew:
I think that one of the things that we've seen that's really interesting is our roundup pieces on brands that are making an impact and just the social impact stories are really, really resonating with consumers. And the brands are sharing the stories, which is just amplifying the message that much more. So the general consumer sentiment that we're getting from a qualitative perspective is that a platform like this is very much needed and like, thank you for building it. So I don't think it's even halfway to where we want it to be, or it could be in terms of the overall product development evolution, but we're going to get there quickly.
Stephanie:
Yep. So how, when you're... You just said that certain stories that you're telling around the brands and the social good aspect of it are really resonating. Is that your main play when it comes to acquiring new customers on your platform is by writing good pieces of content, having the brand share it to get in front of their audiences as well, or how do you think about acquiring new customers?
Matthew:
Yeah, I mean, customer acquisitions, it's always a challenge for a marketplace like this. And that's why from day one, we didn't approach it as a pure play commercial marketplace where you're just aggregating and selling products. From a consumer perspective, that's really not serving the overall need that we're trying to address, which is discovery, research, and shop and convert. And so the research aspect of that is really where we're going to focus a lot of time and attention and work. And what I mean by that is writing really in depth, thorough product reviews that are authentic, that are meaningful, that consumers value and ultimately Google values that content really highly as well. And so, what I'm getting at is the SEO and organic traction and such. It's going to be a big part of how we grow organically, keep our acquisition costs low.
Matthew:
There's a lot of performance marketing things that we can and will be doing. Brands have had tremendous interest in doing paid marketing partnerships, whether that's white listing on Facebook, or sponsoring newsletters, or any sponsorships. I think there's a tremendous amount of demand for that. And we really are just dipping our toes into the very first test there. And then I think PR and having, as I said, our brands amplify, our content is also, it's just going to be a latent, organic way to continue to build low cost audience. I mean, I think if you think about the way that Leesa scaled and a lot of those 2015 brand scaled, we know that we can't run the same playbook and build a sustainable business.
Matthew:
And so as we were launching in early days, it's like being a media company is really hard, right. Coming up with really engaging content every single day, pumping it out, like the Morning Brews and Web Smith's of the world, I take my hat off to those guys because it's not easy, but I think you can already start to see the rewards that we're going to reap from that.
Stephanie:
Yeah. So what channels are you... Well, maybe actually first, let me talk about the content piece, because that's top of mind for me is, a lot of people say you just need to create good content and that's the key to finding great people. How do you go about brainstorming something that will resonate? Are you actually going through maybe search trends and starting there to see what's going on in the industry, and then writing articles around that? Or is it purely, just like, I want to talk about Haus's story and we're going to talk about what they're doing behind the scenes? Like, how do you brainstorm content?
Matthew:
It's a mix of all of that actually. So we've got a number of things that we're covering at any one time. A lot of it is when we have new brands onboarded, we've got to write the brand story and we've got to review their products. That's phase one. And that's like an ongoing process as we get up and running. But yeah, we're also looking at industry trends, category wide trends, search trends around specific products or competitive products to see how we can write really compelling content that meets that need.
Matthew:
And then we're thinking about the cultural relevance, things that are happening topically in everyday life. And we've got a couple of different personas that we look at. And so what are our personas caring about, what's their headspace, and then what are the things that are happening in their specific lives at this very moment in mid January? So as we think through those things, you start to surface really relevant content ideas, and that's where our social content, a lot of our editorial content comes from. And that's generally how we do it.
Stephanie:
Cool. And what are some of the channels that you're most excited about right now, or you think that there's untapped potential? Are you sticking with the Facebook where of course stick the Facebook? How is sticking with-
Matthew:
Afterthought.
Stephanie:
I like that. Hey, they used to be though. Right?
Matthew:
Yeah. Drop that.
Stephanie:
Yeah. I mean, when? It's still pretty relevant, but yeah. Are you sticking with Facebook? A lot of other brands still say that's the best place to reach customers. Are you trying out a bunch of new channels and experimenting? How are you thinking about that?
Matthew:
So Facebook isn't a priority for us right now other than to the extent that we use it for paid social advertising. I would say it's there. Of course it's there. But when we're thinking about building audience, Twitter has been a nice surprise for me, I'm really bummed that I didn't get myself on Twitter several years ago, but Sharon, our audience development team's doing an awesome job of engaging that really passionate community.
Matthew:
I think LinkedIn has sneaky, organic reach and potential. And we found that a lot of our brand founders are sharing our content there and we're getting a lot of engagement.
Stephanie:
They're more organic then, right, because LinkedIn is super expensive when it comes to advertising.
Matthew:
Yeah. All organic. And then stuff like TikTok is interesting as we look at really organic product reviews doing things with founders, I think that's something that we're going to be looking at as well as Clubhouse.
Stephanie:
Yeah. Clubhouse. I think that's where it's at. I'm on there. I listen to people. I think you can connect with a lot of great people on there. I'm still not sure about the unstructured format sometimes where things can go on for hours and hours, but yeah, it seems like there's a lot of potential there to at least connect with new people. I don't know about selling.
Matthew:
A lot of untapped potential.
Stephanie:
Yeah. So I saw that you were also an investor in GRIN. Right. And that's the influencer platform, which is... That's the right brand. Right?
Matthew:
Yup. [inaudible].
Stephanie:
Okay. So our guest yesterday that we had on was, that's her favorite new tool that she's looking into and I had not heard of it before. And I'm interested to hear a little bit about how are you thinking about influencers? What attracted you to GRIN, where's that market headed over the next couple of years?
Matthew:
Yeah. I mean, we've been doing influencer marketing since 2012, honestly. And I think there's going to be a lot more regulation around it for one. So you've got to be buttoned up as you execute it
Matthew:
So I think that's just part of the industry growing up. A lot of these minors are now celebrities in their own right with huge followings and PR teams. And so the days of just engaging with an influencer that way are over. It's really about adopting a micro/nano strategy where you're activating pockets of a couple thousand followers up to 50 to 100,000 followers and doing it more strategically at scale. And that's where I see a lot of brands and agencies having success doing this stuff. So GRIN is just a really awesome tool for managing that entire workflow. Keeping you really on top of things, you can search for look alikes of an influencer. So if you have someone or something that you want to find influencers around, it's great for that.
Stephanie:
That's awesome. And how did you think about attribution and analytics around utilizing influencers and seeing if you're really getting the most bang for your buck?
Matthew:
Yeah. I mean, well, especially with iOS 14 and everything that's going on there, it's always been an imperfect science, we never assume that we would have even close to perfect attribution on influencer activations. So we always treated it very top of funnel and you do what you can in terms of attribution. So you give them trackable UTM parameters, you give them a bespoke promo codes with their name. You give them a landing page experience, everything that you can do to cookie the user on your website and get them into what feels like an authentic customized experience for that loyal following. That's going to increase conversion, I think as much as anything.
Matthew:
And the vast majority of influencer activity is probably happening on mobile anyway. So wherever you're sending them, it's got to be very mobile optimized because if they switch over, your attribution's lost at that point.
Stephanie:
Yeah. And I think that authentic piece you're saying, I mean, it has to fit your brand. The person has to not just be saying something just to say it. And I think taking that longer-term approach more of like a partnership and someone who is going to be a part of your brand, even if they start out smaller and grow with you, will be way better than just trying to target a big name, because I normally don't really put any weight in products that large celebrities are showcasing, just because I'm like, I just know how much money you're getting paid and I highly doubt you're using that teeth whitener.
Matthew:
Yeah, I mean to that point and a lot of grants are basically incentivizing on the CPA or per sale basis with, like you're saying a subset of really loyal influencers and affiliates that they can send that influencer their fall collection of bags and apparel or whatever, and they can get 10 or 15 posts out of it if the influencer continues to see performance. And so I think that's the new way of doing things nowadays.
Stephanie:
Okay. So yeah, viewing it from a content generation perspective of, they're not just posting once trying to get their product off, but they're also creating an article or blog posts that you can repurpose and pull quotes from or whatever it may be.
Matthew:
Yeah. And more frequency drives more conversion. So the more you get that brand in front of your audience, the more likely it is they'll finally take action.
Stephanie:
Yep. So I want to talk a bit about mentorship, which I always love asking questions around this. I saw that you went to Necker Island a few days ago... a few years ago [crosstalk], really? Few years ago. And of course Richard Branson's Island. So I want to hear, what did you learn there? What advice did you hear? I saw, I think Damon John was there, Tim Ferriss, Seth Godin, Marie Forleo, a bunch of great people to learn from. And I want to hear about the stories behind going there. What did you learn, all that?
Matthew:
Yeah, I mean, it was a life changing experience for sure. Damon is still pretty close to us in the business. He got involved with Leesa after we met, especially with their 110 program, and I really just learn from him the hustle, the grind. He told his story about how he came up with FUBU and really built that business from zero. And so, talking about fundraising with him is a different thing.
Matthew:
Tim was on the Island too. I was fanboying out when I met Tim actually, because I was obsessed with four hour workweek, four our body and here I'm chatting with him in person. We actually started talking about going up against Casper. At the time, we were pushing pretty heavily into podcasts and Casper was buying up literally every podcast that we could find, that we wanted to go after. And funnily enough, he would really push a micro strategy to us. He said, "You need to go after these very small podcasts that aren't affiliated yet, that have nascent, but growing followings." And we did, we found 10 of those, especially in comedy and gaming, and we stayed with them for years and they ended up crushing for us.
Stephanie:
Oh, that's great. And did you secure long-term partnerships with this company?
Matthew:
Yeah, I think we're still working with a few of them honestly.
Stephanie:
Oh, that's great.
Matthew:
We just completely sapped the audience, an everyone's got a Leesa now. Yeah. And then we talked with Seth. David and I chatted with Seth Godin, who's a marketing genius. He's like the professor of modern day marketing. And at the time, we had done around 30 million in our first year of sales, which was just crazy. And he was talking about making this leap called crossing the chasm. Basically when you're attacking the early adopter market and you're doing quite well, there's a point at which you have to "cross the chasm" and reach the broader demographic of people. And so I don't remember the tactics that he talked about, but he always impressed that idea of our okay, now we've got to broaden our sphere of influence. We still use that phrase today.
Matthew:
And then Marie Forleo was there and we had a lot of really good, we like chatted one-on-one several times, because I was incredibly anxious. I've always dealt with anxiety issues in my career, in my past. And so we had some frank chats about vulnerability and putting yourself out there. And once you do that, it just eases the tension, eases the anxiety. And I still use that to this day.
Stephanie:
Yeah. I was going to say, does it help now? Because I mean, I definitely feel that too. I remember when we first sold this podcast, then they're like, "Oh, Stephanie can new host it?" And just being like, oh, I usually always would have our other team members host the shows and yeah, I liked working behind the scenes and it definitely was hard being like, okay, you just have to do it. You have to get yourself out there. Did it help afterwards thinking through about her advice?
Matthew:
Yeah, it totally did. And I always think of this idea of demonstrated performance, where it's like, you're nervous about something, you're anxious, you step on stage or you sit in the seat, you put yourself out there and you have a really good performance. And then that just gives you one more step, one more piece of confidence and you keep going and building. And now stuff that I do every day without even looking at my calendar is stuff that I would have just freaked out about all day five years ago. So I think it's just about experience.
Stephanie:
Yeah. Now I agree. I remember even just thinking about doing video meetings, like when I first was starting out in the corporate world and being like, "Oh, my gosh, my first meeting." I was just so scared and sweaty and nervous and then now taking like 10 a day and being like, not even thinking twice. So yeah, I think just doing the work and pushing past and knowing you'll probably fail a couple of times and who cares?
Matthew:
Exactly.
Stephanie:
That's great. And did you meet Richard Branson when you were there?
Matthew:
Yeah. We met briefly. He gave us a talk which was awesome. He talked a lot about Virgin's impact program, and what he's doing there. And so that was really important to us at the time, because we were setting up our Leesa 110 program and that was cool to hear from him.
Stephanie:
That's great. So where do you see the next couple of years headed for The Fascination? What are you guys building for? What are you doing in stealth mode right now? What are you planning for the world to look like in a couple of years?
Matthew:
Yeah, I mean, right now we're really heavily focused on getting the digital product where it needs be to really deliver on a full transactional marketplace that's cutting edge for consumers. So in the next couple of years, we want to have a destination that is super engaging. We want to have brand founders engaging with consumers real time in the platform. We want to have people shopping and reading and researching brands and products all seamlessly, and to be able to buy those products in one click, right? Right on The Fascination.com. And so a lot of things have to happen in the background to obviously make that work.
Matthew:
And then we're always thinking about, how can we acquire the best customers, bring them in most cost-effectively? And it's always on my mind of like, delivering really solid, meaningful content to the audience, not just fluff stuff, but stuff that's really, really valuable. And so that's what I think we're trying to win.
Stephanie:
Well. Yeah. It also seems like there's such an opportunity to... I mean, when you have all these brands and they have access to a lot of insights on their customers or who's coming to their website to then build lookalike audiences off of those brands, and then all of a sudden you have access to customers and you're coming from a different angle where maybe if Leesa would have already gotten in front of a customer two times and they're like, "Nah," they then see The Fascination comes in and they're like, "Hey, check out this mattress. It's like a third touch point. That's very separated." But it seems like there's a lot of opportunity there to get insights at a much more accelerated rate than you would get just by yourself.
Matthew:
Yes. That is the goal. Yeah, there's a whole data infrastructure that we really need to put in place to get the most out of it. And honestly, coming from Leesa for so long, I'm still trying to wrap my head around what that all looks like in terms of affiliate click attribution and how we create audiences and how we do product recommendations. So we're only a month old, but we'll get there. And I can tell you that there is such tremendous demand for what you're talking about. Just leveraging lookalike audiences, leveraging audiences across categories that aren't competitive with one another. At the end of the day, everyone that comes to The Fascination as an interested consumer if we do it right, it's always going to have similar demographic profiles, right. Whether they're a man or a woman. So as you aggregate that at scale, there's a ton of value for brands to be able to tap into that.
Stephanie:
Yeah. It seems like eventually they'll have to be tools for the merchants as well, to be able to interact with all the platforms they're on. Or like, I mean a lot of sales are moving towards the edge. There's a lot of people say and how do you keep track of that? Like, how do these merchants they're selling on The Fascination, they're selling on Fancy, they're selling on not that Fancy is the same, but there are quite a few places popping up where these brands might be like, "Yeah, I want to sell on that platform or over here," but I don't know if enough tools exist right now to keep track of what you're doing and consolidating it all in one place.
Matthew:
Yeah. I mean, it's got to be a challenge for these fairly young brands. There's product feed software that'll handle some of that, but at the end of the day there's manual stuff that's always needed once you're drop shipping and wholesaling and you have retail partners. So yeah, we're going to be thinking about it from the other side, just the same, how do you manage 100, 200, 300 merchants and keep them happy?
Stephanie:
Yeah. Crazy. All right. Well, let's shift over to the lightning round. Lightning round is brought to you by Salesforce commerce cloud. This is where I'm going to ask you a question and you have a minute or less to answer. Are you ready, Matt?
Matthew:
Yes.
Stephanie:
One minute to answer. All right. Yeah. Prepare, drink your drink, whatever that may be. All right. First thing, what one thing will have the biggest impact on ecommerce in the next year?
Matthew:
I think the convergence of content and commerce is, is going to have one of the biggest impacts. You've got media companies that are converging in the commerce, they all want to be transactional. They all want a bigger slice of the pie. They all want more lifetime value extraction from their readership. And then I think on the commerce side you see brands and retailers who are obviously seeing the cost rising of customer acquisition in the traditional sense and creating really rich content. It's the only way to do that. So we're diving in right at the intersection with what we're doing at The Fascination and that's where we saw it going. And that's why I think we're bullish on where we're headed.
Stephanie:
Yeah. Well, it'll also be interesting to do a recap episode on what's happened since some of these brands got into mixing media with commerce. I mean, I'm thinking about NBC, I think did a whole shoppable TV thing. And I remember seeing them launch that maybe in February or April last year, but I don't know what actually happened. So it'd be fun to do a recap of like, here's who launched in 2020 when it came to mixing media and commerce and here is status update.
Matthew:
Hopefully we will be one of the givers.
Stephanie:
Yeah. Hopefully. What's one thing from 2020 that you hope sticks around in 2021?
Matthew:
I think that we've all had to embrace things like this, just getting on video conferences, not having to present ourselves through this façade, in the office I would have never thought about wearing my hat backwards and rolling around in athleisure. And now that's just the norm for everybody. And kids are on work calls and it's just, the whole thing feels a lot more familial. And even if we do go back to offices, I really have loved that work now feels a little bit closer to home because you're in your home, but also because just the interactions, you see more than you would if everyone was in an office environment.
Stephanie:
Yeah, I agree. And I think it definitely brings a more human perspective too. Like you're saying, working together, knowing someone's kids, seeing them in the background, and then you also have more, I guess, empathy when a mom or dad's like, "Hey, I got to go do this with my kids." It's like, "Oh yeah, I saw your kid connection." Of course you can, whereas I'd say prior to this. Yeah. Not as much of a leniency, I guess for that. Yeah. That's a good one.
Stephanie:
What is the funniest story or best story you can think of when it comes to either building up Leesa or building up The Fascination where you're like, "Oh, this is a good time or a good story that really sticks in my brain from those years."
Matthew:
We've done so many like gimmicky things at Leesa. We were growth hacking like crazy and we were throwing stuff against the wall and not all of it stuck. We did a ton of stuff with Barstool Sports. We maybe did a few influencer integrations that wouldn't go over so well today with certain influencers.
Stephanie:
And with Barstool, I feel like they're so edgy that they can get you in trouble all these days anyways.
Matthew:
They're very edgy and we purposely like with all of those podcasters and creators, we're like, go be very authentic. And so you can't tell Barstool like, tame it down and not be authentic. But they were a huge converter for Leesa for several years.
Stephanie:
That's fun.
Matthew:
So we did a lot of fun stuff. We sponsored Larry at the gambling goldfish, which was a gold fish swimming around in a tank on Barstool sets, they pulled a mattress behind a truck with a Santa Claus riding on it. But we've also done a lot more admirable things, like we did a sleep out for the homeless. We've done a lot of cool things at Leesa just in the experientials side of things that made it fun.
Stephanie:
Yeah. I mean I have a love for the gambling goldfish. I want to go check that out. That actually sounds pretty funny.
Matthew:
Yeah. One more thing that we did is I think it was the 2017 NFL Draft, it's shown on ESPN and all the players are interviewed in their homes. And so we sent the players that we knew would be interviewed on TV, on ESPN Leesa mattresses. And we had them put their Leesa mattress boxes behind them and their families. And we got millions of impressions that night because we had Leesa mattresses all over the air on ESPN Draft.
Stephanie:
Oh, that's fun. See, I love creative stuff like that, where I mean, as long as it actually converts too, I always have the question about TV, does it actually convert or what happened after everyone saw the mattress behind them? Did you guys see a big uptick in sales, or?
Matthew:
I don't remember if we did or not. I think we saw a bit of an uptick, but I mean, it was such a low cost stunt to do that. It wasn't a swing for the fences, but we also did a ton of TV in heyday at Leesa. And you can really see the brand awareness effects the TV has even though it's insanely hard to track.
Stephanie:
Yeah. I agree. What is next on your reading list?
Matthew:
I'm probably going to do Shoe Dog by Phil Knight.
Stephanie:
Such a good one. I love that book. Yeah. So inspirational. I highly recommend. If you were to have a podcast, what would it be about and who would your first guest be?
Matthew:
Well, that's an interesting question because we may very well have one soon.
Stephanie:
Oh, nice.
Matthew:
Yeah, I don't know in what format it will be. It may be a podcast. It may just be like Instagram TV stories, but we really want to interview, just do flash interviews with our brand founders, asking about their origin story, asking about what makes their products different, fun facts. And I think a groundswell of really interesting stories like that would be fun.
Stephanie:
Cool. That sounds good. And then the last one, what's the nicest thing anyone's ever done for you?
Matthew:
Oh, that's tough. I mean, I there's been so many instances of generosity. I think honestly, giving me a chance to make the career switch that I did, and this is a bit of a shout out to David my co-founder, but he really took a chance on me. He's been super supportive of me for years, and it's really gotten me to where I am today in terms of my career and the place that we're at collectively. So him and the people around me that pushed me to make that leap out of the traditional corporate world of consulting. I was really hesitant to do that coming right out of my MBA and looking at a nice salary, and he was one of those people that pushed me over the top to do that. And I'm thankful for it.
Stephanie:
That's really cool. Great story. All right, Matt. Well, thanks so much for coming on the show. Where can people find out more about you and The Fascination?
Matthew:
So about me, you can find me on Twitter at MattDHayes, all one word, and then The Fascination.com. Go check it out.
Stephanie:
Awesome. Thanks for joining us, Matt.
Matthew:
All right. Thank you.
You’ve heard it time and time again on this podcast: That influencer marketing not only works, but could be the key to unlocking massive business potential for your eComm business. Influencers have the power to take a product – or an entire brand – from unknown to a trending topic product overnight. And sometimes, the community that they build is so valuable, it creates a jumping off point for a business of their own. That’s what Deepica Mutyala did when she launched LIVE TINTED.
On this episode of Up Next in Commerce, Deepica takes us through how she progressed as an intrapreneur at BirchBox before she took the plunge and set out on her own journey. And it all started after one beauty video that she made went viral on YouTube. Deepica explains how she went about building a community based on a mission to bring more diversity to the industry, and how she’s been able to tap into that community to create content and launch a successful business with products designed specifically for her community. Plus, Deepica reveals some of the advice she got from her investors and mentors like Bobbi Brown and Andy Dunn. Enjoy this episode!
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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Transcript:
Stephanie:
Hey everyone, and welcome back to Up Next in Commerce, this is your host, Stephanie Postles, co-founder at mission.org. Today, we're talking to Deepica Mutyala.
Deepica:
There you go, you nailed it.
Stephanie:
The CEO of a beauty brand, LIVE TINTED. Deepica, welcome.
Deepica:
Thanks for having me.
Stephanie:
How many times do people pause when they're like, "I'm about to botch your name, I know it, I know it, ah, there it goes?"
Deepica:
I mean a lot, but I appreciate the pause and effort to get it right, versus just blatant lack of attempt to try and get it right. So, I appreciate you trying. Thank you.
Stephanie:
Good. Yeah, thanks.
Stephanie:
So, I was doing a bit of research, as I always do on my guests, and I'm fascinated by LIVE TINTED. I mean, you have such a great story, so much stuff [inaudible] want to dive into, but first, I think it'd be fun to kind of talk through how you got here, your background, What did you do before you founded LIVE TINTED?
Deepica:
Yeah. So, I actually started my career on the corporate side of the beauty industry. In college, my first internship was at L'Oreal in New York, and post-college I had a brief stint at Limited Brands, which is now L Brands at Victoria's Secret, which is no longer there because they went bankrupt. So, I was there for a brief stint, but the whole goal and end game was to one day create my own beauty brand. I was that 16 year old girl who grew up in Sugar Land, Texas who said that... I was going to change the narrative of what I saw when I was going down the beauty aisles.
Deepica:
When I was a kid, I shopped at Walmart predominantly, honestly, that's where I shopped for beauty because, going to shop for beauty wasn't really a thing in my family's life, so when we were just getting groceries at Walmart, I would divert to the aisles and go look at makeup. And I would find myself not reflected in the ads, and I would also not see any foundation shades that worked for my skin tone. And I literally, remember telling my family at 16 that I was going to change that narrative one day, and everything I've done for my career since that point was to get me to starting LIVE TINTED.
Deepica:
So, it's kind of crazy being now back in Texas, like I was telling you earlier, that it's just really full circle being here, and finding doodles of me writing out what I thought my brand name was going to be, and talking to family members who are like, "It's just crazy that you're actually doing it." Because this is what I wanted to do. So then, after nine months at Limited Brands, I quit my job to take a risk on a startup called Birchbox, which at the time was the hottest tech company... Not even just beauty, but I think overarching, they created a whole category of subscription model that really created a whole new category.
Deepica:
And so, that was really cool, incredible experience working for two bad-ass female founders who, in my parents' eyes, were really okay with me working there, and taking a pay cut, and going for my dream, because the two founders went to HBS.
Stephanie:
Oh my gosh.
Deepica:
And so, they were like-
Stephanie:
I also read the quote from your... You were saying, "Oh, my dad all growing up would hand me a stethoscope," and then you would instead grab lipstick or something, and I thought that was really funny.
Deepica:
[crosstalk]. Yeah. It's kind of an Indian tradition where... There's this ceremony that happens... I think it's after your first 100 days, and we just did it for my nephew, where they put things in front of you [inaudible] like a book versus different things to see what you would gravitate towards. And instead of me gravitating towards anything that was in front of me, I was grabbing my mom's lipstick in her [crosstalk].
Stephanie:
In the purse digging over there.
Deepica:
Yeah, yeah, which is so funny, and crazy, and full circle now, but yeah, this was always the dream, and it's wild for me to look back and reflect. But I worked at Birchbox, and in true startup culture, you can create opportunities for yourself at a startup. And so, I made it very clear to the founders that I wanted to one day create my own beauty brand, and they gave me opportunities in the company to do that. Then, I had to do it a lot of the times, in my free time, it wasn't like... I still had to do my day job, but if there was projects that I could work on in my free time, I did it, because I saw it as Birchbox was my business school.
Deepica:
And they always said it as founders, right? But I truly felt it. I really felt like working there was an incredible network of really smart people, and I got to... Literally, you have an idea, you can test it, and just go for it. And so, I got to work on product development at Birchbox. I got to work on influencer partnerships at Birchbox. And when I did that, was my first time being like, "What is going on in this influencer world? And how much are these girls getting paid? What is happening?" Some random girl at Iowa getting paid this insane amount of money to do a YouTube video, and I was just like, "This is wild."
Deepica:
So, as I was doing that, was when I realized there was nobody who looked like me on YouTube creating content, and I kind of just saw it as a fun hobby. I was like, "You know what, Deepica? At the end of the day, you're not quitting your job, just do it on your weekends. And at the end of the day, all the people in your life that text you questions about makeup and things like that, you can just say, 'Go to my channel, stop texting me.'" So, really, I didn't think much of it. And so, January of 2015, I picked up my iPhone... Because again, I didn't know what I was doing video content wise, I had no clue how to... Ad revenue wasn't even activated. I didn't know.
Deepica:
And I picked up my iPhone and held it vertically instead of horizontally. The production, it was like I knew IGTV was happening before IGTV was happening. I did it in a vertical mode, and I used red lipstick under my eyes to mask dark circles... And people who are hearing this are probably literally so confused, but-
Stephanie:
I read that too, I was like, "Well, it'd be funny if I showed up with red lipstick under my eyes."
Deepica:
Oh my God, that would have been awesome. Yeah, no, I used red lipstick under my eyes to hide dark circles, and I guess that was crazy to 10 million people, because that video went viral, and yeah, has millions and millions of views.
Stephanie:
And it worked. For anyone who's like, "What did that look like?" I looked at the pictures and the video, it actually works.
Deepica:
Yeah. So, here's the deal, I basically... That was my biggest beauty concern my whole life, how to hide my dark circles? And it wasn't talked about, people didn't talk about it because it's such a specific problem to specific communities of people. And so, I just did the video that I had learned when I was on set one day, where a makeup artist was using a color corrector under my eyes, an actual product made for under your eyes, and I was like, "What are you doing putting red lipstick under my eyes." And she was like, "Oh no, it's a color corrector, it cancels out the darkness, so when you put on your foundation, you really can mask your dark circles, because you have extra pigments that require kind of additional correction." And I was like, "Well, what's the difference?"
Deepica:
My brain is always thinking about hacks and simplifying things, and so that doesn't change with my beauty routine. I want to always simplify things. And so, she basically, said, "Not much." And so, I filmed this video and it went viral, and when the video was at 4 million views, I got a call from the Today Show to come on to do the segment on air, and I quit my job that day. I kind of just had this moment of, this could be a cool 15 minutes of fame, or I could turn it into my dream career. [crosstalk].
Stephanie:
That's amazing. What did the founders say? Because I'm guessing, you had a pretty close relationship with them. I mean, they were letting you essentially, be an intrapreneur within their organization, and test things, and learn, and try, how did they feel about that? Because I saw that they were some of your first investors along with Bobbi Brown, which I'm like, "What? How did you get in front of her?" So, what was that process like leaving and getting them to invest afterwards?
Deepica:
Yeah, it was really tough. There's two co-founders, and they just had different mindsets, right? One of them was more like, "You are all on a Birch tree, and you're all acorns that will fall into the world." I remember she said... And she's the one that's currently an investor in my company, "I want to see you grow and thrive." And the other one, it's not to say that she didn't want the same thing, but she was really excited about me growing within the company. And listen, she had every reason to feel that way. She helped me get so many opportunities within the company to be able to create what I have been able to do today, and she gave me those opportunities, but it was more like... I was really close to her too, I worked more with her directly. So, of course, it was like one of those bittersweet things, but they're both incredible and really supportive.
Deepica:
But it was really scary to... I remember when I got... The day I got the email from the Today Show was when I pulled her into a room that day at 6:00 PM, towards the end of the day, and I just was like, "I feel like I have to go for it." And she gave me a really big hug and said, "She's really happy for me." But you could tell it was like a bittersweet thing, which I appreciated, because at the end of the day, that means she felt that I made an impact at the company.
Stephanie:
That's great. So, what was the Today Show like? Did you go on there and do a tutorial? Tell me a bit about that.
Deepica:
Oh my gosh, it was wild. So, my sister came on and was my model on air. So, she flew in from Texas. My dad was backstage sitting next to Kid Rock, which was hilarious. Picture this immigrant Indian dad who's like, "What is even happening? My daughter is on national television. And who is this guy with a beard and long hair, what's going on?" It was the moment where I realized that I was meant to do exactly what I'm doing in that moment. I was not nervous, I felt like that was... I was just meant to be there, it just felt that way. You know that Eminem song... What is it? Lose Yourself? You get one shot, one opportunity. I was listening to that backstage, and I literally felt like I had four minutes on national television to show people that a brown girl can do this.
Stephanie:
Mm-hmm (affirmative) Oh, that's great.
Deepica:
Yeah. I felt like I could be the Indian Hoda, and just be the next news anchor on the Today Show. I still feel like... I love doing live television, I think it's like... There is a beauty in the imperfections that come with it. And it was surreal, is what the word is, and incredible. And I remember after it was over... The hustle and bustle of live television is very real. The second the segment is over, they're like, boom, boom, boom, moving onto the next thing. And I was like, "That was so fun, let's do it again." Most people were just like, "All right, lady, we're moving on." But then, there was this senior producer who came up to me and she was like, "You should do it again."
Deepica:
And I was [inaudible] around, and it's so cool because my dad is in the background recording it, so I have all this on camera. But she just was like, "We can't believe it was your first time doing national television, we'd love to have you back regularly." And that was really cool for me, because everyone told me that when you go on national television, it's a cool moment in your life and you move on, and I feel like I proved the exact opposite, that if you have what it takes, you can make things happen for yourself. So, I became a regular doing beauty segments on the Today Show, and was a full-time influencer, which is a thing.
Stephanie:
Yeah, I saw that. That was one of the first things when I was looking into your bio a bit, and it's like, "Oh, Deepica is an influencer, and I think she's just signed a deal with WME." I'm like, "Oh." So, tell me, now you've got the status, and you're super popular, how did you think about capitalizing on that, and to get out of just being an influencer, and then being like, "I'm going to create my own stuff?"
Deepica:
Yeah. Well, here's the deal [inaudible] I never grew up saying I wanted to be an influencer or even be famous, but I did grow up saying I wanted to be a CEO and run my own business. And so, when you fall into something like this, it's very weird. But I think what got me through the years where I was just an influencer and didn't have the business side of it was, the end goal was the same. I wanted to change the face of representation for people who look like me, period. So whether that's in the media, or through my own beauty brand, the net goal was the same, and it still is the same.
Deepica:
And so, what I realized was, I had this opportunity to create a brand around myself that was really once in a lifetime, honestly. And I was just like, "I want to focus in on this and really learn everything I can about the beauty industry." Which at this point, I knew a decent amount. I worked at Birchbox, I had a lot of beauty brand contacts. And really, what I did was, after I quit my job, I emailed all my contacts and I was pretending to be my own assistant, and I was like, "Hello, I'm the assistant to Deepica Mutyala, beauty influencer with 10 million views, Today Show beauty expert, blah, blah, blah, blah, blah, blah, if you want to work with her, whatever."
Deepica:
And for every 100 emails I sent, I got one reply, and that one reply led to my first job where they asked me my rate, and I had no idea what to say. And then, when they said, "Okay," I realized, damn it, I could have asked for triple. You just learn as you go, and you're your own assistant, producer, editor, manager, agent, sometimes lawyer, which I don't recommend.
Stephanie:
Nope.
Deepica:
I'm like, "Bad idea."
Stephanie:
Yeah.
Deepica:
But you just learn as you go. And so, I think for me, what got me through being the girl who was waking up and taking selfies, and posting it for literally a career, I got paid to do that, was that I really saw a narrative in the beauty industry that didn't exist when I was growing up. There was no token brown girl, there was always... And even then, there wasn't really a token black girl growing up, that was still in the... Now, I feel like we're finally... It still has so, so much work to do, but I do think that we now have representation happening more than I ever saw growing up, but there still is this tokenism that happens where... I felt like for three years, as grateful as I am, that I've been able to work with every beauty brand under the sun, like a L'Oreal commercial to a Samsung ad that aired during the Golden Globes, and just any beauty brand I could have dreamt of.
Deepica:
I also realized there's plenty of people out there that deserve the shot to also do that, and there shouldn't just be one of me. There is not just one white girl on the campaign, why shouldn't there be more brown girls in the campaign, more black girls in the campaign? That experience as an influencer is what led me to launching LIVE TINTED as a community platform prior to launching the actual product itself. I didn't plan for that, again, being a community brand wasn't a thing growing up either, but it was lived in experience that truly inspired the idea that, before this launches with a physical product, let's create this united community where they dictate our future decisions.
Deepica:
And really, for me, honestly, I was craving a home where people were talking about things in the beauty industry that was not a thing, heavy topics like colorism. But then, other topics like facial hair, and things that you just didn't say. And so, we created this almost like collective home where every day we were just posting about faces that I felt like you didn't traditionally see being shown in campaigns. And it just started to organically grow into this very, very engaged community, which then at a point, I was like, "Let's create products for them, it's time." And that's kind of what led to our first product launch in may of 2019.
Stephanie:
Yeah. We had a really cool company on... Food52, same thing, they build up a huge community first, and then, afterwards, she was like, "Oh, it was only right to then start creating products to service that community." But my biggest question is always like, how did you build that community? How did you transfer the audience from TV to then go into your community? Or from Instagram, or YouTube, or wherever you were, how did you pull them in and get them engaging in a way where you're like, "They're here for the long haul and now I can move on to phase two of a product?"
Deepica:
Yeah, no, it's a good question. I think for me, I feel very grateful that those three years as an influencer, I created a community of people who felt very connected to me, because again, there wasn't a lot of brown girls doing this. And so, I felt like they would be ride or die for anything I put out into the world. But that is, to me, a huge responsibility, and it was like, "Okay, so now, if I create this brand, I don't want it to be about me, I want it to be about something so much bigger than myself."
Deepica:
So, if I had just launched it, which a lot of investors in the beginning were saying to me like, "Why do you have to create this community first and spend money on creating content as a community platform and things? You already have a following, create a product, show proof of concept, and build it out." I just didn't listen, and I felt really strongly that LIVE TINTED was bigger than my own identity, it was about a larger multicultural group of individuals coming together and finding common ground in industry where I felt like people were so divisive.
Deepica:
And so, I really wanted to kind of bridge that gap and create a really powerful, I think, warm home for people. Which, I think, a lot of brands are saying they're doing now, and it's awesome, right? I'm not hating, I think it's all for the greater good. But people are smart, and they can understand when some people are being performative versus not. And I feel very grateful that since day one, we've had values and core beliefs that we've... Of course, they evolve, but the core belief around diversity and inclusion is the pillar that has stood strong since the beginning.
Deepica:
And so, for me, on an actual tactical level, the first 20,000 followers, I would say, came directly from my following, from... I remember before we even launched it, I was trying to find photos of deeper skin brown women online, and it was virtually impossible. I was just searching and the team was searching, and I was like, "You know what? Let's use the power of social media." And I just posted on my Instagram, "I'm working on a project on stories, if you see any deeper skin melanated brown women, use #livetinted." I'm not even kidding, within minutes, the #livetinted was flooded with just tags. It was just like this community of women who have been thriving to be seen. They are just craving for this industry, who has neglected them, to pay attention to them.
Deepica:
So, when you ask, how I did it, sure, my following definitely helped do it, but what really did it was that there was just a natural need. These people didn't have another home, and they were excited to finally have it. And so, I also think that it grew from just being a South Asian Brown collective to being much larger. Because again, I talked about topics that were very specific to me and my life. I didn't force it and try to speak to something that I didn't know personally. And with that, I recognized colorism is not an issue in just the South Asian community. To be honest, I'm learning so much as we build this brand that... I had no idea, this is something that so many different cultural backgrounds face around the world.
Deepica:
And that actually, excited me, because I realized that there is an opportunity to create a brand with pillars that, like I said, unite people from all different cultural backgrounds rather than divide. And so, it just organically grew from there, just by talking about things that I lived in and experienced in my life.
Stephanie:
Yeah. That's very cool. So, how many people are in your community now?
Deepica:
Well, it's a tricky number, because I say 600,000 because I include my community as well. Because quite honestly, my whole brand has shifted to just LIVE TINTED stuff, Which I love. Yeah, we're a little over 600,000.
Stephanie:
Cool. And how do you think about keeping them engaged on the different channels? What are you doing now that's maybe different than when you started out in what? 2015, 2017?
Deepica:
I mean, yeah, because my brand started in 2015, and then LIVE TINTED started in 2018. But you have to evolve with the times. Perfect example is, hello, TikTok.
Stephanie:
Yeah. Actually, my favorite influencer is an Indian girl on there with her dad.
Deepica:
Oh yeah, she's amazing. I love her.
Stephanie:
What's her name?
Deepica:
Sheena? Is it Sheena? It's starts with an S.
Stephanie:
Yeah. She's so funny. But you never see her dad, it's always just his responses to things that she's doing. I've never seen her dad anyways in any of her videos. But she's my favorite. She's hilarious.
Deepica:
I'm obsessed with her. And yeah, I feel like there's this understood brown community bond where you're rooting for each other, because it's like, so many of us were told to be doctors and go down this traditional path. Yeah. One of my goals for the brand is to spotlight not your traditional beauty influencers, but people like her who are just creative creators. I think there's this incredible creative community that I've come across just from building LIVE TINTED that deserves so much spotlight. We have big plans to only continue to spotlight them in a bigger way as the brand continues to grow, Which I'm excited about. What was your question, again?
Stephanie:
[inaudible] Yeah. Okay. So, [inaudible] I like to derail things every once in a while, but back to saying... You said you had to change with the times, from what you used to do to what you do now, and you said, of course, TikTok, what are you doing today to keep your audience engaged? And how do you think about treating the different platforms different, [crosstalk] people right now are connecting with them best?
Deepica:
Well, I think, first and foremost, I don't try to pretend like I know something that I don't know. And so, luckily, at this stage in the business, bringing in an intern that's in college that can do TikTok for us, because I'm like, "Wait, what is this dance move? What's going on?" So, I think hiring subject matter experts is something that I feel like, finally, oh my gosh, because I've been just doing everything for the longest time that now, it's like, let's hire for people to do what they're good at.
Deepica:
But of course, you have to have a pulse and know what to even hire for, right? It's like, am I looking for an email expert? You have an X amount of budget, if you're going to focus in on email versus... Social versus paid versus all these other marketing levers, you know what makes sense? For example, for us, influencer is such a critical part of the business, because a lot of them are my personal relationships, but we need to continue to grow that network to the people... Just like the girl you just mentioned, there's a whole community of people that are continuing to create and build every year, and so, for me, it's about staying on the pulse and making sure you feel comfortable evolving with the times.
Deepica:
Facebook is still a powerful, powerful sales channel, for sure. And so, we do need to be relevant on there. But if you're a small team, and you have to pick and choose your efforts, for us, it's been deprioritized, and eventually, we'll get back there. But I'm way excited about LIVE TINTED impacting the next generation and helping them be a more tinted future, where everyone sees beyond the hues of their skin.
Deepica:
And so, I get really excited about tapping into a younger audience because they are the future of this entire industry, than going towards maybe an older audience. So, these to me, are just the little things you have to keep your mind on, what is your goals? What is the audience you think that you can really tap into? And what are they doing? And then, you decide your marketing leverage based on that.
Stephanie:
Yup. So, how are you thinking about tapping into TikTok then? I mean, you're mentioning partnering with an influencer who isn't a beauty influencer, but could still probably drive results. And I know earlier you said influencers, and you kind of cringed too in thinking about that. So, tell me a bit about, how do you partner with them? Does it work? How do you make sure that it works? All the details behind them.
Deepica:
Yeah. I cringed because I feel like the word influencer has been so like... It's been created into this like comedic relief for people, and I think that's what makes me cringe. But one thing that I feel really, really strongly about, is the value of these creators. I think of them as creatives that are just really changing the landscape of marketing. And I think that it's just the word influencer used to really make me cringe because I felt like it wasn't respected. And as somebody who went through being an influencer, and I still am an influencer, at the end of the day, [inaudible]... By the way, something people forget is influencers have always existed, they were just called celebrities before.
Deepica:
The definition is evolving and changing, and it's going to continue to evolve and change. If you have a platform and an audience, you are an influencer, you have an influence of some sort. And I think it's actually a really powerful thing, if you think about it, because it makes you realize, anyone can be an influencer, and it makes people empowered to use their voice. But the part that I get really excited about, like I said earlier, was this creative community, and how we can work with them. The same way I told you, these girls were just wanting to be seen. These creatives are just wanting to be seen, and they've never been given the opportunity to be seen. So, how is it that LIVE TINTED as a brand can tap into these people, and really invest time and effort as an internal team to search for these people, and work with them, and not go against the grain, and go against who everyone else is wanting to work with?
Deepica:
Listen, we're still a small company, so paid partnerships is something that I can't wait to be able to do. It's like, are you kidding? I went through it, I want to be able to do it for other people. So, we're working on trying to grow those relationships now. So, when we have a full budget in place, we support these, I would say, underdogs, versus going towards the people that everyone else was going to, because that's no fun.
Stephanie:
Yeah. And I mean, that's a big theme that I'm hearing too, is finding more of the micro-influencers who have a very engaged following, but they might only have a few thousand followers, versus a million, but those few thousand are ready to convert and really buy the products, and do the things that you're doing. How do you go about finding those people? I mean, it seems hard to have to go through TikTok and Instagram, and find people that might not show up on your feed right away, if you are kind of searching through all that.
Deepica:
Well, there's a lot of cool tools now that we've actually just invested in, which... Honestly, for me, my plan was to do it the old school way, of just investing the time, finding people, and I think, that to me, was the way to go, but there's supplemental tools, like there's this new platform... I sure don't know if it's new, it's new for us, called GRIN. And it's a way to manage your influencer partnerships and relationships, so you can actually have data and analytics to back up why you're doing certain decisions. And it's like, traditionally, in PR, you send products out, you hope somebody posts about it, who knows if they do? Tracking that is really... It's just a lot, so you need to have the manpower to be able to do it.
Deepica:
And now there's these tools in place that make it a little bit more scalable, which is really great. But I don't think anything can beat the just human aspect of finding a gem of a person and saying, "This is who I want to grow with." And I now, luckily, now that there's a team in place, I can spend my time doing those things, because, first of all, I truly believe that is the special sauce that comes from a brand, is those little efforts you put in that take time, that really set you apart from the others out there. I don't want to be the person who partners with the biggest TikToker, and not just because of the financial reason, which I think... I don't want to speak for other people, but I think a lot of times, the theme is to go to micro or nano influencers because of budget reasons. And to me, it's really exciting that they're untapped, and have a voice, that they're... You just want to continue to empower that voice, I guess.
Stephanie:
Yep. Yeah. I love that. So, how do you think about strategic partnerships, or when it comes to when you're getting investors? I mean, I'm thinking, okay, you have Bobbi Brown who is very big in the makeup space, what did that look like? Did you have that in mind when you partnered with her, like, "Oh, maybe you can kind of showcase my line along with your brand?" How does that work? And how did you think about picking strategic investors instead of just going with the first person who might give you money?
Deepica:
Yeah. That's actually exactly what happened too. So, I learned so much through my fundraising process, so it was my first time doing it, and what I came out of it realizing was, nothing is more valuable than experience, and that includes a cheque. I think I was taking people's cheque, but really, what I was taking was their experience, that's what I wanted to learn from.
Deepica:
And so, I had a couple term sheets where it was like one large cheque from one VC... Which, by the way, that whole process is a whole thing in itself. But I feel grateful to say that... I actually don't feel like I had as much trouble being a woman of color getting investors on board as much as I think I've heard a lot of my other girlfriends who are women of color, specifically, black women, which is just all sorts of messed up in its own, that... I feel very, honestly, grateful that I didn't go through that, but I also think it's really messed up that I didn't go through that as much. But that process has taught me so much in what I want to do in my future of... There's so much I want LIVE TINTED to do to help other women who want to create their own brands. But when I went through that process, I was like, "Wow, I really don't want one person this early in my business to dictate my decision-making."
Stephanie:
Yup.
Deepica:
You're learning so much in the beginning, and the last thing you want is for someone who knows nothing about your business, who just gave you a cheque, to say, "You need to go into this retailer, or you need to do this partnership, or grow this, or hire this person." So, instead, what I did was tap into a network of people who I worked my off to build my entire career, and tell them, "I'm launching my own brand, and you've been somebody who has been a mentor in my life in some capacity." And really positioned it as an opportunity to be a part of the growth of what I'm building. And I feel very confident about that. I still feel that way. I know and I feel very competent about what I'm building, and what the impact it's going to have on the world.
Deepica:
And so, I went to all of these mentors or just advisors in my life, and they put in more angel cheques, strategic angel cheques, really, just to get their advice. I'm learning from their mistakes. Andy Dunn from Bonobos, the other day, I sent my annual investor update, and he was like, "Just continue to focus on profitability, don't overspend on marketing, learn from my mistakes." I'm learning from all of their mistakes. Payal Kadakia from ClassPass, she would say, "Focus on your why, don't ever get distracted from the why." And Bobbi Brown, she was the first to tell me, "Go on a motherfucking date." That's what she told me to do. She literally, told me to go on it, and she used that word. So, that's why I said that, I apologize [crosstalk].
Stephanie:
That's okay.
Deepica:
But that's Bobbi for you. She is such a dope woman. She is no BS. She told me, she was like, "At the end of the day, you will succeed because that's who you are, but you don't want to look back and wonder, what was it all for if you don't have someone to share it with?" And so, maybe that's a part of the reason I came back to Texas, and I'm kind of taking a step back and zooming in on things. But they all give me different advice for their own nuggets of what they went through. And Hayley Barna from Birchbox, is now a partner at First Round Capital, she put in a personal cheque, and I feel like I could always call her to ask her about fundraising advice, because they've obviously raised so much money.
Deepica:
It's just truly invaluable to be able to talk to people who've gone through the mistakes and the wringer to say, "I'm thinking about [inaudible]..." I'll give you an example right now. Food52, I love what they're doing. You mentioned them earlier, I love what they're doing. I love the idea of a collective ecommerce shop where you're creating content to commerce. I think it's really smart. And I've gotten distracted in the past of wanting LIVE TINTED to also be that as a collective home for inclusive beauty. I wanted to create the next sephora.com that truly zoomed in and focused in on, you won't be on our site unless you are caring about inclusivity. That doesn't mean you have to be a POC owned brand, we will absolutely prioritize it more than most people do, but I had this vision.
Deepica:
And at the end of the day, I think the biggest, hardest thing for founders to remember is to stay focused, eye on the prize, and I think... That doesn't mean I don't want to still do it one day, but we have way too much momentum happening as a singular brand that I think I just have to stay focused. And these kinds of founders in my life, if I called them, and I'm like, "But what if we, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah." They will all pull me back and say, "All in good time, young grasshopper." [crosstalk].
Stephanie:
That's awesome. And I mean, that is the time when a lot of founders do kind of want to start seeing profit, want to go big, want to experiment a bunch of different areas, and I think that's really smart. And I also love Bobbi Brown's advice too. I mean, I love the personal aspect when you find people like that.
Deepica:
Another thing, on the Bobbi Brown thing, her specifically, we met through the DM.
Stephanie:
That's great.
Deepica:
Yeah. You can connect with anyone in the world, you have no clue what the power of social media... There's so much negative that comes with it, but there's so much positive. And I remember on my launch day, I was in New York City doing a ton of press, and I went to Jersey to meet with Bobbi Brown in person, and she was like, "Wait, your launch day is today, and you're here?" And I was like, "Yeah, you're Bobbi Brown." [crosstalk].
Stephanie:
I'm here.
Deepica:
Yes, of course, I'm here. Because to me, she was doing inclusive beauty before inclusive beauty was inclusive beauty. And as a Jewish woman who grew up in New York, I just find it to be so impressive that she recognized that... She sees it as like... Obviously, I care about making sure that everyone feels represented, that's how she sees it, and I feel like I wanted to learn from that person. I want to create my own Bobbi Brown cosmetics one day, and I feel like with her guidance, I'm well on my way.
Stephanie:
Yeah. That's cool. So, I mean, you have a lot of good mentors and investors. I mean, Andy Dunn is another good one. He actually was our first investor in our company too-
Deepica:
Oh, wow.
Stephanie:
[inaudible]. So, good people you got there. What is something that they're guiding you on right now for 2021? How are they kind of... I mean, Andy has Walmart, but he got to look at... He has a lot of things that he can see around ecommerce at Walmart. What are people like that saying right now? Like, "Hey, Deepica, you need to start preparing for this. Or we're seeing this shift at our company, so maybe you need to kind of pivot, or adjust, or do something different to be ready for this new world." Anything high level like that?
Deepica:
I think the biggest theme and general advice, is slow and steady growth for the win. And that's very different from what I was told when I was first fundraising in 2018, it was all about the next billion dollar unicorn company. And I have a couple of people who were unicorn companies, Payal Kadakia as an investor, and it's like, they are all also advising me like, "Just don't get caught up in the noise, don't get caught up in the quick turnaround story." And the more I'm seeing what's happening in this bubble, that's kind of bursting, it's like, "I'm so happy that we didn't take on a ton of funding, we're growing slow." And I'm going through the fundraising process right now for our Series A, and the reality is that we don't need to fundraise right now. It's this back and forth of like, we're doing really well and we can go really slow.
Deepica:
But at the same time, like you said, Andy is with Walmart, and one thing we're exploring right now is retail partnerships. And so, one thing that I think is very apparent now is, it's a very different ecommerce and D2C climate than it was five years ago, as we know. And I think the idea of being omni-channel, it's not an option. We have to be omni-channel to also beyond just like the business and the metrics, because myself being, again, that 16 year old girl who dreamt of having her own beauty brand, it's about impact too. And I want my physical products to be able to be touched and held by people who are in store. And again, go down those beauty aisles and actually see yourself represented. And I feel like we're the brand that needs to do that in a big way.
Stephanie:
Yes. Beauty feels hard to me though from ecommerce. I mean, I'm just thinking about... I went to Tarte, which is of course, a beauty website, and I was ordering things on there, and it still feels so hard to figure out what you need to buy based on your skin tone. And it's asking me all these crazy questions, which you're probably like, "Yeah, those are obvious ones." Like, do you have a pink with a yellow undertone there?
Deepica:
Undertone.
Stephanie:
I'm like, "I..." And it literally has 50 options, and I'm like, "I don't know, am I pink? Am I yellow? Am I green? I'm not really sure." So, beauty feels hard. I mean, I know obviously, being in retail, being in person is important, but during this time right now, where that's been a little bit harder, how did you think about adapting your ecommerce experience in a way that people could know what they wanted, or what was meant for their skin? It just feels so hard.
Deepica:
And it is really hard. That's totally true. We're actually going through a site revamp right now, and it's all going to focus on community, which I know is such a buzz word. But the best thing we can do is tap into all these people who, again, have been just dying to be seen and be featured. And they're not like the person with all this following, whatever, this massive following. And to me, what we can do is... The best marketing tool we have is them, and see them, the product, have them create the content, have them be the things we feature on our website, so people like you can go directly to the site and see themselves and say, "Oh, well, I look like her." It just helps.
Deepica:
I think Rent the Runway is the first example I saw of a company that... I remember shopping it and picking a dress, because I saw girls who had my body type, and I was like, "Oh, well, she..." All the reviews, I think it was [inaudible] that they used on their website that is really great customer review experience. And I remember when we created livetinted.com, I wanted to use [inaudible]. So, we do for our review system, because I wanted it to feel really real, a yelp kind of situation where you're truly feeling like you trust that person telling you which product works for you.
Deepica:
So, it's tough, but there's tools and ways to make it better. And I think just leaning into people and humans, and having them be a part of the experience, and creating a really strong customer service experience so they want to meet that review, is all important.
Stephanie:
Yeah, that's great. I also think that technology is evolving to a place now where... You should be able to have your face in front of your camera, and take a picture, and then be like, "Here's exactly what would go best with your skin tone or something."
Deepica:
It's getting there, and there's apps and stuff too where you can do that, but lighting is such a factor. We're getting there, but with beauty, it is tricky. And I think all the tools I've seen this far, none of them have worked for me. That was one of the business ideas I wanted to do in college, I was like, "It's just too hard to shop for beauty online." We'll get there though.
Stephanie:
Yep, I think so, too. All right. So, let's shift over to the lightning round. The lightning round is brought to you by Salesforce Commerce Cloud. This is where I'm going to ask you a question, and you have a minute or less to answer. Are you ready?
Deepica:
Yeah, sure. Okay.
Stephanie:
All right. What one thing will have the biggest impact on ecommerce in the next year?
Deepica:
I would say new ways of leaning into people and community. Yeah. I just said that, but we're currently revamping our ecommerce site, and the biggest thing we're focusing it on is people and experience, and tapping into the human aspect of what people are looking for when they're buying something, which is as emotional as a color corrector to solve their dark circle issues. And so, I think if you continue to focus in on people, community, how they can drive purchase decisions, you'll thrive in the ecommerce world, especially in beauty where things are very... You want to see yourself reflected.
Stephanie:
Yep. I love that. What's the nicest thing anyone's ever done for you?
Deepica:
Wow. Is this personal or business? I mean-
Stephanie:
Whatever comes to mind, whatever you want.
Deepica:
This is the first thing that comes to mind, because we just talked about it. You should always value every person you meet in life, because you never know where it's going to lead, and come back, and connect, and help you in the future because... I didn't work directly with Hayley at Birchbox, but when I quit my job for her to... She introduced me to XFactor Ventures, which is our first VC that came on board, that gave us our first cheque, which then created a ripple effect that made other people think we were legit, that created another ripple effect. And I think that confidence in somebody who only... I worked with her but at a very bird's eye view and stuff, and so it's kind of like... I'm so grateful for that. And not just her, just generally, I think, when I think about the people who have taken the bet on me, I think it really makes me feel like I'm here for a reason, and I have shit to get done.
Stephanie:
Yep. That's great. What ecommerce tool are you most excited about right now?
Deepica:
Right now, it's GRIN, that's the one that we're literally doing trainings on right now. We're really trying to optimize. I think the influencer partnership space is something everyone's trying to figure out and find a way to scale, and I'm hoping and hopeful that GRIN can help us do that.
Stephanie:
Yeah. Wow, that's awesome. We will check that out also. If you were to have a podcast, what would it be about? And who would your first guest be?
Deepica:
Well, I'm working on getting this started, but it's going to be... It will be called Hue To Know, which was... Instead of [inaudible] To Know, Hue To Know.
Stephanie:
Yeah. I like that. That's cute.
Deepica:
And we had a whole video series for LIVE TINTED when we were just a community platform, where we interviewed people, they came on, and they talked about their identity and culture, and it was all these... To me, they were dope creatives, again, people that you should know about that you may not, like a black Muslim rapper, or a gender nonconforming South Asian artist. And these people who were like, "I'm going against the grain and creating a path for myself, and living tinted." That's really, to me, what that means, and what LIVE TINTED stands for. So, I want to bring them on as a guest, and create it into a podcast form. And my first dream guest would be Meghan Markle, because I think she's incredible.
Stephanie:
That sounds great. Well, if you need help getting off the ground, you know who to call.
Deepica:
Great. Okay. Cool. Yeah.
Stephanie:
All right. And then, the last one, what is your favorite business book where you often go back and think about it, or read quotes from it, or whatever it may be?
Deepica:
Man, I wish I had it so I could show it to you right now. This was a pile recommendation. It's called Financial-something, Financial Terms... Financial... I'm going to have to find it and send it to you.
Stephanie:
[crosstalk].
Deepica:
Yeah. But she told me... Before you go into fundraising process, as a person who's never done it before, there's a lot of terms that get thrown around, like convertible notes, and cap tables, and all this stuff. I didn't know what I was doing, so she was like, "It's going to feel like you're reading a dictionary, and it's going to be dense, but you want to be able to walk into those meetings with full confidence, and I highly recommend that you read it." And so, I have to look for the book and find the name. There's a lot of different terms in there, so I'm blanking on the title itself.
Stephanie:
Yeah. I think there's a good book that it reminds me of called Venture Deals by... I think it's Brad Feld-
Deepica:
That's what it was.
Stephanie:
Oh, is that what it is?
Deepica:
Damn it, it was Venture Deals. You're right. Yes. Yes.
Stephanie:
Okay. Well, [inaudible] because I'm like, "That's a good one too." Where I remember-
Deepica:
That was it.
Stephanie:
... when we were thinking about raising money, I'm like, "All these terms, I don't know what they are. Pre-money, post money, cap table. Oh my God, what are we talking about?" So, that's a good book for anyone raising money right now.
Deepica:
That was it. Mm-hmm (affirmative).
Stephanie:
Awesome. Well, thanks so much-
Deepica:
[crosstalk] But it's a good book, but yeah.
Stephanie:
Yeah, yeah, yeah. It's a good book. And then, after you read it, you're like, "Okay, I'm done with that for a while." Awesome. Well, thank you so much for joining the show. It was so fun having you on. Where can people find out more about you and your work?
Deepica:
Well, I'm obviously, going to plug LIVE TINTED first. LIVE TINTED is L-I-V-E T-I-N-T-E-D, livetinted.com. @livetinted all on social. And then, you can also follow me at @deepica, D-E-E-P-I-C-A on all social outlets.
Stephanie:
Amazing. Thanks so much.
Deepica:
Thank you for having me.
What if we told you that you may be approaching Amazon in all the wrong ways? Many brands, especially more established ones who started out in brick and mortar, have been playing a game of catch up while trying to quickly figure out how to sell on Amazon and win. But it may feel like a confusing place to win. Especially if a brand is trying to apply a brick and mortar sales approach, like winning a category, to online platforms like Amazon, Target, or Walmart.
But we all love a good underdog story, which is why we invited Andrea Leigh to the show to share her secrets.
Andrea is the VP of Strategy & Insights at Ideoclick, a full-service ecommerce optimization platform. Before Ideoclick, she spent nearly a decade working for Amazon, so she is coming to the table with a true insider’s view and strategies in her back pocket that she’s seen work on Amazon and other marketplaces.
In this interview, which was one of my favorites I’ve ever done so far this year, Andrea and I discuss why brands need to accept the death of the category and start thinking about how to stand out against an entire competitive set. Doing that means repositioning your brand and winning the share of search, it means optimizing for SEO, and it also means going back to the basics of differentiation so that you’re not just another option in a sea of products that look exactly the same. Plus, we talk about selling across multiple ecommerce platforms, and how to think about Amazon releasing “white label” product lines. I hope you enjoy this discussion as much as we did!
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Transcript:
Stephanie:
Hey, everyone. And welcome back to Up Next in Commerce. This is your host, Stephanie Postles, co-founder and CEO at Mission.org. Today on the show, we have Andrea Leigh, the VP of strategy and insights at Ideoclick. Andrea, welcome.
Andrea:
Thanks for having me. I'm excited to be here.
Stephanie:
I'm excited to have you on too. I was looking through your bio and I saw that you were at Amazon for almost a decade, and I'm sure you have some good juicy stories from that those 10 years.
Andrea:
I do. It was a wild, wild ride. I think when I started, I was employee 4,012 or something like that, and then when I left, 99.9% of the company had started working there after me, so I was literally a dinosaur. Yeah.
Stephanie:
Oh my gosh. That's amazing. So what were, high level, some of the things that you did at Amazon and are any of those things still relevant today?
Andrea:
Yeah, I think they're super relevant. I spent my entire career there working on their ecommerce business, and everything from the early days of helping launch their price matching software, the software they use to price-match other retailers. I worked on Harry Potter book launches back when print books were the only way to read books. We also had some things that we did with Oprah's Book Club. I worked on the launch of the grocery category on Amazon.com, and the Fulfilled by Amazon program there, helped launch the baby registry and built the baby category after Amazon severed ties with Babies R Us.
Andrea:
I was general manager for Amazon Fresh for a little while. At my last three years there, probably the most exciting, I moved onto our Canada business and I launched 15 product categories for Amazon Canada. I ran the Prime program up there, and then I also managed our transportation network. And that was probably my most exciting role because it was certainly cross functional. But I think the common thread is, and probably why I liked Canada so much in the later years was just, I really, really enjoy working with the manufacturer community.
Andrea:
I think that the process that they go through to really understand the customer, to build products, to address customer needs, and then to figure out how to connect consumers to the values that they've built in their products, I think is just really exciting, and figuring out how to do that online is even more exciting. Certainly, in the early years of Amazon, we spent a lot of time working with brand manufacturers and partnering with them because we weren't very big back then and we were really trying to get these categories built and to get customers shopping online for things besides books.
Andrea:
And I found that to be really enjoyable because every manufacturer has a unique set of challenges. It's like a puzzle to be and to collaborate on. And that's still what I get a chance to do today at Ideoclick and really, really enjoy that process of helping manufacturers solve those puzzles. And we certainly don't have all the answers, but I think it's a similar process to go through with each manufacturer to identify where they are on their ecommerce journey, and then help them figure out how they're going to build a sustainable business.
Stephanie:
That's awesome. So tell me a bit about Ideoclick. How did you think about creating Ideoclick? And what is it? What does it do? How does it help companies?
Andrea:
Yeah. We're an ecommerce optimization platform, and we're a hybrid of a software solution and a services organization. And my husband actually started Ideoclick about 13 years ago. We were both working at Amazon together at the time, he left and started Ideoclick and I stayed at Amazon for 10 more years. And I joined up with him about, it was probably like four or five years ago now, to help him run Ideoclick. And really, it came from the same place that I was talking about earlier, really wanting to work more closely with the manufacturers, help them figure out how to navigate Amazon.
Andrea:
As Amazon became bigger and bigger, not only did it become more important to the manufacturers' business, but it started to become a little unwieldily in terms of how to be successful, how to make sure your products stand out, and how to negotiate and operate. With such a big player, that's so unique and looks so different from brick and mortar, which is what most manufacturers have been really accustomed to for so many years. And so Ideoclick was really born out of that to help manufacturers navigate these waters. And we are a full service, white glove providers.
Andrea:
So we do everything from setting up the items in the digital catalog, writing content, running all of the automated advertising on Amazon, Walmart, Target and Instacart, and also going back and assisting with operations, managing the chargebacks and fees that the retailers often slap on the manufacturers and recovering some of those fees. So we're a full service agency, we're in a category called managed services.
Stephanie:
Got it. So what are some of the biggest maybe missteps that manufacturers or sellers are making on the platform where you're like, "I've got all these secrets from an exec at Amazon that I know how to prevent that or why you shouldn't be doing that." What kind of things are you preventing from happening when you're working with them?
Andrea:
Yeah. I think my answer would have been really different a couple of years ago, especially COVID impact on ecommerce. Amazon's not the only game in town anymore, and these other platforms, more specifically Walmart and Target, but if you look category by category, they're a becoming a really big player in each space, whether it's Wayfair for furniture, or Sephora and ULTA for beauty, or Chewy for pets, there's a player there that's starting to represent a sizeable portion of the business. So a couple of years ago, I would've said getting these Amazon foundational things right is the most important and it's the biggest misstep.
Andrea:
But I think now we would say not having a strategy across all of these eCom players is a real big misstep, and shooting from the hip, because I think we're in a world where these retailers are in fierce competition with one another, they're price-matching each other, they're very closely watching what one another is doing. And you don't want the customer to suffer as a result of that. And so having a strategy that does things like differentiating assortment or helps you figure out how you're going to allocate your ad budgets, now that all these platforms have ad platforms associated with them as well.
Andrea:
I think that shooting from the hip is probably the most common misstep that we see. But I think some of the same things still hold true from several years ago, which is just getting those foundational elements right. There's certainly little tricks you can do and little black hat tactics that will get you some more reviews real quick or help you get to the top of search. We don't focus on that stuff, it's not sustainable, most of it's against Amazon's policies. So it's really about making sure your products are in stock, making sure you have the correct information on your product pages, making sure that you've got resources internally within your organization to support ecommerce and to drive it, making sure that you have good SEO and you're making use of the ad platform in appropriate ways.
Stephanie:
So now that you just mentioned SEO, I do want to talk a bit about categories. I know that you've been on, maybe a brand or whatever it may be for a while around like, categories aren't the way forward anymore, and that you really need to optimize for search, just like you would anywhere else. So tell me a little bit about how ecommerce owners should think about that going forward. Why is Amazon not as focused on categories anymore? Or maybe the buyer's not focused there?
Andrea:
Yeah, I think it really starts with the customer, and the customer not being as focused on categories. I can tell a little story that might help illustrate it. We had a manufacturer come to us and say, "I'm like the number two or three bottled water brand in the world, and so I should be number two in my category on Amazon." And there are a number of reasons why that thinking is a little bit out of date or flawed. When a customer goes to Amazon and searches for bottled water, they don't just see bottled water, they see tea and electrolyte water and powdered electrolytes for water and ice, flavored water, and all kinds of things that are category adjacent. But they may also see things that are out of category.
Andrea:
Peanut butter is another great example. If you search peanut butter on Amazon, you're going to get some peanut butter, you're going to get peanut butter crackers, you're going to get peanut butter bars. And it's not because like Amazon is not thoughtful about deciding what to return in those search results, for example, they're returning those products because those are the products customers are buying. Their algorithms are very, very smart. And even from an advertising perspective, you can't win those ad slots unless there's a history of customers making that search and buying your product.
Andrea:
And so the concept of a brick and mortar category totally makes sense if a customer is going to a store, they're going down an aisle, they're presented with bottled water, they choose from what's available to them, and then they move on to shop at a different category. But eCom customers don't shop that way, the category is dynamic, it's continually evolving, shaped around that customer. And what they've specifically looked at when retailers are using automation and personalization. And so you can't really apply that same mental model to ecommerce. You have to really think about that entire competitive set.
Andrea:
And so that manufacturer who thought he should be number two or number three bottled water brand his competitors on Amazon, aren't just bottled water, as we stated, they're tea and they're electrolyte water and all kinds of other things. So his competitive set is different, but also because ecommerce platforms and more specifically, Amazon, has frictionless entry, so any manufacturer can sell on Amazon, the competitive set is going to look a lot different than in a brick and mortar store where you have like a buyer making assortment decisions.
Andrea:
So, whereas there might be five or 10 nationally recognized brands in a brick and mortar store and maybe a couple of local players and private label, on Amazon, there is a huge long tail of brands that are not nationally distributed, maybe only sell on Amazon so that competitive set looks entirely different. And I think that's a big misstep that manufacturers make, is applying that same mental model, trying to look at like market share and category and ranking category, versus moving their thinking to the ecommerce world where there's really no such thing as a category.
Stephanie:
Yeah. The only time I can see categories being helpful is if you're in the browsing mood where you're like, I'm going to be having a baby, and I just want to see, what do you buy for babies? So like if you're in that browsing mood, which maybe isn't always high intent to buy, more just kind of looking around and maybe you buy, or if it's a curated category, like here's the guest for Father's Day. I have found those helpful where I'm like, I don't know what to get my dad, and on the homepage, it's like, "Here's a whole... " Maybe it's not a category, but the whole curated collection, pick one and go.
Andrea:
And that's where I think some of these category specific players win over Amazon. They do encourage more browsing because they are curated assortment, because their browse and data are really clean, and it's a more enjoyable experience. But if yo did try to shop by category on Amazon, the data shows that more than 90% of customers just go and start searching, you would maybe not like what you found. It's an overwhelming experience, it's not curated in any way. And then the categorization data is bad because Amazon doesn't use it. They're building a search platform more than they are building a browse platform. And I do think these other eCom players, this is where they can win over Amazon, is they make the shopping experience more enjoyable, they encourage browse, and they curate the assortment.
Stephanie:
Yeah. We just had on a company called The Fascination. It was about discovering new D2C companies and being able to browse around. But once again, that's highly curated versus just going to a category and being like, "Whoa, let's see what's here today. Oh, there's like 1,000 things. No, thanks." So if we're in a search world now, where you need to optimize for that instead of just worrying about being the number two water bottle, showing up in the category, how should a brand be thinking about that? How do you optimize for search? Are you bidding on keywords? Do you have to use just Amazon platform? Or is it more of like a holistic approach of like, you got to have a good product, you have to have good reviews, and all encompassing?
Andrea:
Well, certainly it's a whole package deal. There's not like one thing that drives all of the success. But I do think that really understanding that customer and the process we go through at Ideoclick and manufacturers could go through a similar process on their own is we identify these customer search groups. Identify the customer that you're going after and the product that meets their needs. And then from there, what are all of the search terms that customer might search when they're looking for that product? And then bouncing that against if there's any search philosophy. Amazon publishes that data, so it's knowable to know if a search actually has any volume associated with it. And then that's your customer search group. And then we're able to measure progress on achieving placement in search on that customer search group relative to the competition. So the way that we're doing that is, in a brick and mortar world, this would be like market share.
Andrea:
Like you'd say, "What are my sales over the entire category sales?" And in ecommerce what we do is share of search search. So we say, "What are all of my positions within those first 20, 30 search results relative to the entire set?" And obviously, there's some weighting associated with that, because like if you're up on top, that's more valuable, drives more sales than if you're like down at the bottom or the customer has to scroll a lot on their phones. So measuring that share of search for your customer search group relative to the competition.
Andrea:
And it does a couple of things that I think are a lot better than a brick and mortar market share model. The first is it very quickly identifies who your competitors are. So if you didn't know which... Most manufacturers don't know who their Amazon competitors are, and that's because manufacturers, when they're checking on their products on Amazon, tend to search for their brand name. So of course you're going to get your products. But if you take a step back and instead of searching for your branded facial moisturizer, you search for face moisturizer, you're going to see an entirely different picture of who's turning up.
Andrea:
And so this allows you to really measure your percentage of that customer experience, essentially, going back to the customer. And in addition, it gives you more of an upstream look at what's about to happen. So market share is, it already happened, your sales occurred and now you're measuring as a percentage of a total. This allows you to affect what's going to happen in the future, so it's an upstream, maybe an input metric versus an output metric. And then lastly, the share of search is measuring like a finite amount of the first or second page, which is really, as far as the customer is typically going on like a basic search...
Andrea:
And that looks a lot different in terms of number of brands than what you might see in like a finite category on a brick and mortar shelf. So there may be more brands, more types of categories represented, and measuring that as the percentage of a customer experience really allows you to develop some advanced strategies against those competitors.
Stephanie:
Is Amazon providing the tools so you can see your share of search, or are you doing this for your customers? Or if I was by myself trying to be like, "Who are my competitors?" Would I be going through the first three pages and being like, "Here they are? How do I figure out that share of search?
Andrea:
Yeah, it's really tricky. So we have software that does it for us, and share a search is our proprietary offering that we provide to our clients. But it wouldn't be hard to do a very simplistic view of this, which is identify like five terms that you think matter for your product, run a search and count how many of the first page you have. It's not a difficult activity. To get more nuanced about it and track it over time and track all the competitors and all of that, obviously you need some software, but you can do a really simplistic look. And this is often what we do for a manufacturer who is considering working with us, we'll take a look, we'll do a quick share of search audit and do exactly that exercise.
Andrea:
What are the five terms that we think matter? How much of the page they have, and who else is showing up? And you can really quickly see how you fair relative to those competitors, not just in the position of search, but like how many reviews do you have versus the competition? What's your star rating? What's your price point look like? What is your packaging look like? It's a very fast view of how you compare in this marketplace. And there are some really aggressive brands out there. We have clients that come to us and they say, "I'm private equity backed, I am a new go-to-market brand," no one has ever heard of them, "I have no distribution, and I want to get distribution in Costco next year, in a year. What is your plan for me?"
Andrea:
And we have a program for that. It involves a really, really large marketing investment. But but that's what these traditional manufacturers are up against, are these really upstart brands that are doing pure play Amazon and really trying to make a presence for themselves. And while they feel like ankle biters when you're just looking at the Amazon search results, next year when they are in Costco, they're no longer ankle biters.
Stephanie:
Yeah. Which is what's great about it. How do you think about when someone comes to you and says they want to be in Costco... I mean, I've read amazing articles about how Costco will make sure that your product... Like their product always has to be slightly better, but they'll also still work with you to make sure that your yours is selling as well. So one example was like Starbucks. They made sure that their coffee, Costco brand, Kirkland brand was a little bit better than Starbucks based off whatever criteria, but then they also made sure that Starbucks was also being sold, or whatever the brand name was, in a way that it wasn't cannibalizing.
Stephanie:
But Amazon feels a little bit different when they come out with white label versions of things. You see that, and you're like, "Oh crap. There goes my products."
Andrea:
Look out.
Stephanie:
Yeah. That's the one thing that I think sellers are scared of now, is Amazon just copying you? How do you deal with them?
Andrea:
Well, I think you touched on a couple of things. The first is the beauty of a value-added retailer like Costco for a manufacturer. In that model, in the value-added retailer model, the retailer takes responsibility for the inventory, for the promotion, for making sure it sells, for the profitability, for curation, deciding what the product should be. All of that happens on the retailer side. And that's true across traditional retail, whether you're talking about an ULTA or a Nordstrom or whomever, they own that responsibility. In marketplaces, the responsibility is all shifted back to the manufacturer, so they decide what assortment they're going to carry, they decide how they're going to price it, they have to promote it and market it. And it's a really different model.
Andrea:
So I think that's one interesting thing about what you were talking about, is that Costco does that. And when retailers complain about Amazon or say how much of their business Amazon's stealing, I think it's important to remember they're there to lean into their strengths, which is providing this value add for these manufacturers and reducing a lot of that burden, and usually, producing a higher profit margin for that manufacturer because they don't have to take on all of that work themselves. On the private label front, it's really interesting what Amazon's doing there. Some of the categories like consumables are getting up to about 10% of the sales being Amazon private label, which is really... And fashion, I think, was maybe even higher than that.
Andrea:
As a part of Amazon's antitrust hearings, they had to release that data and you have to dig around to find it, but it shares the percentage of each category sales that are driven by Amazon private label. It's really interesting. And manufacturers will often come to us and they'll say, "Oh my gosh, my life is over. Amazon just launched a private label in my category." But I think really, it's an opportunity for the manufacturer to really be more on their toes. And a great example of that is, if you take a look at Amazon Basics, they have a luggage spinner. And if you search luggage spinner, suitcase, or whatever, you see Amazon Basics and you see Samsonite and a bunch of others.
Andrea:
And the Basics, it's like a third of the price and it looks just the same. And I think what's really interesting here is that Samsonite has an opportunity. If you actually click through to the product pages, you still can't really see a difference. But as a part of an article I was writing, I then went to the Samsonite manufacturer site and actually specked out what's really different about it, and there were enormous differences. It was like a TSA compatible lock, it had all of these extra features that weren't even coming through on the product page, that certainly weren't coming through in the title and the search results and the hero image.
Andrea:
And so I think Amazon is going to usually come in at this lower price point and this more value driven offering. And for these manufacturers who have better bells and whistles on their products, talk about them. I mean, it's classic differentiation stuff, just the way you differentiate looks a lot different in an ecommerce marketplace. Like you have to do it through the images and you have to make sure that the bullet points really display that, you have to have a title that calls out something about the feature that's really unique. I do think Amazon's seeing a lot of success with their private label because they are able to leverage their own platform and they know it best.
Andrea:
But through share of search, we've also identified enormous holes in their strategy from a marketing perspective, like entire categories of keywords they aren't bidding on, and then you can get really granular and really go after those holes that Amazon's left wide open. And I think it's because I think the reason Amazon has those holes is they're using an algorithm to drive their private label. It's not people back there saying, "Okay, we got to bid on these five keywords. These are the ones that matter, and here are the features that everyone cares about." And then I think if you don't have a point of differentiation against Amazon's private label, it's time to take a real hard look at your product, because if it's that copyable, it's not just Amazon private label that can copy it.
Andrea:
But also, if you often look at the differences between the top selling product in the category... Soup's a great example, you can search chicken noodle soup on Amazon, and Amazon has totally innovated the packaging and the format of the product to address all of the customer complaints. Canned soup is terrible online, it dents. No one really likes to eat anything out of a can anyway. So Campbell Soup showing the can traditional format, you look at Amazon's chicken noodle soup, it comes in a reclosable box, which is one of the top complaints in the reviews about the Campbell Soup, which is like, "I can only eat half of it. And then what do I do with it?"
Andrea:
It ships in its own container, so they're all nicely tightly packaged into a box so it doesn't dent or get damaged in the shipping. It's way more profitable for both the retailer and the manufacturer. So I think there are some areas where Amazon's really innovated on the behalf of the customer and it should be keeping manufacturers on their toes.
Stephanie:
Yeah. That's such a great point. So many things to unravel there, thinking about, you need to be different and leaning into your differences. And the whole point of having a product is to have a great story and showcase your features and don't get complacent. I love that. I could see even being able to look through the data and find opportunities, just like Amazon is, of like going through reviews and seeing what is someone complaining about? Oh, so many people keep talking about this, creating a whole spin off product, I guess Amazon could do the same, but it seems like there's a lot of opportunity in the data that's already there too.
Andrea:
There is. And I think this is one area that large established CPGs really struggle, and it's because they have so many brands and they carry so many products. If you're a nutrition bar and you only have 20 items on Amazon and you're growing really fast, it's really easy for you to look through the reviews on your 20 items and come to develop some insights and say, "Okay five people are complaining that they think it's a little bit too sweet, or 10 don't like the sugar content," or whatever. And you can re adjust your product in your next product development cycle. But if you're a large established CPG working across so many brands, so many different categories, I did my air quotes there.
Andrea:
But if you're a large established consumer brand, maybe you've got 1,500, 2,500, 5,000 items, there's no scalable way to do that right now. And I think that's an excellent business opportunity for someone to get into, which is like really analyzing some of that consumer feedback. I actually just had an MBA student from Northwestern reach out to me through a connection wanting to talk about like that very business idea. She's like, "What about all the customer reviews? Who's got data, that's mining that?" And I'm like, "No one." There are some players out there like Reviewbox and I think Profitero, and maybe even Salsify to some degree that allow you to access them, because Amazon doesn't even provide them, you have to just look at them, and develop some basic insights and maybe some word clouds and things like that.
Andrea:
But there's so much more to be gained from those reviews that would really help inform product development.
Stephanie:
We've even heard from so many of our guests talking about the long tail reviews or where the insights are. I think we had someone from HP and then Stitch Fix, of course, talking about like, that's the ones that you need to dive into to see... If someone's providing paragraphs of data to tell you how to make your product better, you better be looking at that and seeing, are enough people saying that? To pivot whatever product you're working on.
Andrea:
Yeah. You really need some natural language processing technology to really make the most of those reviews. But either Amazon has it or they're just really good at it, because if you look at... I could give so many examples of this, but if you search short-sleeve wrap dress, they have an Amazon Basics, it's a top seller, I even have it. It's a great dress.
Stephanie:
How did they stick that one up?
Andrea:
And relative to like the top three other results, I mean, you go through the negatives on the other top three results, and it's like, "It's too short, so it's not work appropriate. It doesn't wrap enough to be able to sit down in it well enough at work. It doesn't come and extended sizes." Those were the top three complaints. And Amazons comes out with an offering that's more conservative, slightly longer, comes in extended size. It immediately just addressed all of the things, all of the negative reviews about the other top three sellers. They've either got something that's helping them do that, or they're just really good at it.
Stephanie:
Yeah. But I think that also just plays to the point of needing to be diversified and beyond all the platforms. I look at Walmart right now and so many influencers are showing me stuff from Walmart, I'm just even thinking... I've bought rugs in the past month, I bought an egg chair from Walmart, all because these influencers are talking about stuff at Walmart, which also I think has increased quality a lot, and they are becoming a larger player. Maybe their tech and backend still needs a little bit of work and out of stock issues and all that, but I do see them coming up strong. Target also. How do you advise the companies you work with to think about all the platforms and be on all of them and optimize for each one in a unique way?
Andrea:
Yeah. And I think that's really the million-dollar question, because up until a couple of years ago, those other eCom platforms didn't really matter as much, up until last year, they didn't even have ad platforms. The world is moving and changing so quickly. I actually was just giving an internal speech right before this to our employee base and I was like, "Retail, if you really go back, is meant to be a really simple business. It's, a manufacturer has a product, they sell it to the retailer, and the retailer resells it." And the people who grew up with that model, it's relatively uncomplex or simple process. But if you just look at what's happened over the last five years, even five years ago, you had to be advertising on Amazon and search engines like Google and maybe even Facebook at that time.
Andrea:
Now, there's social live streaming, there's social media networks, and you have retailer ad platforms. The level of complexity that these manufacturers are faced with right now, and if you think about the ones who lived through all of this, they weren't attracted to this field because it was a technology field, they were attracted to this field because it was really based in sales and product. And so the level of complexity that they are faced with is an enormous. And I was in a share group the other day where a manufacturer called the...
Andrea:
In our space, we're like the service providers, it's super fragmented, it's a ton of point solutions that help these manufacturers be successful across all these different platforms. He called it a Frankenstein, and this company that was presenting at the share group was working with 35 different service providers from data and analytics to execution, to strategy and execution and strategies, where we set to operations and EDI and inventory management, and how do you allocate inventory across all these platforms. So there's certainly no perfect answer to how do you think across the different eCom platforms, but I do think it's important to really think about, where's your customer?
Andrea:
Is your customer shopping on Walmart, Target and Amazon? And most of them are because most of them are cross shopping. Where else is your customer shopping? What category specific players should be really important to you? And then where are you most profitable? And where can you get a good ROI? And what platform do you use for what? For Target, it's a little bit more about that curated assortment being on trend with merchandise and being associated with, Target gives your brand a little bit of a boost.
Andrea:
Walmart stands more for value, Amazon is about assortment, and obviously, price and all of that, but I think really aligning yourself with the marketplaces that are core to your brand's identity feels really important. So the customer, what's consistent with your brand, and then in terms of the investments to make across them. A lot of the fundamentals are pretty similar, so that's good, you have to have those, you have to be retail ready. And the ad platforms are similar, but different in very important ways. And so I think when you think about how to allocate those investments, then it really comes down to profit and what you're trying to accomplish, if it's awareness, if it's maintaining your position in the market, whatever it is.
Stephanie:
Yeah. I always think about the opportunity that exists for manufacturers of creating a piece of tech that allows them to plug in all the inputs that they have to deal with, even when I'm having companies come on and say, "Oh, we feature D2C companies on our website and they have a backend place to log on." And like, okay, that's one place. Then they're on Amazon and then they're on Walmart, and they're trying to figure out their own inventory stuff. There's so much stuff for them to keep track of that it feels like there's no unifying source right now for them to be able to get a holistic picture of their company as a whole.
Andrea:
In fact, I got this urgent call yesterday from this guy, this colleague of mine that I've worked with in the past, and he's teaching a course at Harvard right now called The Future Of Work in one of the courses. And he called me yesterday, he's like, "Okay, I'm preparing for this thing, I'm making a deck, I'm showing this crazy environment that we're in with all these providers and all these different things that these manufacturers have to keep track of." He's like, "Who are the service providers who can help them unify it?" And I was like, "There aren't any. It's not because you didn't look hard enough, it doesn't exist."
Stephanie:
I always think like, "Who is out there?" I even asked an exec, I'm like, "What do you do?" And they're like, "Oh, it's just hard." I'm like, "Someone needs to solve this."
Andrea:
Someone needs to solve it. It would be a really big job, but even just take like logistics like 3PLs. So you can outsource your warehousing and your purchase order fulfillment either direct to customer or to retailers to a three PL. I just did this as a part of an industry trends report. There are tons of 3PLs 70 some percent of them have fewer than five customers each. So it is a super fragmented industry. It's so fragmented in fact that the new trend is a 4PL. And a 4PL is a broker that helps you manage all your 3PLs.
Stephanie:
I have not heard about that yet.
Andrea:
Isn't that crazy? That's like a new cottage industry, is 4PLs, and that's the broker that helps you manage across the other PLs, I guess the other 3PLs. And that's just in logistics. So it's a really challenging space and I think what ends up happening, the ones that end up suffering... Right now, I think the manufacturers are suffering because all of this complexity deteriorates their profit margins. And then they also have to advertise on the reseller platforms now too, which is new, and pay and pay for that. But I think in the future, eventually, if no one figures this out, the customer's going to have to pay for it because the prices are going to go up.
Andrea:
The manufacturers can't shift from 5% of their business online to 50% of their business online, which is a much lower margin business for them and not raise their product costs. I just don't see how that happens. So hopefully, someone will figure it out.
Stephanie:
Yeah. Do you see any manufacturers doing it well right now where you're like, "Oh, I just talk with someone and they are doing it this way," that seems like it's streamlining at least a piece of the process. It might not be all of it, but any stories there that highlight someone doing something really good?
Andrea:
I think there are a few folks who are doing a really nice job designing for online. So that's first and foremost, make the packaging and products such that it's low weight and it ships economically, because that's number one. If you can't do that, if you're trying to still try to sell dry bags of conventional dog food or cat litter online, you have no future in that. And so we've certainly seen like Clorox do some really interesting things in the litter space, Purina36:10 they're doing lightweight litter. There's some great examples of companies designing for online.
Andrea:
So, how do you build a sustainably ecommerce business? Well, make sure that it can ship well or the retailers aren't going to want it, and you don't have a future in it. So I think there's some good examples of that. Clorox is also doing, they did a green works product a while back that instead of selling three bottles of spray cleaner, there's one bottle with two tiny concentrate refills, so it's less water, it's less waste, it's more sustainable packaging. I'm certainly seeing some really cool stuff from some upstart brands. There's one called Ethique, which does shampoo and conditioner bars.
Andrea:
That's, again, less weight, ships really well, online store as well, it doesn't leak. And then we're certainly seeing a lot with Liquid I.V. and all of the electrolyte powder drinks. So moving from selling it as a bottle that has water in it that you can't ship to powder. So some interesting stuff on designing for online. I think there are some companies who do a really nice job like aligning their org structures to support ecommerce. I think some good examples of that would probably be, L'Oreal does a really nice job there, P&G has a pretty solid and smart eCom department.
Andrea:
There are a few CPGs who do a really good job there. And then I think the one that everyone seems to struggle with those logistics, especially the larger CPGs, they're built to scale products and ship truckloads and not necessarily fill direct customer orders or ship like super small quantities to all these little Amazon warehouses. So I think logistics is really been hard on the CPG industry, ecommerce logistics.
Stephanie:
Yeah. I only see it getting harder and worse. I'm thinking about my interview with Domm from Fast, and him talking about one click checkout where they'll batch the orders on the backend for you buy, buy, buy all in separate transactions, but that's still also encouraging one-off orders that maybe you wouldn't have had otherwise that maybe brands aren't used to, someone just coming in and buying one shampoo or something because normally they have limits. So I only see it getting more difficult as technology gets better and they figure out how to make things easier to buy, it just makes it harder logistically.
Andrea:
Yeah. And I'm starting to see, I just feel like ecommerce retailers have gone I've really come a long way on this in the last couple of years probably to compete with Amazon, but I can't remember which retailer said, he was Wayfair, I was shopping on the other day. And they suggest that, they're like, "Batch my orders, you can select it. It's like defaults to batch my orders, so they all show up on one day or you can check the other boxes, no ship them each as they become available. And Amazon has been also doing that because in ecommerce, at least on the Amazon, the average order's one.
Stephanie:
Yeah. And I think that's what Domm said that Amazon's been doing this for a long time, it's that most ecommerce companies aren't doing that. So that's why on Amazon, you can always go and hit, buy now, buy now, buy now, and you don't even think.
Andrea:
And they'll try and batch it.
Stephanie:
They'll try and figure it out, but you don't even have to worry about a cart anymore. And that seems to be the way of the future, but I'm just thinking about these smaller brands who are trying to, up and coming, trying to get their foothold and then be like, "Oh my gosh, customers are expecting to be able to just hit, click buy for one thing, and I wasn't prepared for that."
Andrea:
I think we're going to continue to see... We'll certainly continue to see Amazon grow, they had an amazing quarter, but also I think we'll continue to see customers really being less loyal. And I think that because these other retailers are really upping their game. And if you look at, there was a study that came out that showed the top reseller app downloads in 2020, Walmart was right there under Amazon. And granted Amazon is a huge in-store base, so we need to take it with a grain of salt. Wayfair was on there, Wish, all these other retailers.
Andrea:
And so I think the pandemic has forced us all to shop more online, but also due to product availability, shop more across retailers. And as a result, we have discovered that the shopping experiences on some of these other retailers sites are more favorable to the types of products we're looking for. Maybe even more fun or more curated or whatever it is that you're looking for, and I think the retailers are starting to figure out how to be more efficient with batching orders or, remember when you used to have to go get your credit card every time you placed an order online?
Andrea:
They're all saving it now, I mean, stuff that we take for granted because Amazon set a really high bar.
Stephanie:
Yep. I love that. I know we don't have a ton of time, so I want a quick touch on Bezos. I know he just recently stepped down as CEO from Amazon, so I want to hear your hot take on what does that look like for Amazon of the future? How do you see that changing things?
Andrea:
Yeah. Well, first I should probably say, I don't know, Jeff personally, and I don't have any inside information. I've been gone from Amazon for five or six years now, but I do think if I were him and knowing what I know about him as the fearless leader, he's an inventor, that's what he's really good at, he's really good at inventing and disrupting industries and inventing on behalf of the customer experience. And when I look at what he has really had to focus his energy on the last couple of years, even pre-COVID, you had the antitrust investigation, they were under intense scrutiny for their treatment of their warehouse workers, counterfeits on the site and fake reviews, labor unionization efforts, here in Seattle, they've been under just a ton of intense pressure for contributing significantly to local elections.
Andrea:
Our local government put in place a headcount tax just to stick it to Amazon. And it's been really intense here, and also a lot of discussion about their role in increasing housing prices and driving the Seattle's homelessness epidemic. The stuff that he's had to deal with, a super public divorce, all of that stuff. And then you layer in COVID and all of the operational complexity of that that he had to deal with, nothing in there is inventing. And if I were him, I would not only be exhausted because I think the best way to exhaust an inventor is to tax them with a bunch of drama.
Andrea:
And so if I were him, I would be exhausted, and I'd be really bored, there's no inventing in there anywhere. They've made some really interesting inventions, I guess, disruptions more, I think of them less as inventions, more of disruptions as it relates to transportation. And in the earnings call yesterday, they said half of their packages now are being delivered by their own fleet. Incredible. They are a huge transportation company now, and they'll probably license that out and just walk out, but there's not a lot of inventing happening now, it's all about scaling, managing under scrutiny and really going head to head against some super fierce competition for ad dollars and for customers.
Andrea:
And so if I were Jeff, I'd be looking at the future and I would just be like, "Not interested, if I were an inventor and I was Jeff. So I think that speaks to why he would step down, I think timing it with going out on the high note with the Q4 earnings being just astoundingly positive probably makes sense. It's interesting, I don't know a lot about Jassy, but I think he was the CEO of AWS for a very long time and he's really good at scaling a business and scaling a business against adversity or fierce competition. If you look at what they are up against with Microsoft, and I think they even like filed a lawsuit against for an RFP that they didn't feel like was handled correctly, he really has gone head to head.
Andrea:
And I think that that's maybe signaling that Amazon's going to be a bit more about scaling and more about competing and a little bit less about inventing going forward, which maybe that's the stage that they're in.
Stephanie:
Yeah. Cool. All right. Well, with a couple of minutes left, we have a quick lightning round. Lightning round is brought to you by Salesforce Commerce Cloud. This is where I'm going to ask a question, but this time, you only have 30 seconds or less. Usually I get people a minute, but you're so quick, I'm like, you can't have a minute. You get 30 seconds.
Andrea:
I'll do my best.
Stephanie:
All right. What one thing will have the biggest impact on ecommerce in the next year?
Andrea:
I'm going to go logistics. I think the ability for other retailers and D2C to prevail against Amazon or compete effectively with Amazon, is going to be their ability to ship fast and for us to see some consolidation and maturity in that industry.
Stephanie:
Yeah. I love that. If you were to have a podcast, which you're about to, what would it be about and who would your first guest be?
Andrea:
Our podcast that we're going to have is Melissa Burdick of Pacvue, who is a competing agency for us in the ecommerce advertising space, and myself. And we're going to be doing a hot take on ecommerce current events. And my job as VP of strategy is all about staying current on ecommerce trends and news. And it's even hard for me to keep up, there's so much happening right now. And so we wanted to really try to provide a value to the manufacturer community of helping keep them current and tell them what they need to know. And then more importantly, tell them what we think it means for them.
Stephanie:
I love that. I can't wait to listen. What's up next on your reading list?
Andrea:
On my reading list, oh gosh. Well, I guess on my reading list is a lot of research because I'm trying to write a book about eCom.
Stephanie:
You're a busy lady.
Andrea:
I'm a busy lady. I'm trying to write a book about ecommerce and really transitioning our thinking beyond that physical aisle, kind of some of the things that we talked about today. So a lot of my research right now is reading some other pieces of thought leadership around that. And in fact, on my immediate reading list is I need to read a case about Unilever for my class with Harvard on Friday morning, and it's all about Unilever and how they have successfully transitioned to an ecommerce framework and mindset.
Stephanie:
Oh, I could come to your class too, that sounds good. Awesome. And then the last one, one thing do you not understand today that you wish you did?
Andrea:
I don't understand, well, I think a couple of areas, one is that as a manufacturer thinking about when is the right time to invest in the most forward-thinking ecommerce technology, which in my mind right now is live streaming. And I don't know a lot about live streaming, I'm learning more about it, I'm certainly watching some of it and trying to participate in it. So nascent here in the United States, but in China, it is incredibly powerful. And in this Harvard class, they had a woman who's a super influencer in China comes to the class and she live-streamed in the class and she was selling Harvard t-shirts, and I think she sold, I don't want to say like hundreds or thousands in a minute.
Andrea:
It was insane. And then they projected what was on her phone to the screen and we got to see it. And it really blew my mind that we're in such a different place as it relates to ecommerce. So I don't understand it super well, and I want to understand more of it so we can do a better job of helping our brands transition.
Stephanie:
Yeah. That's a really good one. Definitely one I don't fully understand either, but I know it's very different market there, so maybe people shop differently, but any insights, bring in my way, because I don't get it either. Cool. Well, Andrea, it's been a blast having you on, I hope we can bring you back for round two in the future because I feel like I could probably keep going on for an extra hour if I didn't have a meeting in a couple of minutes, but where can people find out more about you and Ideoclick?
Andrea:
You can follow me on LinkedIn and Twitter, you can visit my website at Andreakleighconsulting.com. I write and speak and post very frequently about ecommerce. And you can find Ideoclick at Ideoclick.com.
Stephanie:
Amazing. Thanks so much for joining us. It was a blast.
Andrea:
Thank you. Thanks for having me.
In 2008, the economy had tanked and John McDonald was left at a crossroads. Rather than withdraw into comfort, he took the opportunity to do something a bit crazy. John was a woodworker who spent time at trade shows, and someone once suggested that he make cabinet doors that fit with IKEA cabinets. With nothing to lose, John launched Semihandmade to do just that.
Now, a decade later, Semihandmade has seen consistent double-digit growth year over year and has been featured in countless blogs, interior design social posts, on the feeds of influencers worldwide, and in the homes of tens of thousands of people. On this episode of Up Next in Commerce, John tells the story from start to finish, including how he built a successful ecommerce custom cabinet model on the backs of the IKEA brand, and how he’s now launching into the DTC space with the first US-made custom cabinet DTC offering, BOXI. From finding the right partners, to building an omnichannel approach that doesn’t handcuff your resources, to challenging yourself to strive for more, you’ll learn something from John and his story that just might help you level up your ecommerce business, too.
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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Transcript:
Stephanie:
Hey, everyone. Welcome back to Up Next In Commerce. This is your host, Stephanie Postles, Cofounder at Mission.org. Today, I had the pleasure of chatting with John McDonald, the Founder and CEO at Semihandmade and also Boxi. John, welcome.
John:
Thanks for having me. It's great to be here.
Stephanie:
I'm really excited to have you on. Before we get started, I was hoping you could give me a little background, and for anyone who doesn't know what Semihandmade is and also Boxi, how did you start it? What is it? How do I think about it?
John:
Sure. Semihandmade is a company that's been around, I guess, just over 10 years now. We're based in Southern California. We make doors that fit IKEA cabinets. What that means is, if you want to buy a kitchen, bathroom, closet media system, IKEA, for the most part, gives you the amazing flexibility of not buying their doors. For a kitchen, you'd buy the cabinets, you'd buy the interior components. Then we have over 40 different options from entry level doors to some really high-end, one-of-a-kind offerings.
Stephanie:
I love that. Do I think of it like white labeling? You take IKEA's [inaudible] and then you can add like rose gold fixtures on it, yeah?
John:
Yeah, absolutely. Yeah. The credit, obviously, goes back to IKEA. This is an ever expanding ecosystem that's been around probably for 15 years now. People that make amazing slipcovers that you can put on their sofas. People that make furniture legs, companies like us that make fantastic cabinet doors. It's a way to get a really high-end look for a really mid-level price.
Stephanie:
Cool.
John:
I'm even fortunate to grow quite a bit with that.
Stephanie:
That's great. How did you come to this idea?
John:
I'm always honest and clear that this was ... It's a spectacular idea that somebody gave to me.
Stephanie:
Who gave it to you?
John:
I think his name is David Stewart. I think he's a photographer. Look, I'm 53. I don't know if I'm older than a lot of the people you talk to.
Stephanie:
A little.
John:
I came to things a little bit later. I had moved to California from the East Coast when I was 21. Well, wanted to get rich and famous, work in the film business, didn't really have any kind of plan, bounced around with that, was writing, not making any money like everybody else I knew waiting tables. Then I woke up in my early 30s and said, I got to do something with my life. It was post 9/11, which is a wake-up call for a lot of people. I tried a bunch of different things. Then I somehow landed in woodworking and furniture making at first and cabinetry. I got good at it.
John:
Through the late '90s and early 2000s, that's what I was doing, Southern California based custom furniture and cabinetry company called Handmade. I worked hard. I approached it like a business into my late 30s, which was different than a lot of other people I knew, the craftspeople, spectacular artists, but just no head for business, no interest in business. I always looked at it like as a business like any other. That's what I was doing through, again, the early 2000s. I was networking and blogs just started to happen. I was doing a lot of woodworking shows but also design shows. At one of those design shows in 2008, I think somebody came up to me, this guy randomly and said, "Have you ever thought about making doors for IKEA cabinets?"
Stephanie:
Was that something that others were doing? Why did he have that idea? Then was like, I'm going to tell John to do that.
John:
It's interesting. Again, I always want to give credit where credit is due. On top of him, there was a company called Scherr's based in North Dakota that has been making doors for IKEA cabinets just a little bit prior to that. People are always making their own doors as well. It is because IKEA lets you not buy doors when you buy their kitchens. I don't know why he mentioned it. I think part of it was because when I did those shows, it was a show called Whelan Design, which is a great show in Southern California at the time and back when Dwell magazine was really in its heyday and just an iconic brand.
John:
I was always like the one off independent company. It was me and all the big brands. It would be like Kohler and Caesarstone and Sub-Zero. I was there alongside them with my little custom furniture setup. I don't know if he took a liking to me, but we just spent that day, the Friday and then the following day just talking about it. I had no idea what he was talking about at first.
Stephanie:
That's awesome. Then for people listening, I know when I first heard of your brand and was looking through it. I'm like, oh, it's just like a small thing, a big thing. Then I was looking through some of the stats and you've been named like the fastest growing private company every year by Inc. magazine [inaudible].
John:
Well, yeah, one of. Yeah, one of many. Inc. 500 originally, we've been on that list, I think, six or seven years now.
Stephanie:
You've had double digit growth for almost a decade, year every year.
John:
Yeah. It's exciting. It's, again, one of many things. I try to be candid and clear, but I never expected this. I never thought in a million years I'd be doing this. Every year that we were fortunate to grow, even my ambition or dreams, it got bigger. It's like get to a million, get to two million, get to five million. It's been exciting. Believe me, I don't take it for granted. That's why I enjoy doing things like this, because I always ... At 40, I was newly divorced. I didn't have any kids at the time. I have a son now. He was nine. I lived in my shop for a year, because I got divorced.
John:
I didn't have anywhere to live. I had options, but I wanted to hide. I lived in my woodworking shop. I lived on my sofa with my dog. I just said, I got to do something else. It was a huge wakeup call. Then that's when the conversation I had, I think, six to nine months prior. It was like, maybe I should try this. Again, in terms of the second acts in life, whatever, I was 40 and had no clue. 10 years later, more than 10 years later, it's different.
Stephanie:
Yeah, that's very inspirational. Cool to hear about and cool to see where you can start and where it can grow to. How did you grow the company? From starting out where you're woodworking, you're building stuff, and then you're like, okay, I'm going to buy IKEA stuff and make it better. How did you get in front of people and be found in general?
John:
Like anything, Stephanie, it's like you look back on it and as much as it was, a long journey at times were so challenging, whatever. You get through it, and you gloss over it. It's only when conversations like this that I do get an opportunity to look back. The reality was, again, I had a nice custom furniture cabinetry business. I had some really good clients. I work with some good architects and designers. Then in 2008, the market tanked. Everybody went in the dumpster. I had to do something else. Things had slowed down.
John:
I started saying to a couple designers and architects, "What if we try to do integrate some IKEA cabinetry into the custom project." Because at the end of the day, a box is a box, and you're just going to see the outside of the beautiful panels and the doors. There were a few people that took a chance on that. That's how it ... It's like anything. I was 100% custom in 2009. Then it's like, okay, you can start mixing it in and starting to organically ... I don't even know what kind of ... I wasn't doing advertising. Blogs had just taken off.
John:
Apartment therapy had seen see me at a design show and written about me, which was amazing. That was a really big deal. L.A. Times did a story on me, which is incredible. Yet it was always organic. Through 2010 and 2011, it became, okay, now we're doing half custom, half IKEA. Then every year, it's a little bit more headed towards full IKEA. The truth is, I don't know when it was, maybe 2013, when it was fully just making doors for IKEA. It was fun. It was always a steady progression, always growing every year.
Stephanie:
Yeah, sustainably growing, which is a lot different than a lot of the brand.
John:
Yeah, profitable every year. Beginning, doubling every year, which, again, was not what I expected. Part of that, what's funny too is I have a lot of incredibly supportive family, but also friends, guys that I grew up with. When I was in California at 21, or 22, or 29, or whatever, they were amazing. They love me. They were supportive, but they probably had no clue where I was headed. I didn't either. Now, it's fun. I gave them a hard time constantly about the fact that they probably gave up on me.
John:
Not in a bad way, but it's just ... I mean, I do think that there is a time to cash in your chips. It's great to have dreams. There was an interesting like Scott Galloway kind of thing recently about if you should follow your dream. His overly simplistic thing is definitely do not follow your dream. Because unless you're willing to pay your bills to start because following just exclusively your dream can be incredibly impractical. The people that you admire, suddenly, the people that I admire weren't these head up in the clouds kind of people. They worked really hard. I geek out on founder stories, things, podcasts like this. I'm fascinated by that. It's never an overnight thing, or at least it's rarely. Again, I'm 53 now. This is all house money.
Stephanie:
Wow, that's awesome. When you started, getting more money, you're doubling growth, more revenue, obviously. Where did you invest? How did you think about investing that? Because I'm sure you're like, woo-hoo! I'm going to go have fun now.
John:
No.
Stephanie:
No?
John:
It was never like that, no. It's interesting. I would say I like nice things like some people do. I'm pretty frugal. In terms of the business, everything lives inside the business. I had a partner at that point. Up until three years ago, we made everything in-house. I was the original guy making the doors and packing them up and then shipping them in New York or different places. Then my partner at the time, Ivan, came on board. He was the guy cutting the doors. Now, we were fortunate to grow.
John:
Eventually, we had close to 35, I think 35 or 40 people that were working in production. Up until three years ago, we topped out at 75 people and half of them were making products. Now I'm proud to say we don't make anything in-house. Everything, it's made around the US, some at the top manufacturers in the country. That was a huge shift. To answer your question, everything is in the business. That's why you see revenue numbers are different than other things.
Stephanie:
Yeah. What were some mistakes maybe that you remember where you're like, ooh, I would have avoided this if I were to do it again, or especially in the more maybe the past five years or something. Not early on when you're just ...
John:
Right. If we're going to say 10 years ago, the mistakes that I made were unavoidable in the sense that I was creating this out of thin air. Ivan and I were just making stuff up as we went along. We were two guys. He's a little bit younger than me. He came out from Boston. I came out from Philadelphia to be writers. In some ways, no business starting this kind of business. In the last five years, it's probably the mistakes that I've made are ... I don't know, maybe waiting too long to really build up the team, which is not to say that we didn't have good people, we did.
John:
Part of my job now is just looking at the next 12 months and 18 months and say, hopefully, where are we going to be? Where do we think we're going to be? What are we going to need then? As someone who is ... Again, I think pretty honest about their limitations or whatever, we only thrive with people that are smarter, better, or more experienced than me. That's one of the biggest changes in the last at least six months, where we really just hit the gas and brought in some really amazing complementary pieces.
Stephanie:
Yeah, cool. How do you think about building on top of another company? What if IKEA changes their cabinet line or does something different, did that ever worry you, building a business that's ... I mean, a lot of businesses are built on another businesses, obviously. How did you think about that?
John:
We've always been after market. With IKEA, it's pretty well documented. We've gone up and down with them. I think in most ways, they appreciate what we do. Certainly, it's undeniable that we sell kitchens that people wouldn't normally buy if we weren't available. They also, I think, hate a little bit that we're there. I don't know this is arrogant or anything to say. They're not going to change their model because of us. They're never going to not sell doors. Even if they did, I would say to people like, "Then just buy the doors that literally cost $2."
John:
Then we'll pay for them and recycle. Their model is that a la carte wide range of pricing. We've always been respectful. Again, I have immense respect for them and what they built. It's extraordinary. Even when my fiancé and I moved into a new house and it's like going there, buying the basics for the house, it's just nobody can beat it [inaudible].
Stephanie:
Yup. I'm doing that now as well. I think, like you said, you're opening up a market that they probably wouldn't have access, otherwise. When I'm about finishing this house now, I honestly would not have thought to go to IKEA to get cabinets. I don't know. Then when I saw you guys, I'm like, oh, well then you can have the finishings and the colors and the things that I actually want. I don't actually care what a cabinet is like inside or behind the scenes, but I care about how it looks. A lot of the IKEA stuff does look like you know sometimes.
John:
Yeah, it's understandable. Because at that scale, you can't get that fancy and creative. This is the part where I drop names, just in the sense that what I do love is we work with some really cool people that do make IKEA more accessible. It is people like Karlie Kloss and Coco Rocha and all kinds of celebrities and high end designers and influencers. They, more so than us, have normalized IKEA. That's good for everybody. If design is supposed to be democratic and accessible to everybody, there's nothing more accessible than IKEA. Obviously, Amazon, Wayfair, and things like that.
Stephanie:
Walmart? Walmart is coming back. I have bought rugs now, a little egg wicker chair. It's from following influencers. I'm like, Walmart is coming back.
John:
You're right. It's funny, because the same thing with my fiancé, Stephanie. Yesterday, she was looking at different coffee tables. She said, "This is ... " She showed me a thing. I was like, "That's awesome." She said, "Oh, it's like the Kelly Clarkson line." I was like, "This is great." It's true. Look, certainly, you can make the argument that some of that stuff is more disposable and it's going to go into a landfill and less sustainable. I understand that. The reality is, not everyone has the same access to disposable. If you can get cool stuff, it's reasonably priced and it lasts for a few years. I don't know. It's hard to turn that down.
Stephanie:
You mentioned that you partner with influencers and celebrities. How does that relationship work?
John:
Yeah. I think that's always been a huge differentiator for us, one of several things. From the start, I always felt no self-consciousness about reaching out to people. Whether it was blogs, I would say, "This is what we're doing. Here are some photos. I'd love for you to write about us." Or even influencers. The biggest one and the one that we worked with the most is Sarah Sherman Samuel. We've had a door line with Sarah for three years. That's a situation where, god, I think 2014 or 2015, she reached out and said, "Hey, I bought a bungalow in Venice. I love IKEA cabinets.
John:
I wonder if we could partner on some doors." We did a small collaboration, gave her a tiny discount. She painted the doors. She styled everything. She took photography. The kitchen went completely viral. It's one of those kitchens that is everywhere. I think a really cool Farrow & Ball paints, brass and mixture of this light green and white. That just opened the door to all these other relationships. People saw that and started reaching out to us. It's been an amazing thing. The truth is, we've gotten to a point where we've had to pull back on that because it's just a different way to market the brand. It can be expensive. It's definitely grown us, there's no doubt about it.
Stephanie:
Have you thought about Netflix series? I'm just thinking, wow, they should be on a home remodel type of show. How perfect is that? People always trying to do amazing things on a budget on like the HGTV [inaudible].
John:
Yeah. We've talked about that stuff in the past. I like that stuff. Again, I don't know. I do think it's interesting our growth. That's how I always look at things, behind the scenes of how businesses grow, especially within that. I do like someone we haven't worked with in a while, the Studio McGee, the Netflix series, which is great. That's really interesting, especially after listening to another podcast like our friends at Business of Home, where ... I left the podcast with so much more respect.
John:
Because my interaction with them was a long time ago, and then I just see the photos and the beautiful stuff. Just the growth that they've had and the behind the scenes, and again, hearing their story is really extraordinary. I enjoy watching that stuff. I don't know if I want to watch this. I get sick of hearing myself talk. Maybe if it's everybody else, that might work.
Stephanie:
Yeah. I was just thinking like, wow, that'd be a really good partnership strategy. I always bring up the Container Store partnership that they had on the Netflix series and just how much Container Store sales went up after that series.
John:
[inaudible]
Stephanie:
I can see why, same thing with cabinets and stuff.
John:
Yeah, it's interesting. Because even that, again, I'm a lot older than you, but in the early '90s, whenever Trading Spaces came on and that was huge like ...
Stephanie:
I watch Trading Spaces, just to be clear.
John:
I mean, even in the '80s, the godfather of that is like Bob Vila in this old house. That's definitely before your time. That was restoring amazing New England homes and stuff. It was master carpenter, Norm. I think Norm Abram is absolute craftsman. That was the start. Then you had Trading Spaces. Even now, you would have thought, after 10 years, that goes away, and it hasn't. That's the thing. Is it the ladies like Home Edit and stuff like that? I don't know. It hasn't evaded, it just only grown. Obviously, Chip and Joanna Gaines and the dynasty that they have built. It doesn't show any sign of stopping.
Stephanie:
Yeah. It seems like the world is now just moving to a more curated collections like I'm going to look for someone who knows my style, so I don't have to waste time looking at everything. Whereas before, it's like, oh, I'm going to go to Target to get this, and then I'm going to go to Dollar Tree to get this. I make it up. I think, 10 years ago is very much about DIY, but all over the place. Now, it's like, okay, I'm going to follow Chip and Joanna Gaines, their line at Target, whatever that is, and follow the people that I know are my style and be ready to immerge myself in that brand.
John:
Yeah. The interesting, whether it's the 180 to that is the amount of growth that Restoration Hardware has had, where it's just almost like meteoric, being a complete luxury brand and selling the whole experience. It is like the Ralph Lauren of today, and now as they move towards hospitality restaurants and sounds like hotels. Part of your brain thinks, man, you can't sustain that. How do you keep growing? There is a market for that. Even when you watch the Studio McGee, their services are not expensive. Amber Interiors, who we work with, people like that, incredibly talented, at the really high end of the market. They keep growing.
Stephanie:
Yup. Tell me a bit about your omnichannel approach. I saw that you had showrooms around the country. Then you're, obviously, online as well. Now you're moving into DTC. How do you think about keeping a cohesive story of your brand but also expanding and reaching a lot of people on different channels?
John:
I guess the biggest challenge, if it is the biggest, it's just the fact that what we're selling comes at a higher price point than the average online purchase. We sell certainly, if you're doing a GODMORGON bathroom vanity, that then may cost $150, $300, $400. We're selling cabinet doors and panels and complementary trim and things like that that can cost $3,000, $5,000, $20,000. Again, it's not buying a pair of Warby's or an Olay bag for a couple hundred bucks. There's a lot to it, a lot of back and forth. Excuse me.
John:
Showrooms we're always a part of we've got to show people our product, especially when we're asking them to spend that much. The benefit of IKEA is, even though they're still a privately held company, there are only, I think, less than 60 around the US. What I could say to people to say to you, Stephanie, or wherever, like you're in New York, go to one of the five local IKEAs. Then come into our mini ... I never want to call it a showroom, because it could be 200 square feet. It's got some cabinetry in it. It's got door samples, things like that. There would be a whole experience.
John:
I would always say, if you want to see a kitchen, go to IKEA and you can see 15 kitchens or see 20 kitchens. Want to see the doors? Come see us. We've had that in New York, in Brooklyn, in Chicago, obviously, in LA, Minneapolis, a bunch of different places. Again, trying to be reasonable about that. I don't want the overhead of signing leases if I don't have to. What we've typically done and we will continue to do even more so is partner with other great brands. It is like a multi-brand approach.
John:
With our lighting friends, with hardware companies like Rejuvenation, Fireclay Tile, upcoming collaboration with Caesarstone, it's partnering with Cambria in the past. It's just saying, let's do this collectively. Because the kitchen is, as someone said to me, "The base purchase, if you're fortunate to have him as a house, there's a car, and then maybe there's your kitchen." We're trying to grow the company that way. We started what I think is an amazing ... I got to [inaudible] blog anymore. It's that. [inaudible] stories that launched last summer.
John:
That was the idea that I wanted to bring together all these great writers, great content to help promote the brand, of course, but also expand us, again, to make that cliché to becoming a lifestyle brand. On the one hand, it would be enough to have a really successful cabinet door company. I just think we have the opportunity to do so much more. That's what something else we can talk about, is this brand Boxi, which is going to launch at the beginning of March. That really is direct to consumer. That's our own product, no IKEA. That's a whole different thing for us.
Stephanie:
Alright. Let's move there next after my one thought. I've many ideas when talking to you now.
John:
Awesome.
Stephanie:
What about having like partnering with IKEA on their AR app or developing your own AR app, instead of having to have a showroom, being going to IKEA, pull up your phone, and then you can swipe through the designs of ours, and you can see exactly what that trim would look like, what that doorknob or whatever, so then you eliminate showroom.
John:
It is interesting. Look, the thing with IKEA, they have partnered with people in the past. Obviously, places like Target have done an amazing job of that completely. As you said, Walmart too.. It always seem like the natural fit with us. If you were going to do it with anybody, it would be us. In terms of AI, yeah. IKEA has been slow and is put a huge push in the last couple years of their online presence and their economy. They have an app they launched last month. What we are doing with the new brand is working with a 3D AI company called Skip. It's going to launch in the next few months. That lets you basically not go in showrooms.
John:
There are ways to order this new line of cabinets, and one of them is to make an appointment and someone comes to your house and 3D scans your room. Then you design remotely. With 80 hours of AI and machine learning and everything else, it's compressing that and then presenting you with design options.
Stephanie:
That's cool.
John:
That's where we're headed. All has changed dramatically in the last year. COVID or not, it was headed towards that. The new iPhones have the camera technology where you can almost do that. Maybe in 12 to 15 months, you don't even need a guy to come to your house. You can do it with your iPhone. They're already pretty close.
Stephanie:
Yeah, I think it's fair. I have a little tape measure app on my phone and it says, okay, scan the whole room. You do that and then you can measure everything. The placeholders all around the room for you and [inaudible].
John:
Yeah, it's fascinating. Even brands like Primer that launched last year, which do the work with other brand partners, and you want to click on like the Hygge and West Wallpaper, you can hold it up to your wall. They'll show you different swatches and things like that. It's interesting. For us, yeah, that is part of what we think is a differentiator. IKEA is always going to have massive brick and mortar. Even though they move in some cities towards smaller footprints, it's still footprints that are 20,000 to 150,000, as opposed to 300,000. There's another cabinet line that's launching.
John:
It just launched, it's got a 30,000 square foot showroom on the East Coast and 100 kitchens. You go in and wear the AR or the VR goggles. That's completely different because you're looking at some space that has nothing to do with yours. It's kind of what you're saying. The point is, things are changing so fast. With Boxi, it is saying, can you make this as DTC as possible? The caveat being, it could cost $10,000 to $15,000, to $20,000. It's not like ...
Stephanie:
Okay. Tell me what is Boxi then since we [crosstalk].
John:
Boxi is the first American direct to consumer cabinet brand. It's a cabinet system for the entire home. It's basically taking the last 10, 11 years of everything we've learned from IKEA and saying, let's try and offer something. I don't know, if it's ... I don't want to say better than IKEA. Because again, I've huge respect for them. It's a more complete package. Certainly, the quality is there. The accessibility is there. One of many things that we're going to improve on is the fact that Semihandmade customers have to go to IKEA first.
John:
It's a two-part process where you've got to go to IKEA. You've got to order the cabinets and hardware. Then you've got to order the doors from us. Thank God that they do, but especially in the last year, IKEA, like a lot of people, has suffered horribly with supply chain issues. We have customers now, unfortunately, it's January, they're hearing, cabinet boxes might not be available for three, four, or five months because ...
Stephanie:
I ordered a couch from Pottery Barn and four months out. [crosstalk] order, I just didn't look, I guess.
John:
As a business, on a personal level, that annoys me because I want ... That's a whole thing. We have such ridiculous expectations because they're easily met or they have been up until now. Not to blame Amazon because that's too easy. I'm a hypocrite about Amazon too. With Boxi, we're saying, no big box stores. Somebody can come to you, things ship, leave the factory in a week. Part of what we're doing, you're from Palo Alto, I don't know if you're born there, but it's almost like an In-N-Out Burger West Coast approach. Meaning we're going to do a limited number of items, and we're going to do it great. If you want ...
John:
What they do is they're great. What's interesting about that is they ... I think just little background on burgers. I think the founder was best friends with Carl Karcher who started Carl's Jr., another big West Coast place. In the '50s, they open hamburger stands right next to each other. The In-N-Out guy's thing was always, I'm not worried about competition. You're welcome to open across the street from me, next door, or whatever, because I'm just going to bury you. I'll just be that much better. Not like in an obnoxious, overly competitive way. Just like, this is going to raise our game. With us, with Boxi, yeah, limited selection, fast turnaround ships in a week, never need to go to a big box store. It's built in the US at a really competitive price point. That's the idea.
Stephanie:
I love that it's built in the US. I think that a lot of companies right now are bringing things back into the US and some are struggling seeing how expensive things can be and what was happening overseas and maybe how it's just different here. What did you guys learn from IKEA that you're taking with you? Then what are you discarding where you're like, we're going to do this different though?
John:
Again, in some ways, I learned everything from IKEA. Look, I learned a couple things. One of them is you can't compete with them in terms of pricing. That's the most basic thing. I always say like, with Amazon, the same thing, you can't ... I mean, then the turnaround lead time. Up until recently, with COVID, you could buy a kitchen today and bring it home today. Nobody else could do that at a crazy price. Best of all, really high quality. IKEA, to their credit, pretty much every year, as long as I can remember, the last 10 years, is right at the top of like J.D. Power customer satisfaction in terms of quality, customer service, things like that.
John:
You could complain about certain products from IKEA and their quality, but their kitchens, I think, are inarguable. As much as I'm not affiliated with them directly, I always get defensive when people would slag them. Because it's also understanding that the product that they offer, and this blows some Americans minds, but it's a particleboard core with a melamine skin, a three-quarter melamine box. That standard in the entire world for kitchen cabinets. The most expensive cabinet brands in the world are constructed the same way.
John:
In the US, that's less the case because 70% of the market wants a frame around their cabinet. It's literally a face frame cabinet. The European style that IKEA is called frameless 32 millimeter. Again, I've learned everything. We're deeply indebted to them.
Stephanie:
Well, is there anything that you're changing though now that you are exploring DTC that's [crosstalk]?
John:
Yeah. We'll always have the ability. With Semihandmade, one of the differentiators were ... You'll always have this when you're smaller, we're microscopic compared to them. It's just being able to be nimble, to be able to get more custom, to be able to offer certain versatility that they could never do. Limited run doors, ability to do appliance panels for really anything. The Semihandmade, we could always do that. We can do upgrades with matching ... We used to do open cabinets that match your doors and things like that. We do less of that now.
John:
With Boxi, what will be interesting is because the hope is anybody to scale and to have short lead times, quick turnaround, we're not going to offer as much customization. We've learned like what ... In terms of people's taste. We have eight doors, which are basically the biggest sellers for Semihandmade. It's basic white, gray, black, and some wood tones. It's not saying like we have at Semihandmade of 45 choices. That's fun to me. Because if anything, you can have too many options and that is paralyzing.
Stephanie:
Yup. Just going to say that I appreciate when things are curated or you showed me something cute and I'm just like, "I'll have that." Whatever that is, the white, the gold, and the brown, perfect. That's what I want. Not choose every single piece of it. Which I think is for a lot of ecommerce, that's what I've heard throughout many interviews, is don't give so many choices, show people what you think or know that they're going to want based off of preferences or how they're interacting with your site or whatever it may be.
John:
That's part of if there'd been multiple challenges with getting Boxi off the ground understandably. I think the biggest one is like you said, with even a call today, there was seven of us on the screen and I said, "If the seven of us were the typical technology guys or girls that knew nothing about socks, but we're launching a socks brand, we wouldn't bring all this baggage to it about what we thought we knew." With Semihandmade, we have all this great knowledge, but some of it can get in the way with the new brand.
John:
Because the new brand, for it to really work, you can't do all the customization. There are certain things that Semihandmade where we'll make exceptions and we'll do things. Of course, you always want to service the customer, first and foremost. It's just recognizing that if the goal is for this really to take off and grow, which I think it will, we have to be a little stricter, a little more brand fidelity, like say, this is who we are, this is how we get to where we want to go, and then stick to that.
Stephanie:
Yeah, that seems tricky. Having two different hats where you and your team are like, we know what works, this is what works, we build a company that does this. Then having a slow creep where you turn the other brand into the same thing. Like you said, you have to really be strict about creating a whole new company with a new vision and making sure everyone's on board and not just let the old company creep in and [crosstalk].
John:
I think in some ways too, whether in a good way or a bad way, the fact that we've been fortunate to have growth and success for Semihandmade, it's either made it easier or harder to get the new venture off. Because it buys you certain time. If we were a startup, we raised funding. We've got 18 months to runway all these different things that will be different. Probably, things have taken longer. On the other hand, we wouldn't have been able to do it. When this launches, what we leverage is, yeah, it's 10 years of Semihandmade. It's 25,000 projects. It's incredible.
John:
We have 2,000 semipro designers around the country that are champing at the bit to offer this. It's relationships we've got with Rejuvination and Kaff appliances and Caesarstone that are going to be partners. I continue to remind people and even myself like if we were a startup, we'd never have this stuff. We wouldn't have five, six amazing influencer projects that you're going to roll out in the next six weeks with the new launch. You'd be launching and then keeping your fingers crossed.
Stephanie:
Yeah, yeah. Okay, cool. Alright, so let's move over to the lightning round. The lightning round is brought to you by Salesforce Commerce Cloud. This is where I'm going to ask you a question and you have one minute or less, prepare, get your water, [inaudible], shake it out, do what you got to do. Alright, are you ready, John?
John:
Yup.
Stephanie:
Alright. What one thing will have the biggest impact on ecommerce in the next year?
John:
That's great question. Do I have a minute for this?
Stephanie:
Yeah, a minute.
John:
I think it depends. I'm cynical about the fact that in some ways, yeah, a lot of companies have taken off, Instacart and things like that, but even like Wayfair. I was reading Bed Bath & Beyond today. I think the question is whether or not that'll be sustained. When life comes back to normal, which hopefully, inevitably will, certainly, people will be more inclined to shop online. There's no doubt about that. The world is changing. It's not going to go back. There are companies that have gotten a little frothier or whatever that I think that artificial is going to wear off. It's normalized.
John:
It's great. There's stuff I would have never done. Even with not ecomm, but with Zoom, we hired a new president, Beth and Molly, who runs marketing and stuff. I hired three of our highest people remotely. They're based in New York. I would have never done that. I would never trusted people or trusted myself. Now, it's normal.
Stephanie:
Yeah. I was slow with grocery delivery and curbside pickup. It forced me to do that because I was the one who always want to go to the grocery store, look around with my friends, whatever it maybe. Now, I'm like, oh, I don't really want to go there anymore. There's no point. I'll save my time and do other things.
John:
It is amazing. To me, it's more interesting to see how those people make money. That's the part where it's one thing to do great revenue. Obviously, profitability is a thing, unless it's not your money, unless you have a thing too. When it is your money, it's much more of a focus.
Stephanie:
Yeah. We just had someone from Intel on who was saying that they work with a hardware store and they're struggling because contractors were coming in and placing 40, 50 item orders for curbside pickup.
John:
All of it?
Stephanie:
Because they're like, why would I send in my contractor and paid him to be there for two to three hours when I could just have you all do it. They're struggling with trying to figure out the program because they weren't really expecting them.
John:
Yeah, that's interesting.
Stephanie:
I'm like, that's scary. What's the nicest thing anyone's ever done for you?
John:
Business wise or otherwise?
Stephanie:
Anything, whatever comes to mind.
John:
I guess the biggest cliché was my son's mom having my son. That's probably ...
Stephanie:
That's a good one. Having three kids, I appreciate that answer.
John:
I mean that from heart.
Stephanie:
Yeah, that's a good one. What's up next on your reading list?
John:
I constantly have five or six books I'm reading. That's interesting too, whether it's because I pursued writing for a long time. I haven't made the jump to eBooks. There are few writers that I correspond with on Twitter. Twitter is another thing that I didn't use that much before this. I've asked them like, "Well, what's the feeling on eBooks? Is it like cheating or whatever?" Of course, these guys and girls want to sell books. They're not considered cheating if you buy their eBook. The response I got from a bunch of them was, it's best in some ways for nonfiction.
John:
I read tons of nonfiction. I'm reading Say Nothing, which is a story about the troubles in Ireland. I'm finishing a great book on ecommerce called the Billion Dollar Brands book, something like that. That's spectacular. I've got so many. I'm reading a book on Chinatown, the making of the movie. I love a lot of different things. It is mainly. It's less fiction now. It is more nonfiction.
Stephanie:
Very cool. What is your favorite cabinet design? What's in your house?
John:
My house, it's interesting. Because in my house that I share with my son who I split custody with, we have a more contemporary kitchen. It's walnut. It's unique. We sell a fair amount of walnut and it is one of a kind. Every kitchen is different. That's a little more contemporary, even though it's wood. It's contemporary. In the house with my fiancé, where she lives, that's a more traditional. It's a shaker kitchen. It's got some really pretty hardware. I guess I'm very particular about what I like. In general, even when we she and I have arguments about furniture, I just say like, "Buy something quality and it'll fit with everything else." I know it's a copout, but that's where I'm landed. I love eclectic as long as it's nice quality.
Stephanie:
Yeah, cool. Alright and then the last one, if you were to have a podcast, what would it be about? Who would your first guest be?
John:
That's a great question. I like a lot of probably IKEA. I like a lot of different things. Even podcasts, same thing. I didn't listen to before, frankly, a year ago. I listened to one the other day. Marc Maron was really talented, funny guy who've been doing podcast for about 10 years. He had this guy, Daniel Lanois, who's a big time record producer, did U2 and all kinds of amazing people. I was amazed at the depth of Maron's knowledge of music. I don't have that. I don't know. I like diverse things. I don't know if I could do it.
John:
Because I like to think I'm a good listener, but I'm probably not because I'm always ready to say something. Obviously, like in your spot or whatever, to do it well, you should be listening to people. Again, I love screenwriting podcasts. I like anything. I like news, podcasts.
Stephanie:
Okay, so it'd be a little bit of everything. I like that. That's cool.
John:
I could do this kind of thing. If we're talking about remodeling, if anything, would always have an edge to it. If I were going to do a show, that's the thing. I gravitate less, maybe not towards Gordon Ramsay, but like Anthony Bourdain. There would be an edge to it. It wouldn't be ... Even when I was inside people's houses, I don't know if I was combative. I had very strong opinions about with architects and designers and homeowners and what I thought they should want. The one thing I don't like is when it's all sweet and sacristy and artificial. Totally with an edge.
Stephanie:
I like that. That sounds good. Alright, John, well, this has been a pleasure having you on. Where can people find out more about you and your work?
John:
Sure. Semihandmade, we can do semihandmade.com. Then Boxi, which launches March 1st, is at boxiliving, B-O-X-I-L-I-V-I-N-G.com.
Stephanie:
Okay, thanks.
John:
I appreciate the time. This has been great.
Stephanie:
Yeah. Thanks so much for coming on. It was fun.
John:
Thanks for having me, Stephanie.
We’ve all seen it — maybe some of us have even fallen for the trick — you’re on an ecommerce site and a big “Wheel of Savings” pops up. This innocent-seeming discount offer, though, isn’t what it seems, and it’s doing damage to the end-user spinning the wheel, and the site the wheel pops up on.
The world of malvertising and browser extensions has been causing headaches in the ecommerce world for years and brands are constantly looking for ways to fight back and regain control of their websites. Matt Gillis is helping with that mission. Matt is the CEO of clean.io, which offers real-time protection against malicious actors and code for some of the most-trafficked websites in the world.
On this episode of Up Next in Commerce, Matt takes us through some of the methods bad actors are using to install malicious code on ecommerce sites, and he gets into the nitty gritty of why browser extensions like Honey and Wikibuy are hurting brand bottom lines, and why those extensions are making marketing attribution nearly impossible. But he also offers some solutions, too, so that ecommerce brands can finally win back control of the user experience. Enjoy this episode!
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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Transcript:
Stephanie:
Hey everyone. And welcome back to Up Next In Commerce. This is your host, Stephanie Postles co-founder at mission.org. Today on the show we have Matt Gillis, the CEO at clean.io. Matt, welcome.
Matt:
Stephanie, thanks for having me. I'm excited.
Stephanie:
I am very excited to have you here. We were just talking about how cool your background is, and I think that's actually kind of a fun place to start of where you're at in the world. And tell me a bit about your background.
Matt:
Yeah. Hey, so I'm in Baltimore and we actually just took possession of this office in February, right before the pandemic. And so the irony is I've been here every day since the pandemic started pretty much.
Stephanie:
By yourself?
Matt:
But I'm by myself. So we have 4,000 square feet. We just did the mural right before the pandemic and no one on our team has been able to experience it pretty much. But yeah, cybersecurity company located in Baltimore, we're about 45 people, I guess you could say solving this problem of untrusted and malicious JavaScript that is ruining user experiences in revenue across the internet. That's us in a nutshell.
Stephanie:
Cool. Well, I am really excited to dive further into clean.io. Before we do that though, I was hoping you can kind of go through your background because I saw you've worked at places like AOL, you've been in publishing. You've been in ad space. Tell me a bit about what you did before you came to clean.io.
Matt:
So full disclosure, I'm old. And so I've been around a little bit. I've had some fun. But yeah, I think key things I've spent probably the last 20-ish or so years in a couple of different capacities. Right out of university, I started in the mobile industry and mobile at that time was just making phone calls, that's it. There wasn't even texting then.
Matt:
In fact, my job back in those days was I would stand on a golf course at a golf tournament and let people make free phone calls because that was the cool thing to do then. No one had cell phones and if they did, they were like those brick ones. You remember those ones that you couldn't fit in your pocket?
Stephanie:
Yeah. And you were the cool guy like, "I've got access to an awesome phone, anyone want in?"
Matt:
Yeah. And listen, men and women would come up to me and they'd be like, "Can I call back and check and see if I have any messages?" And so that was the cool thing to do then. I know it sounds so crazy that was a thing at some point, but yeah. So I worked at mobile operators in the early stages of my career.
Matt:
So I worked at Bell Mobility in Toronto, Canada. I'm from Toronto. And then I moved down here to work at Verizon Wireless. And at the end of my tenure at Bell Mobility and my tenure at Verizon, I was focused on some of the services that you live by on your cell phone today. So this was in kind of late '99 and then the early 2000s of things like video on demand on your phone, playing games on your phone, downloading ringtones on your phone, I'm sure you did that.
Stephanie:
Oh, ringtones, yeah [inaudible].
Matt:
They were, obviously a huge business at some point.
Stephanie:
Now if my phone rings I'm like, "Stop it, what are you doing? Who's calling me? Don't call me, text me."
Matt:
Put it on mute. Yes, exactly. So I was kind of part of the foundational days of things that you would do with your phone, before the iPhone. And then I went and took a swing at being an entrepreneur and joined a little small video game company. Our biggest game was Who Wants to Be a Millionaire? We did a lot of TV game shows. So we did, Are You Smarter than a 5th Grader? And things like that.
Matt:
So I kind of walked the mile as a publisher for a while and then Capcom, which is the Japanese video game company acquired us. So I ran their publishing business for a few years and I got to experience what it's like to be a publisher and how hard it is to make money.
Matt:
And that was kind of in those early days of the iPhone where I'd say to people, "You'll go and spend $5 on this latte, but you won't pay $5 for unlimited use of a game over a period of time." And this is back in 2008, 2009. And so we had a real struggle and people weren't wanting to pay for our games. They want them free and free became kind of the thing on the iPhone.
Matt:
And so recognizing that struggle, I actually joined this company called Millennial Media, which was one of the earliest mobile ads platforms for app developers, helping app developers make money with ads. Some of our biggest customers at the time were like Words with Friends, if you've played Words with Friends-
Stephanie:
Yes, I have.
Matt:
... ads in every game. So we were kind of one of the foundational tech partners with folks like Words with Friends and various other games across the internet and apps. Did that for eight years through an acquisition with Verizon and AOL. And then we acquired Yahoo. So I ran the publisher platforms business at the combined entity of those companies, which was awesome.
Matt:
And one of the biggest problems in my time over that period was this thing called malicious ads, or malvertising as they call it. You probably are familiar with when you're scrolling away on your phone and all of a sudden it redirects you and says, congratulations, you won an Amazon gift card. And you're like, "I didn't click anything." Or spin the wheel for your chance.
Stephanie:
Yeah. I did that once I fell for it. I was like, "Oh, I spun it." I couldn't help it.
Matt:
Never spin the wheel, Stephanie.
Stephanie:
I only did it once, but yeah, afterwards I'm like, "That was a bad call. Why did I do that?"
Matt:
Yeah. So it was a big problem in my past life. And there were a few folks that were solving this problem and two of them were folks that I had worked with at AOL. When I left, it was called Oath at the time, which is Verizon Media now.
Matt:
I went and had lunch with these guys and they told me that they were spinning up this company called Clean Creative and set to solve this problem of malvertising. And I didn't have a job and it was getting too cold to golf. And so I said, "Hey guys, can I be an intern?"
Matt:
And so I came and hung around for a couple of days a week. And I was like, "You guys are really onto something here because this was a massive problem in my prior life." And so I said, "Hey, can I have the keys?" And they obliged. And that's how I'm here, started as the CEO two years ago. And we've kind of been blowing it up ever since. That's awesome.
Stephanie:
Yeah, such a fun story. So what is your day to day look like now? And what's your best day in the office look like while you're there by yourself? Are you around skipping around bicycling around the big office? What is your days look like?
Matt:
I do pace and I get my steps in over there. Day-to-day, we're startup, so we're small. And so as any of your listeners would know at a startup you do everything, and you take the trash out and you sign big contracts, hopefully you raise money. You kind of do run the gamut. So it's a little bit of everything. If you've worked at a startup you know that generally speaking, there's epic highs and epic lows. And so you have those days where you are the king of the world and you and your team are high-fiving and celebrating. And that's a little different now because you got to do it all virtually.
Matt:
Part of being at a startup is you get that culture of everybody generally speaking, being in an office like this, but we're a widely distributed culture now. We were before the pandemic where we kind of had, I don't know, five or six or seven locations among all of our people, but now we have 40 locations. So it's just like any other gig except there's really no net underneath you. You're walking this tightrope and hopefully you get to the other side.
Stephanie:
Yes. I definitely feel that.
Matt:
It's fun though. Isn't that why you do it?
Stephanie:
I mean, yeah, it's definitely really fun. Other times you're like, "Oh my gosh, I'm responsible for so many lives." And then other days it's like, "This is fun." So it's a good balance.
Matt:
Yeah. I mean, I won't lie. I had months of sleepless nights when we were raising money. We most recently raised our series A and we started raising it in March, right at the beginning of the pandemic. And yeah, all these people's jobs, for me, the pressure was on me to make sure that we could raise money and continue on this mission.
Matt:
The reality is, is the people behind the scenes are the ones that actually made my job easy because they're the ones that enabled me to go and tell the story of our massive revenue growth and our massive traction and our product market fit and all of that sort of stuff.
Matt:
Startups are hard, but there's a reason that many people once you leave the big company and you actually go and take your swing, that becomes the thing that you keep doing and doing and doing because you like having that euphoric feeling.
Stephanie:
Yeah. No, I definitely agree. And I mean, I think it's a good reminder too, as the CEO at any company to kind of get out of your way and hire a team that can support you and do things, but then let you do the higher level things like selling, raising money, such is a good point for, I think a lot of business owners who want to kind of stay attached to, "I've always been coding." Or, "I always did this part of the business." You need to step away and find people who can step in for you so you can go on to the next thing.
Matt:
Yeah, and focus on your strengths. Don't try and overcompensate and really... We did this thing called StrengthsFinder with our leadership team. And it was really about figuring out what are the strengths across this group of people that are practically leading the company. And you go, "Okay, well, I'm really good at this, this and this. And you're really good at this, this and this. Wow. We compliment each other. I should continue to keep doing this stuff. And boy, we should just let you handle all of this sort of stuff." So yeah, hire a diverse team and hire people that are way smarter than you and you'll be successful.
Stephanie:
So how have you seen the digital security landscape change? Maybe even over just the past year or two, what new things are popping up, what should e-commerce owners be aware of right now that maybe wasn't happening last year or two years ago?
Matt:
I would say that where we cut our teeth was in this malvertising space and what it is, is malicious JavaScript that's kind of being injected into the user experience through ads. And what we've seen is that the bad actors, the people that are doing it, are getting even more sophisticated over time. They have figured out how to get around the systems. They've figured out how to get around the checks and balances.
Matt:
And we kind of stumbled into this e-commerce world where we were protecting, we're protecting some of the biggest websites on the internet. There's seven million websites that run our code. Probably many of the websites that you go to everyday either to get your news or to read entertainment gossip, or that sort of stuff if you do.
Stephanie:
No.
Matt:
I'm not saying you do Stephanie, but we protect all of those sites; every single page view on those pages, we make sure that the user experience is protected and revenue's protected. And by the way, in that world, it's folks that I would say, delivering malicious JavaScript. What we started seeing in the e-commerce world is there's this whole phenomenon of what I would call untrusted JavaScript.
Matt:
Now in either case, the premise is you own your website. You should be able to control everything that executes on your website. You should be able to protect your user experience. You should be able to dictate your user experience because it's your website. On the malvertising world, what we saw happening was if folks had ads on their website, they had lost control of the user experience. They had lost control of revenue because any bad actor could just buy an ad and take over the user experience and get you to spin the wheel.
Stephanie:
Only once, but yes.
Matt:
Only once, but it happened. And so in the e-commerce world, what we've noticed is there's a lot of stuff happening on e-commerce sites, just like there is in any website that is without the permission or without the authorization of the person who owns the site. The biggest problem that we kind of dug in and gone to solve for is, if you ever heard of these things called Honey or Wikibuy?
Stephanie:
Yeah.
Matt:
So these are Chrome extension, Safari extensions, Firefox extensions. They sit resident on the user's device and Stephanie, when you're out shopping on your computer and you get to check out, Honey will pop up and say, "Hey, I've got coupons for you. Do you want them?" You as the user you're probably like, "Yeah, I'd love to get a discount. I'd love a better price, if I can get it without having to do any work." Honey does all the hard work for you.
Matt:
We think that's not really in the best interest of the merchants because they own their website and now someone is injecting code in and disrupting the user experience, disrupting your revenue. So just like it is in this malvertising world, the same phenomenon is happening over here. The difference is Honey is owned by PayPal. Wikibuy is owned by Capital One.
Matt:
So the folks that I would call "bad actors" in this world are actually fortune 100 companies. They're folks that you would expect to be able to trust. And what they're doing is they're actually injecting code in to disrupt the user experience and disrupt revenue. And so that's the problem that we've gone out and solved.
Matt:
We just launched our product that's called cleanCART. And what it is is it's a Shopify app and it gives Shopify merchants the ability to protect their carts at checkout and make sure that they can prevent this sort of code from disrupting user experiences in revenue. So it really is giving control of the websites back to the merchants.
Stephanie:
Oh, interesting. So when you implement that you just can't get coupons or are there other pieces that it kind of protects as well, or the user can't see coupons from a Honey or something, or are there other things that your app is also protecting against?
Matt:
So we're in, I would say the second inning of the baseball game. So early stages. We're really focused on to start is blocking the automation of these coupons. So we don't want to block you as a user going in and manually inserting the coupon. We think that's the intended use case. But what we think is unfair is that someone is standing beside you at checkout and handing you a mitt full of coupons and actually not even handing them to you, they're actually giving them and just scanning them all to make sure that they all have a chance to work.
Matt:
If you think about this analogy, the grocery store would never let someone come and stand beside the checkout and save you 30% off your grocery order while you're already ready to pay. And I think that's the phenomenon that we're trying to solve for in the earliest days, which is, let's prevent the automation from happening. Let's not prevent people from manually inserting coupons. Let's give control back to the merchants because it impacts them in so many different ways. Obviously, it impacts them from a revenue loss perspective.
Matt:
I talk to merchants every day. Many merchants are complaining that these injections are literally scraping and pulling 30% off of their cart value at checkout. So someone who had $100 cart, they go to checkout, Honey runs and it knocks their cart value from $100 to $70. That's kind of bad for the merchant, especially if that person was going to convert anyway.
Matt:
The other key thing is Honey and Wikibuy and these other discount extensions have made it really hard for merchants to have discounting strategies that they can track. And so what's happening is that promo codes are ending up in the wrong hands. It's creating an attribution nightmare for merchants where they think that this social media influencer or this Instagrammer, or this YouTuber is driving tons of sales and lo and behold, Honey has grabbed that coupon and is injecting it.
Matt:
And now every order that comes through where Honey was present on the page is applying that person's code. And so now the merchant not only has bad data that is going to ultimately drive their marketing decisions but now, they're also losing revenue and they're paying out affiliate fees to folks that generally didn't deserve that affiliate fee. So I think it's created a bit of a nightmare.
Matt:
And so, we felt this kind of pent up demand for this product. And that's exactly what's happened is that no one has solved it. We think we're first to market. And we think it's important that people are fighting for the merchants. There's been 10 years of growth in e-commerce over the last year. The pandemic driving a lot of that.
Matt:
And we think it's important that merchants really get control of their websites, get control of their margins, get control of their revenue and really get the right data to make the right data-based decisions of how they're going to run their marketing programs.
Stephanie:
Yes. I think that's a really cool story. You were just talking about how you were looking at a problem that people were complaining about, and then now you guys are like, "Well, let's solve it." Because I've read, I'm trying to think where this was, where they're talking about going to Reddit and looking at some of the threads of people talking about problems that keep occurring and occurring and how you could build businesses just based off Reddit threads. And you guys did that, just looking at problems with what merchants were struggling with. So a really cool example of how to build a business is look at all the problems that are going on and jump at solving it.
Matt:
Well, and I think the other key thing here is as you know is solving the problem, but also during that process of your hypothesis that you're going to develop of what you're trying to prove, it's you also need to prove that people pay for it. And that's, I think part of the foundation of what we've built here, obviously on the malvertising side, but also on the e-commerce side is it's a big enough problem. People need to protect user experiences.
Matt:
If you think about just in the internet in general, it's very expensive to create content. It's very expensive to drive traffic. And once you've done those two things, why would you leave it to chance that someone might come to your website and have a crappy user experience? Protect your user experience.
Matt:
It happened last week on the Harvard Crimson on the crimson.com where somebody was on Crimson and they got one of these redirect ads that took them to this landing page that said, "Hey, you're a Verizon customer click here and take the survey and answer these nine questions and you'll have a chance to win." And this user actually took to Twitter and said, "Hey @thecrimson, which is, I think their Twitter handle, you've got a crappy user experience. Why are you letting this happen?"
Matt:
I never even saw a reply from the Crimson. But when we did some investigation on what was going on, they don't even have protection on their website. So it almost feels irresponsible at this day and age to not be protecting your asset because your asset generally speaking, isn't your website, your asset is your users.
Matt:
And so protect your users, make them feel confident that when they come to your site, they're going to have a great experience. And so that's really what we've focused on is just delivering technology that solves a problem that people are willing to pay for. Because obviously without that, we don't have a business.
Stephanie:
So when thinking about like the Crimson example, that's all from a bad ad being run on their website, correct?
Matt:
Mm-hmm (affirmative).
Stephanie:
Someone was able to buy that ad unit have bad JavaScript, and then that's when they were sent to that Verizon survey. I'm I thinking about that, right?
Matt:
You're totally thinking about that right. And what's interesting about the thread is that when this woman went on to Twitter and said, "Hey, this is what happened. And here's a screenshot," there were a whole bunch of people that piled onto the thread of like, "Oh, here's what I think is happening." "Oh, you have a virus on your computer." Or, "Oh, you have a bad extension on your computer or whatever." Everybody had a hypothesis of what's happening.
Matt:
And so we actually went and captured the threat and reverse engineered it and said like, "Here's exactly what's happening." And yeah, it's all coming through ads in that case. And there's so many great things of the open programmatic ecosystem.
Matt:
So programmatic media being able to buy a single oppression at a time by single user real humans, real devices, real networks, like you know I'm having a one-to-one engagement with this person and in the malvertising world, that's a feeding ground for bad actors because they get to do the same thing.
Matt:
And quite frankly, they're better at it than any other advertiser out there because they're the ones who know how to pay 20 cents CPM and buy an ad and actually get 100% click-through as opposed to the rest of the world that's just hoping that they get a half a percent click-through rate. And so they figured out how to buy that ad, that ad renders on your device.
Matt:
And then usually it's like an onTouchEvent. So when you actually just touch the device, they put a transparent overlay on your device. And that turns into a click or they'll auto click something on your behalf, or however they decide to inject their technology. But yeah, it's as simple as that. And I think it's lucrative, otherwise-
Stephanie:
They wouldn't be doing it, yeah.
Matt:
What they do is they try to do it at the lowest possible level without getting caught. So if you think about sophisticated marketers, what do you do? Well, you pick the right users, you maybe frequency caps so that you don't lambaste them with ads. You want to hit them at the right time with the right message and all that sort of stuff.
Matt:
And so these bad actors have figured out how to very elegantly and in a sophisticated fashion, they'll hit you with that ad. But the reality is they'll probably frequency cap you to one so you can't reproduce the experience and that's how they evade getting caught in most cases.
Stephanie:
Yeah. Very interesting. I didn't understand the whole backend of how that works. I mean, I do spend a lot of time thinking about building incentives for advertisers because we build up our own ad networks to advertise our podcast and we bring on partners all the time.
Stephanie:
And it's really funny thinking through how to build incentives for especially newer advertisers when you might say something like, "Oh, we'll incentivize you based on a download." Then all of a sudden you're getting all these fake downloads. No, not downloads. We'll incentivize you based on consumption. Like, does someone listen to the episode? They wanted to hear it.
Stephanie:
And then you see instead of actually having good people come through and consume the episode, the advertiser will say, "Okay, I'll pay you to review the ad or review the podcast, which makes it show that you were consuming it because you had to for maybe a minute to then be able to review."
Stephanie:
And it's always interesting trying to figure out, I mean, and these people are not good actors maybe, I'm not really sure. But it's always very interesting thinking, how do you incentivize people to do the right thing and actually deliver and not try and always get around the rules and just meet a number which I'm sure a lot of the platforms deal with the same kind of thing, but-
Matt:
It's interesting you use the word incentivized, and that was a dirty word in the early days where most advertisers didn't feel that the word incentivize was a good user because they didn't truly have the intent to do the thing that you want because they were being paid or a bounty or whatever the thing is.
Matt:
I saw the evolution of incentivized in my mobile career where it became really hard to get people to consume video commercials, like 15, six second whatever that metric was. And in the games world, they figured out this thing and they actually rebranded it instead of calling it incentivized video, they actually called it rewarded video. And-
Stephanie:
I feel like that's a little more, I don't know.
Matt:
Well, listen, and so I talk about one of the apps that I love is this app called Candy Crush. And I've been playing candy crush for almost 10 years now, I think. And when's the last time you played the same game for 10 years? Like never?
Stephanie:
Yeah. That's impressive.
Matt:
But they've artfully integrated video into their app. And I think if you run out of lives, you can watch a 30 second spot that is unskippable. So you have to watch the whole thing. And then if you, do you get rewarded with that extra life or whatever it is, maybe a lollypop, I don't know. But yeah, so I think there's different ways to approach it. But you're right, usually when you figure out the bounty, everyone else figures out how to capitalize on the bounty.
Matt:
And I think the interesting thing with Honey and Wikibuy is they've figured out how to get paid for the bounty or get credit for the bounty when lo and behold, they didn't really do anything. All they did was they had code that was resident on the machine that allows them to kind of get credit for that user purchasing when I think it's questionable whether they had any influence on that.
Stephanie:
Yeah. I've kind of thought that too, when seeing different Instagrammers with their promo codes for e-commerce site. And I always thought like, "Oh, how does that attribution work?" Because I mean, she's sharing it here, but I'm sure it's very easy for someone who doesn't follow her to also find that code outside of a Honey, but just be like, send it to my friend, "Hey, use this code." They never even followed her and now, they've got 25% off or something. So it does seem like attribution can be tricky, even if someone's not using Honey. How do you think that world's changing right now to make it easier for merchants to track where their sales are actually coming from? It feels very messy.
Matt:
Oh, I agree. I think it's a total mess. That's why we focused on the automation because I think that's one of those low hanging fruit, but big problems. Honey will tell the world that they have 17 million or so users. I don't know if Wikibuy which is now called Capital One Shopping, I don't think they announced how many users they have. But what I can tell you is both of those companies are spending a tremendous amount of money acquiring new users.
Matt:
Every time I log into Twitter, usually the first ad that I get is from Honey. All throughout the Christmas season, the holiday season just recently Capital One which owns Wikibuy Capital One Shopping, they were running TV commercials for this product with Samuel L. Jackson and John Travolta. So there's like a tremendous push for them to grow these user bases.
Matt:
In talking with merchants and we've got, I don't know, we've got maybe 25 merchants using our product right now. And we're in closed beta. That problem that you just mentioned, which is, "Hey, I worked with an Instagrammer and I gave them a code. And all of a sudden two days later, I've had a vitamin company tell me that story. I've had a sporting goods company tell me that story. I've had a toilet paper company tell me that story.
Stephanie:
They're using Instagrammers?
Matt:
They're using Instagrammers. They're using YouTubers. They're actually using podcasts as well.
Stephanie:
I mean, interesting to see how they're partnering on toilet paper.
Matt:
Because they're partnering for the audience on these podcasts and they're hoping that they can get that audience to find out about their product and again, then they're incentivizing them to come and become a customer. It's basically the same net story. The vitamin company told me they're like a supplement company. They partnered with one of the biggest triathletes in the world.
Matt:
Let's just say they had 50,000 or 100,000 followers, but you've got to imagine they're probably rabid followers. If you're into that, then that's probably the gold standard of who you would listen to. And that person did some blog posts and did some Instagram posts and posted their code and as soon as it happened, they saw a surge in sales attributed to that person.
Matt:
Now, the marketing person at the company was like, "Oh my gosh, we figured it out. We nailed this. We knew that people would be rabid about that person's content. We knew that person had so much influence to get people to come and buy." And then they're like, "Oh my God, it's Honey." Because literally they went from zero sales to 80% of their sales that had coupons was that person on Monday.
Matt:
I think it's a frustrating problem. And I think the sophisticated marketers have woken up and are like, "Man, we're bleeding money." One merchant told me that when they started kind of parsing out the attribution that Honey was costing them. They did about a million and a half in revenue online per month, so call it a $15 million business give or take. They believed that these promo code extensions were costing them about 150 grand a month, 10% their overall value.
Stephanie:
I mean, we just had a guest who they ranted about their hatred of Honey, I mean, even on the show. So I think it's maybe a couple episodes before maybe when yours is going to go out.
Matt:
Call me. We can help.
Stephanie:
Yeah, I'll send the link so you can hit him up.
Matt:
Absolutely.
Stephanie:
He was not a happy dude about Honey. But I guess when I think about promo codes, it kind of feels archaic to me. Maybe this is just a me thing, but it feels like where QR codes were where all of a sudden they're gone and you don't even think about them anymore. Promo codes kind of feel like that to me too of just, it feels like a manual old way of attributing things.
Stephanie:
How do you think about attribution when it comes to influencers and stuff or anyone, without having to use a code? Are you guys even thinking about a new way of doing things or do you hear of people trying new ways of attribution that isn't like I'm putting in a manual like Stephanie 20, to get my 20% off? Is there a new way of doing it?
Matt:
I mean, we're thinking through all those things. I think the challenge is specifically if you're using these one-to-many mediums. In a perfect world, I think you'd have a unique code for every user and so you'd have to authenticate. We'd know that that code went to you Stephanie and if you redeemed it, I would know that you actually bought something and you bought something because of this engagement that we had. I think in these one-to-many mediums it's, how else can you do it? And some of the challenges that the one-to-many mediums like think of YouTubers.
Matt:
One of the companies that we're working with has a problem where they have a very high dollar ticket item. Their item that they're selling is about 1,000 bucks. And obviously, if somebody grabs a code of 20% off that you're losing 200 bucks, it's a lot of money. Their problem was that they were doing YouTuber videos and they were publishing a code within the YouTube video to reach the audience. And for them, it was extreme sports, the audience that they were going after.
Matt:
Well, literally the next day, and I don't know if you know how Honey works. If you have a Honey on your machine, the very first thing that Honey does is it scrapes out anybody who manually puts a code in. So in order for Honey to be able to grab that code, it has to happen once where a real person saw the code and was motivated to go and type it in and buy.
Matt:
If that happened to me, if I got that code, I would go in and type it in. And if Honey were on my machine and then I hit okay, Honey will scrape that code out and now everybody who comes after me gets access to that code whether they saw that YouTube video or not.
Matt:
The problem for this company is spending a lot of money engaging with YouTubers and creating videos and obviously, doing the presentation layer of these offers. Well, once Honey gets a hold of the code... And what they've also found is that Honey and the other extensions, are not very merchant friendly. The relationship between Honey and these merchants is actually quite adversarial. And so it leaves them with no other option.
Matt:
I guess the two options: one, you just keep running your YouTube thing and you resign yourself that you're going to be paying out a 20% discount to everybody who comes and has Honey; which that stinks, that doesn't feel right or you need to reach out to the YouTuber. You need to recut the video. You need to recut the voiceover. You need to kill that code. You need to put a new code in. And so it's made this sort of marketing endeavor with YouTubers and Instagrammers and you name it very hard, because you're actually turning off codes.
Matt:
We saw one email which was interesting. I always say to people, let's remember we're all consumers too, you and I buy stuff on the internet, even though we're deeply entrenched in the businesses that we're running. I have Honey on my machine, so I can understand what that user behavior is, so that I can actually talk with merchants.
Matt:
One of the folks on our team bought a pair of shorts from one of these companies that advertises on Facebook and Instagram. And they were out of stock after he had ordered it, so they sent him an email. And they said, "Hey, listen, sorry you didn't have it but guess what, here's a code. You'll save X percent. But please, make sure you use it within the next 48 hours because Honey has been grabbing our codes and we're going to shut this code off."
Matt:
How can people market, if you constantly have to play whack-a-mole. And if you now think of the analogy, it's back to what we do in the malvertising side. If you aren't going to solve things with software, you're basically playing this long cat and mouse game that you won't win.
Stephanie:
I mean, that's why I think about merchants turning on and off codes.
Matt:
It's a nightmare.
Stephanie:
We were handing out swag and me just trying to... I had unique links that could work for more than one person and just thinking, "That could be tricky and go really bad." But I guess that's why I just think codes just feel, like I said, a little bit archaic. Why can't I just go to a YouTube video?
Stephanie:
I mean, the internet knows so much about me and where I'm at anyways. It should say, "Hey, Stephanie watched Matt's video where he was talking about this toilet paper." And then all of a sudden she's at our website, you can say, "Stephanie, a 20% coupon awaits you when you go here."
Stephanie:
And then when I get there it should know who I am and then be like, "Your coupons applied. And it will be applied for the next three days on this website or whatever, because I know where you've been and what you saw and where exactly you came from." Why can't it just work?
Matt:
I mean, I wish it was all that simple. Listen, we are taking obviously, technology solution to what we think is a longstanding and challenging problem. And in the malvertising world, the people in ad operations were literally playing whack-a-mole. Like, "Let's figure out where this bad ad came from." "Turn that demand source off." Or, "Turn that buyer off." And guess what, the bad actors, they just pop up again.
Matt:
And so we believe that, and I've seen and talked to merchants who are like, "Listen, here's how I solved the Honey problem." And they're like, "We actually created promo codes for 10% off, but the promo code was Honey is stealing your data."
Matt:
Because if you use Honey, you know that when Honey pops up it'll actually tell you the codes that it's implementing. They went on a mission to discredit and put the fear of God in their buyers that Honey was doing... They were like, "Honey is doing nefarious things with your data." And guess what, Honey D listed them as [inaudible].
Stephanie:
Well, there you go. Now, you know how to do it, I guess.
Matt:
The irony is, is that was three months ago that I talked to that merchant. And yesterday they cameback in and said, "Listen, we have a problem again."
Stephanie:
Honey added us again.
Matt:
No, this time they've got a Wikibuy problem. The problem is going to be never-ending, I think. Ultimately, we're hopefully going to give e-commerce companies the tools that they need to go out and be able to operate their business and focus their time on the things that really matter, in my mind, which is driving incremental revenue; not playing whack-a-mole with your promo codes and having to go recut YouTube videos. Hopefully, that's one of the big things that we help solve for.
Stephanie:
That's cool. I mean, I do like the idea of that one merchant you were mentioning where they said, "If you act within the next 48 hours or whatever, it'll only lasts this long." And I just had a guest yesterday who said that. I think it was either Burger King or McDonald's made it so if you're within 20 feet or something of a McDonald's they would send you a code and say, "You have five minutes to get to a burger King to get a free burger or something."
Stephanie:
And I'm like, "That's interesting." That's a good way to make people act quickly if you know something's expiring, I know I act a lot quicker. But I mean, of course, solve the problem that's number one. But I do think that's an interesting marketing tactic too.
Matt:
And make it measurable. I think that's the key thing is that... I often say, "What gets measured gets managed." And so hopefully, what we're doing is we're taking one of the things out of the equation that is making measurement really challenging for merchants. Again, using the triathlete example, yes, the marketer was high-fiving the rest of their team going, "We finally solved this." And then when they actually looked at the data they were like, "Damn it. I guess we got to go back to the drawing board."
Stephanie:
It's also just so tricky too, knowing how much of those people would have bought otherwise or not. So even looking and being like, wow, we have all this attributed to this one promo code and maybe it was because of Honey. But how many of those people would have bought if there wasn't some promo in there? It's just hard to know.
Matt:
We're solving that problem. We're giving merchants some deep analytics on exactly what's happening on their site, because we think there's a blind spot there where they don't know. For instance, how many users actually came to your site that actually had an injection capability? One of the extensions of Honey, Wikibuy, Piggy, Amazon Assistant, you name it. So we give them that lens.
Matt:
And then we give them the lens of, what were all the promo codes that they tried to inject? What was the most popular promo code? And stack rank those things and then going deeper down to conversion rate. And guess what, what we're seeing in these early days is that when you block Honey and Wikibuy at checkout, the vast majority of users actually still convert.
Matt:
And so that to me is the icing on the cake which is, guess what, you take control back of your website. You take control of your margins. You take control of your revenue. You now have the data you need to be able to go out and drive incremental sales. We think that's pretty powerful.
Stephanie:
I mean, that makes sense. I've heard a couple of times that also, discounts don't matter as much as you would think. I think they were talking about, they did a study between 10% off and 20% off. And actually, they were kind of the same when it came to consumer happiness. And what can be worse though, is if someone has the ability to go in and put a promo code in or something and then it doesn't work.
Stephanie:
I don't know if you remember those days of just going to the internet promo code for macys.com and trying out 10 different promo codes and all of them failing. I was way more unhappy then, than just not having one at all, just buying at full value.
Matt:
Let me tell you the opposite of that which is the worst-case scenario, in one of our merchants experience and that's why they're using our software. They're in the home interior space, so they do drapes and carpets and wallpaper and all that sort of stuff. And they were trying to build favor with interior designers because they wanted interior designers to know their site and know their stuff and all that sort of stuff. And so they did a very exclusive but unfortunately, a promo code that Honey got ahold of that gave interior designers 50% off.
Matt:
Well, lo and behold, as soon as one designer used that code and also had Honey on the machine, that code then got swept up in the Honey and everybody, every order that had Honey was now getting 50% off. Their customer service nightmare was that they couldn't afford to give every consumer 50% off, so they actually had to cancel orders; believe it or not.
Matt:
They called customers and said, "We can't honor your order with that coupon because that coupon was not intended for you." Created a customer service nightmare for them. And that's what they want to do is, they want to control their user experience. They want to control their revenue and their margins.
Stephanie:
Oh my gosh, that's horrible.
Matt:
Out of control. But think of that disaster of having to call someone and say, "Hey, I know you wanted to spend $500 with me, but only pay me 250 bucks. I can't give you 50 off but I can give you like 15 off, that's kind of what you were probably entitled to." So anyways, just trying to get control back in these merchants hands and let them control their destiny.
Stephanie:
I love that. When thinking about back to the now advertising piece, how much do you think it's on the publishing platforms? Is it their responsibility to make sure that they continue to increase their efforts to make sure bad actors aren't out there anymore?
Stephanie:
I mean, I know they're probably doing a lot. A lot of people like to hate on the publishing platforms and they want them to always do more and more and more. Is it maybe on them or maybe not on them anymore to continue to try and track those bad actors, who like you said are kind of popping up here and then they shut down and then open up a new account and do one off things and then shut down again. How should we think about leaning on the platforms like that?
Matt:
Well, I say to folks, the value chain in that industry is actually quite wide. And so from the bad actor who's putting their hands on the keyboards to the consumer, there's a whole bunch of players in the middle. I think it's on everybody to really have defenses in place and to make sure that they're protecting...
Matt:
So if you're at the front end, if you own the demand side platform that the bad actor's using, you need to have your own checks and balances to make sure that you're not bringing in malicious buyers. But all through that value chain, the onus is on everybody. But at the end of the day what I say is, the only person that can be responsible to that end user, is the publisher.
Matt:
Pick your publisher, if you are Fox News or you're the New York Post or you're the Washington Post, you're the one that has that ultimate relationship with Jenny or Johnny consumer who is surfing your site and consuming content. So you're the last line of defense. You're the one that created the site. You're the one that drove the traffic. You're the one that is using ads to monetize your traffic. It's really on you I think, ultimately.
Matt:
Now the publishers, all those folks that I named and there's millions of them, they all want to look upstream and they should. And they should hold everybody accountable upstream. But I think they're the ones that are really the that last line of defense.
Matt:
Because if you go to one of these sites and you have a crappy experience, you don't really care that it came through an ad. Like the woman at Harvard Crimson last week, she didn't know the origins of why it happened. And here's the other crazy thing, she knew that when she went to the Crimson, she was delivered a crappy experience.
Matt:
Now, the crazy part. First time we've ever done it, we actually did a private webinar with the end user because we wanted to explain to her here's exactly what's happening. She told us this story, she said, "Listen, I use ad block." And obviously, the risk to publishers are, if you don't create great experiences, your users are going to start using ad block.
Matt:
What she said was, in the desire to get real news and in the desire to really understand what's going on in the world and in the desire to actually make sure that real news publishers are actually getting compensated, she turned her ad block off and this is what happened.
Matt:
So shame on the Crimson for not delivering a great experience, because guess what? Now that user's like, "I'm not turning ad block off the next time I come to your site. You're not going to get paid for the traffic that I'm going to generate." So again, it really goes back to the publishers, the onus is on them.
Stephanie:
And thankfully, I think there is like new technologies popping up that maybe we'll be able to enable them or even just thinking about implementing. I mean, I've seen some advertisers looking into blockchain and having that as being kind of like a more source of truth to be able to know a one-to-one relationship and knowing who's behind... You don't know exactly who's behind what, but if you have it in a way where they sign up and they can't just start creating a million different accounts because they've got their one single one that they can go off of, it seems like there's a lot of ways that it can improve over the next couple of years that maybe hasn't been so easy the past decade or so.
Matt:
I agree. Obviously, there's industry bodies all trying to figure this out together. There's companies like us who are innovating and coming up with new and unique techniques to block these sorts of nefarious actors. I do think the biggest and most important thing is to recognize that the bad actors aren't just sitting still waiting for somebody to solve this problem. They're innovating honestly, a more rapid rate than many of the industry leaders that you would expect that have hundreds or thousands of people trying to solve this problem. Bad actors unfortunately, are innovating at quite a rapid pace.
Matt:
So the problem I think is going to evolve and change. We've seen it evolve to not just being ads but obviously, compromised Chrome extensions that just seems to be a great vector. And so I think you're going to see the problem move around and especially, if there's a lot of money in it. If there's ways for these guys to make money, you're going to see them salivate with... You're going to put up this defense and they're going to figure out this way to get around it.
Matt:
And there's so many different browser types. There's so many different machines. There's security flaws. There's zero-day. There's so many ways for these guys to actually buy and target, to only focus on iOS 13 and below and blah, blah, blah to reach their audience.
Stephanie:
So tricky. Hopefully, it'll get solved over the next decade. Cool. Well, with a couple minutes left, let's move over to the lightning round. The lightning round is brought to you by Salesforce Commerce Cloud. This is where I'm going to ask you a question and you have a minute or less to answer. Are you ready, Matt?
Matt:
I am ready.
Stephanie:
All right. First the harder one, what one thing will have the biggest impact on e-commerce in the next year?
Matt:
Listen, I think it's been the gold rush for e-commerce merchants over the last year. In many cases I talk to merchants, they're like, "It was raining money last year." Sales were up five X, 10 X, who knows. I think the next year is going to be that year where folks actually look to efficiency, and they look to figure out where there are holes in the boat that they haven't had to look before.
Matt:
And I think that plays to our product because I think in many cases when it's raining money, you almost turn a blind eye to some of these sorts of things. But I think now folks are like, "Listen, if I can be more efficient. If I can take control of my revenue and my margins, I'm going to do that."
Matt:
So I think that's probably, this is the year of people now are catching their breath and they've figured out their distribution and they've figured out their fulfillment and their warehousing and all that sort of stuff and the panic that they had to do to keep up with the pandemic growth. Now, I think it's a deep breath of like, "Okay. Now, let's look at the math."
Stephanie:
Yeah. I agree, that's a good one. What one thing do you not understand today that you wish you did?
Matt:
What one thing do I not understand. I think the affiliate landscape is complex. I think there are a lot of legacy ways in which people have calculated incrementality and I'm not sure if they're all believable. And I hear a lot of feedback from merchants where it's kind of like they just brush it under the rug and they're like, "I know I'm probably paying for stuff that I didn't really get, but let's just let it go." I think every percentage point matters. That ecosystem, because I hear there's good guys and there's bad guys and I'd love to really dig deeper on that. And I think that's a big opportunity for us as a company.
Stephanie:
That's a good one. What's the nicest thing anyone's ever done for you?
Matt:
Wow. The nicest thing that anyone's ever done for me.
Stephanie:
I like to go deep.
Matt:
Yeah. That's a deep question. I think I've been fortunate throughout my whole career in that, I have been given opportunities that I probably wasn't ready for. And by the way, I had never been a CEO before I was at this company. And so, who knew that I'd be able to do it.
Matt:
But I think it actually starts way back to when I first graduated and I was seeking my first job. And I had a mentor that took a risk on me and gave me my shot. And I worked my butt off and hopefully that translated and he and she felt great about what I was doing. So I think the nicest thing, I've just been given opportunities that I don't think I deserved and hopefully I earned that respect and trust over time.
Stephanie:
That's a good answer. If you were to have a podcast, what would it be about and who would your first guest be?
Matt:
Wow. This lightning round is hard.
Stephanie:
Good. Needs to be.
Matt:
If I were to have a podcast. I love gadgets. I'm one of those guys that buys the infomercial type stuff. I bought one of those Rotisserie Showtime girls 20 years ago, I still use it.
Stephanie:
Worth it.
Matt:
Maybe it could be interviewing people who've built made for TV products and really understanding the backstories behind how they came up with the idea and how successful they were and God knows how much money we all made them.
Stephanie:
That's good. We had Kevin Harrington on the show, he was the original OG shark in Shark Tank. He basically made the infomercial. And it was very interesting hearing his perspective of how it started, where it's at now and Shark Tank.
Matt:
I'm fascinated by that ecosystem, it's super cool. And by the way, I always do buy one of those stupid things for my wife for Christmas and she hates me for doing it because she's like, "You're just burning money."
Stephanie:
I had fun buying it and watching the infomercial today.
Matt:
Believe it or not, one of my coworkers gave me a Squatty Potty for Christmas.
Stephanie:
I actually feel like those have good value though, the science is there. It's just a weird thing to buy your wife, if you got that for her. Someone gave it to you, got it.
Matt:
I was given it, by one of my coworkers, "By the way it works."
Stephanie:
And their marketing, I think that's the Harmon Brothers who did their marketing with the whole unicorn and they did the Poo-Pourri thing.
Matt:
Oh yeah, it's super cool. I love those kind of gadgets.
Stephanie:
That's a good one. I would listen to that show. All right. And then the last one, what's up next on your Netflix queue?
Matt:
Well, on my Netflix queue, I think I've got three episodes left on the Queen's Gambit.
Stephanie:
Love that show. That was a good one.
Matt:
I'm a documentary guy. I actually will tell you that I've been kind of hooked on HBO Max for a little bit. And I just finished the Tiger Woods documentary last night, which was fascinating. Nothing that you hadn't been told before. This guy through adversity has come back multiple times; knee surgeries, winning on a broken leg. So I'm into those sorts of stories. One of my guilty pleasures is The Bachelor, so it's on my DVR. I'm playing catch up on that.
Stephanie:
That's great.
Matt:
I love reality TV and that sort of stuff.
Stephanie:
I like where your head's at, me too. Well, Matt, this has been a very fun interview. Where can people find out more about you and clean.io?
Matt:
So you can find me at matt@clean.io. So if you want to send me an email, obviously happy to help you guys in any of your challenges and would love to hear your challenges if they're similar or if they're different than ones that we're solving for. Hit me on LinkedIn, so you can find me there. And our company website is clean.io.
Stephanie:
Awesome. Thanks so much for joining us.
Matt:
Thanks Stephanie. Thanks for having me.
For more than two decades, Dan McGaw has been engrossed in the world of marketing technology. And through the years, there has rarely been a new MarTech tool that Dan hasn’t given a shot. Why has he placed such an emphasis on knowing the latest tools available to marketers? Because every company, big or small, needs to invest in tools that will elevate their business rather than slow it down. Some tools are better than others, and sifting through the rubbish to find the diamonds is a daunting task. That’s where Dan and his company, McGaw.io, come in.
On this episode of Up Next in Commerce, Dan discusses all of the marketing technology he’s bullish on at the moment, and why he believes ecommerce companies will be investing heavily in certain tools and operational activities. From campaign tracking, to multi-touch attribution, to recommendation engines, to personalization, Dan’s toolbelt has a tool for you, and he also has some comforting words for anyone who is worried about the potential of a cookieless future.
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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Transcript:
Stephanie:
Hey everyone and welcome back to Up Next In Commerce. This is your host, Stephanie Postles, co-founder at mission.org. First things first, I would love it if you could hit subscribe and leave a rating and review, let me know how I'm doing and what you guys are interested in hearing in the future. All right, onto the show. Today, we have Dan McGaw, the CEO and founder of McGaw.io. Dan, welcome.
Dan:
Hey, how are you today?
Stephanie:
Good. How are you?
Dan:
I'm doing amazing. I'm living the dream right now. So having a ton of fun.
Stephanie:
You are. So tell me a bit about McGaw. So I was reading about your background and what you were known for, and someone called you the godfather of the marketing tech stack and one of the original growth hackers. So if I'm setting you up big here, let me know. But tell me, how did you get those names and what does your current company do?
Dan:
Yeah, great question. Well, I got those names from other people calling me, which is pretty fascinating to say the least because I remember the first time that I heard that I was like, "What?" But then it kind of caught some legs. So I've been in this space for over 20 years. So I've been doing marketing technology marketing since 1998. So I've been doing mass emails since before mass email was even a thing. So I just have been around for a really long time and I've been in the marketing technology space since before there was even a concept known as marketing technology. So definitely have had a long history of doing this. I've been an entrepreneur for a long time, even have been, another funny, fancy title that I was given is I am a United States ambassador of entrepreneurship.
Stephanie:
I saw that too. I didn't know what that meant though so I was afraid to put that one out there.
Dan:
Right? So I was selected by the United States State Department to be an ambassador of entrepreneurship to Mexico and I was flown to Mexico and I had to advise a bunch of companies and corporations and colleges on how to build entrepreneur ecosystem. So it's just been really fascinating. I think that the big thing that I will just say is I have a really big mouth and I'm always out there doing something stupid and I'm not afraid to say how I feel. So it's kind of wound me up with some cool places and I've done some really cool stuff, but yeah, I've had an amazing career. Everything from working at a cemetery, to making pizzas to now of course doing some really bad-ass marketing technology stuff. So I hope that helps.
Stephanie:
So what'd you do at the cemetery? Now you've piqued my interest there. We'll just have a conversation about that now.
Dan:
Yeah. Right. And that was the creepiest job I've ever had, but so awesome. I just did, I was a lands crew person and I weed whacked and I blew leaves. I think I was 14 in middle school, but I've always had the hustle so I just wanted to work and make cash. And I mean, I started my first company when I was 13 and was very successful in that business. So I've always just wanted to make money and that's actually how I got into marketing technologies. I saw marketing technology was going to blow up and we chose a vein in there and stuck with it and it worked out really well.
Stephanie:
That's cool. So how did you see that area was going to blow up? I mean, you're saying that it was before there was even a terminology around it. How did you see this as an industry I want to get into and now I know what to actually do to even be helpful.
Dan:
Yeah. Fascinating question. So my first company was basically in the music business. We started one of the first online booking agencies for DJs and producers. So everybody here has probably watched the Fyre documentary on Hulu or Netflix. I literally did that same exact business except for I was not a fraud, which is so fascinating. We started an online website and bulletin boards marketing DJs and producers that basically would do raves. Today we now call it EDM and it's all this big billion dollar industry, but back then it was like nothing. And I was just young and didn't know what the hell I was doing. And so I said, "Hey, we're going to figure out how to promote these DJs because I love raves like any ..." What 13 year old goes to raves? But either way-
Stephanie:
Yeah, really. Where are your parents? We don't know where Dan went. He's been gone for a week.
Dan:
Supporting me a 100%, crazy enough, but I started that and then really started figuring out the internet and none of our competitors were using the internet. They were still just like relationship based. And as we went through that process, I learned a little bit about development, HTML and nobody was doing anything. So so far in like those days, AOL didn't even have a concept of mass email. You had to get white listed to send mass emails. So I just kind of started doing it to come to find out that there wasn't really any technology back then to do this stuff. So before there was all this tech to be able to make it happen, I was already kind of making it happen manually. So I got really involved, naturally Google analytics which was urchin came out and like ad tech became and there wasn't MarTech. It was just ad tech at the time, Google analytics and traffic tracking.
Dan:
I got really big into UTM tracking, which is kind of the first bit of it. So fast forward a little bit to like 2000, I think like 11 or something like that, Kissmetrics was a large analytics company. I got hired there as the head of marketing. I was hired to replace Neil Patel, one of the founders. So I wound up becoming like the head of marketing at one of the rocket ship analytics companies. But all the stuff in between the middle there was kind of you just made it up as you went. And then 2011, 2012 was when MarTech kind of like took off and I saw that as a humongous opportunity. So I've just kind of have stayed in that industry.
Stephanie:
Okay, cool. And what brands do you work with today for context?
Dan:
Yeah, really, really good question. I mean, our clients weren't ... So our company mission is to help companies of all sizes realize that their customer data is their most valuable asset. So we work with some really, really small companies all the way up to some really, really big ones. So some big ones that people would know like King's Hawaiian Bread. We do a lot of their implementation work. We are managing their ecommerce. Hydro.com, which is like the Peloton of rowing. We do work with them. Some other people might be familiar with like forksoverknives.com. They were a long time client of ours. We no longer work with them, but I mean, we helped blow them up. These are some really popular brands that people would be aware of, but we also work with some of the MarTech companies. So even Kissmetrics has hired us. Segment.com has hired us. Looker which is owned by Google has hired us. So it's really across the board. It's been a lot of fun.
Stephanie:
Cool. And what kind of challenges do you see the bigger brand struggling with today? And is it kind of similar to maybe with the smaller brands that you work with? Like same kind of thing or are they very different problems you have to focus on?
Dan:
I think the problems are exactly the same. I think the tactics which are being used are slightly different because the tool set changes, but there's two primary problems that most companies have and that's when they come to us, which is great, is they either lack visibility into their customer journey or they lack the ability to engage in the customer journey. And this is a pretty big problem that every business faces is that they can't see what's happening in that customer journey or they can't act in there. And that's where the marketing stack which is what our specialty really is, is we help companies basically connect all the tools together, integrate them, operate them and be able to gain visibility into that journey so they can provide engagement there.
Dan:
And this is one of the biggest problems that you're facing in marketing today because everybody's figured out ad tech. Everybody's figured out email automation and everybody is kind of trying to figure out analytics now, but there's still this huge middle and bottom that nobody understands and that's really where our company kind of sits nice and sweetly. So the customer journey is huge right now. I mean, that's what everybody's focused on.
Stephanie:
Cool. So where do you see companies going wrong right now in the customer journey? Like are there similar things or like you guys all keep doing the same thing and it's messing everything up or is everything very different, all the problems that you maybe discover as you were starting to look into how the brands are operating.
Dan:
Yeah. The biggest thing that we see that that's fairly consistent, and it's the thing that no marketer really focuses on is it's the taxonomy of the integration. So like what does taxonomy mean? So every time that somebody does an action or we learn an attribute about somebody who's coming through our funnel, that's got to have a name to it. It's got to have a label or as you might call, nomenclature. We've got to all call it the same thing. And that's a big problem that we see across organizations and I'll try to put this ... If you're working with an online education company, the marketing team is calling it a signup, but the development team is calling it an enrollment, but customer success is calling it a registration. And the problem is when this happens and the data all goes into the systems, you now have three attributes for the same exact action, and it makes it really hard to tie all these things together.
Dan:
So the fundamental problem that we see most companies have is that they just don't have a consistent taxonomy across the stack. So when they finally start looking at the customer journey, they have it all in different namings, and then they have to spend all their time transforming things to get them to line up. So that foundational thing is the last thing everybody focuses on, but when they get that right and it works across the entire stack using a unified taxonomy, which sounds so technical but it really isn't, they really are able to create magic because now everybody is calling the first name of a customer by first underscore name in the analytics, but in the attributes you see in marketing automation is Fname. Right? So that's usually the key problem that we see is that taxonomy is wrong. And then the second problem that we see is that the tools are not connected.
Stephanie:
Yeah. So it's funny talking about how the taxonomy is wrong. A lot of people listening might be like, that's so easy. And I'd say for a startup like starting out, it's very easy if you know to do that from the start. Like of course, have your variables, make sure they're exactly what you want and train people up, have your data dictionary, whatever you may have so everyone uses the same term. But actually when it's a bigger company which I've seen like back in my Google days, everyone's operating off different things. How do you bring the org together and all the different departments to be able to not only agree like this is the variable, but then make sure everyone's using it that way? Because that's actually a lot trickier than I think some might think.
Dan:
Yeah, it's extremely, extremely hard to get that cross department alignment. And it's fascinating because like this is one of the things that a growth team would ultimately help with, is kind of cross department alignment in regards to these things. But growth is always focused on action, not necessarily planning. So a new companies or I don't want to say new companies, excuse me. The new role a lot of companies are rolling out is revenue operations, marketing operations, sales operations, revenue operations is the big position that SaaS companies are hiring because it straddles across marketing sales and customer success And that's the big thing that's happening. And I think in a lot of the enterprise companies, you're going to see a lot more of these revenue operations style roles that are coming out that try to align it.
Dan:
Because everybody's realizing if your data's crap, okay, great, we can't do any of these cool things. This is where a lot of companies are getting their CIOs involved. I think the conversation over the past two years has really shifted away from, hey, we're just talking to marketing technology. So now the CIO calls the shots for all of this because the CIO is the one who makes the decision on business intelligence and all that. So I think a lot of CIOs own the problem. I don't think that they understand the problem because it's outside of their purview, which is sales and marketing. So I think it will be really, really hard, but it's really important for a company to have good data. And without good data, you're kind of, you can't do machine learning, you can't do artificial intelligence, you can't do personalization. But right now it's the CIO, which I think needs to hire the revenue operations person to really get that done.
Stephanie:
Yep. Yeah. And a side note, if anyone's like, "I really want to hear more from CIOs," we have a whole podcast called IT visionaries where we interview CIOs from fortune 500 companies. So go check it out. So okay. You get your data all set and correct at the company that you're working with. What's the next thing that you encounter that's either an issue or that you see happening a lot right now?
Dan:
Well, I mean, just to make sure, I mean, the taxonomy, the data dictionary like you said, which I think is possibly a more common term or a schema. I mean, there's just so many ways to call this, which is ridiculous. The integration of the tools I think is really, really important. A lot of companies don't understand the way that tools can now integrate. We have a concept that we call data recycling. You typically see companies that are looking for what's known as we want our source of truth or our single record of truth. And for us, we find that to be a really, really bad model. What you should be trying to do is mirror your data across many, many different tools over and over and over again, and then recycle this data throughout the entire tools. If you have a single record of truth, which is always great, that means that you're helping one team and holding back many other teams.
Dan:
So we try to make it so that we recycle the data as much as we can and that's through basically data recycling. Leveraging a customer data platform is always really helpful for this, leveraging tools like Zapier, leveraging tools like tray.io, Workado is always really, really good, but you have to string the systems together along in a very, very structured manner to make it so that that data can even flow. Because even if you call everything the same, if nothing's connected in the right way, you're still not going to make any progress. So integration is also a key part of that.
Stephanie:
Yep. Cool. So now thinking about a little bit farther down the line like maybe when it comes to actually either interacting with the customer or guiding them around on your website or something, what things can be improved there because I've talked to quite a few companies or people on this podcast who say, "Any plugins, get away with all the plugins, they just slow your website down. You just need to focus on website speed. But then you were mentioning earlier how much do you love tools, and so tell me more about that.
Dan:
Yeah. I mean, I definitely think website speed is extremely, extremely important. I mean, when you're a large ecommerce company, speed is obviously paramount because it affects everything from SEO rankings to people actually converting on the website. But I also think you have to very much focus on personalization and creating a customer journey for the user. I think there's two kinds of use here. I mean, one marketing automation is great because it enables you to do so much, but sometimes we lose the human element and we kind of forget that people are still humans. They want to have a communication channel with us. So you want to make sure that you can personalize the experience and tailor that experience as much as you can. But at the same time, you just don't want to overdo it. So we focus a lot on personalization throughout the website, getting people back to where they want it to be, back to where they left off.
Dan:
And this would be, so as an example where you don't want to use a plugin because you want to let them use their experience. As things are happening on the website, we can track that in real time. We can save that in marketing automation, we can save that in any tool. So when the person leaves the website, we can very easily send them an email saying, hey, picked up where you left off. Especially if it's ecommerce, right? Last product that they viewed, they don't need to add it to their cart. I think it's the stupidest thing that we do. We send cart abandonment emails to people when they add something to their cart, because we think they have interest. If you send people an email which showed them the last five items that they've viewed, it adds the same value, right?
Dan:
Just because I added it to my cart, yes, it means I'm interested. Just because I didn't add it to my cart doesn't mean that I'm not interested in it. It means I probably have a five-year-old that's distracting me and I didn't get to add it to my cart. So we see allowing people to pick up where they left off as a really, really easy thing to do. But personalization in helping them accomplish their journey I think is the biggest thing. Marketers job is ... I come from a developer company where the marketer's job was, we were there to manipulate and trick people. And it's like that's not my job.
Dan:
But a marketer's job in my opinion is to basically help somebody accomplish their goals by serving them what they wanted in the first place. Right. It's to create that magical customer experience, knowing what they already wanted and serving them that on a silver platter, not tricking them to figure out, oh, you should've bought this, right? And I think that's where growth hacking went bad a few years back is it got a little like slimy and really it's about how do we just create the best customer experience for them through personalization?
Stephanie:
Yeah. So sometimes I think that personalization that I could see it going too far and I've talked to this a bit on the show before of like when you call in on the phone and it's like a robot and they're pretending to type, and they're trying to personalize it to your name and they're jacking with your name or sometimes you get an email and it's so over the top, like Stephanie, I saw this, this and this and it made me thought of you and whatever. I'm like, "Oh, creepy." How do you walk that fine line of giving people something that is helpful, but not being creepy.
Dan:
Yeah. And just because you're using the word creepy, it brings back some awesome ... I have a webinar and deck that I did before COVID happened. I was traveling the country doing this talk about automation without being creepy. But what does creepy really mean? So what I advise everybody who's listening to this podcast, grab your cell phone and I need you to go to your text messages and I want you to text (415) 915-9011. I'll just say a number again, (415) 915-9011. And I just want you to text the word creepy to that number and then follow along with the text prompt. There's a bot that will follow along with creepy. And then if you're really, really well known on the internet, you're going to get a super creepy email that will surprise you on what the internet already knows about you and that we have access to through your email. So either way, nice experiment for your people to go try, but-
Stephanie:
I want to do that now. Now that piques my interest. I don't know if I'm well-known enough on the internet though, but we'll see. It'll pull things from like Facebook. I'm like, "Here's what you're doing, Stephanie, back in high school."
Dan:
Yeah. We'll see. I mean, and usually the minimum that you're going to get is like we get your zip code or it might have your wrong zip code, but there's for myself and had over 300 attributes. I was like, "Holy crap, the internet knows way too much about me." But that being said, you do follow this line of creepiness to straddle, right? And you have to understand like target as an example can predict with nearly 90% accuracy that you're going to be pregnant within three months or you are pregnant within three months and that's crazy data science that you have and that blurs the line of creepiness. What you have to understand is that you don't want to impact life moments like that. Always, you don't want to precede those things, but what you have to figure out is how do you understand what they're looking for and then just serve that element to them?
Dan:
Because with an email address and with your IP address, we can basically find out anything we want, which is really, really terrifying to think about. So you have to make sure that you're just superseding what somebody is probably already looking for and there's definitely enrichment that you can get. So knowing that it's raining in somebodies area and sending them an email is not necessarily a bad thing, but you don't need to tell them that you know that you know it's raining, right? Like don't say, "Hey, it's raining, you should buy an umbrella." But yes, it's okay to send them umbrellas and rain boots and things like that, which banana republic knows how to send emails based upon that but they don't say it's raining. So there's a lot of ways that you can be helpful to somebody without telling them that what you're doing. But I mean, you can be really creepy if you want.
Stephanie:
I mean, I think that it sounds simple, but I like that where it's you have all this information, but you don't have to be like, "Hey, here's the zip code you live in? And apparently there's this festival going on right now." Like you can send something where it's like, oh, how did you know? Cool, okay. That's helpful because now I know of an event or whatever nearby without you saying, I know exactly the attributes of why I'm sending you this email because of this or whatever. So that's interesting.
Dan:
Yeah. There's an API for that too. When you talk about the events, I immediately think of companies that have APIs that allow you to have events and people's areas. So definitely an API for that nowadays.
Stephanie:
There you go. So what are some of your favorite tools that you're using where you're seeing the biggest success with right now? And it can be marketing tools., it can be stuff around like helping the customer journey. I mean, what comes to mind where you're like, "Oh, 2021, I'm really leaning into these things or we're implementing these things on our customer's websites."
Dan:
Yeah. So there's probably two primaries that I would go with. One, I'm super big fan of text message marketing, but I think a lot of companies get it wrong in the fact that they use it as a promotional channel and they use it as spray and pray. So I think text is really, really big. We use a software called autopilot, which is our marketing automation tool. They have an integration with Twilio so you can build a Twilio bot. So earlier I said, "Hey, text this number and text this word to it." It adds you to a subscription list and then it will automatically send you information and it can talk back and forth with you. And those types of technologies are where you really get some interesting engagement from consumers in regards to your services. So definitely is a real unique channel, but I wouldn't say that that's something that you would leverage on your website all the time.
Dan:
However, as somebody's going through your checkout flow and you collect their cell phone information, this is a way that you can reach out to them. Hey, we shipped your order to you and it has arrived today, right? Provide them helpful tips and then say, "Hey, you received your order. On a scale from one to five, how did it arrive?" And things like that. And providing this two way communication channel is really, really good for consumers. It gives them a communication channel. You do have to connect it to a support system and things like that. But customers really find it unique when you're trying to have a two-way conversation with them compared to like buy my 20% off thing.
Dan:
People hate getting those spam promotions. They hit stop more than you would like to think. So I think that for me, leveraging the SMS bots, whether that be through Autopilot and I think there's a company called Text In, which does really, really good there. There's another company called salesmsg.com. And no, I'm not talking about the Panda Express MSG, but salesmessage.com. They're more integrated with HubSpot or more meant for sales teams, but they work really, really good for customer support too. So text is huge for me. And then the flip side-
Stephanie:
How do you think about engaging people in texts? Because that's an issue where, I mean, I even think about like World Market right now just sent me a text this morning, like oh, 20% off. They send it to me like every week. I'm like is every week, 20% off week? I start to lose interest and I just haven't had the time to hit stop yet. But how do you think about building a flow that's going to keep your customer actually engaged and excited to see your texts coming in? So I feel like it's a two-way thing instead of just blasting them with promotions.
Dan:
Yeah. It's got to be really personalized. And this is why when we think about text messages, we think about it from a helper perspective. Right? So we have to think about like the things that are going to optimize their customer experience, not the things that are going to help us, right? Sending somebody a 20% discount is not helping them, that's helping us. So when we think about the change in that fundamentals is of course like when somebody is coming through your website, like hey, you can of course, hey, do you want to be updated with sales and promotions? Right. But I would target it more, hey, do you want to be made aware when we launch new skirts or hey, do you want to be made aware when we do these specific things, and try to only send the messages what's they're requesting which is going to help them in whatever they're trying to accomplish.
Dan:
And you get unique opportunities like when somebody is going through the checkout experience, right? Like, hey, do you want us to keep you aware of certain things that they're already interested in or hey, do you want to be shipping notifications? Do you want us to keep you aware of your shipping notifications? And those are good ways to get people going, but asking questions is going to get you much more than, hey, here's 20% off. Right. So I think asking questions, that's where the bot part comes into play is asking the question, like do you feel that our customer experience is optimal? Can you reply back with a one to 10 on how your checkout experience was? People respond back with a seven or two or a five. That's the interaction they're looking for, not hey, here's 20% off, right?
Stephanie:
Yeah. Unless you walk in the door. That's when I always think I'm like, if I walk into the door of a retail location and then I get that text, cool. I'm happy with it. But if you're just sending it to me when I'm at home ... Yeah. It is so possible. I know I'm like, they've got the beacons in the stores, you can do it. There's so many ways to do it now, but I don't see many brands at least retail locations doing that quite yet. But maybe I just don't go into retail stores obviously.
Dan:
Well, yeah. Yeah. The retail stores is hard. Yeah. I mean, I definitely think if anybody on this podcast wants to do that, let's do that because I know how to do that, leveraging radar, mobile apps and all that stuff. So like totally cool. I think my favorite campaign was by Burger King. They said if you were within 500 meters of a McDonald's, we will send you a free coupon for a free Whopper and you have five minutes to buy it. So if you had the Burger King app, came in within 500 meters or so I think it was even maybe a hundred yards of a McDonald's, you would get an instant push notification, you have five minutes to get your free Whopper. Holy crap. I mean, can we say contextual?
Dan:
But yeah, that's all possible. I agree with you. If I walked into JC Penney and JC Penny sent me a 10% off discount, I would totally use it. We were working with an ice-cream retailer, which I can unfortunately say the name. They're trying to create a loyalty program, but they couldn't figure out how to do it. And we're like, "Dude, just put a fricking number on the side of your building that says text loyalty now to this number and you're in our loyalty program. And then connect that to beacons and you can do more stuff with it, connect it to your app and do more stuff with it." And-
Stephanie:
Did they do it?
Dan:
No, they didn't listen because they were too traditional, who needs technology either way. But [crosstalk] is super powerful.
Stephanie:
That'd be a really good thing to do now that I'm in Austin area. So hey, anyone listening from Austin, give me a shout out. I'm here now. Yeah. But that's a good area to do that because there's so much like artwork and graffiti that turns into artwork on all the buildings out here, but people pay attention to it. So I think it does depend on the city you're in of like, are people open to that or will they see it and be like, "Man, there's writing on a building."
Dan:
Yeah. I think text is awesome. I mean, you just, people suck at it and I think people suck at most marketing in general. They just try to spray out there and hope for the best. So the one other technology, there's two technologies that we're testing a lot right now. One is called ConvertFlow, convertflow.com which is really, really good. The other one is right message. And both of the technologies are relatively the same. They're a pop-up technology that happens in your website, except for they're integrated in with your marketing automation solution and they also track a lot of what's going on on the website. So you can provide real time personalization to the website based upon what people clicked or what people did. And for anybody who follows the B2B space, there's like these drift chat bots.
Dan:
So if somebody comes to the site, a pop-up comes up, what is your goal today? Did you want to see a demo? Do you want to see this? Do you want to see this? People click on it. And then only the chat bot is able to control like what happens next. The difference with these technologies, specifically ConvertFlow is that when those types of things come up, you can click on something, it will drive you different places on the website, but it can also change the headline copy of the page. It can also change like things that are happening. So if somebody comes back, it can be like, "Welcome back, Dan. We hope that we were able to help you in your last visit. Last time you left off, you were looking at socks, let's go look at socks again, right? Or is there something else we can help you find?"
Dan:
And then of course you could constantly be contextually changing the experience for that user. For us, ConvertFlow has one of the most powerful engines to it and it's super cheap. These two twins created the platform, super, super cool guys, but they're really good at that. And then the flip side would be right message, which right message is more of a kind of a chatbot-esq. It doesn't change your websites, but it does constantly provide you personalization to push people down the funnel based upon what they sent.
Stephanie:
Cool. Like how many tests should a company be running to see what works and then how much should they pull it back and narrow it down to?
Dan:
Yeah, man, you should be running tons of tests. I mean, there's a linear line between the number of tests that you run and as well as the growth that you can create at a company. So I would just say you should run as many as you possibly can, that you can hit statistical significance with, speaking of which we have a tool for that. If you Google AB testing calculator Chrome extension, go check it out. It'll help you know if you have statistical significance. But yeah, I mean really, you should be running tests all the time. You shouldn't be launching anything that's not a test in our opinion. That's a big part of our business.
Dan:
So companies like Hydro, we run all of their AB Testing experiments and we're always running tests, right? So like for me, you should not be doing anything unless you're testing it. The thing that I would just add as a caveat of that is you have to have enough traffic to run the test. You have to hit statistical significance and you have to know what you're doing from a data perspective because false positives, I lost a company $125,000 in 24 hours because I had a false positive. I made a mistake. Luckily, this was a long time ago, but-
Stephanie:
What was the false positive? Tell me the story, or backstory of that.
Dan:
Yeah. I mean, a great problem that you have is that people only focus on one metric. So when you create an AB test, the test, I worked at a company called codeschool.com. Going back to that developer centric company, we were an online education company for developers. We created an experiment called the summer school campaign or summer camp campaign. And I had optimized the AB test for sign-ups and then purchases. The problem was we didn't optimize the test for lifetime value. Lifetime value was 75% less on the winner of the test. So we saw an immediate increase in conversions. We got super, super excited, come to find out that those users were 75% less valuable based upon that test.
Dan:
So there's a thing known as you have to basically reverse look at tests. So when they've been running for two months, go back and look at that to see if it hurt lifetime value, it hurt retention, anything like that. But we basically had just wrote a headline, which wasn't 100% percent true to the developer. Like it wasn't 100% in line, so they wound up churning after their first I think it was two months. The other users who didn't see that headline stuck around for like six months. So it was just-
Stephanie:
Okay. So was the headline, it made them think it was something that it wasn't where they came in-
Dan:
Yeah.
Stephanie:
Okay, got it. Yeah.
Dan:
That's what the developer said that we manipulate people and it was like, no, we just had a misalignment in regards to what we wrote. I wasn't trying to manipulate somebody, but either way, that's marketing.
Stephanie:
Yeah. I mean, to me, that's just always a good reminder that all of this is a long game and anything that's focused on like a quick hit and trying to pique someone's interesting and get them in, it's probably not going to work out long-term.
Dan:
And if anybody knows of Kissmetrics, that was the whole reason why the company went out of business and got sold to a private equity firm is there was too many people at the leadership level that were focused on quick hits and it's what put us out of business. You got to focus on, you've got to have a good mix of short-term and long-term focus and why we've been so successful and are still successful even at our company and our clients, we focus on the longterm as much as we do on the short term.
Stephanie:
Yep. Yeah. Very cool. So when thinking about marketing and all these data attributes that you can have on your customer, how do you think about a, sorry, a potential cookieless world?
Dan:
Oh, it doesn't bother me at all. Cookies, whether you like it or not, the cookie is not going to die. It's third-party cookies they're talking about which are going to die. It's not first party cookies. The problem that people don't understand is we've already come up with millions of solutions to create better first-party cookies, if I could talk, better first-party cookies, which we hide third-party cookies behind. So I mean, we just had a whole debate about this last week.
Dan:
Cname cloaking and proxies and all this stuff. There's already a ton of ways to kind of hide it and change it. The cookie's not dying. It's just the way that the cookie gets used is what they're saying is going to die. But cookieless world is going to happen. Is it necessarily going to be ... I almost want to say it's a false or that the cookie is going to die because you can't completely kill a cache in a user's browser about what we know about the user or you'll break the internet.
Dan:
And the internet is not prepared to completely get rid of all those technologies, so there's always going to be a hack around it. So we have a technology called utm.ao that we use for campaign tracking. So if anybody out there uses UTMs, they have a stupid UTM spreadsheet. We solve that problem. But the real problem is that the technology is now making it so that before you even before you even get to the website, we know who you are. So that's all going to be passed to the website through URL parameters, and there's all kinds of hokey stuff there. So I guess like I'm not that stressed, if that makes any sense.
Stephanie:
So why are other people so stressed? Because I listened to different ad tech podcasts and other marketing shows. And I mean, there's been so many conversations where people are stressing about it. So why are you so chill about it then and they are so worried?
Dan:
Yeah. Well one, if you're an ad tech company, Apple's out to cut your throat, right? Like there's just no way around it. Facebook is in a complete battle with Apple, which I think one, Apple is totally doing this for a promotional stunt because their job is to own your data, right? Like don't let them fool you, they know every single thing you do and they hold it on. It's the reason why they're one of the most valuable companies in the world is they know every single action you do. So for a Facebook, it's definitely really, really concerning because they have to be able to get companies like, and I'll just use one of our clients, King's Wine to figure out how to do Cname cloaking and proxy changes and stuff like that, which is really, really hard.
Dan:
But if you're using myself as like your consulting firm, like that's our job is to figure that stuff out and to solve those problems for you and to deal with it. So I guess like for me, I'm not stressed because that's what we do. But for the ad companies, like how the hell did they get everybody else to know how to do that, right? They've got to teach mission.org how to load a advertising pixel in this certain way and there's no way that mission.org is going to figure that out unless they hire me. So that would be the reason why there's the big difference is I actually know how it works. Most people have no idea how any of this stuff works.
Stephanie:
Yeah. Okay. Well that's good then. So then no one has to be worried and just hire someone who can help you, sounds like the gist of it.
Dan:
The general thesis of it. And it's expensive. It's a lot of service that stuff. So I mean, the problem is that 95% to 98% of the internet is not going to be able to understand it or fix it and that's where a lot of people are really panicking on how do we get this done? But there's always a hack.
Stephanie:
Yeah. And a certain point though, I wonder if Apple is going to have to change the way they do things. I mean, I know that they have been like ruling the market for a long time, but I see now that they're trying to get into something like podcasting and they have big competitors out there who already know how to do podcasts advertising, and they know how to show the dynamic ads and actually showcase metrics to the advertisers. There's so much competition when it comes to that. I can see Apple having to change the way they do things and provide more data and show the ROI instead of being like the black box of like yeah, just put it on here and it's in your best interest because we're a big platform.
Dan:
Yeah. Well, we have to remember that they did invent the pod cast and that came from the iPod. But they're allowed to, I mean, I think when you have that dominance, you're allowed to be slow to things. I mean, when we think back, I used to run a bunch of mobile app companies and like they sucked at giving us data about the mobile app. So we had to figure out all these other things. But when you're the gateway to the rest of it, right, when you're the heroine of the drugs, you can be a little late to solving your problems and that's unfortunately how Apple is. So they're going to be late to the party, but when they step on the throat of anybody else, they make changes. And I think the easiest way to think about it, does anybody remember the QR code? And it hasn't gone anywhere, but all the QR code apps, there's none of them, they're gone because it's part of your camera now. So when-
Stephanie:
It's funny how you forget about that. Like I remember being like, "Oh, which QR code app is the best one that I need?" And it's like, they're all the same, just pick one.
Dan:
And now none of them are around, just like the calculator apps. And like when Apple wants to ... And in our business, one of the things that we try to help our customers figure out and this is something I hope all of your podcast people listen, if you've never read the book, Crossing The Chasm, it's a really, really good read. But you have what's known as basically these innovators, which are out front. Most innovators die, right? They just don't live forever. And what we've recommended to our clients is be the early majority, right? Don't be the person always out trying to be a hipster because then you wind up finding out that like, hey, this stupid business idea blows up. I mean, I was put out of business one time by Facebook changing a feature like, oh my God, I can't believe Facebook changed a feature I went out of business.
Dan:
There's definitely things that other big companies, when you build on their platform, you have to be aware of that if they just decide to get into that space, you could go out of business or you could not have a feature which your business is around. So we always recommend people don't always try to be the innovator, wait for there to like be something solid, wait for something to be proven, wait for something to be figured out. Because if you're always going from the next hot flip to the next hot flip, and you're always a hipster, you're going to spend 10X more money than I am, and I'm going to still make the same amount of money if not more than you and that's always fascinating.
Stephanie:
Yeah. I also recommend that book and it's come up a few times on here. It's a really good one. I mean, how do you think about companies relying on a platform? Because I see so many brands right now just launching on Amazon, for example, and not even worrying about building out their own website presence or even developing their own community. Like how do you think about that?
Dan:
Well, I think my opinion would be different if they would have been doing that 15 years ago. Right. But if you've ever read the book, The Everything Store About Jeff Bezos, just understand he is coming for your throat too. I mean, they're just like Apple. If you read what they did to the book publishing industry, I'm like, "Holy crap. Wow, they completely gutted that industry." So for now I mean, there's not much you can do about it. You have to play with it. But I think it's definitely imperative that you create your own online presence. And I think this is where Shopify is trying to come fill a void is there is definitely, you have to do both at the same time because at any time Amazon is just going to come out with Amazon basic of your product and you're done. They've done it hundreds of times, if not thousands of times.
Dan:
So you do have to build your own kind of side sliver as a brand. And I think the best book that I think I've ever read, which made me understand not only my childhood and why I am the way I am as an adult is the book Antifragile.
Stephanie:
Yeah. You seem to love them.
Dan:
Yeah. It's such a great book. But you have to have optionality and if you put all of your cards on Amazon, well, you don't have any optionality. And I think creating those options is a huge business. I mean, I read 42 books last year. So we want to get into like talking about all the cool things I learned just last year on that stuff. But optionality is huge. I think it's really, really important.
Stephanie:
Yeah, we've had a great guest on from, let's see, it was Taylor Holiday from, I think something collective. I can't remember what his company was, but he said, "You need to figure out how you can basically win even when you're wrong." So like when your models are wrong, which to me I'm like, "Yeah, you're talking about being anti fragile and making sure that you won't fail, even if your models set you in the wrong direction, how can you still benefit and have upside?" Which I thought was really interesting to frame it that way.
Dan:
Yeah. And I think in regards to the platforms and I'll try to bring this back to like the marketing technology platforms, there's a lot of optionality that you can look at and you need to have a backup plan to your backup plan in regards to marketing technology tools. I mean, Marketo got bought by Adobe and that's going to revolutionize the way their product works. And I mean, there's a lot of things in Marketo that suck already and Adobe buying it just means that it's going to slow down, right?
Dan:
So you have to be prepared to be able to say, "What's my backup plan to Marketo? And if I was to switch, what is that going to take?" And that's one reason why we recommend a lot of companies to leverage customer data platforms because it makes switching easy, but then you run into the same problem. Well, if you have a customer data platform and all of my data goes to the CDP, well, what happens when that CDP gets acquired? Right. What happens when Twilio buys Segment for 3.2 billion? How does that change my ... what's going to happen to the CDP? So you just have to ask those questions, like what are my other options with these platforms when I choose it and how much am I baked into this tool? And if I lost this tool tomorrow, what would it take to replace it?
Stephanie:
Yeah, that's really good to have a mindset like that and be thinking about all angles. So really good. So from a general ecommerce standpoint, what kind of trends are you guys preparing for in 2021?
Dan:
Well, first one, just going back, the death of the cookie.
Stephanie:
Or apparently you're not preparing at all and you're like, "I'm good."
Dan:
No, I mean, we started ... I mean, if Google the death of cookies McGaw.io and we wrote a blog post about this a year ago. So we've been tracking this for a long time. I think that the biggest thing that we are focused on, the biggest thing that we see in ecommerce right now, everybody wants to do multi-touch attribution. Everybody's trying to figure out how do they do multi-touch attribution to better align their return on ad spend. Because the key problem that you have is all these retailers are spending millions of dollars a year on advertising spend. And then if they look in Facebook, they see a conversion in Google, they see a conversion in LinkedIn or whatever the platform they see a conversion and they're attributing one sale to five different conversions. So they're really trying to say, "We understand that those five conversions we see in these different platforms or from one purchase, and we need to be able to pull that data together." So touch attribution is huge.
Dan:
We're extremely well-known in that space so a lot of companies are working with us on that, but every company is a unique snowflake for multi-touch attribution. Recommendation engines are probably the other thing that we see a lot of companies really trying to figure out. There's a cool technology called blue shift. Really, really good for ecommerce especially if you have thousands of products. They use machine, excuse me, machine learning to consume your catalog. And then also use machine learning to distribute that catalog as a recommendation to people based upon the best channel that suits them at the best time for them. Blue shift is crushes it. Great technology, Josh, the CMO or CGO, chief growth officer is a good buddy of mine.
Dan:
So we see a lot of the trend in regards, how do we make proper recommendations on the right channel at the right time with the right message. And then the last thing would just be customer data platforms. So those are the big three trends. I mean, one of the reasons why we're crushing it right now is like we know CDPs better than almost anybody else, customer data platforms. And customer data platforms, it's not a fad, it's not a trend. It really is the future on how you need to manage your data and your customer data specifically. So those would be the three big things that I would lean on for 2021 and going, especially into 2022.
Stephanie:
Cool. So you were just mentioning channels. What kind of channels are you guys most bullish on right now? Maybe are there any new ones out there? We've had a lot of people mention TikTok. You and I were talking about Clubhouse earlier. Is there anything that you guys are kind of shifting your focus towards and trying out?
Dan:
Oh, I love TikTok. Man, they tried to hire me as a brand ambassador and I so wanted to do it, but we had to turn it down and I love TikTok. I spent so much time on there. It's ridiculous.
Stephanie:
I do too. It's great.
Dan:
I think TikTok is great, a really, really cheap channel, but you got to learn how to do it, but it's a harder curve so I think that's good. I think that there's a lot of ... YouTube, oh my God, YouTube, YouTube, YouTube, YouTube, YouTube. We haven't even hit how valuable YouTube is. I mean, they're going to be ridiculous. So I think between those two channels, figuring out video is going to be really, really important for companies across the channels with TikTok and YouTube. I think if you can't figure that out in the next five years, you're really going to struggle. There's a cool tool called Fleeq, F-L-E-E-Q.com, which will help you do that for video. So I think YouTube and TikTok are huge if you want to be successful. I think there are some other really surprising ones. Like I always try to tell people you should invest more in Bing. Bing's really cheap. I always think that's always really, really good.
Stephanie:
I haven't heard Bing yet. That's a new one. Okay.
Dan:
Yeah. It's just so cheap. Not as much volume, but just the per dollar comparison is good. And the last one that I'll just say is direct mail. Like, oh my gosh, it's so cheap.
Stephanie:
What are you guys doing in direct mail right now? Because that was also something I've brought up a couple of times of like so many people are now at home and I am delighted when I get mail that's not something spammy where I can actually look through a great catalog and like, oh, this is actually cool stuff. And I always mention the Trader Joe's pamphlet where I'm like, "They have really fun content that also sells their products as well." But it's, I mean, I look forward to that one. So how are you guys approaching the direct mail piece?
Dan:
Yeah, so depending upon what the integration ... I mean, there's a company called lob.com, which makes direct mail really, really easy. And we leverage autopilot as our automation tool and we've been able to, I mean, personalize tons of stuff. In regards to giving people recommendations, we are able to literally write text on the postcards saying the technologies they use through data enrichment. So there's a lot of stuff that you're able to do there, but we have to remember is like sending somebody a thank you card or a birthday card in the mail as direct mail like happy birthday. It's your birthday coming up soon. Right? Like that's not hard, but people love it. And with COVID, I think the best quote that I had somebody say to me into COVID, the most exciting part of my day is walking to the end of my driveway and collecting my mail. And I was like, "What?"
Dan:
So I think it's just a great medium to use. And if you build it as part of your automated personalization journey, I mean, once again, you don't have to know it's raining in somebody's area to send them direct mail. Right. But you can know that it's going to snow two weeks ahead of time or there's a good possibility, you could send them a coupon for snow boots. Right. Like I just, the options are endless. So yeah, I mean, I think it's great. Hey, you abandoned your cart and you left these three things on and you print like three things on there. I mean, the personalization is really, really crazy and awesome.
Stephanie:
Yeah. Yeah. Very cool. All right. So we have a quick lightning round brought to you by Salesforce commerce cloud. This is where I'm going to ask you a question and you have a minute or less to answer. Are you ready?
Dan:
Can I admit I'm scared? Yeah.
Stephanie:
You can admit it. Yes. All right. I'll start with the easier ones first. So you sound like a little bookworm. What are the next three books on your list?
Dan:
Oh, next three books. I don't know. I'm not prepared for that one. I think Atomic Habits-
Stephanie:
I usually ask one, but I'm like, "That's too easy for you." You have to tell me three.
Dan:
Yeah. I'm slacking on my book thing because I had a goal at the end of the year to hit 20 books and I demolished it. So I could probably say my last three books, but Atomic Habits, Billionaire Plan and Maverick. Those are the three books that I want to finish right now.
Stephanie:
Cool. Where are you traveling to next when we can travel again more easily?
Dan:
Oh, well that's an easy one. I fly to Snowshoe West Virginia and less than four weeks to go snowboarding again and I'm super excited for that trip. I traveled multiple times during COVID so-
Stephanie:
Yeah. I mean, I have too, but some people haven't. So if you were to have a podcast, what would it be about and who would your first guest be?
Dan:
We are in the process of creating a podcast of what we call The Stack and we'll be talking to VPs of marketing and CEOs about their marketing technology, sales technology and customer success technology. My first interview is hopefully going to be with mission.org and figuring out how you guys manage your marketing tech stack.
Stephanie:
All right. Yeah. Bring us on. And we also have a whole marketing trends podcast where we interview CMOs. So then we'll have to bring you on that one as well.
Dan:
I think that'd be great. I think it would be a lot of fun. This has been awesome. You are amazing at this. Good, good work. I thought this was fun.
Stephanie:
Thanks. Yeah. I mean, we talked about in the beginning, what was our line was just don't be generic. So I think that was a good motto of our interview. All right. Two more questions. What's the nicest thing anyone's ever done for you?
Dan:
Nicest thing that anybody's ... My godfather took me for my first snowboarding lesson when I was like eight years old. It's the best memory I think of my entire life because it's something I've used forever.
Stephanie:
Oh, I like that. Alright. And then what one thing will have the biggest impact on ecommerce in the next few year? And it can't be the three things that you mentioned earlier.
Dan:
Oh, come on. The next biggest thing in ecommerce that's going to happen. Amazon will start to die. They're going to get ... I think Amazon is going to get split up because Jeff Bezos will want to do it. I think that's going to be one of the biggest things that happens in ecommerce in the next five to 10 years though. I don't know how long it's going to take, but I think that and Congress realizing that Amazon, they're too big.
Stephanie:
All right. Well, that's a good answer. I'm glad that I punted the other three so you had to think of a new one. All right, Dan. Well, this has been an awesome interview. Thank you for not being generic. Where can people find out more about you and McGaw.io?
Dan:
Yeah, so definitely you can go to McGaw.io, but I'm most active on LinkedIn, so go to LinkedIn and search up Dan McGaw. There's three of us, but you'll be able to find my pretty face. Go there and send me a connection request and play along. I've got over 25,000 followers there and I try to stay active.
Stephanie:
Amazing. All right. Thanks for joining us.
Dan:
Yeah, thanks so much. And the one thing I forgot, look up Build Cool Shit, my book which is all about how to build a marketing tech stack. If you go to McGaw.io, I'll send you a free copy. It's on the headline, but I forgot all about it. I have a book called Build Cool Shit. So I forgot that's-
Stephanie:
We will link it up. Don't you worry. Cool.
Dan:
Thank you very much.
Convenience is king. Everyone wants the easiest experience possible, but, they also expect that experience to be seamless and delightful at the same time. When it comes to shopping, ecommerce has been able to bring all those elements together better than in-store retailers. But even though brick and mortar retailers are facing an uphill battle, Joe Jensen believes that they aren’t going anywhere, and there are still massive innovations to be seen to make a more cohesive experience.
Joe is a vice president in the Internet of Things Group and the general manager of the Retail, Banking, Hospitality and Education Group at Intel. He is helping brands across all industries and of all sizes become more nimble and data-centric. According to Joe, there are simple changes retailers can implement to solve big problems so long as you’re asking the right questions..
Like, what if you could solve all of your inventory issues with a simple technology that has already been in existence for years? And how can brands leverage in-store experiences as more of an enhancement to customers who typically enjoy online shopping but crave something more in-person?
On this episode of Up Next in Commerce, Joe answers those questions and more. Plus, he explains how and why traditional retailers should be utilizing more data just like their ecommerce competitors, and he gives a first look into the technologies that will be making an impact on the future of retail.
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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Transcript:
Stephanie:
Hey everyone and welcome back to Up Next in Commerce. This is your host, Stephanie Postles, co-founder at Mission.org. Today on the show we have Joe Jensen, vice president and general manager of Retail Banking, Hospitality and Education Business at Intel. Joe, how's it going?
Joe:
Oh, fantastic. Beautiful day here in Phoenix.
Stephanie:
Good. Yeah, I'm glad to hear it. That is a mouth full title, but I feel like you deserve it when you've been somewhere for 36 years, I saw?
Joe:
Isn't that scary. I didn't even think I'm 36 years old, so it's weird.
Stephanie:
That's amazing, actually. I want to just start there. Tell me how did your journey begin at Intel and what are you doing today? What's your day to day look like now versus 36 years ago?
Joe:
Well, I started as a product development engineer at Intel, and I worked in a bunch of different product disciplines as an engineer. My original life plan was really to leave Intel at about year 10 and go to a startup, but by year 10, Intel stock options were so attractive that I ended up being so that fully handcuffed into the company.
Stephanie:
Yeah. As with most tech companies, I was this close to staying at Google for the same reason. I'm like, "Oh, it's hard to leave. I see my options vesting in year three and five and seven," and you can just extrapolate it out and it'll keep you there. But it's good-
Joe:
I shifted from engineering to the business side in about year seven, and I've done a ton of different business startups in the company. I think one of the things I'm most proud of, I've started three businesses that were at zero and have hit over 500 million a year.
Stephanie:
Oh, wow. So what are the businesses that you've worked on?
Joe:
Two different ones in an embedded space, and then now the Retail Banking, Hospitality. Education is added into that, but that business started, gosh, it started at single digit millions and we grew it to, well, we're the largest business within the IoT space in Intel I can say.
Stephanie:
That's cool. So tell me a bit about when you're saying IoT, and then retail banking, now education, how do I imagine what you guys are doing for your partners? What are you providing them? What does that look like?
Joe:
In our space, the IoT space for Intel is really where IT for an enterprise meets the real world. So in the case of retail, it could be digital signs, point of sales systems, inventory management, building management, time clocks, any system that might be connecting into IT. If you go into the manufacturing side, which is in my space, the manufacturing units, it's where equipment data flows in off of manufacturing side flows into the enterprise.
Stephanie:
And how many opportunities are being missed right now by not implementing? I would say data analytics like you're talking about. When it comes to inventory I know that Walmart for a while was trying to figure out how to track out of stock issues and it was really hard even when they had the cameras going around the lanes because they couldn't see behind what was in front of it. I don't know if they figured it out yet, maybe you know better than me, but what opportunities are being missed by not having this implemented into retail stores?
Joe:
As an engineer, I really think about root cause and what's the underlying problem, and we really believe that inventory inaccuracy is one of the underlying problems in physical retail. The problem we have is if customer can't find it in the store, it's out of stock. It doesn't matter if it's in the backroom, doesn't matter if it's hidden behind some items on the shelf, it doesn't matter if it's misplaced. If the customer can't find it, it's out of stock. We have data and research that shows that 1% of customers who experience an out of stock will go through the whole journey of they search on the shelf for it, they go track down a staff person to go find it, they dig through the rack or they don't find it. They say, "Hey, hold on. Let me go check in the back." They go look in the back and then come out and then maybe they go to the POS and they look to see if another store has it, or they'll ship it to your house. 1% of the shoppers are that patient.
Stephanie:
That's me. I'm that 1%. I did that the other day at Pottery Barn. But then I was very upset at the end because I was like, just like what you said, let me look in the back. Not there. Let me look at our partner stores. Not there. Let me look online. Ooh, it's not the size you want. And at the end I'm like, "Ugh. Okay, goodbye. I never want to come back again." I love Pottery Barn, but.
Joe:
Talk about a study that showed that if a customer experiences that out of stock frustration five times in a store, they stopped going.
Stephanie:
Yeah, I can see that. So how do you go about solving something like that to get all your systems on top?
Joe:
It's really tough. I still think RFID is going to play a key role. Japan has a huge labor shortage problem. They just said because of the aging of their population, they don't have enough labor, and the government decided four or five years ago to put a big push on RFID, and they're mandating by 2025, all consumer goods that are sold in China have to come from the manufacturer RFID tagged. They've also funded a kind of research-
Stephanie:
And that essentially keeps everything inventoried, right? Then you don't have staff to work.
Joe:
Yes. What happens is you don't even need staff to check out now because consumers will put their items in a basket, step the basket on the checkouts, and it'll read all the tags and then we'll just pay and go.
Stephanie:
So it's like the Amazon Go store where they're experimenting with, but I don't know whatever actually happened to that. I went into one in Seattle maybe two years ago, but are they still around? What happened with the Amazon stores like that?
Joe:
They're still running. They do a tremendous amount of business. I don't know how much of it's because of convenience and how much of it is the novelty. I suspect that they're augmenting a lot of that with human capital behind the scenes. I do think that you're going to find retail bifurcating into two types of retail. You're going to see the hyper-convenient side, which is you just want to take all the friction out. How do I take all the hassle? How do I take all the friction out for the shopper? And I think for staples day to day things, you want to go pick up fast food, fast food should be fast. I won't throw the chain under the bus, but there's a new location near our house, and I swear there's a three-hour wait all day, every day.
Stephanie:
Oh my gosh.
Joe:
Fast food just isn't that good for me. I'm not going to wait in line for three hours to get my fast food. And so I think on the hyper-convenient side, that's a big part of retail. Then on the other side, we're calling hyper experience. With hyper experience, shopping is an enjoyment and a pastime for a lot of people. And during the pandemic, obviously you can't go to the mall. You can't go shopping like you used to, but that will come back, and that you want to go and get experiences. You don't want to go to department store A and then walk down the mall to the department store B. And if you close your eyes when you walked in, you wouldn't know which store you're in.
Joe:
Now, if they all have the same assortment, they all have the same brands, they all have the same brand micro stores inside their department store, what's the experience that you're delivering to the consumer? If you go try to find a piece of clothing and it's out of stock, how's that experience? That's not a very good experience. So yeah, it's funny. I had one of my engineers in China explaining how he really has everything delivered. All his groceries, all his food. China is just hyper convenient from that perspective. It's cool and I love it.
Stephanie:
But they're used to it. They grew up like that, though. I feel like here, if you try and introduce some of those conveniences, it'd be like everything should be done this way. I don't know. I think Americans are a little bit more like, "Oh, that's weird," because we just know we have to do like this.
Joe:
It's really cultural differences, but I love this quote from him. And he said, "If I'm going to bother to put pants on and leave my apartment, it'd better be worth it."
Stephanie:
That's pretty great, and true. I feel that.
Joe:
It's like if I need batteries, do I want to get in the car and drive and go buy batteries? Well, if I do that and go to the store and they don't have that special battery, then it's really disappointing because now I spent 20, 30 minutes going out of my house to go get something because I wanted it right now and then they don't have it. This is why consumers do it a few times, they just start ordering online.
Stephanie:
Yeah. And I think the product, like you said, has to be worth it. How are you guys thinking about the experiences piece? Because we've had quite a few guests come on the show who've talked about their retail locations and turning them more into an experiential place, where you go there and you've got the certain music, and the vibes, and maybe you've got a yoga class going on over here and you're going there, not just to maybe pick up your product that you did order online during this time period, but you're also going there to maybe experience something that you wouldn't get elsewhere.
Stephanie:
A lot of people are saying retail's dead and I definitely do not see that happening. I'm like there is pent up demand to go in person and to go into stores, but I do think now there's going to be a new level of expectations of the consumers, not just going to want to go and shop around, they're going to want something else. How do you do that?
Joe:
I think that the role for retail is changing in terms of what experience means. If you go back 30 years ago, 40 years ago, shoppers didn't know what the new fashions were until they went to their favorite store and they saw what the new fashions were. So you went to your favorite store whether you're a Neiman Marcus shopper or Macy's shopper or a Target shopper, you went to the store to see what's available, what's in now. And there was that discovery and learning and value proposition that that store was giving you by bringing you things that fit your demographic. Today people know what's current as the store learns what's current. It's what the celebrities are wearing between social media and how quick things are in internet time. There is really no discovery value proposition for mass merchandise things.
Joe:
Where we see real success is curation. So you go to a store that's not a little bit of everything. It's a store that dives deep into a lifestyle or deep into a fashion style or deep into a demographic, and you go there and you immerse yourself in that brand, and then you immerse yourself in what that brand is about. That's the discovery. If you're someone who likes West Elm, and the style that West Elm delivers, you go to West Elm to see things that would be hard to find on your own elsewhere. If you wanted to go find your own curation, it would take you months of time on the internet trying to go discover all that stuff. But you can go to a store where their buyers have pulled that look together for you.
Joe:
If you're a Pottery Barn shopper, same kind of thing. You go to Pottery Barn and they've curated a set of things that fit a certain demographic and the lifestyle that they're looking for. So I think you're going to see a lot more of that curation. We did tour in New York City a couple of years ago, and the stores that were really doing amazing well were really deep into that curation idea.
Stephanie:
Yeah. I love that. I completely agree. I'm thinking right now about going into a Crate and Barrel or something like that, and I'm looking to find new things of a similar style, instead of going somewhere that's exactly the same that I can just find online. That's a really interesting take. How are you viewing the omni-channel experience of making sure that's frictionless when someone's looking online and then going into the store and having a good experience online and offline?
Joe:
I think a few retailers are starting to really get it right. I think in the beginning, omni-channel was a poor band-aid for I'm out of stock in the store, and I think most customers didn't see that as a good solution. I think the right way to think of omni-channel is there used to be a really consistent funnel for how shoppers and the shopper journey went from just initial discovery all the way through purchase, and that funnel, I think, no longer exists. I think people find out about products all over the place. You might see it on a television show. You might hear about it from a friend, you might see it on social media, and your discovery happens in your life. Omni-channel really ought to enable you to easily find something you're interested in whenever you see it, or whenever you want to. There was an old Burger King commercial Have It Your Way, I think 30 years ago.
Stephanie:
I remember that.
Joe:
I think the omni-channel today really means that shoppers ought to be able to engage with a brand or engage with a product wherever and however they want to.
Stephanie:
And I like the idea too of picking up where you left off. Like if I'm shopping online and then I enter the store or get near it, a subtle reminder of, "Oh, hey. You were looking at this and it's actually here on aisle seven," or whatever it is, directing me to complete the consumer journey. But I don't feel like it's there yet. I know we've got beacons and ability to see when people are entering your store and track that, but it seems like not a lot of retailers have fully leaned into that method to make sure that the full experience is cohesive.
Joe:
Yeah. I think that we're coming from the early days of that. One of my favorite stories years ago, we were shopping for a Tiffany lamp years ago, a couple of years ago, Tiffany lamp. And I searched online one night, looked at some options. We went to a store and we bought a Tiffany lamp. And for the next two months, every banner ad I had on the internet was for Tiffany lamps.
Stephanie:
Yeah. It's like I'm past Tiffany now. I'm onto the next kind of lamp.
Joe:
I think that what's happened is there's been too much of trying to use algorithms and online searches and data to try to target individuals with things that you think they might be interested in and not enough focus on helping people build a cart of things that you are interested in. So, for example, imagine if you turn it around for a minute and the brand for an item that you're interested in has an ability for you to put something that you're interested in, in a basket. And then when you pass a store that carries that item, that has it in stock, they flag you that this thing you're interested is in this store, and it's almost turning it all the way around from the store or the brand pushing to having the brand help guide you to where you find things.
Stephanie:
Yeah, that's really good. That's the kind of world I would like to live in where it actually is helpful and not annoying. I was just speaking with another guest about text messages and how certain retail locations will be like, "Come on in for 20% off," and I'm like, it's not helpful when I'm sitting on my couch, watching The Bachelor. It's helpful when I'm walking into the store and they're like, "Hey, you better make sure you buy that rug from World Market because here's a coupon now. So make sure you finish the journey and you don't just walk in and out." But yeah-
Joe:
You're reaching to the point that's one of the things I think the retailers especially are missing, and I don't know what a good analogy is, but I think that discounts and sales and coupons are an overused tool and they influence a lot of people, but not everybody. I think that for some people being first is more important than getting it on sale. For other people something scarce and having access to it before it runs out. So I think there's a lot of opportunity, even just convenience. Take a grocery store, nearly every grocery store I've ever been in, they put all the staples in the back, and they run with 19th century's retail logic of, oh, if I make people walk all the way through the store, they might buy some more stuff.
Stephanie:
Not me, I got blinders on. I'm like I need my milk and goodbye.
Joe:
It turns out that the convenience stores like 7-Eleven sell a ton of milk. I don't know if you've ever bought a gallon of milk at 7-Eleven.
Stephanie:
I have, yeah. Hey, my two year old, desperate times desperate measures.
Joe:
And it's about convenience. So if I were in a grocery chain, in fact, I talked to one about this big chain recently and said, "Why don't you take your house brands of the staples and put them in a section in the front of the store where they're super convenient and mark them up, make them the same price or maybe even a little bit more than the branded stuff." And the answer was, "Well, we tried that and it didn't work." I'm like, "Oh, when did you do that?" "It was like 10 years ago." I'm like, "People have changed a lot in 10 years."
Stephanie:
Yeah. I'd rather pay more to get right to it. So what are some maybe interesting stories like that, where they have listened to your advice and they've seen good results? Or anything where you're like, "Oh, I remember this one customer did this and they increased revenue a bunch because of this one subtle tweak in the store layout or how they did their products or inventory," or whatever it may be.
Joe:
We'll start a little bit maybe with I think that pretty much in every case when we've helped a retailer test or try a technology, the results always exceed the indicators that they put forward. And the very be wilderness thing to us is that even though these solutions look to deliver tremendous results and impact, they still don't scale them.
Stephanie:
I don't think.
Joe:
Years ago we had a partner that was putting cameras in the ceiling to measure shopper engagement, how long does it take for a staff to engage a customer? And they happen to have as an artifact of that, I won't say the brand, but they had a brand of popular, very popular Cola was in the camera view on the shelf. And they observed that this diet version, this Cola was out of stock almost all the time. So they went to the head of all stores for this giant grocery chain and said, "Hey, I think that there's an opportunity for you to..." Actually it was, I'm sorry, the brand, they went to the brand and said, "You got a not at stock problem in this grocery chain." The guy they talked to said, "Oh, there's no way. I was head of merchandising in Southern California. We have people in that store twice a day checking inventory. Its inventory are stocked twice a week. We are never out of product."
Joe:
And I'm like, "Oh, really? Here's some video of how much you're out of stock." And it turned out that within a half a day that they stocked, they would sell out and they would be out of stock all day, for two days. The problem we run into is you put process in place and you tell people to follow the process and it may or may not happen. So they look at this and they're like, "Well, there's tremendous value in having this product in stock. It's a driver product for the store." If they're out of stock, and the store cares that they're out of stock. The cost of deploying the solution was probably $30 a month per store, not a huge thing for one of their top 70 driver products, and yet it never scaled.
Stephanie:
Interesting.
Joe:
And you feel this thing. There was another one where the labor, they showed this 30% increase in tool sales in a major chain by tracking the staff and shopper engagement and improving that. It was really simple solution. Almost never scales. Now one that we have seen scale, Theatro makes a Voice over IP ear piece set up for staff. So if you go to, I think, well Bass Pro Shops, as an example, who's the one that does jeans and apparel for teams? They all have an ear piece and a radio.
Stephanie:
Oh, Alister? Gap.
Joe:
Anyway, it doesn't matter. A lot of retailers use radios, and there's a cost in the radios, and for a parody, they can switch over to this Voice over IP, and this is one where we're seeing people test it, and then in a matter of weeks completely changed all their devices over. The value in that if you look at it, if you're on a radio network, everybody that has an ear piece in their ear hears all the chatter from everybody all day. With this new solution, you can address a message to an individual person. So only the person you want to talk to gets the message. Then there's the ability to ask for stock and deliveries and things like that. So they've also built the ability, some of their customers, if somebody drives up to do a pickup, you order online, pick up at the curb, you don't want there to be a high friction experience. You want to be able to pull up, very quickly have somebody bring your item and leave.
Stephanie:
So where do you think then the future of retail? What does it look like with all these new... Some of them feel like little tweaks, a radio where you just talk to who you want. To me, some of those things feel little. Are there not enough incentives for these retail stores to change? I know you had mentioned Wall Street maybe beating up on retailers a little bit when it comes to wanting to try new and innovative things. What do you think is holding back retail right now?
Joe:
I think a big part of it is Wall Street, again, back to that root cause problem. There's a set of retailers that we think of as digital media, and these are brands that started as a purely online brand, and now they're going to open up stores and they realize once they get to about a billion dollars or so in revenue to get to the next level, they've got to go physically open stores or expand their reach.
Stephanie:
Yeah, like Warby Parkers of the world.
Joe:
Yeah, exactly. And these digital native retailers, when they come into the physical world, they expect access to the same kind of insights that they've been getting with their online entity. They want to understand how many shoppers are coming in and when? What's the dwell? When people are picking things up and putting them down and not buying them, it's like something in your cart that you took back out. And they come in with a long list of insights that they'd like to be able to get in the retail operation. The question in Intel is how can you help me find people that can bring these solutions or help me deploy these solutions? And when I go to more traditional brick and mortar retail, the conversation is trying to convince them they should have these insights.
Joe:
So I think that a part of it is the digital natives come from a world of when you're online only, the only insights you have into your shopper is through the data trail they leave behind them. I think if you go to brick and mortar, they're not used to capitalizing and utilizing that data. Talked to one partner recently, they haven't validated this, but they said that the amount of data that Walmart generates in a day would take 26 years to upload to the cloud, being given traditional techniques.
Stephanie:
Wow.
Joe:
So there's a tremendous amount of data created in the enterprise of retail every day. And we think with IoT and the cost of compute coming down so much, and the ability to use AI to get insights, you can utilize a lot of this data at the edge without incurring the costs of moving it to the cloud and trying to process it there. I think that if you imagine that you're moving petabytes of data to the cloud, and you're trying to find the needles in the haystack, it's a really big haystack. How about if I just try to sift through the insights real time as they're occurring in the store?
Joe:
We talked to a major fast food chain who prides themselves on fresh product, and one of their major problems, I won't say what the product is, but they were throwing away 40% of their product to maintain the freshness, and they wanted to have a short wait because they understood freshness was important, and freshness was important for the brand, but they were having a huge product waste problem, and they wanted to use predictive analytics to understand what's happening in the parking lot? What's happening in the drive through and what's my queue look like in the store so they could predict when to put product in the cooker versus cooking it always, and then having it there just in case.
Stephanie:
Were you guys able to help with that?
Joe:
Absolutely. That kind of change drives tremendous business cost savings, but also ensures that your product is fresh and that your customers are satisfied in having to wait for product. So when done well, we think these insights deliver not only customer satisfaction, but also tremendous business impact.
Stephanie:
I mean, that also makes sense for why a lot of the more Legacy Retailers are scooping up all these DTC brands and keeping them separate and learning from them to see like, oh, what are you guys doing over there? And then starting to integrate them into the org to maybe be brought up to speed a bit with how maybe retail should operate from a digital perspective and what are the expectations coming in from someone who's used to that? And how can it get implemented into the org? We had someone on from Kellogg's who said just that. They would acquire different DTC brands, but then keep them off on their own so they didn't get too mixed into the Kellogg's culture because they wanted the DTC brands to stay as their own brand. So they didn't, I guess, turn too corporate if it happens. I don't know.
Joe:
Maybe not say corporate. I think you don't want to turn them old school.
Stephanie:
Yeah, exactly.
Joe:
[crosstalk] We see that same thing, and you mentioned the expectations. One of the ways we explained this consumer expectations, every time you have a better consumer experience on your mobile, better app experience, in the back of your mind, you wonder why every experience isn't that good. I'm old enough that I used to travel where you had to go to the ticket counter to get your boarding passes before you could print it at home, and then they went to kiosk where you could print them at the airport and it was an amazing improvement, and then they went to actually really pretty good apps. So airline apps, you can see if there's a meal on the plane, you can pick your seat. You can do quite a few things, check the status of the incoming flight, et cetera. Airline apps are really pretty good, and I travel a ton and I stay in hotels all the time. Why are the hotel apps worse than the airline apps? Why can't I pick my room?
Stephanie:
That's true. Why? I'm sure you probably asked them before.
Joe:
Well, and actually it's interesting. It turns out that the most hotel chains are using a third party service to assign and block rooms.
Stephanie:
Got it.
Joe:
So they don't actually have control over that, which is kind of crazy.
Joe:
And so I think what happens is anytime you have this better experience as a consumer, then it raises the bar on your expectations for every other experience. Cabs were, I've never enjoyed a cab ride. Not once in my life, I think.
Stephanie:
No, never.
Joe:
Uber realized early that there was a huge amount of friction in getting ride and people hated cabs. You'd call for a cab, all they would do is throw it on the radio network and maybe a cab responds, maybe not. You didn't have any predictability. When you get to your location, the last thing you want to do is sit there in the cab on the street corner and spend two or three minutes paying the cab driver.
Stephanie:
Yeah, awkward.
Joe:
And they understood that there was this huge friction. Well, now that Uber has taken the friction out of getting a ride, consumers see friction elsewhere in their life, and like why do I have this friction? Why is this not as good as an Uber?
Stephanie:
So what areas do you think are the biggest friction points when it comes to retail locations right now? And what do you wish things were looking like maybe over the next couple of years? What are you guys planning for? Where are you hoping the world will be in like three to five years?
Joe:
Well, we think that you're going to see a lot more delivery. I think that grocery delivery was very slowly ramping, pick up at the curb or delivery, and with the pandemic, a ton of people jumped in and tried it that probably wouldn't have tried it for a long time. So the adoption curve for that took a real steep spike up, and we don't think that that adoption is going to slow down. So I think that the grocery, and the grocery business is tough. They run really slim margins, and we talked to one major chain and they said, if you pick up at the curb, that they lose $5. And if they deliver, they lose 10 to 15. So the chains have to figure out how they're going to deal with that. There are a bunch of startups that are building essentially dark store technology. So instead of having a retail location with a giant parking lot and a big square footage and employees, they'll end up with a small industrial space with all the same inventory, but some robotics that will pull stuff off the shelf and pack totes.
Stephanie:
We actually just talked to a company called Wolseley who talked about how they see the future being... They're B2B also for plumbing and HVAC and things like that, but they're like, "I'm not so sure if retail for us anyways is the way to go anymore," instead of just having a small guide shop out front, and then just having a micro fulfillment center or a warehouse in the back, and then they get your stuff and give it to you on the curb. But why do you need to come in for their business anyways and shop around when a lot of times these contractors already know what they want. They don't need to walk around like they would at Home Depot.
Joe:
It's funny, I was at a home improvement store recently, and I'm waiting in customer service to make a return, and they're on the phone with a customer who very wisely placed an order for like 50 things, probably contractor, but he did an online pickup at the curb order. They were on hold with this guy and they're talking to each other saying, "We don't have the labor to have somebody spend an hour running around the store to pick all these stuff." What a smart contractor? Why not have the home improvement staff eat that labor versus him send somebody? And he said, "Hey, can you please call me once it's all picked?"
Stephanie:
That's smart. I mean, how can-
Joe:
And of course they had to say, "Sure." The manager's like, "Yeah, absolutely." So I think what's going to happen is these expectations are going to keep rising from consumers, and the retailers are going to have to figure out how to adapt.
Stephanie:
Yeah. It seems it's the pricing thing, though. Right now everyone is expecting a curbside delivery or something to be free because it's new and that's the expectation now, but I could see eventually being like, if you want someone to shop for you, just like you would with any of these grocery delivery shopping apps, you're going to have to pay a little bit to have them go and-
Joe:
But look at it this way. We talked, again, one of these companies building these systems and we talked to a big chain that's testing it. If you go to the normal financial model for a grocery store, big piece of real estate, prime location, huge parking lot, a lot of physical assets tied up. And if you go to a dark store, really cheap, industrial space real estate, so the real estate model's completely different, the staffing model's completely different, and the financials could be such that, and again, I don't know, but it actually might be cheaper to deliver groceries that way. Now, it's a new build add, it's a new approach, but again it's a huge change, but it doesn't necessarily have to mean higher prices for consumers. And I think what's going to happen is some will try to charge more and others will figure out how to go do it in a way that doesn't cost more.
Stephanie:
That's a good point. I like that. So how do you think about-
Joe:
It's competitiveness, right?
Stephanie:
Yeah. Hey, that's economics right there. Someone will figure it out and put the other one out of business possibly, or not. But how are you thinking about new technology right now? I know we were talking a bit about AI and how it's impacting retail and retail workers. What are your thoughts around that or other technologies that are maybe going to disrupt retail?
Joe:
Well, still really believe a lot in computer vision, and I think one of the things I'm really proud of for Intel is we've always been huge advocates and protectors of consumer privacy, personal privacy. So as a company, our core culture, our philosophy, our lobbying efforts are all around protecting privacy. Our point of view in using cameras in retail, and we've been helping people do this for many years, we only want to do it in a way that's totally anonymous. So it's not like I'm trying to detect Joe when Joe walks in the store. I want to look at the pattern of behavior that this shopper has anonymously, and what have people in the past that had that similar pattern of behavior been interested in, and how might I go send some staff over to do the right thing there. So take me, for example, if we go to the mall and I'm with my wife or daughters, I'm probably hanging out with him and I'm not really shopping. So I'm wandering in the store-
Stephanie:
You're that personally couch just chilling.
Joe:
Yeah, or I might be wandering around in the men's department, but I'm kind of killing time, but I'm probably open for somebody to come show me something, because I'm browsing and you could observe that, oh, this person is slowly walking around and looking at stuff. There's other times when I need another white dress shirt for a business trip, and I know exactly which door to park at, that's the shortest distance to the white dress shirts. And I'm walking in a direct line to a section. Computer vision and AI could detect that this shopper's not browsing, don't bother him. Don't send them a discount coupon or don't send him alert to some new item they might be interested in.
Stephanie:
Do you have retailers right now who are implementing that? Because that sounds awesome and a really good way to personalize to the shoppers coming in. Do you have anyone who's trying anything out yet?
Joe:
There've been lots of things to experiment and test, a lot of partners building solutions like that. I think the world of privacy right now is way too fragmented. Too many different points of view, too many different state perspectives on it. You've got some places where cameras are banned. You can't use a camera at all. And I think that the governments really need to get their act together and understand how is the data going to be used? How is the technologies? How can it be done in a way to protect privacy? In the implementations, we advocate no data ever leaves the edge, the system. The only thing that ever leaves the system it's account. This kind of shopper did this kind of pattern of behavior. Everything's fully anonymous. Back in the early days, we actually went and talked to governments across Europe where the privacy is even more simple, and every government entity we talked to was totally comfortable with the approach we were advocating.
Joe:
I think the computer vision that we think is really going to be profound, and it'll be used for mundane things like trying to understand out of stocks or inventory situation. Years ago, I won't say the name of the chain, but there was a study where they're comparing Amazon to a giant big-box retailer. They went to 25 locations of the big-box retailer and bought these 40 items and then they priced it out on Amazon. The headline for the story was Amazon was more expensive than the physical retail location, which was big news at the time because everybody thought Amazon is just winning on price. But the subtitle of the article, the second message was, but 25% of the items on average were out of stock at the brick and mortar retailer.
Joe:
We happened to be meeting with the executives in that company about a week after that, story came out and their heads were exploding because they thought they had a 5% out of stock problem. And it turns out that they did in terms of it was in the store, but it had a huge congestion of stuff in the back room that wasn't on the shelf yet. And as we dug into it further, we did a lot of work with them using computer vision and whatnot, this is years ago, and it turned out that one of the behaviors they had that they had to try to break is the people stocking the shelves would bring a box of say large size mint shampoo out and they needed to have the small and the large, but they didn't have the small, so they just filled the shelf up in the large.
Joe:
So when somebody came to look for the small, it's out of stock, and the shelf looked full because they would face it all out so that every front was full of product, but they didn't have all the products on the shelf. It was really because the people stocking the shelves were not following the process and they're being lazy, and that's where we thought to-
Stephanie:
Use robots then. Robots aren't lazy and they listen to whatever you tell them. So that must just be the way to fix things.
Joe:
Yeah, maybe. I guess as a tech company maybe that's a good thing for us, but I think that, again, if it's a staple, you just want it to be convenient, and convenient means the fastest, easiest way possible. To me it's like when I run out a catch-up, wouldn't it be amazing if it was just at my door automatically the moment I needed it? Well, we're not there yet, but at some point, somebody's going to figure out how to make my running out of ketchup something that won't happen.
Stephanie:
Yeah. I thought there were brands or companies working on that to track what's in your refrigerator and then reorder it if it's out. Maybe that never came to fruition and that was more just that [inaudible 00:36:00].
Joe:
They've been a lot. We actually had some partners who were doing that years ago as well. The challenge ran into it I think is how do you know what's in your fridge? Does the consumer scan all the barcodes? Do you have the discipline to scan a barcode when you run out. These problems certainly aren't easy to solve. We mentioned earlier out of stock, so I'm working at that problem. We worked with probably, I don't know, more than 20 big retailers on trying to see how RFID could help solve their inventory accuracy. Then we would always start with taking one of their stores and we would do a really deep physical inventory. We never found any retailer that had better than 65% of their skews correctly counted.
Stephanie:
Wow. That's sad.
Joe:
Then if you want to be able to compete with an online-only retailer who gives free shipping, you probably have to give free shipping, but wouldn't it be ideal if you could deliver all of your stuff from a local store so that you minimize the shipping time, you minimize the shipping cost. But if you don't know what your inventory is, then you take an order assuming you've got really close delivery, but then it's out of stock in the store. We talked to the department store who was really aggressively trying to do this fulfill from store, and they were spending on average 20 minutes per item to find it on the floor.
Stephanie:
Jeez, if they're taking 20 minutes-
Joe:
That's [crosstalk 00:37:26], right?
Stephanie:
Yeah, that's wild.
Joe:
So they were looking at RFID to try to be able to help with that as well. With RFID, you would know where things are in the store. This is another one too. We talked to, gosh, I'm try to really keep people anonymous here, a head of stores executive who came from a large brand who had a lot of stores, and they deployed RFID in all their products in the branded stores, and they've got their sales go up like 60%.
Stephanie:
So why wouldn't everyone do RFID? We're talking about Japan's doing it with all their stores now, brands who are implementing it, are taking off when it comes to sales. Why wouldn't people? What's the holdup? Why are more people-
Joe:
That's the big mystery? So if you can figure this out through your interview, please share.
Stephanie:
I will have to start asking around. I'm like it seems like a no brainer. Is it hard to get your manufacturers to do it?
Joe:
I think there's a lot of processes that get touched, is one of the problems. There's your supply chain, there's your distribution center, there's all the staff in the distribution center, there's process changes at the store. So there's a lot of pieces of this that end up getting touched. We talked to one retailer, big retailer, who they made the change on the POS. It was a touchscreen checkout for the staff. They had to do a training class to train people on this change, and it was a two hour training class for like 170,000 employees. And they said it was all extra time. You couldn't do it on the floor. So now you've got 340,000 extra hours of labor to make a simple change on a user interface.
Joe:
I think when it gets to doing these kinds of changes, what happens when there's a return? What happens when there's a return but the RFID tag is no longer in the item? So there's a lot of things that have to change. I think what's going to happen is we're going to see branded retail do this first because they control the supply chain, and you're going to see some really tremendous results. The example I gave you when they were head of brand and retail at one brand, and then went to another one, the challenge with the second one is they had a lot more suppliers, so they had to manage a lot of factories to supply their stores, even though they were all their own brand. It was still a supply chain challenge.
Stephanie:
Well, it seems like Whole Foods and Amazon are going to be the first ones that can do it. They've got the ability to, especially with Amazon's operations and processes, and they've got the Whole Foods brand going on. They control all their supply chain.
Joe:
And the Amazon could decide to spend a gigantic amount of cash modernizing Whole Foods infrastructure and Wall Street wouldn't blink an eye. Kroger could never do that because Wall Street wouldn't let them.
Stephanie:
That's sad, and also just shows how there's, I don't know. It makes you wonder about how a lot of companies right now aren't going the IPO route, and I get it. I get it hearing and seeing the incentives like that, or lack of incentives of wanting to... They talk about destroy your business to make an even better one and how some of the best companies had to do that, whether it be the Netflix of the worlds. But yeah, it seems like a lot is held back.
Joe:
What do you mean? Private equity, we're seeing more and more where private equity will come in and the leadership of the company will be in favor of a private equity takeover because it can pull themselves off the Wall Street treadmill for a bit to make these fundamental changes.
Stephanie:
But isn't it usually a bad sign when PE comes in? Don't most of those companies end up going bankrupt when this happens?
Joe:
I think there's a couple kinds of private equity. Look at Dell. Not a retail case, but Dell they needed to retool Dell and they needed to not be under the scrutiny of Wall Street for a while, and Dell has done amazing things through the use of private equity. I think if the company is fundamentally unsound, private equity might be vulture capital, where they come in and strip things down to the bones and get rid of it. But I think fundamentally sound business that needs to make changes that aren't really possible to Wall Street, I think this is going to be one of the areas where I think there's going to be a lot of money made where private equity is going to go look at some of these really good retailers that fundamentally have to change. And if wall street doesn't change the model P&L expectations, I think private equity will become a much bigger factor.
Stephanie:
That's a hot take. I like that. That's very interesting. So if there was some data right now that brands should be collecting at their retail locations, that's not really hard to implement, but they should be doing from the start, what comes to mind? Where you're like, "Right away, you should be collecting at least these five attributes on your customers as they come in and you don't need computer vision. You don't need beacons or RFID, but you should at least have this to be able to give a better experience to your consumer." Anything come to mind?
Joe:
I think that the thing that is most fundamental, and it's still shocking that all retailers don't do this, and that's just counting your traffic. Not counting it daily, but knowing what's happening with your traffic every minute.
Joe:
But I think understanding your traffic, that's the most important thing for an online business. What's my traffic? Dwell. How long was this shopper in the store? How long was this shopper on my site? What things did the shopper browse? What was their click path for my online? What was their path in the store? For me, if I were going to leave tech and move into retail, I would start with how does an online retailer excel? And how would I try to get all those same insights for brick and mortar? One of the things to me that... There's a tremendous amount of demand created real time in retail. So we saw one study that says 60% of purchases in stores in the US and Europe are for things people didn't know they were going to buy when they went to the store. So a huge amount of real-time demand. You see something, you like it, and you decide you want to buy it. Well, how disappointing is it when you see something you like and then it's out of stock in your size?
Stephanie:
That's worse sometimes.
Joe:
That goes from being a point of excitement. You got a little bit of excitement to buy something and then you're let down. What we would say is rather than having mannequins displaying items that the brand is paying you to show this week. We talked to retail after retailer after two or three days of something on the mannequin that sold out, but they're paid to run it for a week. So they're creating demand for something that's sold out because the contract of the brand said you need to show this item for a week. It's funny. If you talk to a giant apparel brand about this problem, honestly, one of the C-suite executive was like, "Oh my God, that's why stuff's always out of stock in the store." I'm like, "Yeah, you have some flexibility and freedom to the staff to put what they have too much of."
Joe:
We talked to one major department store chain that made that change a few years ago where they said, "Instead of getting paid to run things on the mannequins, we're going to have our staff every evening look at inventory and whatever they have too much of, put that on the mannequin for the next day." And it's amazing how much they were able to sell through inventory before they had the market down. We would advocate that at the front of the store where you've got posters and prints, maybe it's a department store and it's prom dress season, so you're showing prom dresses on the poster, that isn't really relevant to most of your shoppers. Most girls are not prom dress age. Most moms are not at the age of having daughters that are prom dress age. Most dads don't buy the prom dress.
Joe:
Put a more simple thing in it. Put a digital sign at the front of the store with a camera that will anonymously look at age and gender. And then if you're really sophisticated, you could say, "Okay, well now I'm going try in inventory system and I have too many of something." Phoenix it was a really dry winter. We have too many raincoats. I see a guy coming in and I've got too many men's raincoats. Throw a men's raincoat on the screen. And even the next step, we can estimate the size of the shopper. So I've got a really big guy coming in, but I'm out of extra large raincoats. Don't show them a raincoat. These subtle things, and it's not like every shopper is going to buy a raincoat, but suddenly putting something that's possibly more relevant on the screen than a prom dress is a great way to use that valuable real estate. That's the kind of thing that an online retailer will do. Like Zulily, they introduce thousands of new products every day.
Stephanie:
Zulily? Yeah.
Joe:
We met with them one day at one point, and they said in the morning, early in the morning, they have one landing page, and by 8:00 AM, they have 280 unique landing pages. Then they know what demographic, what bucket you fall in for them as a shopper. So when you go to their landing page at 10 in the morning, you're going to see something that's full of things likely to be relevant to you.
Stephanie:
We were talking with Lenovo way early on in the show and they were saying they have 85,000 different landing pages going on at any one point. I'm like, "Oh my gosh, how do you keep track of that?" But he's like, "Oh yeah, that's just how you test and know what people want." So it's just very interesting. But I think Zulily though, when they say how many landing pages they have, they are all about talking about being personalized and stuff, but I think a lot of times they just think having a new name isn't being personalized and they count that towards a new landing page. That does not count just saying, "Hi, Stephanie," or, "Hi, Joe."
Joe:
The way they were explaining to us is if you shop for baby clothes, you often are buying baby clothes, your landing page would have baby clothes on it. If you don't buy baby clothes, your landing page would not have baby clothes.
Stephanie:
Yeah. That's more personalized. I like that. Very cool.
Joe:
The key thing here is that this is a journey. I don't think anybody's going to go make all these changes overnight, but there's the ability to start using this information. I think one starting, know your shoppers. It's amazing how many retailers when we talk to them about what are your shopper's pain points? What are your shoppers not happy with? They don't have a good answer, which is really surprising. For me, when we're out trying to define solutions for the market, the first thing we look for is what's a business problem. And if I go into education, what is the problem that educators are having right now that they're worried about? We go into hospitality, what problem do they need help solving? I often tell people at Intel, we have 3,200 PhDs. If we understand your problem, we can figure out how to solve it. And it's amazing how many retailers don't spend time really understanding what friction or what pain points do their shoppers have.
Stephanie:
Yeah. I think they're going to have to now. I think now with everything that's happened and you had the acceleration of ecommerce, there will be, like you said, new expectations. And yeah, I think the theme is now there's also all these new technology to use and utilize, and maybe implement if it's allowed, but then putting that extra level of human curation on top of it when needed is going to be the way of the future. So use the tech, but also have it curated and have the human feel to it that people are going to miss over this next year, especially with how much we've been at home all by ourselves.
Joe:
And after people have really radically modified their behavior for a year. A few months it was one thing, but we're coming up on a year where people have had to change pretty fundamentally how they shop and live. How much of that's going to stick permanently? Like I said, I think grocery, and some of those things are going to way more people will be doing that post pandemic than did pre pandemic and they'll stick with it. What else is going to fundamentally change?
Stephanie:
Yeah, I agree. All right. Well, I know we're running up on time, so I want to shift over to the lightning round brought to you by our friends at Salesforce Commerce Cloud. This is where I'm going to ask you a question and you have a minute or less to answer. Are you ready, Joe?
Joe:
I am ready.
Stephanie:
All right. What's the nicest thing anyone's ever done for you?
Joe:
Oh my gosh. Our twin daughters were born three months premature, and the amount of help and leaning in that we had as relatively young and new to Arizona couple was just staggering. Probably 80 families leaned in to help us, which is amazing,
Stephanie:
Man, I'm going to come to Arizona. That sounds like a nice spot to be. How old are your twins?
Joe:
They're 30 today. That was a long time ago.
Stephanie:
Nice. I also have twin boys, and I'm a twin.
Joe:
That's awesome.
Stephanie:
What's up next on your reading list?
Joe:
I'm really actually studying more around AI and frameworks and trying to get a bit smarter around the nerdy geek stuff. So I don't have any grade to casual reading. For me it's more about the tech.
Stephanie:
Hey, that's good. Well, I was just going to ask you what one thing do you not understand today that you wish you did? Is it AI, or are there other things that you wish you understood?
Joe:
I grew up as a silicon engineer and so I'm a hardware person and I'm not a software developer, I never have been. And so I'm really trying to understand the worldview of a software developer more than a hardware person. At least I think I know I don't know everything. So it's almost like the first step of the 12 step program, acknowledging that I don't know everything, I'm there.
Stephanie:
Well then maybe you want to check out the book I'm just starting to read. I think it's called Ask your Developer by the Twilio CEO. I just started reading it.
Joe:
That sounds good.
Stephanie:
Yeah, there you go. If you were to have a podcast, what would it be about? And who would your first guest be?
Joe:
My podcast would be on how technology is going to fundamentally transform shoppers' lives.
Stephanie:
I love that. Who would your first guest be?
Joe:
And my first guest, I would actually like to have Bezos.
Stephanie:
As do I. Let's go get him. Jeff, where are you at?
Joe:
See if he can help you with that.
Stephanie:
Yeah, I know. Is Moore's law dead?
Joe:
Moore's law, if you think about it purely as Silicon, which is when Gordon created that, it was really a silicon construct. We're no longer on that same track, but at a system level in terms of what a system does for you, we're on a similar curve. One of my favorite ways to explain this is, if you hold up your smartphone, the amount of compute in your smartphone 10 years ago was 100X the volume and the same thing's going to be true. So if you look at this amount of compute today is going to be one-100th the size in 10 years. Or you could say, "Hey, what would 100X?" It'd be a giant server room could be in your phone. And so if you think about it, it's not a matter of if I have enough compute to do something, it's a matter of when I have enough compute to do something.
Stephanie:
Got it.
Joe:
And I think that's probably to me the magic of Moore's law and some people really get it, and they really understand that it's just a matter of a few years until the compute is cheap enough to do what you want. We're talking about AI for a minute, if we go back 10 years ago at Intel, we had $100,000 computer workstation on every one of our factory tools and these are $50 million tools. Workstation and a huge number of engineers creating algorithms to optimize our manufacturing. So we were doing AI that was very expensive 10 years ago. Very few manufacturing processes can afford that. You jump forward to today and it's simple and cheap and easy to have that amount of compute, and the maturity of this AI computer environment is so much improved that anybody can really deploy what took an army of engineers and very expensive compute 10 years ago.
Stephanie:
Oh, I love that. I forget what show podcast I was listening to where they were talking about AI and saying a lot of the stuff that we have today, we had access to 10 years ago. We just didn't have the compute power and the ability to do it, but people knew it was coming. And I'd always be interested to hear from those people who could see the vision and be like, "I just need another five or 10 years of acceleration and then my product will work." It's very interesting.
Joe:
If you imagine the amount of compute that you can afford, whatever that number is, $1000, $100, whatever, but the amount of compute you can afford is going to double in performance every 18 months. Okay, double, you can imagine that, but you don't realize it's 10X in five years and 10X is really hard to comprehend.
Stephanie:
Yeah, it's hard to extrapolate things like that. Well, I appreciate you answering that question. I was like, "Hmm, I know Joe will have a good answer for this one, even though it's very maybe off of ecommerce." But Joe, thank you so much for coming on the show. Where can people find out more about you and your work?
Joe:
Well, I work for Intel, obviously. We do have a retail landing page at Intel. We actually don't sell anything to retailers. All of our work is done enabling suppliers to retail to build better solutions, and I try to spend all my time, if possible, talking to retailers to better understand the business problems they have so I can help guide my partners in building better solutions.
Stephanie:
Cool. Sounds good. Well, people will go and find you if they have any questions I'm sure then. Thanks so much.
Joe:
Thanks, Stephanie.
It doesn’t matter how great your product is if no one knows it exists. That’s why marketing matters. But not every company has the resources to go all out on a big-name CMO or to commit a large yearly budget to specific marketing efforts — especially when the digital world is changing so quickly. So what’s an ecommerce brand to do in order to get its message across to the right people?
Erik Huberman founded Hawke Media to answer that question, and for more than seven years he and his team have been making marketing more accessible to businesses of all shapes, sizes and stages. On the episode of Up Next in Commerce, Erik explains how companies should be planning their marketing budgets and what the revenue threshold is that companies need to aim for before they can even think about scaling. Plus, he digs into his entrepreneurial and investor roots to give some advice to those out there who are just getting started, including the hard truth about what it means to be an entrepreneur, and some tips on new and emerging platforms where you can grow your personal and professional brands. (And yes, we are talking about Clubhouse!)
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Transcript:
Stephanie:
Hey, everyone. Welcome back to Up Next In Commerce. This is your host, Stephanie Postles, Co-Founder at Mission.org. Today, on the show, we have Erik Huberman, the Founder and CEO at Hawke Media. Erik, welcome to the show.
Erik:
Thanks for having me.
Stephanie:
I am excited to have you on. I was just chatting up a bit before telling you how we are actually a client of Hawke Media, full disclosure to anyone listening. It's been amazing. But I would love it if you could go through what is Hawke Media for anyone who doesn't know?
Erik:
Yeah, sure. We're an outsourced CMO and marketing team to companies. So, what that means is we basically go into companies, identify what the holes are in their marketing, organization, or strategy. And then we can spin up different experts on an ala carte month-to-month basis, whether it's a Facebook marketer, an email marketer, a fractional CMO, et cetera. We've got about almost 200 full time people. We manage marketing for about 500 different companies from small startups to Fortune 100.
Erik:
Our mission, for lack of a better word, is to create accessibility to great marketing. So, the idea is we really saw that it was really hard to, for most companies, get access to great marketers. We wanted to make a place where we had amazing marketers, amazing talent, people that were top of their game, but it was super easy to work with them. That was a challenge we saw on the market that didn't exist, a solution didn't exist. That's how we got started.
Stephanie:
That's awesome. Yeah, it's been really fun. We did the CMO thing first. It was cool, because you do get access to people who have been CMOs at big companies before and they have all this expertise. But we had them for three months. And then they transitioned us on to the next stage of implementation of social and other things. It was just really fun to be able to have access to talent like that without actually having to hire them as an FTE or something.
Erik:
Yeah, that's exactly the model. I came from building and selling a couple ecommerce companies and just wish this existed. My last ecommerce company, we were heavily funded. So, I had a 10-person marketing team of talented people, but they all worked or they could have all worked half time or less and gotten what I needed to be done. So, we had toyed with the idea of, "Could we hire these guys out to other companies? Because they're a great team, but we don't need them all full time. But we need all their expertise." So, that's part of where it came from, the idea was born.
Stephanie:
Okay, cool. What ecommerce companies did you have before this?
Erik:
I had a company called Fame Wizard first, which was online music business coaching for musicians. Then a company called Swag of the Month. It was a T-shirt subscription company, long before Dollar Shave and all that. And then an activewear brand called Ellie that's still around, the E-L-L-I-E.
Stephanie:
That's awesome. So, what things did you learn at those companies that maybe you brought either to Hawke Media or to how you're maybe advising brands today?
Erik:
Yeah, really quick bullet points. Fame Wizard have a customer that has money. Having independent artists as your customer is really hard to build a business off of. Swag of the Month, the need for working capital and financing, which funny enough, we just launched our financing and working capital arm of Hawke Media a couple months ago. And then the third one, Ellie, don't overcomplicate it. If it's working, double down on it. Also, that I don't like having other people make decisions for me, because that's when I was working with a committee and I was not the main decision maker. They screwed up a lot.
Stephanie:
I like that you have bullet points. You're like, "I already got it covered. I already know."
Erik:
Yeah. I've definitely walked away with very specific, "Don't do that again."
Stephanie:
Yup. Yeah, that's great. So, are you able to share some brands that you work with? So, we can get the scope of who-
Erik:
Yeah.
Stephanie:
... that you guys are learning from and working with right now and teaching.
Erik:
Yeah, I mean, it's the full scale in terms of small startups, most people haven't heard of, and hopefully, we change that. Tamara Mellon, we started with it when they were a tiny business and skyrocketed them for a couple years. GREATS, the sneaker company, we built for three years with them and they sold to private equity. Incase, the phone case, until they sold to Incipio. It's ironic. We get a lot of companies to scale and then we get fired, but it's par for the course.
Erik:
And then we also work with big brands, Nike, Unilever, Estee Lauder, Red Bull, et cetera, as well. And then a lot of small brands that don't necessarily want to be the next big VC-backed company that are $3-, $4-, $5-, $10-million companies while we're working with them. That's what they want to be. They slowly grow and run a lifestyle business that pays them a couple million bucks a year and do great.
Stephanie:
Yup. Do you see the big brands having the same type of struggles as the smaller ones, or is it very separate where you have to put very different skill sets depending on the company size?
Erik:
No, the expertise are similar and the struggle is similar in the sense of access to talent is really one of the biggest... True knowledgeable, experienced talent is what everyone's struggling with. The way we have to operate is different, because when you're dealing with a small business, a lot of times you're dealing with the owner, CEO. They can do whatever they want. There's no one they're reporting to, even if they have investors who usually have control. When you're dealing with bigger companies, you're dealing with publicly traded companies, a lot more processes, a lot more checkboxes, a lot longer time to make decisions. So, it's a lot slower. So, that's why I look at our client base like a distributed portfolio.
Erik:
The startups are super fun, because you can do whatever you want, you can get going quickly, et cetera. But they're also super volatile on the other end, where they'll fire you overnight for one small thing. Whereas big companies, they take forever to sign, take forever to make changes, but they also stick with you forever. So, we've worked with a lot of these bigger companies for years and years and years, because they're used to signing three-, four-, five-year contracts, even if we are month to month.
Stephanie:
That's good. So, what are some challenges you're hearing right now around either marketing challenges or business challenges that you guys are tackling that's maybe different than what you were hearing in 2020 or 2019?
Erik:
Yeah, I mean, 2020 was all COVID, but the silver lining was the market share of spending online almost over doubled. So, our clients on average doubled their revenue on what we were operating for them. So, that was really good. What we saw what changed towards the later end of the year and now into this year, so, now that market share hasn't diminished that much. Instead of 13% of consumer spending, being online pre-COVID, it went up to 30. Now, I think it's at 27%. So, it's still massive increase.
Erik:
So, we are seeing that now, all the big CPG companies and all these bigger companies that back to the point can't make quick decisions, unless the world's falling apart, cut everything. They usually do that and then they slowly roll back. They're all really coming back strong into digital, because they're seeing so much more market share there. So, what happened was the cost to advertise on Facebook and Google during Q2 and part of Q3 dropped about 30%, because there was less competition on it. Q4, October and November were insane, October because of the election and then November, holidays hit. December, they carry over a little bit, but they do lessen.
Erik:
And then I think now, I am anticipating advertising continuing to get more costly, because now, again, 13% of these big companies marketing online is now 27, they're going to spend more to capture that market, which means you're going to compete with them. So, if you're a small or medium business competing, there's a good chance that cost to advertise online increases significantly. So, not necessary what companies are looking for but what they should be is ways to increase their ownership of their customers, because if it costs you more to get a customer, the way to combat that is to increase your lifetime value to a customer. It's a math equation. It's that simple.
Erik:
So, how do you do that? You find ways to increase your lifetime through merchandising, through retention, through customer experience. When I say merchandising, having other products and services you can sell to the same customer. There's just a lot of things you can do, and then just continuing the communication like email marketing, SMS, chatbots, ongoing content, just all the ways you can create a walled garden around your existing customer base for them to buy more from you. The companies are going to win, which is why you see Amazon just skyrocketing. They were a book company at one point. Now, they sell you anything.
Stephanie:
Yeah, I love The Everything Store talking about how he and his wife are going and dropping off books to try and ship them out. That was a good book for anyone who hasn't read it yet. So, I mean, I'm thinking about myself as a smaller company right now. We're talking about ad costs are going up. It's going to be harder to compete against bigger brands. If you haven't acquired those customers yet and you don't have anyone to talk to, it seems like there's definitely an opportunity to be more strategic of finding new channels, whether it's the TikToks of the world or the Clubhouse.
Stephanie:
Shout out to Hillary, you just got me onto Clubhouse. But it feels like there's a bunch of new channels popping up that could help democratize community building a bit more or yeah, finding your audience in different channels that bigger brands maybe won't hop on as quickly.
Erik:
That's funny. I just got accused of being addicted to Clubhouse. So, my wife has actually had to say, "When we're eating, put that thing away." It's just the past week, but that platform is taking off. Yeah, it's always about working for diversifying. The problem is Facebook and Google still perform so much better than these other platforms that they need to catch up. TikTok will absolutely compete as they build out their ad platform.
Erik:
I think it's a no brainer in the way that the platform's built, but they need to do a better job of their targeting and everything, which when I say that, no one's spamming. It's just too early. Snapchat seems to be getting their legs under on Twitter. Hopefully, we'll figure it out.
Stephanie:
Yup, yup. I agree. Are there any new places that maybe are lesser known, where you're like, "We're trying out this one little thing in the back alley here that no one else knows about"?
Erik:
I mean, your know about Clubhouse. Clubhouse doesn't plan on monetizing through advertising, but as a community builder, it's crazy. I've been on it one week. I've 11,000 followers. I'm not an influencer. Twitter, I have a bunch of followers, but that's unusual for me.
Stephanie:
What are you doing on Clubhouse then? Because I get on there, and I'm like, "Hi." For anyone who can't see this, my awkward waving in Zoom. I don't know what I'm doing on there.
Erik:
Yeah, I've been fortunate enough to spend the past decade building a pretty solid network. So, when I got on there, a bunch of my friends were the people on stage that people want to hear from. So, guys like Daymond John and Lewis Howes and [inaudible] were all pulling me up to talk with them. And then other guys, like Grant Cardone, who I never knew before this now, start pulling me around with them. So, it's been a week, but all of a sudden, I've connected with a bunch of these heavy hitters that I've never knew before, that now we're also jumping on calls offline and connecting. So, for me, basically, I was on two flights a week almost in 2019. So, I spent most of my time traveling to shows and conferences and meeting people. This is scratching that itch.
Erik:
So, for the people that really want to network and build that network and learn from other people, this is the perfect platform for someone like me. It's not for everyone. So, I've gotten on stage. I've talked a lot. I mean, there's millions of people on it. Thankfully, I've been very lucky to build what I've built. A lot of them are looking for advice on how to build their businesses. So, now at this point, this is my fifth business I built. We've bootstrapped it. I've invested in, I think, 30 other companies. I've had a few exits, had some successes there. So, a lot of times, I can give some quick guidance to someone on there. So, I've done a lot of that, which has been fun.
Stephanie:
Yeah. So, since no one else has talked about this, this is why I'm diving even deeper into this. So, someone that can listen and be like, "Okay, I'm going to try that out too," are you speaking on there when you're saying you're on stage? Are you getting invited from someone? Are you just creating a room yourself? Tell me a bit about how that's working.
Erik:
Yeah. So, I mean, just to recap the platform, basically, it's super simple. All you see is a person's headshot, their little icon. It's all voice. So, you just talk. So, there's the stage and then there's the audience. Whoever's on stage can talk and you can mute your mic and talk. You got as many people on stage as you want, like a panel, and then anyone can come in and listen. So, as mentioned before we started this, I like to talk. So, me sitting in a room and talking and I've been in rooms with 20 people on stage, 30 people on stage, where I chime in once every 30 minutes.
Erik:
A lot of the habits that are starting to come on there are just people rotating on the stage asking questions of the panelists and just doing Q&A for hours, but it's people asking about, "How do I build my business? I'm struggling with this. What do I do here?" And then what I've seen is a lot of altruism, which has been fun. I've opened up my direct messages on Instagram through that. So, it's like, "If anyone needs help, just hit me up." So, making connections to VCs, to funding, to whoever could be a good distributor or a partner, give them advice, trying to help people.
Erik:
What I've seen also is a lot of people that aren't in L.A., New York, Austin, or Silicon Valley, that don't have access to these networks are all of a sudden... There was a whole world of amazing entrepreneurs I didn't even know until I got on this thing. It's a lot of the BIPOC community is getting on there and really helping each other. Not that I am one of them, I tried to help and very passionate about diversity and inclusion. So, we do a lot of charity work around bridging the opportunity gap. So, I've seen this as an amazing tool for that, because there's so many people that don't have access to... I've grown up around entrepreneurs. My dad's successful frankly. I grew up around people that have started businesses. I had a pretty easy path of role models.
Erik:
Most of these people don't or a lot of these people don't and that are coming from inner cities, et cetera. They are now on this. I do get pinged maybe 100 times a day actually on that thing, asking to be their mentor. I'm like, "You don't have to make anything official here. What can I help with? Let me answer your questions," that kind of stuff. So, that's been super rewarding, but I do see this as we're all stuck at home right now, where you are means nothing.
Erik:
So, this is a way for everyone to be connecting. But without having to be on video, it also makes a lot more people comfortable having a conversation. With voice, people are not as rude, demeaning. Social media has a problem on the tech side. We all know it, where it's like when you can just text whatever you want... We deal with it all the time with clients. If we have an angry client and we're on email, we'll get hate mail. Then I pick up the phone and call them and they're like, "Hey, how are you?" It's like, "What?" Same thing, I really think there's something there.
Erik:
The curiosity I have is as a social media platform... I'm sorry, this is all going to Clubhouse. But just as a social media platform, on Facebook, you might spend 3 minutes, 5 minutes, 10 minutes at a time scrolling through Facebook. Clubhouse, I'm watching people spend 12 straight hours in a day. I've never seen a social platform that people just zoom in and go. So, I'm really curious what that turns into. I think they'll end up monetizing by adding tips to panels, so you can actually tip the panelists or paid speakers, I think that's what we're going to see. Because they said they want to make money for their content creators, and they don't plan on adding ads.
Erik:
So, I think that's going to be interesting. But for brands to answer your question, I think for personal brands, it's massive. You're a CEO or whoever you are, building your brand on there and starting to talk. I mean, we had a channel the other day, where it was a bunch of beauty entrepreneurs from the south, bunch of women that had built beauty brands bringing up young beauty brands to talk to them. There were women coming on stage to talk about their brand and then going, "I've made $300 in the past two months on my website. The audience just bought $7,000 worth of items."
Stephanie:
Wow.
Erik:
That's happening. It's an eight-month old platform, but really got popularity two weeks ago. So, it's interesting to see where that can go.
Stephanie:
Yeah, I mean, that makes sense, especially around the theme too of, I mean, bigger brands too leaning into becoming their own media companies and getting on there and leading not just from their brand perspective but being thought leaders. Their brand is behind the scenes. If you offer value, someone won't mind if it's coming from someone at a large company that's like, "Well, sounds so smart. So, I'm sure they work at whatever big company that is," but they're the one on there offering the best tips.
Erik:
Yup. That's the other thing is there's no BS-ing it. When you talk enough, people are going to know whether you know what you're talking about or not. I've seen it. The rest of the two people on the stage are like, "Wait, what?" People call each other out, because I think people feel responsible, including myself. The audience is taking this advice. I jumped into a panel yesterday that was talking about Bitcoin. Some guys said, "There's absolutely no risk in investing in Bitcoin. You just put as much money as you can." I was like, "Hold on for a fucking second. Excuse me." Yeah, so there's that too.
Erik:
And then I do think there's a whole community and personal aspects that were like 21 Savage is one of the biggest followed people on. He does DJ sets every night with Sir Mix-a-Lot and all sorts of other people. It's not just business. There is a lot of other fun conversations. Overheard LA did a whole thing where they were saying, "What's the weirdest story you've had in COVID around dating?" There's comedy shows. There's all sorts of fun stuff.
Stephanie:
Yeah, that's awesome. So, when you're on there giving tips to businesses and people who are trying to learn, what are the top questions that you're asked or what things do you talk about that resonate most with business owners?
Erik:
So everybody wants funding. These are all early, early businesses. Everybody goes, "How do I get funding? How do I get a grant or a loan or funding?" If you need money to get started, that's a bad sign. Don't get me wrong. There's high tech companies and certain companies that you can't get around it. But most of the initial funding for businesses comes from friends and family if you need it. If you need a heavy amount of funding and it's not something high tech, you have to be real if you're the right person to start that business. That's one. There's a lot of people that pitch for that while starting with the hardships story, something that's like, "This is what I'm struggling with." I've noticed that it doesn't get the reaction you'd hoped for.
Erik:
Compassion is a big thing. I think for help, people do, but if you lead with that to try to get someone to be part of you in business, it shows the wrong focus. It's not to diminish what people are going through. A lot of people have had a really hard time recently and in general, but I do notice that when you lead with that versus excitement and optimism, you're going to attract a lot more people with optimism.
Stephanie:
That's a good one. Yeah, I've definitely seen a lot of people who come with the story where you're like, "I should feel bad, but also as a businessperson who maybe is either going to invest or partner with you, we'd be in this together. I need to know that you have another reason to want to push this forward. It's not just this." So, that's a good point. All right, give me more.
Erik:
The COVID excuse, I'm not very nice about this one, but I have too many friends that have done well in spite of COVID. Not because they got lucky. Someone came on the other night as like, "I've launched my ecommerce company last a year ago, but because of COVID, we've had a really hard time." It was like, "Take a beat. Because of COVID, your ecommerce company has had a tough time." We just went over the stats of ecommerce. I was like, "Explain that." It wasn't ecommerce. It was the person couldn't get out of their way. So, that's generally the advice I end up giving to, because again, there's a lot of people trying to get started. It's just go.
Erik:
My biggest learning in entrepreneurship in general is no one's that smart. It's just people that went for it and got lucky. I really believe that, including myself. I don't think that I'm not impressive. I think I went for it. I timed it right, meaning I got lucky. Meaning, because of the way the world worked, I knew about ecommerce right when the world wanted to build all the ecommerce and I was one of the only free agents in LA with a reputation of being successful. So, that's a big one.
Erik:
So, with COVID, I have a friend that owns 20 gyms across Canada that got shut down overnight, done. He's been doing it for 20 years. He three days later decided to launch a virtual training platform and has done millions in revenue in 2020 as a gym owner and was able to keep his entire staff, pivot, not lose money, and now have a whole new revenue stream that when things do reopen, he's got both.
Erik:
So, I have a friend that owns a chain of restaurants in L.A. He's not thriving, but his businesses are all still open. He's making money. He's made a living. There's ways to operate that you can actually get through this. I watch some of our clients, ecommerce brands. They're like, "Cut everything." I'm like, "What do you mean cut everything? The numbers are good. I get that the news is scary, but you're doing well. Do not cut." The companies that cut, I don't know if any of them recovered, the companies that I know that cut with us. And then we had a whole bunch of other companies that stuck with us, our average client in Q2 doubled their revenue.
Erik:
So, interesting if you think about what happened in Q2 of 2020. So, yeah, getting back to it, the biggest one is like don't give yourself excuses, go for it. That's a lot of what we're talking about. And then we get into sometimes deeper marketing conversations like, "What do I do to get started in marketing? If I don't have a budget yet, where should I spend my money? Should I run Facebook ads right away?", those kind of questions.
Stephanie:
Yeah, I love that. It reminds me too of doing things in haste, there's a good quote. That was around investing, but it's like the person who's scrambling to themselves when the news sounds bad or something, they're never the ones who do well or find a good ROI. I thought I'd be the person sitting and waiting most times and play the long game, instead of reacting to the news or quickly stopping or starting something really quickly. It's probably never that necessary to jump on something.
Erik:
Correct. You have to give yourself that luxury, so to speak. So, what I learned myself out of this was I'm keeping more money in the bank going forward, so that I can take a beat. Even if I see my business losing money, I can go, "Deep breath. What's the right long term plan here?" Not just react because I got to stay in business tomorrow. That's where a lot of businesses got stuck is we're in such a great economy. People are just spending all their money on growth. All of a sudden, it cut off. So, you have no money in the bank, that can be a bad situation.
Stephanie:
Yeah, I agree. So, you're talking about many of them don't have budgets and they're trying to start marketing or launched an ecommerce shop or something. How would you go about that? Because I used to read quite a few books that talked about scrappy ways to do it, whether it was just putting up a landing page and then maybe linking to products, reselling them. There's so many things that we've been taught when it comes to being scrappy and starting something without having to invest money, but how would you do it now in 2021?
Erik:
Yeah. Everybody loves to throw around the MVP model, minimum viable product. The problem with it is people go to minimal and not viable. Meaning, you make a product that gets out there, but it's not really viable. It's not really what somebody's going to buy from. It's a landing page that sends you to a site that says you can check out but you can't or whatever it is. People think that just getting up and running is good. You got to commit.
Erik:
If you're just getting started, keep the day job, make money along the way. If you can't work a day job, then you get started on midnights and weekends, you're not going to be a good entrepreneur, because welcome to entrepreneurial life. So, that's actually a good way to get used to it in my opinion.
Erik:
Also, it never happens as fast as you want it to or almost never. So, it buys you time. You're not under some ultimatum that if this doesn't work in six months, I can go back to work. It's like well, just give yourself as much time as you need. Switch over when it can support your lifestyle. So, to get started, I mean, there's a few ways. If you're trying to launch a new product, you might need to put in 10, 20, 30, 50 grand to get started. That's actually a thing. That's where the friends and family come in if you're launching a new shoe line or something, but start small. Sell out. It's okay. Meaning, sell your product, not sell out as a jab or anything. It's okay to have a small run in the beginning.
Erik:
And then in terms of marketing, I've really honed in on this focus, actually, through a lot of answering these questions on Clubhouse is where we invest our investment threshold and where we like to look at companies is 20 grand a month in revenue. Because honestly, that's when you've been able to get over the scrappy period and you started to build a sustainable business. Still small, but there's something there. That's traction to us. To me, it's like get to that point without spending too much money.
Erik:
Partnerships, get someone that has your audience that you're trying to reach and find a way to make them talk about you to their audience. That could be press. That could be influencers. That could be other brands that collaborate with you. That could be many different ways. But start there, start building that organic reach groups. If you're selling shoes, not in COVID, but in general, sell them out of your trunk. Don't make it so it just has to be through your website either.
Erik:
My view is focus on one thing, and don't narrow yourself in other ways. The idea of being direct consumer and not opening up every other distribution channel for your brand is crazy to me. Go omni-channel, open up retail, open up everything else, and build a model that makes sense for all of those, and then see where the least path of resistance is. Maybe Nordstrom decides you got the coolest sneaker ever and you get a $5-million order. You're able to ask the right people, so you can protect yourself, because a lot of those big box will return the entire order when they don't put it on the shelves.
Stephanie:
Oh, wow.
Erik:
So, there's ways of that-
Stephanie:
[inaudible 00:25:50].
Erik:
That's why retail is hard. Walmart, they charge you for the products that don't sell and send it back to you. So, you got to be careful on those agreements and what you take on, but listen, it can also set you up for the rest of your life getting a deal like that. So, open it up to do all those things and be scrappy about it. Instead of throwing other people's money and trying to grow and hoping it works, find ways to make money right away. As someone that has bootstrapped a business and owns it with my partner, but the two of us, it's awesome. We tell our team all the time, "Anything you want to do, we can do it. Just ask." We're not reporting to anyone. We don't have people on our board or investors that we have to report to that are going, "I don't agree. I'm worried about the risk of my money." Not all investors do that, but some do. So, yeah, if you can keep ownership, it's a lot of fun. It's stressful at times too, because there's no one else backing me up. It all falls on you. But once you get through those hardships and get used to that challenge, because it never ends, it actually becomes pretty fun.
Stephanie:
Yeah, yeah, that's definitely my viewpoint on investors too. Unless they're very strategic, they're going to open up a network for you. They're going to give you something that you can't get otherwise. If you're just going after money, you probably needed to look elsewhere. I mean, my friends and family, not so much. I would have never been able to raise any money from them properly. But, thinking about it more strategically, instead of just, "Here's some dollars," because we had a guest on the show, who I forget who they were.
Stephanie:
Maybe Hillary can remind me in our prep doc here, but they're talking about how they built their company based off a Kickstarter Indiegogo type of thing, because they had this whole quote that was, "Don't rely on friends and family." Because if that's how you think you're going to fund your product, you're already going to fail. Account for them to maybe only be 3% of what you need or something like that. Only 3% of your product will be bought from them. The rest, you need to go out and form those email newsletters. Find your audience elsewhere, or else, there's no point in you trying if that's your only goal.
Erik:
Yeah, I would say that with smart money, which I agree with, if you're going to take money, take smart money that knows what they're doing and can help you. But a lot of times you can get that help without even taking their money. That's the other part. There's an anecdote about call someone for advice and they'll give you money. Call someone for money and they'll give you advice. So, if you want connections, most people that have been successful, most not all, but most are really willing to pay it forward, I've noticed. They want to help. They can't help everyone, but when you catch them at the right time... And then for anybody, it's a game of numbers. If you're looking for help, reach out to as many people as possible. Someone's going to say yes.
Stephanie:
Yup, I agree. So, the one area that we sometimes neglect on this show is B2B commerce, because of course, everyone's focused on B2C. But I saw that you put out a list of tips for B2B ecommerce companies. I was hoping you could walk through, what are you guys seeing for B2B companies? Do you work with B2B companies? How are you advising and marketing for them right now?
Erik:
Yeah, I mean, in the nutshell, B2B marketing is actually very similar to B2C, except for the end goal with B2C is a transaction. B2B generally is to drive a qualified lead, but you're still marketing to an individual. That's the part that I think people really forget. When I'm marketing to B2B, I'm not marketing to a business. I'm marketing to the decision maker at that business. So, it's still a person. So, instead of marketing to someone that likes dogs and biking, I'm marketing to someone that has this title at this type of company, who's a marketing manager at a Fortune 500, whatever it is. So, it's just a different targeting methodology.
Erik:
And then the way you position the company is still value proposition. You still want to get an emotional reaction. That doesn't mean like go crazy with it. So, don't take that too verbatim, but people justify emotion with logic. So, if you can hit the emotional reptilian side of the brain and get with any type of marketing and get them to feel like you're going to do something for them, that's the best way to get someone. So, Hawke Media is all B2B obviously. We don't use it that much now, but we're about to ramp it back up. Have you seen our commercial with the lemonade stand?
Stephanie:
No.
Erik:
Super fun. We filmed this less than a year into business, I think. I sat with my business partner. Again, we're marketing to business owners. That was our main target. They were like, "What do people like?" I'm like, "Puppies and kids." It was just when GoDaddy got banned from the Super Bowl for putting a puppy mill as a joke commercial. I was like, "No, let's not do that. So, let's go with kids." So, we basically created the commercial about a bunch of kids in a really corporate office.
Erik:
But when I say kids, eight, nine year old's running around, skateboarding, throwing paper airplanes, freaking out. The owner, this little blonde girl going like, "I can't take this. Who's handling our Facebook ads? Who's doing this?", and just freaking out. And then we come in and we got you. I was in the commercial too. We explained that. It shows them at the end, a bunch of kids making it rain with cash and dancing and having fun.
Stephanie:
That's cute.
Erik:
It was fun. It got people's attention, but the whole point was, "We got you. I know you're freaking out, but we're not and we got you." That's how it came off. That emotional connection, even though we're talking about B2B, which you'd think is super logical. How much do you cost? How much money you're going to make me? No. Why people hire us, the logic reason is bandwidth's our expertise. The emotional reason is, "Please someone just handle this. I don't know what's going on here. I just want to grow and I need someone to take it off my plate," or "I don't know what I'm doing." We need someone to just come in calmly and help us.
Erik:
Understanding that in B2B is super important, because then everything you do with positioning yourself is like, "We're here. We got you. We know what we're doing." You can sleep easy at night is our positioning. Now, you change that. And then how you execute on that, same channels, Facebook, search, email marketing, press, all the things we use for our clients, creating your own content is the stuff we use for ourselves.
Erik:
I'd say any marketing is aspirational. Not meaning I aspire to be like something great, but more like, "I'm currently at this state, and I want to be here." It's as simple as my socks have holes in them. I want comfortable socks and you go buy socks. This aspiration doesn't have to be something groundbreaking. So, understanding that you need to position yourself as that aspiration, the solution to getting the person from where they are to where they want to be, no matter what you're selling, B2C, B2B, is the most important part.
Stephanie:
That's really good. Yeah, I mean, I think about the ads to B2B and they're so lame. A lot of times, they make things so corporate. It's like, "I'm pretty sure any corporate citizen will not want to watch another corporate style ad." They want something new and different and love to just connect with the person. Even if it's a title that you're connecting with, there's someone behind that title. If you wouldn't like it, they probably won't either.
Erik:
Yes, exactly. That's been the awesome thing about Hawke and its marketing specifically is I'm the customer, literally, who would be buying from us. That's why I created it. So, I get to make things that I didn't want to see. You just nailed it. I hate the boring, stodgy, men and women in suits. We've been trusted for 25 years. Who cares? That's not why I'm hiring you.
Stephanie:
It's like the stock photography, where you go on there. It's like all these people in offices and business suits. I'm like, "Who's buying this stock photography? This is horrible."
Erik:
My favorite, I used it again recently. So, that's why it reminded me. Remember that photo shoot they did with the baboon doing stock photos in an office. I just found it. My brother-in-law asked me what I was up to this weekend, I sent him the baboon banging on the keyboard. I'm like, "Just working." That was a great shoot. That was so perfect. Yet so many people did not get the point of that, which is this is ridiculous. Why are we taking office stock photos?
Stephanie:
Yeah, yeah, that's funny, but I mean, a lot of people use them for a while. I guess it worked for probably a solid week, and then everyone realized it's not working anymore.
Erik:
No, no, a lot of people still use the office photos. Listen, that's not going to be the only driver of your business. You don't have to be perfect in marketing. If you have a good product or service, marketing helps, but it's not critical. So, a lot of people get away with really bad marketing and still have a really good business.
Stephanie:
Yeah, the one theme that I've heard from quite a few people on the show is that the organic videos and natural things are all performing way better than stock photography or anything that seems like it was built out of the box. Are you seeing that as well?
Erik:
It depends. It depends on what type of product it is. If it's a product that needs a lot of trust, you need production value. Meaning, a supplement or something that people are looking to solve a problem. They don't want to see that you threw something together. If it's like fashion or lifestyle products that people aren't really worried, you can get away with that a lot more.
Stephanie:
Yeah, I like that. So, one other thing, I don't know how much do you guys experiment with TV, because I was listening to a good episode. I forgot what podcast it was, but I think it was Gary Vaynerchuk, where he was essentially saying, "All TV is dead except for Super Bowl ads." That's the only ads that actually work. Every other TV commercial, they don't work anymore. They're dead.
Erik:
Gary's a friend and I think he has nailed what he's doing. He's a super bright guy, but I think a lot of times, he speaks in hyperbola. Nobody ever gets held to these big grandiose claims. I called a friend out for claiming that Bitcoin will be at 50 grand by Sunday. And then Sunday came around, I screenshot it and I sent it back. I'm like, "What the hell, man?" He's like, "Whatever, it'll happen in the next month." It's a habit that a lot of people got into, making these giant claims. I'll be real, TV does work. You got to buy it, right? Yeah, we do some TV, some radio. It's not a big part of our business. I'm not trying to hype it up.
Erik:
But once you have an amazing funnel and you really know who your customer is and you're really good at nurturing leads... Meaning, not just letting them come to your site and hopefully, they buy, but capturing email, capturing their phone number to text them and follow up and really nursing them. Again, you know your audience and you know your messaging. So, you know how to attract your audience and get them to buy. TV is still one of the cheapest places to get a 30-second impression from a massive audience. So, both TV and radio are still very viable options as you scale, but you can do a lot of digital before you have to go there.
Stephanie:
Yeah, yeah. Yeah, I agree. We had one of our podcasts aired on radio. They took it and turned into a one-hour special for Veterans Day. It's called The Story. Some people were like, "Radio is dead. Why would you want radio?" I'm like, "Do you know how many people still listen to radio?" Actually, it's still very legit if you can get on radio. I mean, it's huge.
Erik:
Most people are sitting in their car. They're not going anywhere. They're not changing the station either, because, frankly, there's not that many options. You can get a lot of people that are doing nothing. The hard part is to get them to remember things, but it works. We've had a lot of luck, especially event sales. When we're doing big events like TED and stuff like that and trying to sell tickets, DutyCon was a good one, radio works really well.
Stephanie:
Yup. Yeah, like you said, getting that CTA, where it's not something that's distracting or they crash, but seriously, going by what I just talked about.
Erik:
Yeah, exactly.
Stephanie:
All right, only couple minutes left. Let's move over to the lightning round. The lightning round is brought to you by Salesforce Commerce Cloud. This is where I'm going to ask you a question and you have a minute or less to answer. Are you ready?
Erik:
I'm ready.
Stephanie:
All right. What's up next on your podcast list?
Erik:
Who is or what?
Stephanie:
Either, who or what? What are you listening to?
Erik:
Oh, well, we have our own. So, who would be Rachel Zoe.
Stephanie:
You have her coming up?
Erik:
Yeah, we've worked with her for years. She's awesome. Yeah, so that's the next one. And then after that is Rob Dyrdek, I think. I want to get more into How I Built This. He's awesome. I just think that that's always an interesting story. My podcast is more about their life story. His is really about how they built their company. So, I like the life story too. My podcast was I wish someone did this. So, I'm just going to do it and hit up cool people and find out how they got where they are. Yeah, so my podcast is Hawke Talk.
Stephanie:
Awesome. Yeah, I will be checking it out. What's up next on your reading list?
Erik:
Whatever my business partner assigns me. I am not a voracious reader, and my partner is. So, he's decided-
Stephanie:
He assigns it to you?
Erik:
He's decided as of last month that he's going to give the executive team including me a book a month that he wants us to read and be on the same page on. I'm all about it, because I don't have any motivation on my own to really do it. I'll pick up a book now and then probably a couple a year. Most of the time, I end up listening to it on Audible. I'll buy the book. I buy all my friends' books. My wife rolls her eyes every time. I got to support, but I don't read any of them. Sorry, guys. We're coming out with our own book towards the end of the year called The Hawke Method. It's how we grow companies, basically.
Stephanie:
That's awesome. I love that. What one thing do you not understand today that you wish you did?
Erik:
I wish I understood the public markets more. I've put money in it now and started to try to learn it, but I've surface level things I understand. But when we started getting into derivatives and the complicated side of finance, I'm still not completely clear. I've also shied away in some ways, but I think when you overcomplicate it, it's too complicated for everyone. That's when we get into the housing crisis and things like that, but I also would love to understand it so that I can call bullshit on it sometimes, because I realized in my entire career, no one's that smart. If it's complicated, it's probably a problem.
Stephanie:
Yup, that's a good one. What favorite piece of tech are you enjoying right now? It can be new or something you've used for a long time. It can be an app or anything.
Erik:
Yeah, I will say the one that surprised me the most is the Oculus, because I've been a naysayer of VR. I'm like, "VR is too isolating. It's stupid, blah, blah, blah." But once I got one and I ended up helping an organization called YPO do an event with Oculus and got one, and I'm like, "Oh, wow, no, this is interesting." There's actually something to VR and the experience you can have. Most people can only use it for 45 minutes at a time, but I think it's really cool. I think there's something coming down the pike with that that I think will be really cool.
Stephanie:
Yup, yeah, we wrote a 2021 Trends Report. That was something I'm keeping an eye on is how to use that when it comes to not only following influencers, but shopping from feeds and watching live events, but also being able to get it while watching it and stuff. I think there's a little work to be done, like you said. I know a lot of people especially myself still get dizzy and not feeling very good after, for me, 10 minutes, but it seems like once that gets a bit better, there's a lot of opportunity, especially for ecommerce companies if they can figure out how to make it an event and something fun that people want to attend.
Stephanie:
Plus, also, it's like The Container Store in Netflix series. You want to buy with the Netflix series ad, even though they don't really slap you over the head with Container Store stuff, but you're like, "But I need that specific box to put my scarves in."
Erik:
Yes, exactly. No, I think that's exactly it is. The business model needs to be fixed around the content for VR, because it's just not good enough yet to track enough content and things to do. But once that turns into a much more prolific platform, I think that you'll see it hockey stick quick.
Stephanie:
Yup. All right, last one, what is the nicest thing someone has ever done for you?
Erik:
Oh, I have to think of a nice thing, because I feel like if I'm going to say the nicest, it's going to be...
Stephanie:
Or you can say the meanest too. You're like, "Oh, this person was really mean to me."
Erik:
I had a business partner that really screwed me up, but I don't need to give it any credence. Not my term.
Stephanie:
Nicest then.
Erik:
I'm trying to think of nicest. I mean, the fortunate thing is many, many people have done a lot of nice things for me. A lot of people taking bets on me before I had any reason to deserve them. My parents were always great to me. My wife's great to me. I'm surrounded by people that do nice things for me. So, I will say a nice thing that stands out that I never give enough credence to is when I graduated college, I went into real estate a week before the whole banking industry collapsed. I made $350 that year.
Erik:
Six months in, a friend of mine's dad called me. I was a guitarist growing up. My drummer in my band's dad called me and said, "Hey, I've been watching you. You seem to be like a young, aspiring entrepreneur. I like your grind and your spirit here. I want to help people like my son, who is still pursuing music, figure out how to do the business side of things. So, they can actually at least make a living being a musician. I think there's a thing we could do here." I spent a couple months putting a business plan together, showed it to him. He not quite disappeared but went MIA for three months.
Erik:
Called me July of 2009 and said, "Hey, I'm putting in a quarter million dollars. I think I can raise this another $750,000. You're going to run it. Let's go." That became my first online company. So, that guy put in his own quarter million dollars, got his friends to put in $750,000 million invested in an online music company in 2009. And then put me in charge of it, gave me 5% of the company and paid me minimum wage, which I was grinding.
Erik:
It was a bet. Don't be wrong. It could have really worked out for him, but I also think of that as that guy set me up as an entrepreneur in a lot of ways too. I don't know what I would have been doing without that opportunity. I'd probably still have grinded through real estate unless something else popped up for something. That put me into digital. That did a lot of things for me. I'm still in touch with them, but that was a big one.
Stephanie:
That's a good story. I'm glad I asked. Yeah, that's really good. Cool. Well, Erik, this has been a very fun interview. I want to bring you back for another round in the future to hear how 2021 is going. Where can people find out more about you and Hawke Media?
Erik:
Definitely, Clubhouse.
Stephanie:
I'll see you there.
Erik:
Yeah, [erikhuberman on any social platform's fine. And then Hawke Media, if you ever want to reach out, is just hawkemedia.com. We do free consultations. Always happy to help.
Stephanie:
Cool. All right. Thanks so much for joining us.
Erik:
Yeah. Thanks for having me.
Imagine this: You’ve developed a new product. One that you know works… and that you know people need. There’s just one minor problem: Selling that product requires you to not only enter a battlefield filled with regulatory land mines, but face competition with billions of dollars at its disposal.
We’re seeing this situation play out in the multi-trillion-dollar industry that is supplement and pharmaceutical sales. It’s an industry that entrepreneurs everywhere are trying to make waves in, and just like any other industry, finding success means coupling the right product with the right strategy.
Zak Williams was able to kick the door open with his company, PYM, which sells all-natural amino acid-infused chews that have proven mental health benefits. Zak is the son of the late actor, Robin Williams, and he is using his own experiences navigating the ups and downs of mental health to help him build PYM into a company that advocates for mental health support in whatever way works best for the individual. Practically, that means working out a business strategy that allows PYM to not compete against big pharma, but sit alongside it. And it includes developing new kinds of convergent experiences that allow consumers to operate in a physical and digital world simultaneously. Zak explains all of that and more on this episode of Up Next in Commerce.
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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Transcript:
Stephanie:
Welcome back to Up Next in Commerce. This your host, Stephanie Postles, co-founder at Mission. Today I'm chatting with Zak Williams, the co-founder and CEO at Pym. Zak, welcome to the show.
Zak:
Thank you so much, Stephanie. It's a pleasure to be here.
Stephanie:
Yeah. I'm very, very excited to have you on. I was going through my amazing prep dock, and I first thought that Hillary was playing a joke on me when she wrote down Zak's the son of actor Robin Williams. She likes to put in silly things to see if I'm going to go with it. Then I'm like, oh wait, this is actually real. I started reading a bit about your story and your company, and I would love for you to actually start with that. Tell me a bit about what led you to Pym, and yeah, expand on that, because I was really excited to hear about the full story.
Zak:
Yeah, certainly. What led me to starting Pym, the mental health support company, started very early on in life. I had anxiety throughout my teens that manifested into something more extreme after my dad, the entertainer, Robin Williams, died by suicide. I found myself experiencing bouts of depression, also extreme anxiety and stress episodes. I was feeling like my life was becoming unmanageable. I was trying to use alcohol to self medicate and was trying to find any other solution that would work. I tried cannabis products, had prescription pharmaceuticals, which work for many people. For me, I didn't find the solution that necessarily helped me in a way that would work in perpetuity. Then I found some help in things like talk therapy and alike.
Zak:
Through that experience, a couple things happened. One was I was diagnosed with post-traumatic stress disorder and was dealing with a lot of issues associated with that. The other thing is I started to find help and support through committing to service, specifically working with mental health organizations, not for profits; supporting them around things like governance, organizational development, fundraising initiatives, strategy, business development. Whatever it is they needed help with, I wanted to jump in and support because I found actually that commitment to mental health organizations really helped me. Through that experience, another thing started to happen, which I found that me sharing my story and what I went through really helped others while helping myself. I found that being vulnerable and taking a lens of vulnerability and opening up really ultimately ended up starting that process of healing for me. I found that mental health advocacy is one component.
Zak:
The second component is when I took self medication out of the equation, using alcohol, and by the end I was drinking alcoholically and it was just not good for my mental health. I was feeling very emotionally dysregulated and not having a great time. When I cut out alcohol, I was still really stressed and really anxious, and realized that I needed something to support me throughout the day. I found a solution that my wife introduced me to. My wife, Olivia June, who's also co-founder of Pym. She turned me on to amino acid formulations, which when I tried them were a game changer. They helped me feel clear and erased the anxiety that I was feeling and that was ultimately crippling me. She was introduced to this sublingual tincture by one of her doctors. When I tried it, I was just like wow, this is transformative.
Zak:
Armed with the insights of mental health advocacy is very healing for me, and amino acid formulations really helped support me throughout the day, I realized there was an opportunity to develop something that was very near and dear to my heart, but also helpful for people while focused on the core mission of mental health support. I started Pym with the lens of creating a brand that stands for mental health support, like Red Bull stands for energy. In starting the company, we kicked off the food science and product development element of that in 2019 and created something that was both safe and effective, while also being delicious. We worked with a food scientist named Lena Kwak, who was the director and research and development for The French Laundry, which is a restaurant in northern California; a very well-known internationally regarded restaurant in California. We wanted to create something that had a great taste and smell and a texture that felt unique but also toothsome.
Zak:
We came upon something that we ended up testing with our early beta testers that they liked and they found effective. We kicked off the commercialization phase when we decided that everything was in line with not only how we wanted it, but how our beta testers felt it should be. Through that process, we hired the chief operating officer of Sugarfina; a wonderful man named Scott Cuillard who came on as our chief operating officer, and he accelerated the process of commercialization by 200%. Now we're at market. We're just getting this feedback from our customers and early advocates that our product is a lifeline and it's helping people in a very significant way and we're doing these giveback campaigns where we're supporting mental health organizations, starting with Bring Change to Mind, which is an organization I'm on the board of that focuses on developing communities and high schools for mental health support, while launching campaigns to break down the stigma associated with mental health.
Zak:
Moving into 2021, we will be deepening our relationship with Bring Change to Mind and have a portion of our proceeds of every sale going to supporting building mental health communities and high schools. That's what we've been up to in a nutshell. The why behind it relates very much to mental health advocacy. We see ourselves as a brand that stands for advocacy and we want to really triple down on supporting the movement associated with mental health. That's what we're all about.
Stephanie:
That's great. It seems like this kind of product would have a lot of barriers to entry, because when I think about the market right now around mental health products and CBD and cannabis and all this stuff, there's already a market there. There's already been a lot of messaging, a lot of advertising before a product based on amino acids, which honestly, I haven't even really heard of that. Tell me a bit about how you overcame those barriers and educated new audiences or are starting to. I know you just recently launched, but tell me a little bit about that process to really get your product on the front of people's mind.
Zak:
Sure. Amino acid formulations for mental health support is not a new thing. We didn't miraculously come upon something that was new to the world. They were gaining momentum and popularity as a way to provide mental health support by balancing out the endocrine system in the 80s and 90s. Something happened in the 90s that set off an era of a pill to solve all your problems in life. Kind of that era of taking a curative approach to symptoms. Do you know what that event might be?
Stephanie:
I'm guessing you're talking about prescription pills, but I don't know what the event is.
Zak:
Yeah. Actually, it's a very specific prescription pill. It was the creation of Prozac. The profound thing about Prozac is it was a product that would function as an antidepressant that would not kill you if you took it in excess or stopped taking it, because at the time, the available toolkit of prescription pharmaceuticals had toxicity associated with them. In certain situations, you could take a product and if you stopped taking it, you would be at risk of severely debilitating affects in the like. Prozac created kind of a safe mechanism to provide mental health support. By the way, I'm a big believer in prescription medication being helpful for many, many millions of people. I don't want to make it seem like I'm not supportive, but the momentum that amino acid formulations were getting kind of fell by the wayside and didn't favor of this era that lasted a couple decades of a pill to solve all your problems.
Zak:
It's only been in the last five plus, just over five years, from my perspective, that the whole idea of seeing the individual as a system, as a collection of interacting organs and functions working together to help support and sustain the body, that idea and premise has really been embraced in a major way by the medical community. Going hand in hand with that is the idea and premise that you can take certain products, to kind of balance yourself out, because they provide support for a number of different systems and create kind of a balanced ecosystem to better help you. That's kind of where amino acid formulations kind of come into play.
Zak:
From our perspective, we just concentrated these existing amino acids in a way in which they actually provided a more comprehensive form of support for stress and anxiety with our first product. That's the story in brief, but the challenge is very specifically we need to popularize amino acid support as a way of providing mental health support, because there's science and research behind. Science, research and studies behind amino acids being helpful for people, but people aren't too aware of it.
Zak:
As part of forming the company and making the effort to formulate something that's helpful for people, we established the science advisory board from Harvard Medical School, UCSF, USC, and MIT, and with specific focus on neuroscience and neuroendocrinology, with some mental health epidemiology being an element of that as well. As part of that, we are in the process of establishing a pre-trial study, which we'll then use as a foundation to go into an actual clinical study that we'll be using to really get a deeper understanding of how we can provide decisive support for the mind and the body. We're kind of in the brave new world of natural compounds providing support both for the brain and the mind and also the body, but I'm an advocate and believer in compounds that are safe and effective.
Stephanie:
Yeah. It does feel like the timing's right. 2020 is a year where I've at least seen a very big shift in not only healthy living, but people actually looking into the source of what they're ingesting and thinking about healthy alternatives to not only their diet but also things they're taking, whether it's prescriptions or whatever it may be.
Stephanie:
It feels like the market's ready for it, but then figuring out ways, like you're doing, to pull it together and put it in an easily, I guess, consumable format where people kind of know, oh, here's the five things that are coming together, here's what they're going to do. Someone's already done the science behind me, instead of trying to piecemeal these extracts and things off of Amazon together to try and fix a need based on all the YouTubers and influencers and people who are telling you oh, this is good for this, and this is good for this. It's so much information now.
Zak:
Right. That's what I was doing. I was cobbling together an experience that helped me, but it was a bunch of different products. I agree. I think that there is a major opportunity on the research side too. There's some great companies that are focused on establishing more research through studies. Some registered, some focused more so on doing the research to really understand how things work prior to actually doing registered studies. There's organizations and companies that are focused on actually creating frameworks to do the testing. I will give a specific shout-out to my buddy, Jeff Chen, who was one of the founders of the Cannabis Research Initiative at UCLA, and he recently started a company focused on doing research around natural compounds. His new company, Radical Science, is hyper-focused on establishing frameworks, specifically clinical frameworks, around testing for natural products. It's so essential that people actually really start understanding what it is they're putting in their body to support themselves.
Stephanie:
How do you approach that regulatory field? Like you said, to me, it sounds so scary entering a market like this one where you're doing things for the first time, it's new, people aren't used to it. How did you approach this field and did you find any quick paths to get past some of the crazy rules and regulations to be able to actually start creating a product and testing it and seeing how it would work?
Zak:
Yeah. Great question. It wasn't a cold start for me. I have several years of experience working with complex compliance and regulatory environments due to investing, advising, working within the cannabis industry.
Stephanie:
Got it. Okay. That's good background. You weren't a newbie to this. I've done this before.
Zak:
No. The lens we take. I say we in terms of our team and our advisory board is prioritizing compliance and safety. In starting the company, we sought the most sophisticated advising we could get. We need to continue prioritizing safety as front and center with what we do. We're a dietary supplement as a product class, and it's important to consider how we make claims. We are very cautious with how we do so because from our perspective, we are given the privilege and opportunity to provide support for people given a specific framework, and we want to be considerate of that framework. The key thing for us is as we go about doing studies and the like is we want to develop a deeper understanding of how we're actually providing support for people.
Stephanie:
Is your goal to not just be a dietary supplement eventually?
Zak:
The big goal for us would be to become a doctor recommended product, or there's a class of products called a medical food. What a medical food is is a product that is meant to support specific disease states in the like. It's a product class. It means there's a lot of research behind how it's been effective to support different states. You can make specific sets of claims.
Zak:
From our lens, the reason why medical food establishing that type of status is important for us is because that way we can actually say we've done X amount of research, it's shown to be statistically significant, and we can really make these specific claims around supporting people. That's a process. That takes a long time to do. It's not inexpensive. There's stages that we're required to kind of get through to get to that point.
Stephanie:
How much money are you estimating it could cost to have your product become medically food stamped? That's a weird term.
Zak:
There's a range. Depends on what type of condition we're seeking to support and how long the study is meant to be conducted. Generally, these studies are months long. In some cases, over a year. It's not inexpensive. Let me frame it like that.
Stephanie:
Yeah. I guess that it what makes me worry about maybe new entrepreneurs who see opportunities or if they're like you, but they don't have connections and they don't have the story that you have and maybe the status. You'll probably be like, don't say that, but you have a lot of things that maybe a lot of others don't. It seems like innovation's going to kind of stall if it takes so much money to get something natural into the world, or a blend of something natural, and then to be recommended over top of prescription drugs where these pharmaceutical companies have huge amounts of money and marketing.
Stephanie:
I read this whole book about... what was it called? Let me think. It was called like the cure to cancer or cure of cancer. Something that was abour apricot oil and the apricot seed. I don't know if you've ever read this before, but it was about how this guy was showing that apricot oil, I think that's the kind of oil it was, was having a big impact on cancer and cells and all this. All a sudden, these big pharmaceutical companies start putting out hits on him. He had to go to a whole different country to prescribe it. It seems like an insane world to even try to do something new just to start, and then also not having a huge budget or connections. It doesn't feel like anyone can enter this market, really.
Zak:
There's ways to do it. The barrier to entry in terms of launching a natural product is not as high as, say, launching a pharmaceutical product. You have to make certain assertions to say hey, this product will be effective. It seems to help people, and you have to generate demand. We've very much in the business of demand-gen. From a Pharma perspective, I would say that pharmaceutical companies are actually taking a lens of openness towards utilizing natural compounds to better support people.
Stephanie:
They're not taking out hits on you.
Zak:
No. Where it gets challenging is if you're going out and saying, we have a mental health support solution, and you go in certain channels where you're trying to advertise, you just get squished. You just can't afford to acquire a customer when you're talking about going in a channel which people are seeking certain mental health support solutions through search, for example.
Stephanie:
You have to find ways to maybe be innovative to not have to rely on the same channels as maybe the big Pharma companies and find ways to get to the users who are probably looking for that, but they just don't know exactly what to look for or the terms to search for.
Zak:
The big advantage that entrepreneurs should look for when it comes to creating an edge, an unfair advantage in this space is distribution advantages.
Stephanie:
Tell me more about that.
Zak:
Direct to consumer, there are some advantages, but there's also some disadvantages. We have had limited success with paid search. It's just hard for us because when people are searching for specific needs, that can be very expensive from an SEM perspective.
Stephanie:
What do you do instead if paid search is expensive for us? What kind of channels are you maybe looking at instead or experimenting with where maybe you're finding better results?
Zak:
We've had enormous success with earned media and organic SEO in the like, but that's a strategy we set out from the get go in applying. I come by our company and the products very honestly. Part of what I do in mental health advocacy is just share on a story consistently and when it's combined with Pym, people are curious. Sometimes they end up being drawn and attracted to our product. The thing too, which we found has been helpful for folks is that we're not advocating for a product to be a cure-all. It's actually kind of I don't want to say the opposite, because that's not quite what it is, but it's kind of adjacent to that. Really what we're saying for is our product's a catalyst. We want to get people into the mindset of prioritizing mental health hygiene as part of their daily rituals. Hopefully our product's a catalyst. If they're taking our product as the solution for their mental health support over the course of their day, that's great, but ideally, they should be doing other things to best support themselves.
Stephanie:
I think that's the messaging that will win going forward. All the companies I've had on the show so far, so many people talk about authentic messaging and not just having the same kind of corporate speak like maybe they used to years prior or something. I think thinking about how to craft that going forward, it's actually more trustworthy if you say something like, this isn't a fix. This is meant to be a part of your daily routine along with exercise and eat healthy and whatever else you need to do to stay healthy.
Zak:
Yeah. The thing for us we really want to push for and advocate for, something I call enrichment loops. Meaning if you come to our product and take it on a consistent basis, hopefully it adds value every time. Meaning you're clear headed, you can learn something, you can engage in an activity that's helpful. If that's not the solution for you, then we're not going to push it on you. Do something else that helps you. Again, this is where prescription pharmaceuticals, if you're finding a solution with prescriptions, by all means, take that solution. If it's meditation, if it's mindfulness activity, if it's a fitness regimen, If it's nutrition. For most people, it's most likely a mix. For me, it's a mix of meditation, eating well, some fitness, but I could definitely be better on it. I take Pym because it helps me. I'm a big believer in talk therapy and community support groups. That's my mix.
Zak:
To close on the unfair advantages in distribution. If you have a digital channel like an app or something, we're exploring creating a companion experience. That gives you an ownership of being able to really provide unique insight, pushed out notifications, establish a foundation of data that better helps you understand what it is a customer needs and there's an advantage there. I think blending DTC with Omnichannel is a huge opportunity, but Omnichannel can often work as just establishing brand presence that ultimately pushes people into DTC, or vice versa. It could be DTC that ultimately pushes people into a daily loop, ideally an enrichment loop, around purchasing products at their natural grocer. Okay. I'll close at that, but I think focusing on unfair advantages in distribution is how entrepreneurs will get ahead in a very challenging space.
Stephanie:
The one thing I've heard a lot is a lot of entrepreneurs that I've talked to on the show, a lot of them have really good stories, but not everyone tells it. Some people are hesitant to tell their story. Did you experience this with everything that happened? Did you ever feel a need to pull back and you weren't sure if you wanted to share or you weren't sure what you wanted to talk about? Tell me a bit about how you thought about sharing your story and resonating with people. Were you scared at an point to do that, because I've heard a lot of people have been? I don't know to tell.
Zak:
Regarding story, look, the lens I take is that there's great strength in vulnerability. I've been guarded a large part of my life, and not sharing my experience and alike, I've realized that I was losing out on opportunities to help people. I was given many advantages in life, and there are elements that have been disadvantageous. Instead of seeing it as that and seeing it as kind of a foundation for resentment or being annoyed around certain things, I say, this is just part of my experience. There might be shared experiences or there might be something that would be unique to your experience or not very many people, and I think that needs to be embraced.
Zak:
My whole thing is share my perspective and story. As it relates to Pym, try to be considerate of really the advocacy that underlines what we're doing as well because that's what really matters at the end of the day. I think people just need to find what it is that they want to tell, and really understand that they're crafting their story in the present, in the now. You don't want someone else's story. Own your own. It's a muscle. I had a lot of fear and anxiety around sharing stuff for a large part of my life.
Stephanie:
Now you're talking about even before your dad's passing you were not very vulnerable. What pushed you to want to start sharing, and why do you think you were holding back before?
Zak:
I think I was doing certain things that I was ashamed of. Drinking has always been a problem for me. I'll be perfectly honest, and it was something that only came to a head where I was like whoa, this is getting out of control after my dad died by suicide, but prior to that, it was something that was a challenge and I wasn't liking doing it. I think there were elements of my story that I was ashamed of, perfectly frankly. To be perfectly frank about it. In that, I realized there's certain elements of my story that are private and I relate to being considerate of the sphere of individuals or communities that are titled to that. Then there's elements that I love to share and talk about. The thing for me is when it comes to mental health, talking about mental health and alike, I like talking about it because it's very healing for me.
Stephanie:
Mm-hmm (affirmative).
Zak:
Yeah.
Stephanie:
Very cool. Before the show started, we were talking a little bit about converging experiences, and I want to hear how you're thinking about this, especially with probably giving certain talks that now, this past year, had to all be virtual and not as much in person. Tell me a little bit about how you're thinking about online and offline blending and what you guys are betting on for next year.
Zak:
Well, the big bet we're making is that people will continue needing mental health support products.
Stephanie:
After 2020, yes.
Zak:
Yeah. Here's the thing is that relative to the pandemic, there's been a shift into the COVID pandemic. We can talk about the parallel mental health pandemic, which is a thing too. There's been a shift to kind of embracing and engaging, or customers, communities, populations embracing and engaging in digital experiences, whether it's telehealth, things like that or for meetings, remote work, Zoom, things like that. We're hitting the stage where we're starting to see what a post-pandemic world will look like. Just little glimpses of it. There will likely be people wanting to connect with other people in person, people wanting to go out and shop and dance and eat out in the open. There will be certain habits and there will be people who have become acclimated to digital experiences, but people will also want to go out into the world. I think it'll be interesting to see the blend of online and offline that's going to be this new paradigm. I think as we're thinking about it Pym, we're very much thinking about establishing a companion experience to support people throughout their daily activity.
Zak:
For us, there is a need to really establish a better understanding of how people are requiring mental health support products and experiences. In the neuroscience community, there's something called an adjuvant experience, which has shown to be very helpful. What adjuvant means is... it's very simple. It's just something in something else.
Stephanie:
Something in something else. Wait. What? Sounds simple, but I don't get it.
Zak:
No, it's just an adjuvant experience is talk therapy and some sort of prescription protocol.
Stephanie:
Oh. Okay. Blending two things together. Got it.
Zak:
Yeah. That's adjuvant experience. From our lens, we wanted to create an adjuvant experience that is fun, accessible and accretive in terms of delivering value and support for people. The two things that are most helpful, at least based upon my experience talking with researchers and doctors and scientists about how consumer oriented mental health support experiences can help people is insight and community. The insight component involves behavioral recommendations, maybe data, specific things that help people live a life that they want to live. The community component involves supporting authentic connection with people. Those are the hints in terms of how we're thinking about developing an adjuvant experience, which ideally we hope to be convergent.
Zak:
I see there's an enormous opportunity, and it's very hard to get right. I'll say that. It's in the cake walk, because you need to really factor in blending the online and offline experience into something that feels natural and seamless and ideally, fun. I think a lot of companies are going to be taking that tack, because events are going to be really big, people are going to start eating out again, people are going to start shopping beyond just kind of going out and doing a foray out into the wild and then coming back.
Stephanie:
Oh, it just went to Costco. What a blast.
Zak:
For instance, where Target has really done an excellent job is on their pick-up experience. It's been a game changer for Target this year in 2020. Where you shop, you order online, and then you go to Target and you pick things up. You pick stuff up. That's technically a convergent experience, blending online and offline because it involves you having to engage in the physical world and using a digital experience to achieve your goals and objectives. I think most companies are going to have to think about that in a very meaningful way in order to maintain an edge. I think telehealth platforms have achieved a huge boost this year, but there's going to be some reversion, and it's not going to be a reversion to the previous me. They need to think about okay, what is it that we can do to establish an edge to further support people when they go out into the world again?
Stephanie:
Mm-hmm (affirmative).
Zak:
That's essentially what I mean by convergent experience. From a mental health support perspective, it's really about developing an adjuvant experience. X and Y together at last to create better support for people than the individual parts.
Stephanie:
Got it. I love that. That's a very good example and description, and I feel like I learned a new word. This is a win all around.
Zak:
Hey, it's my pleasure.
Stephanie:
All right. We have about 10 minutes left. I want to shift over to the lightening round. The lightening round is brought to you by our friends at Salesforce commerce cloud. This is where I'm going to ask you a question, and you have one minute or less to answer. Do you think you're ready, Zak?
Zak:
Yes.
Stephanie:
All right. What's up next on your Netflix view or Hulu or whatever you use?
Zak:
I'm excited about watching The Crown. It's been on my list for ages, and we're starting to get through our queue.
Stephanie:
A lot of people have said that, so I'm guessing you're going to enjoy it. All right. What one thing do you not understand today that you wish you did?
Zak:
I wish I spoke Japanese.
Stephanie:
That's a good one. I love Japan. It's my favorite.
Zak:
I love Japan too. For me, the process of learning a new language is already daunting for me. I'm not a polyglot. I don't learn other languages easily. At some point, I should just take the plunge and just start. That's my goal, learning Japanese.
Stephanie:
That's awesome. Sounds like a good goal. If you were to have a podcast, what would it be about and who would your first guest be?
Zak:
My podcast would be about getting to the very core of people's experiences, like what's their truth. Whether they know it or not, hopefully we can uncover that truth. What is it that they're all about? My first guest would likely be one of my favorite people on the planet, Dr. Adam Gazzaley, who is an advisor for Pym and a scientist and a profoundly interesting person that I'd love to get to the bottom of finding his truth.
Stephanie:
This sounds like a good show. I think this needs to happen. What's the nicest thing someone's ever done for you?
Zak:
Well, I'm a big fan of my son, Mickey.
Stephanie:
That's good.
Zak:
Having my wife, Olivia, her having carried Mickey for nearly a year.
Stephanie:
That's sweet.
Zak:
That was extremely thoughtful and considerate of her.
Stephanie:
That was very sweet. I like that. All right. Well, I have two more. What's up next on your reading list?
Zak:
There's a bunch of things, but the main one is Jim Simons' biography.
Stephanie:
Cool. All right. Then the last one, what one thing will have the biggest impact on ecommerce in the next year?
Zak:
The one thing that will have the biggest impact on ecommerce in the next year would be, I think, oh man. That's a really good question. I think it very much relates to more seamless experiences, frictionless experiences. Even though it is quick and can be considered convenient, it could be so much more convenient. I think the disrupters that are establishing quick checkouts, embedded checkouts, connecting wallets to checkout experiences, things like that, that's going to be a game changer, because people who have an edge there are going to really be able to see the difference in their bottom line. I know that's a very tactical consideration.
Stephanie:
That's a good answer.
Zak:
I think that's really one of the game changers.
Stephanie:
Yeah. You'll have to check out our interview with the CEO of Fast. It was very fast, and a good interview and definitely opened up my eyes to what a frictionless ecommerce world could look like.
Zak:
I think Fast is great.
Stephanie:
Yeah. All right, Zak. Thanks so much for coming on here and sharing your story and being vulnerable. Where can people find out more about you and Pym?
Zak:
Well, you can find out more about me through tuning into this podcast and other advocacy work I do specifically. I'll push people to advocacy. I work with organizations called Bring Change to Mind, United for Global Mental Health, Inseparable, and then Project Healthy Minds. Those are the four mental health organizations I work with. You can find out more about me through the work that I do with those organizations, and then you can find out more about Pym at youcanpym.com. Y-O-U-C-A-N-P-Y-M dot com.
Stephanie:
Amazing. I will be checking it out after this. Thanks so much. It was really a pleasure to have you on and love to have you back in the future when your app is out.
Zak:
Awesome, Stephanie. Such a pleasure.
Let’s get this out of the way now: most companies will not have someone go from intern to CEO in a matter of months. That’s a situation unique to James Standley and Solé Bicycles. What isn’t out of the ordinary, though, are the many challenges and hurdles that James and his team had to deal with when scaling Solé into the success it is today.
On this episode of Up Next in Commerce, James takes us through the trials and tribulations of the Solé journey, including various shipping and manufacturing disasters and lawsuits that nearly bankrupted the company, and he explains how he worked his way out of those troubles and what he learned along the way. Plus, he gives some secrets on what’s working well for Solé now, such as the strategy of finding different touchpoints to reach customers in a way that has absolutely nothing to do with selling to them.
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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Transcript:
Stephanie:
Hey everyone. This is Stephanie Postles and you're listening to Up Next in Commerce. Today on the show, we have James Standley. He's the president and founding partner at Sole bicycles. James, welcome.
James:
Hey, how are you guys doing?
Stephanie:
Doing good. Thanks for joining us.
James:
Yes, I'm super excited to talk about all things ecommerce with you guys.
Stephanie:
Yeah. I was just looking through your website and I am very excited to get a bicycle after this. I didn't even know I needed one, but now I do.
James:
Totally, totally, yeah. We have tons of great bikes and yeah, and tons of cool different colorways and options and a bike for just about anyone's kind of need.
Stephanie:
Awesome. Tell me a bit about how you started Sole. I think it was in college, right?
James:
Yeah. My business partners, that I ended up starting the business with and I, we met back, funny enough, my first venture, which was a music festival I helped start back in college. We were both partners in that.
Stephanie:
It was called the Coachella for the Mountains, right?
James:
Yeah. It was called Snowball, and the idea was Coachella meets on the mountains. Yeah, there was this guy, Chad Donnelley, who I knew through the lacrosse world. I played college lacrosse and he came up with the concept and I was always involved in music. Growing up, I was a concert pianist, and I had DJ'ed in college and been in bands growing up. We met through the lacrosse world, and he came up with this idea. He had reached out to me just to ask my opinion on the project and what I thought about it. At the time, I was a freshman in college and he was asking me about it and I ended up just going back to him and say, "Hey, I want to be a part of this. I think this is amazing."
James:
I was part of that initial team. We kicked off this event with ... Our first, we had Edward Sharpe and the Magnetic Zeros, and Bassnectar, and Pretty Lights, and Diplo and all these amazing artists come out and sold like 15,000 tickets. It was a really cool first venture and a first event. Yeah, so Jake and John, my original founders with Sole, they were partners in it as well, and they helped get some of the money for the project. We met, first year was a huge success and we stayed in contact. At the same time, they were coming up with the idea for Sole, and going back that summer, between my freshman year and my sophomore year of college, they were looking for some additional help on Sole.
James:
I said I'd come in and I've got a more like operational financial sort of background or mind, and they were more of the creatives and the visionary type of people. I came in, helped clean things up. We got the business off the ground. Then going through the summer, they ended up going and raising some money and starting another business, and I ended up taking over the business. I went from being technically an intern in May to the CEO in August. Yeah, so that's how I got involved. Shoot, that was 2011. So, we're going on nine years ago, and I've been CEO ever since.
Stephanie:
Wow. Very cool. That's a wild story. How many bikes were you guys selling when you took over, and where are you at now? So I can get the scale of the company.
James:
Totally, totally. Yeah. Our first year we were featured on this big Forbes article and the business sort of took off, and I think we sold maybe a thousand bikes our first year, which was a lot for a first year business. This past year we're going to sell about 15,000 bikes.
Stephanie:
Wow.
James:
Yeah. We've grown quite a bit.
Stephanie:
That's great. What is the selling point of Sole bikes? How's it different?
James:
Totally, totally. Yeah, for us, our main selling point is you go look at the bike and it's just going to look different than any other bike you've ever seen before. We're really heavy on our marketing and design and colorways and wanted to make something that's really, really simple, easy to use, easy to maintain, but also looks really beautiful, and something that has a personality, and really people can relate to. I think a bicycle, for most companies, is more of a utility product, something that's really spec-driven.
James:
For us, we wanted to make something that people were really, really proud of, and it's like, they can relate to, and find a colorway that really matches their personality, or they could this store music fixed tapes or find these other ways that people can relate to the product. That's really allowed us to set ourselves apart from other bike brands.
Stephanie:
Cool. It seems like pricing is also a big thing. The one thing I've always thought is, why the heck are bikes so expensive? Why? How'd you get your guys cost down so much?
James:
Totally. Totally. Yeah. Yeah. The biggest way we do it is we work directly with a manufacturer and we sell directly to our customers. Just the natural, by cutting out some of the normal distributors or middlemen, we're able to offer what would be a traditionally higher price point products for a lower price and pass those savings onto the consumer by selling direct.
Stephanie:
Tell me a bit more about that, because what did that look like finding a manufacturer? I think I saw you found, in the early days, your manufacturer on Alibaba. Right? Which I was like, oh, that's interesting because I feel like Alibaba ... I've been there before and there's a lot going on. There's a lot of people. It's hard to know who to trust, it's hard to know if they're going to send me something good. How did you guys go about finding a manufacturer there? Did it work out well? Give me some behind the scenes.
James:
Totally. Totally. Yeah. Our first, when we got the business kicked off, we actually were involved in this Ali-Baba business plan competition. Back when we were in college, Jake and John had applied for this business plan competition. They won it and we got a $15,000 grant from Alibaba. That grant or that money paid for them to initially go over, meet our first supplier who Alibaba had helped set up, and we got our first order of bikes in. That's what the initial financing that got the business kicked off. But over time, went through a few different suppliers and really had to iterate our process.
James:
I spent a lot of time over in China meeting with different suppliers, refining the product, getting it to a place where it is today. It took a lot of trips over there and a lot of refining.
Stephanie:
In the early days when you're picking your suppliers and manufacturers, what would you do differently this time around? What lessons did you learn or what things did you maybe stumble on in the early days that you can avoid if you were to redo it now?
James:
Totally. What I would recommend is, we got placed with the supplier via Alibaba, and we just worked with the first person we were placed with. I think we ended up switching a few different suppliers over time, but what really ended up getting us with a supplier that we were super happy with is we went over there, and I went to one of the big trade shows, and we ended up visiting another 15 or 20 during this trip I went on about year two or three, and that trip we ended up finding the supplier we worked with, still to this day.
James:
We really got to go out and meet these people and do your diligence and find the supplier that makes the most sense for you, and not just use the first one that you end up getting placed with or you end up meeting with. You got to go over there and develop a relationship with them. I mean, it's so important. They have this saying there. It's first, you drink tea, then you drink Maotai and then talk business. What I mean by that is, they want to meet you, the different suppliers and the different people over there want to meet you. They want to build a personal relationship, and then they want to talk business because it's so important there to have a personal relationship, as well as a business relationship.
James:
If you're going to try to source something from China or overseas, I'd recommend going over there and meeting these people and spending time with them, and learning, meeting them as people, and really developing a relationship, because that's going to help that business relationship over time and make a really, really strong business relationship.
Stephanie:
Yep. If you don't go and meet them and you didn't really do your due diligence, what kind of problems could a new company encounter? Did you encounter any issues in the early days with some of your suppliers that you stopped working with?
James:
Totally, totally. Yeah. The supply chain for a bicycle is pretty complex. For our product alone, there's over 50 parts. Those 50 parts come from 20 different other suppliers, and then those have to come into an assembler, the assembler puts the product together and then it's shipped over. There's a ton of different things that could go wrong. A good example would be we had one of our biggest shipments ever, at the time for the business. We had put in an order for summer, and it was like 2000 units. We had also set up a big sale online with a company called fab.com. At the time, they were having ... I don't know if you remember the company, fab.com, but they were one of the fastest companies to a billion dollar valuation, I think, and people were talking about it as the next Amazon.
James:
It was having this really big moment. We were selling really well on there. We partnered with them and we were like, hey, we're going to bring in a bunch of units. Let's have a really, really big sale. We have this massive sale. We sell like 1,500 to 2,000 units, pre-sell them, and ends up being the biggest sale ever on fab up to that point. So, do the sale, goods come in, and then we ship all the product out. Well, our manufacturer had packaged the bikes slightly incorrect to where ... The crank arm usually woven through the front wheel, which is detached, and then tucked to the side of the bike when it's shipped. They were all packaged slightly off that almost every single bike came with one of the spokes popped off.
James:
You get your brand new bike that you just bought offline, brand new, beautiful bike, you open it up, and one of the spokes popped off, which it's like ... You can't ride it, but it's a small problem, but it's not an easy problem to fix. Oh my gosh, that situation almost bankrupt us. What ended up happening we-
Stephanie:
What did you guys do?
James:
Yeah, we had the product on credit. We had given we had been sold the product on credit, so we went back to the supplier and we were like, hey, this is going to bankrupt us. We got to figure something out, and they refused to take any discount on it. Then, our advisor was like, "Hey, we're going to just hold payment until we get something settled." They ended up serving us a lawsuit. They came to America, served us a lawsuit.
Stephanie:
Oh my gosh.
James:
So we were served, and had to go through this entire ... Mind you, I'm like 21 years old at the time. I'm still in school. We get served a lawsuit. I'm like, oh my gosh, what is going on? So, we had to hire a lawyer who was our body. He was only like 30 and we didn't have a ton of money. We had to put together a case and actually go out and defend ourselves.
Stephanie:
Yeah, did you win?
James:
We go through this, and we hired this lawyer, and he's like, "Look, you guys don't have the money, [inaudible] afford me, so I'm going to teach you how to build this case." I went and actually built this timeline of everything that's happened, and we came up with a case theory and counter sued them. They responded and deposed me. I had to go through this 40 exhibit eight hour deposition. But we held our ground and got through it. After that, it got to the point where it was like, financially it made the most sense to settle and were able to settle for what ended up being about half off of what the original was. Yes.
Stephanie:
That's wild. I'm just imagining being in college, dealing with it. How was that experience being in college? I'm just thinking, all of a sudden, you have this company and you're having to go to China and now you're getting sued. What was the college experience like for you when you were having something very different than probably a lot of your peers go on?
James:
To be honest, it was really exciting. You felt like it was just so cool to be building something and going through this. We were so ignorant, I think, going through a lot of this stuff, which I think ended up actually helping us. It was just very shoot from the hip and like figure it out. Yeah, so many of these different scenarios could have totally bankrupt us or ended us, but I think it builds a lot of character by going through these different situations and surviving it and learning from it and growing from it. Yeah, it was exciting. It was really fun and exciting. The goal was just like, don't go bankrupt, don't die. Keep fighting and figure it out.
Stephanie:
That's good. I like that. I could see it also just making it seem like, well, what else ... Nothing can really scare me. I've gotten sued. I almost went bankrupt. There's nothing too scary out there after that. I think it's a good place to be.
James:
Yeah. I think it's part of building a business. You're going to face adversity and a lot of ... There's a reason nine out of 10 businesses fail. There's so many things that can go wrong with building a business, but you have to learn to embrace those challenges and know that you just got to fight through it. There's not always a way to figure it out, but there's oftentimes, if you keep working at it and keep fighting, you can find ways to get through these things. If you do get through them, these are like business cards, I guess you could say, or things that'll stick with you and you could grow and build on as you continue to build your business.
James:
After going through all this stuff over so many different situations over so many years, we've now learned to embrace the challenge and just know, hey, here there's going to be some new challenge, every year, there's going to be some new thing that's going to ... we're going to get hit with, and you just have to learn to embrace it and take it head on and not let it beat you up.
Stephanie:
Yeah. I love that. You guys seem really good at partnerships. I've seen some of the very well-known companies that you work with, who they get their own custom bikes built, and you've got things with artists going on and music and all that. How do you how do you view that strategy in your playbook to be able to access new customers and new markets, and how do you even develop those partnerships?
James:
Totally, totally. A lot of that was built from, again, when we started the company, we weren't the traditional bike guys. We were coming from the music background and fashion background. A huge art scene. We had all these relationships early on, and just out of pure having those relationships, we intertwined it in business, and you have the fixed tape series, which one of our early employees was a professional DJ, so he's like, "Hey, I got this idea. Let's create an hour long mix to listen to while I'm riding our bike, and we'll go get some other DJ friends to do it." That piece of content. Just that, that we created that and it's been rolling ever since. We just launched the Sofi Tukker one, which was, I think our 76th mix tape.
Stephanie:
That's cool.
James:
Then that artist creates that mix, and some of these DJs are very globally known DJs. We posted on our SoundCloud and they showed on their SoundCloud, and it creates this nice piece of content that people can come back to and find Sole, or find that mix each month. It's funny because we're not ... you wouldn't think of us as a music business or a bike business, but there's people out there in the world that only know us as the fixed tape company. There are people who'll find out, they'll be like, "Oh my gosh, you guys sell bikes. I thought you were just the fixed tape company or something." It's just organic sort of different little marketing tricks that we've, or little tactics we've built over the years.
James:
They just are organic, unique way to reach new customers and relate with our customers. We do the different partnerships. Again, I'll use the Sofi Tukker example. They're a big DJ group. If you don't know them, they're a big DJ group, globally known. I think one other fun facts, I think they have a platinum record in every country in the world except Antarctica. They're pretty big and they're up and coming. They had a song that's called Purple Hat. One of the lines in the song is purple hat cheetah print. We thought, how cool would it be to make a purple hat, their purple cheetah print bike? So, we had connections.
James:
One of their agencies or marketing companies or whatnot. So, we were able to get a pitch in front of them and they were super stoked on it. Yeah, now we're selling purple hat cheetah print bikes. Again, it's a cool way to ... What other bike companies are selling purple cheetah print bikes? It's just a unique way to reach new customers and provide a unique product and put a cool product out in the world that no one else was doing. I think it's just thinking that way with the bike industry has allowed us to build up these partnerships and set ourselves apart from other bike companies.
Stephanie:
Yeah. When you're doing these partnerships, these partners can also sell it on their website. Right? So, it's not all being sourced back to your website as a central hub. You're essentially letting these partners also sell the bikes on their websites as well. Right?
James:
Totally, totally. Yeah. For each partnership's bespoke and different in their own way. Sometimes like, we did a partnership with Wildfox, which is a women's centric fashion brand. We did these like really beautiful floral prints all over a bicycle. They took them in and they sold them through all their retail shops, as well as their partner wholesale shops, as well as their website, and we sold on our website. There's a bunch of different ways we can structure it. But yeah, it's usually just bespoke to whatever that partnership is.
Stephanie:
Well, that's a good segue into, I mean, when you're thinking about, you've got these mixed tapes going out and partnerships that aren't anywhere close to like the biking industry, how are you tracking conversions? Is your goal to try and get people to listen to these mixed tapes and then come back and buy bikes? Or how do you think about what your goals are around these different projects that you're doing?
James:
Totally, totally. With the fixed tapes, I think we're trying to push out a certain amount of content each month and each quarter. Then we go out and we build content calendars around what are different initiatives that we can tap into? I think when we're thinking about content, we like to look and start with email. Email is like one of our highest converting marketing channels. We're constantly filling and adding to our email list, and then from there, we're trying to push out two to three emails a week. We're mapping out our email pushes. We say, what are the different content initiatives that we can tap into? So, we try to do a fixed tape every two months. We try to do artist series every quarter and large-scale partnership once or twice a year.
James:
We map out all these different things we're trying to do, and then we funnel, and then that leads into email. With email, where you can't really just send very bland marketing type style emails every month. You're not going to get good engagement. So, we have to create stuff that's engaging. I think we've just gotten so good at creating this stuff very cost-effectively that it ends up paying for itself through the conversions of email. It's also a great brand building. They're all great brand building initiatives, and they all kind of build on themselves.
James:
If I do a big large-scale partnership with like a Sofi Tukker, that's going to come back and open up new opportunities down the road for other potential brands, or other potential artists. It's sort of all builds on itself as we go bigger and bigger.
Stephanie:
When you're talking about emails really high, when it comes to converting customers, how do you think about creating that engaging content? What pieces of content are working or what emails work best?
James:
I think one of them more interesting fun little emails that we came up with years ago and it's like the easiest thing [inaudible] to create ever, is we do what we call Sole Saturday. Sole Saturday, it's one photo by the Sole team and then three user-generated photos. Every bike we ship out has a little tag on it that says tag at Sole bicycles hashtag, and you use hashtag of the bicycle for a chance to be featured.
James:
Then, what we do is as we're spelling product, customers are going out and taking photos for us, and every Saturday we feature three of our customers. That, again, it's just like ... we're using user generated content and it's creating a nice email that people can go back to and see if they're featured. It's actually very high converting as well.
Stephanie:
That's fine. Do you think having actual customers and photos is where a lot of brands are going to be headed, less about the models and the people who look perfect and more about ... Is this someone who reminds me of myself and I can see myself riding that bicycle, yeah, feeling a better connection with them?
James:
Totally, totally. It's funny you say that. Because even when you look at ... you go to our paid spend or paid marketing, a lot of times the [inaudible] produced sort of content where it's on a really ... Get a really expensive content creator to produce it and it looks very professional, versus like content that's shot on iPhone or content that's just shot with customers' photos. That ends up converting a lot better than the higher produced stuff. I think that's just the people can relate more to it.
Stephanie:
Yeah. I agree. What kind of channels are you putting that content or the more natural looking content that your customers are creating? What channels are you finding are working best right now to convert customers?
James:
We're constantly testing when we're doing Facebook and Instagram ads. I've been serving different type of ads to different audiences on Facebook and Instagram with different types of content, the more professionals type of content versus the more just shot from iPhone vibe. Even like, over the last year, we've had a big uptick on our online business because of COVID, and people being at home and wanting to find a way to get outside and escape from this madness.
James:
One of the craziest things that we found was iPhone ads or the story ads-specific, so had to build just enough format for iPhones were converting at like crazy, crazy higher row ads versus just more static or traditional images or ads on the Facebook or Instagram. That was like a crazy thing we came up on this year.
James:
There's a very beautiful, simple ad where it's just like the bike on the beach and you have the sky in the background and then the sand below it. Then just the brand and a little copy below it. That little ad actually absolutely killed it for us this year.
Stephanie:
That's great. Are you still using, maybe not that ad, but still putting new ads into the story section on iPhones?
James:
Yeah. I recommend any brand out there that's doing ... I mean, I've been learning a lot of this as we go and trying to get better at it, but when you're creating your ads on Facebook and Instagram for when you're setting that ad up, you can actually split it so that it's like, you have this certain photo for the stack set up and then you have a different photo for when it's served on story. My biggest eyesore, or I hate is, when you're on a story and you get an ad, and it's like an ad that's built for the display. So, it has the kind of squared picture and then it has the words under that.
James:
I don't know if you guys have seen that, but it's such an eyesore to me compared to a beautiful ad that's like really built for the stories. Just making sure that you have the ad set, the story specific ads, it'll help your conversion so much. That's helped us a ton.
Stephanie:
Yeah, that's a really good point. What kind of return on spend should a brand expect from the iPhone story ads versus maybe Instagram or Facebook or Tik-Tok.
James:
That's a tough question. I think it's specific to the brand and the product they're selling, and then, even the time of the year. For us right now, our ROAS is way lower than like the middle of summer. It's almost like a 10th of what it was during the summer. That's just because it's seasonality, our product. We saw specific ... static first story during the summer, I think it was converting 3 or 4X of what it was static. But that's specific to us. I think every brand is different, every product's different. But yeah, I think that can give you an idea of the potential.
Stephanie:
Yeah, very cool. Is there any other new marketing channels that you're trying out, that you're like, I'm not sure if this will work, but we are allocating some funds here to try this out?
James:
No, for now we're focusing just on Facebook, Instagram. We're doing Google AdWords and media retargeting. I want to dip my toes in some other things. I want to try the Tik-Tok and I want to try some Pinterest. I've heard about the Tik-Tok, but the tracking is not that great on it. We haven't done anything yet. Also, Tik-Tok's I think for a little bit lower age or younger demographic than what our target audience is, so we haven't tried-
Stephanie:
I don't know. We've had a lot of people on here saying Tik-Tok works well. That originally, it was just the dancing videos and younger people and all that. People are like, it seems like there's still a good arbitrage opportunity on Tik-Tok right now, because the attribution and tracking might be worse, but you still get a lot of the benefit of going onto a new platform before they increase the pricing and actually understand what kind of conversions they're hitting. I don't know, [crosstalk] to check out.
James:
Totally, totally. There we go. That's my takeaway from this. We'll give it a go. We'll give it a go.
Stephanie:
Yeah, give it a whirl and see. When new customers are coming on your website, I want to talk a bit about like, how do you guide them through the funnel? How do you personalize things and show them, not only content, but also maybe a bike that would work for them or that might peak their interest?
James:
Totally. Totally. It's an interesting ... there's a few things we do. We have about our bikes page, where it's like, which Sole are you? That walks them through the different, we have like six different models. You have the single-speed fixed gear, you have the City Bike, you have the Dutch Step through, you have the three speed City Bike, and then you have the Coastal Cruiser. Top Bar and Coastal Cruiser are down and slanting more. We have a page that we'll walk the customers through the difference between all of those and the pros and the cons of each of those. That can explain the style.
James:
Then once you know the style, what we do different than maybe other companies is we actually ... Each product, each colorway has its own product variant versus like, you may go see a single-speed version of one of our competitors and they keep all the colors on one product page. We create the personality and each colorway has its own personality and its own page. It really helps customers, like okay, I like the red bike, and see the lifestyle on it, and just for that red bike. The red bike would be [inaudible] for a walk and it's got its own story, help the customer really fall in love with that product, and tell a story around each of them, versus them all being bundled up on the one page.
Stephanie:
That's great. Very cool. Then, I was seeing a couple of retail stores that you were partnering with, probably pre-COVID, but it seems like there'd be a really good opportunity to have those partners also kind of market and share for you while they're getting in front of their own new customers as well. It seems like they would kind of take on the budget, the marketing budget to then share your brand under their brand, if that makes sense.
James:
Totally, totally, totally. Yeah. We're seeing a big uptick with like these online third party wholesalers and distributors. That's been, for us, I think our product, it's got such a great look and feel to it that it can transcend from, not just traditional sporting goods or traditional bike-centric channels. We can sell on sites like an Urban Outfitters or on Zola, or some of these other more lifestyle driven sites that want a cool lifestyle product in the bike space.
James:
That's one of our big initiatives that we're trying to get on more of these like third-party digital wholesaler channels, because in the last year, what we've seen the biggest takeaway from all this is like, everything is going digital much faster than it was prior to COVID.
Stephanie:
Yep. Are those partners showcasing your brand? Are they more white labeling, like ordering the bikes and then putting under their brand to say, okay, this is an Urban Outfitters bike, or are they actually saying no, this is Sole [crosstalk 00:33:32].
James:
Yeah, we're selling us as Sole. Yeah, we're selling us Sole through these third parties.
Stephanie:
That's good. That's awesome. How are you getting in front of these big partners? Urban Outfitters is huge and super popular. How did you even get in front of them and convince them to partner with you guys to sell your bikes?
James:
Yeah, just cold email them. Right?
Stephanie:
I hear you cold emailing. Tell us your secrets. Come on, James.
James:
Very easy. Yeah, we'll go out there. If we believe our product could fit in someone's store or someone's space, then we'll hit them up. We're very confident in our product and our brand and we'll sell them on it. It works a ton. Then there's other partners that have reached out to us and want us to work with them. I think, a good example we were connecting ... Target reached out to us and we've just recently started selling on Target's website, which I think is ... It's interesting with them. Target's trying to, in each of their product categories, bring a more 21st century brand in. I think like we really fit that really lifestyle driven 21st century brand for a product.
James:
Normally, there's not a lot of brands in the space that have that kind of fit. I think we really fit those as well. That's an exciting one for us. Then, like I said, the Zola. Zola's a massive, or one of the biggest wedding registry sites. We're one of the only bike brands on there as well, and do really, really well on there.
Stephanie:
Ooh, that's a good angle. I wouldn't think to put a bike on a wedding registry website, but that's awesome, because a lot of times it's just the same old, same old. You're like, I don't need more plates, but I can go for a bike. I would put on my registry.
James:
We sell so many likes there. You'd be really, really surprised. It's a great wedding gift. We have a his and hers, so almost every single order that goes there, it's two bikes, obviously.
Stephanie:
Yeah. That's awesome. Really good strategy. How are you keeping up with fulfillment in the backend? Especially when you're integrating all these partners like Target and Urban Outfitters, what happens if target has a big surge and they've got a bunch of traffic come to their website, and all of a sudden, you've got 500 bike orders? How are you guys keeping up behind the scenes to make sure that you don't go out of stock or have issues on the backend?
James:
Totally, totally. This was something that this year that we've invested a lot of time and energy and effort into, is leveraging technology to make sure all of this stuff runs super smooth. We're using a third party warehouse that has their own systems. Then, we have to use an EDI software or partner to connect to a lot of these systems. It's just spending the time, energy and effort to really automate all this stuff and make sure all these systems talk to each other, and there's inventory pushes going out multiple times a day. You put in the front end work to automate all this stuff so that you can avoid those problems.
James:
There's systems that say, hey, there's inventory pushes that happen multiple times a day to all these systems, so if there's a big spike on say Target, that inventory is removed and pushed out to the other channels so that there's no overselling or minimal over selling. That still happens a little bit here and there because the inventory pushes don't go out all the time. It's a couple times a day, but yeah, it's just about leveraging. There's a ton of technology out there, like using the technology to your advantage to automate the stuff.
Stephanie:
What are some big bets that you guys at Sole are making over the next couple of years? Where do you think the bicycle market is headed? What are some things that you're betting on that you're not sure if they're going to pay off or not over the next couple of years?
James:
Yeah, totally. I think it goes back to digital. We're super focused on digital right now and we're super bullish on digital. We're investing in this technology to make sure that we're set up the scale and then we want to continue to expand where we're selling and who we're selling in front of. Then, on top of that, it's continuing to expand how we market our product and where we market our product and the media partners we can use to get in front of these different people. I think the biggest thing ... People having a stay at home as a result of COVID has set all these new habits. I think they say like, it takes three weeks to set a habit, and what? We've all been at home since April.
James:
Everyone's having to shop from shop online and shop at home. Once we come out of COVID, those habits, I don't think are going to go away. For us, we're super bullish on making sure we have a really solid foundation with, not only our website, but the online e-retail partners that we're selling through so that, as we come out of COVID, we continue to have really strong distribution digitally to the future.
Stephanie:
Yep. I could see some of the retail partners leaning on you guys also for maybe advice and best practices. I've seen some of the bigger companies kind of looking at, not that you're a startup, but looking at startups, looking at people who are able to be agile and move quickly, and trying to figure out like, well, what are you guys doing? Tell us what are the best practices right now, because what we've been doing for the past couple of years was just thrown up into the air and we have to rewrite how we do things now. So, do they ever hit you up and be like, "Hey James, how should we set this up? Or how are you guys doing this so we can replicate this?"
James:
Totally. No, no, no. There's always like other people in the industry that we're talking to. There's always people that we ... Whether it's people in the bike industry or other businesses, other friends that have businesses. Again, always happy to talk with them. For us, you say that we aren't a startup, we are a startup. We've been doing this for 10 years, I still feel like it's a startup. Our team's still pretty lean. There's only 10 of us. We're super nimble and able to move quick, which is great and allowed us to pivot and make changes when things like COVID happened, that bigger companies can't do.
James:
Once we find successes, we can double down and grow on those. Yeah, we're staying nimble and going with the flow and learning quick. Yeah.
Stephanie:
That's great. All right, cool. Let's jump over to the lightning round. The lightning round is brought to you by Salesforce Commerce Cloud. This is where I'm going to ask you a question and you have a minute or less to answer. Are you ready, James?
James:
I am ready.
Stephanie:
All right.
Stephanie:
What is your favorite business book that you think about or refer back to [crosstalk 00:40:28]?
James:
It's not a business book per se, but it is You Can't Hurt Me by David Goggins.
Stephanie:
Oh, okay. I like that. I actually have not heard of that. I don't think.
James:
The quick hitter on it, it's about overcoming adversity and pushing yourself. I think that's so important in business is understanding that you can overcome adversity and always setting your bar higher and higher. Again, it's not technically a business book, but I think there's ton of good business lessons you can learn from it.
Stephanie:
I like that. That sounds good. I'll have to check it out. If you were to have a podcast, what would it be about, and who is your first guest be?
James:
Oh my gosh. If I were to have a podcast, I would talk about ... Personally, my favorite thing outside of business and bicycles is traveling. I would do a travel blog and my first guess would be, Oh my gosh, I would pick Barack Obama.
Stephanie:
There you go. I'd listen to that. That sounds good. What is the nicest thing anyone's ever done for you?
James:
Oh my gosh. The nicest thing that anyone has ever done for me. The nice thing, oh, this is big.
Stephanie:
Heavy.
James:
My friend, Mario and Ken, in the early days when we started up our USC shop, these guys would come out every year and work for back to school, which is our craziest time of year for that shop. We sell like a thousand bikes in two weeks, and they would come out and stay at my place, crash on my floor and help us every year for the first four years. So, shout out to Mario and Ken.
Stephanie:
Oh, that is really nice. That's a good answer. What trend or tech do you not understand today that you wish you did?
James:
What trend or tech? Tik-Tok.
Stephanie:
There you go.
James:
I don't get it, but I feel like I need to get it.
Stephanie:
Okay. I've had some other people say that as well, so you're in good company. Others don't also do not understand it. All right. Then the last bigger one. What one thing will have the biggest impact on ecommerce in the next year? It can't be COVID because we've had too many people say that.
James:
I think the big thing impact on ecommerce, I think it's going to be shipping. I feel like shipping is going to change drastically over the next one to five years. You have like Amazon starting to do their drones. We're starting to see in LA these little robots that are delivering food. Then, on top of that, FedEx and UPS are just killing everyone with all their fees and their pricing. We've been in peak surge charges since July. I just feel like there's so much potential for disruption there, shipping.
Stephanie:
Yep. Oh, that's a good answer. Yeah, I agree. I see a lot of companies, a couple of them actually are in Canada who are trying to get one and two day shipping. I think a lot of more companies will be leaning into that once they figure out how to make that work, and they also see how reliant they are on the FedExs, the UPSs, and how much it disrupts businesses.
James:
Totally, totally. Please someone come out here, please help us [inaudible 00:43:54], it's so expensive to ship bikes.
Stephanie:
Well, maybe James, that can be your next business. You've done a lot in your day. You might as well just start a shipping company as well.
James:
There we go. There we go.
Stephanie:
All right, James. Well, thanks for coming on the show. Where can people find out more about you and Sole bicycles?
James:
Totally. You can check us out at solebicycles.com, or our Instagram, which we update daily, @solebicycles, and then my personal is @JimmyStans.
Stephanie:
All right. Thanks so much.
James:
Thank you guys so much. Appreciate it.
There are some big-ticket items that most people have and need, but absolutely hate shopping for. Mattresses fall into that category. In fact, studies have shown that people would rather go to the dentist than buy a new mattress. Helix Sleep is trying to take the pain out of that experience.
Adam Tishman is the co-founder and co-CEO of Helix Sleep, and on this episode of Up Next in Commerce, he explains why his DTC mattress company is different from the rest, and why those differences matter. He explains the reason it was critical to spend time researching, testing, and perfecting a product before bringing it to market and how that upfront effort created priceless brand equity. Adam also dives into personalization, but he takes it beyond the need to simply give customers a personalized experience, and explains why data-collection and a personalization strategy that includes personalized products can help you expand your business more successfully when you are ready.
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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Transcript:
Stephanie:
Hey everyone. This is Stephanie Postles. Co-founder at mission.org, and your host. Today, we're chatting with Adam Tishman, the co-founder and co-CEO at HelixSleep. Adam, welcome to the show.
Adam:
Hey Stephanie, thanks so much for having me.
Stephanie:
Yeah, I'm excited to have you. so I have never said co-CEO before, which I kind of want to start there. Tell me a bit about being a co-CEO at a company.
Adam:
Yeah, definitely. So we founded the business, myself and two other co-founders, out of business school. And over the sort of evolution of the company and where we've been over the past five years, we actually run it with myself and one of the other co-founders as sort of the two headed dragon as co-CEOs. And then our third founder is our CFO and COO. And it works really well because it allows us to sort of manage different areas of the business at the CEO level and also work really collaboratively together as well.
Stephanie:
Awesome. So you co-founded HelixSleep and that was back in 2015, right?
Adam:
Yeah. So it was founded by myself and, as I said, two other co-founders back in business school, back in 2015. The three of us had moved to a new city to go to school, went through the process of buying a mattress just for ourselves. And it was sort of uniquely terrible in many ways, whether it was really confusing pricing and really expensive pricing in the store, really just bad in-store buying experience. We actually found out later doing research that buying a mattress is actually rated as a worse experience than going to the dentist. And the last thing was, it was just really confusing. If you don't buy mattresses all the time, which no one really does, and it's something that you buy somewhat infrequently, people have a really hard time understanding how to buy it. And so for us, we sort of saw the problem, saw some of the solutions that others in our category were trying to fix this problem, and felt like we could sort of come in and solve it in a much better, more efficient way.
Stephanie:
Got it. So five years ago it feels like so long ago, what was the market like back then? I mean, who were some of the up and coming people and what kind of unique angle did you guys see in the market at that time?
Adam:
Yeah, definitely. So five years ago, I would say the direct to consumer, or just generally buying mattresses online, was pretty nascent. It was predominantly, people were going into stores. There was actually a while where people were buying beds on phones, but we sort of saw the market, which is very consolidated at the traditional brand retail level. So you have sort of Simmon's, Tempur Sealy, Sleep Number, Casper, which is the most well known and largest player of the D to C mattress brands head launched recently and had really done a good job at showing that this was a category that could generate interest online, somewhat of an atypical category with low, as I mentioned, low ecommerce penetration. What we saw as the issues that I mentioned earlier, we felt that Casper and a lot of the other brands that were starting to pop up were sort of maybe filling in one friction, but replacing it with a different friction.
Adam:
So all of us, including Helix, offer products directly to consumers at much better price points, helping out that value chain issue with traditional retailers. Everyone tries to provide a much better buying experience through a really good user experience on the website, 100 night trial, free shipping, et cetera. The issue where we really differentiate at Helix is around the product itself. So what Casper did and what pretty much every other planner space did was said, "It's really challenging to choose a mattress. So we're going to just get rid of choice altogether, and offer one type of mattress for every single person."
Adam:
And what we found doing a whole ton of research and talking to people, and it sort of makes sense that if you think about it implicitly, is that there really is a wide variety of needs and preferences as it relates to your mattress and to the way that you sleep, the same way that we all don't fit in the same clothing. We all don't have the same exercise routine that works best for us, the same diet. Sleep is quite personal.
Adam:
So one of our missions was effectively, could we help customers understand the right products for them through a sleep quiz that asks questions about things that you knew about yourself? So your body type, your height, your weight, do you tend to sleep on your back or your stomach? Do you get hot at night? Do you get cold? Do you have back pain? Do you like a bed a little bit firmer or softer? And then we take that information and effectively translate it into the best mattress for you. So the order of the layers in the mattress, the density of those layers, the types of materials, the density of those materials, are all really important for getting the best night's sleep and effectively that's what we're doing. So we like to think of it as sort of providing a technology enriched solution as a salesperson. So instead of going into the store and sort of hanging out with sales person, we do that online through our quiz.
Stephanie:
Very cool. And yeah, what I love about what I read about you guys was that you did a ton of research. I think I read that you went through 100 plus page PhD dissertations, and you partnered with researchers in Europe to make sure you really understood how to create this algorithm and this quiz. Tell me a bit about your thought process there, because I think that's so different than a lot of D to C companies right now who are just trying to get that quick launch, take advantage of the market, and are just going really quickly instead of taking a step back and doing the research and figuring out how to solve the problem.
Adam:
100%. I think for us, none of the three of us came from a traditional mattress background, right? And so we did what three nerdy guys would do, which is we started to do research. And we actually had this idea and stumbled across a PhD dissertation on sleep ergonomics, which is the study of the sort of spinal alignment of your back while you're sleeping. You hear a lot about spinal alignment and ergonomics and sort of office chairs, but this was really the first PhD dissertation on that, with bodies lying down. And we actually noticed that at the bottom of the PhD dissertation, the head author had left his email address. And so we emailed him.
Adam:
A couple of days later, we got on a Skype call with him. They were located in Europe and then about a week and a half later, we actually flew to Europe and met with them and effectively worked with them to translate their initial science into the crux of our initial algorithm, which over the last five years, we've sort of wholly taken ownership of, and refined quite a lot. And so it was sort of a funny story because it really was, we got on a plane and went to Belgium and had to figure out where we were going and all those types of things. But it was really important because we felt like we had a scientific base for the hypothesis that we were making.
Adam:
I think to your second part of the question, it's really interesting, this tension around, do I want to get to market as quickly as possible, or do we want to take a step back, feel really confident in the research, the development, the product testing? As you mentioned, we went through many, many versions of the mattress, many, many versions of the algorithm on how we matched people. And the approach that we took was that you really only get to come out to the world and present your product once, at least in physical products, that's sort of our belief as differentiated, perhaps, from a more technical product where you can have an MVP. We couldn't really sell a mattress that was only 50% as good as we wanted it to be one day, because we would get terrible product reviews, and we couldn't sort of build brand equity that way. And so we did a lot of work upfront to make sure that the product is where we wanted it to be.
Stephanie:
That's great. I mean, it seems like there's a lot of room to partner with researchers around a bunch of different topics, but what was that partnership like? I mean, when you went over to Belgium and you're essentially building out a model or an algorithm based on this person's research, were they like, "I want a piece of the pie, I want a little equity," or were they ready to give you all the information for free?
Adam:
Yeah, definitely. So we ended up working out a deal with them where effectively, they provided consulting services in exchange for equity in the business. Of course, that could have been consulting services for money. At the time, this was literally very, very early days. It was actually before we started working with them before we had raised our seed round. So there wasn't any money to pay them really. And so we went ahead with an equity relationship, which we felt made sense at the time. We still feel like it makes sense today. We don't really work with them at all and have not for a while, but it was really helpful to sort of supercharge our learning and understanding in terms of the development of the product and the algorithm.
Stephanie:
Very cool. I mean, have you had to iterate the model? Do you see people requesting different sleeping habits or behaviors? Have things changed for the past five years where you've actually had to change the model a couple times?
Adam:
Yeah, a lot actually. It's one of the biggest, from a consumer perspective, our differentiation is about providing personalization and a more custom mattress buying experience, but from a business bottle perspective, our ability to look at our algorithm or our model and effectively improve it is a really big lever to what makes us unique. And so if you think about what we're doing, is we're taking, as I said, information about yourself, matching it to a mattress. And so over the years, we've effectively, having sold hundreds of thousands of beds, we just have a lot more data. So we've been able to improve both the way that we match you, so person A with these attributes, are you getting matched to bed XYZ, and sort of edit, that as well as making physical product improvements to the beds themselves.
Adam:
So a lot of people talk about AB testing and talk about opportunities with using data to improve your product as it relates to your digital product, right? Your onsite conversion or your UX or something like that. We have taken that mentality to the physical product as well. And we've actually been able to reduce our return rate, improve customer satisfaction, improve average order value, all the main metrics associated with product and product satisfaction, by effectively looking at it in that light.
Stephanie:
Got it. And I also it was reading that the return rate, if you overemphasize how you have free returns and the 100 day, night guarantee and all that, if you overdo that, you'll be able to sell a lot more just because people have peace of mind. Even though I think I saw at least, I mean, it was a Casper stat, but it was only 10% of the people or less actually returned their mattress. Do you guys go about that same way of thinking of overemphasize things to make people feel like it's a risk free purchase?
Adam:
Yeah, I think there's two things there. I think that in our category, offering a fairly long return period, it's typically 100 nights, is kind of necessary, because you need to make someone feel confident in purchasing such a large, but really expensive item, right? Average order values in our category are really high. And so people want to feel really confident in the product that they're ordering. And that's why all of these brands are offering free returns, free shipping. In many cases, or in most cases, really generous policies around warranties, et cetera. It's just offering more opportunity to make someone feel comfortable with spending those dollars. So we definitely approach it that way.
Adam:
I wouldn't say that we necessarily overemphasize it. The reality is, most people need around two to four weeks to get used to a new mattress. And then after that, you don't really need another 70 days, but people tend to like that process. And in terms of return rates, you're right that return rates, they're honestly, I mean, Casper's return rate is probably higher than that number you said, but they're not as bad as retail, traditional apparel or something where return rates are 40, 50% or something like that.
Stephanie:
Yep. What happens when a mattress is returned? Where does it go?
Adam:
Yeah, that's a good question. So we do a few things. So when customers want to return a product, first, we work with them to see why, because there are ways we actually can improve the product experience after the fact. So we can send you a topper that adjusts the feel or other things along those lines, but in cases where mattresses need to be returned,, at Helix, at least we actually donate the vast majority of them. So we have a network of donation partners across the country where we will donate them. In some cases, we cannot donate them, either because there's state laws against it, or city laws against it, or if someone's located in a somewhat remote area. And in which case, we work with junk removal partners that end up recycling them. So all of our beds are technically, in the 100 night period, considered lightly used. So they're eligible for donation.
Stephanie:
That's great. So I was reading there's about over 100 companies now that sell mattresses online. How do you show how different your mattresses are and the algorithm that you have going on? How do you showcase that value proposition on your website or your advertising?
Adam:
Yeah, definitely. So it's a good question. And it's funny. That quote comes up a lot, the 100 plus mattress companies. It's one of those weird categories where there is a very long tail of players. So you probably have 10 to 15 players that have reached any semblance of scale, and then 80 that are very, very small. I mean, you would almost consider them, the equivalent would be like a mom and pop shop in retail world. What I will say is that buying a mattress is a long lead process. So when you decide you want to buy a bed, you're typically in market for it for a week, a few weeks, months even.
Adam:
And what that means is that you have many touch points with multiple brands, right? And you can imagine it's like buying a car, it's like buying anything that's expensive. And so across that journey, we feel like we do a really good job of sort of elevating our brand proposition and really personalizing our messaging specifically to consumers in ways that really speak to them so that our differentiation shines. The other thing is that, because of the way that we customize beds, and also that we really spend a lot of time on making sure that the product quality is excellent, is we just win a lot of awards. So we were named GQ's best mattress, Wired best mattress, whole host of others. And then we also get awards for specific affinity groups. So best mattress for back sleepers, best mattress for plus size consumers, or something like that. And we're able to elevate those messages on individual mattresses.
Stephanie:
Got it. Yeah. I saw, I think it was your organic line that won an award. How did you guys think about developing a new product that was organic materials? And also, launching like that, does it make your other products maybe not look as good? Or how did you guys think about that? Will it help or hurt us putting out an organic line? Because when I looked at it and I look at any organic products, it always makes you think, "Oh, well, what's in the other one if this one's made of natural materials and no chemicals?" So how did you guys think about that balance?
Adam:
Yeah, that's a great question. So we actually thought about that question a lot, and where we ended up and it's almost the core strategy of Helix is that throughout the first three and a half years of our business, we were holistically a single D to C brand Helix, right? Started out as just mattresses and then extended into other sleep products, pillows, sheets, box springs, adjustable bases, et cetera. And then about a year and a half ago, we took a step back, saw what we were building, which was this really fast, growing profitable brand, and in a category that we were sort of one of the leaders in, but what we saw under the hood was this really excellent collection of skillsets across our team, across our technology, some in-house built technology, across our supply chain capabilities and relationships. Could we view ourselves less as a single brand and more as a platform on which we could build a portfolio of home good brands?
Adam:
And that is the strategy that we are currently on. And so Helix is our sort of most well-known largest brand, but Birch, which is our organic line, or our organic brand, was launched about a year ago. And it is actually a sort of related, but completely separate brand. So if you were to go to birchliving.com, you would effectively see an entirely organic ecosystem with the goal of really feeling, I mean, truthfully feeling authentic to consumers that care about organic products, that supply chain is 100% sustainable. It's just a much different consumer. And so we want to make sure we talk to that niche consumer in a specific way that is perhaps different than a typical Helix consumer. And we've extended that process out more recently with the launch of All Form, which is our actually our first step out of the bedroom into the living room, which is a modular furniture brand.
Stephanie:
I love that. I mean, that seems so smart because it's different consumers are looking for different things and like you were just mentioning, if you're comparing the two, then you might actually walk away feeling bad if you went with the one that wasn't organic, but when you have it on a completely different site, you're really meeting the needs of the person who's coming there instead of trying to put everything on one site. So I love that.
Adam:
Yeah. I think it's certainly a slightly different strategy, but we just feel like consumers, especially online consumers, want niche experiences and want experiences that really speak to who they are, and their preferences. And we were sort of already doing that on the product side with Helix, but it made sense to do it in this scenario on the brand side with Birch as well.
Stephanie:
Yep. How do you keep track of everything that's happening under the different brands and the different websites? I mean, how do you make sure any learnings that happen at Birch are maybe transferred over to Helix and over to the furniture line? How do you keep it cohesive when you essentially have now three or four different businesses running?
Adam:
Yeah. It's hard for sure. I think we're currently operating under a shared services model, so we don't have a team that just does Helix and a team that just does Birch or a team that just does All Form. We're just not there. The other two brands are just not at that scale yet, but so that makes this actually a little bit easier because you have the same people that work in a functional area,, working across all of the brands, but it's certainly challenging, for sure. And we've been able to take a lot of learnings from Helix specifically, which is an older brand. It just has a lot more data. It has more customers on a daily and monthly basis, and leverage those learnings across the other brands, which it's typically in that direction from a [inaudible 00:22:02].
Stephanie:
Yeah. I mean, there seems like there's a big opportunity to also re-target prior customers because you already know how to talk to them. You've already sold to them before, and then showing them your new furniture line or the pillows or bed frame, even if it's on a different website, you kind of already know how to communicate that to them in a way that has converted in the past.
Adam:
Yeah, absolutely. I mean, I think that's the core business case, right? And from a business perspective, we like that because it allows us to acquire a customer, build a lot of good will with that customer, and then sell them more products, right? Obviously, but from a consumer perspective, we also think it adds a lot of value to the customer journey because customers that are in market for things like mattresses tend to be in market for other home good products. Maybe you're moving, maybe you're renovating, maybe you got married, maybe you had a kid. Something is predicating your reason for being in market. And in many cases, if we can sort of create a lot of good will with you and then offer you more products, it's not just good for our business. It's also good for the customer because it makes shopping easier, right? it makes your purchase cycle and shopping and all of that a lot easier. And so that's what we're starting to do now. And where we're excited to move in the future.
Stephanie:
Okay, cool. So I also saw that you guys, I don't know if you still have showrooms, but you did have some showrooms in New York. And the process was that a customer would come in and they would take the quiz and then they would go to the showroom and maybe hang out for an hour, take a nap, try out the mattress. How has that model changed? And what's going on with maybe not having the ability to bring people into a showroom and try it out?
Adam:
Yeah, definitely. So we had a showroom in New York. It's obviously been closed for the last nine months. It was a really unique experience because it felt extremely personal, because it was really personal. It almost felt more like you were getting a piece of clothing tailored because you would show up, in many cases you would actually make an appointment in advance. We would have your information. We would actually build the bed for you on the spot. You'd be part of that process. And then you could hang out, test it, et cetera. And we tried to make the experience really, really great. It's unfortunate that we've had to close it. We have plans of moving into a more aggressive thoughts around potentially showrooms or retail units going forward.
Stephanie:
And so when thinking about your marketing toolkit, what are some of your favorite channels to get in front of new customers right now?
Adam:
Yeah, so I think that we approach marketing extremely holistically. We have a very, very diversified marketing approach. Part of the reason for that is we think it just mitigates risk. It's very scary when 80% of your marketing budget is in one single channel, especially if one of those channels is a technology marketplace, or if it's Google or Facebook, and all of a sudden the Google algorithm changes, or Facebook gets rid of a targeted audience and that's it. And that actually happened in the home goods category a few years ago on Facebook.
Stephanie:
What did they take away?
Adam:
Yeah, I think it was 2018. They took away, there was a way that Facebook could help identify new movers, and they took that away, and we weren't super hit by it, but I know a lot of home goods brands and a lot of mattress companies, it was overnight, 30% of your ads disappeared, that kind of thing. So we don't do that.
Stephanie:
That's interesting that we're even talking about new movers because I'm in the process of moving right now and thinking about, "Do I just want to buy a new mattress, so when we get there, it's already set up?" Because it's going to take maybe a week or so to get all my stuff there. That's very smart to target people like me.
Adam:
Yeah. And so we try to avoid that just being too aggregated in a single channel. And so we're really diversified. The other thing is we operate almost all of our channels in house. It's just really important to us to be internal and holistic about it. So yeah, I mean in terms of channels that we love, it's nothing crazy. We're obviously across all the digital channels, radio, podcast, direct mail, all of those. I think if there is magic, the magic for us is really around thinking through the customer funnel holistically and making sure we understand and attribute accordingly with a pretty diversified marketing stack.
Stephanie:
Cool. So when thinking about 2021, what kind of trends are you most excited about, or new behaviors that you've seen occurring that you guys are excited about?
Adam:
Yeah. I think there's a lot. I think obviously just in general, COVID has really accelerated ecommerce adoption in atypical categories. And so I think that's pretty exciting to see where that settles once, hopefully, the world gets back to normal. I think a few areas that we're particularly interested in is there's a lot of movement on payment options and better opportunities for people to pay, which is sort of exciting. Another one is really around blending products and services. So sort of offering services and attaching them to products and using those as ways to better convert customers, and the tools available to do that are pretty interesting.
Adam:
Yeah, and then just for us, it's really around continuing to personalize our web experience, provide better customer experience, and those types of things. So I think 2021 is going to be a really interesting year. I think it's actually going to be two distinct years in one, the first half and the second half will be just completely different for a lot of businesses. And I actually would encourage anyone that's thinking about either starting a business or budgeting for a business to think about the world that way, you might actually want to have budgets for a beginning of the year plan and a second half of the year plan, because it's just really hard to know where we'll be. I feel confident in knowing where we'll be for the next three to four months, but after that, it's going to be a completely new experience.
Stephanie:
Yeah. Yeah. I completely agree. So I want to dig a bit more into, you were just mentioning about merging products and services, and I haven't heard anyone talk about that yet. So I want to hear more, what are you thinking around that? What kind of tools are popping up that you have top of mind?
Adam:
Yeah, so I think for us, merging products and services, there's a few forms of it. One, which is at its most face value, it's just offering more services as if they were products. So that would be things like white glove delivery, things like old mattress removal, those types of services, which technically aren't really physical products, but they help convert customers into buying your physical products. Perhaps the more interesting areas as it relates to customer experience, and can you empower your customer experience team to provide service as opposed to just being an answer center? Right?
Adam:
So I think a lot of people view customer experience or customer service as an area where people go and ask questions, but can you be more proactive in providing service, whether that service be design consultation, be helping think through answering questions, or whatever it might be that really activate almost a little bit more a sales channel. I think that that's really interesting as well for us. And then I know a lot of other people are thinking about other types of services they can offer. Obviously, this is just what we're thinking about. But I think that you're going to see a lot more web experiences that are trying to provide a service-like experience to a consumer in addition to a product.
Stephanie:
Got it. Yeah. And it seems like once some of those services start happening, though, a lot of times, they can become commoditized where then the consumer just starts to expect it. I mean, I'm even thinking about contactless delivery and things like that, where it might cost some businesses extra money to be able to do that, or take a mattress away or whatever it may be. But I think eventually it will become standard, and that businesses need to start planning for, what are the consumers looking for now? And what will eventually have to be absorbed into the margin because it's commoditized?
Adam:
Absolutely. Yeah. I mean, I think that if what you're adding is something that can be easily commoditized, it certainly will be. If what you're adding is differentiated, unique, and valuable, then you should be able to charge for that value, right? It's sort of that simple. And so I think the example I use, white glove delivery, that's not unique to us. We're not the only people that can do that obviously.
Adam:
And so offering that, perhaps, could be something that becomes table stakes, or something that consumers come to have a level of expectation, but offering really niche opportunities to engage with someone on our CX team to help you through the buying process, that's not a commodity, right? That's something that you can really get to an amazing place through training and through branding and through just the entirety of your ecosystem, in my opinion. And so I definitely agree that some of these things could be monetized, but if you're doing them right, you should be able to, either, it should show up in your financials somewhere, whether it's you can charge more, your conversion rate is better, et cetera.
Stephanie:
All right. Let's move over to the lightning round, brought to you by Salesforce Commerce Cloud. This is where I'm going to ask a question and you have a minute or less to answer. Are you ready, Adam?
Adam:
I hope so.
Stephanie:
All right. First up, if you had a podcast, what would it be about and who would your first guest be?
Adam:
If I had a podcast, I mean, this is a boring answer right now. It would be on effectively what I was just talking about, which is the future of D to C. And my first guest would probably be Jeff Raider from Harry's.
Stephanie:
Oh, that's a good one. Awesome. What's up next on your Netflix queue?
Adam:
I'm about to finish the last episode of Queen's Gambit and I love it. It's really cool. I like it a lot.
Stephanie:
So good. I like that too, it's awesome. What topic or trend do you not understand today that you wish you did?
Adam:
I dabbled in high-level cryptocurrency a year and a half ago and I just don't understand it at all. So I wish I knew it better because I think there's opportunity there, but I'm not sure I'm the guy that's going to find it.
Stephanie:
What's the nicest thing someone's ever done for you?
Adam:
Wow. The nicest thing someone's ever done for me?
Stephanie:
I get that response a lot. "Whoa, deep."
Adam:
Yeah, I mean that's deep. I don't know. I mean, my wife married me. That was pretty nice. I'm pretty happy about that.
Stephanie:
What a nice lady.
Adam:
I know, right? What a nice... I guess that the nicest thing... I'll just bring it back to Helix. I don't know if that's a boring answer or not, but we had some pretty awesome early advisers that really didn't need to give the time that they gave, and it was just immensely valuable. So I'll go with that.
Stephanie:
That's a good one. All right. And then the last one, what one thing will have the biggest impact on ecommerce in the next year?
Adam:
Well, the real answer is COVID and the vaccine, that is the answer. And I think that anyone that tells you it's not macroeconomic facts is lying. From an internal standpoint, I'll go back to something I said earlier. I think that the movement in payment processing is a pretty big deal and not a lot of people are thinking about it, and I think that's going to be a big deal.
Stephanie:
Yep. Cool. All right, Adam. Well, thanks so much for coming on the show. Where can people find out more about you and Helix?
Adam:
Yeah, definitely. So come check us out. It's HelixSleep.com for Helix. For Birch, it's BirchLiving.com. And for All Form, the modular sofa brand, it's AllForm.com. Yeah. And that's sort of the best place to check us out and learn more.
Stephanie:
Awesome. All right. Well, thanks so much and have a great night.
Adam:
All right. Thank you so much.
Businesses are always looking for the most effective strategies and tactics to create the best customer experience possible, and in the world of ecommerce, that’s getting harder every day. We wanted to dig into some of the trendiest ways ecommerce brands are weaving their way through this maze, so we invited our good friend Jon Feldman on this episode of Up Next in Commerce to show us the way.
As a senior manager of product marketing at Salesforce, and someone who talks to commerce business owners and operators on a daily basis, Jon knows a thing or two about what’s on their minds, the challenges they face, and the questions they are dying to get answers to. He’s also seen first-hand what kinds of major and minor changes ecommerce companies are making that have had the biggest impact. So how are small website tweaks having a ripple effect on call centers? What will happen to the customer journey as commerce moves to the edge? And what kinds of technology and platforms will brands need to lean on to win across a new ecommerce landscape? Find out all of that and more right here.
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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Transcript:
Stephanie Postles:
Welcome back to Up Next in Commerce, this is your host, Stephanie Postles, co-Founder at Mission.org. Joining us today is Jon Feldman, a senior manager at Salesforce who works on Commerce Cloud. Jon, welcome
Jon:
Stephanie, great to be here. Thanks for having me.
Stephanie Postles:
I'm excited to have you. I think before we start, because we haven't had many Salesforce people in the show, I was hoping you go through your background, what led you to Salesforce, and what you do today.
Jon:
Yeah, absolutely. I started doing internet commerce at ATG back before Oracle bought it in like 1997 in their professional services group. I was at ATG for eight years and I did implementations around the world, honestly. I was in New York for a while, West Coast and East Coast, and that was super awesome. I met a ton of people and learned a lot about how people use commerce systems. After that, I went and did a four-year stint at a consulting company, doing the same thing. I guess, it's not as exciting. And then I went to Restoration Hardware for four years. I was the senior director of IT/ecommerce, which was really rad, until I got laid off, which was a super bummer.
Jon:
And as I was trying to figure out what I was going to do with my career after being laid off. I was like, "I really don't feel like there are a lot of jobs that are senior directors of IT/ecommerce in a lot of places." And so I thought I'd try marketing and I switched over to product marketing. And I've really been enjoying it ever since. I've been at Salesforce for about two years now and talking all about the commerce product. It's a lot of fun, honestly.
Stephanie Postles:
That's great. What does the best day in the office look like to you?
Jon:
Best in the office. It's interesting because we're at a big evolution point for Salesforce marketing, I think, particularly for Commerce Cloud. The company was built around physical events. For Commerce Cloud, we had three big stations every year, we have the National Retail Federation, which is coming up in January, we have Connections in the middle of the year, and we have Dreamforce at the end of the year. And those are our big opportunities to talk to clients. And of course, with the pandemic and travel stopping, those have all gone away, which if you are a company that sells software, that's problematic because you need to be talking to customers to generate leads and keep the machine rolling.
Jon:
And so, because of that, we've been trying a lot of stuff with video, and my job is really around how we talk to customers through video and how we continue to generate a conversation in an audience with potential customers and existing customers when we can't see them in person. And so for me really fun days are days when we're working on new video stuff. I think that at a high level, a lot of the video that's created is repurposed webinar, and it is just like, here's just a bunch of stuff.
Jon:
And for me, the fun stuff is how we can modernize the format and talk to customers in a way that they're like, "Wow, this is actually interesting and engaging," and not like, 45 more minutes on payments. Anyways. So that's what a good day is.
Stephanie Postles:
Awesome. So on the topic of video, a lot of different companies right now are talking about that as well, about what they're leaning into in 2021, they see a lot of opportunities there, not only with YouTube, but also TikToK. What are you guys seeing in that area?
Jon:
Taking a step back, I think that modern video is YouTube. YouTube is the number two search engine on the internet. And so there's a format to YouTube, which is 10 to 15 minutes long, really clear call to action, and then there are like a million genres underneath that. And I think that as we think about it, it's, how do we get into a format that is more fun and interesting and engaging, and that has a clear call to action? Yeah, I think for us, it's really about, how do we modernize the format? How do we engage on video in a way that isn't just a 45-minute program on a topic.
Stephanie Postles:
When you're talking to customers every day, what are some of the trends and themes you're hearing from them right now and maybe how they're thinking about next year?
Jon:
Yeah. In my role, making all these videos, we talk to customers all the time because Salesforce doesn't want to make a video unless there's a customer interview, which I think is really smart because at the end of the day, customer's the one who have the interesting stories. Obviously, a lot of a lot of what we talk about, it's the impact of code and retail sales closing, or things being pushed to digital because if you look at the numbers on their own, they're pretty remarkable. I have access to Salesforce numbers, and its biggest Cyber Week doubled. Some of our biggest customers are seeing 500% of what they did.
Jon:
And that's interesting, but I think that it hides some of the really interesting storylines. I think it's easy to talk about the numbers, but one of those common things we hear from our customers is that COVID has pushed a lot of people online, it's increased the volume of their business, the velocity is much higher, and that in turn has exposed a lot of problems that they've had in their supply chain. And that little things that weren't a big problem had become really problematic as the scale goes up. And that's manifesting in everything from more attention, to deflecting calls from call centers, because we talked to Hibbett Sports and they were getting a ton of questions about the order cancellations.
Jon:
They implemented online order cancellations and it had this huge impact on their call center. Even though obviously you're losing revenue when someone's able to cancel the order, the impact of taking that pressure off the call center was worth it. And that also manifested on the front end where we find that-
Stephanie Postles:
Oh, interesting.
Jon:
The thing which I think is really interesting about those call center things is how there's always just little things that make enormous changes in the volume. I remember Restoration Hardware, one of the big efforts we had was to just put dimensions to the objects on every product display page, because at the time, the biggest three reason for returns at Resto was that stuff wouldn't fit through the door. And we weren't telling anybody how big it was, so you'd show up with this giant couch that was designed for like a palace in France and it wasn't going through a US standard door. Yeah, really interesting stuff along those sides.
Stephanie Postles:
Yep. We had someone previously on who talked about spotting bottlenecks, and it reminds me of that. Maybe people aren't looking at their customer service department or figuring out... There's so many things to look at right now. So many companies are saying their models were breaking and they had to rebuild things from scratch. And I think taking a step back and figuring out what are the biggest bottlenecks, like you guys were doing with your one customer, how they were able to look at their call center, is a great first step. That's interesting adding order cancellations online.
Jon:
To your point, what I think I've seeing through a lot of this is that companies are taking a broader view of what the whole customer experience is and looking for ways to work around some of these bottlenecks. Intuitively, as somebody who's done a lot of these implementations, I think that oftentimes those bottlenecks are in places where systems touch or there are like decision points and financial trees. You don't have to turn the whole thing off, but make changes that make it easier and faster for customer to go through it. It just takes stress out of the whole organization.
Stephanie Postles:
So what other trends are you hearing from your customers right now? And do you think these things are here to stay, or do you think the world's going to pivot back to where it was before and some of these are going to be short-term fixes that maybe aren't needed in a longterm?
Jon:
It's a really interesting question. I was talking to another customer, they were bringing up this really interesting point that, 2021 comps are going to be a really tricky thing to work with because the market was so crazy this year and next year, you're going to have to figure it out. You're going to have to say, "Hey, was the push online to COVID forever or short?" To your point. The other thing about what I think the future is going to hold and where commerce is is that, originally, a lot of commerce happened at a retail building, And that made a lot of sense, you own the customer that were in your store, no distractions, ready to go. And then a lot of stuff moved online and customers gravitated towards your website, where you could still have a very curated experience and it could still be on your terms, make everything happen.
Jon:
I think that as I look forward, we're going to see more shopping on the edge, which is where products are going to be more deeply integrated at the content sites or in marketplaces, or you're going to be finding places to shop which are not the traditional website. And I think to the question, I think that then becomes a really big customer loyalty question of like, if I'm on a content site and I see an ad for Home Depot, do I trust that it's really Home Depot? Do I believe Home Depot is going to fulfill? It brings that whole question of, what is my relationship?" And image of that vendor up And, "Am I going to transact with them outside?"
Jon:
But internally, we think that something like 15% of commerce next year is going to happen at the edge. So I'm really excited to see how that goes.
Stephanie Postles:
That's interesting. So how can a brand prepare for that? Like you said, a lot of these brands right now are thinking about community building and how to build up that loyalty. There's so many new DTC companies popping up, so there's a lot of competitions. They're all trying to figure out how to really get ahead. So how can they prepare for that if you're saying now it might start turning into shopping in other places to where you're not going to see the brand front and center anymore?
Jon:
Totally. And it's interesting because I think a lot of people approach that as a technology problem, like, "We're going to buy a bunch of software and it's all going to be magic." My personal belief is that technology is an enabler, but it doesn't actually solve any problems on its own. And so the specific things that I would, if I was to presume to tell someone what to do with their business, it would be that, "I think you really need to focus on what your customer is and how you can build loyalty and build a customer experience that is so great that they would prefer it." I think that if you look at Amazon, arguably the shopping experience is a disaster, but the fulfillment is so strong that you have trust that if you're able to find whatever it is in that haystack, that it's going to come to you and it's going to look largely like the picture has.
Jon:
I think that if I was thinking about going to DTC and I was thinking about how to do that, it's about really knowing who my customer was, what they liked, and where to meet them. Because I think the relevancy of where your product shows up and how that customer journey ties into your system relationship with that company are going to be the most important things. Because ultimately, we've lost control of the presentation, it's owning the customer and just being wherever they are, because then that's the consistent thing, is you are where they are. Not that you're always on your website.
Stephanie Postles:
That's interesting. When you're thinking about shopping on the edge, is that referring to Amazon or is Amazon excluded and it's more talking about newer marketplaces that are popping up, like the Fairs of the world or Italic or places like that where maybe they're sourcing products, or is it all of it?
Jon:
I would argue that Amazon to some degree is the edge, their marketplace is this... anyone can put stuff in there, so your brand has to compete there against the knockoffs and events, that similar stuff. So I think the edge is marketplaces and a host of other non-traditional stuff. The single sourcing stuff, I'm not as sure about, white labeling stuff I think is slightly different. When we talk about it, we really mean that, hey, your products are just going to be in places that you'd never expected. And I think honestly, we think a lot about content alongside content when we talk about it.
Stephanie Postles:
Yeah. You were just mentioning Amazon and knockoff products, and one interesting thing, which I didn't know, maybe it's because I don't have an ecommerce company at the moment, is that you have to win that Buy Box. Did you know this where you have all these competitors and you actually have to win out the Buy Box and be able to like brand gate your brand to make sure that no one else can show up under there? There's so many things like that I think a new commerce owner would not really know until they start figuring out that people are now showing up under their listing and there's fraudulent people there. It sounds like a lot of times, you find out or see things going wrong until you learn how things actually work.
Jon:
Yeah, totally. I didn't know that, but it doesn't surprise me. Retail has always been monetized. Like if you want a good placement at the grocery store, you're certainly paying for it. None of that stuff happens by accident. No, it doesn't surprise me. I think that it all comes back to the brand management. It speaks to how much of a pain in the butt it is to curate a brand, even if at the edge you still have to be controlling it, you have to be really mindful of what's showing up on your PDP on Amazon and who they're showing next to you. Yeah, it's really tough. I think at the end of the day, the control you have is the loyalty, because that transcends the market that you're in.
Jon:
Because if you're buying like an LED light on Amazon to like do podcasting, you've got 62 million choices, 90%, they're all like the same product with different brand names on it. There's no way to stand out in that marketplace. Even if you have won Buy Box, I think it's loyalty.
Stephanie Postles:
Yep. Are there tools right now... If this is going to be the way of the future, buying on the edge, are there any tools that curate where you can sell things, how things are going, all in one place for a business owner, so if it does start moving to that model and maybe their product is now selling in like 50 different areas... I'm just imagining the chaos of trying to keep track of pricing and orders and even knowing where you're showing up and what's happening there. Do you know of tools for that?
Jon:
Yeah, it's interesting. Certainly, at Salesforce, we have some ideas and tools. We have some aggregation tools that make it really easy to plug your existing Salesforce Commerce Cloud catalog into other places. But I think ultimately, when you think about a commerce solution for a company, it's really a platform. Because what you're describing, it can turn very chaotic. I'm selling on 50 stores and I have 50 skews and they're all going to different order management systems, and that all gets crazy. Personally, I think the architecture to do this is to have all of those places centralized into a central order processing, central order capture, central service thing, so that no matter where it is, even if...
Jon:
I think people go into this thinking that, "My customer is only going to shop from me on one channel," but they may be buying something on eBay and they may be buying something on that content blog. How do you link those two things together? So the architecture I think is always the central order capture and service thing and that you have either APIs or integrations that allow you to then push that content in a way that makes sense onto the places and appears at the edge. But I think that all the capturing transactional stuff, if at all possible, runs through your engine. I mean, obviously the marketplace is going to want to own it, but it's not all marketplaces.
Stephanie Postles:
Yep. We've just finished pulling together a top trends of 2021, and we're talking about platforms, so it's relevant. We've talked to a lot of companies where they've mentioned that they outgrew their platforms. And so one point that we were making in the article was that a lot of companies right now are seeing the ability to scale a lot quicker than maybe prior to 2020, just because so many people were pushed online, new demographics are online. You can grow a lot quicker, at least this year, than maybe prior years. I'm sure you guys see this as well, new customers potentially coming your way.
Stephanie Postles:
How do you know they're ready for Commerce Cloud? What kind of problems are they encountering with their current platforms where you're like, "Oh yeah, you've outgrown it," because I think I've heard this at least 10 times from guests who've come on the show, like, "Well, things just started going wrong and we knew it," but they didn't always have details. It was just like everything was going wrong. So I wanted to hear some from you guys, what are you hearing?
Jon:
Well, let me take off my Commerce Cloud hat, because I think it's an interesting question because I actually think that that's a platform agnostic problem. I'd love to say, "Oh, you solve those problems on Commerce Cloud." I implemented ATG for 15 years, and my belief is that enterprise software is elastic, can do anything. And then it's implemented and then it's like in cement and it's very inflexible for a lot of it. And I think that companies outgrow these when either their original implementations didn't model their business processes completely or didn't anticipate the change that they would have to use.
Jon:
And I think that what happens is that if you're a business person within an organization and you need to like launch Wishlists and you're an IT person who hears this and you're like, "Wishlist, that can take me a full year to do." I think those agenda, those feelings that, "Wow, this platform is fundamentally broken." So don't blame this author, it doesn't really matter. I think it means that you need a new implementation and a new truing of your business processes with your IT processes so that what you're putting onto the internet is once again in sync with what you're doing and what your dreams are.
Jon:
That's what I think when people say they're outgrowing, there's so much friction getting just their basic business processes done that they feel that they need to just throw it out and start over it. And I empathize with that, I think that there are truly some systems regardless of the software where just it's better to start over.
Stephanie Postles:
Yep, that makes sense. Another thing that we talked about in the report was about these demographic changes that are coming and how many more people are online. How are you thinking about that right now with meeting those people? Some of them are brand new with ordering online, they're now getting used to it and they're probably pretty sticky going forward, but how are you guys thinking about these new users online?
Jon:
Yeah, it is a really interesting question. For me, an interesting analogy is fitness. In a previous life, I was also a fitness instructor that had small boutique fitness. And you can arguably do everything you can in a group setting at home. There's really no magic, there's no secret thing except someone's yelling at you and telling you what to do. And you've had all those fitness places closed and now everything's at home and you have this huge proliferation of home fitness stuff, Peloton, Mirror, Apple's coming out with a product, and all that's really rad. But the question is, and I think it's exactly the same with the fitness as it is with ecommerce, how sticky is that really?
Jon:
When the fitness studios open up again, are people going to rush back to them? Is there something inherent about that in-person experience that people are going to go back to no matter what? As I think about that, my conclusion across retail and fitness is the same, which is that some people really miss that in-person component, regardless and are going to do it, and are going to go back. But I think that even with that chunk of people going back, it's not going to be, at least initially, be the same level that it was before, because the internet is the new technology. It's something that in the last 20 years is new, and I think is going to have a longterm impact now that everybody's been forced into it for a broad array of daily services that it's going to be stickier.
Jon:
So I don't think it's going to be quite as crazy. I think the 2021 comps are going to be lower online, but I think it'll still be higher than 2019.
Stephanie Postles:
Yeah, I agree. We just had Stitch Fix on the show, and it was really interesting because they were talking about starting to at least test out or try out GPT-3 and how they're focused on figuring out ways to process the natural language, which is what the technology is for, because a lot of these new users are coming on and they're typing very formally, they want a formal answer. They want to make sure they get a response in the way that they would expect it. And so Stephanie from Stitch Fix was just talking about how she thinks about personalizing the messages and reacting to the user depending on how they're typing in their question, how they're asking for things, to make sure they meet the user where they're at.
Stephanie Postles:
Which I thought was a really interesting take on personalization and a use of GPT-3, which I hadn't really heard of, at least in the world of ecommerce.
Jon:
It is. It's really interesting. And I would suspect that that's different from vendor to vendor that some people... Stitch Fix will probably see some of that more formal stuff as more professional people are trying to put together AI-inspired wardrobes. And other places, I could see... I'm stumbling around trying to say it's interesting, because all of those are technologies that ultimately will replace the interaction that you would have with a human. I worked at Restoration Hardware for a long time, and so this idea of human curation being something that you can't replace with AI, that there's something inherently wonderful and irreplaceable about that, the person who like knows the product line back and forth and is able to work with you to help you identify it.
Jon:
I didn't buy the full Resto thing where it's like... There's no way to do it all in technology, because I don't believe that everybody wants that kind of transaction every time, but in these situations, it's really interesting to see how people are trying to make up for that, that human curation, human taste's thing with AI on scale now. Oh, it's fixed, it's obviously doing great.
Stephanie Postles:
Yeah. To their credit, they always keep a human stylist to finalize things and make sure that they're still choosing things from a human perspective. So they do do that, but I have also seen it go very wrong when most recently I was calling a phone provider that I'm working with for my new internet in Austin, and they have it where they have the little robot pretend typing, it literally sounds like-
Jon:
Ugh, that's horrible.
Stephanie Postles:
I'm like, "What? Don't look try that." I know it's a machine, but when you try and add that extra emphasis to try and improve, I don't even know what they're doing, I'm like, that actually makes it worse, I'd rather you just tell me, "This is a robot. If you don't want to talk to a robot, let me know." Or something.
Jon:
Or you use your experienced people. What are you doing? We know it's a robot.
Stephanie Postles:
You ain't typing, you're not fooling me, and anyone that you do fool, I feel very, very sorry for.
Jon:
Yeah. It's interesting too because it's almost like we're going to address that real person thing by pretending, by trying to... Because I think no one's surprised when they deal with an AI thing, they're not disappointed, so why pretend that there's a person behind it?
Stephanie Postles:
Yeah. That was my biggest learning back in the day at Google was, if you're going to build these new pieces of tech and you're going to start having machines interact with people for, I don't know, restaurant bookings or whatever it may be, be up front with them because people are fine with it if you let them know, but no one is fine with it if they feel tricked. And I feel the same thing now with chat bots and anything that's happening on your website, people are fine if they know it's a bot, but don't try and pretend to be a person for then that person or the customer to revisit and be like, "Hey, I just talked to Sally last time and Sally's here again, and there's Sally again, Sally's just everywhere. Oh wait, I was tricked, it's not really a person."
Stephanie Postles:
That's when I think that you can do things well, or you might get away with it once, but you actually might anger a customer if you trick them.
Jon:
Yeah. Tricking customers never a good look, I don't think. My customer journey steps six is, trick them into thinking they're talking to a person.
Stephanie Postles:
Oh, that's a good quote, tricking the customers never a good strategy.
Jon:
No, it's not. I don't know, I would be very curious to know what the designer's life on that last stage of Stitch Fix is like. Is it that the AI has come up with banana stuff and you got to piece it back together. I think that'd be fascinating to see how much manual adjustment they have to do, because it's, I don't know, I think people are pretty good at feeling out when there isn't a real human behind it.
Stephanie Postles:
Oh yeah, yeah. I think so too. The other thing I wanted to talk about a bit was trends from abroad. So we've had quite a few guests on the show, some of which I think are actually customers that you guys sent us, and they've found different products, maybe in, I don't know, Japan or Thailand or something. And then they either created the product there and brought it back to the US, or they just brought the trend back here and figured out how to make it here. And I wanted to hear, how are you guys thinking about commerce abroad right now? Are you guys looking into that area? Do you even have customers who are overseas? And where do you see the world headed outside of just the US?
Jon:
Yeah, no doubt. There's two things in there, the first one is this idea that you would bring a foreign concept to another country and introduce it as your own product. And certainly, that happens all the time. And the other is, if you are a company working abroad or even in the United States and you want to address a global market to prevent just that happening, how would you do it? I think actually they're really intertwined because we do see a strong trend right now of companies serving a much more global market from their domestic website.
Jon:
20 years ago, you couldn't find a payment processor that would take international cards in the states, you were getting stuff shipped out of the country, there was this forward carriers. All those services to make it easier, though, very expensive to ship out of the United States really weren't there. But now, you can find a product anywhere and it can be sourced from anywhere. I remember that my son had a plushy stuffed animal and he was given us a gift and it came from Japan, and we were terrified that something would happen to it. And so we bought another one from Japan, which is... I think increasingly what we're seeing is that, because of global commerce and because of the increasingly connections to this both payments and fulfillment systems, it's much easier to be fulfilling anywhere in the world.
Jon:
I was talking to Sally Beauty yesterday and they were talking about how, when they launched in Canada and COVID hit, they just fulfilled from all their stores because they didn't have a local DC and they couldn't do the inter-country commerce. It's like really interesting stuff. But I think that thing goes back to that question, I think it's going to be harder for someone to be like, I've seen this amazing concept in the Philippines, so I'm going to bring it back to the states because no one's ever heard of this and do it because I think that it's so much easier for that company in the Philippines to find and sell into a market anywhere now.
Jon:
We've actually talked about it at Salesforce, is that this idea that you really need to be thinking, even if you're not directly selling to a global audience and what's going to happen when someone from Switzerland comes to your B2B side and wants to buy your ball-bearings, how are you going to make that happen? So, yeah, I think it's interconnected in just that way.
Stephanie Postles:
Yeah. That's a really smart take. So basically the opportunity that used to be there where people would go to a country that maybe not everyone in the US has been to and come back and be like, "Look at this amazing thing," I mean, that's what happened with Red Bull. They went overseas, found it, brought the recipe back here and then it became a hit. It's essentially that opportunity is now closing because we are able to shop abroad, there's a lot of great things happening with localization, and the payments automatically switching over to wherever you're entering in from, and fulfillment's becoming easier, so definitely the gap is closing now around that.
Jon:
Oh, absolutely. I nerd out on audio stuff, and I've got this bananas like Mic arm that I bought from Germany. And I got most of them from a local US distributor, but there were some weird parts because of my microphone I needed. And I just went to their site and it's shipped from Germany and they took my American Express and it came in two weeks. There wasn't some weird customs thing and it wasn't this big process, it was just like, oh yeah, here we go. Boom. And it shows up. I think market's everywhere.
Stephanie Postles:
Yeah. That's cool. I do think there's still a big opportunity though to find very overpriced items and just do a D2C method. We just had on Solé Bicycles, and they said that's exactly what they did. And now they're being sold in Urban Outfitters and they have a bunch of other big partners, but their bikes are, I think like $400 and you can customize them. And there's so many spots that I still see at least here in Palo Alto, I see people riding around with these bikes and there's these big, you've probably seen this Jon, big boxes on the front where their kids are all in the front of them.
Jon:
Oh, yeah.
Stephanie Postles:
Three to $4,000, and a lot of people are going to Europe to have to ship them from Europe and then it's even more expensive. And when I see that kind of stuff I'm like, "Oh, there should definitely be an option because this should not be a $4,000 bike to just have a bike with a big wooden box on the front of it."
Stephanie Postles:
When talking about potential opportunities or not, abroad, the one thing that we were focusing on a little bit was looking at the internet penetration. And so right now, a lot of, I mean, this is more of a VC who's looking into this, but she had a really good quote talking about places like Latin America that have a really high GDP per capita, similar to China, but then their internet penetration being only 4%. So how are you thinking about maybe approaching markets like that, where you have really high GDP for the amount of people that are there, they're ready to work, but then their internet penetration is so low, how are you guys thinking about that?
Jon:
It's interesting. And I would get to this, both internet penetration as well as last mile fulfillment. A while ago I did a project on one of the major retailers in South America out of Santiago Chile, and their big problem was actually getting the product to people and actually payments as well for those final mile pieces. Internet penetration is tricky, I don't know, frankly, I'm a little surprised to hear that because I feel with the proliferation of phones, I feel I'm so ubiquitous right now that everybody has some ability to transact on their phones. It could obviously just be my own sitting here in San Francisco bias.
Jon:
I don't know. The only people that have the capital to do that are going to be like Google and Facebook where you would see already moving into those. I don't know. I don't have an answer to that one.
Stephanie Postles:
I think that regulations are definitely something that's tricky in some of those areas, and I just think the payment thing, and I know inflation has been an issue where alternative currencies in some of these countries have been looked into, whether it's Bitcoin or whatever it may be. But I think there's a lot of opportunity there, but a lot of times they didn't get focused on like, can the people keep their money? Is inflation out of control? Can they actually spend it? And there are a lot of issues, but I also think there's a lot of opportunity once you can get past that barrier and figure out how do we get these people online and transacting like the rest of the world.
Jon:
Interesting. Is that a good thing?
Stephanie Postles:
Yeah. The 4% right now, I wouldn't say it's good because it's like... It's maybe good for their local economy because they're only spending very locally apparently, but they're not getting access to the rest of the world, which there's got to be some reason there, I just don't know enough about it and why not. But when I saw that quote, I'm like, yeah, that's a lot of people who could be coming online for the next like five years or so.
Jon:
It's like when a AOL put users on Usenet, I was like, "Man, everyone is AOL."
Stephanie Postles:
What is Usenet? I was on AOL, but I don't know what Usenet is.
Jon:
Back in the day, Usenet was like the original internet forum system, it's where like all.nerd.games and like rec.games.pinball, my favorite one in college, it was where the nerds hung out. And I remember it was this exclusive community of college students and internet nerds, and AOL was going to take all of their unwashed people and bring them onto the Usenet forums, and here we are, internet broken.
Stephanie Postles:
Okay. Now, I know, I learned something very awesome and new today about AOL, brings me back to my days of putting up my away message, BRB, going to eat a sandwich.
Jon:
Yeah. And it's funny because Salesforce just bought Slack, and so now all of us are thrust back into Slack and everyone's like, "How does any of this work?" It's really interesting to feel so old, "What do you do with status?"
Stephanie Postles:
We just had Slack's CTO on, IT Visionaries actually. And it was perfect timing because then I think it was two days later it was like, Salesforce acquired Slack and we're like, "Ha ha, we're right on it." We just had [crosstalk 00:36:50].
Jon:
Step ahead.
Stephanie Postles:
Timing news check.
Jon:
It'd be an interesting acquisition, I think it's going to be really good for the company.
Stephanie Postles:
Do you think you guys will be able to figure out the away messages and how to use it?
Jon:
Well, anything connected to the world's number one CRM is going to have outstanding away messages though.
Stephanie Postles:
That'll be fun. Fun to hear about. The one thing earlier that you mentioned, I think is also an interesting trend was about fulfilling from stores. So we've had a couple of brands come on where they were like, "Well, we didn't do this before, but with COVID and our warehouses maybe getting shut down, and then we had all this inventory sitting in stores, we actually started using them to fulfill the orders. And then we realized that, "Oh, it's more efficient to do that because if someone orders from California and our stores are in Oregon, it's better to ship from Oregon than to ship from our warehouse that was maybe in Virginia or something."
Stephanie Postles:
And so they started using a more localized method and fulfilling it based on where the person was ordering from, which apparently, a lot of them weren't doing before. So do you see this staying around even when retail starts to open up again? Do you see them continuing to use maybe retail to also fulfill orders or maybe reverting back to warehouses or PPLs?
Jon:
Well, I think that fulfilling from stores is for sure in the future, and I think that there are a couple of reasons. One is that warehouse space is just getting so expensive, particularly around in city areas. Amazon just spent $200 million for the old Greyhound lot here in South of San Francisco, it's crazy money. So if you already have a physical presence, I think in my experience, living here in San Francisco, Best Buy is doing unbelievable job of this where when COVID closed their stores, they turned them into distribution centers, and you can do all your buy online, pickup in store. When it reopened, they did the mix thing.
Jon:
I think that people will continue to use those mixed models. And I think that the benefits are actually on both sides, it helps the consumers get stuff faster and frankly allows a wider variety of stuff to be stocked because you can have more stuff in stores than you can in a single warehouse is my belief. But from the company standpoint, you can shift stuff more quickly and you also... My wife just got a job doing this, she works up at Sport Space, which is a small sports retailer here in the Bay Area, and she's doing ecommerce fulfillment from their store.
Jon:
And so they have like 15 stores and they use every one of them as a warehouse, and their volume over the holidays has gone way up, but they've coped with it because they have a zillion DCS. I think the trick to it although, is that really for it to work properly, you need integrated inventory. And that can be really tough depending on your backend systems. But if you can get that, then I think it's a total no-brainer
Stephanie Postles:
Oh, that's smart. We when we were talking to Wellesley, they were saying the same thing about they used to have these stores where, they're B2B, they are plumbing and HVAC and stuff, and so they would have these big stores that you would go and talk to the salesperson and place your order, and you could look around and all this. And she was saying in the future, they're thinking about moving to just, they don't even really need a store. They have this huge warehouse behind the scenes, like a shoppable warehouse and you just come to the curb and continue picking your stuff up.
Stephanie Postles:
They don't really need their store anymore, and that's the way they're thinking about the future could look for a lot of businesses, either shoppable warehouse or just order online, and if you need to come pick it up in person there's a very mini, mini store out front of the warehouse that you can transact there if needed.
Jon:
Absolutely. I think that, certainly, I'm biased here in California and I see what it sees in San Francisco, but certainly the downtown area, the metropolis of San Francisco is still completely shut down, very few people are going to work. And all of that real estate is shut down both in terms of offices and the commercial stuff on the ground that I don't think that there's any reason to think that all that's going to open up exactly the way it was before. I think there's going to be a lot of innovation in the physical retail space, particularly in places that are based on worker and office traffic and not like suburban weekday traffic.
Stephanie Postles:
Yeah. What kind of innovations do you see coming? Because I do think retail will be transforming. A lot of the retail stores, I think, we'll have to have that in-person experience component or event or something to bring the people into the store because they're so used to shopping online at this point, probably it's like, "Well, what reason do I have to actually go to a store and be in-person and talk to someone?" Or whatever it may be. What kind of changes do you see coming for physical retail?
Jon:
Yeah, absolutely. I think that just drawing up on what we've talked about already in this call, I think that you will see a deep emphasis on stores that really are just, or the staffing levels in stores that really are just warehouses. If you are a Costco, you just don't need that many people because the vacuum is the single vacuum and that's what you're going to buy. But for stores, I think that the physical retail transformative places where taste is the big thing, or there are multiple products that are equivalent and you want someone to help you curate, this is my Resto vocabulary.
Jon:
But ultimately, a human just going to actually help you walk out of the store with something that's a better fit for what you want. I think that that's the future because... Where was I? I was in line the other day, and I walked to the place because I just wanted to get this one thing and I'm waiting in line, it's like, there's no advantage to this, to, "I know what I want, I want to get out of here as fast as possible transaction." But in a transaction where I'm like, "Tell me which one of these is the right one?" That's where I think physical retail is going to shine.
Stephanie Postles:
Yeah. I agree. A couple of times I've been in line maybe at, I don't know, a T.J. Maxx, not recently obviously, or something, but I would just give up because I'm like, "This line's too long, I came here for a reason and now I'm in-patient. Goodbye." That's happened multiple times, I'm like, "Why can I not just walk in and walk out with this stuff and just hit my credit card with it or whatever it may be." I know Amazon was experimenting with that, but to me, that's going to be the way the future, because I don't want to wait in another dang line ever again. I'm spoiled.
Jon:
No, absolutely. And I think self-checkouts too. I did the Amazon Go store and I found the whole thing very weird because you're very aware that there's a camera in the shelf and everywhere, they're recording everything, but that was the best ever. But to your point, I think that people get used to a faster transaction that they're not. I totally get, you need full service, but no one has the time to sit and wait, or I guess some people do, but it gets frustrating and it's a bad customer experience.
Stephanie Postles:
Where do you see the world headed for ecommerce? I mean, big picture, any higher-level things that you guys are preparing for that we haven't covered yet? Or why you guys are working on the things you're working on right now?
Jon:
Yeah. I think probably we're working on stuff which will make having a really amazing customer journey easier. I think that you can say broad... I think there's an argument today that commerce tools on their own are commoditized. At the end of the day, you can build whatever you need with any of the major packages from just a pure commerce standpoint. And so I think the question becomes, what are the tools that are going to help you have a complete customer journey because you're going to be losing control of the specific place that you're going to meet your customer, so how do you continue to build journeys that are amazing anywhere? That's really where I think we're going right now.
Stephanie Postles:
What things are you focusing on then? When you say, making sure you have a good customer journey, I think a lot of people say that, but not everyone actually gets, what does it mean to have a good customer experience and journey. So what kind of things are you focused on right now to make sure that happens?
Jon:
Yeah, absolutely. I think it's a fair question. And I think a lot of people are like, headless ecommerce? But that's a technology. I think really what you're looking at are ways that you can 100% of the time know who you're talking to as a company and identify your customer. And specifically what that means to customer journeys is that means that when you start with a marketing campaign, that whatever that messaging and whatever you know about them is then reflected in the commerce campaign, is reflected in the order management, and then all the way through to the service.
Jon:
So a customer experience at that point is actually the experience of the totality of interacting with your brand, of discovering it, transacting with it, and then enjoying the product or whatever is after it. So that's what we mean by the customer journey, the full thing and how you can make that coherent and make sense and not like, "Oh man, well, you're in supports domain. Godspeed, I don't even know what those guys do."
Stephanie Postles:
Yep. I love that, especially knowing who your customer is. We had on Domm from Fast, and that was his biggest thing is even though they're known for that one-click checkout, he's like, "We're actually solving for identity so that you know who someone is and you're not constantly having to ask them to fill in the same details that they filled in 1,000 other times in different places." And once you can figure it out, the identity piece, the customer experience part will be easy to figure out because then you already know who you're talking to, what they're looking for, their payments stuff's all covered, and it becomes very frictionless.
Jon:
Absolutely. Totally. And I think that that's the future. When you want to reorder from someone, you want to do with one click, you don't want to be like, "You guys definitely know my phone number, but here it is again."
Stephanie Postles:
All right, Jon. Well, thank you so much for joining us today, where can people find out more about you and your awesome work?
Jon:
Oh, well Salesforce Commerce Cloud, everything I'm doing is up there. Unfortunately, it's all gated, but check it out. I'll make sure they don't badge you too hard if you do check it out.
Stephanie Postles:
Yep. Hit Jon up if they do, he's your guy.
Jon:
Totally.
Stephanie Postles:
All right. Thanks so much.
Jon:
Thank you. Have a great day.
After his first trip down the eCommerce road ended in failure, Jay B. Sauceda swore to never again travel down that path. But life has this funny way of coming full circle and turning your failures into successes. Today, Jay is the founder and CEO of Texas Humor, an eCommerce shop so successful that Jay decided to take the leap and also build Sauceda Industries, which helps manage not only Texas Humor logistics, but the logistics of many other D2C companies.
The journey from failure to repeated success was a winding one, and Jay takes us through it all on this episode of Up Next in Commerce. Along the way, he digs into what it takes to build a company from a base of loyal supporters and his advice to marketers, including how to be a trusted friend rather than a bother in a consumer’s life. Plus, he explains why customer expectations around fast shipping don’t always have to apply to the products you offer.
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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Transcript:
Stephanie:
Hey everyone, and welcome back to Up Next in Commerce. This is your host, Stephanie Postles, co-founder at mission.org. Today, we're chatting with Jay B Sauceda, the CEO of Sauceda Industries. Jay, welcome.
Jay:
Hey, how's it going?
Stephanie:
I'm really excited to have you on. As we mentioned before the show, I'll be moving to your neck of the woods here in a month or so.
Jay:
It's a very popular thing to do these days.
Stephanie:
It is.
Stephanie:
Yeah. I'm excited to get there. So today I want to talk about two things that feel very dispersed. We are talking about Texas Humor and logistics, but I think the best place to start would be your background so then I can guide the listeners through the story in the way that makes the most sense.
Jay:
Yeah. I grew up Southeast of Houston in a blue collar town called La Porte, Texas, which is where there's a lot of the chemical plants refineries that most people can picture with the whole oil production industry of Texas. But the really great thing about La Porte that I loved was, it fostered really any kind of career development and adult development that you might want. So if you wanted to go to high school and upper education or undergrad education wasn't your thing, you could still graduate and go make 70, $80,000 working in the chemical plants close by and really support your family and do a really great thing. If you were a creative kid like I was, the high school there was really fantastic about fostering creativity of young people and developing their careers dependent upon what direction they wanted to go.
Jay:
So it wasn't like one of these small towns that you see in a movie where everybody works at the coal mine and you got generations of people doing the same thing like that. That may be the case for some people, but there was a lot of latitude to figure out what you're going to do and have people who could help you chase some of those dreams. So for me, I was always a creative kid and was really into photography and those types of endeavors. So I was able to exercise and work out those muscles creatively speaking when I was a kid, and then ultimately ended up coming to University of Texas, where originally I thought that I was going to study political science and which I did. But ultimately went down the path of advertising and the creative field.
Jay:
I spent four years at UT and ultimately just realized that doing the law school and the political science thing wasn't really my GM and ended up in advertising and working for a small ad agency here in Austin, which was the beginning of my creative career and ultimately what led to me ending up in e-commerce some years later.
Stephanie:
Okay. Cool. When I was doing a bit of research, I saw that the creative agency or advertising agency was only six people. So you were able to hear about the business deals, learn about the business side of things as long as the creative piece as well?
Jay:
Yeah. It was a great little firm called The Butler Bros. The two principals there, Adam and Marty Butler, both had some really high level well-positioned roles at the big ad agency here in Austin called GSD&M. They had that front row seat to these really large deals that bigger agencies deal with. But eventually went and started their own firm, and yeah, in those first few years there were just a handful of them. So I was able to sit in the room and as this college intern had access to a lot of conversations and things that I don't think that most ad agency interns would typically have access to. As a result, I really think that it propelled my career forward in a way that, when I ended up starting a little design studio with some friends and building out the early years of my career, I felt more prepared to operate ahead of my years because of some of those experiences and the things that you just pick up when you happen to be in the room with the principals of two companies.
Stephanie:
Yep. So where did you jump to next after the advertising company?
Jay:
I had done that for a while and then went freelance after working for them. They gave me some really great advice on the tail end of my career there. I was curious whether they were going to hire me to work for them or not. At the time they were indicating that not likely, that I hadn't really had enough of a specialty up until that point to make it worthwhile for me to be somebody who was there full time. So really great as an intern, but not so much as a full flung employee. So for that reason, their advice was to go out and try to specialize in something which ultimately ended up being photography.
Jay:
So I went and started to focus on photography as a whole and developed a career as a commercial photographer and ultimately did that for about 10 years. But I guess the eventual destination in this story that's worthwhile to your listeners is that, during that period, I started a small ad agency, a little designed firm called Public School with a group of friends. We had this motif that was all based off of the 1960s era of graphic design specifically around school books and textbooks. And so when we started publishing to our blog and publishing about our work, people really gravitated towards the t-shirts and the various pieces of collateral that we had designed for that brand.
Jay:
So we were really excited because we thought, "Well, why don't we capitalize on this and start an online store?" Which we did, and almost immediately had a ton of sales for t-shirts and various items that we were selling, which was massively exciting. But as with most people who sell things online, it's really funny to see, or it's real fun to see that money and those sales come in. It's not a ton of fun to have to deal with getting all those orders out after the fact. And ultimately that's what we ran into. It was a lot of excitement around making the money, but not a lot of excitement around having to deal with shipments. So the work associated with having to get those packages out the door was so time-consuming and unfun that I, after a while shut [inaudible] and then swore off ever getting back in the e-commerce again. So suffice it to say it's a little bit funny to find myself sitting here about 11 or 12 years later, the CEO of a e-commerce logistics brand shipping the number of packages that we are every day.
Stephanie:
That's great. So tell me a bit about, what year was the store live and did you shift right into the logistics business or did that come a bit later?
Jay:
No. I launched our online store in 2013. The social media audience for Texas Humor, I'd developed over a few years before that. Then in 2013, got it off the ground and started trying to get into scale. Initially, we were just shipping the orders out of my home garage, but over time, basically we had decided to try to outsource the work because we had just gotten so sick of dealing with the scale and having a tough time getting out of our own way as business owners. I reached out to some 3PLs and one of the ones here in Austin just had a very snarky and negative approach to telling me that it wasn't really the right time, which ultimately led to us just getting a little bit of a chip on our shoulder about it and decided to just do it ourselves.
Stephanie:
Mm-hmm (affirmative). What kind of pushback were you getting when you were reaching out to these 3PLs other than them saying that you were too small for what they probably wanted to work with?
Jay:
Yeah. Really, that sums it up. It's mostly, "You're too small for this to be worthwhile." And look, I don't have a problem with that. I run an organization that has to say that to people as well. The difference though, is that culturally our approach is to say that it's not a no, it's the not right now. And what we'd rather do is try to be a resource for some of these companies to help them understand what would make them qualify to work with the 3PL and/or make it cost effective for both parties to be in a mutually beneficial relationship. A lot of, I think, small merchants just get in this mindset that their business is worthwhile and they're ready to just offload and go. And in my case, I recognized that we were too small at the time. What I was trying to point out to the guy was that, "We're not big enough to be worthwhile today, but let me sit down and show you the marketing plan and all the things that we're going to do that will make us worthwhile in the near future."
Jay:
And that was just not something he was really willing to listen to. So that was very much an approach that just rubbed me the wrong way and was something that has definitely informed how we coach brands as they come to us and we have to turn them away because of a number of reasons. Sometimes it's just, we're going to be more expensive than it is even worthwhile for you to be working with us. So until you hit a certain level, you can be spending more money than you are making just to facilitate paying us to do the work and that's not a good position to be in for anybody. So let's avoid that and try to find something that's going to be beneficial for everyone. And that might mean not today, but in the near future. So let me help you fast forward by giving you some tips and some other things that can help you get there quicker.
Stephanie:
Yep. That's great. Before we dive too deep into the logistics piece, I was hoping you could touch a bit on Texas Humor so people know how you created Texas Humor, what it turned into and what you were trying to sell to even start talking to a 3PL.
Jay:
Yeah. Over my career, I've done a lot of this kind of audience building with our brand at our old studio. And for me personally, as a photographer, audience building has been a big aspect of what I've always done. And Texas Humor was just this idea that was born out of a discussion with one of the partners in the design studio I was in, in which we were just talking through what different audiences could we build and where could we go with that? And so I started from nothing, started just tweeting about Texas as a whole and that's ultimately really like where we developed the idea. There was no specific e-commerce goal in mind. But once we realized that we had a few million followers and this captive audience that we could do something with, that was the point at which we decided, "Why don't we try to make this into a little bit more of a business?" And ultimately where we got the idea to start texashumor.com.
Jay:
But it wasn't this big strategic thing in which we said, "Hey, we're going to go start this and we're going to build a store and we're going to do X, Y, and Z." It was far more organic than that. But I took the background that I had in marketing and advertising and leveraged that to really scale up what we were doing. Probably much faster than most organizations would, who would be doing something like what we were doing at the time.
Stephanie:
Yep. So how did you develop that audience and get in front of people? I think I see now that you have over 2 million followers on your social channels, and so, how long did it take to get a big enough audience that then you were like, "Oh, maybe we should try and sell something to them as well." And what did that process look like?
Jay:
It was a couple of years before we actually did try to actually sell anything to anybody, because at the time we were just so averse to e-commerce and wanting to develop any inventory position or anything like that. So we didn't come out of the gates thinking like, "Oh yeah, we're going to totally go do this thing and have it be focused on e-com." That was very much later on down the road. The goal that we had initially was to just try to make some form of money. But it by no means was, "Let's try to focus on e-commerce." Originally, it was more so of a content advertising play and that's really what drove it in the early years.
Stephanie:
Yep. Yeah. I saw that you were generating like 40,000 in revenue by the third month of operation with the content piece of it, right?
Stephanie:
What are some tips around building up that audience? What are some tactics and strategies that maybe you even use to this day to build up an audience?
Jay:
I'm a big believer that, I don't remember who told me this. Maybe I made it up, I don't know, but I just see content and advertising as like a guest in people's homes. Most people do not want someone who's going to come over to their house for dinner and just spend the entire time talking about themselves. And so as brands or content generation organizations, if the only thing we're doing is going me, me, me, then of course, people are going to be turned off by it. That's the exact definition of bad advertising. So for us, and for how I thought about building Texas Humor initially, it was really trying to think and put myself in the shoes of the people who were our audience and try to say the things that they had on their mind already.
Jay:
So there's no science to that necessarily, and I think it's why yes, there are probably some, I don't know, formulas for "going viral", but a lot of the things that do ultimately go viral have this weird X factor that people have a hard time wrapping their head around. And in my mind, that X factor is that it comes from the heart and it resonates with people. So if you really wanted to know what is it that we do that's different than everybody else, we're not the only brand or the only feed that talks about taxes, but I do think that we're the only one that tries not to just purely patronize people. And I think that that's really what set us apart early on. We were trying to be unique, we're trying to provide quality and we weren't just doing social media for the sake of doing social media.
Jay:
The store almost felt like a secondary function of the audience that we had built and not the other way around, which is where I think a lot of brands start. They say, "Well, how do we sell to everybody?" And then they think about everything after the fact, and in my mind, that's really the wrong way to approach it.
Stephanie:
Yeah. Yeah. I love the idea of building a community first and just focus on making that great. I know we've had someone from Food52 on the show previously, and they had the same experience where they're like, "We're just here to build a good blog, good content, make sure our community likes what they're getting from us and can also engage with each other. And then it was just obvious to start selling products and giving them what they wanted based on the recipes we were showing and the maybe materials we were using and whatnot."
Jay:
Exactly. Really, the strongest brands are the ones that think about the commerce secondly. It depends upon what it is you're selling. Your brand may be the content, but in our case, it's not. The content is the brand versus the brand being the content, if that makes sense. Really, the difference is we took that tact.
Stephanie:
So let's talk a little bit about the logistics arm of Sauceda Industries. Tell me why did you, or how did you even decide, "We're going to go into fulfillment and logistics?"
Jay:
Mostly for the reason I described earlier. We were already doing it for ourselves and it ultimately just was a way to cover the costs that we had as an organization. Most fulfillment operations are cost centered, not really a revenue driver. So those types of things tend to be an area where you're losing money or you're killing your margin. So we saw it as an opportunity to make some money rather than just have people carrying it as dead weight.
Stephanie:
What kind of mistakes do you see brands making today when they start exploring the path of working with a 3PL?
Jay:
I think most brands just make the assumption that their time is less valuable than they think it is, or the leaders of the brands tend to think that. And so as a result, they don't farm out the things that they should be. Not having accounting firms from outside handle your books, not working with a logistics company to handle fulfillment. There's this idea that most entrepreneurs have that they can do things for cheaper and faster than most people. And that's probably the case, but in terms of opportunity costs, having a CEO of a online brand handle all of the orders simply to save a little bit of money or to not have an invoice to have to pay for that it's like, that's not really the right way to be thinking about it. So we just really try to coach people on opportunity costs and help them understand those types of things.
Stephanie:
Yep. Are there any bets right now that you're making in the world of logistics where it's headed? It seems like consumer preferences and demands are definitely increasing around everyone wants one to two day shipping, Amazon's made everyone expect that now. What kind of things are you guys leaning into or investing in right now to keep up with those trends?
Jay:
Everybody says that, and I actually don't believe that at all. I think that everybody thinks that that's the case because that's, in my opinion, what the major news outlets say are pundits on TV, but I've not found that to be the case. I think if people are buying a toilet paper, yeah, they need that in one to two days. But if they're buying something very specific from your brand, they'll get it when they get it. I actually think that there's more price sensitivity to shipping than most people think. As a result, people know what they're paying for and in the case of Amazon, like sure, if what you sell is available from 75 other people on Amazon, yeah, you better hope that it's prime enabled and it's cheap and all of the above. But if you've built a brand that sells something very specific that only you carry, then if you build the desire, then people, they'll get it when they get it.
Jay:
But it's not this type of thing where just because they can get toilet paper or Mrs. Meyers baths or a kitchen soap in two days means that they need their Texas Humor shirt in two days too. I'm a pretty adamant person when it comes to that case because I get that question a ton and I think a lot of people say that, but no one has actually really proven to me that that's true. Now, if you ask people their preference, they're all going to tell you two days. But I think that we don't deal, or we don't work in this vacuum in which every single store and shopping experience that happens online is compared equally. I think most customers who are shopping online are doing so with it in mind that like, whatever it is that they're buying is unique to that experience.
Jay:
And so, so long as the brand is setting their expectations up front about what the experience is going to be for the customer, I really just don't think it's as much of a challenge as most people think it will be to get the orders out the door whenever they're going to get them out the door.
Stephanie:
Yep. Yeah. I definitely can see that. It definitely depends on what the product is, like you're saying. If it's diapers, yeah, I need that like right now, in an hour. First, because I probably didn't think about it until last minute versus, I just ordered earrings from this one company, Marjorie, I don't know how to say their name, but I don't mind if it comes in a week. That's okay because they're the only ones selling this product that I want and I'm okay with waiting.
Jay:
Correct. Correct. Yeah.
Stephanie:
Yeah. I definitely think there's a lot of room for brands to be more transparent around the shipping though. And I would rather have someone under-promise and over-deliver than tell me something where it might actually get delayed where I'm betting on that.
Jay:
No, and I think that that's absolutely correct. I do believe that there are a lot of brands who do a pretty poor job of being clear about those things. So no, I'm 100% with you on that. But I do think that a lot of people will just make the assumption that everybody's going to care about it more than they actually do. Which is partially why I'm adamant about trying to dispel with that rumor.
Stephanie:
Yeah. Well, you're doing it here. Yeah. The one thing I was just reading about too, was about delays in shipping and how there's going to be a lot of shake ups in that area, especially if the COVID vaccine gets approved. I don't know if you've read about this a bit, but how, if it starts being something that's going to be shipped everywhere, which is what would happen if it's approved, it's going to delay all the postage everywhere. Have you read any bit about this or thought about things like that, that are a little bit less predictable than other things that would maybe delay shipping [crosstalk 00:27:42]?
Jay:
Yeah. I've actually spoken with some people on the inside of FedEx and a few other places. There are two major vaccines that are out right now. There's the one by Pfizer and then there's another one by the other organization, I'm trying to blank on. Both of which require cold storage for the transit. The Pfizer vaccine in particular requires cold chain storage that is very, very specific to medical purposes. And so you're not sticking this on a FedEx truck. This is going on a very, very specific type of vehicle. None of which carry any of your packages from my store to your house. The other-
Stephanie:
The won't be shared, you're saying? Even if there was a cold storage company like a computer company or food, they would never be shared on the same truck anyways, so that it's not like a-
Jay:
Correct.
Stephanie:
... same pie that you're pulling from them then is what you're saying?
Jay:
Correct.
Stephanie:
Okay.
Jay:
It is not a similar supply chain, cold chain storage is wildly different or cold chain transit is wildly different than the type of process that we have in place for your regular parcel. So, yes, I would believe that a massive amount of distribution taking place all of a sudden would certainly strange FedEx as a organization but the van delivering packages to you from Amazon or from myStore, or any of the stores that service us is not the van who is going to be carrying these products to the end locations. Even the other vaccine, although it doesn't require the same -20 Celsius or whatever temperature requirement that the Pfizer one does, it does still require refrigerated storage on its way to the end point.
Jay:
I think it's a lot of people circling the word logistics and saying everything under this is going to be affected, but within logistics, there's so many different styles of shipping or needs around shipping. And for that reason, not everything in a Venn diagram of like who services what, in large part, the cold chain network is not really one that is as easily affected or would affect the networks that you and I typically expect our packages to come through.
Stephanie:
Got it. Okay. Yeah, that's interesting. I didn't read too much into it, but I'm like, "That's a good black swan event to prepare for, for some brands then if they do do the cold chain shipping."
Jay:
If you're buying food subscriptions and things like that from your... Like Blue Apron or one of these, yeah, you're more likely to, but you know what, more of that is actually the result of limited supply of dry ice. And that's the result... I can get into all of that, but the dry ice shortage is a result of less driving, which means lower cost of oil, which means less drilling for oil, which means less petroleum byproducts, which means less carbon dioxide, which ultimately means less frozen carbon dioxide, which is dry ice. So yes, there aren't aspects of the industry that will be affected, but the underwear that you're ordering from Amazon should not be affected by a ramp up in cold chain transit volume overall.
Stephanie:
True, good. I was worried about that. I really need my underwear on time.
Jay:
Yeah. Exactly.
Stephanie:
All right. Cool. The one thing I was thinking about too, when it comes to logistics, if I'm a new brand, and I'm thinking about having a 3PL to work with, what are some things that I need to get in order before going that route? Because I can imagine some companies coming to you with it being chaos behind the scenes, and you're like, "I can't work with you until you at least have this, this and this in order for us to plug and play." How should a brand prepare before even reaching out to 3PLs?
Jay:
I think a lot of brands will never really give things like their skews and the tags that they used and all of that, like a second thought. They're cobbling together a plan, and then you're two or three years in, and you've got a store with three different naming conventions and all that. And clean data is really what makes the world run smoothly in the logistics world. And so if there's not a really strong focus on attention to that, you end up with a pretty significant issue trying to work with the 3PLs, because you have to go back and clean all that up. So most of my suggestion is, look, try to think through that and it's the spring cleaning exercise that I think a lot of brands have or should go through every year looking back and saying, "Are the ways that I structure my data and my reporting the way that will allow me to be really successful at scale?"
Jay:
And if the answer is no to any of that, then go back to the drawing board and try to make sure that you're adjusting for that because it certainly creates a lot of issues as you try to scale your business up.
Stephanie:
Yep. That's a good point. Yeah. We've had a couple people on the show talk about making sure that you plan for your data dictionary and have it cleaned up from the very start, if you can, so that you're not trying to fix everything after the fact.
Jay:
Correct.
Stephanie:
It sounds like you've definitely been on top of the market or trends or even news, just like we mentioned earlier about the vaccine and stuff. What kind of trends or patterns are you excited about right now over the next couple of years?
Jay:
I think just in general, there's more attentiveness to better and more targeted marketing that I think people are going to be excited to interact with. So from a just overall perspective, I get excited by the idea that I'm not going to get emails that are just boring and seem to be broadly targeted to everybody. So I think that as more small brands leverage tools like Klaviyo and Shoelace and things like that, I think that just overall marketing as a competitive sport becomes more fun. And as a consumer, it's a lot more fun to watch.
Stephanie:
Yup. So how are you guys leaning into the targeted marketing a bit more?
Jay:
I think it's exactly what I said. Just mostly trying to think about, we're not just selling to one person sitting on a couch repeated 3000 times over. We're selling to 3000 different people. So I think if most marketers think that their job is done simply because they came up with a campaign, that's a bummer. I think the more work that gets put in to try to wow people so their brand can connect with them directly, the better. And when it comes to email, the way that we do that is through segmentation and we try to look at all the various segments of behaviors that people who might interact with our brand would be members of, and then trying to evolve the creative that we're developing in a way that seems to speak to them directly. So they feel like when they receive something from us, it's not just this blanket email that says, "Come shop at Texas Humor," it's really touching on the size of clothing that they've purchased in the past or the types of content that they're really into, those types of things.
Stephanie:
Got it. Okay. So you're looking at types of content or you're maybe showcasing things based on size. What other kinds of behaviors are you segmenting right now to be able to craft your message differently?
Jay:
The highest or the best way to say it is around recency and frequency. So we look at the various behaviors on a store and try to segment based off of the recency and frequency of them doing whatever that behavior might be. There's a lot more detail than I can probably go into on this show, but I would say that starting with that is a really great way to make sure that you're not just... I think the word email blast or the phrase email blast is a bad phrase because you definitely should not just be blasting people with anything. I think it's really critical that you be more surgical with how you send emails out to your customers. So that way people feel like they're having a conversation with the brands that are emailing them.
Stephanie:
Yep. Yeah. I think it'd be really great if I were to get an email that said, "Hey, Stephanie, we saw you're moving to Austin. Here's a bumper sticker for your drive or something." Being able to find data like that that connects with me in a different way of like, "Oh, wow, that's cool. I didn't think about a bumper sticker," or whatever it may be, but because you know a little bit about me like that, I'm going to come to your website and explore a bit more.
Jay:
Yeah, exactly.
Stephanie:
All right. So let's move over to the lightning round. The lightning round is brought to you by Salesforce Commerce Cloud. This is where I'm going to ask a question and you have a minute or less. Are you ready, Jay?
Jay:
Yup.
Stephanie:
All right. What's up next on your reading list?
Jay:
I will say I haven't read much in the last couple of weeks because I've been so focused on getting everything out the door. But I'll probably actually read The Obstacle Is The Way by Ryan Holiday. I read Stillness Is The Key, which was great, but Obstacle Is The Way's one that a lot of people have been telling me I should read.
Stephanie:
Yep. Yeah. I read that. It is good. What is one trend or topic or piece of tech that you don't understand that you wish you did?
Jay:
I wish that I could personally write SQL queries and do more database work and business analysis myself.
Stephanie:
Yep. That is a good skill to have that I still appreciate to this day. I used to work at Fannie Mae and I'd be all up in SQL all the time, and it comes back even till today where I'm like, "Hey, I at least know what that query is looking for."
Jay:
Very good.
Stephanie:
And then the last one, what's up next on your Netflix queue?
Jay:
I'm eagerly awaiting the next season of The Crown. I know it's like two years away or something like that, but I'm absolutely eagerly awaiting that.
Stephanie:
Yeah, same. I'm excited about that. All right, Jay. Well, it's been a pleasure talking to you. Thanks so much for coming on here. Where can people find out more about you and Sauceda Industries?
Jay:
They can find out more about me on my Twitter account, which you can just find my full name, Jay B Sauceda. I'm everywhere on social media on that username. And then obviously our websites, saucedaindustries.com. So if you have any questions about the logistics space and how it relates to e-commerce or you're just curious about tips on how your brand can best work with the 3PL, happy to answer those or connect you with somebody on my team who can. We'd like to be a resource in our community for e-commerce crane owners, because we know that it's a big jungle out there and we have navigated it once or twice. So to the best of our ability, we'd love to help people take the shortcuts when we know where they are.
Stephanie:
Amazing. Thanks so much, Jay, and I'll see you in Austin.
Jay:
Sounds good. Thanks so much.
Brands large and small are all fighting the same battle of customer acquisition. How you reach customers, and how much that effort costs, is in constant flux, which is why Nik Sharma is a big fan of constantly running micro experiments.
Nik is the CEO of Sharma Brands, a company that remains one of the best-kept secrets among the DTC community and which helps brands scale into the tens of millions. On this episode of Up Next in Commerce, Nik takes us behind the scenes of what that scaling process looks like, including his strategies around customer acquisition. Nik explains how important constant testing is, and he shares some micro-experiments he recommends running regularly. Plus, he tells us why reading every review and every comment associated with your brand is the best leaping-off point for your creative process.
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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Transcript:
Stephanie:
Hey, everyone. Welcome back to Up Next In Commerce. This is your host, Stephanie Postles, co-founder at mission.org. Today, we're hanging out with Nik Sharma, the CEO of Sharma Brands. Nik, welcome to the show.
Nik:
Thank you for having me. I'm excited to be here.
Stephanie:
Yeah. Me, too. If we had video on, I would be trying to look at your whiteboard that you had on with probably 1,000 notes on it.
Nik:
All the secrets. It's got all the secrets.
Stephanie:
Yeah. What kind of secrets are on that board? I was really trying to zoom in like what's going on back there?
Nik:
It's got all the goals for the week, starting with nine hours of sleep, all the way to-
Stephanie:
That's a good goal.
Nik:
... how we plan to combat Facebook and Apple's big fight that's going to start January 15th.
Stephanie:
Oh, tell me a little bit about the big fight. I'm obviously not up to date on that. What's going on?
Nik:
Yeah. So basically in the new iOS update, Apple is going to give pretty much everybody multiple opportunities to block tracking. And so it's really going to hurt attribution for a lot of these ad platforms, especially for small business ad platforms like Facebook ads, Snapchat, et cetera. And so we're basically starting to think through how we combat that going into the new year because a lot of the businesses we work with, they're either brands that are just starting. And obviously, those are small businesses, but there's also some mid-sized businesses doing anywhere from 200 to 800 million in revenue, but they're also going to be just as effective. And so we're trying to think through how we go about combating that going into the New Year, basically making sure that there's not a ton of drop-off as it relates to the client.
Stephanie:
Yeah, I didn't realize this was happening so soon. I was paying attention a bit to the taking away cookies and tracking and all that kind of stuff. I didn't realize the iOS update was happening January 15th. So what are you guys thinking? What's your strategy? What are you advising your brands to do? I know I just jumped right into it, but this is really interesting.
Nik:
Yeah. Well, as of right now, it's a little bit up in the air. We have a few ideas going of how to combat it. But to be honest, there's not a ton of information out that we have to work with. We're trying to work with multiple different ad tech partners to understand how they view the impact happening. But at the same time, we're trying to think through how do we basically start creating our first party audience ads much faster than running ads when we need them, so whether that's by creating what I would call a prospecting CRM versus just a customer-centric CRM post-purchase, or trying to think through how do we still drive lower funnel conversion and attribute those sales properly, even though they might not be last click purchases. Yeah, it's a big cluster of unknowns right now.
Stephanie:
Yeah, that's tricky. I also wonder to what extent will a user maybe turn that feature off and then start to realize maybe how helpful that feature was when it comes to showcasing you the information that you want to see, or maybe ads that actually are helpful because I think right now, a lot of times people are like, "Oh, I want privacy and I want this and I want that"? But if you were to turn off a lot of the features that you're talking about, then you wouldn't really get the customized experience that people will do oftentimes appreciate in Google and other places. They wonder what that would look like.
Nik:
Yeah. Most of the people I've talked to have basically said a similar thing that they like the personalization and whatnot that comes with it. But there is definitely a pretty big group of people who would rather prefer that they never get targeted with an ad. Unfortunately, that's the threat to a lot of the small business advertisers out there.
Stephanie:
Yep, interesting. Well, when you guys have a little more insight into that, I'll just bring you back in here, how you guys are approaching it and what happens in January 15th.
Nik:
Yeah, definitely. Definitely.
Stephanie:
Cool. Give me a little background on Sharma Brands. I was seeing that you guys work with a lot of brands, some of which we've actually had on the show before, which is really cool to see. We've had [inaudible] and I think I saw two others. But tell me a bit about what is Sharma Brands and what do you guys do for the brands that you work with?
Nik:
Sharma Brands is like the secret of the internet. We don't really talk about it much publicly. But basically, what we do is we work with brands that are either just launching or have just launched. We either guide them through the launch or we pick them up right after launch. We work with brands that are midsize, brands that are doing really well and ideally want to do better, or we work with brands that are pretty big retail businesses that want to get their ecommerce business set up and on track. And so we come in and handle everything from strategy to execution, to implementation. A lot of it is testing, a lot of it is focused on creative and messaging and offer testing merchandising. We also do everything all the way to producing national TV spots, satellite radio, like basically helping brands venture out from the more traditional just Facebook ads or building a website.
Stephanie:
Got it. What inspired you to create Sharma Brands? I saw you had a lot of roles. You were the head of D2C for a couple of companies. I think you worked at Hint. Is that what led you to creating Sharma Brands, or tell me a little bit about that journey?
Nik:
Yeah. I've always had a knack for wanting to work on multiple brands, which is probably why Sharma Brands works. But separate from that, I don't know if we are even the perfect solution. I don't think we aren't because we don't really do everything. But there's not really a proper growth partner for a lot of these brands. There are media agencies, there's media companies, there are creative agencies, there are product development agencies, but there's really not many when it comes to true growth and helping them in things like scaling, going from 1 million to 10 million or 10 million to 60 million. And so we created this little niche where we help brands do just that. We try to stay on for no longer than six months per project. Our goal is to basically get in and do just an insane amount of testing so that by the time we leave, that brand knows exactly what's going to scale and what's not going to scale.
Stephanie:
Interesting. What kind of testing do you mean? What do you do throughout those six months to figure that out?
Nik:
It can be anything from copy, creative, landing pages, long form content. When I say creative, there's a whole variety of creative. There's the things like... We might test UGC, we might test influencers, we might test studio stuff, we might test just a whole variety of different types of content. We do the same thing when it comes to page experiences, so whether they're landing pages, whether they're listicles, articles, partnerships with companies like Morning Brew.
Nik:
And then of course, the last piece of it is the merchandising, so everything from offers and pricing to products, to what gets people in the door, what's the best product to sell them after that. And subsequent to that, how do we optimize for brands that are high consumption? How do we focus on subscription? How do we keep customer lifetime value high? How do we bring back repeat purchase rate without having to spend money to reacquire that customer? The goal is to figure an overwhelming majority of those types of things out so that by the time we're done, there's a very clear playbook that they can operate on for the next few months or a few years.
Stephanie:
Yep. I'm assuming that when you were working at Hint and other places, you started seeing similar things that were working and weren't working. Can you tell me a bit about what it was like working at those companies, or maybe you started uncovering a few universal truths around D2C?
Nik:
Yeah, working at Hint was great. It was a lot of fun. We grew really fast, which led us to a lot of challenges that we were able to overcome. But it gave me a lot of insight into the challenges that a lot of the brands face. Obviously, I think customer acquisition is one of the biggest things that brands don't necessarily understand or distribution, which is, I think, one thing we're really good at. But then after that, after you get to a point where you're able to acquire 1,000 customers a day sustainably and at reasonable prices, then how do you take those customers and service them further? How do you come up with products that feed those customers after what they've already bought if it's not a high consumption product? How do you think through unique partnerships that attract eyeballs that then give you the opportunity to sell those customers onto your brand? There's so many things. Basically, it all stems down to distribution. Good brands are really good at product and brand building. But then the idea of then getting that in front of other people is where the tough part comes in.
Stephanie:
And so how do you approach customer acquisition now, where maybe it was different than prior to 2020 because it feels like there's so many new companies in the space? Maybe not all of which will be here in a couple of years. There's a lot of companies. I think more businesses launched in 2020 than in 2019 and prior years. So how do you approach trying to compete and get the eyeballs and find new customers for your brands in a pretty competitive market right now?
Nik:
To be honest, we don't really take competitive brands into account. What we try to do is just be really innovative with the way that we message and get in front of people. For example, something as simple as like Judy, which is emergency kit you know, being able to really hone in on understanding whether it be by surveys or by looking at what types of messaging has better click through rates and conversion rates, understanding the types of messaging that people are reacting to, and then going really deep on it, all the way to coming up with funky partnership ideas like putting Poo-Pourri and Judy together because both brands service emergency situations.
Stephanie:
That's a really good partnership.
Nik:
Yeah, no, it's great. It's really just about like how do we stay ahead of competition? Most brands today probably run a very similar playbook of like, "Let's create some... text some images, put some ads up and run them to our homepage." We put that on steroids. We're testing maybe 17 different versions of creative or testing 7 different versions of landing pages or homepages or sites that they're leading to along with 37 different audiences that we're going after to understand which type of messaging converts better with which audiences.
Stephanie:
That's great. So how do you think about creating all those different types of messaging? How do you stay creative? I know when I'm thinking through ad copy, even for our company, once I create one or two or three, then I'm like, "That's all I got. I'm out." How do you guys stay creative and create like, what'd you say, 17 different landing pages? I mean, like a lot.
Nik:
Well, I have a team that's insanely creative, so that helps.
Stephanie:
That's helpful.
Nik:
But outside of that, I think one thing we do, which is honestly something anybody can do, is we try to look at every single review. So if we work with a brand, we try to read every single review and we will literally use a whiteboard and make a tally of the different value props and how many times they're mentioned and then use that to basically work backwards and understand messaging. So things like that to things like looking at comments on ads, to customer service emails and messages, to how are other people tweeting about it, how are other people taking press about a brand and then tweeting about the press or talking about that specific article. So we try to take in a variety of things. And then if all else fails, have a little glass of whiskey and take an approach with some fresh eyes.
Stephanie:
That's good. When it comes to large brands and small brands, we've been going through some of these challenges, but are the challenges the same for both big and small, or do you see completely different challenges depending on the size of the brand?
Nik:
I think that a lot of the challenges on the macro side are the same, but on the micro... On the macro side, for example, customer acquisition, right? A company that's doing 800 million versus a company that's just launched, both are going to be focused on how do we acquire customers smarter, better, faster, cheaper with higher lifetime value? But on the micro side, it's a little different because a company that's doing even 50 million in revenue has a lot more awareness to play off of. They have a lot more scale to go leverage things like partnerships with other brands, they have budgets to go to places like The Skimm and Morning Brew and other places like that versus a company that's just starting.
Nik:
They still have the same problem with customer acquisition, but they need to figure out even if they raised a little bit of money or if they did it, they need to figure out, "Okay, what is the fastest way for us to get 100 customers and then 1,000 customers and then 10,000 customers and then 50,000 customers." And obviously every time you hit that milestone, it gets easier and easier, but it's still the same. That's the challenge of how do you get in front of as many eyeballs as possible and also relevant eyeballs. You don't want to get in front of just eyeballs that are not going to convert for you.
Stephanie:
Yep. Are there any tools that you use to stay on top of maybe trends or what people are searching for, or even staying on top of like different kinds of audiences to reach and how to reach them in new ways, like new things you're doing maybe this year that you weren't utilizing in the past?
Nik:
One thing that we have started doing a lot more this year versus years in the past is really not taking creative too seriously. So, for example, like running memes as ads insanely outperforms things like really beautiful $30,000 photo shoots, or the way like... Do you use TikTok?
Stephanie:
Yes, I do. I love TikTok.
Nik:
I'm addicted to TikTok.
Nik:
With TikTok, I think if you look at the way TikTok has impacted culture or pop culture, I should say this year, it's pretty fascinating. Like when Instagram was big and there were Instagram models or even you could even say like... yeah, you could probably say even like big YouTubers, they don't really make news or make headlines, nor do they get, for example, flown out to fashion shows internationally to come walk in a runway. But TikTok has just completely taken 2020. And whether it's like TikTok is being flown out to Rome for fashion week or it's the fact that all of Snapchat discovers tabloid garbage is all influencers, there's something about TikTok that resonates really well with the masses.
Nik:
And so one thing we've been doing is testing, not only just testing TikTok's style videos, but also even the way... If you look in the comments of TikTok, I think the comment section is where the memes of tomorrow, or the memes of next month live. And so we've been [crosstalk] doing a lot of things where we test those. Those have been having really interesting results too. Just really like, again-
Stephanie:
All right, so give me some examples.
Nik:
... just a bunch of testing and fun stuff. My favorite is the... For example, if you were like this podcast is the perfect podcast for ecommerce operators, you would put the word operators in between the sparkles emoji, or just like random silly things that you see on TikTok. Yeah. It's hard to explain, but it just works so well.
Stephanie:
No, yeah, I know what you mean. Yeah. Well, tell me some of the most interesting comments that you've seen on TikTok that you've turned into memes.
Nik:
Well, the sparkles one is probably the easiest. Let's see. Outside of that, the eye mouth eye I think is hilarious. What else? What else? The concept of like it's the blank for me. There's just so many little inside jokes on TikTok that becomes so... Not only relevant on the outside world, but also people see it and they relate to it because they think they're the only ones that know about it because TikTok is such a one-to-one thing, you know?
Stephanie:
Yep, yeah. And then when you were talking about creating TikTok style ads, I'm assuming you're saying that you're creating an ad like you would create a video on TikTok and then you're actually putting it on other channels and platforms. Is that what you meant by that?
Nik:
Yeah.
Stephanie:
Yep. I was just thinking about that actually a couple of days ago. My head of growth is like, "Oh, can you create some audio ads and video ads and all this to help promote the shows or whatever?" And I was like, "Well, what's the easiest way for me to do that?" Honestly, creating it on TikTok, even if it's an unlisted video-
Nik:
Oh, 100%.
Stephanie:
Yeah, so much easier than trying to do anything else.
Nik:
The best ads in ecommerce are ones that do not look like billboards on the street. That's where a lot of brands go wrong is that when it comes to ads, they try to create this unique experience or this look that doesn't resonate with the common person. It's like no wonder they don't work because they look like if you see an ad, there's no chance you're going to sit there and be like, "Oh, an ad, let me watch this whole ad." All your ads have to feel like they're not ads. They have to feel like content that somebody maybe not wants to watch or needs to watch, but something that's intriguing enough where they're going to watch the first little bit, and then it's your job as the brand to hook them to watch the rest of it.
Stephanie:
Yep. Yeah, I love that. The other thing, now that we're talking about influencers and spreading things, I heard that your fridge is famous. You tell me a bit more about this because when I heard that, I'm like, "Isn't Nik an influencer? Why is his fridge famous and you're known for your fridge?" So give me the deets on this.
Nik:
Yeah, the fridge racks up impressions. That's for sure.
Stephanie:
Why? What is up with your fridge? Is it a fancy one?
Nik:
I'm just trying to look up real quick how many impressions the last one got. But no, it's funny because obviously I worked at Hint and I've worked with a bunch of different beverage brands. Yeah. So the last tweet about my fridge has 151,000 impressions.
Stephanie:
Why? What'd you say?
Nik:
It's nothing special. It's just the fact that a lot of people know me as a beverage marketer or beverage person. I'm just looking at this tweet from September 14th and my fridge has Taika, has Empathy Wines, it has Jock Coffee, it has Dose, which is like a new wellness shot, it has JuneShine, which is hard kombucha, it's got Sanzo, it's got OLIPOP, Red Bull, Orgain protein elements, which is a adaptogens beverage, and then a bunch of Hint Water.
Stephanie:
Close to D2C fridge. You're stacking it up.
Nik:
It's basically a D2C fridge. Yeah. And then depending on when you open it, you might see different drinks. There's another picture of the fridge I'm looking at. It's all RISE cold brew. It's got Lemon Perfect and it's got Cha Cha Matcha's ice tea lemonades.
Stephanie:
Interesting, interesting. And then so how are people engaging with this? How did it even start of you posted this picture and realizing people like to see what you were trying out, or what you were investing in, or what made them excited?
Nik:
Well, it started because a friend of mine, David Perell, basically posted a picture of my fridge, I want to say when I first moved to New York last year, or I think he might've done it when I lived in San Francisco. But then he posted about it and how like my fridge is basically a vending machine. And then all these beverage companies started responding. And then whenever I tweet about my fridge, I just get a flood of packages over the next 10 days from different beverage brands that want to be included in the next round of the fridge.
Stephanie:
That's really funny. But I also feel like it's helpful to see how to share things that get shared, that go viral because the best way to advise brands and other people is by doing it yourself.
Nik:
100%. That's always been the thesis behind any kind of public account that I have. Whether it's my community number, whether it's my email newsletter, whether it's my Twitter account, everything that I try to do is like, "Okay, I'm basically just testing it so that we can hopefully do this on a brand and it makes a big impact because maybe it's something that they haven't done before or just people in general haven't done before."
Stephanie:
Yep, yeah. That's very, very cool. So when you're working with all these brands, one thing that we've been discussing here at Mission lately is just about all these new users who are now online, a new demographic group is online shopping. They're getting used to it, they're going to be here probably for the long haul now that they have maybe ordered groceries or gone on Amazon for the first time. How are you working with your brands to ensure that their messaging and their interaction and that they may be personalizing things in a way that also connects with this new demographic of shoppers that weren't here prior to 2020?
Nik:
So basically, how should brands prepare for-
Stephanie:
Yeah, having like an older generation now who are ready to shop. And I'm sure the messaging or the way that brands are personalizing is usually towards millennials or 18 to 35 or 18 to 40. Everyone seems to focus on that same two generations, but the older generation are the ones that have the money. They're the ones who are ready to spend. They just haven't brought it really online until recently. But it seems like a lot of things have to change for it to also work well with them.
Nik:
Yeah. I think tactically, there's different things you can do, whether it's the channels that you choose to advertise on. So whether that's shifting budget out of Facebook and onto platforms like TV and satellite radio and connected TV even, or it's... One thing that I've found at a previous brand I worked with was that the creative we would put out that has, let's say, models or talent that looks like they're in their late 20s, early 30s is what resonated best with the audience groups over 45.
Stephanie:
Oh, interesting.
Nik:
So it might just even be something as simple as a shift in your creative to reach [crosstalk 00:27:11].
Stephanie:
Yeah. I wonder why that would be the case.
Nik:
Everybody aspires to be better looking or younger or smoother skin or whatever it may be. And that might be a reason. I think another way though too is thinking through just the ease of how something as simple like your website functions. How easy is it for somebody to come in and shop? I always send landing pages or websites to my mom. She'll look through it and be like, "This is confusing," or she'll be like, "This is perfect. It was one click and I was in the cart." And so we always go for the ladder as the goal. But the other thing too is like... One thing I always say is you got to treat your customers like Kim Kardashian on the red carpet and you're her assistant, right? The brand is the assistant. So you can't expect your customer, you can't expect them to go browse around your site and learn about your brand and learn why they need your brand, or how your brand is going to make their life better, or the deal that they might be able to get, or the coupon.
Nik:
There's so many brands that they clearly offer coupons when you Google, for example, like... I don't know. If you Google like... we'll say Jetblack because they're not a business. If you Google Jetblack coupon, there's probably 17 coupon sites that have a 10% or a 20% off coupon. But what you do is you now create an opportunity for somebody to leave the experience of checking out to go find that coupon. There's a good chance to just get distracted and never come back versus something as simple as like... Basically, what I'm trying to say is you want to create everything or you want to put everything in one simple experience so that somebody who has no time, somebody who has no patience, somebody you could assume they don't have the knowledge of how to navigate a site can basically come to your site and get what they need and they know why they're getting it and just create something really easy to use.
Stephanie:
Yep, yeah. I think frictionless shopping is the way of the future. The one thing about coupons though, I feel like they're just dangerous. Like you said, you leave the site... I know I used to back in the day, go through all these coupon codes and then I'd really get annoyed because none of them are working, all of them were expired. And yeah, it's still feels like there's room even on a website to be like, "You will never find coupons outside of our website. So don't try. Don't go looking around, don't go testing like 1,000 different codes. You'll find nothing. It's only here."
Nik:
Totally. The other thing too is like then you have companies like Honey, the browser extension, which are basically fraud companies, in my opinion, or scammy companies. And if you don't create something of an offer for let's say you run a... let's just say a beverage brand called Three Stars, and somebody comes to the Three Stars' site and they want to buy a variety pack because they're a new customer and they want to try the flavors. When they get to the checkout and they see, "Oh, there is no discount. Oh, but Honey says..." The Honey thing pops up and you click it because you're hopeful that there's a discount. Even if Honey generates no discount, Honey is going to refresh the page and now that becomes a 10% affiliate cut. The brand is paying the Honey without them even realizing it. The customer is not getting any value out of it. But because you didn't create the opportunity for them to check out without having to use Honey, you're now going to end up paying Honey 10% if they have it installed.
Stephanie:
Interesting. I hadn't realized that's how it [crosstalk 00:31:03].
Nik:
Yeah. Honey is a really scammy business. It's really scammy for brands.
Stephanie:
Oh, geez.
Nik:
I hate Honey with a passion.
Stephanie:
Oh my goodness. I actually think we had someone from Honey the long time ago before our commerce show was even live in the world. We had, I think, their COO on one of our other shows, Mission Daily. So if anyone's interested, go check out [inaudible 00:31:24].
Nik:
Yeah. It's a genius business model for them. Basically without showing the customer or without really showing the brand, they're just ripping 10% off of every purchase. And if you're selling like a $400 emergency kit, that's 40 bucks that they're making for everybody who just has an extension installed, but it's-
Stephanie:
And the brands can't control that, or they can't say-
Nik:
No, they can now. When I saw it, I went to them and said, "You guys, you're basically just taking credit for everything you're not driving." And they're like, "Oh, well, it's just the way that Honey works. We drive a lot of traffic." And I'm like, "No, you don't." So then we just shut them off. They just don't get paid now, even though they can still be used.
Stephanie:
Oh, interesting. So when thinking about outside of coupons, but more ways to connect with different users, what do you think about catalogs? Because we had a good discussion, I think, many episodes ago with one of the execs at Marine Layer, and she was talking about how great catalogs work for them. I haven't heard many people talk about it. So it seems like there's still an opportunity there though with so many people now working from home. I know I get excited about mail that's actually fun to look at and helpful. So how do you advise your brands on connecting with an audience through catalogs or paper mail?
Nik:
Personally, I'm a fan. I think it's a sign of luxury when I get a catalog, whether it's from a company like Buck Mason or Todd Snyder or [inaudible 00:33:06], like it's definitely a sign of luxury. The catalogs themselves are printed on very nice and chic paper. I think it just adds to the overall experience of being a customer at those brands. At the same time, if you're a brand that's just starting and you don't have the capital means to do it, I think there's ways you can create digital catalogs for fairly cheap and have them be digital experiences.
Stephanie:
Yep. When you have a catalog, I've heard some brands optimize for experience and fun and more of like a branding play versus others are focused on send them back to the website, get the conversion. How do you think about optimizing a catalog to work well?
Nik:
Well, I think it's two ways. One, you got to feature products that I think people want. So if your spring collection is 250 pieces of clothing or 250 different SKUs, maybe you feature the 27 that people really want. But then secondly, I think from a messaging standpoint, it's got to really make you salivate when you're going through it. That was [crosstalk 00:34:36].
Stephanie:
Like Trader Joe's catalog.
Nik:
Yeah. That was one of my favorite things about... Do you remember SkyMall?
Stephanie:
Yeah, yup.
Nik:
SkyMall just made you want to buy everything in that magazine because everything was like, "Oh, a random flashlight for under my desk chair. Sure. That now seems like something I totally need."
Stephanie:
Yep, yep, I agree. I just saw something in a catalog that I actually ended up buying. It's a... What is it? A candle lighter, but it's not like a big flame thing. It's operated by battery. It has this really long stick on the end and it's intense, it's awesome. Everyone should check it out. We'll link it up in our show notes. But I bought that from a catalog because it was showing it going inside a really deep candle. I was convinced. And it's amazing.
Nik:
Yeah, no, totally. It's all about like building... You want to build a use case for somebody to go tell their friends why they bought what they bought from you. That's like the best way to market.
Stephanie:
I think you also have to have good paper quality though.
Nik:
100%.
Stephanie:
I hate the catalogs that come with just like icky, thin paper, and it's just 1,000 pages and I'm like, "It doesn't feel curated. Just every thing is here. I don't even know how to look through this in a way that makes sense for me," versus the ones that are just 10 pages. It's what you want to look at, or just the best thing that feels like it's personalized, even though it's probably not. I'm okay with that as long as it feels high quality.
Nik:
Totally.
Stephanie:
Let's jump over to a little bit higher level ecommerce question of where do you guys think ecommerce as a whole and D2C is headed over the next couple of years? What are you preparing for right now, or what big thing?
Nik:
Well, I think that ecommerce, as a whole, is going... There's been a ton of innovation this past year and the year prior, both on the side of operations, things like understanding you can't blow cash on acquiring customers, all the way to understanding how to optimize shipping costs or manufacturing costs or even using tools like Settle, which let you basically hack your cash flow. I think, to be honest, over the next year or two, it's just going to be a lot of growth in the category across many different categories that maybe thought they weren't going to be ecommerce. Everything from sitting at a restaurant and now... Obviously, we see QR codes everywhere, at least in major cities, at restaurants for scanning and getting the menu.
Nik:
I think we're going to see that you're going to start paying your bill through Apple Pay after you order your meal, all the way to things like better experiences with packaging and unboxing or just how you learn about a brand for the first time after you buy it. But I think there's also going to be a rise in things like marketplaces. There's a company that I just joined called The Fascination. And basically, the entire idea behind The Fascination is to take a lot of these cream of the crop direct to consumer CPG brands that are independently trying to acquire the same customer and basically put them together, create content around it, and create shoppable content.
Nik:
So, for example, if you have a daughter who's moving to... I don't even know if people are going to be going to college next year. But let's say she's going to college next year, and it's like the ultimate list of things you need for your dorm, it's got your mattress topper, it's got your pillows, your comforter, it's got your desk lamp, it's got organizers. You would be able to basically shop all of this in one page with one checkout through The Fascination. And on the back end, all these brands are getting orders basically pushed into their order queues. The Fascination basically just takes a tiny cut, like an affiliate. But the brands own the customer, they own the relationship with their customers, they have the ability to remarket to those customers. And The Fascination acts as a front of acquiring the customer and now selling maybe eight things at once.
Stephanie:
Oh, that sounds really cool. I think that's much needed with so many new brands popping up right now too. It just feels like sometimes I don't even know who to trust and who's actually got their back end filled out. Is this just the landing page that they're testing out to see if people actually want a product that they haven't even developed yet? So it seems like it's needed to have a trusting source like that to say, "These are some of the best brands and we've verified them and you've got customer service here and we're reputable and blah, blah, blah."
Nik:
Yeah. And that's another thing too is there are a lot of sketchy brands that have launched because the barrier to entry is so low. What The Fascination is trying to do is basically the same way you have like a kosher sticker on food items or a gluten-free sticker that's very universally known. I think they're going to basically try to do the same thing, but for four brands.
Stephanie:
That's awesome. Yeah. I will have to check that company out, maybe bring them on the show. Sounds like [crosstalk 00:42:39].
Nik:
Yeah, yeah. They would be a great one to bring on.
Stephanie:
Yep. The other trend I'm excited to watch this next year is last mile and see how that evolves, especially with the food delivery companies and the DoorDash and Grubhubs of the world starting to actually just work with local retailers to fulfill last mile deliveries. And I think that whole industry is about to have a big evolution. So that'll be an interesting one to watch.
Nik:
Yeah, I couldn't agree more. I mean companies like Ohi or even FastAF, they're doing some pretty awesome things when it comes to last mile delivery.
Stephanie:
Mm-hmm (affirmative). Yep, yeah. I agree. All right. Well, let's move over to the lightning round. The lightning round is brought to you by Salesforce Commerce Cloud. This is where I'm going to ask you a question and you have a minute or less to answer. Are you ready, Nik?
Nik:
I'm ready.
Stephanie:
All right. What's up next on your reading list?
Nik:
Ooh, I would say the book Supermaker by Jaime Schmidt.
Stephanie:
Oh, that's a good one. Yep, sounds good. What is your favorite business book that you refer back to?
Nik:
Atomic Habits.
Stephanie:
And you're on it. You're like, "Are you top of mind? I got this great." Sounds great. What topic or trend do you not understand today that you wish you did?
Nik:
Bitcoin.
Stephanie:
I've had a couple of people say that. What's the nicest thing anyone's ever done for you.
Nik:
The nicest thing anybody's ever done for me is-
Stephanie:
I had to stump you. You were too on it. You were too lightning.
Nik:
Yeah, that's a good question. Honestly, my favorite is when just people just reach out randomly and say, "Hey, how's your day?"
Stephanie:
You like that? Sometimes I'm like-
Nik:
I love it.
Stephanie:
... "What do you want? Get to the point."
Nik:
Yeah. Well, sometimes you can tell when people have a reason for asking. But when a genuine friend just texts you out of the blue and just says, "Hey, how's your day going?" It's always nice to know.
Stephanie:
Yep, yep. Okay, a friend. I thought you meant just like a random Twitter person.
Nik:
Oh, no, no, no.
Stephanie:
I'll get messages on Twitter like-
Nik:
No, no, no, a good friend.
Stephanie:
... "Hi, how are you?" I'm like, "What? Who are you? Why are you asking me how I am?" That's weird. Ah, 2020. What's up next in your travel destinations when you can travel again? Where do you want to go?
Nik:
I want to go to Jamaica actually with a friend of mine, Chris Hall, and a few of his friends. He's got a pretty good setup there in Jamaica for quick trips out there. So I'm looking forward to hopefully in February maybe go there for a few days and just unplug from work.
Stephanie:
Oh, that sounds fun. Chris, bring me out there as well. That'd be great. What's up next on your Netflix queue?
Nik:
Ooh, actually there was... I forget the name of the comedian, Andrew Schulz maybe. He just launched a stand up. I saw it yesterday and I added it to my list. So that's next up on my queue.
Stephanie:
Oh, that sounds good. I'll have to check it out. If you like it, I'll check it out. What are you most excited about to add to your fridge next?
Nik:
Ooh, that's a good question. There's a beverage that we are launching called Barcode in-
Stephanie:
Barcode.
Nik:
... Q1 next year. It's with the former head trainer of the New York Knicks, who's also a big celebrity trainer, as well as with Kyle Kuzma, who's a championship Lakers player. It's basically a healthier version of Gatorade and it tastes incredible and it's got everything. It's like everything he would prescribe or give to his athletes, but bottled up in one drink.
Stephanie:
Oh, that sounds good because I do like Gatorade. But then when I'm drinking, I'm like, "I know this isn't good for me."
Nik:
It's horrible for you.
Stephanie:
Yeah, it is delightful though.
Nik:
It is.
Stephanie:
All right. And then the last one, if you were to have a podcast, what would it be about and who would your first guest be?
Nik:
I've actually been thinking about this recently. It would probably be about the struggles of commerce that people go through. So it would only be focused on problems people have had in their business, not the successes and not focused on people who've successfully exited. It is strictly focused on people who have, for example, not figured out how something works or how they're going to get through something. I don't know why, but I always keep thinking my first guest is going to be Paul, who's the founder of Prose, which is a haircare brand.
Stephanie:
Okay. I think that sounds great. I love stories like that, where people can actually learn something and because there's so many... Any media article is always like, "Oh, here's the end result. And now, they're a billion dollar company. Oh, and they exited, Oh, they got acquired." It's like, well, what actually happened where they failed because I don't want to fail too and I know they have some kind of knowledge of things that I could avoid, that's why I love biographies and stuff because you can read it and essentially accelerate your knowledge through that person's life and hopefully avoid some of the pitfalls they went through.
Nik:
Totally. And not only that, but also then for all the people listening who might be starting a business, or might be getting themselves into a position where they're not really sure what to do, it almost becomes an encyclopedia where, "Oh, Paul had no clue where to get you pumps at low MOQs for his shampoo bottles. How did he figure out what they were and where he could find them and not get ripped off?"
Stephanie:
Yep, yep, yeah, or I always love the stories when people are going overseas to find manufacturers and hearing things that they encounter. I forget what brand we were talking to on the show where they... I went into one of the warehouses and they were selling apparel and they were like... and all of the employees were smoking and all the stuff smelled like smoke. It's like I would have never realized that unless I actually went over there and was doing an audit before moving forward with one of them.
Nik:
Yeah, totally.
Stephanie:
Very cool. Well, Nik, thanks so much for coming on the show and sharing all your knowledge. Where can people find out more about you and Sharma Brands?
Nik:
The easiest is my website, which is just nsharma.co, or the second easiest which I read every tweet, every message is my Twitter @mrsharma.
Stephanie:
Awesome. Yeah, just go to Nik and say, "Hi, how are you?"
Nik:
Exactly.
Stephanie:
All right. Thanks so much, Nik.
Nik:
Thank you.
Access to goods is still an issue for millions of people around the world, but recently, ecommerce has been leveling the playing field. With so many direct-to-consumer operations in business today, the average consumer has more choice and therefore more access than ever before. But there’s one industry that stands out as lagging behind this trend: Coffee. That’s one of the reasons that Pernell Cezar co-founded BLK & Bold Specialty Beverages. Pernell is a long-time coffee lover and saw an opportunity to turn that passion into a business that could also make a big social impact. Historically, coffee has been hyperlocal, but he envisioned a business model that democratized access and brought specialty coffee to everyone. The only problem was that neither Pernell nor his co-founder had any experience in the coffee business other than as consumers.
On this episode of Up Next in Commerce, Pernell reveals how they were able to turn BLK & Bold into a nationally-distributed product, including how they turned a mission-driven ecommerce business into a retail one by securing partnerships with places like Whole Foods and Target. Plus, he explains the importance of giving potential customers multiple ways to find your product, and the value of finding mentors to help you fill in your blindspots.
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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Transcript:
Stephanie:
Hey everyone, and welcome back. This is Stephanie Postles, and you're listening to Up Next in Commerce. Today on the show we have Pernell Cezar. He's the co-founder and the CEO of BLK & Bold Specialty Beverages. Pernell, welcome.
Pernell:
Thank you for having me.
Stephanie:
I'm excited to have you on the show. I actually just saw some of your coffees in a Whole Foods around here. I was like, "Hey, he's joining us." It was perfect timing.
Pernell:
[crosstalk 00:00:30]. I love it.
Stephanie:
I'd love to hear a little bit about BLK & Bold, what is it? And let's dive right into your founding story because I know you have a good one.
Pernell:
Sure thing. BLK & Bold, we are a coffee roastery out of Des Moines, Iowa, founded about two and a half years ago really from the length of conversations that my childhood best friend, who's actually my co-founder, his name is Rod. I'll likely reference him a few times here. Him and I had just in teenagers, talking about whatever to being professionals and being time strapped and wanting to make sure that we were spending our dollars more consciously to support initiatives that we really felt we didn't have a lot of time to put into like we wanted to.
Pernell:
After so much ideation around our ritualistic beverages and coffee and tea, we really decided to focus on connecting everyday consumers back to their community by way of turning those beverages into vehicles for impact, and in which we launched BLK & Bold with the initiative to tangibly give back to disadvantage youth by way of giving 5% of our profits back to initiatives across the US that service specifically that demographic, but then also making specialty coffee and the delicacy of coffee and tea more accessible in conventional spaces where people shop already and not have it be confined to the independent shops that exist in neighborhoods across the US.
Stephanie:
Very cool. How did you decide to start with coffee? Because I read you didn't really have a background in that, and I was watching your video where you guys were starting it, I think, in your garage and you were trying to figure out what buttons to press and it was really fun just seeing how you really didn't know what you were doing. How did you land on that idea and decide like, this is the one.
Pernell:
Professionally, I didn't come from the coffee industry per se. However, as a consumer, I have user experience as a consumer. And going-
Stephanie:
You're a pro.
Pernell:
Yeah, exactly. Going across that journey, I always call it the coffee spectrum in the sense of what you like and what you don't like. And that's really where the curiosity book hit us where just traveling so much professionally in one state of my career and I just became immersed with the coffee shop culture. Visiting city A, city B, city C and falling in love with these different shops but they all have different menus. And so you learn to appreciate the different tiers of coffee, especially the specialty coffee, the more premium side of things, and really enjoyed that.
Pernell:
But again, the accessibility of these different experiences or product experience that we learned was hard to consistently access. And it then became a matter of like, "Okay, well, what is this? And why is this?" And from there, it was a matter of, "Okay, well, let me see if I can make this." And that hints the sample roaster journey back in our garage with me really just wanting to see how is this made, and the complexity of it went down the rabbit hole from there. So I always equate it to people that have heard someone's craft brewing story and starting that journey in their basement with a few tools here and there. It's pretty much the same approach from just a coffee junkie and wanting to learn more about it, but also have access to the different things that I was learning. So just kind of taking in our own hands.
Stephanie:
I love that. What were some of the biggest surprises when you were trying to find the beans and the equipment and all that? What were some of the biggest surprises you encountered when starting out?
Pernell:
I would say, the initial shock was just how massive, complex, the coffee manufacturing side is, whether you're talking about the sourcing of beans, which was part of your question, but also literally the manufacturing piece of it. The diversity of equipment needed, the diversity of capabilities, there's just a ton of science that goes into the process of turning a crop, which is coffee coming from the pit of a coffee cherry plant, or a fruit from a coffee cherry plant and turning that into this fine, ground product that you are brewing and drinking. And the nuances in between that to uphold integrity of that is really the really enjoyable part of the science that just, you don't know until you peek behind the curtain, fall down the rabbit hole and the learning process begins from there. So it's not as difficult to fall in love with if you're curious, because of just the many nuances in ways it becomes an art after you get going.
Stephanie:
That's very cool. And did you guys launch ecommerce first or were you also exploring retail as well? How did you think about that launch?
Pernell:
Sure thing. Obviously our go-to-market strategies much more cemented in our ideation of building the brand upfront. And so to make more sense out of that, for us, looking at building a brand in coffee in the modern day coffee climate, mind you pre-COVID, for modern day coffee climate where you have independent shops and then you have of course the conventional grocery isles and the lack of accessibility, but you also have ecom continuing to be ingrained in people's lifestyle in purchasing habits every single day. But when you look at part of the reason why coffee hadn't been accessible so much in more conventional spaces, ecoms, is because of how hyper-local the product is, and the hold coffee shop culture has on people's behaviors and what their preference is.
Pernell:
For us, it was a matter of, well, we are looking to shift the economics of how currency impacts domestic youth. And in order to do that in the commodity category, you have to be able to scale it. And if we go into shops, the margin is much tighter where we it's harder to make a sustainable contribution. But if we manufacture and we wholesale, it gives us more room to make the contribution more sustainable. And by way of that, we need to make more access and scalable environments such as retailer distribution and/or ecom. And so in thinking of that and understanding that, but knowing that, all right, we're going after this with little to no resources self-funded and with our own validation and learning curves to go from that. And so we for sure launched with ecom as our fastest point of entry, but also a place where has to validate the concept.
Pernell:
And so our ecommerce platform as well as social media, the idea of ... well, there's tons of micro roasters that pop up every day, but to pop up, but also with a very different rhetoric on being this domestic impact model, we needed to find validation that consumers were interested in that as well. And so very long-winded answer to, yes, ecom was the way we started, very much part of our DNA in the sense of being ready to own our message and also provide accessibility for people given that we don't have our own storefront.
Stephanie:
I love you started with the social impact model to derive results you wanted. How much did that really push you to think bigger and be like, "I'm not just going to go to one of the coffee shops and sell to them. We need big results with our model and to do that, we need the wholesale model. We need retailers, we need ecommerce we need like everything."
Pernell:
Yeah, for sure. We have to believe upfront, and building a hypothesis for a business that the sediments that resonated with us on there being a void of values and tangible values that were relevant for us, that other people, if that opportunity existed, we'd align to that as well. And I guess because of that, that allowed us to really focus upfront on what channels make the most sense, I guess. And so the shift in consumer behavior and the validation from consumers shifting their behavior, I want to back up and say, not behavior more so than mindset. We want consumers to still consume coffee, consume especially coffee, but we want them to know that brand B versus their brand A actually has a different value proposition that allows you to extend your impact without really changing your behavior. And that allows us to actually become considered a lot earlier than going at it in a more conventional way.
Pernell:
And so that was very much key for us in the sense of how do we make it easy for people to extend an impact without having to change their behavior, which allows us to then get them on board, allows us to get retailers on board, allows us to get businesses on board, all around shifting the commerce to be able to scale the impact domestically. So it's a little much of a lift for everyday people, but to have a much more relevant tangible sustained impact.
Stephanie:
Got it. And it seems like that story in that messaging definitely helped put you guys on the radar of a lot of new customers. Was that one of the key ways that you acquire new customers and they found out about you was getting that messaging out there and getting that PR out there for like what you guys stood for to then bring in new clients, or were there other tactics you used to bring in your first customer?
Pernell:
Yeah, no doubt. There's a fine balance because for us, we look at multiple entry points or propositions for where we can be in someone's consideration set. And then as they enter into understanding our brand and they learn more about what we stand for and ideally one if not all of them, resonate as well. And that strengthens the loyalty of if they have loyalty to the product, if they entered us through the product proposition, and/or from a brand values, and then they also love the product. And so the storyline no doubt allows for accessibility when we are introduced to someone in a non-tangible space. And so we can scale our story to impact this is normal that we're looking to bring in the sense of domestic social impact versus someone is shopping in the coffee aisle and so forth. So it definitely gives us a much more scalable share of voice that people can discover us a lot faster given the sensorial experience that most people usually choose coffee for.
Stephanie:
Got it. And at what point did you launch on Amazon? Because I saw you guys are listed there. When did you decide it was the right time to sit on Amazon?
Pernell:
Amazon was always part of our model as well. It was a matter of the prioritization of the learning curve. We launched June 1st of 2018. We had our core coffee items that Q4 of 2018 set up. And it was really a matter of just having them active so we can learn, and kick the wheels and make sure that we're not doing more harm being on Amazon and not for Amazon's sake but for, again, the learning curve. And then again, transitioning into, let's see, throughout 2019, the trial and error of learning that. But then with 2020 and prior ... let's call it, this 2019 was a matter of being digitally native, but ramping up and preparing to launch in brick and mortar.
Pernell:
And so once we got past that milestone at the beginning of 2020, of course, fast forward COVID, being on Amazon allowed us to pivot more fully into maturing, what that experience, that digital experience on Amazon looked like. And so while we were on Amazon, let's call it about 15 months prior to launching our formal storefront. When we launched our foremost storefront in early April this year, that's where we really were able to drive people to who we were, what we represented in a way that it was much more convertible given that people were ... this shift of coffee and consumerism and accessibility changed completely of course because of COVID.
Stephanie:
Yep. So essentially you were shifting over to retail and then COVID hit, and then you were like, okay, now back to Amazon, back to our platform and you had to quickly change once the world started changing.
Pernell:
For sure. I think the benefit was that we were already digitally native and our site being the hero experience, having an extension by way of Amazon and the size of traffic and consumers they have. But no doubt when it became time to diversify our revenue streams, fortunately, we were much further ahead of the Amazon experience look like then more of the, it's called the indie boutique micro roasters that relied on shops and didn't have a digital experience. They had to then began the learning process as well.
Stephanie:
You were already ahead of the game.
Pernell:
Fortunately. The case study for us was a matter of, can we accelerate our awareness curve of what we stand for in order to convert enough people at a healthy enough rate that without having a shop, we can convince those consumers to purchase more coffee for home or those that were buying coffee at conventional grocery areas that the quality and the value proposition of a slightly higher price point is still worth it for them at least to get them bought in? And so the shift of COVID and the states closing and all the shops being closed, it's completely changed the necessity of everyday people to have to purchase more for home and we were fortunate on the front end of that just from a digital standpoint. Brick and mortar as well, because of the timing of us launching was just ahead of the pandemic really showing his face, but the digital pieces was definitely huge.
Stephanie:
Yeah. Before we get into brick and mortar, I want to dive a bit more into how you sell on Amazon. How does it differ when you sell an Amazon or what are you seeing right now versus your customers that maybe buy from your website or customers that even buy from target.com or something? Do you have different messaging or what kind of things are you seeing behind the scenes?
Pernell:
We offer a singles as well as a bundles, two packs. And just from a sheer economic standpoint one of the old challenges from being a omni-channel brand that also lives on is retail price and the disruption of an everyday price with the retailer versus what he shows up on Amazon. For us, we worked through Amazon's fulfillment centers and allows us to control the price, but from a bundle standpoint, it allows us to ensure that we have the same product proposition, but in no way shape or form any pricing activity would disrupt because they are from a item count standpoint, different experiences. And so that was a core piece of how we stood up our business initially, and some of our bundle items do better than our singles. The ones that don't do better do about just as strong.
Pernell:
And so seeing people go on Amazon really as a basket builder, it has been huge. And even from an awareness play on the amount of users that Amazon has, we focus specifically our consumer acquisition on Amazon platform. So we don't really focus on driving people to Amazon because there's so much space to play and win within Amazon as we're still early on as well. To the other pieces, as our site continue to build, we have seen pure incrementality from the Amazon platform where we don't see the shift of trading one consumer from one to the other. It's very key to being an awareness play for us, but then just, we have to also come back to the reality of consumer dynamics. And what does the social landscape look like? What does the economical landscape look like that's impacting those consumers? And the focus on supporting small businesses, supporting black-owned businesses, and then the accessibility of specialty coffee.
Pernell:
People are much more intentional about whether they want to save a dollar for Amazon or shave two days off Amazon versus support individuals that are trying to build their businesses and support them where margin is much more supportive and favorable. And we've seen the incrementality on both sides from consumers that are more mature on Amazon and those that are really looking to put their dollar further into the business to support the businesses during these times.
Stephanie:
Yep. That's great. Your users on Amazon, do they seem stickier? Because I often think about like, when I'm checking out whether it's through using Whole foods or whatever on Amazon, they always give me the recommendations or they're like, "You'll just buy this again." And I'm very quick to be like, "Okay, sure." And it seems like I'm a very sticky user when it comes to reorders. How does that customer profile from your Amazon customers seem to differ from people who are maybe just going direct to your website because they want to make sure to support the business and the message and they understand that by going there directly, it's probably going to help margins and the story behind it.
Pernell:
To a certain degree, our engagement is really high on our platform and with our community and our email list as well as on social. And so we get a lot of stickiness from our existing community and bringing them in. And so from an anecdotal read, there's just a significant amount of loyalty, not just to what we're doing, but what we're offering. And our subscription business is really strong on our site. When we do drop new launches, we also see a quick adoption on those as well, and so we have much more flexibility on those. Just launched a limited edition collection just ahead of the holiday season. We're able to fluidly do that where in Amazon, while it's not a brick and mortar, you still have to have much more lead time built into that versus being nimble as a small business.
Pernell:
And so even in putting something else that adds a little bit more complexity, it's incremental from a experience, from a product standpoint. Our consumers also still highly converted on that even though we have a strong subscription business. The Amazon piece is, what we see is also very sticky, but we still have much more conventional tactics on whether it's a prize promotion here or there or the affiliate programs that come from press that are driving the Amazon. We see those strong conversion pickups as well. But I would say again from an incrementality, we are pleased with the learnings that we have right now from the stickiness of it, but at the end of the day, we still from the recording of today, we are still, in this pandemic and trying to navigate life through it and the loyalty from coffee isn't going away anytime soon. And so I think people, wherever they're most comfortable with shopping are still highly susceptible to converting because they know that they need that fuel.
Stephanie:
Yeah. I think that's smart as you were mentioning to develop a different kind of experience on your website, not only with subscriptions, but also limited edition drops. So you get early access to and developing that community seems key. How do you go about, not only curating and developing a community, but also keeping them engaged for that longterm?
Pernell:
Yep. No doubt. I think the most important piece of this is no doubt customer service and experience. What we don't want to be is a one trick pony in the sense of, hey, we can do these two things really well because coffee is very vast. And as I mentioned earlier, the spectrum of coffee is really wide. And so we don't want to be too linear to offering only certain flavor profiles whereas as people either discover new brands or their options of how they safely access their daily fix of coffee or caffeine, that we then follow it lower in the consideration, or we just have to lean on whatever consumer habits that they had in the current, but we'll then be in the past.
Pernell:
And so for us, it's a matter of continuing to diversify, evolve what the experience and options are on our platform in particular and try to drive our email list and drive as many people to our site, so we can capture and engage with them so we can continue to evolve with them on their coffee journey and make sure that our offering is healthy enough, that we can do that without gridlocking our operations and our other distribution priorities.
Stephanie:
Let's talk a bit about retail. You're in some good stores. I saw you're in Whole Foods, Target, and I was reading a bit about how you got in front of these retailers. I think you were going to sourcing call events where they had like pop-up events. And I was wondering, how did you get in front of these retailers? How did you peak their interest and what was that process like?
Pernell:
For sure. A big piece of BLK & Bold and my co-founder and I bringing this to life was our formal background prior to. We launched this in our 30s, our early 30s and Rod's background being in philanthropy and fundraising with higher education healthcare, and mine being in corporate merchandising, brand business development around packaged goods. And so the lens that we took to the white space of coffee was a by-product of what lanes exists within coffee. And the understanding that the accessibility gap was huge when you stepped out of a premium specialty coffee shop that's in neighborhood A somewhere, and trying to carry that across the country. And so, understanding that we know where the opportunity is, which again, ecom retailer shelves, now we have to build something viable enough that allows for them to consider us from whatever the right starting point is and from the way those retailers test or minimally launch.
Pernell:
And so our journey throughout 2018 and 2019 was operations, learning curve and validation of consumer marketing. We did a ton of road shows, just consumer shows engaging them on the product. And the aha moments for most of them were the 5% for our youth model that we have. It wasn't where they were introduced to us. It was supplementary validation for them. And so continuing to drive that part. But then also just from formal background within retail, understanding that there's different engagement points. We are a certified minority business enterprise, which is a national certification organizations out like that, where they have shows and tons of industries that attend these to meet diverse or minority owned businesses. And fortunately for us, we have visibility to select retailers that attended these as well.
Pernell:
In addition to digital platforms, there's one called a RangeMe for those that are not familiar, that is a virtual marketplace for all packaged goods brands and merchants, which is hyper dependent in today's climate, where corporate is not allowing people to travel. And so knowing where to start and having something viable was number one. Number two is being a student of those retailers isles. Understanding who was in the competitive space, how long they were there, what a swarm in they were there for so you can understand what their core consumer was, but then what value proposition do we incrementally bring for that merchant? What problem are we solving for that merchant? And so that was a big piece of when we had our opportunity to engage with these different retailers. Target, for an example, we understood what value proposition we were looking to bring to them. The conversation from there became a matter of readiness operationally, organizationally, to be able to launch and sustainably start with intention, of course, sustainably growing.
Stephanie:
And was there a bit of back and forth with the retailers when they were like, "We're interested, we love your model, the coffee is great." Were they giving you any guidance on, here's what we think will do well on the shelves or here's how to set yourself apart, or was that really all on you guys to do the research, figure it out and present, here's some maybe new packaging that we think will do well at Whole Foods?
Pernell:
Yup. For sure. It definitely, it can be either way. We had our first, let's call it national launch or a major launch was with Target Corporation, at the beginning of this year on about 300 ... it was 350 stores across the major markets within the US. The conversation and the process of having that launch was about a nine month process from introduction to essentially the product arriving on the shelf. And this was from our social media engagement and fortunately word of mouth being passed on to Target for a show that they were having, we received an invite and we were fortunate to have an introduction with the coffee buyer and allowed us to further the conversation, this is not only our business model, but our case, the consumer that we're looking to capture and the incrementality of that consumer to retail.
Pernell:
But then, thereby also helped us understand where our strategic priorities were in a sense of how this space is set up and where there may be room to identify the incrementality if it's really there. And so the feedback on just the core consumer that we're going after and aligning on that was very real. And quite honestly, for us, while we had that opportunity to have the connection and the conversation, we knew we weren't ready because where our packaging was, we had a checklist of key things that we wanted to accomplish before we entered onto a shelf, so we can have our best foot forward, and we were halfway through that checklist. And so the merchant said, "Hey, well, when do you think you're ready? Well, here's the key things that we need to accomplish."
Pernell:
B Corp certification was one, which was, we hadn't got through the finish line on it yet, and the rebrand on packaging and also some of our operational scalability. And so that nine month journey was really with, understand the strategic vision values and knowing that with accomplishing that, we can have a solid start together to go push it through. In January with that launch then gave us the opportunity to credibly approach other merchants with some understanding that we were already vetted and well equipped to enter into their shelves as well if we had the same alignment on the value proposition. So the Whole Foods conversation was a lot more in the sense of, "Hey, we see what you're doing here. Here's some of the assortment that you have that we think will work really well is some feedback on what may not be yet, but let's get started and let's find out together."
Pernell:
And so it was much more collaborative in the starting point and from my experience, that's exactly what you want. If you're pitching to retailers with the hope that they will take whatever you're pitching, I made the perfect vision, they didn't ask me a question, they're going to take it. Where the risk is that they don't understand enough of where your blind spots may be, and you're all going to find out-
Stephanie:
Yeah, you want to partner.
Pernell:
Yeah. You all are going to find out together and that's the last thing, because it's really expensive to back out of distribution. So any who.
Stephanie:
That's so smart. I love the idea that you had the checklist going into it and you were open with Target, like, here's the things that we need to knock out. Tell me a bit more about what else was on that checklist and why were they important? Like why were you looking to have that B Corp certification and what else was on the checklist on top of that?
Pernell:
Sure thing. The B Corp I would say is a major one. I have to remember some of the smaller ones, but the B Corp was a major one mainly from being in retail. And once you learn about B Corp, it's hard to unsee it. But it being a ... it's essentially a independent organization that certifies businesses, those that value stakeholders equivalent with shareholders. And so being for-purpose being equally as important as for-profit and you have organizations like Ben & Jerry's, Tom Shoes, Warby Parker, Patagonia, these major organizations that are all at B Corp, they continue to move into improving society while again, building sustainable businesses.
Pernell:
And for us with, having this domestic social impact focus, the model doesn't exist. It's unfortunate it doesn't, but that's also a core reason of why we decided to go into this space. And knowing that, given that it doesn't exist and at the scale that we have to start at, we want it to be taken serious to our consumers and our stakeholders on the intention of where we're going while we work on getting there. And so with the launch into retail and being on the national stage, we took it various cities to make sure that we have third party validation vetted out already for us, for people that can engage with the brand.
Stephanie:
I don't know much about court structures. Are there also benefits that come with being a B Corp?
Pernell:
Yep. There's different tiers of ... you can incorporate it as a B Corp if your state has that as a legal option. And that I think there's definitely a different tax implications for being a legal B Corporation. And then there for states that don't, and this is the way that it was initially set up is that there's a certification and you're certified by, it's called B Labs, which is the umbrella organization. So you're certified by B Labs. And then as they continue to build momentum and further penetrate their models where the states began to allow it to be a legal entity structure.
Stephanie:
Got it. And then tell me a bit about, so you're getting into these new retail locations and you're working on your packaging and getting certifications. Tell me about how you guys are preparing for the orders. What were you doing behind the scenes with distribution and logistics and setting up partnerships? What did that look like?
Pernell:
Chaos.
Stephanie:
Craziness to say the least.
Pernell:
Yep. Chaos. Again, self-funded bootstrap and never want to put the cart before the horse was really a matter of trusting our forecast and building enough bandwidth to at least get through the initial hump of a national launch. And so then instead of today, we do everything in-house. We source and we work with our importers. They move the goods right with export departments, but we are identifying what origins we want to source through. We're doing all of the testing cupping and validating the integrity of what we're putting into our product. We micro roast in-house, we package in-house and we work we shipping partners to get goods out the door.
Pernell:
And so at the time, we had graduated from the garage and in to a shared production space with a local brewery. That's where we had our commercial roaster and we essentially had to tighten up our ship, bring onboard a few individuals that had coffee background in roasting and packaging to help us get the Target launch out of the door. And so that was a mad hustle because again, it was, here's what we are, here's the bandwidth we have, we're going a 100% capacity, sometimes a little bit more than that to get the launch out of the door with the intention of sourcing a new location that we can grow into. And so, fast forwarding that story, we had identified a location and we're closing the deal in March. And of course pandemic changed all of that. And so we found ourselves still running idol in that location for a while, but it wasn't with a bevy of orders and things until we started getting further into the summer. And that's when we got flooded in that space with orders go on and so forth.
Stephanie:
If you were to look back and change anything, what things would you have done different if you were to start again? And it can't be everything. You just got to pick me like, there's this one thing when I was setting up my partners or distribution or with the retailers I would've maybe done this differently.
Pernell:
It's tough because there's been too many reasons because there's so many learnings and it sounds so cliche, and that's why I was trying to prevent it sounds so cliche, but there are so many learnings that if I didn't learn them then I'm going to have to learn them later and I just don't know it yet. Because we are continuously learning and it's not just about coffee, but it's about, you're in a space where we are looking to win over over the longterm consumers into not only what product was selling, but the impact that we're selling and there's so many curves along the way. And so I am happy to have the learnings that we do have in the bank checked off. I think more so it's a matter of how do we continue to broaden our view to mitigate blind spots?
Pernell:
What I would say is one of the things that was hugely helpful early on as we were initially launching with literally our hearts on our shoulder was sharing what we were looking to build with some other professionals, just more mentor related people in the network. And as our informal mentors, that fortunately connected in to a formal mentor that was previously executive within the industry and just gave me a history download on how coffee and the industry came to be. And that in itself, just broadened context more so than why you have to, you're crossing Ts and dotting Is and every single step of the process. But to have that broader context of how the industry around you got to its point just fast forwarded that blind spot for sure. I would just try to color it all in.
Stephanie:
Do you have other mentors right now that you rely on or that help when it comes to guidance or showcasing what else is happening in the industry or ecommerce as a whole that you lean on?
Pernell:
Yes and no. Informal, for sure. Students of work, without a doubt. I think it's important to have a broad lens on what's working across different industries in digital in particular. And so if you rely on someone that's hyper-focused on a particular industry, then it may mitigate you from having your antennas up to learn about other things that are working elsewhere. But I'd say informal, yes. But tapping into what's working for them and learning from there, it's really hard. This may be a me statement, but I'm sure it may resonate with someone else out there. It's really hard to move at the speed of entrepreneurship and startup, and to have someone that isn't as intimate with your business to give you specific guidance on building the business more so than giving you more visibility to things that work and that exist. So it allows you to be able to align closer and jumping into rabbit holes further that you know may be in the path where you're going. So much work is done offline that having visibility of things allow you to dive into it without having to bottleneck someone else's time and do it.
Stephanie:
I think that's really good advice. And a mentor might fail to give you a higher ideas or industry level things or maybe connections but I think it's the same thing when it comes to investors, the second someone starts giving you like really nitty-gritty advice on what you should do, you might want to be a little wary of that because you know your business best and you know where you're headed. What's next for BLK & Bold. Where are you guys headed? What are you betting on right now?
Pernell:
Sure. We're still young and awareness is still important, accessibility is still important. The more traction we get, the more we can further cement our contribution model. Now that we've kept the door open, even minimally in the product assortment that we do exist in, the more immediate is to continue to round out our accessibility, but with our key partners that have strategic alignment with us. And so we have retailers that we're on board with today, Target, Whole Foods, Hy-Vee in the Midwest and we're rounding out a few more that have shown very important strategic alignment with us. But then we're also looking to diversify outside of just retail shelves and moving into food service that allows us to have more B2B contracts that are now consumer adoption, but also businesses to help further the impact which ultimately helps drive consumer awareness as well.
Pernell:
And so from a ecom standpoint, home base is home base. And so we're going to continue to pour into our website to be more proactive in how we drive engagement, but also acquisition. And also, we're selling a tangible good. And so while that's key and that's great, we also have to look at supply chain, all the efficiencies, but innovation that's out there to allow for us to continue to connect and win with convenience and accessibility from what that means from a D2C space as well. We got some ideas under our belt on some strategic partnerships that can allow us to further that. But without a doubt, continuing to further develop our D2C. And the more important pieces that help our community better be more transparent with how we are building and continue to support from an impact model, but also to build more loyalty for that come in to see it in action.
Stephanie:
That's awesome. I'm excited to see, especially that B2B piece too. I think that could be such a strong partnership. I used to work at Google and I think about the road shows they would do and having companies come and all the employees would test out the coffees and the chocolate and all that. And that could be huge and very smart partnership to have that B2B angle in there.
Pernell:
No doubt.
Stephanie:
All right. We have a couple minutes left. Let's move over to the lightning round, brought to you by Salesforce Commerce Cloud. This is where I'm going to send a question your way and you have a minute or less to answer. Are you ready for now?
Pernell:
We'll find out. Let's do it.
Stephanie:
All right. What's up next on your Netflix queue.
Pernell:
Gosh, I just googled this yesterday. The Undoing. I think that's what it's called. We just ran through all the Schitt's Creek. So TBD on Netflix.
Stephanie:
All right, there you go. And I've got Hilary in this document say, "It's amazing, and it's on HBO." So that works.
Pernell:
Love it.
Stephanie:
All right. What's next on your reading list?
Pernell:
Oh my gosh. Besides emails?
Stephanie:
Yes. Besides emails. It doesn't count.
Pernell:
Oh man. It's a great question. I digest so much content through just online, but if I'm looking at something tangible, it might literally be a roasters magazine.
Stephanie:
That's great. We have not had anyone say a roasters magazine.
Pernell:
Yeah. In the anecdotal know of what's going on.
Stephanie:
That was perfect. If you were to have a podcast, what would it be about, and who would your first guest be?
Pernell:
Oh, goodness. First guest would be Rod, my partner. What it would be about? I don't know, the random things we come up with throughout a day, which is a plenty, and most people don't get to see or experience. You're building something with a best friend you have for over 20 years. You can only imagine the randomness that comes about within a day.
Stephanie:
Oh my gosh. I love that. I could see that being really fun. Pernell and Rod's musings.
Pernell:
Love it. Love it.
Stephanie:
That's great. What topic or trend or theme do you not understand today that you wish you did?
Pernell:
That I don't, that I wish. Oh my gosh. This sounds terrible, but Twitter. I tried to figure out my Twitter game early on when everyone else was, and I was just too loyal to Facebook. And now here I am still trying to figure out how to not tweet on the wrong thing or something.
Stephanie:
Me too. Well, what's your Twitter handle? We'll get you some followers there.
Pernell:
It's Pernell Cezar. [crosstalk] name.
Stephanie:
Oh my gosh, you don't even know.
Pernell:
Yeah, I don't.
Stephanie:
Well, that's the problem Pernell, you don't even know your handle. I actually don't know if I know mine either. We'll link it up in the show notes. There you go.
Pernell:
Okay. Appreciate it.
Stephanie:
All right. Then the last one, what one thing will have the biggest impact on ecommerce in the next year? And it can't be COVID.
Pernell:
I know that's right. That's a good point. From a good standpoint, I do think supply chain, speed of delivery on native sites and not having to be relying on third party commerce platforms. We know the behemoths, they in-house a lot of that and they have major contracts that do that. But the comeback of boutique independence and owning their future I think really be a by-product of independent supply chain companies doing the same thing. So again, from a packaged goods or a tangible product lens, but I think BLK & Bold can deliver something in a matter of hours and not having to rely on Amazon, that just drives that much more engagement and loyalty for the longterm.
Stephanie:
That's great. Cool, great answer. All right. Pernell, well, I've had a blast talking to you on here. Where can people try out some BLK & Bold and learn more about you other than Twitter? They shouldn't go there right now.
Pernell:
Yeah, don't go there. But on social media platforms, BLK & Bold, spelled B-L-K and Bold, and then our website, blkandbold.com.
Stephanie:
Awesome. Thanks so much Pernell. It was a blast.
Pernell:
Yeah, same here. Thank you.
Think about the last ad you saw an ad that had an image of someone’s living room. What color was the throw pillow on the couch? Was there a dog present? How many people were pictured? You might not know the answer to those questions, but the marketers who put that creative together sure do, and you better believe that they thought long and hard about each of those aspects and dove deep into some data to decide exactly what to include in the ad
Those minuscule details may seem frivolous to the naked eye, but the data proves that every decision you make in your creative process has an impact on the bottom line, and the ecommerce businesses that pay attention to the data while still putting their own spin on the creative aspect are the ones that are rising to the top.
R.J. Talyor is the founder and CEO of Pattern89, which uses A.I. and machine learning to analyze advertising and guide marketers toward the performance metrics that matter. On this episode of Up Next in Commerce, R.J. takes us through the most recent trends report that Pattern89 put out, which includes some important information about why businesses should be paying particular attention to copy and hashtags. Plus, R.J. gives tips on how to avoid the trap of following “best practices” and why creativity will always win.
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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Transcript:
Stephanie:
Welcome back to Up Next in Commerce. This is your host, Stephanie Postles. Joining us today is R.J. Talyor, the CEO and Founder at Pattern89. R.J., welcome.
R.J.:
Hey, thanks for having me. Appreciate it.
Stephanie:
Yeah, I'm excited to have you on the show. I just downloaded your report, as you saw, right before the interview and I feel like there's some good juicy stuff and the things that you guys are doing and we'll have a lot to talk about today.
R.J.:
Yeah. Great.
Stephanie:
So tell me a bit, what is Pattern89 and how did you go about creating that?
R.J.:
Pattern89, what we do is we predict creative performance with machine learning and AI, and I've worked in digital for almost 20 years now. I worked at ExactTarget and then at Salesforce and then at another social startup, and learned quickly that marketers are spending so much time creating journeys and figuring out who their audience is, but still use a lot of their gut on what creative to put in front of those audiences, or in the places in the journey. While data is being used to figure out what and who, it really is on the creative side, still kind of a gut decision. And so set out about four years ago to help marketers use AI and machine learning, to predict creative performance, and now we're a 25 person strong scale up and serving customers all over the globe.
Stephanie:
That's awesome. I was reading a bit about your data co-op and how many brands you have that you get to look through all the data, so give me a little bit of like the behind the scenes of what kind of brands do you have in there, if you can share, how many do you actually have, and how do you go about looking at all of their data?
R.J.:
Well, when we started the business, we knew we needed a giant data set in order for the machines to find patterns and outliers that would actually help creatives, and so we started offering a free scorecard or creative assessment in exchange for joining the co-op. We're almost at 2000 brands who-
Stephanie:
Wow.
R.J.:
... have connected their accounts to Pattern89. And our machines, they don't actually look at anything that's identifiable. Instead, they're looking at 49,000 different creative dimensions of a piece of creative and tying it to a performance metric. As an example, it might look at a picture of a living room and say, "All right, there's a couch, plants, window. Is there a human or not? What color is the couch? Is there a blanket on the couch? Is there a dog in the picture?"
R.J.:
Then associate that with a performance metric, like, did it drive X purchases or Y video views or X views, so then we can understand in aggregate what are the patterns and outliers that we're seeing across massive amounts of data, so that we know living rooms actually perform better when there's an orange throw pillow on the couch, for example, like the one small detail. So massive amounts of brands, massive amounts of data, and really granular creative insights.
Stephanie:
Very cool. How do you go about, if you're looking at that kind of anonymized data and you see something doing well, how do you know it's doing well? Maybe because it's a Nordstrom where it's like, well, of course they have brand recognition, it's very easy to buy from them, versus a brand new D2C company where maybe one of their ads is doing well, or it's not doing well and it's kind of getting skewed because they don't have that brand recognition.
R.J.:
Yeah. That is a big question. The first thing to know is that our data science team uses a set of statistical tests to kind of ferret out what is actually driving the performance or not driving the performance, so that we're not chasing after kind of red herrings. The other thing is from an audience perspective, the history of that audience use, so is it a brand new audience or is it a legacy audience? Is it a customer loyalty audience or something else like that? Those are all the components that are also taken into account so that we can distinguish between maybe the brand legacy of a Nordstrom versus an up-and-coming D2C startup and still provide statistical significance at over 95% competence.
Stephanie:
Got it. What things do you think are going to work in 2021? I mean, I was just going through the report that I mentioned earlier and I mean, it was cool because it's all the way down to "Here's certain emojis and colors and imagery is up, but maybe with multiple people or one person and video's down." So tell me a little bit about what you guys are seeing and predicting to work well when it comes to advertising and copy in 2021.
R.J.:
Yeah. Well, the first thing that it's important to notice, the creative lifecycle has shrunk and rom a creative life cycle perspective, it's just a lot shorter than it's ever been. In addition to the creative life cycle shortening, what is performance in those creatives is changing as well, so the best advertisers have a 2:1 image to video ratio. While video performs a lot better in general, image to video 2:1 is the best performer for top performers in the dataset, and we're seeing more and more emphasis on video and video performance, but videos tend to be more expensive, so 2:1 is a good framework.
R.J.:
Then taking a look at what's trending and what's forecasted to be a performant in 2021, we see things like TVs and electronics really improving cost per clicks, also spas and massages, those types of things. And then maybe not surprising, we're seeing a lot of isolated people, so one face in creatives and those people are reading or studying or doing something by themselves, which kind of reflects the world that we're living in, especially as we head into 2021.
R.J.:
One of the surprising things, and sorry for all the cat lovers out there, is that pets typically do very well, dogs and cats, but we're actually seeing cats driving performance down. So it's more expensive to advertise with cats in 2021, so just keep that in mind as you're here.
Stephanie:
That's funny. Don't put a cat in your ad.
R.J.:
Yes, exactly. Yeah. But consistent performers, things like images or videos of those people exercising, phones, images of cities, those types of things are really staying flat. This is all going to change by audience and by brand, but in aggregate, those are the things that we're seeing rise, staying steady, and then underperforming in terms of predictions.
R.J.:
The other thing that we analyze is color and the importance of color driving performance in 2021. In December, we're really seeing kind of teal colors and blues perform best, but what's trending up in 2021 are, it's kind of this peachy color, and I can give you the exact hex code for the designers out there, but peach and dark green are really trending up and they've been trending up over the last three years, while kind of a pinky and a brown color are really trending down for the last three years and will continue to trend down. It's kind of funny as we think about what background colors or what shirt colors our models should be wearing, or how we should stage a photo shoot, or even what stock photo or image or video to pull, these types of decisions can impact your CPMs, your CPCs, and your click-through rates and ultimately your performance, so it's good to have the data on your side.
Stephanie:
Yeah, that's great. The one thing a lot of guests have mentioned is that more organic videos, iPhone videos, even iPhone photos have been performing better for them then-
R.J.:
Yes.
Stephanie:
I mean, because a lot of them couldn't stage things anymore in their studio, or didn't really want to use the stock photos. Are you seeing the same thing?
R.J.:
Yes, and especially selfies, really driving performance up. So when influencers take a selfie video, which might've seen sort of not have been as polished as in the past, but selfie videos in the data is actually spiking in performance as well as popularity, so yes is the answer to that.
Stephanie:
Cool. Any other trends in that report that stood out to you that were maybe a bit surprising and you were like, "Why is that happening" or "Why is the data showing that" where you had to dig in a bit deeper?
R.J.:
One of the other things that's really surprising when you deep dive into the report is copy and the impact of copy alongside your creative. Oftentimes we spend a lot of time developing what the creative would be, and then maybe we'd just go with a standard message, but the impact of performance when you have copy that's like 5 to 15 characters long, that's what's going to drive the best performance for awareness or top of top of funnel campaigns, whereas body copy needs to have between like 40 and 60 characters and should include a hashtag.
R.J.:
What's a little bit surprising about hashtags specifically, is that including a hashtag overall improves your performance, but it's going to be a little bit more expensive. And then even further, if you put a hashtag as a text overlay on an image or on a video, you're going to see the costs go up even more. So it's funny how best practices intersect with performance in good and bad ways, and what we're kind of distilling down is how the algorithms at the individual platforms prioritize or deprioritize content, based on supply and demand, like what's popular and what's actually performing.
R.J.:
If you think about it from the platform perspective, they want creative diversity. They want you to be producing something that creates more thumb scrolling and more content engagement. So they're looking at how much of X do we have, how much of Y do we have, and then prioritizing content that favors newness and differentiation and engagement. Anyway, some of these things are like, need to put a hashtag in there because that's actually going to drive your performance up, but it might also drive your cost up so you've got to kind of weigh the pros and the cons of each creative dimension.
Stephanie:
Cool. I'm thinking about all this data and feedback that you're giving to customers, and how do you make sure that they don't all start doing the same thing where it's becoming like a self-fulfilling prophecy? Because I know a couple of guests prior who've been on the show previously have mentioned, like, "Don't go in the Facebook ad library and try and get inspiration from there, go to the books from the 1960s and check out what was happening back then. Don't just look at what your competitors are doing, because the second you start just doing what they're doing, you lose." So how do you make sure that your clients aren't just all doing the same thing, driving the same trends, driving the rates up or down because they are all hearing like, "Oh, the color green is like the way to go"?
R.J.:
Yeah. Well, I love what you're saying there because I have really railed against "best practices" as a way of doing marketing, and so much is changing that I think a lot of marketers go to "best practices" and then look at a creative forecast from Pattern89 or some sort of other data source and say, "All right, that's what we should do." The problem is exactly what you're saying, which is that if we all do the same thing, then the advantage goes away. Instead, we need to think about data and creative AI as a recipe. Every chef gets the same... I love watching food TV, like Food Network and all that stuff, and you can give Michelin star chefs the same recipe and they all make something different, even though the recipe components might be the same.
R.J.:
I think that that's how we have to think about creative. How does our brand interpret these recipes? How do we make it distinctly ours and so our brand message shines through while also honoring those creative elements that the algorithm cares about? A good example is we know that 40 to 60 body copy characters, so we should have a 40 to 60 characters in our body copy, and a hashtag. So don't go copy paste some body copy from a competitor and just change the brand name. Instead, what's the unique message that you want to tell in that? And then what hashtag can you use that actually spells out your brand message? Or if we know that images of people studying or reading books are important, what is the way that we can tell that brand story in a funny way, an engaging way, in a serious way? However it reflects your brand.
R.J.:
I've used this slide in a presentation where I actually have five different brands, Instagram posts, where they're all advertising athleisure wear, and they literally all look the same. It's all a woman who looks fit, who is exercising in her sort of ethereal-looking inside apartment. It's like literally the same creative and you can't distinguish between those ads, and I think that's where we're seeing kind of the "optimization to best practices" cause problems. Instead, we need to figure out how do we take this creative recipe and put our humanness or human creativity to tell that story in a new way? So be aware of best practices is the summary there, and instead use it as a recipe and create from there.
Stephanie:
Cool. Are you kind of guiding your clients when you're like, "Okay, we see these emojis are trending, these colors are trending, here's the copy limits that are trending, but here's maybe how to apply this to your brand" or like, "These photos are trending, like you said, but here's a funny spin that you can put on it individually." You're kind of giving like one-to-one advice instead of just like, "Everyone try that and figure it out for yourself." How do you go about guiding your clients?
R.J.:
Pattern89 is a platform, so we serve as a data service, effectively. When we get on a call with a customer, our creative agency will often say, "Here's what's trending up and here's how your data matches or doesn't match that trend. And then also, here's the counter-trend to it." Some customers are like, "No, we just want to kind of play it safe and go with the trend." Others say, "Hey, what's the counter trend? What's the outlier? What is the opportunity there?"
R.J.:
It just depends on if the brand likes to play it safe and predictably, or they're willing to take some creative risks, and it actually depends on their level of risk tolerance there, because some people just want the sure thing and, "We can follow the trend or the best practice." But then others say, "Hey, we're willing to take a risk. Our brand is about risk-taking or about X." So it depends based on that. Then sometimes we work through creative agencies and digital agencies and coach them to say, "Hey, here's the risk of going with the trend versus here's the counter trend" or "Here's how your data intersects or conflicts with that."
Stephanie:
Yeah, very cool. What kind of variables do your models look at to see? I mean, not only the cost behind things, or maybe what's doing well, but how do you know something's doing well? Is it engagement? Is it people clicking through on an ad? What's the success rate in figuring out what a trend is based on? One good example is someone was talking about influencers on the show and they said someone can get like a billion likes on their posts, but that doesn't mean they're an influencer. You need to look in the comments and see are people in there asking like, "Hey, where can I buy that shirt from" and actually consumers who are ready to convert and do what that person's saying. So what things are indicators to you in ads doing well and actually will create a conversion or a new customer?
R.J.:
Every prediction in Pattern89 or in the platform has two factors. One is who's the audience, and then two, what's the objective? The audience can be net new customers, it could be loyal customers, it can be previous purchasers, whatever the audience makeup is. Then the objective is what the machine understands. Are we trying to drive the lowest CPM? Are we trying to drive app downloads? Are we trying to drive purchases? Are we trying to drive likes and follows? Whatever that overall objective is, so the machine knows, "This is the audience, this is objective, and then this is the candidate set of creatives that we want to drive for one of those objectives for that audience."
R.J.:
So if the objective is purchase, then we can tell you exactly what's going to drive purchase. We can't predict sentiment of comments. As you're suggesting with influencers, that's just a limitation. But a good point to note that what the AI can do and can't do, so that you can set the engagement up for success.
Stephanie:
Is there any new advancements in tech data you're looking at to kind of gauge that sentiment? Or anything else where you're like, "We aren't there yet, but we're looking at this because we think it's an important field going forward"? I mean we just had yesterday, the VP of data science at Stitch Fix on, and she was kind of mentioning just that there's a new demographic coming on the market, they speak very differently, and so they need different types of natural language processing to figure out who this person is to then be able to respond to them how they want to be responded to. So is there anything like that that you're watching right now or looking into?
R.J.:
Well, just on that comment, I need some natural language processing to handle my 12 and 13 year old nieces who I'm like, "I don't... " When we text with them, I don't know really what they're saying and I thought I was cool. So I'm just using that to-
Stephanie:
Oh yeah, my-
R.J.:
Yeah.
Stephanie:
I feel that. My mom sends me screenshots that her students, because they're all doing Zoom calls right now, she's a teacher, and she's like, "These kids just talking, they're like 'NVM,' what's that mean? And then there's a U and then there's a two" and this and that. She's like, "I don't know." And apparently they gave her the acronym for "Pony hair, don't care," but they just put PDC or something and she's like, "What's that mean?" I'm like, "I honestly don't know." I don't think that means anything. And she was like, "I found it out. They were making fun of my ponytail." I'm like [inaudible 00:18:44].
R.J.:
I imagine Urban Dictionary is getting a lot of site traffic from people like me these days.
Stephanie:
Yeah. I mean, yes.
R.J.:
Well, I'll tell you, we've heard a lot of customers ask for sentiment, like you're describing. The other thing that's of particular interest is the multi-touch journey. With Pattern89, we can predict what people are going to do, like a one hop. So I can tell you if they're going to download the app, but I can't tell you if they're going to use it, or I can tell you that they're going to put something in their cart, but maybe not purchase it.
R.J.:
What marketers really want to understand is how do we actually predict creative against each of the steps of the marketing journey that they're setting up for the customer, versus like a point in time? That's what we are really locked in on, is how do we predict creative performance across that life cycle, versus just, they did one action on a social site or one action on as a result of seeing your ad on Google or something? So it's this multi-touch attribution issue.
Stephanie:
Where do you see the future of attribution going? Right now I'm interested in it because I was just listening to a bunch of podcasts about attribution with TV and other types of media and how it's very slow to evolve, but it's something that people are going to be very eager to figure out over the next couple of years, about how to like measure things. Is there anything that you guys are looking into in that area or just keeping tabs on?
R.J.:
Well, I'm keeping tabs on kind of there seem to be two counter trends going. One is that everyone's going to new payment options and new conversion options on their phone, and there just seems to be more and more like mobile payment, fractional payments, mobile wallet, Afterpay, all that type of stuff that I think is going to create even more data that we can understand the ultimate conversion especially in retail.
R.J.:
The counter-trend is a cookie list future and a highly-private world and GDPR, et cetera. Those seem to be counter trends to me where we could get to a fully anonymized world where you just have no idea what happens, or to whom, I guess. And then the opposite is we can know everything. So I don't know that I have an official prediction, but I'm certainly interested in those paths, diverging and where we end up. Yeah, I think that that's going to be super interesting as it accounts for attribution.
Stephanie:
Yeah, I'm definitely paying attention to the cookie list future, and I mean I think Facebook's fighting pretty hard at that so it seems like it might be a long process if it were even go through, because a lot of people are against it. That seems like a scary place though if you really can't show what you're doing.
R.J.:
It is, but I think... I have a creative background, I majored in English, I have a master's in creative writing, and I came into technology kind of thinking creative is the actual differentiation. But so many liberal arts people, so many marketers have been told to act like machines and just make only data backed decisions, and of course that makes a lot of sense, but I think we've kind of over-indexed under the data side and it kind of left creativity out to dry as kind of like, "Those are the crazy creative people over there" or something.
R.J.:
I think that the cookie-less future and all this, because ultimately we're going to lose some of the sight of the data that we were able to pull before, and instead, creative is going to win. Personally, I believe that as the CEO of Pattern89, creative is going to really matter as we head into the next 5 or 10 years, because we don't want to... To the earlier question about isn't AI or machine learning just optimizing to the same exact thing, well, yes is the answer. How do you diverge from that while you introduce new creative ideas? You differentiate your brand, you tell a different story, and I think that's super exciting. I think we're in this a reemergence of creativity that I nerd out on and I'm optimistic about.
Stephanie:
Yeah, I'm optimistic. I'm just wondering how would you know it wins? How do you know what does well if you can't even tell what happened?
R.J.:
That's true.
Stephanie:
When you can't track it?
R.J.:
That's true, that's true. That's fair.
Stephanie:
So as a creative, how do you go about sparking creativity? What does your process look like to maybe not only help you know yourself at your company, but also the brands you work with to try and also get them to think creatively?
R.J.:
Well, I mean, I guess ironically, it does start with data. We look at trends on a monthly basis and we forecast our monthly trends to understand what is it that's trending up, trending down, and then move that into, how we... I mean in startup land, we're always trying to figure out what is the counter trend? How do we stick out? Because we don't want to say the same things that big, big companies are saying. We want to see something different and something risky.
R.J.:
So that's what we kind of analyze the trends and then go against them to figure out how can we stand out? I'm a big proponent of running and swimming. I grew up swimming, I swam in college and I still swim, and running, swimming I think that provide that kind of meditative or that space to kind of let your brain sort of turn off, but still be on, you know? And then come back from a run or a swim or after you've looked at some of that data and then new ideas start to emerge, and start pitching them and then figure out if those ideas might work or not.
Stephanie:
Yep. Do you ever look through historical things, since what's old is always new again, eventually? So you go back to the archives and be like, "Here's something that worked in the 20s, let's try this."
R.J.:
Oh yeah, yeah, yeah, yeah. We're actually doing some 20s based stuff for 2021 and the kind of Roaring Twenties is coming back. We just did a cool campaign called DonDraiper.com, that was D-O-N D-R-A-I-P-E-R. So like putting the AI in the Don Draiper, and looking at all these 50s campaigns and 60s campaigns to understand what actually would be predicted to win now, and it is kind of amazing to see like copy as well as imagery that was being used at the time and in-color, and how those were resonating using REI to predict whether they would resonate with this audience in today. Yeah, I think that's a definitely a good place for inspiration.
Stephanie:
That's cool. Do you see some of those more vintage ads and photos and things like that working over the next couple of years?
R.J.:
Well, I don't know about the next couple of years, to be honest. I think in 2021 alone, we're going to see a lot of nostalgia and I think that that is going to be a big factor because we're all looking for comfort after 2020. I can tell you on 2021, yes, nostalgia I think is going to be a big, big trend.
Stephanie:
2021 will be nostalgia for 2019. "Ah, the good days. What happened in 2019? Let's bring back those vintage memories."
R.J.:
That's funny.
Stephanie:
Are there any new consumer shopping behaviors that you guys are watching right now that you think are going to continue post-COVID?
R.J.:
I think touchless everything, even in store, is a big one. And the one I mentioned earlier about mobile wallet, I think mobile wallet adoption is just going to spike, and then I think all sorts of augmented reality capabilities are also going to, because going to a showroom for example, to see a couch may or may not be something that an individual is willing to do anymore, to make that separate trip. So, "I want to see it in my space. I don't want to buy it without seeing it and then return it, have a hassle with the return, especially with a large purchase item for a home."
R.J.:
So I think that mobile wallet is going to explode. It already has, but coming from mobile land in my previous roles, it's amazing to see how that's taken off. Then I think augmented reality apps, they're just going to be driving the future of commerce.
Stephanie:
Cool. All right, well let's move over to the lightning round. Lightning round is brought to you by Salesforce Commerce Cloud, but this is where I'm going to ask you a question and you have a minute or less to answer.
R.J.:
Okay.
Stephanie:
Are you ready, R.J.?
R.J.:
I'm ready.
Stephanie:
All right. We'll start with the hard one first. What one thing will have the biggest impact on ecommerce the next year?
R.J.:
Creativity is going to be my answer, because actually our data shows it. For example, masks in ads, this is an interesting thing. So masks in ads are being more popular, but they don't perform as well because people don't want to see kind of the ugly truth when they're viewing creative. How do we creatively manage and creatively work through a situation that everyone is tired of feeling? I think the breakout brands and the commerce brands that find a way to tell an empathetic but inspiring story creatively are going to win.
Stephanie:
Yep. I like that. Yeah, that's a good point too, of just because it's happening doesn't mean people want to see it-
R.J.:
Right.
Stephanie:
... everywhere they look like. Sometimes people might want to see what the future could look like and inspiration.
R.J.:
Yes, exactly.
Stephanie:
What's up next on your Netflix queue?
R.J.:
Ooh, let's see. Mandalorian. It's not my Netflix queue, it's my Disney queue. I'm just like, eagerly awaiting each episode of Mandalorian, which is interesting because I'm not a big Star Wars fan, but I love that show. It's imaginative, it's creative, it's kind of melancholy. It's-
Stephanie:
I actually don't know that one. I need to check it out.
R.J.:
I'd recommend it, and I'm excited about that show.
Stephanie:
What age group is it for?
R.J.:
Well, they say that Star Wars fans love it.
Stephanie:
Okay, I like Star Wars, I guess.
R.J.:
Yeah. But like my eight year olds' buddy Charlie was like, "Man, that's my favorite show." So it also not only 40 year old men, but eight year olds like it. So it's a family favorite.
Stephanie:
Big range. Good. So they did well creating a show for all overall.
R.J.:
Yes, yes.
Stephanie:
Good. What topic or trend do you not understand today that you wish you did?
R.J.:
TikTok.
Stephanie:
Yeah.
R.J.:
I don't understand TikTok.
Stephanie:
I've gotten that answer a lot.
R.J.:
Yeah, I don't understand it. It feels very voyeuristic and it feels... I'm all for fun, but for whatever reason, it just doesn't... I don't understand why you would spend hours rehearsing a dance, for example, and then take a video of yourself doing a sort of ridiculous dance.
Stephanie:
I feel like your kid is probably listening and it's like, "Dad, anyone who says 'I'm all for fun' is not fun." If you have to start a sentence that way, you might not be all for fun.
R.J.:
I think you're right.
Stephanie:
Yeah. But I have had a lot of people say they don't understand TikTok.
R.J.:
Yeah. I think it's the age group.
Stephanie:
But that would be an interesting data set to pull in data and see what's engaging from there, because I have also had a lot of people say it converts really well and that there's a lot of [inaudible] that platform.
R.J.:
Yes. Yeah. We've got customers who use our data on Snapchat, but we've not moved into TikTok just yet, but it is interesting to see what trends might apply there. I think that again, personally why you do that, I feel like that's like a PhD or something that I could do is like, understand the motivation there or something. I don't know.
Stephanie:
Yeah. Well, you let me know how that research goes. We'll bring you back for your PhD on TikTok. What is a favorite book on business or creativity, or just one that you refer back to quite often?
R.J.:
Hm. My favorite author is a British author named Julian Barnes, who I love. I often try to not read a bunch of business books. I mean, I find some of them to be really good, but I like to look outside for inspiration, so I'm a big fan of Julian Barnes. His books are really creative and strange and weird, and he's a well-known British author but maybe not known as well in the US.
R.J.:
Then on the maybe non-fiction side, I read that book Evicted, which is again, not a business book, but just in regards to kind of some of the social issues we're after, I find that Matthew Desmond's book is really, really good as well. But I look to those for inspiration or to kind of take my brain outside of business.
Stephanie:
Cool. All right, and then the last one, what's up next in your travel destinations when we can travel again? Where are you and your family headed? Or just you if you're like, "Peace, family."
R.J.:
I don't know that my wife would be okay with that, but we actually had the good fortune, we went out to Idaho for about five weeks this summer and rented an Airbnb and loved it, and we want to go back.
Stephanie:
Where'd you go? Because I was just looking at Coeur d'Alene, which I think is in Idaho.
R.J.:
Yes, yes, yes.
Stephanie:
It's really pretty.
R.J.:
We were in Driggs, Idaho, which it's on the west side of the Tetons, about an hour from Yellowstone, and it is beautiful. I mean, it was wonderful and we're going to go back. We had all sorts of international travel ideas that my wife and I wanted to do with our kids, but I mean, we just had such a nice time out there that want to head back this summer and spend some time out there exploring the mountains.
Stephanie:
Oh, that's great. I want to check that out too. Idaho is such an undervalued area. No one talks about it, but when I started looking at the pictures, I'm like, "This place is pretty, come on people."
R.J.:
It is. It's wonderful. Yeah, it really is.
Stephanie:
All right R.J., well, it was a pleasure having you on. Where can people find out more about you and Pattern89?
R.J.:
Sure. Yeah, just Pattern89.com or I'm on Twitter @rjtalyor and would love to hear from you, or come on to Pattern89.com and check us out.
Stephanie:
Awesome. Thanks so much.
R.J.:
Thank you.
Style is a very personal part of what makes someone who they are. The way you dress is a reflection of who you are or who you want to be, and what speaks to you may be totally foreign to the next person. Knowing all of that, it’s understandable if you believe that something as personal and experience-driven as style could never be boiled down to data points or plugged into an algorithm. But… you’d be wrong.
At Stitch Fix, a combination of human stylists, powerful A.I., and behind-the-scenes technology has created a winning model that delivers a personalized online shopping and styling experience straight to clients’ homes. A powerful data science team is one of the key reasons that Stitch Fix has been able to launch its valuation into the billions. Stephanie Yee is the VP of Data Science at Stitch Fix, and on this episode of Up Next in Commerce, she explains all the ways that data and technology are being put to use to create the best customer experience possible.
Stephanie describes how technology like GPT-3 is going to finally make seemingly unimportant data consumable to a consumer audience, and she explains how an event like COVID-19 can impact your backend models and what to do to adapt in that situation. Plus, she gives tips on how any ecommerce operation can go about building a data science team, and the soft skills to focus on when hiring talent.
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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Transcript:
Stephanie Postles:
Welcome back to Up Next in Commerce. This is your host, Stephanie Postles, co-founder of mission.org. Today on the show, we have Stephanie Yee, the VP of data science at Stitch Fix. Stephanie, welcome.
Stephanie Yee:
Thank you. I'm excited to be here.
Stephanie Postles:
Me, too. I know it's going to be a good interview when there's two Stephanies, but I'm slightly worried about how the transcript will look. Like who's saying what? Who sounds smart? I'll just take all your quotes and pretend they're mine.
Stephanie Yee:
Perfect.
Stephanie Postles:
So tell me a little bit how long have you been at Stitch Fix for?
Stephanie Yee:
I've been at Stitch Fix for almost four years. Yeah, four years in January.
Stephanie Postles:
Well, tell me a little bit what does the role of the VP of data science look like day-to-day?
Stephanie Yee:
Yeah. If I have to think about it, being the VP of data science, it really comes down to maximizing the value that the data science itself and the team can bring to the company, like how do we really get the full promise of an algorithm's approach to things? I think as you guys probably know, Stitch Fix is really thinking about how do we help people find what they love and how do we use data science and human expertise to do that? So the types of things that I think about in service of that are things like what are new opportunities that we haven't really discovered yet? And that's been pretty exciting over the last four years.
Stephanie Yee:
I think another area that I think about a lot is like what's the right almost interface between data science and data scientists and the business partners. So this is if we have data scientists working with the design team, or the product team, or the marketing team, or even executives, what's the place where data scientists can contribute the most? And also, just being really intellectually honest, like what's the place where it makes sense for others to take over? And then obviously, the last part of my job is to really create an environment where the team can be motivated and fulfilled in doing things that bring out the best to each of them.
Stephanie Postles:
That's great. So it would be great to dive a bit more into Stitch Fix. I know what it is because I'm a customer, but I think a lot of people may not know exactly what it is or all the things that go on behind the scenes to get the pretty box on your door. So could you explain what it looks like, what is Stitch Fix from a high level, for anyone who doesn't know, and then what goes on behind the scenes to create the company that it is?
Stephanie Yee:
Yeah, so Stitch Fix is a personal styling company. And at the core, we use both data science and real stylists and their expertise to help people find what they love. If you think about unpacking that, it's really about understanding... or from a data science perspective, it's really about understanding a client's needs, as well as being able to set the stylist up for success. The core of Stitch Fix, the way that it shows up is in a box of one or more items and clients are able to try it on, they're able to send back what they don't like and really just keep what they really love.
Stephanie Postles:
Tell me how do you go about making sure that you give the customer the exact outfits they would like or refine that process to where maybe the second or third time you've nailed it? Because for me, at least when I am getting the outfits, I'm like, "The first time, maybe like one thing was off or something," but then after that, it's like, "Okay, now, this stylist knows me, or this algorithm knows me." So how do you refine that behind the scenes?
Stephanie Yee:
Yeah. I think that that's a great question. I think a lot of it... I mean, as a data scientist, like I always think about the data that we collect and what's available, and this comes both from what clients tell us as well as what we're able to infer, so a really interesting example of this, and this is where you had mentioned like, "Okay, there might be one item off at first and the algorithm really learns over time," we really think about things in terms of the ability to say like, "Okay, what data do we have now?" And with the stylist, the stylist is incredibly important throughout the client's life cycle. With the stylist, like what's the right thing to be sending right now? And in response to feedback like, "Oh, that item that didn't really work out for whatever reason," we're able to respond to that.
Stephanie Yee:
I think a really interesting example of the approach that Stitch Fix takes, or rather one of the interesting things about Stitch Fix is that we're thinking about this and we're thinking about a purchase experience in terms of soft goods. So if you think about the way that ecommerce really started off, or at least as I recollect it, it was like comparison shopping sites where you were looking at like how many megapixels do you want in your digital camera. And a camera, those are very easy to compare because it's like, "Oh, it is three or it is four." Whereas with what I think of as soft goods, there's so many different variants on like a V-neck top that it's almost a little bit overwhelming.
Stephanie Yee:
And then on top of that, a lot of the typical searching and filtering is not really going to get people there, just because what might be a great top, even if it's the same aesthetic, what may might be a great top for you might be not as great for me or vice versa, just because it's like, "Oh, you know what? I really need things that are machine washable, or I have very narrow shoulders or something like that." So Stitch Fix is really trying to distill a lot of these things that are ultimately very difficult to categorize into what we would call a latent space, but really to say like, "Okay, we have something like style." Style is not what lunch table did you sit at in high school, it's really a form of self-expression. And because people are so different, we need to be able to use data science to quantify where people are on a spectrum versus what category they're in. To handle this like-
Stephanie Postles:
How do you even encourage people to get maybe the feedback that matters? Because I'm even thinking like if I were to get a shirt and I'd be like, "Well, it doesn't fit," I know you're probably behind the scenes like, "Well, why? What part doesn't fit? What don't you like?" How do you encourage someone to tell you what you need to know to then send them something better?
Stephanie Yee:
Yeah. That's a great question. So what we found, I think that the motivation to give us feedback is actually just an inherent part of the service. I think a lot of people they'll like... When I've styled people and maybe I've missed the mark, people will say, "Oh, you know what? You didn't get it right the first time, but here's more what I was looking for." If you think about it as a relationship, it's not a transaction where you walk into the store and you say like, "I'm happy or I'm sad." It's relationships and relationships are predicated on that back and forth. So it's really a phenomenal percentage of clients that leave feedback on a fix. It's something like 85%.
Stephanie Postles:
Wow, that's great.
Stephanie Yee:
It's just like an intrinsic part of the relationship just because we do frame it as a relationship.
Stephanie Postles:
Yeah. I think having that stylist there really is what forms a human connection, where you're like, "Well, this is..." Of course, there's a bunch of machine learning and algorithms behind the scene, but there's a face here, a human who's actually approving this style and making sure it's perfect for me. And you instantly feel that connection and you don't want to let your stylists down [crosstalk] get that feedback.
Stephanie Yee:
Exactly, exactly. And similarly, the stylist doesn't want to let the client down. So there's that level of trust that gets established. And from there, I think, a lot of the desire to say like, "Hey, this had a fit issue for me because it was too long or something like that." There's just something that's special there inherently. And then on top of that, we obviously do encourage clients to give us feedback, like we'll give them a nudge. But we're certainly not the type of company that has to like... They'll come to us rather than us having to really force the issue, will say.
Stephanie Postles:
Yep. What are some of these subtle nudges that you give that aren't annoying, but then encourage the person to give you the information you need to help them. I think a lot of brands struggle with that, where they either don't follow up at all sometimes if they want feedback, or they do it too much and you're like, "Whoa, chill." How do you guys get that right blend?
Stephanie Yee:
I think that there's two parts to that. One is saying like, "What's the right number of times to be asking or to be reminding really because it's less on asking?" It's just more like, "Hey, if you want, you can leave feedback and there's someone on the other end who's going to be really thinking about it and responding to it." I think it's figuring out like what's the right time to tell people, and it's really like when would this be relevant to someone? I think that there's some other aspects where it's like what's the right time of day to reach out to someone? And all of these can be distilled down into data science problem or data science opportunities. I really find that to be really interesting. I think that there's another aspect, which is that the clients do come back to the app and come back to the site, even without looking to transact. Once they're there, then it's possible to be like, "Oh, by the way, did you want to..." Just making it really easy and lowering friction to giving feedback. That's another way that we're able to implicitly encourage it.
Stephanie Postles:
Yep. So with all this feedback coming in, it's a lot of natural language that you're probably getting, or is there any tech that you're excited about right now to help you categorize it? Are you looking into GPT-3 or anything new this year that could help solve that problem when people are just giving you probably long paragraphs of like, "Here's the things that aren't working for me," and they're just putting in terms that you're like, "Okay, I can actually build any database at this."
Stephanie Yee:
Yeah. I think it's interesting because I think some of the unstructured texts or data generally that might be, I would say, overwhelming to someone like you or I. Computers are actually quite good at processing it. So I think GPT-3 is really incredible, sort of advanced in the way that we're thinking about the opportunities that come from natural language processing. So I think the team is really actively thinking about like what's the right way to bring that into the client experience? We certainly want our stylists to continue to be proactive and like a central part of that relationship. And we're actually trying to figure out like, "Okay, how can we actually bring the stylist forward even more?" But I think the way that I would look at it is I actually love it when there's a large corpus of data, will say, just because there's quite a bit of things that one can infer or pull out of that that would be otherwise a rather arduous task for a person like you or I.
Stephanie Postles:
That's great. Earlier, you were saying that the team is looking at how to maybe utilize GPT-3. And it can be for the overall industry, not just Stitch Fix too. Is there anything where you're like, "I could see this really impacting ecommerce in this way," because that's the one area that I've been trying to look into it? I can see all the things that you can do with it, from not having to code things and writing books and stuff. How could it actually impact ecommerce or data science or behind the scenes?
Stephanie Yee:
Yeah, I think that's a great question. I would say that if you think about... GPT-3 is a really great way to translate information into the format that people are used to absorbing information in, which is text. I think that it's especially important going back to the like you can't take a shirt. The specs of a shirt are not particularly helpful to a shopper. They can be helpful to a computer, but it's like, "Okay, the sleeve is 13 and a half inches, like who cares?" And GPT-3 is able to almost add in a way that would have been incredibly difficult before. It's able to translate some aspects of an item into what that actually means in someone's everyday life. So it's not like, "Hey, we could show you a table of information where it says, 'Here's the sleeve length.'" But it can be more like, "Oh, you know what? This shirt is going to hit your elbow and it's actually going to drape a little bit."
Stephanie Yee:
And because there's so much clothing out there and it's all slightly different in its own way, even if it's once again, the same aesthetic, same color, everything, we're able to bring that to the fore for a massive amount of inventory. So that, I think, gets me really excited. I think another thing that's really promising about something like GPT-3 is it'll let us... yeah, it'll really let us customize an experience to a client using a format that... and move beyond tables of data into information that might be more relevant or easier to absorb.
Stephanie Postles:
Oh, that's great. Yeah, that takes it to a whole new level. I think about right now when I'm shopping around and it shows, "Okay, there's this model and she's 5'9 and 135 or whatever it is," I'm like, "Okay, I could see maybe how something would fit if that's like a similar person to me." But that takes it to a whole new level and saying, "All right, Stephanie, this is going to be bad, you get your elbows and it's going to be very short on your waist," and just putting it in a contextual term where I'm like, "Oh, it's fixed. You all know me. Thanks for letting me know."
Stephanie Yee:
Yeah. And if you think about style and aesthetic, there's almost something... Style is a form of self-expression. And describing style in terms of only numbers is quite limiting. If you look at the way that people will describe clothing, and it's always really interesting to say like, "Okay, fashion week happened. What are they saying about what's being shown?" It almost becomes poetic in that level of abstraction. And I think that that's something that that language is much better at doing, or images even are much better at doing than just numbers and texts.
Stephanie Postles:
So the thing I was just thinking about... I mean, you guys have all these models running and algorithms behind the scenes and you have really large amount of data. How have your models changed? I'm thinking about like pre-COVID models, [crosstalk] probably around work and work clothes, and I want to look nice and heels. And then now, it seems like all those models probably had a big shake up because now it's, "I want athleisure and I want sweat pants and comfy hoodies." How have you guys models changed and what are you doing to adjust them, or what should brands be thinking about with adjusting their historical models that are probably wrong?
Stephanie Yee:
Yeah, I think that's a great question. It was funny actually. In April, one of the data scientists posted in Slack and he was like, "Oh my gosh, like all of the experiments that we're running, we're just going to have to start over." I think that there was a lot of stress behind that statement. And obviously, we're not starting over, but we're starting from a place where the data has changed. And the really wonderful thing about an algorithm and about being able to really take advantage of technology is that they can adapt much, much faster than a person. If we only had the styling team, it can take a little bit of time to figure out like how do we... If we're learning something about like COVID trends, how do you train a team of thousands of people to be on top of everything that is there, in addition to letting them style each client individually?
Stephanie Yee:
So what's really wonderful... and COVID was a fascinating situation because it's like, "Okay, all of the..." There was a tremendous amount of work that had to be done to say like, "Okay, given a pretty big step change in the way that both like the world writ large as well as the way that people are thinking about shopping and shopping online, how do we adapt things to that?" So there was quite a bit of work to do that across the board. And then on top of that, it was easier than it would have been if we hadn't taken a data science approach, just because so much of the models are designed to change. Some of our algorithms they'll be like, "Okay, this is just going to be updated every week just because it needs to be."
Stephanie Yee:
I would say that in terms of COVID specifically like... And a lot of it, we're sitting there and we're saying like, "What are people like?" We'll have conviction in where we think that the market is going. With COVID, it was like, "Okay, you know what? Everyone can anticipate. If people have to stay at home, then they'll have to work from home and maybe they won't feel a need for as formal closes as they normally would." But what was interesting, and this is just from how things unfolded from a data science perspective, we actually had... One of our data scientists was a former epidemiologist. So when we were trying to figure out like, "Oh gosh, the world has changed, like how much merchandise should we buy a year from now," she was actually able to contextualize a lot of the news.
Stephanie Yee:
As a company, we were able to come to what ended up being a pretty reasonable, I would say, assumption about the world and then to go forward and say like, "Okay, overall, how much should we buy?" And then within that, it's like, "Okay, how are consumer tastes going to change?" We can lock down that merchandise. I think the merchant team did a really great job responding to that. Within that, we can make sure that the clients who are looking for working from home clothing versus something else they can actually get it. I think in terms of general trends, I think it's like a 10X increase in requests for working from home clothing. Definitely, a shift out of formal work wear and into more like casual and everyday styles.
Stephanie Yee:
I think athleisure, those purchases have accelerated quite a bit. With Stitch Fix, because we sell actual items, the merchant team had to do a tremendous amount of work to really anticipate that. And then the styling team is able to make sure that those items get to the right people. Because if suddenly we started to only send out leggings, that's not really going to work for many of our clients who just need to make sure that the people who are looking for athleisure can get it.
Stephanie Postles:
Yeah. That's so smart having someone who understands that industry. I feel like there's more room for brands to partner with industry experts like that to help them build their models. Because oftentimes, it seems like everyone is so focused on just, "This is our company model. Only the executives of the company can figure out what the future looks like." But by tapping into someone who has very different experience, [crosstalk] maybe what's happening, it seems very smart.
Stephanie Yee:
Yeah. One of the things that I find to be really fascinating and amazing about Stitch Fix is the way that the executives... like for executive decisions are able to take advantage of the data science capabilities that we've built. And you almost get to this like the core question here, and this is almost... it gets existential, like is how do you handle uncertainty? For me, I'm like, "Okay, this is why I want an executive with like 20 or 30 years of prior experience because some of these questions are genuinely hard."
Stephanie Yee:
I want to arm them. Given the data available, the task of a statistician is to really squeeze out as much information as possible and to say like, "Okay, guys, here's what we can know, here's what we can't know. And the part that we can't know, to the extent that it's incredibly important to have a decision or a point of view on that, that is truly human judgment." So the executive version of that, I find to be really interesting and there's many versions of that throughout the company with the stylist, with the product team, with the marketing team, with the merchandising team, everyone.
Stephanie Postles:
That's great. So when thinking about updating the models and algorithms, would you suggest that a company rebuild from scratch, or should they update a current model to kind of pivot a bit? Because I guess when I think about updating a current model, I worry that there's so many things built into it after the fact and the algorithm just runs away on its own and people are like, "I don't really know what's driving it anymore," versus starting over again.
Stephanie Yee:
Yeah, I think that that's a great question. There's a couple of different aspects to it. Generally, we'll think, "Okay when you have a..." because a model is really expertise in how to use data. So if you find a model that seems to fit the world very well, then you will want to continue to improve it. If fundamentally the world responds quite well to a random forest, or we get very good predictions out of a random forest, then there's no need to change it just because, but there's opportunity to improve on that. Now, with that said, as research is continuing on different methods, people are going to try different methods. But I would say that you definitely want a mix of both because it's both the method and the tuning of that. It's both the type of model that people will think about as well as the tuning of that model or adding new variables to the model or something like that that we want to do.
Stephanie Yee:
So to give you a concrete example, like with COVID, we have a demand forecast. The demand forecast is really modeling client behavior and it's really being able to give the merchandise team and the executives and the operating partners visibility into like, "Okay, what's life going to be like a year from now and how should we plan?" When COVID happened, everyone's like, "Oh my gosh, the world is very different." But what was great was we were able to say, "Okay, here's some assumptions that we have. We can update those assumptions, but we've got several years of work into the capability itself. And the great news is that we don't need to start from scratch because things have been built in a way that can adapt."
Stephanie Postles:
Yeah, that's very smart. When thinking through your demand forecast, are you guys forecasting that the world will eventually return back to pre-COVID, or do you think it's a new normal and now people are going to continue working at home indefinitely and keeping it adjusted? How are you guys forecasting the future of apparel?
Stephanie Yee:
Yeah, I think that's a great question. I would say that there are certainly things that are very large shifts and there are other things that are just probably going to stay the same. I would say that it's a blend of the two. I certainly don't think and I certainly hope that we're not going to be working from home forever.
Stephanie Postles:
Yeah, I hope not.
Stephanie Yee:
Exactly, exactly. With the vaccine coming out and just how effective the vaccine seems to be, I think that we will be returning to... There's some things that are going to fall back into place. There's some things that frankly have already fallen back into place, and then there are other things that the company is really leaning in to take advantage of, so definitely a mix.
Stephanie Postles:
Yeah, yep, I agree. Have you seen any different types of consumer buying behaviors around what consumers are expecting now that more people are at home, they have more time to try things on? Have you had to adjust how you interact or work with your consumers during this time that was maybe different than COVID or pre-COVID?
Stephanie Yee:
Yeah. I think as I mentioned, there's definitely a difference in what it is that people are looking to buy. I think another thing that has been really exciting is that I know quite a few new shoppers, people who have never bought anything online before suddenly they're like, "Oh, shoot, all the stores are closed. I now have to try this new channel." So we're seeing people who aren't even used to a traditional way of shopping buying things. I think that's been really interesting because that behavior, as you can imagine, can be quite different. So it's great that the business is able to respond to that and-
Stephanie Postles:
Yep. It seems like there's a whole new demographic market that is opening up now that a lot of ecommerce companies are going to be able to have a lot of opportunities with. I'm thinking about Stitch Fix, my mother-in-law, who's almost 70, when they came back and told me she... I had never told her about you guys and I don't think she would actually ever do that. And she's like, "I ordered from this company, they picked things out for me, it fits perfectly." And I'm like, "Are you talking about Stitch Fix?" And I was genuinely surprised, but she found out about it on her own, went forward, bought it, worked with a stylist, and got her box. It just made me think about how many opportunities are opening up with this new group of people who never were probably comfortable with buying online before. But now, they're forced to it and it's now becoming normal for them.
Stephanie Yee:
Yeah. I love that story. That's wonderful. I think what's interesting too is that folks like your mom or my mom where they're not actually as used to buying online, they're more used to going into a store, so they're actually more used to being able to talk to someone. Whereas like my friends are like, "I don't want to talk to a human being."
Stephanie Postles:
Yeah, don't call me. Don't look at me.
Stephanie Yee:
Just text me. Right. Don't leave a voicemail, that doesn't work. Right. But the folks who are trying something online, they're used to a store. And Stitch Fix like the gap between some of these department stores where you do have a person and the department stores online presence is quite uncomfortable. So if you have Stitch Fix, obviously you're not in the store, but you get to try things. You get to work with a person, you get someone who's actually there to help you. I think in some sense, it's actually a more natural entry point, especially if folks aren't used to the current paradigm of shopping.
Stephanie Postles:
Yeah. How would you advise a company to be able to not only continue to focus on their traditional consumers that they're used to, but also lean into that new group of people because it seems like you would have to have very different messaging? Like you were just mentioning, some people like myself and you are like, "Just text me, do not leave me a voicemail. Don't try and call me, I'll decline it," whereas this group, you have to have a whole different mentality. Your customer service team probably needs to start calling people and doing things very different. How would you advise a company thinking about this, who wants to maybe connect with both of them, their current customers and the new ones who are now coming on the market?
Stephanie Yee:
Yeah, I think that's a great question. So the way that I would think about this is, first off, you have to come up... Let's take the messaging example. You want to think about what are the different messages that are going to be resonating with consumers? And then the second is how do you get the right message to that consumer? In terms of what will resonate, I firmly believe... There's a very interesting opportunity for interaction between design and data science and user research and things like that. Data science can contribute, but ultimately the messaging strategy is one that is the overall messaging strategy. You can try many different variants, but the overall strategy is one that is a judgment call.
Stephanie Yee:
And then machine learning is wonderful for being able to say like, "Given this message, or given this client and given a universe of messages, how do I make it so that the client can see the most compelling one and really understand on their terms what it is that we can offer?" I would say this is an area where you definitely need both art and science because messaging is so incredibly important and strategic. So it's working with the marketing team, it's working with the design team, and then the data scientists can really help figure out where should that message be delivered? How should it be delivered? What is the right way to make it land with the client?
Stephanie Postles:
Oh, that's great. So we're putting together this end of year commerce article about 2021 trends. And this is one thing that we're talking about is how much the over 55 demographics spend. And they spend twice as much as millennials. And I think I saw, let's see, 10,000 baby boomers are going to turn 65 every day until 2030.
Stephanie Yee:
Oh, wow, okay.
Stephanie Postles:
And then by 2050, the over 60s will account for 20% of all people globally. So when I started seeing these stats, I'm like, "Whoa, more people need to focus on this demographic." Oh, and then another one, the 50 and older crowd has a lot of spending power. And if you put it in terms of GDP, it would be the third largest in the world.
Stephanie Yee:
Oh, wow, okay.
Stephanie Postles:
US is 21 trillion, China's 14 trillion, and then Japan is 5 trillion. And this is where the people they spend 7.6 trillion in 2018. To me, I'm just seeing all these opportunities that are being missed right now. I'm like, "What the people be doing?"
Stephanie Yee:
Yeah, no, I think this is a wonderful group of folks. Within the tech industry, I would just say especially there does tend to be a focus more on millennials and things like that. I think the great thing about Stitch Fix is that we are... And oftentimes I think some brands they'll sit there and they'll say like, "Oh, our target demographic she is between 25 and 39. And after that, she's not us." I think with Stitch Fix, we're able to say, "You know what? We're not going to categorize you into one group or another, we're going to serve you where you are. And with personalization, we are able to..." I completely agree with the stats or the information that I have on how that generation of clients interact with Stitch Fix is very, very consistent with some of the numbers that you had described. So it's a really wonderful group of people who are thinking about their personal style, and I do agree it's folks who, I think, tend to be served a little bit differently, really at the retail industry's loss.
Stephanie Postles:
Yep. Yeah, I agree. How would you go about getting the right data to then be able to craft the personal message then? For Stitch Fix, it does feel a little bit easier because you can ask things like age and a bunch of other questions and they're like, "Well, they're styling me." But for a lot of other brands, if you were to ask age, they'd be like, "What?" How would you advise other companies to be able to get enough information to then be able to personalize a message like that?
Stephanie Yee:
Yeah. I think that there's a couple of different ways to do it. And a lot of it really is around the marketing and design toolkit. Because ultimately, when you're coming up with messaging, you don't want to say like, "Okay, this is the messaging for folks who are 50." I'm an old soul, so maybe I'll just really respond to that myself. A lot of this is just a strategic question. So data science can play some role where it's like, "Okay, based on what we know, people tend to respond to X, Y, and Z." But really, if you want to be looking forward, it's less like what've people responded to in the past?" You definitely want to take that into account, but it's more like where are things going in the future, especially at a time when things are changing so rapidly?
Stephanie Postles:
Yep, yeah. That's why I'm also excited about being able to ingest the sentences that people are asking the customer service reps or putting in the search bar because I think that alone could tell you who someone is just based on how they say [crosstalk 00:32:09].
Stephanie Yee:
Oh, absolutely. Absolutely. Yeah, I agree. I think that the notion of being able to have more conversations with people is something that I think is incredibly exciting and it does allow for a level of, I would say, flexibility of expression, especially once computers can really respond to that.
Stephanie Postles:
Yep. So when thinking about building up a data science team, what are your first steps? How would you tell a brand to think about it to be able to build it up in an efficient manner, where it's answering the right questions, you have the right goals in mind? Because when I think about data science from different companies I've worked at, some people are called data scientists when they're really a BI team [crosstalk] called data scientists. And then you have marketers who are also data scientists. So like how do you [crosstalk 00:33:26]?
Stephanie Yee:
It's certainly become a loaded term. It's funny because in recruiting, it can be incredibly frustrating like, "Well, this LinkedIn search is not very helpful." Yeah, that's the first thing that I would say is if people are thinking about like I need to build out a data science team, searching on the term data scientist is probably not going to be the most efficient way to get there. I think probably the step one that I would advise people to do is to really think about what role do you want data science to play and where are the areas that you see as high value? And this can be a little bit of a hard question because without... in the same way that I'm not a 100% familiar with a merchant's toolkit or a designer's toolkit.
Stephanie Yee:
If I, as a data scientist, look at a problem, I can be like, "Oh, this is something that can be very easily solved with the machine learning." It's hard for folks who don't have that background to know that, but really thinking about like what is the strategic problem that people are trying to solve? With data science, I'm very supportive of making it like a core... like figuring out how to have in-house data scientists focused on the core problems of the company. So it's like what are the core problems of the company? What role would you want data scientists to play within that? I think one of the things that's wonderful about Stitch Fix is that data scientists are really expected to take a leadership role. And this can be incredibly exciting for some folks and it can be just not really interesting to others.
Stephanie Yee:
So figuring out like, "Okay, if you want data scientists to play a strategic role like, A, what's the core of your company, B, can you hire people who are inclined to really step up and to contribute to that strategy, and then C, how do you set them up for success," I think... And when I've talked to companies, some people will say, "You know what? We're really about logistics." And it's like, "Oh, actually, there's a subset of data science," where they're really thinking about operations research, they're really thinking about warehouse efficiency, supply chain and things like that.
Stephanie Yee:
And if people are really thinking about demand forecasting and logistics and fulfillment, that's a great tack to go for Stitch Fix. A lot of it is around the warehouse and the fulfillment side of things, those folks who are doing wonderful work and it's all in service of a very specific type of client experience or being able to provision a specific type of client experience. So we have folks who are working on the warehouse side of things, but then we also have folks who are really thinking about like, "How do you work with a stylist to help people find what will really help them or what will really bring them joy?"
Stephanie Postles:
I got it. If a company doesn't really... They know some of their problems and they know their operations, but if they don't know data science, how would they know what they can solve, or how would you recommend, like should they go and talk with the company or a mentor or advisor who understands that area to do just what you just did with me of like, "Oh, of course, you can put it in logistics and you can put it on your website or here"? How would you tell someone to move forward if they don't know what they don't know?
Stephanie Yee:
Yeah. If you tell me what is most important to your business, then I can help you figure out like what are the data science opportunities there. And sometimes data scientists may not be the most important input to that, at which point then there might be alternative areas to invest.
Stephanie Postles:
Yep. What kind of skills would you be looking for when you're hiring a data scientist team, or what are some of the emerging skills too that you're like, "We weren't looking for this four years ago, but now it's something that's very much in demand"?
Stephanie Yee:
Yeah. That's a great question. I would say the skill that seems to be more and more in demand, and this is something that I think from the early days Stitch Fix had good intuition that this was important, is around problem framing. Like a data scientist, we need them to have a good understanding of statistics, oftentimes machine learning, computer programming, sometimes software engineering. But really, the core thing that we think about is like, "Can they frame a problem and can they... How do they think about problem framing?" Because what will often happen, and this is a pattern that I've seen in other places, is people will very valiantly answer the wrong question. And it's not their fault that they're answering the wrong question, it's just the wrong question was asked.
Stephanie Yee:
So what we really encourage folks to do and what I think the most effective data scientists do when they're empowered to do so is if people pose a problem to solve, it's actually okay to say like, "Okay, let's take a step back. Let's dig into this a little bit and figure out like is this posed in a way that can lend itself to the full suite of potential solutions?"
Stephanie Postles:
Got it. So if you're interviewing someone, how can you test that when you don't have much time with them? What kind of questions can you ask to see are you able to actually ask the right questions to figure out what the problem is without going down the wrong path right off from the start?
Stephanie Yee:
Yeah. That's a great question. Oftentimes there's two ways to do that. One is to say like, "Okay, tell me about a time when someone has posed a very vague business problem and how did you think about refining what it was?" I think that that's one angle. And then another angle that I will bring to the table is I'm thinking about this type of problem, how would you help me? How would you think about it? And just really making it into a discussion because what you're really looking to assess is how do people think? And I will say interviews are not... When you only have 45 minutes with someone, or you have six people with 45 minutes each with someone, you don't get nearly as much data as you'd ever want to. So when I think about it, I just want to have a conversation and see how people think and what connections do they make. If something is framed in a way that merits revision, how do they go about figuring out what that revision might be?
Stephanie Postles:
Great. So in an industry that's changing so quickly, how are you staying on top of new trends and tech? Are you subscribing to a bunch of newsletters? Are you listening to podcasts? What do you do to stay on top of the data science field?
Stephanie Yee:
I think that that's a great question. I do subscribe to newsletters. There's a couple of blogs that I really like as well. I think Andrew Gelman is a professor, I believe, at Columbia. He has some wonderful work. Susan Athey is actually another researcher at Stanford who I think is absolutely wonderful. She thinks about causality. So this is like what actually causes another thing. And she thinks about machine learning techniques that can... One of the areas of her research is thinking about how machine learning can contribute to that field. I personally like to stay closer to some professors that I particularly admire. And then also the great thing about Stitch Fix is that everyone has a different set of passions and interests, will say, as well as a different background. So when people are coming across a lot of different methods or papers, there's a wealth of different conversations going on. So that's another great way to stay on top of things.
Stephanie Postles:
Yeah. I found it really helpful when I dive into certain trends. Like every week I'll pick a new piece of tech or a new trend or something just to see what it's about. And then I start to realize how many new things I'm being introduced to and new people on Twitter that I'm following and new ways to solve problems, like at a media company with podcasts, where I'm like, "Whoa, I never thought about using that. But now that I've read about it, I can think of 1,000 ways to maybe implement it, or I have a whole new model in place or a business model idea based on just very things that are not a part of maybe the media industry or something."
Stephanie Yee:
Exactly, exactly. I love finding metaphors in one area that tend to work in another. Being able to abstract between things is such a source of insight. I agree with that.
Stephanie Postles:
Yep. So where do you see the future of data science in ecommerce headed? How do you see that experience playing out in the next five years or so? What does it look like, or what does it feel like?
Stephanie Yee:
Yeah, I think that's a great question. I think that the future of ecommerce is really one where you have a more personalized experience. I think that as we've discussed, data science is an incredibly important input to that in being able to really fulfill on that promise. I think that data science can also help retailers make better decisions. I see a lot of promising growth on that front. I think for retailers who are particularly fulfillment or operationally focused, there's some really wonderful sort of... I think Amazon is really leading the way in the direction that that side of things can go.
Stephanie Postles:
Mm-hmm (affirmative). I see a lot of companies probably looking to this field, especially after all their models and plans started breaking last year, trying to figure out what can I get ahead of this next time? There's going to be a next time of something and how can I get ahead of that and start seeing the early indicators and maybe be able to be more agile with adjusting forecast and supply chain and all of them.
Stephanie Yee:
Yeah, absolutely. I think that that level of agility is something that I'm very proud of that Stitch Fix has. And part of it is because we're able to use data science, not only it's like, "Okay, we can update this model relatively quickly compared to others, or we can figure out how to take into account in the past but not too much," but then also in the ability to help executives think through different scenarios. Because ultimately, we can use data to do some things like we need to executive input on other things.
Stephanie Postles:
I always love a good data story. Are there any stories that come to mind that either the data shows something that was wrong or it was funny, any of your favorite data stories that you think about from time to time?
Stephanie Yee:
Yeah, I think that's a great question. The one that I find to be quite endearing is... We have this notion of latent style. And this is rather than saying like, "Oh, here's the lunch table I sat at in high school," it's where within the broader realm of style do you sit? And one of the early hypothesis, it was like, "Okay, we have this sense of the types of clothes that people will like, and we can show pictures of them. But we should figure out how to articulate this to a stylist." So there was some work done to say like, "Hey, here's a set of clothes and here's another set of clothes, named them." So you could be like, "Oh, this is casual and preppy, or this is boho and edgy or something like that."
Stephanie Yee:
We basically ask people to annotate collections of clothing based on how they would describe that aesthetic. What was wonderful in a sense was all of the... There wasn't really that much consistency between what people were saying. I think sometimes people are like, "Oh, this is a problem." I was like, "No, this is great, guys. This is actually great because it proves that there's things that are there that are beyond categorization. I view self-expression and style as of them." Ultimately, when it was like, "Okay, now we need to express a client style to a stylist," a lot of it was just like, "Let's just show examples and pictures because we don't have the words for it."I thought that that was wonderful. In my mind, it really spoke to the value that Stitch Fix's approach brings to ecommerce.
Stephanie Postles:
That's cool. So that definitely shows that consumers on your side definitely can't be used from a... You do see annotation label or dataset type of aspect because they're all going to come back with, "This is preppy. Oh, no, this is boho. Oh, no, this is athleisure," and it wouldn't really work for you guys.
Stephanie Yee:
Yeah, yeah. It does become interesting. Because if you have something that is totally fashion-forward and wild, then nobody would certainly say like, "Oh, it's classic." So there might be a cloud around things. But it definitely does speak to like where is it that people can be most effective versus pictures versus something else?
Stephanie Postles:
Mm-hmm (affirmative). All right, cool. Well, let's move over to the lightning round. Lightning round is brought to you by Salesforce Commerce Cloud. This is where I'm going to ask you a question, and you have a minute or less to answer. Are you ready, Stephanie?
Stephanie Yee:
Sure.
Stephanie Postles:
All right. First up, what's the nicest thing someone's ever done for you?
Stephanie Yee:
For me personally?
Stephanie Postles:
Yep, personally.
Stephanie Yee:
Oh my goodness, okay, I'm going to need the minute.
Stephanie Postles:
Yeah, go for it.
Stephanie Yee:
I guess this is tangential to data science. But there's one point early on in my career. I started my career in management consulting and management consultants are an incredibly impressive bunch, incredibly good at dealing with uncertainty. They also have a very clear view for like what makes you successful management consultant. And there was a talk that one of the partners gave that stayed with me. I think of this as nice because it was quite informative in how I viewed the world and what I can do within it. He said like, "You know what? Every place that you work is going to try to put you into a box. They're going to try to categorize you and nobody really fits into a box."
Stephanie Yee:
So it's actually okay to say, "You know what? Try to find a job where you fit closely enough into... where all of the strengths that you bring to the table match the strengths that they're looking for." But it's actually okay to say like you have quirks and you're not always going to fit into the box. I think that that was really wonderful because it was like, "Oh, I need to find a job where the way that I think about things maps really well to the thing that the company needs." And then I also need to say like, "What are the things that I bring to the table that people might be like, 'Hmm, okay, that's interesting'"? And decide like, "Is that something that I want to develop about myself, or is that something that I want to say, 'You know what? That's just a strength that I have, or that's just an aspect of myself'"? I would say that that piece of advice was incredibly generous to give as well as something that was very valuable to me.
Stephanie Postles:
Oh, I love that. I'm really glad I asked that question now. It's a new one. So I always am waiting to hear if someone's like, "Ah, nothing," or something really great like what you just said.
Stephanie Yee:
Okay, I'm glad that that worked.
Stephanie Postles:
That was good. What is a trend or piece of tech that you don't understand today that you wish you did?
Stephanie Yee:
That's a great question. Let's see. A piece of tech that I don't understand today that I wish I did. I think on my list, I've been very interested to get in a little bit more into the weeds and how autonomous vehicles work. I've read at least like what The New York Times will say about Waymo or things like that. But I haven't gotten a chance to really read up on the literature. That's definitely been on my list in part because I think it's just a very interesting problem to solve. And I actually have some friends who are working on that problem, so I can probably just ask them, but also because it's something that is probably going to transform society in the next decade or so.
Stephanie Postles:
Yeah, I agree. What's your favorite data science book that you refer back to?
Stephanie Yee:
What's my favorite data science book? The core one that... And this one is not exactly readable, but it's quite nice to reference is elements of statistical learning. I would actually say that it's... Well, for some people, it's readable. For me, it's more of a reference book. But it's this wonderful collection of information put out by some professors at Stanford. I think that it's like a cornerstone of a lot of machine learning and data science classes.
Stephanie Postles:
What's up next on your Netflix queue?
Stephanie Yee:
Right now, I'm in the middle of The Crown.
Stephanie Postles:
Okay. I've had a lot of people say that.
Stephanie Yee:
Yeah. I hadn't gotten into The Crown actually until shelter at place... I sort of been like a elapsed inactive Netflix customer on and off throughout the years. But I had heard so much about it that I was finally like, "All right, I will sit down and watch it. It's really good.
Stephanie Postles:
Yeah. I started it and I'm excited to finish it. And I heard the next season's not coming out for like another couple of years or something.
Stephanie Yee:
I know. I was just like, "Oh, I should have waited to get into it until everything is done." But yeah, I think it's like two years.
Stephanie Postles:
All right. And then my last question, which is very important, how strictly do you enforce when people are writing up the term data? Do you use it properly, like the data shows, the data show? How strict are you with your team about use the word data properly?
Stephanie Yee:
I will say-
Stephanie Postles:
Very important [crosstalk 00:52:14].
Stephanie Yee:
I notice when people use it. I noticed people's grammar, including that. There are other concepts that I will become more passionate about than grammar necessarily. I think it's incredibly important, but I think the contents, like the true content and making sure that we're precise in certain other words is probably higher priority. I generally try to take a light touch with my team.
Stephanie Postles:
Okay, you're now stickler about it.
Stephanie Yee:
I do notice though. I have to filter it, will say.
Stephanie Postles:
I think you does it right. [inaudible 00:52:56].
Stephanie Yee:
I do, I do, actually.
Stephanie Postles:
I love that. All right, Stephanie, well, this has been a really fun interview. Where can people find out more about you and Stitch Fix?
Stephanie Yee:
That's a great question. The stitchfix.com website is probably the best place to find out more about Stitch Fix. I think in terms of myself, that's a great question. I do have a side project called RTD3.us.
Stephanie Postles:
I was looking at that. What is that actually? I saw it on your Twitter, but I didn't have enough time to jump into it.
Stephanie Yee:
It's just a side project. I was at a machine learning and fraud detection company at the time. Oh my goodness, this was probably like six years ago or so, maybe seven years ago when machine learning itself was just starting to like... It wasn't anything that people knew anything about. And a lot of the vendors out there would be like, "Hey, we have this super advanced algorithm, dah, dah, dah, dah, dah, dah." I found it to be a little bit annoying that people would market it as it's too complicated, you can't understand, ours is the best. And at the time, I was quite indignant because we actually had top-notch data scientists and engineers who did actually have something that was the best, but we were still trying to figure out how to market ourselves.
Stephanie Yee:
So I was like, "Okay, I want to sit down and I want to be able to explain machine learning and some of these more advanced statistical concepts to people who didn't take linear algebra in college." Very, very smart people who just decided to study something different because it doesn't have to be as difficult or as complicated as people make it out to be. There are some things that are incredibly complicated and wonderful and elegant, but you can distill something down to something that is accessible to a broader audience. So I worked with a designer/front end engineer, and we came up with something that really tries to explain some of these core concepts and to make it accessible to people who otherwise like... others are just trying to confuse them.
Stephanie Postles:
Yep, yeah. That's great. It reminds me... I mean, it's not very similar, but have you heard of Sideways Dictionary?
Stephanie Yee:
I haven't. I want to go check that out though. That sounds wonderful.
Stephanie Postles:
That's a dictionary and it uses analogies to explain technical terms. So very different than what you're talking about, but it's helpful because if you look at... Let's see, I'll look at API. The analogy is it's like the connectors on the back of your TV. They let you plug in a device from another manufacturer and both the TV and the device know what to do next. And the connectors are the interface that lets one machine talk to another.
Stephanie Yee:
Oh my goodness, I love that. This is actually something that I end up doing at work anyway. So I'll have to take a look at that. This is wonderful.
Stephanie Postles:
Yeah, check it out. I was looking at the about and I saw that it was created by Jigsaw. I don't know if you remember that. It's a group within Google. I think it's just one of their side projects that some of the engineers built. I'm like, "This is actually pretty helpful for me to understand technical engineering type terms."
Stephanie Yee:
Yeah, yeah, no, I think t's very easy to forget like what it was like to not know something. I think that for folks who can remember that, there's a great deal of empathy there and there's a great deal of desire to help people just understand technology in general. So I will definitely look at that. That's very exciting.
Stephanie Postles:
Cool. All right, Stephanie, well, thanks so much. Yeah, we'll have to have you back around since I feel like we have a lot of things we could keep talking about, but until next time.
Stephanie Yee:
All right. Thank you. This was great.
Do you drink kombucha? Do you even know what kombucha is? Don’t worry if the answer is no, you have plenty of company. In fact, various sources have put the awareness of kombucha at less than 50% for certain age demographics. Nevertheless, kombucha is big business (we’re talking a multi-billion-dollar market), and Health-Ade is right in the thick of the hunt for a slice of the pie. Health-Ade was created in a one-bedroom apartment when the founders were looking to create a product to regrow hair with the fermented tea's living culture. The kombucha liquid was just a byproduct, but after getting an offer to sell the kombucha at a local farmers market, they jumped at the chance. Health-Ade now generates more than $100,000,000 in retail sales, and is sold in 30,000 stores. But just like any brand in an emerging market, the company is looking for ways to grow even bigger.
Enter Calvin Lammers, the VP of eCommerce for Health-Ade. Calvin joined Health-Ade after cutting his teeth at some of the biggest healthy CPG brands on the market, Kind, Bai, and Spindrift, where he launched a number of new products and elevated their ecommerce operations to new heights. But when he entered the world of kombucha, he had his work cut out for him.
On this episode of Up Next in Commerce, Calvin talks through how he not only had to develop and execute content to help educate a consumer base, but also about how he had to build an entire ecommerce department from scratch. He gives advice to other brands who are facing similar struggles, including what to focus on when building an ecommerce team and what metrics to hone in on in the early days. Plus he discusses why it’s important to have a holistic view of the customer journey.
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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Transcript:
Stephanie:
Hey everyone, I'm Stephanie Postals, and you're listening to Up Next In Commerce. Today on the show, we have Calvin Lammers, the VP of eCommerce at Health-Ade. Calvin, welcome.
Calvin:
Thank you. Thanks for having me.
Stephanie:
Yeah, I'm really excited to have you on. I was looking through your background, and you've worked at some of the hottest, healthy CPG brands. I was looking at Kind, and Bai, and Spindrift most recently. And so, I feel like you have a lot of good knowledge, and you're a veteran in the eCommerce world.
Calvin:
Thank you. Yeah, knock on wood. Yeah, thankfully I've been able to be a part of some really great brands. I mean, it's been fascinating from a personal level. It's also been helpful from a selfish consumer level as I've been able to enjoy some really good product as well, while working for these companies. So, I think it's definitely shifted my taste buds, I think for the better.
Stephanie:
Yes. That's great. Yeah, I just started recently enjoying Spindrifts, and my two and a half year old wants one everyday now. It's probably a bad habit that I've formed. This is so perfect California kid wanting his sparkling beverage everyday.
Calvin:
That's amazing. No, I definitely got my niece and nephews hooked on Spindrift. And so, it's always funny whenever my family send me photos of the kids taking a big sip of Spindrift. So yeah, love it.
Stephanie:
Yep, you understand then. So, with all this great background that you have, how did you land on this eCommerce path? How did you first get involved, and know this is what you wanted to do?
Calvin:
Yeah. So yeah, I mean, it's definitely been a journey. Even just 2020 as a whole but even just getting to this point, it's interesting because I always like to say that there's no one linear path to eCommerce. I feel like everybody I've talked to that's been in this space for a while, or even new to this space, they've had a different journey than mine. So different. So, going way back when, I graduated from college and was in the mid-west in Minneapolis, and worked at Target Headquarters. Obviously, knew Target, new and loved it. So, thought that would be a great opportunity. So, worked in the snacks department there for a while. Realized, not quite for me, too corporate, very big company, and wanted to... And also was in the mid-west for a while, [inaudible] Change of pace. So, was looking to get out to New York, and looking for a retail related jobs.
Calvin:
And happened upon this start up, or newer company called Quidsi, which Amazon had just acquired right as I joined, and they had multiple eCommerce sites, they had diapers.com, soap.com, and a few others but obviously, I was familiar with Amazon at the time, still pretty early in the journey but was familiar generally with it but had never worked at an eCommerce company. And yeah, thankfully landed the job at this Amazon subsidiary, and really cut my teeth in the eCommerce space, building eCommerce sites, overseeing assortments, [inaudible] overall UX layouts. Really just ran the [inaudible] And I think it was exciting because there was just a lot of, what's now proven to be, it was a really good incubation for a lot of great eCommerce minds.
Calvin:
So, is Mark Laurie who is now the CEO of walmart.com. That was his former company, before he actually started Jet. There are a number of leaders there that they were at Jet, they started their own eCommerce companies, eCommerce D2C brands. And so, yeah, it just was really great learning around and realized I loved the entrepreneurial space, the vibe, and just loved that world. And so, obviously was working on the eCom retailer side, and decided to make the switch over to the brand, and basically be that voice and leader to build out eCommerce on the brand side, and have been doing that basically ever since. And so, as you mentioned earlier, I've been able to work either at a number of great brands, doing that same thing, in building a eCommerce focus and in channel strategies for the respective brands.
Stephanie:
That's very cool. So, at Quidsi, you were mentioning that there was a lot of great leaders there that you got to learn from. What is some of the advice that you remember, or that still stays top of mind from some of the people that you learned from there? Because like you were mentioning, that was a good name there, jet.com, that's great. I'm sure there's a lot of good things that you refer back to every now and then.
Calvin:
Absolutely. So, I think the biggest piece of advice, and I still... This is how I think I view eCommerce, and what I've carried with me, is really viewing even if it's a category, or viewing... Even if it's a certain sub-category on the site, viewing that, and as well as eCommerce, there's a whole in taking ownership, and business ownership, and really just viewing it as a business leader. So, through in through. So, while you might... Maybe you're focused on acquisition, but really having a full view of how it's going to impact the overall business where that's just going to help you work cross-functionally if you're on a team or a business leader, that's going to really carry through to being more strategic with all of your decisions, all of your investments, all of your prioritizations. Just really keeping that lens on whatever you're owning at that point in time, I think is crucial, and that's just how I've carried through to at my various stops in my career.
Calvin:
And even now, we're overseeing an entire eCommerce department, it really is a true business unit within the overall company since you have your separate operations, [inaudible] eCommerce divisions that companies have their own finance department, their digital marketing component. So, really having that lens, I think has been helpful for myself, and I think in general, that's just been a beneficial way to how I viewed my surroundings in business, depending on the company that I've been at.
Stephanie:
Yeah. I think that's an important reminder about how they are their own business unit but how do you make sure they don't become a silo? Because I think I was reading in one of the articles that when you were working at Target, the eCommerce group was in a separate building, and there was two people or something.
Calvin:
Yep, yep.
Stephanie:
And I'm like, obviously that was a long time ago, and that's how a lot of companies started out but how do you make sure that the team integrates with the company as a whole and doesn't become, "Oh, that's just the eCommerce group, that work on their own."?
Calvin:
Yeah. Even now, it's still a challenge, I would say but I think it's become less of an issue, or a challenge, or a hurdle, than it was when I was at Target, or at prior companies, just again with the changing views of eCommerce as a whole. But as I said, you still need to work to be integrated and fully aligned across departments, full company. And so, I think that's where... That's the other piece, is that, that's not always the case, it depends on the company. Some companies have eCommerce as it's own business unit, sometimes it lives in marketing, sometimes it lives in sales. And so, I've had differing experience but the biggest thing is, it is whether you have those individual responsibilities, or head count in the eCommerce department, or they still live in different departments, it is one of the most cross-functional areas as well for that exact reason.
Calvin:
Because you're touching operations, you're touching marketing, you're touching finance, you're touching brand. So, there's an innate need to interact, and work closely, and be involved with each respective areas. So, I think that's where it really the whose... Any eCom leaders, or practitioners that are either starting out, or obviously, well into their careers, really making that effort to both educate in terms of why they should be caring about eCommerce, what of the benefit, how will it impact them, how will it impact the broader company and organization? And really just being that leader, and educational voice, I guess, for the company to gain that [inaudible] And sign on. And I would say that's been one of the biggest focuses at any company, is really making those pitches, and sell-ins.
Calvin:
And then, obviously, at the same time, going the extra mile to show why it is beneficial for the respective department leaders to work closely with the eCommerce team, and myself personally.
Stephanie:
Yep. So, you were just mentioning around them being a cross-functional team, and when I think about a cross-functional times, I think about, a lot of times... And I was one of these back in my earlier days. You're not always doing the work but you're there to coordinate many groups, and bring them together, whereas in eCommerce, team having to also be a cross-functional team seems tricky. So, how do you go about building up a team like that? What are some best practices, and how do you make sure you hired the right people, and build up a good team who can do both of those functions?
Calvin:
Yes, I think that's... It's definitely something that I have very recent experience with. So, I think, a lot of times... And this has been the case at previous companies as well, where eCommerce was maybe less of a focus for a brand, or there weren't as many resources put into the company, or the headcount was on the lower end of the spectrum. So, you have to be very, very efficient, and careful with how you were filling any headcount openings that you had available because that might be the only one you get for the next year, or the next budget cycle. So, it's previously been super important for that reason but even now, as I just joined Health-Ade six months ago, when I joined, there was no dedicated eCommerce team. There were shared responsibilities but there was no eCommerce team to speak of. So, very quickly had to be mindful with the roles that we were building out and filling right off the bat because again, we were building this essentially from scratch.
Calvin:
So, had to be very thoughtful and mindful about, "Okay, over the next two years, what areas of responsibility, and what departments, or what coverage do we need? And will that last us for presumably the next two years? Because we need to be hyper-efficient, and competitive with how we're proofing out the success and viability of the channel. So, we don't want to overload, and hire a 10 person department before we break six figures in revenue." So, we want to be very strategic in that. So, with that, I think that also goes back to my mindset from Quidsi where I still very much have that start up entrepreneurial mindset. So, I've worked at companies where I was the only person on the eCommerce team for a year.
Calvin:
And so, it's a lot of work. I think it's been helpful for myself, as I've touched every aspect of the business, and while I don't work in a day to day at this point, I have at least a background and knowledge of how everything works, and I think that is really important for eCommerce leaders to be able to speak knowledgeably just about eCommerce fulfillment just as much as they are about eCommerce acquisition, or marketing. I think that is hugely important. And so, that's been my mindset, is hiring people that are not the jack of all trades, but maybe a utility knife, where they're able to... Quick learners, able to pick up things very quickly. They have an interest, they're super curious. But they're open, and willing, and wanting to touch multiple things of the business and not having very narrow minds that then, "Oh, that's not my responsibility."
Calvin:
Again, going back to having that ownership view, carries through to how I view headcount, and bringing on new team members because I think that's just hugely important. Especially early on, as you're building out a team.
Stephanie:
Yep. Yeah, you have to have those scrappy individuals who are ready to treat the company as if it's their own, and ready to jump in wherever needed, even if they're on a team that maybe isn't relevant to the task.
Calvin:
100%.
Stephanie:
So, let's talk a bit about Health-Ade. So, I'm a fan of Health-Ade. I have been following it for a while. I also just love the story. I mean, I think the CEO was selling it. She started with $600, and she was selling it at Farmers markets, and now I think I saw you guys generate over 150,000,000 in revenue, and you're in 30,000 or more stores. So, I want to hear a little bit more about Health-Ade, what is it, and what drew you to the company?
Calvin:
Yeah. So, obviously, great to hear you're a fan. I am myself, I like to say that, that's been very much a part of my career path and choices where I worked at, and wouldn't be joining a company if I didn't really enjoy, or love the product, and that absolutely was the case with Health-Ade. Yeah, thankfully, I got connected with the team here. As I mentioned, they were looking to build out their eCommerce channel with really no focus, or presence to speak of before I joined. I was a big fan, it's a probiotic tea, kombucha, is their primary product line, that's as you mentioned, founders and [inaudible] Where they started out a number of years ago. That's really been the key focus for the brand, and where we've seen most of that growth to that surplus of over 100,000,000 in retail sales.
Calvin:
We obviously have looked to expand the kombucha, and recently, we just launched a new product line called Booch Pop, which is a ambient soda made with kombucha. And so, looking to expand into some of these other areas but really, kombucha still is the first and foremost, and primary product line for us. And it's been great to see obviously kombucha as a whole, has been a huge growth driver and really fast growing category, and Health-Ade has really been the primary contributor to that growth over the last few years. So, love the brand, loved what it stood for. Just loved everything about it. The unique challenge, and I think the thing that caused me hesitation was just obviously, with the kombucha product, it is [inaudible] Requires refrigeration, it's also in glass bottles.
Calvin:
So, obviously, anybody that knows anything about eCommerce fulfillment, not really the easiest things to turn into a viable eCommerce business right off the bat. So, very difficult, very, very challenging, and very costly just from an operations standpoint. So, that was definitely the biggest hurdle, or thing that gave me pause but always like a challenge. I like to say that every single brand that I've worked at, I've wanted to make more difficult. So, I've gone from snack bars, to refrigerated beverages, so gone one end of the spectrum to the other, and the food and beverage space. And that's been a big focus for us, and making that a very viable channel, and obviously just making sure that our operations and fulfillment is a strength for us, out of necessity really.
Stephanie:
Yep. Yeah, I'm definitely going to be diving into the logistics piece in a bit, so be prepared. It seems like you choose brands too that... I mean, maybe everyone say, every brand needs convincing, to convince a buyer to buy it. But you choose brands that aren't very well know. I mean, I'm thinking about Kind, when they came out. I remember when I worked at Google, they started having the bars there but people still really weren't sure what they were. Same thing with Buy, the coconut water. And Spindrift more recently, I mean there were so many sparkling beverages [crosstalk] Convincing someone of why you don't want that artificial flavor, and why you [crosstalk] I mean, it seems like you have a pattern here where you're picking harder, and harder things, and now kombucha.
Stephanie:
I think I was just reading that maybe between 20 and 40 year olds, more that 50% still don't know what kombucha is. I saw that stat somewhere and I'm like... I mean, that's crazy to me. Maybe it's because I'm in California, and it seems like everyone here knows what it is but it seems like it's a hard market. How are you going about educating people? Is that why you chose to do the soda route where it's still kind of kombucha, but maybe might connect with a whole different audience, and bring them into the network of kombucha?
Calvin:
Yeah, no, and I think that was a definite thought and factor in the development of the Booch Pop product line, and having multiple ways in for consumers. To this point, there's been... You're a kombucha consumer but that's something that we've done studies on, and have research on in terms of the overall awareness and knowledge of kombucha. It is limited, it still is not as mainstream, or widely known as you would think at this point. So, that also is impactful to how we're approaching overall messaging, and advertising, and just overall content on digital for us. So, that follows through from everything from our Amazon product pages, to our own website, to our email flows, to our SMS marketing, to influencers. So, it's hugely impactful, and I think that's been a major, major focus for us in the brand, in that we realize that there still is a huge section of the population that not only doesn't know Health-Ade, but doesn't know even what kombucha is.
Calvin:
And so, I think that, at the end of the day, presents an opportunity, and I think is what we see as the open lane for us, or opportunity for Health-Ade, is really being a leader in terms of contents and education for kombucha, and gut health overall. And so, really making that case, and driving home that education piece around what is kombucha? What are the prebiotics, what are probiotics? Why are they important? What benefits do they actually help? How does that contribute to overall health and wellness? Because what we've seen, is that, that benefit is actually, strangely enough, unlike most food and beverage categories, taste is actually a second driver. It's actually the health and benefits that is the primary driver that we are focused on.
Calvin:
So, we're really making clear why somebody should be incorporating kombucha in their daily diets, what are the benefits? And just really driving that home. That's, I think, where we see the opportunity. And so, that also relates to content and messaging. And again, you have a better ability, or avenue to do that on digital as opposed to just your traditional retailing on shelf, and you're limited to just the label, or the packaging. So, I think that actually is where it helps brands like Health-Ade, or even start up an emerging brand, so you can create more engaging, and enticing, and interactive content in messaging that really can hit home the messaging and objectives that you're trying to drive, especially as you're building awareness, and overall education for the brand or category that you're in.
Stephanie:
Yeah, I think the gut health thing is still new to a lot of people. I mean, my friend the other day just got a test done to show the bacteria in their gut, and it was really bad, the test results, where she's having to do a whole entire diet reset, and take a bunch of things out, and then, re-introduce them, and take all these probiotics and stuff.
Calvin:
It's certainly been an education process for myself because yeah, certainly, I had somewhat general awareness of good health, and probiotics, but even the amount that I've learned, being at Health-Ade for the last few months, yeah, it's a very, very important part to the overall body, and there's just so many aspects to it, that it does require a decent amount of education. So, it's a journey that we've also got to bring consumers along. It is, as much as I'm going through the same journey myself.
Stephanie:
Yep. So, are there different channels that you utilize when you're maybe going the education route, and you want to get in front of the new people, and educate them on why this a good product to try out? Especially now when they can't maybe test it.
Calvin:
Yep.
Stephanie:
I mean, I remember, in the early days of Health-Ade, there was a lot of samples at Whole Foods, or wherever I would go, that's how it came on my radar. But what are you doing now to introduce it to people, especially if they can't really try it?
Calvin:
Right. Yeah, so I think that's where we have a couple of different channels that we're focused on. So, obviously, within the eCommerce and digital purview, we have our D2C businesses, we have Amazon, our eRetailers. And then, we also have Last Mile. So, obviously, on eCom, going back to the overall financials, and build of that business, it gets very difficult to [inaudible] individual bottles of kombucha. It just overall doesn't work, the economics don't work out. So, traditionally, we sell 12 packs, which again, are quite a bit of product for a consumer who's new to kombucha, or new to Health-Ade, and hasn't tried before. So, what we've done recently is that we built out some sampler packs, so included a couple of different flavors for our different product lines [inaudible] As well as our new Health-Ade plus line, which is our kombucha with additional benefits.
Calvin:
And so, that's been our primary focus recently in driving new customer acquisition in these sample packs, or variety packs, and we've seen some really good responses mixed with that education which again, via our different channels. So, via paid social, we've tested out a few different things for longer-form content, and driving to landing pages, and that's worked extremely well where you have use [inaudible] Initial tidbits, or insights that you include in the copy in the messaging with the paid social campaigns. And then, driving to the landing page which really fleshes out more of that storytelling piece. And these are all consideration and top of funnel campaigns and tactics, and we've seen really, really strong responses to that. And so, that's been super efficient for us, and seen really good responses.
Calvin:
And then, at the same time, we also are focusing on... We have our delivery partners in Last Mile, partners like Instacart. And so, with Instacart, and these other channels, you can obviously purchase just one bottle. So, been really leveraging the ad platforms, and some of these emerging platforms as the way to drive trial where the cost to entry, or the barrier to entry is a little bit lower, just because they're just buying one bottle. And so, we've been actively engaging in working with the Instacart ad platform to promote our products on Instacart as well, and really seen some huge gains there, and see that as a really good opportunity to drive trial on individual bottles when sampling isn't an option obviously, currently.
Stephanie:
All right, so let's talk a bit about launching products. So, you have launched a bunch of new products but also, for the first product maybe in the line versus launching a newer [inaudible] Like you just did with the soda. So, tell me about the differences when a brand is just starting out, trying to get the word out there, and putting out their first product or two versus launching something very different like soda to a market who's maybe expecting just kombucha.
Calvin:
Yeah. So, I think it really goes back to, I think, overall with the roll out and marketing approach. So, obviously, with a new brand, or really establishing any market space as a whole for a new brand, you're going to go to much wider, you're going to have to go much, much shallower with the content that you want to engage right off the bat because you're trying to drag overall impressions, and touchpoints, and just top of mind awareness for that new product line, or new brand. And you're going to have to go a little bit wider spread with your focus, and your tactics that you're employing, and really going true, true top of funnel brand awareness as opposed to a new product line. With Booch Pop, obviously, this is going to [inaudible] Similar or, if you're drafting off a different category, like at Kind is probably the best example where Kind had it's original nut bar line.
Calvin:
And then, came out with the clusters, then the granola bars, and came out with a number of different product lines. And so, with that, it's different because once you establish that brand recall and awareness, you're either able to leverage that and target within that specific category, or... I think this is the [inaudible] With Booch Pop, is that even people who might be aware of Health-Ade, or again, maybe they weren't interested in kombucha, or they hadn't tried before, and we've gotten this response to where it's like, "Is it too healthy? Do we want to target some more mass consumers?" We can draft off of that brand persona and establishment, and cache, and either go super targeted within that and say, "Okay, these are the specific audiences that we want to target, and draft, and leverage that brand cache."
Calvin:
Or, if there's just general awareness, the brand can draft and go into an entirely new segment or audience, and utilize that established brand elements as much as you can. Obviously, finding that right balance and depth that you go is the... End of the day, that's the biggest question but that's, I think, the difference that I've seen in my experience and how that's been incorporated to the roll out for new product lines, and yeah, very much similar story to how that played out at Kind as well.
Stephanie:
Yep, very cool. So, let's talk logistics a bit. So, you're talking about the cold chain process, and you've got glass bottles. What did it look like when you joined and they want you to build out the eCommerce channel, what did that look like behind the scenes? And what were some of the lessons as you've been going about that?
Calvin:
Yeah. So, I think right off the bat, when I joined, I guess the biggest thing is that we were utilized... And again, because Health-Ade, like a number of brands, saw huge demand and interest in eCom and direct-to-consumer earlier this year due to the COVID surge, and it was a minimal business. And so, right off the bat, needed to get things rolling forward to meet the increasing consumer demand. So, for the fulfillment itself, really hadn't been a focus for building out what that actual packaging, and refrigeration, and insulation looked like. So, we were just using styrofoam coolers to keep the kombucha cold, and adding some ice packs, and shipping to consumers. So, not the most sustainable, or eco-friendly option, especially as we're increasing volume. So, right off the bat, that was a big focus for us, is really finding, and implementing a sustainable, and eco-friendly liner and insulation option, which thankfully we were able to get in place pretty quickly when I joined a few months ago.
Calvin:
And so, that was one of the biggest pushes for us, is obviously, just fitting with our brand, and our persona, wanted to make sure we were also being very sustainable, and mindful with how we were actually getting product to consumers. So, that was the biggest thing right off the bat. Currently, we have three different fulfillment warehouses, and so that helps us get to most consumers in two day... Or, 95% of the country in two days. But it still poses challenges because there's still that refrigeration requirement, so that limits the number of days because we don't want a product obviously waiting in trucks over the weekend or anything like that, so it limits the number of days that we can actually ship.
Calvin:
And as consumers as we know these days get more and more... Their expectations for delivery times increases. There's an opportunity to decrease the delays in delivery times with their products, and so, that's the current focus, is how can we reduce from two days to even one day, or even next day delivery? Especially, in key markets So, that's really the journey over the last six months that we've been in. And obviously, it's been a lot [inaudible] In six months, and I got a lot more to go here going into next year.
Stephanie:
Yeah, and how's the forecasting process been? Because I mean, the world's just been so crazy, and especially, leaning into eCommerce right when things are crazy, how do you go about forecasting things so that you have what you need, you don't go out of stock, you've got your variety packs? I mean, it sounds like you've brought a lot of new things to the brand but that's a lot of new challenges that'll come with it.
Calvin:
Yeah, you hit it spot on. So yeah, especially, we have no historicals, no base line to go off of, so that's... Our team has been hyper focused in really nailing down, and narrowing in that forecast, especially, we added new SKUs to the mix. So, it's really been... Thankfully, our warehouse and 3PL partners have been super, super helpful in partnering with us, in maybe over-stocking based on previous demand to ensure that we have sufficient inventory, especially if we have an upcoming promotional push, or we're leaning more on any of our acquisition campaigns. If we were just going off of historicals, obviously, if we were selling a couple hundred cases a month a year ago, to then change and go to a few thousand cases, even alone, that's a huge increase. At first glance, it'd be very tough selling with a lot of partners, or 3PLs that would take the traditional growth and forecasting route.
Calvin:
So, with that, they've been really helpful in loading, and carrying more inventory than needed to anticipate any increases. But then, on top of that, it's really staying close to the vest and staying ery, very... Being very diligent with how we're tracking it. So, we built our reporting to track by location, by SKU, on a daily basis for inventory levels. And then, if we see any risk, working quickly to turnaround shipments to get out the door, and get us back in stock. And so, it takes a village to say the least, and thankfully, it's just again, having the right partners, and really having the team be hyper diligent, and stay close to it, has really made a huge difference.
Stephanie:
Yeah, I've got it. So, I'm guessing you've also had a lot of experiences when it comes to figuring out what platform you want to choose, or re-platforming at the brands that you've been at in the past. How did you do that with Health-Ade, and how do you figure out what platform's going to work, and what kind of features you need, and how to make it so it'll convert?
Calvin:
Yeah. So yeah, the platform side's been interesting because even that's evolved pretty extensively. So, for me, at the end of the day, you want to have scalability, and also enough customization, especially early on, that you can really make the full use of any platform.
Calvin:
Long term, you want a turnkey Platform that again, can scale, integrates well with most of their channels, apps you need but you don't want a very dedicated, or customized CMS that will require a lot of heavy lift, or work whether it's on the internal team, or external party because the cost and hours are going to quickly snowball from there. So, I think that's where for us, again with a limited team, or smaller team, and especially early in our journey, that, that customization, scalability is really the biggest piece for us in deciding with platform we ultimately landed on.
Stephanie:
Got it. And what kind of metrics are you looking at after you... You've got the platform up and running, what kind of things do you look at to make sure things are going well, and how do you figure out what you want to maybe test maybe, and see how to even optimize it further?
Calvin:
Yeah. And that's a big thing for us. Obviously, there's a couple of components there. So, there's the Platform A, but then there's the overall site design, and architecture. And so, that's the biggest piece that we still have in our journey, we previously were on WooCommerce with WordPress as the CMS. And so, a lot of that is legacy content, and pages, and code that's been built there that we've evolved and tweaked it over time, before we had the eCommerce team. So, that's where we're making... We're flying the plane as we continue to tweak it, and build it, but really, that's the biggest opportunity, is that there's only so much that a platform can do without the actual highly functional, seamless UX experience for consumers. Super engaging navigation and content, that's still needed in order to best leverage and utilize whatever platform you end on.
Calvin:
And so, that's the next piece, is we've seen... We continually are looking at our conversion rates, our balance rates, our time on site, our click throughs, and the time to conversion. And that's really what we're holding as our key metrics here, to measure true success of the website before we get into consumer journey, lifetime value, and things of that nature, just the overall site experience. So, that's the biggest thing that we're trying to address, and improve now over the next few months, now that have the right platform in place. So, working with an overall site redesign, and site build, to really bring our full digital experience for the website to match our brand persona, and really bring that up to speed, and make a viable experience for consumers that really will sustain us long term.
Stephanie:
Got it. Are there any changes that come to mind that have made the biggest impact around the consumer journey, or seeing those conversions increase? Even if it's maybe starting to introduce that variety pack. What do you think the impacts have come from this year?
Calvin:
I think site load times, honestly. So, it's just something as simple as that. Obviously, a second in the digital age, or a D2C experience is a life time. So, that was a big focus just recently, just reducing page load times, reducing font sizes, page weights, image weights, all these things. And almost impacting how the page are loading. Making sure that add to cart buttons are loading first, as opposed to maybe copy further down the page. So, just those small tweaks have huge impacts just right off the bat. And so, that's really what comes to mind right off the bat, is just making sure the time from landing to checkout is as seamless and as quick possible because you want to make it as easy for customers to checkout and give as little reasons as possible for consumers to bounce. And so, I think reducing the page load times has been crucial, as well as testing out... Again, just where we're driving new customers to.
Calvin:
So, we've updated our collections pages where we drive a lot of our traffic, and just updating the layout, and the overall structure, adding add to cart buttons on the collections page. Again, just to remove another step needed to checkout. So, those minor tweaks are really what we're focused on now until we completely revamp the website as a whole, and thankfully, they've made some significant improvements, and had a marked impact so far.
Stephanie:
Very cool. So, where do you see the world of eCommerce and D2C brands headed in the next year or two?
Calvin:
Yeah, I mean, if I had $1,000,000, and wish I can do and embed on that because yeah, I mean, if anybody told me that in 2020 we would see eCommerce penetration go from the five, 6% to... I think the last figure that I saw was 11, 12% just in 2020 alone. Yeah, I would have said, "You're joking." So, who knows at this point? But at this point, I don't think we're going back. I think this is the new standard for new consumers. I think that's what I've seen, is that every consumer, or most consumers that have either been forced, or shifted purchase behaviors to online, especially in the grocery space since food and beverages still being the lagger in terms of under indexing versus other categories in eCommerce penetration, and that's changed tremendously over this year. So, I think that the consumers are going to stick with that trend.
Calvin:
So, a lot of consumers that have tried grocery delivery for the first time will likely stick with that over the next couple of years. I think it's going to be more... I think the biggest thing is that it's just going to become more seamless with... Especially, on the brand side with how they view channels, I guess. So, instead of having this prior mindset where it's like, okay, there's brick and mortar, then there's this eCommerce thing, and they're separate channels, you need to be mindful of the entire customer journey because yeah, you might have a consumer that you have a programmatic ad that they get started with, and then, they're purchasing in store. Or, they see a programmatic ad, and they're purchasing on last delivery, or maybe they're in store, or buying a pick up order, or maybe they're ordering via an SMS channel.
Calvin:
So, I think it's just becoming more holistic with it's not a matter of channel separating but having a true, unified vision of that customer journey, and approaching that as such as a company, and a brand, and that's very much what we're thinking off as we're building out our collective efforts at Health-Ade.
Stephanie:
All right. So, how are you guys prioritizing retail versus eCommerce? Where are you investing right now? Are you pulling back a bit from retail, and learning more into D2C, or how are you thinking about that?
Calvin:
Yeah. So, I think that goes in line with my previous comments. So, we're absolutely still supporting our retails channels since as I mentioned earlier, that is where the bulk of our business is currently but we're also changing in how we're activating and supporting those retailers. So, maybe traditionally, or previously, we might be supporting retailers in on shelf, or POS material, instead we're running geo-targeted display ads, or paid social ads, or running a programmatic display campaign to support a specific retailer. So again, just leveraging more digital components as well as supporting the last deliver, or Last Mile platforms like Instacarts that still... Obviously, the revenue in volume is being pulled through the retail stores.
Calvin:
So, it's definitely not a shift of focus, or priority, or in an investment, it change in terms of how that support is played out, I guess. So, that's, I think really been the biggest change for us. And then, on top of that, obviously [inaudible] that support from the eCommerce piece, and how that plays into the mix. What I've also seen at previous companies, and a number of white papers, and research that I've seen, is that any eCommerce advertising, or digital advertising, it will drive eCommerce, and it has obviously a huge impact on eCommerce specific sales but a lot of the impact is actually seen in your traditional brick and mortar, or retail sales. And so, having that lens, and that... If you're spending a dollar for eCommerce advertising, it doesn't mean that entire pack is going to eCom, it is also driving the overall brand awareness, and retail sales.
Stephanie:
Yep. Yeah, which is definitely a tricky thing to measure, and then try and convince maybe [crosstalk] It's having brand awareness, and it's also driving those retail sales but I can't exactly track it right now.
Calvin:
It's the age old debate. Yeah, I've been there all too many times. That's a fun one.
Stephanie:
All right. So, with a couple minutes left, let's move over to the lightning round. The lightning round is brought to you by Salesforce Commerce Cloud. This is where I'm going to ask you a question, and you have a minute or less to answer.
Calvin:
Oh, man.
Stephanie:
Are you ready, Calvin?
Calvin:
I think as ready as I'll ever be, so let's do it.
Stephanie:
All right. What's the best piece of advice you've ever gotten?
Calvin:
Best piece of advice, I guess is... Again, don't look back. Take ownership, and own your mistakes. I think you can't shy aware from your mistakes, just make sure you don't make them again.
Stephanie:
I like that, that's a good one. What's up next on your reading list?
Calvin:
Next on my reading list, I would say right now, I actually got a book that I've been meaning to get to for a while. It's called The Sympathizers, it's a historical fiction novel set after the Vietnam War, in the US. So, it's one of those that I've had on my list for a while, and it's about time I finally get into it.
Stephanie:
Sounds good, I'll have to check that out. What do you not understand today that you wish you did?
Calvin:
I would say the biggest thing that I understand today that I wish I did was just the impact to that eCommerce operations and fulfillment has, and in total business. I've said this, I think, in the past speaking to other people but if I knew then what I knew now, I would have gone back and got an MBA in logistics and supplier chains, just with how much of an impact that has on eCommerce. And again, going into it, had no idea how crucial that is to a viable eCom business.
Stephanie:
Got it. That's good, you pivoted the question which now I think I want to ask going forward because you took it in the route of what do you understand now, that you didn't understand that you wish you did. So, I like that. That's a new question I'm going to have to add in.
Stephanie:
So, if you were to have a podcast, what would it be about, and who would your first guest be?
Calvin:
Oh. I would say it would probably be about pop culture in... I guess pop culture and entertainment in the '90s, and my first guest would definitely be Conan O'Brien, I think just because in general I love just talking about pop culture, and entertainment in the '90s, and Conan O'Brien was one of... It still is absolutely one of my favorite late night hosts, and his podcast has been one of my favorites, and it's been a good one to have a hefty playlist for his podcast episodes to get through the past few months.
Stephanie:
That's a good one. All right, and then, the last one, what one thing will have the biggest impact on eCommerce in the next year?
Calvin:
Biggest thing I think will be, I guess technology at the end of the day but then, also, just again, how consumers are changing their shopping behavior. So, I've said this in other forums but previously, my biggest expectation is that integrating technology into just the kitchen and the pantry, again, speaking more on food and beverage since that's been my space, my territory. I think that really seems like the opportunity where you want... Especially, if consumers are shipping more to eCom and digital delivery, having that be less of a top of mind thing, I think, and making it more efficient and removing any legwork on the consumer side will be beneficial in the long run. So, whether that's scales that you're placing products on, so that your subscription knows when you're almost out of your coffee, and you need a refill, or anticipating based on your purchase behaviors, I think that is probably the next trend.
Calvin:
Especially, on the consumable side. That's, again, just going to remove pain points in consumer's journeys, especially when you're getting it delivered to home, that's really the biggest one at the end of the day.
Stephanie:
Cool, I like that. That is a really good, unique answer that we have not had so far.
Calvin:
Oh, great.
Stephanie:
I like it. All right, Calvin. Well, this has been very fun. Thanks for coming on and sharing all your eCommerce knowledge. Where can people learn more about you, and Health-Ade?
Calvin:
Yeah, you can find me on LinkedIn, Calvin Lammers. And if you want to check out more about Health-Ade, and read some more about that education content that I mentioned, you can go to health-ade.com.
Stephanie:
Thanks so much.
Calvin:
Thank you.
In recent years, UrbanStems has grown from operating its online flower ordering and delivery business in a few markets to processing and delivering orders from coast to coast. It’s a DTC success story, but it was by no means an easy road to get to where the company is now.
Scaling is one of the most challenging parts of running a business. Where do you allocate your resources? How do you enter new markets? And what do you do when disaster strikes in a way that could topple your business?
Seth Goldman had to answer those questions and more when he took over as the CEO of UrbanStems in 2017. On this episode of Up Next in Commerce, he spilled the tea on everything he learned along the way. Seth explains how to navigate through the process of scaling, finding bottlenecks in your operations, and breaks down the ways to look at ROI when trying to break into a new market. Plus, he gives some insight into best practices when adding headcount.
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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Transcript:
Stephanie:
Hey everyone. Welcome back to another episode of Up Next In Commerce. This is your host, Stephanie Postles, co-Founder at mission.org. Today, on the show, we have Seth Goldman, the CEO of UrbanStems. Seth, welcome.
Seth:
Thank you, Stephanie. Great to be here.
Stephanie:
Yeah, I'm excited to have you. For anyone who does not know UrbanStems, can you tell me a bit about it?
Seth:
Sure. UrbanStems is a six-year-old old company that is the premier provider of direct to consumer florals.
Stephanie:
That's awesome, and how long have you been with the company?
Seth:
I've been at the company for about three and a half years.
Stephanie:
Cool. What brought you to UrbanStems and what was your background before?
Seth:
Yeah, so it was a person actually that brought me, the founder, Ajay Kori is a dear friend of mine, and we both worked at a company called Quidsi together, which was acquired by Amazon back in 2011, and we remained very close friends from that point on. I went off to a company called HelloFresh. He went off to found UrbanStems, and we reunited in 2017.
Stephanie:
That's great. What did you do at HelloFresh?
Seth:
Yeah, I was the CEO of the US business, helping to grow HelloFresh from its near infancy in the US to a much larger business, and it was a wild ride and I had a lot of fun doing it.
Stephanie:
That's great. It seems like a good company to get a lot of lessons from, to bring to UrbanStems, like similar problems maybe, or things to tackle.
Seth:
Absolutely, both in terms of the apps, specific product, a perishable product, and a complicated supply chain, as well as I'd say the softer skills in terms of scaling a business, scaling a team and the challenges that come along with that.
Stephanie:
Very cool. When you came into UrbanStems, what was going on back in 2017, and how has it changed since?
Seth:
Yeah. When I came on board, it was great. Ajay brought me in and asked me to help beef up the operations of the company. I'd say, as a consumer, the biggest difference between now and then is that you could only get UrbanStems in a few select cities across the US at that point, and we made a big decision to go nationwide in early 2018, and that's really helped us scale the business since then. Although, we really still love our city delivery method that we still have in New York and DC. It creates that really intimate relationship with the customer and their recipient. We hope to be able to do more of that going forward.
Stephanie:
Tell me a bit about how do you pick cities? Of course, if it's started in a certain city, you're probably going to launch there, but how would you go about picking which cities to start in and having that city method that you're talking about, is developing a good relationship in that city?
Seth:
It's a pretty simple exercise of figuring out which cities are likely to have enough revenue and an ROI on that city to get in there. We believe there probably around 30 cities that we could identify today that likely makes sense. In terms of which cities we'd prioritize next, we would really rely on data. That data would help us understand what would be the revenue opportunity, how quickly we might get there. From there, we would also layer on supply chain and we would try to figure out if that city was easier or more complex from a supply chain standpoint. Finally, we'd overlay brand. We'd try to understand if there were any idiosyncrasies of that city that made it more or less attractive. Then finally, we might say, does that city have any sort of non-financial strategic importance to our business?
Stephanie:
Oh, great. Okay. This is a very interesting topic that I actually have not talked to many people on the show, so I want to double click into all of those, if you're happy to go there with me.
Seth:
Sure, let's go.
Stephanie:
All right. When you're picking your cities, you're talking about developing which ones have an ROI, and then of course, looking into a bunch of data for rolling out to the next cities. How do you go about developing which cities will have a good ROI?
Seth:
Yeah. The great news is that we have data to show what revenue we have in those cities currently. We would have to do a deep dive analysis of what zip codes we thought we could actually deliver to, depending on the city, if it's a city that we could get in with bike messengers, as we currently do in New York and DC, or if it's a city that would force us to rely exclusively on cars, which is not a major concern although we really love our brand promise of delivering via bike where we can.
Stephanie:
That's fun.
Seth:
Yeah, we would then use analytics to understand where we stand in each city revenue versus where we think we might be able to get to, where we start to have to look at some proxy data. For example, Google can help us understand what we believe our penetration in that city is versus a benchmark say of New York or DC, where we currently have our strongest brand recognition. That could give us some guidance as to whether, if we're doing X dollars of revenue, do we think if we jump in, we can increase that by 25%, 50% or more than 100%? Then we have to partner with the marketing team to understand what sort of a marketing effort would be required to get us there within a year or 18 months to break even, which is sort of, not a hard rule, but it's sort of a general proxy of what we're going to be looking for.
Stephanie:
Okay. When it comes to that marketing effort, what kind of channels do you look for, especially when you're launching in a new city where maybe you're not well-known and it's like, this seems like a city maybe similar to DC, but we've never been there before? What kind of things do you explore to get those new customers and brand awareness?
Seth:
We have to probably devote certain on the ground marketing campaigns. It could be as simple as going to street fairs, it could be that we would take some sort of local radio or other sort of top of funnel awareness advertising out. Each city though, is really going to be unique. I think that's something that we've learned, even just having New York and DC, we see small differences in the average order value. We see small differences even between, say Manhattan and Brooklyn, in terms of the percentage of flowers versus plants that the consumers purchase. So, we'll have to do some research that helps us understand the consumer and then that would help us figure out which marketing channels would make sense. But we almost certainly would be more comfortable getting aggressive in awareness marketing when we jump into a new city, because the return on that investment should be pretty strong, given that when we get into a city, the conversion rate, we would expect to be higher on our ecommerce platform.
Stephanie:
Yeah. That's cool. I can also imagine if you have bike deliveries, like if they had the backpack with your logo and beautiful flowers sticking out of it. That in and of itself could be a great marketing tactic to spread word of mouth.
Seth:
Absolutely. That is an entire romantic vision is true, except hopefully for the flowers sticking out the back, because they should be in contained packaging.
Stephanie:
Oh yeah. I guess I would just buy all over the place if they're just sticking out. Huh.
Seth:
But we do have branded everything for our couriers, t-shirts and vests, the coveted sweatshirts and hoodies. In fact, one of the downfalls of our sort of head of delivery was that he designed a hoodie that was too well loved that, not to accuse our corporate team, but they started taking them in numbers that they shouldn't have so we had to place an extra order. It really is the most comfortable hoodie.
Seth:
But it accomplishes two goals. The first, as we discussed is, it's really nice branding and advertising for the company. The second is it helps make these employees in these remote locations feel more part of our broader and greater team and brand.
Stephanie:
Yeah. I love that. Are there any other on the ground methods like that, that you're experimenting with or that you are hopeful of to promote word of mouth in maybe a new and different way?
Seth:
It's interesting in, especially the last nine months, we probably pulled back on a lot of that for obvious reasons. I think that it's an area where we would experiment, but I think you also have to be careful because it's hard to measure the effectiveness of that spend it takes, not just monetary resources, but really time. One of the things that I noted when I came on board in 2017 is that my city managers were being asked to do a lot of these in-person events. We hadn't really thought through how much of their time was being taken and how to think about them as an operations manager versus a marketing manager when we had a lot of work to do to scale the operations of the business. I think people just have to be thoughtful and careful about the KPIs that they're going to measure people against.
Seth:
But the people who are responsible for budget, but also the people whose time is going to be taken during these events. The good news is that the people love doing the events. These small scale events were very popular for the staff that, even after I told them that they should pull back, I found out months later, they were still doing them because they enjoyed them, but then they would complain that they didn't have time for other things. It did have to lead to some alignment meetings.
Stephanie:
Yeah. That's a really good point. So, thinking about the next piece that you mentioned was layering on supply chain when rolling out into new cities. It seems really difficult of course, with fresh items. So, how do you all go about thinking about that in a new city and building out a good supply chain that makes sure the flowers don't just die in a warehouse or something?
Seth:
A very sort of blocking and tackling for our goods is that you have to have a refrigerator. It has to be something that you have confidence is going to maintain temperature at around 35 degrees. And you, say very simple things like just like you're developing any real estate, make sure you give enough time to build it out, so you're not under pressure, because it's hard to come back from that if you're forcing yourself to open up on January 1, but you just can't have the refrigerator installed before then, you're going to fail. Making sure you understand your lead times. But for our business, I'd say the most important thing is understanding the notes in our networks. We have a larger facility in the Greater DC Area that helps service our New York and DC same day delivery locations.
Seth:
We have to think through as we branch out to more cities, if so for example, Philadelphia, we could certainly service from the same Maryland facility with limited additional CapEx, with limited additional complexity added to our supply chain. As we think to the West Coast, or as we think to, say the big populations in Texas or in the upper Midwest, if we have a facility nearby, there may be synergies where we can pull product from there and deliver it to a local facility. I would say that the farther we get from our home base, in terms of miles, in terms of being three hours and three time zones behind, you have to just ... it's hard to model it out on paper, but you have to start to acknowledge that the difficulties, things that could get lost in translation. You go from having everyone on the same eight hour, 9:00 to 5:00, to only overlapping for five hours, that can just sort of add strain to the systems.
Seth:
If you're going to go to the West coast, have you hired someone, did you decide that you're going to spend three months having them on the East Coast, training up, learning your culture before you send them to the West Coast, or you're going to take a gamble and just hire them on the West Coast and through more Zoom calls and maybe someone flying to California, try to build them into the culture and the brand of the company? I think those are really important decisions that don't sound like supply chain decisions, but ultimately, really help you down the line when someone is going to have to make a lot of executive calls that will impact your supply chain and will impact your ability to be successful or not on a day-to-day and week-to-week basis.
Stephanie:
Yeah. I think that's so important around building culture and a team. I mean, especially right now, where everything is digital and companies are still having to hire and find the right people, and it's kind of hard over Zoom. I've interviewed some people over zoom and it's like, you don't really know if you know them or how many notes they have in front of them, or what's really going on. How do you guys go about building a relationship and hiring? I think earlier you mentioned having this connection economy, where everyone's on digital tools, but people still want to connect in the real world, but maybe you can't right now. How do you think about that with teams and cultures and hiring new people?
Seth:
Yeah, that's a great question. We actually have hired probably about half a dozen people since the lockdowns were initiated and since our corporate staff for the vast majority of folks have not gone into the office. I'd say that we had one key advantage, which was that, before March, we did have a team that was split between New York and DC, so it was not uncommon for us to be on video conferencing. That transition was, to some degree, at least natural. In terms of the hiring process, I'd say the hardest part, and one that we definitely still have not right, and I'll be honest, for some small company, we didn't have it right necessarily before the pandemic was the onboarding. That the team though has started to make headway, we've gotten our swag. We've actually pulled it from the various physical locations and people are getting a care package now when they are in their first week at the company.
Seth:
I make sure to reach out to new hires during their first week to just welcome them with a warm email and then tell them when they're feeling no longer overwhelmed that we'll have a 30 or 45 minute call with no specific agenda other than really getting to know each other. I can try to sprinkle a few of my thoughts around company mission and values into those calls.
Seth:
I think for hiring managers and/or senior executives out there, I would also say, it's not just you making sure you know them. If you have someone that you really like, how are they getting to know you and feeling it on both sides? That you have an easier time convincing them to come on board.
Stephanie:
Yeah. Are there any best tips that you recommend to make sure that the candidates get to know you because, especially over Zoom, it seems like people are always talking over each other, even with ... I was talking earlier about internet, the video's not on, I had to turn it off. Is there anything that you guys practice to make sure that, not only are you getting to know the candidates, but also that they feel comfort with you and can ask questions and feel confident about that?
Seth:
Yeah, so we do as much as possible try to do video rather than just phone call interviews. I guess you could make arguments that that's better or worse, but it certainly allows people to respond to facial expressions, queues when it looks like someone is about to speak so you can try not to talk over them. I do reserve the last 15 minutes of every interview to allow the interviewee to ask me questions. That's both for them, and also, I secretly am looking to see how prepared someone is by the quality and thoughtfulness of the questions that they ask. If anyone is local, I will try to meet with them in person. We have to be thoughtful about that. Let's say we have two candidates and one is in New York and one is in DC, and we haven't crossed this bridge yet, but how do we make sure there's no implicit bias that we're pushing for the person that we met in person? But we try to have a variety of interviewers for each role. I think we've done a pretty good job with that.
Stephanie:
Okay, cool. Thinking through bringing on new employees, the first thing that's coming to my mind is scaling companies, something you've had quite a bit of success with around HelloFresh and now UrbanStems. I wanted to hear a little bit about how you think about scaling companies, whether it's at UrbanStems or HelloFresh or anything in the past that you've worked on.
Seth:
Yeah. I think what I try to do is, when I do have a moment to step back, is look at each function within the business, or I look what our plan is, where are we expected to get to over the next year? Whether that's our revenue mark, whether that's improvement along other KPIs or important metrics, and I try to pair that against each function. Is each function at a point where they can make that leap without any additional people? Are they at a point where they can make that leap but they'll need to improve just process? Do they need technology investments in their function in order to be more successful? We are nowhere near perfect on this, but each year we've gotten better. Our planning process is in the sort of June/July timeframe, of talking through what that plan is, and each team trying to think through what they will need to be successful there.
Seth:
I would say that stepping back where you run into problems, and it's sort of dual-edged sword, is if you put cash out and investments ahead of growth, you can get yourself in trouble. But you can also get yourself in trouble if you put growth ahead of investment. It is a dangerous game. I think, when it comes to hiring people we try to be thoughtful. It's also, what level are you hiring at? That's something you'll often hear me say to the team if they ask for another resource. To me, it's most important that we get that right level right. Very different to hire an associate versus even someone with two or three years of experience where you're saying, we just could not be successful, we hired someone just out of college. My next question will almost assuredly be, why?
Seth:
And managing the specific work that someone needs to do against the experience that you're saying is required. You don't want to hire someone too senior to do junior level work. They won't find it satisfying. There is such a thing as overqualified. Then on the flip side, you have to be careful what you can expect of someone more junior and what level of accountability and ownership you can place on them. I think, to me, that's the most important thing, is making sure you're hiring it to the right level, that everyone is aligned, that this role is needed. The reality is, in almost any startup, you're going to have a whole slew of resources that are not yet hired that people think are necessary, and trying to at least agree on alignment on when those might get prioritized.
Seth:
If something comes up that accelerates something, that happens too. That can throw a wrench in plans and you have to walk people through that that's happening and have conversations, well, hey, how did this new role cut in line ahead of the others? That can be hard, but you have to do it.
Stephanie:
I've definitely seen that in the past. At previous companies I've been at, I worked in finance, and every team always wanted headcount. Everyone always had a reason and were pretty good at justifying why they need those people. How do you go about spotting those opportunities of like, this is an area that obviously needs investment and I see growth coming after that? How do you actually think through finding the opportunities when they seem like they're pretty hard to spot? What's holding what up to create growth or to create exponential growth in the future?
Seth:
Yeah. I would say that you're sort of hiring for two reasons. One is growth, like you said, we're truly, there's a revenue or a profit or a customer experience opportunity that's not yet ... We can't go after because we don't have someone on the team. The other is that we're, I don't want to say things are crumbling, but sort of this more fixing the foundational type hires that you have a critical process that's not being executed the way you want. That's where you have to start to lean in and understand, is that a process technology or a resource issue? Once you get comfort that that's a resource issue, from my standpoint, typically that's a pretty easy hire, because, unless you have invested in something that's causing friction, that itself is not worth investing in, that hire will pay for themselves financially, because they're going to unblock something that, that is important to be unblocked.
Seth:
That's how I get comfortable with those kinds of hires. On the revenue side, if it's creating something new, you can run ROI models. Sometimes you can do those in your head. Sometimes you put them down on paper. Then for other functions, sometimes it is a little bit of taking a risk. For example, it was about a year or 18 months ago that we decided we needed a stronger social presence. We weren't sure exactly what that meant financially, but we brought someone on board on our brand director, Megan's team. After a few months, we started to really see results. We were really impressed. We managed to, in the last 18 months, five X on our Instagram following, not that that's the be all and end all of KPIs. Then for the sort of CFO in me, we started to see revenue, directly attributable revenue follow that.
Seth:
I think the other thing that, this is where managers have to do, is they have to sometimes take a risk. They say, there's a resource I'm really asking for, this is what I think it will return, and when they have something pan out, they are able to probably come to that next meeting with an ask with a little more confidence themselves, and with the, me again wearing my CFO hat, and me having more confidence to say yes to that opportunity.
Stephanie:
That's cool. I like you wearing your CFO hat. I appreciate that with a background in finance. You just mentioned, which I'm now I'm sure a lot of people are like, well, tell me how you grew your social, because that is an avenue that obviously a lot of brands are relying on and it's becoming even more important with the ability to click and buy on social, or at least it's headed in that direction. What did you guys do to grow your social presence?
Seth:
Yeah, so the very first thing we did is, like I mentioned, hire a dedicated resource, someone who spends probably 75% plus of her time thinking through our social channels and how we can become more influential there. Second is, once we started to see some results there, we added a SaaS software platform that helped us assess which visuals were going to be more engaging for our customer base. We did, though still have conversations, interestingly enough, the photos that I'd say I prefer from a brand perspective, those with people in them significantly underperform those of just flowers.
Stephanie:
Oh, interesting. This is a piece of tech that you guys were utilizing to figure out which ones like, which images would you best?
Seth:
Yeah. I actually don't know how precise it is, but it certainly helped us. We didn't need that to tell us that people underperformed flowers, but even just different variants of a similar image, they were able to pretty convincingly predict which one was going to outperform. Obviously we are betting on engagement, at least these measurable engagement statistics mattering. I think one of the hardest things in social is understanding what matters and what doesn't. Like I said, having our Instagram following at 150,000 versus at 30,000, where it was, we think that is directionally very good, is that, can I quantify what that means for our company? No. Will we continue to push to increase our reach. Absolutely. Are we seeing that increased reach is translating into direct revenue? Yes. Is that our only goal? No.
Seth:
Do we know the relationship between directly attributable revenue and non-attributable revenue? No, we have no idea if that even is the same month over month. But these investments that we made in a resource, training her, we actually had some, at one point also gave a green light to bring on an intern so that our full-time hire could manage up and start to add strategy to how she was thinking through, not just executing every day, and that's been great. We talked about that. How much is this going to cost? What is this person going to do? It was a pretty quick decision. But because it wasn't a ton of money, but even there, what I think is still critical is that someone comes to the table with that analysis done that's thoughtful, and that they seek to justify any investment, whether it's $100,000 or $1 million or $1,000.
Seth:
It just gets people in the discipline habit of understanding that money is going to be invested or not across teams, and it's not ... there's not an infinite amount of it.
Stephanie:
That's very cool. Now that your social person is able to start managing up, what kind of tactics or strategies are they hoping to implement over the next couple of years? What are they saying they believe in, or they want to try or test out?
Seth:
Yeah. I think a big buzz word in social is influencer. One of the things I've said is, if Oprah came out and endorsed UrbanStems, I don't know if that would even help us because our website would probably crash. We'd be out of stock on inventory in the next 20 minutes, and we'd enrage all of our good customers who came back and sold out. So, we have to think through how we would even execute that, but the team is bullish that, that matters. So, we're trying to think through that. I certainly also believe in content. The team believes in that. So, expect the we'll invest more in content. It's no secret that video content outperforms static photo content. So, looking at that, but it's also no surprise to anyone that videos are a lot more expensive to make than taking photos.
Seth:
You have to figure out what your budget is. You have to still be able to test very scrappily. I still will always believe in that, some of the best content is always going to be UGC. Some of the best content is going to be filmed in an iPhone, or for suckers like me, Samsung Galaxies. It's about mixing that with the more professionally created content, figuring out where and when to spend bigger, both from a photography standpoint and from a video. For example, the team did a wonderful job. This Thanksgiving, we have a dedicated lining page, which features video for the first time on the site.
Stephanie:
Oh nice.
Seth:
I'm really excited about that, testing it and testing more of that. With everything digital, the best thing is that you can always AB test that. Even if you spent a ton of money on something, I still encourage you to AB test it, to ensure that it's working. If you want to AB tested at 80% with the video and 20% control without so that you get more out there, that's fine. It'll just take a little longer to get the results of that test.
Stephanie:
Yeah, that's great. I appreciate you letting us look into the future with you and your team. I'm sure that you're probably like, ah, I don't want people bringing this up anymore. That's so three years ago. However, it came to my mind when you were talking about Oprah and if she were to endorse you guys and you could sell out, and their website will crash. It brings me back to, of course what happened in 2017 that I think a lot of people could learn from, who are listening, around, I think there was like a Valentine's day snafu where you had too many orders and the website maybe crashed or something. Tell me a little bit about that and what you guys have ... what actually happened, what are the details on it? I know you weren't there, but what are the details? What have you learned from it? And what do things look like today?
Seth:
Yeah. No, I wasn't, but I don't think that's the sort of important part of the story. I think, in three short words, we messed up. We did not fully understand how we were going to execute the holiday. It was unfortunate that it was on Valentine's day, which is one of these two days a year that everyone looks to flower companies to sort of solve their buying need, which is to get flowers delivered. We were better at marketing than we were at executing that year. We learned a lot. I think that that's the most important thing, which is we learned that we needed a more sophisticated plan. That plan needed to be backed by data. To be honest, this is why I came in. This is why Ajay asked me to come into the business, which was to help figure it out for the next year.
Seth:
The first thing I did was I talked to people. I got the stories. I started sharing those stories around to make sure that they matched with what people thought went wrong. I started to look at data, and data helped me craft a plan. One thing that I actually think I did really well is that we had the data and we had the plan, and we just kept going over the plan. I think that is one of those things that, for people who would like to move quickly, can infuriate you. It's infuriated me at times. The number of times that I think we had to go over the plan or that we went over it was well into the double digits, just reviewing and reviewing, but we were successful and it wasn't just that we fixed everything from the previous year.
Seth:
In fact, we had to make changes that had nothing to do with people making mistakes. We had just pushed too many orders into certain physical facilities than we could handle. Our tech had not been robustly tested to meet the peak needs by a combination of looking at data and incorporating feedback from people who had gone through it. We were able to create a plan that was, again, based in numbers and efficiency metrics, and a realistic execution, still stretched by all means. We did not pull back. But to the credit of Ajay, he brought me in, and he gave me the green light to bring in some additional resources, which I did. We did some new things. We delivered for the first time in the company's history via a third party parcel carrier that allowed us to take orders that we otherwise wouldn't have been able to take.
Seth:
We had an on-time rate of about 98% to 99%. So, it was a nice reversal from the previous year. The way we phrase it with the team is, it's three and a half years ago, so it's, we don't dwell on it. But we do remember it, and we remember it as a way of motivating ourselves to make sure that our plans have been vetted, thought through, are based in data and have been shared with the team well enough in advance so they feel confident in their ability to execute them.
Stephanie:
Yep. What are some of the biggest data points that you looked at? When you were coming in or when you reviewed what actually happened, what were some of the biggest things that stood out where you were like, oh, was it the website crashing because it was the tech stack? Was it the supply chain? What specific things were the biggest contributors that maybe any new company can learn from of like, oh, if I'm setting up a similar type business, I need to look for this, this and this. If Oprah decides to come out and give me a shout out.
Seth:
Yeah. And Oprah, if you're listening, we will still take the shout out.
Stephanie:
Yeah, send it our way.
Seth:
But I think the challenge was, when I got ... everyone thought it was everything. It was really important to help people compartmentalize. It actually brought me back to a course in business school. I feel like, in many respects, I was one of the only people, one of the only ones of my friends who actually learned something in business. I remember taking an operations course and it talked about a factory that made, I forget if it was chocolates or chairs, it almost doesn't matter, and they said it was an assembly line and it took a minute to make the first chocolate. The chocolate had to go through, it doesn't even matter, let's call it six steps that each took 10 seconds, and it said, how many chocolates can you make in an hour? I got it wrong.
Seth:
I said, well, you can make 60. It takes a minute to make each chocolate. It turns out that there were six, like I said, six steps, each were 10 seconds. So, you can actually make six a minute, or 360 an hour. My mind was blown. It was really cool to figure out how an assembly works, what throughput is. I went to a Chipotle just to observe it in action, to find out what the bottleneck was and to figure out actually how a company like Chipotle does an amazing job at lunchtime. It's actually the cashier who typically is the bottleneck. So, you can see they add an extra cashier. Sometimes it's the first person who has to do both your burrito and the meat. So, you'll see they have an extra person who just does the meat. If you ever want to understand operations one-on-one in action, go to a Chipotle at peak time.
Stephanie:
Oh, that's good. I'll be looking at police so differently now.
Seth:
What really I just had to understand, and what was clear to me is they hadn't really done that kind of analysis to look at throughput, how many orders can be packed out. We also have to ... people kept telling you what the bottleneck is. The bottleneck is basically where your business chokes, what's the slowest part of your operation. People kept telling me things that ... and then I would say, well, how long does it take to do this? And I would write down the answer, and the numbers they gave me did not match with it being a bottleneck, which either meant that it wasn't the bottleneck, or that it took a lot longer than what they thought.
Seth:
The key thing was keep digging, keep trying to understand, is it ... because at the end of the day, the math will be the truth that you can use. But if your assumption is based on faulty math, then it's just garbage math. So, you have to look at the operation in action and you have to understand, so for example, with us printing out these custom note cards, whereas it's the note that you wanted for your mother for Mother's Day, right? That's what makes every UrbanStems order unique, besides the fact that you get to pick the bouquet you want and the ad-ons that are specific to your order, which took a lot of technological build hardware and software, to be honest, but it's that note card.
Seth:
I was told, "This is our bottleneck," and I said, "Well, how long does it take to print a note card?" And they said, "Five seconds." I said, well, it takes a lot longer to pack out an order than five seconds. That can't be. But then I started to lean in, and it turns out that they would print 20 of these note cards at a time, and then they would organize these into a folder, and then they would put the folder away, and then they would bring the folder back out when they were ready to pack out. What was five seconds, when I did all the math, ended up being a minute, and you couldn't even do them one by one, like in the chocolate example, because you had to get 20 chocolates assembled at once. You had to wait for 20 of those chocolates to go down to the end of the assembly line before. So, if you ever got behind, the time to catch up was significant.
Stephanie:
Oh, wow. That's really Interesting, about like something where you're like, oh no, that's not the problem. Then being like, oh, actually your process is the biggest part of the problem.
Seth:
Exactly. This is a very cool evolution. People who have not been at the company for at least two years, don't understand. With a bottleneck, you have two solutions. You either make it more effective or you add resources to the bottleneck. The first year that's what we did. We had five of our most analytical people, five very smart people who just on Valentine's day helped us print them. As absurd as that sounds, that's what we did. We just overwhelmed the process with resources. This past year, the tech team and the supply chain team got together and they completely reinvented. Now, every single order is sent to a specific person's queue that ties to their physical desk, and there's a printer at every station and that printer prints out one note card at a time that's tied to that a specific order. Now, it takes five seconds to print an old card, and it is no longer a bottleneck.
Stephanie:
Yeah. That's great. It seems like there'd be a lot less room for things to get lost. I mean, if everything's in a folder and you're trying to sort through it, [crosstalk] maybe picking up the wrong notes and you'd be like, hey grandma, and be like, oh, this is the wrong note that got sent out. It seems a lot more. Yeah. You're not going to have any errors doing it this way now.
Seth:
Yeah. The error rate, both reported and for sure, actual declined. We also saw that our throughput overall went up by 50%, 60%, 70%, and we could train people on this new system much faster. Those five people that I mentioned that had to be in that room on Valentine's day now don't have to be in that room.
Stephanie:
Yep. That was very good reminders about bottlenecks. I think it's very encouraging for every new brand to kind of look into that and really dive deep. So, yeah, I love that example. All right. The couple of minutes left, let's jump over to the lightning round brought to you by Salesforce Commerce Cloud. This I'm going to ask you a question and you have a minute or less to answer. Are you ready, Seth?
Seth:
I am ready.
Stephanie:
All right. We'll start with the hardest one first. What one thing will have the biggest impact on ecommerce in the next year?
Seth:
The one thing that'll have the biggest impact on ecommerce is FedEx and UPS.
Stephanie:
Okay. Tell me a bit more.
Seth:
Yeah. Their ability to grow and sustain their supply chains and deliver on time is going to be critical to, in the next 13 months, they're going to have two holiday seasons, and either a lot of happy customers or a lot of unhappy customers. It'll be really interesting, your 800 pound gorilla. Amazon is highly confident because they've largely disintermediated their over-reliance on UPS. In fact, FedEx and Amazon, they're divorced for the most part. I think that their ability to continue to shift to ecommerce to add Saturday and Sunday delivery nationwide to do FedEx, and UPS delivery to do ground deliveries next day, seven days a week, based on a previous day pickup, all of these things are going to either allow ecommerce to continue to blossom or hold it back. Also, what's very unclear is how much they're going to raise rates in January. Typical years call it 3% to 6%. There is a lot of concern that they could be above, and potentially well above that 6%, and what does that do to demand?
Stephanie:
Yep. Yeah, that's a really good answer. What one topic or thing do you wish you knew more about?
Seth:
One topic or a thing.
Stephanie:
[crosstalk] technology or ...
Seth:
I've been in and around physical product ecommerce businesses. I think getting more in the data and technology side is always the right ... that is always the future. I love being in consumer businesses. I love the ability to ask almost anyone about the product or service that I'm working with and trying to lead forward and getting their opinion and having that opinion matter. That's the joy and the challenge of ecommerce, but certainly getting deeper into data, getting deeper in technology is something I'm going to encourage anyone, especially anyone young, certainly what I'm going to get my kids into.
Stephanie:
Yep. I love that. If you were to have a podcast, what would it be about, and who would your first guest be?
Seth:
I think it would be about brands that do it right. I think that I so admire people who build iconic brands, and it goes back to this consumer side of things, but to me, it's looking at these revered brands and whether they are the Phil Knights, Nikes of the world, Reed Hastings and Netflix, or some lesser known smaller brands. I'm always so impressed with people who take the leap to do it. Those, especially who do it without raising significant amounts of capital and create something that just clicks and resonates with consumers, because I think we can all learn that. I find that I've been around companies that have done a nice mix of brand and execution, that have focused so much on execution. I think it's something that I'm good at, and I've been around other people that have been good at it. Maybe it's because of that, that I so admire the folks, those creative, just truly creative visionaries on the branding side.
Stephanie:
I love that. And who would you pick to bring on as your first guest?
Seth:
Who would I pick to bring on as my first guest? I guess, not that Reed Hastings would agree, but Netflix ...
Stephanie:
He might.
Seth:
Netflix so transformed and based on an industry that could have gotten there, had they seen it coming. In fact, I think at some point he had discussed with them with blockbuster buying out the business, and they dismissed him. I'm sure he has fabulous stories. I'm not so interested in actually the last three years where they've been a powerhouse. I'm really interested in those first years when he struggled, when he kept the faith when things were not going well, how he saw the future when others didn't, how he pivoted from CDs delivered, when he knew it was the time to digital and build something big and special, how he hired people in those early years and got them convinced it was going to be big and special. Those are the questions that are ... and/or now getting the best and the brightest is easy, given the company that they've built. But it's those early years that I'd be really excited to learn about.
Stephanie:
Yep. Yeah, I love that. I think we have the same kind of passion, and you would probably like one of our other podcasts called the story, because it's about people like that. We did retastings Phil Knight, We do Elon Musk, and it talks about the early days, how they got started and then you guess their identity at the end, because you wouldn't actually all the things they went through to build the companies that they did. You have to check that out.
Seth:
Very good. I will.
Stephanie:
All right, Seth. Well, this has been a great interview. Where can people find out more about you and UrbanStems?
Seth:
Yeah, UrbanStems is the company name and it's also our website, so urbanstems.com will get you there. If you want, you can also reach out to me, seth.goldman@urbanstems. I'd be happy to chat with you. I'd be happy to provide you with a promo code on your first order. We love people enjoying flowers, and more importantly, we love people sending gratitude to people that they care about.
Stephanie:
Awesome. Love that. Thanks so much, Seth.
Seth:
Thank you so much, Stephanie. Bye.
The fact of that matter is that the healthcare system was not built with the consumer in mind. That is, until hims & hers came along.
This three-year-old company has been making waves in the industry, and for good reason. Its platform has facilitated more than two million medical visits and is valued at more than $1.6 billion. And all of this in an industry that has been immune to disruption for decades.
hims & hers is the first true consumer healthcare brand that, through its platform, creates an easy, transparent, and high-quality experience for all those frustrated with their current healthcare option. Its mission is to help people finally feel empowered to talk about and get treated for certain conditions, and Hilary Coles, the co-founder and VP of Merchandising for the company, is responsible for making that happen.
On this episode of Up Next in Commerce, Hilary explains why humor really is the best medicine when it comes to marketing, and she talks about how brands should approach experimentation. Plus, she provides tips to anyone who is thinking about trying to disrupt a big industry, and why she thinks it’s a risk worth taking.
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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Transcript:
Stephanie:
Welcome back to Up Next In Commerce. This is Stephanie Postles, co-founder of mission.org. Today, I'm really excited to be chatting Hilary Coles, the co-founder at hims and hers. Hilary, welcome.
Hilary:
Thank you so much for having me.
Stephanie:
Yeah, I'm really excited. I think we're going to have such a good conversation and there's so many areas where we can take it. I was doing a bit of research, and there are so many case studies built around you guys. Did you know that?
Hilary:
I didn't actually know that. Is that true?
Stephanie:
Yeah, I found at least three and so many articles diving into your business model. So, there's a lot of content I want to cover, and maybe first we need to start with what is hims and hers?
Hilary:
hims and hers is really the first consumer health care brand, and what that means is that we prioritize the consumer and really thought through every aspect of the business in order to suit the consumer, in order to give them choice, in order to give them control, in order to give them transparency into how they take care of themselves because we thought it was way too hard to take care of yourself today and navigating the health care system is incredibly difficult. And that's really because it's never been built with the consumer in mind, and so everything we've done from the beginning has been really just to champion the consumer. And so, today hims and hers is a platform that allows you to treat everything from dermatological conditions like acne to sexual health and wellness, to metal health, to hair care, all conveniently from home, which after this year has never been more important.
Stephanie:
So, as a new customer, I can essentially get on there, have a virtual doctor's visit, maybe even get a prescription for something I need, and then even order it on your platform, like it's everything from start to finish? Am I thinking about that correctly?
Hilary:
Exactly. Everything happens on our platform, and the reason why we did that is so that we could ensure that from start to finish we were in control of the level of quality that you would experience as a consumer. So, from the moment you come on to our platform, you select what you're interested in, what your health care goals are, you are given education, you are given a direct relationship with a provider, you are given product options, and you are able to make that decision that's right for you. And then, you're able to skip going to the pharmacy, skip taking off work, finding child care, taking off time in your day to go see a doctor, and able to talk to a doctor from wherever you feel comfortable. And then, having that product shipped directly to you and managed by you, which is again, just totally revolutionary from the way we've thought about health care to date, which has never prioritized the customer's needs but has focused really on everyone else in the healthcare industry except for the patient.
Stephanie:
Yeah. When I was looking through it I'm like, "Oh my gosh, this is what I've needed all my life." I've always thought everything with health care feels backwards and old school, and I'm like, "How have I not heard of this?" I mean, I'd heard of you guys before but I didn't know it was also for women.
Hilary:
Yeah, it's such a good point, and the reason why we developed hims and hers is because when we looked at our lives and the level of control and choice we have with with, you can choose a hundred different things to be delivered to your house in the next 20 minutes for lunch. You can choose your mode of transportation, you can choose what kind of couch to get delivered to your house. You can choose what kind of workout you're going to do today at whatever price you want, but when it came to your health care it was like this weird thing that you put off doing because it was so inconvenient. You never knew what it was going to cost. You were made to kind of go on a maze to figure out who's the right provider, are they covered by your insurance, how do you pick an insurance plan? And it's so unlike the rest of our world works today, and I think consumers are too smart for that and they expect better. And so, we really just developed something that fit into the rest of our lives.
Stephanie:
I love that. So, just so everyone knows the scale of where you guys are at, because I saw a lot of numbers from all my research, everything from evaluations, your revenue numbers, but I'd rather hear it from you and know it's accurate. Where are you guys today? What's your evaluation or what revenue numbers can you share just so everyone knows how big you are? Like, you're legit.
Hilary:
We're legit. So, in the past three years we've done well over two million medical visits, and when you think of a big company like Teladoc in this space, it took them 13 years to get to one million visits, so we've accomplished double that in three years. We are valued at 1.6 billion dollars.
Stephanie:
Billion, everyone.
Hilary:
Which we think there's so much more to do, because if you think about it, the health care industry is really the last trillion dollar industry that hasn't been disrupted. So, we really think this is just... It sounds like a big number, but it's just the really top top tip of the iceberg. The majority of our business is subscriptions, ongoing reoccurring revenue, and yeah. There's lots of excitement coming. We have more than a dozen conditions that we treat with almost 100 skus, so we've really... I think that's been a key differentiator for us in this industry as more and more people enter the D to C healthcare industry. When you look around at the landscape, so much of it is pretty niche and one condition focused, and what we've strived to do from our early days is be this umbrella company where you really can treat multiple conditions, you really can take care of yourself very practically on one simple to use platform. We're not expecting you to jump around.
Stephanie:
And that's great, it really is. It's like the future, it's what I've always wanted. So, I love talking about the early days of starting these companies, and especially with yours it feels like it's so intricate, especially on the back end. Probably not for the consumers who are like, "Oh, everything just works," but behind the scenes I'm just thinking about the partnerships that you're getting with the doctors, and then you got the products that you're selling and how to make everything work. I want to hear a little bit about how did you start it, what did you focus on first, and maybe what did you experience where you're like, "We would've done that differently if we knew what we knew now?"
Hilary:
Right. Hindsight is 20/20, of course, but we... Our first iteration into Hims was an MVP I think that we called club room at the time, and that was to learn how men were shopping for haircare products, and specifically hair loss products at the time. We explored funneling and promotions, we explored brand personas, and really how to talk to men. And we learned a lot about price points, we learned a lot about what men were looking for, and that was a really really valuable... We got enough signal really from that to have confidence that we were doing something differently with what is not hims and hers. And we knew a couple of things, we knew we would have to provide access to providers in every single state. So, by the way, that means setting up an entity in every single state, which is just a tremendous amount of work. There's nothing out of the box we could do so we had to build everything from scratch on the back end.
Hilary:
We needed to have proprietary products. Part of our goal and what we've continued to do is really blending both wellness products and prescription products and education, and so we had to create our own wellness products. So, I remember in the early days showing up to manufacturers in the middle of the country who looked at me like I was crazy and I was begging them to put our brand on the line and produce Minoxidil, which is generic Rogaine. And they basically said they felt bad for taking our money because this is an industry that hadn't shifted in decades, and what were we thinking, and there's no way this is going to work. And we were able to blow through what we had ordered from them in days, not months, and from there it was just kind of beyond. I think everything we processed from the beginning, or we prioritized from the beginning, was our brand. I think we knew that unlike 10, 15 years ago when you had all of these "disrupting" startups coming out your brand wasn't as important, but because the barrier to enter direct to consumer brands is so low these days with all the onslaughts of digital channels that you have, having a differentiating brand, having a point of view becomes so important and earning trust becomes so important.
Hilary:
And you need to do that, you need to have a deeply differentiated and personified brand today in a way that I think was not as urgently important 10 years ago. And so, that was the bet we took early on that really really paid off, as well. And [crosstalk 00:10:19]-
Stephanie:
You can definitely see that with all your marketing and branding, and people are eager to buy your products and you focused on a market, especially around men in the beginning, that I think wasn't being served well. I mean, you mentioned Rogaine and I'm thinking about the commercials back then of like just not very pleasant ones. I wouldn't want to buy that product based on the TV commercials I used to see around that, and it seems like you leaned into that and not only served the market but did it in a way that people were eager to even talk about it and have word of mouth.
Hilary:
Totally. I think the most interesting thing about our brand today, and especially in the early days, was that majority of the people coming to us for hair loss, for sexual wellness, for mental health, it's the first time they're ever treating these conditions, the first time they've trusted anyone with these conditions, and that's a big deal because it's not like you wake up one morning and you decide you're going to take action. It's usually on the heels of days and weeks and months and years of feeling unsure and feeling like it was something you had to hide in the back of your cabinet or didn't want to engage with, like the Rogaine example you just had. And so, that's really been the key unlock is that relationship we've been able to foster. And to this day, that remains my favorite compliment that we get as a business is, "Your brand empowered me. It made me believe in myself." That's really what we're getting at here, because the products exist, and for us it's about kind of slaying all the dragons of access and cost and barriers to make it easy for the customer but we can't walk you to the front door. We have to be on the journey with you and you have to believe that we're on that journey with you, and so that's really our mission at the end of the day.
Stephanie:
I love that. So, you just mentioned about the brand empowering your customers. How do you create that messaging, especially around topics that a lot of people don't want to talk about? How do you go about doing that in a way that has grown and seen the success that you all have?
Hilary:
I think one of my favorite quotes ever is that sunlight is the best disinfectant, because I think if you can't see it you can't talk about it. And so, that, from the very early days of fundraising, was a big eye opener for us because when we came into the room and we were talking about erectile dysfunction and hair loss, no one wanted to be the first to ask any questions about it. No one wanted to seem overly interested in it even, you don't want to be associated in it. And it wasn't until we changed tack and started using humor and started using numbers and saying, "Hey, every third person in this room will probably suffer from erectile dysfunction or hair loss." You need that provocation, that shock, that humor to remind ourselves that in a weird way, you're not special, like baldness doesn't... hair loss doesn't choose you, anxiety doesn't choose you. It happens and it's common, and if we're all in it together we can talk about it. We can find the education, the products, and the services to tackle it and get you feeling good.
Stephanie:
Yeah, that's great. All the campaigns I was looking at were funny and I could definitely see it sparking engagement, like people like... I mean, I saw there was a urinal campaign that you guys did and there was a quote I think that you said-
Hilary:
Our urinal takeover.
Stephanie:
Yeah, you're like, "No one in the history of ballparks ever wanted to advertise in a urinal, but we saw it as a creative channel." Tell me, how do you even think of things that are funny like that? Maybe I'm just not a funny person because I'm like I would never think to do that, but that's great, or like your cactus, your erect cactus. You know, people look at that, they know what this is for, it's super funny.
Hilary:
Right. You can't deny... I think that was part of the beauty certainly the early campaigns where we did city takeovers with city takeovers urinals dominations we called them with the phallic cacti, because you can't deny that you know what it is. You instantly know what it is, and so it save you the rigmarole and dance of are we talking about this, what is this, I think it's this. And fundamentally, I think some of the bets we've taken with marketing channels that have been more on the creative side like the urinal dominations, like we've sponsored corn hole tournaments, and all sorts of things that people haven't necessarily tried before. It's because I think we have a really deep empathy for our consumers and we're thoughtful about where are they spending time, where are their eyeballs? I always joke with our team, like, if you try hard and believe in yourself, anything can be a billboard or a messaging opportunity for the company because we're...
Hilary:
You want to meet your customer where they are, and I think unlike a typical DNVB and D to D playbooks out there where you're on the same channels as everyone competing for the same eyeballs, we really are striving to be health care for the people, for all people, for anyone with a body, and to do that we have to get eyeballs everywhere. We can't just be on the traditional digital channels. We have to think outside the box. We have to be provocative. We have to shift the traditional ways of thinking.
Stephanie:
How do you go about encouraging your team to think creatively like that and to come up with new ideas? Is there a process that you guys have in place or something to have fun ideas rise to the top like that?
Hilary:
Our team is amazing, so they need very little encouragement, but I think what we've preserved since the early days of Andrew and I joking around on text message late at night or around a table is just what do you think is interesting? What do you think is funny? what are we not seeing? And so, from whether it's a customer service agent, whether it's someone on our creative team, whether it's someone on our analytics team, just what are you interested and what are you seeing? And I think as the team's gotten bigger it's gotten... it's been so interesting to learn all of these different perspectives and what people are into. Like what is happening is with gamers? What is happening with cooking trends, and how is that relevant and what does that mean about people today? I think we try not to be too precious with our own ideas, and I think Andrew and I are the first ones to say, "Oh, that didn't work. That's fine," and we very much internally socialize the things that didn't work as much as the things that did. And that ladders back up to the priority we place on testing and learning, and so I think because we remain flexible with that and have fun with that all in service of learning, it makes every single big campaign less do or die.
Stephanie:
Yeah, I like the idea of not being too precious with your ideas and being open to just testing and seeing what works. In the spirit of testing, what campaign did you launch, or your team launch, where you're like, "That's not going to work," and it actually did?
Hilary:
Oh my goodness, we have... There is a commercial we can find later, and it's still shown, and it is essentially just our full portfolio of the Hims products and the signature peach and pastel colors that we've become known for. And all of sudden, when we launched our company three years ago we launched with candles, which a lot of people made fun of us for but we wanted to really be extremely explicit about the fact that we were a wellness company as well as a health care company and we were doing something different. And so, we played on this idea of candles being something we were known for, loved for, and mocked for, and that whole campaign is somebody just lighting that candle in front of the portfolio of products.
Stephanie:
Oh my gosh.
Hilary:
And we're like, "It's so simple. There's no way it's going to work," and it's been going for like a year and a half. It is far and away one of our most successful creatives.
Stephanie:
That's so funny. I've heard that same theme though around the things that you don't think will work actually end up working. I mean, especially we've been experimenting with different YouTube ads and just seeing what people connect with sometimes is a little out there our you're like, "Wait, why do people like this?" But that's why it's important to test and actually figure out what connects with people. Who knows, maybe in that candle commercial people are like, "Well, let me..." like, they're obviously going to look and see what's being the candle and analyzing it more than they probably would in any other commercial.
Hilary:
Right. You're competing with so much nowadays and I think there is a tendency sometimes to over complicate, to simply copy what other people are doing, and I think we've been pretty brave with what we're willing to test and keeping smart about that rather than having, you know, pouring millions of dollars into one solitary campaign, we're able to come up with several different iterations that are more appealing to more different groups of people. Which again, comes back to our mission of being for everyone and meeting you where you are.
Stephanie:
Yeah, I love that. I think going forward brands can learn a lot from your guys' campaigns because I think, especially the past couple of years, there's been a lot of censorship on how the brands can and should interact and what campaigns are okay or not, but I think really for that authenticity is going to be really important for the brands to actually come above the other ones and stand out by actually leaning into their goals and doing it in a way that they feel is best for their products and their customers and connecting with the people they need to.
Hilary:
That's totally right, and I think is one of the more exciting trends that I'm hoping we see more of in the coming years. I think, as I mentioned earlier, especially in the past five years, it became so easy to launch a company and as a result I think you saw a real copycat culture, a real everyone using the same kinds of design, a real same kind of brands and missions even, for a lack of a better word. And it became really hard to tell the difference between anybody, and I think where everyone's feet started being held to the fire is this year where there's been so much in the world happening and it's now becoming clear if you don't stand for something, or if you stand for the exact same thing as everybody else, you get lost in the shuffle. And I think that's really going to separate the brands that are here to stay from the brands that probably won't cut it, and it comes down to having that clear point of view. Because again, consumers are so smart and they know.
Stephanie:
Yeah, I think authenticity will always win and I would rather maybe be offended by a brand who's trying to do something where I remember them than just be like, "Oh, this is another brand saying that they're standing for the same thing as everyone else because they're probably being told that that's what they have to stand for." Those are the ones that I forget about versus the ones that are experimenting and trying and testing out messaging. That's the ones I'm excited to watch where they head.
Hilary:
Totally. I think that's where sometimes not saying anything is as powerful as saying something, and thinking about what do your customers really want from you? What are they coming to you for versus what you personally are excited about and what makes you sleep better at night? It's not about making you feel good, it's about serving your customer, and I think some brands get that twisted this year.
Stephanie:
Yeah, I completely agree. So, when it comes to... since we're diving pretty deep on marketing and brand voices and stuff, how do you think about measuring your campaigns and which ones are doing best? Like, I saw you partner with Snoop Dogg, which is awesome, like how do you measure a partnership like that versus your TV commercials and what's successful in that area?
Hilary:
I think the thing that has been the most interesting about our marketing approach is that on any given day we are in at least two dozen different channels, and we are testing within each of those channels. Again, it ladders up to this mission of being there for our consumer wherever they are, and so it's about not just having radio and podcasts and various audio, but it's what are you saying within each of those channels and does it make sense? Because you don't want to jar the customer out of what it is, and so, yes, the Snoop Dogg campaign was awesome for being well known and the J-Lo and A-Rod campaigns I think all make sense in certain contexts, but I think we keep a pretty broad playbook which allows us to really start the relationship off on the best possible foot with our consumer. Because I think at the end of the day the KPI that matters the most is NPS, and I think what's been really remarkable about hims and hers is that our NPS is 65, and for healthcare services the NPS of the whole rest of the industry is nine.
Stephanie:
That's what I was going to say, is it like five?
Hilary:
Yeah. So, we're talking about single digits, deeply unsatisfied people, deeply negative experiences, and we're talking about a huge exponential growth on that. And that's what we're really protective of and why I think a real reflection of what happens when you give consumers choice and control and transparency and kind of treat them like adults and know that giving them more information is not going to, if anything, going to increase their trust in their lifetime with you.
Stephanie:
Yeah, that's great. How do you think about personalization, because healthcare just seems like such a tricky thing, and especially when you're talking about the NPS and developing that trust. What do you do, if you do at all, personalize when communicating with people so they're like, "Oh, yeah, this is just about our conversation. This isn't a generic message?"
Hilary:
Absolutely. I think personalization remains so important particularly in healthcare where you're used to being treated like a number, where you're used to being left behind and expected to sprint to keep up with just a basic level of treatment. And that's where we've been able to differentiate so much by having that end to end control and being totally vertically integrated as our consumer healthcare platform. And so, we spend a lot of time thinking about, within each of our respective categories, within each of our respective brands, what that consumer journey looks like and what the consumer segment within that consumer journey looks like. So, that end to end we know you're going to get checked in on at the right time to make sure that your skin is adapting well to your new prescription skin routine that you're on, so that you're being exposed to the most amount of information and the ability to chat to your personal provider whenever suits you and being there kind of one step ahead. I think that's the best lessons in hospitality that we've tried to bring into our business of anticipating the need before it happens, before you even think about it, and that's where our service has been super seamless.
Stephanie:
So, how are you anticipating that need? Because that is a really good example where I'm thinking about factors... It'd be so nice if they checked in on me a bit more because I'm also just lazy.
Hilary:
Right?
Stephanie:
And a lot of times I might need something but I just need a reminder, but I haven't seen any of the traditional models having a good method for doing that, that checks in in a way that's not annoying.
Hilary:
Absolutely. So, each category, each journey is heavily directed by an advisory group of the top medical professionals from all the best institutions across the country, and really getting that brain trust together within that specific category, so say using the skincare example, the top dermatologists in the country and walking through if you had a magic wand, what would the best possible treatment look like for a patient? What would that best possible experience look like? And then, we map out, if you could clone yourself 600 times as a doctor, what would you be doing, and then we go and we build that.
Stephanie:
Man, that's a really good lesson I think for any business model. It's kind of coming in... I mean, it is coming in with a beginner mindset and just saying, "Start from scratch. How should this work?" Doesn't matter if it can work or if we know how to make it work, what should it be doing right now? What is success, and then building towards that?
Hilary:
Yeah. I think that's really fundamentally why we've been so successful in a short period of time, is we've just asked why, because in so many, especially in established industries like health care, so much of it is just continuing on because that's the way things have always been done. And a lot of it was just us asking naively, "Why? Why do you do it that way? Why is it done that way? Could it be done this way?" And just having that endless capacity I think for curiosity, and I think the more we... When we first started working on the company, we had assumed there were, to be frank, adults in the room who had already figured this out and had already really tried to do their best possible job for the consumer. And the more we asked questions, the more it became clear nobody was doing this and wasn't an impossible task nearly, it was it just needed a different lens and some elbow grease I think.
Stephanie:
I can imagine you guys getting a lot of pushback and people kind of betting against you, especially in the early days around what you wanted to do.
Hilary:
Oh, definitely. I think, one, sure, disrupted [inaudible] industry and then do it using millennial beige color and a bunch of cacti. We were nobody's best friend's. I remember even my fiance saying in the early days, like, "Are you sure about the name Hims?" I wasn't 100%.
Stephanie:
And now it's like, "Well, yeah, obviously."
Hilary:
Yeah, exactly.
Stephanie:
Very very cool. I could see there being a lot of room of having a great community, and maybe you guys already have that, because I'm thinking you're getting people to talk about topics that they maybe never would have otherwise, but you know everyone is on there googling their problems and you end up finding bad Reddit threads or, who the heck knows, whatever you stumble on, and you're trying to see, like, do other people have this issue? How are y'all approaching community and having people speak up and talk about and talk about their results and everything?
Hilary:
That's such a great question. That was a key motivation for us, is how you get people to stop doom spiraling and looking in the middle of the night for things... to ask about their health, because spoiler alert, anything you ask about your symptoms is going to lead to you're dying.
Stephanie:
Yeah, you're dead.
Hilary:
And it's scary and you're not empowered and you don't feel in control. And so, it was really like how do we make it so easy that even you would be willing to, just as easy as googling something, it's just that easy to go to our platform and that level of simplicity and directness of that relationship. And that was really, again, I think a key piece of having our brand be aspirational and safe and celebratory. And why we knew that that worked and why that resonated is in the first two weeks of sales of being open as a company, we had men submitting videos of themselves unboxing their hair loss kits, we had men submitting before and afters probably, and these are all on public channels like Instagram, tagging us in them. And these are things that historically were so private and had never been spoken about, and here they were sharing, tagging, telling us, "Please post. Please share my story. I feel so good and I had no idea it was possible, and everyone should know about this." And so, community from day one has been such a core piece of everything that we do in helping you feel like we're your hype person.
Hilary:
We're here for you, and I think people really responded to that idea of positivity. And I think that's kind of wild to think that there are brands with 100,000... a healthcare brand with 100,000 fans on Instagram who are-
Stephanie:
Yeah. No, that's wild.
Hilary:
... submitting and talking and sharing their, prior to us, deepest secrets. [crosstalk 00:33:34].
Stephanie:
Yeah, that's crazy to think about someone sharing before and after pictures without getting paid. I mean, that whole industry when you see those pictures you're like, "Is this real? Is this a real person that seems like they're kind of like me?" I mean, how did you encourage that word of mouth and encourage people to want to share that kind of stuff, other than just having a good product? Because that's obviously key, you have to have a good product that actually works, that people get excited about, but how do you encourage them to take that next step and actually put it on a platform that's public?
Hilary:
Yeah. I mean, truly we were surprised. We didn't think it would be a lever for us, especially in the beginning. We thought there was no way you were going to see the before and afters you were seeing on some of the other D to C companies or what you would normally see on a woman's brand, for example. When we started seeing it, we were like, "Oh, this opens up a whole new world," and so we built a community team that focuses on relationships with our existing consumer, and that can be everything from seeding them new products and seeing what they think of those products. It can be sharing their story for people who tell us that they want to be that inspiration for somebody else. And yeah, we've gotten to a point where we have 1,000 people in our community network who are just true fans of the brand that happened completely organic. And then-
Stephanie:
Very cool. So, what does the next maybe two or three years look like for hims and hers, and what kind of big best are you guys taking?
Hilary:
I think where we are really excited in the next couple of years is to continue to expand into more conditions in order to be of more service to the consumers on our platform, to provide entry points for new consumers, and to be able to manage with that high level of quality that consumers expect, more conditions. And so, for us what that means is entry into chronic conditions like fertility, like sleep, like cholesterol. That means expanding into broader portfolios into the main categories that we serve today, and that means continuing to expand into our wholesale partnerships like we have with Target which allow us to be more accessible, same day, more accessible in any single market to people who are in need of effective affordable products.
Stephanie:
That's very cool. What kind of advice do you have anyone who's looking to disrupt a big market? I think you're the perfect person to answer this, like it's doable, but what advice do you have?
Hilary:
It's doable. I think, again, just keeping asking why. I wouldn't assume that there's a reason why things are the way that it is. If you see something that isn't right, that doesn't reflect the world or reality that you want to live in, ask why. There's a good chance that it's a pinpoint for other people and it hasn't really been tacked effectively.
Stephanie:
Yeah. I love that, ask why. Is there any tech that you're betting on, tech trends, things that you're thinking you might be able to implement over the next couple of years that you're excited about?
Hilary:
I think we are super excited to continue to centralize information for our customers and help them make smarter decisions about their healthcare. When you look at, again, this digitally native generation who thinks of healthcare in a very different way from the way our parents think about healthcare... When you ask a gen-z or a millennial about how they think of taking care of themselves, it includes nutrition, it includes sleep, it includes mental health, it includes physical health. It includes a wholistic picture of flourishing, and I think using data to help coral all those decisions and provide them all at your fingertips so it's not just this discreet siloed experience, I think is very revolutionary and where we're excited to think about. And it's so different from how we all thought about healthcare before, which was you only really engage with it when something physical is broken and something wrong with you, otherwise you stay far far away. And so, I think we're motivated and excited about a future where you feel good because all of your decisions that affect how you feel are... You have options, you have information, and you have opportunity to help meet your goals.
Stephanie:
Yeah, that wholistic view of things is something I'm very excited about and can see you guys crushing, because right now, like I said, it does feel like so much of healthcare is siloed, and if I have an issue why isn't my diet taken into consideration? Why isn't how all my supplements interacting with each other, interacting with vitamins that might interact with whatever you're going to prescribe to me, like why isn't everything taken into account? So, to have like a dashboard where not only can your doctors talk easily and see what's going on wholistically, it seems like where the future needs to go and what everyone wants right now, and you guys are the first to tackle it.
Hilary:
Yeah, I think we firmly believe that the future needs to go the way our lifestyle and behavior preferences are going, and it's very cool, especially as we talk to the gen-z consumers who are like, "Yeah. No, of course, I never wanted it to be siloed and I fully reject a future where it is." And they're just... It's very cool to see that that's an expectation for the future, not a nice to have.
Stephanie:
Yeah, very inspiring. All right. So, let's move over to a quick lightning round, which is where I'm going to ask you a question and you have a minute or less to answer. Are you ready, Hilary?
Hilary:
All right. We'll see.
Stephanie:
All right, we'll the tougher question first. What one thing do you think is going to have the biggest impact on ecommerce in the next year?
Hilary:
I think big etailers entering the market and consolidating is going to have the biggest impact.
Stephanie:
Tell me a little bit more about that, that's interesting.
Hilary:
I think as we start to see, especially with the pandemic, we start to see Targets and Amazons and Walmarts start to be even more of a one stop shop than normal. As we're all trying to stay home and take care of our families and limit the amount of trips that we're making, I'm interested to see how those big companies start including different services, different products that where they wouldn't normally have been interested in in a year or two ago in order to serve more of the needs of the every day consumers, and where consumers will trust and not trust them, but for sure we're going to see some aggressive moves.
Stephanie:
That's a really good take about consolidation. I like that. What do you not understand today that you wish you did?
Hilary:
I don't really understand TikTok but I really wish I did.
Stephanie:
Someone just said that, I just did an interview about an hour ago and they said the exact same thing. Even they do really well on TikTok, their company does, she was like, "I don't understand it and it takes a long time to makes videos."
Hilary:
Exactly. I mean, I love it. I love the generation of content creators and I think it's really interesting that the shift is moving from influencing to actually creating, and I think it's certainly more democratic which is more in line with certainly the world that we believe in at hims and hers, but I would be lying if I said I came close to understanding it.
Stephanie:
We'll have to learn it together.
Hilary:
Yeah, deal.
Stephanie:
Because, yeah, I agree. What is your favorite book? It can be a business book or something where you're look, "I quote stuff from here. It's something that always come to mind when I'm making decisions." What's your favorite book?
Hilary:
My favorite book... Let me think, it changes all the time.
Stephanie:
Or you can have a couple.
Hilary:
I think the things I come back to frequently are The Five Dysfunctions of a Team, Innovator's Dilemma, and I think one that is earning a place on my shelf is the New Rules of Culture that Netflix just came out with.
Stephanie:
Oh, I haven't heard of that one. I'll have to check that one. Those first two are good ones. Very cool. All right, and the last one, if you were to have a podcast, what would it be about and who would your first guest be?
Hilary:
If I were to have a podcast it would be focused on people who use their energy to uplift and amplify other people, and to me there's nobody who does that better than Michelle Obama.
Stephanie:
That's great. I would enjoy listening to that. We need to make that happen, Hilary.
Hilary:
[inaudible 00:47:34]. I'll reach out to her. I'll send her a DM right now and see where we end up.
Stephanie:
Yeah, just DM her. We'll have this in the works in like a week, no big deal.
Hilary:
Yeah. That's the Hims pipeline, for sure.
Stephanie:
All right, Hilary, well this has been such a pleasure having you on the show. I knew it was going to be a good interview and you exceeded all my expectations. So, thank you very much, and where can people find out more about you and hims and hers?
Hilary:
Definitely, there's always so much going on, and thank you for all the thoughtful questions. Forhers.com and forhims.com and on our Instagram @Hims @Hers are always the best ways to keep in touch with the latest and the greatest.
Stephanie:
Awesome. Thanks so much for joining us.
Hilary:
Thanks, Stephanie.
At this point, it’s old hat to say that 2020 was a pretty wild year — countless industry experts have waxed poetic about the long-term implications of the acceleration of ecommerce we’ve seen this year. But Joe Manning hasn’t just been talking about adapting in the face of change, he’s working to make it happen.
Joe is the Chief Business Officer at Shipt, an on-demand delivery service that connects customers with thousands of grocery items and retail shops like Target, Best Buy, CVS, and national and local grocery stores -- and they do it all through a single mobile app. This year Joe has been on the front lines of scaling Shipt while still delivering not only physical products, but exceptional experiences to Shipt customers, employees, and partners.
Earlier this year, Shipt doubled the size of its shopper network to meet the growing demand for grocery delivery. And now, as the holiday season is in full swing, the company has added 100,000 more shoppers to its network. Not every company will have to scale quite that quickly or extensively, but ecommerce companies that will thrive moving forward will be the ones that are ready to jump into new markets, pivot quickly, and reach beyond their comfort zone.
On this episode of Up Next in Commerce, Joe explains what it takes to do just that, including how to maintain a culture of happy workers and customers as your company grows and changes. Plus, he looks at what is ahead this holiday season and why last-mile delivery is an area ripe for innovation.
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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Transcript:
Stephanie:
Hey everyone, and welcome back to the number one ecommerce podcast. This is your host, Stephanie Postles, co-founder at Mission.org. Today on the show, we have Joe Manning, the Chief Business Officer at Shipt. Joe, welcome to the show.
Joe:
Well, thank you. Thank you for having me. I'm very excited to be here.
Stephanie:
I'm excited to have you too. How many podcasts have you done so far? You seem like a good veteran.
Joe:
This is my first.
Stephanie:
Ooh, really? Oh, this will be fun then. I love having people on for the first time.
Joe:
Cool.
Stephanie:
So before we dive into Shipt, I was hoping you could kind of touch on your background at Starbucks because I saw that you worked there, I think, for over 10 years. And I want to hear what you did there, your role and some of your learnings that you got from there.
Joe:
Absolutely. So, I had the opportunity to work for 10 years at Starbucks. Starbucks was an amazing company. And one of the things that I really loved about what Starbucks did, and does, and how that applies to Shipt, Starbucks is very focused on the human connection between the barista and the customer. And they're great at leveraging technology. But as an enabler for a human connection. And I think at Shipt, we're trying to do very much ... We are doing very much the same thing. We are all about creating great connections between shoppers and customers, and we're a people-first organization. And we recognize the technology is a great enabler for that. But it is about the human connection.
Joe:
And so when I was at Starbucks, I worked in a couple of different spots. One area was the licensed stores business, which is the store inside a store. So, if you go into a Target or an airport, that business model I worked with those retailers to really build out those businesses. And then in addition to that, I spent a few years on the CPG business, which is the coffee and the aisle at the grocery stores. And that retailers and I led the business development area for that for a few years as well. And as I said, it was a great experience and the commitment to partnerships and the human connection was really impactful. And really, I think, gave me great insights to bring to Shipt as we started to build out the Shipt business.
Stephanie:
That's great. So what's one of your favorite memories or stories when you were working at Starbucks and trying to get Starbucks within the stores, or getting it on those supermarket shelves? What do you have a fond memory of or a funny story from your days there?
Joe:
Well, I'd say, I think one of the pieces that we really focused a lot on the Starbucks cafe experiences is very unique. They take a lot of pride in that customer experience. And so it was exciting when we would bring the stories to the retailers about how to operate at Starbucks or what the brand should be within the cafe. And we started to hear where retailers were then using the same terminology that Starbucks had been using. So, it was really fun when we started to hear them repeat back to us the words and the phrases that we had used, which really signal to us that it was going to be a great partnership, that they really understood what we were trying to accomplish. And that they were embracing that for their own business purposes, which was great.
Joe:
So coffee is at the core of everything Starbucks does. And I had an opportunity to go to a coffee farm in Costa Rica. And I got to plant a coffee tree and connect with all the farmers, or a lot of the different farms in Costa Rica where we sourced or Starbucks sourced coffee. And it was just really inspirational. I mean, it was fun to do for sure, but hearing the stories from the farmers about how their lives have changed because of their opportunities to partner with Starbucks was really inspirational and really made us feel good that we were making a difference around the world, not just creating great coffee or creating great experiences in the cafes.
Stephanie:
That sounds like a really good life-changing trip. Very cool. So what had you go over to Shipt? What led you to Shipt?
Joe:
So in about end of 2015, 2016, everything in Northern California was focused on the gig economy. Airbnb was growing, Uber was growing, and grocery delivery was starting to grow. And I don't know, about 20 years before then, there had been a grocery delivery company called Webvan that had had some success, but then it did not last. And I had been working with grocers, and it really felt like the time was right for grocery delivery to really kind of flourish. And I started looking around at different gig economy delivery companies, and I came across Shipt and Shipt was a small company. It was headquartered out of Birmingham, Alabama still is. And the founder was talking about how the quality of the shoppers and the personal experiences between the shoppers and the customers where was the competitive advantage that Shipt was going to capitalize on.
Joe:
And I really thought that that really resonated with me. I do really believe people have a personal connection to the food that they consume, the foods that they have in their homes, and creating that model. And it was different than what a lot of other companies are talking about. A lot of other companies were talking about the technology, and how technology was so important, and it was changing the landscape. And again, technology is important, but I really love the way Shipt talked about the personal connection, and the quality of the shoppers, and how that was the area where Shipt was going to invest, and it was going to win.
Joe:
And then when I met with the founder and I met with the company, the culture was just phenomenal, and it still is today. Everybody is passionate about the mission for Shipt and really focused on doing right, making a difference in the communities, passionate about building the business, but they recognize that it's really about helping people. And if we do that, then the business results will follow.
Stephanie:
I love the fact that you guys are so focused on giving a good quality shopper that I can feel a connection with. Because so often, when I order from certain companies, I'll get things like an avocado that's so soft. I'm like, "Who would get this? I would never pick an avocado this soft. Or I would never pick tomatoes with fuzz on them. You obviously do not care about my groceries." So, I feel a very close connection to having someone who ... A shopper that is looking out for my best interest, and actually picking things that I want, and not just being like, "Ah, there's five avocados, throw them in a bag, or they're fine."
Joe:
Well, that's exactly right. And that's what we hear from customers too. It's again, produce is tough to pick. And we put a lot of effort into supporting our shoppers so that they can get the right produce. And even the product is set up so that when we ordered bananas, we order a couple of green and then three yellow because we know we're not going to consume them fast enough. And our shoppers are graded, selecting that for us, and we get what we want. And it really is impactful because getting products that you don't want or that aren't going to work for you defeats the whole value proposition and the convenience of grocery delivery.
Stephanie:
So tell me a bit about how Shipt has changed over this past year because it seems like ... I mean, especially with grocery delivery, people really just had to rip up their plans, and start over, and be like, "This is the new world. Now I need to figure out how I'm going to do shipping." And everything seems so hard when it comes to grocery delivery instead of like Amazon, where they're all on routes, and they can deliver 60 things in a day versus a grocery delivery just feels so one-to-one. So tell me, what kind of shakeups have you guys seen at Shipt, and what are you doing to tackle them?
Joe:
This year has been unreal and, obviously, unexpected. And one of the first things that we did is we ramped up our shopper network. We doubled the size of our shopper network early when COVID had spiked, and we knew demand was growing, and we knew people were just desirous of getting products delivered. And so, we wanted to be able to support as many customers as possible. So we invested a lot to ramp up the shopper network. And even as we've gotten into holiday now, we're going to add another hundred ... We are adding another 150,000 shoppers this holiday season. And so, building up the shopper network was first and foremost and what we need to do to support the demand. But then, in addition to that, we worked really closely with a lot of grocers and a lot of retailers to help them succeed in this space.
Joe:
And to your point, it's a complicated model. And as you said, it's a one-to-one model. So there isn't the ability to drive around, for numerous routes all day long, you really have to put the care and effort into each individual order. And the order sizes are 25 to 30 items in the basket. And so we've worked a lot with retailers, not only to enable them on the Shipt marketplace to reach more customers. But we invested a lot in our last-mile delivery business, which we call Shipt Driven, which has really helped a lot of groceries. And a lot of retailers extend their curbside program to last-mile delivery. And that's really been impactful certainly through COVID. And we're seeing it even more so now during the holiday when again, there's a little bit more of a COVID spike. But then, just during the holidays, every retailer is trying to put together the pieces to support their customers and enable them to get the products they want in a way that works for the customer.
Stephanie:
Are you also helping advise some of these retail partners around coming up with the economics to make it work? Because it seems like a big Safeway has a very different model and how to get scale and efficiencies than a local grocery might have. Are you working with them to be like, here's what I see works? Here's how to make the model work for you guys.
Joe:
Absolutely. And you're right. I mean, we work with a lot of awesome regional grocers. And to your point, they don't have the scale of some of the national grocers. And so, in putting our programs together, we work closely with them to make sure that not only is it a good experience for the customer, but that it's economically beneficial and profitable business for the retailer. And we'll do that in a couple of ways. We'll certainly work with them on the technology and the integration to manage that so that it's as cost-effective where they get the best return on investment that they can. But in addition, we'll create marketing programs together. We'll do merchandising programs together to add items to the basket. And then, we'll collaborate on operations efficiencies so that we can pull out costs from the system so that it can be a profitable endeavor for them.
Stephanie:
So earlier, you were mentioning how you scaled up your shopper network. I think you said 100,000 shoppers, right?
Joe:
150,000 in holiday. And it was as a 100,000 earlier in the year. So 250,000, over the last six months or so.
Stephanie:
I mean, that's a crazy number, especially if you're trying to keep quality high. So how did you all go about hiring those shoppers? I mean, even finding that many people and making sure that they're going to be the quality shoppers that you want. How did you go about scaling like that?
Joe:
Part of what we did was implemented some enhancements to our recruiting process so that we were able to move through applicants much more quickly and thoughtfully, but while still ensuring we're getting the great quality candidates.
Joe:
We also invested a lot, as you would imagine in sourcing applicants, but we also worked with a lot of retailers back in the spring. There were a lot of retailers who were shutting down stores. And so, both our partners, as well as other retailers. We partnered with them to enable their employees who were looking for work to get fast-tracked through the Shipt application process so that if they wanted to pick up some Shipt shopping opportunities, they could, and they were great partners with whom we worked. And we got a lot of great applicants through that.
Joe:
And then another piece that we did ... Doing the first shop can be intimidating for folks if they've never done it before. And so, we have a lot of resources available for shoppers to access. And we continue to build on those, especially around how to enable the first shop. Because once you do a shop or two, you get into a rhythm, and you feel good about it. But it takes a little encouragement sometimes to do that first shop. So we put in resources to really make it as easy as possible for our shoppers to get out there and do the first shop.
Stephanie:
That does seem kind of scary doing that first one. So, I mean, how do you think about onboarding people? Did you have to set up all-new systems for all these new people? Did you have to change a bunch of things to scale that?
Joe:
Fortunately, we had the systems in place and in part because Shipt has been expanding rapidly since 2016. And even in, I think it was 2018; we were launching three to four markets a week for a good portion of the year. So, we had really good systems in place for recruiting shoppers building the network. And so, it was really more of just kind of amplifying that so that we could go even quicker during this period of time as opposed to having to build out new systems.
Stephanie:
Got it. So when you are going into these new markets, and you're launching quickly, what are some of the biggest issues that you encounter when you're going into the new markets?
Joe:
So new markets they're exciting, but they can be challenging. And one of the great things is the market dynamics differ. Launching in a New York City is different than Savannah, Georgia, for instance. And so, one of the pieces that we do is, when we go into markets, we'll spend time there to really understand the market dynamics so that we're thoughtful about our investments. Not only in how to recruit the shoppers to succeed in that market, but how to tailor our messaging so that it resonates with potential customers and that we're knowledgeable about the markets. And we've built out a market operations team that works and serves in all the different markets in which we operate so that we have the local knowledge that we can tap into.
Joe:
But one of the things that is super exciting as we launched markets is, we will do a market launch gathering a couple of days before. And then the night before, we launched the market, and the intent there is to get together with shoppers, to engage with them. So, we understand how they're feeling about launching this market and supporting us. We'll partner with the retailers in those markets with whom we'll be working. And it's really a great opportunity. It's a celebration of sorts. There's a great opportunity to connect with the shoppers and really help them better understand what Shipt is all about. Help them understand the retailers with whom we're working, and to get them excited about launching the market. And then back to the Shipt culture, part of what happens is there's just a whole group of folks who are working through the night to make sure the launch goes off properly. They're in the market for the next couple of days, picking up orders if we need to, troubleshooting if anything happens.
Joe:
And again, it's a celebration, it's a lot of work, but it's really exciting. And listening and engaging with the shoppers is really fun because you really get to understand who they are as people. And again, how enabling these jobs is really kind of making a difference in the communities in which we operate.
Stephanie:
It seems like a really good way to also build a community among those shoppers where they could potentially get to know each other, talk about best practices. I mean, do you cultivate the community of shoppers so they can kind of have their own little network? Can you talk to me-
Joe:
Absolutely. You're exactly right. We support the shoppers, and through various Facebook lounges, there are shopper communities. But you're right. The shoppers build such an amazing community amongst themselves. And it's great because they share best practices. They share tips. They're great resources for new shoppers who again maybe are a little bit hesitant or uncertain about how to operate. And then they celebrate with each other. And there's been instances in which there'd be a surprise party at a particular store because a shopper is just on their 5,000 shops or something like that. And we see the pictures of it and you see the shoppers. They're just so excited for each other, and they really do support each other.
Joe:
And they recognize that the stronger the community they build, the better the customer experiences are going to be, which is going to drive more volume, which is going to be supportive for everybody. And it's really exciting to watch. And we do think it's something unique that we've helped create as what we've seen with other gig economy companies. They don't put the same effort into supporting their shoppers or their gig economy workers. And we do think it's a unique advantage that we have.
Stephanie:
And I think that's a really good lesson for gig economy type of employers because I think a lot of people who do that work aren't really celebrated. And you don't see the person being really proud to be working on that because I think the company is not cultivating a community where people can be excited to actually showcase the brand and say, "This is what I do." I mean, I think about shoppers right now. You wouldn't know looking around Whole Foods or something, who maybe is a shopper, who's not, they're not wearing a shirt. They're not walking around proud for the majority of shoppers or even delivery drivers or anything like that. And I think that the moment that you start incorporating people to be proud of their job like that, and wanting to celebrate the other people in that network and community, you're only going to scale quicker and also build a good experience for everyone.
Joe:
Totally agree. Totally agree. And that's I think too often, some of the technology companies look at the gig economy worker as a cost. And we look at it the other way. We celebrate them, they're a phenomenal brand representation, and they represent our brand, and they represent the retailers with whom we work. And so, the more they feel good about what they're doing, the more we can help support them to do a great job. Often, it'll show up in the customer experience, and that's so hugely important. And so, we are excited about that, and we do provide Shipt Swag, let's call it because-
Stephanie:
It actually sounds better.
Joe:
For sure, the shoppers wanted it. And it's great. And again, I mean, it's brand building, but it's really more ... It speaks to how excited they are about what they're doing. And then the stories we hear from the shoppers, they feel like they're making a difference in people's lives. And that's invaluable to growing and driving the business. And so, we're excited about that.
Stephanie:
I think people view ... I mean, at least out in Silicon Valley ... And you probably know this Joe, since you lived out here. But swag being a thing of like, "Oh, you get so much of it." Employees don't even want that anymore. Don't spend money; it's a waste. They just throw it away or whatever. But I think they aren't thinking about the rest of the country who actually still celebrates a great t-shirt or hoodie and how important that is to them. And that's still a good technique to keep your employees engaged and excited to get something great.
Joe:
Absolutely. Absolutely.
Stephanie:
So let's talk a bit about customer acquisition. I saw a few articles where you were giving Shipt, I think, memberships to the elderly for free, which I was like, "Wow, that is genius." Because these are people who maybe wouldn't have engaged with grocery delivery ever before, but it's a good way to not only help them right now but also have a long time customer, even when COVID and everything's done. So how do you think about growing your customer base, getting on their radar, people who maybe would never find you organically?
Joe:
And so, one of the things that came out through COVID, there were a lot of people who tried grocery delivery for the first time. And we saw a large increase in the senior population as well. And it makes sense there may be a little less or a little reluctant to go out to the stores. And so, from that, we began talking to different agencies across the country who support the senior population. As well as talking to some healthcare entities and talking about how do we work together to build awareness about grocery delivery, make it easy for folks to get grocery delivery, support them economically? And so, that's been an area that we are continuing to invest in because we're seeing good results. And again, we know it makes a difference in the community, and the feedback we've gotten from the agencies and the senior population has been phenomenal.
Joe:
In addition to that, I mean, again, desire for grocery delivery has skyrocketed this year. Previously, Shipt was a membership only option you had to buy and an annual membership. During this year, we expanded to offer a pay per order option. And then you can also one order, or you can buy passes and get multiple orders. But we did that because, again, we knew people wanted to try the service. They weren't certain that it was for them, and either they wanted to try it because they were in a need state for it or because it was just new to them. But by enabling the PPO option, we have greatly expanded the number of customers that we're reaching. And it's really been, again, it gets back to supporting customers in a way, where they are today. And sell by providing the individual orders or the passes we've greatly increased the number of customers that are accessing the Shipt service.
Stephanie:
So how did you think about retention when it comes to ... I mean, I think that's great to be able to allow someone to pay for order. I know that would be something I would do. Is like try it at once and if it works well, maybe do the subscription, or maybe just keep paying for order. But how did you think about retaining someone who might just try it out and then forget how do you keep that customer around for the longterm?
Joe:
Absolutely. And with our members, the usage and the retention is phenomenal, and it makes sense. They've committed to the membership with the PPO customers. We are very focused on connecting with them and engaging with them so that we're giving them multiple opportunities to use this service several times. What we've found is using the service several times, it starts to become part of your shopping pattern. And so, part of what we do is we continue to connect, to communicate with those customers to make it worthwhile for them to try it a second or a third time if they haven't.
Joe:
And what we've seen, we've been very pleased. What we've seen is the transition from PPO to either multiple passes or Shipt Everyday, which is our annual membership, has been very good. And what we do find is as they use the service a couple of times, the quality of the service they're very pleased with. And so that gets them to kind of continue. But to your point, we're absolutely focused on how do we continue to connect and communicate with them so that they aren't one-time customers, but they become a much bigger part of connecting with us.
Stephanie:
So this past year, I'm sure you guys have noticed customers coming to you from many different channels. Like new channels are popping up to tax, not very big. I mean, where have you seen your new customers coming from, and how are you also trying to differentiate yourself from all the other competitors right now? Because I'm thinking, if I'm a customer, and I'm scrambling, like, "I need eggs." I'm just going to go on there and be like, "Okay, either I can just go on Amazon, because I already have a Prime account or let me just try, Instacart or whatever. How do you make sure to separate yourself, and really show your value, and also get on new and different channels, and finding customers in new ways where maybe other brands aren't doing that?
Joe:
We think the quality of the experience that we provide continues to be our competitive differentiation, and the quality of our shoppers is far and away superior to others in the market. We've always been very good at digital marketing, and we continue to invest there. We've also done quite a fair number of social media campaigns that have created different avenues and exposed us to different customer demographics that have been really beneficial. And then we've also leaned in more to traditional marketing as, particularly for the grocery space; we find that to be an effective channel. And so, in working with our grocers and exploring traditional media, we've seen some very good results with that. And so, it's really quite a credit cross-section of investments across various channels. But we're seeing good success across all the different channels in which we invest.
Stephanie:
Cool. I could see there being some fun campaigns with just an image of a dirty little brown banana and being like, "Did you just get this delivered to you? Come on over to Shipt. It'll never happen."
Joe:
Absolutely. And one of the campaigns we did, we talked about again the quality of our shoppers. And there were fun little snippets of how the shoppers will go above and beyond to get you the right product. And I think there was a version of it was tongue in cheek. But a shopper going into a lake to make sure you're getting fresh fish or diving into the freezer at the grocery store to get you the right product. And really trying to capitalize on the quality of the shopper is really beneficial because you want to get the products that you want, and not have somebody who's just focused on trying to get in and out of the store as quickly as possible, and throwing whatever in the bag to deliver it to you.
Stephanie:
So, with the holidays coming, you hear a lot right now with ecommerce about there's going to be a ton more demand for shipping. Things are going to get held up. How are you guys approaching the holiday season right now since you don't only do grocery, you do other things as well?
Joe:
That's right. And so, as we said earlier, ramped up the shopper network so that we can continue to support the increased demand. One of the areas where we've invested a lot in 2020 is in our last-mile delivery, so, Shipt Driven. And that's a program where a customer will actually place an order of the retailer's property or ecommerce program, and our shopper will arrive at the store and pick up the order and drive it to the customer's home. So it's basically extending BOPUS to last-mile delivery. And that business has skyrocketed this year. And we've got a great lineup of retailers that go beyond just the grocery side. So, we work with Bed Bath & Beyond, and Best Buy, and CVS, and Office Depot.
Joe:
And one of the things we're doing closely, we work closely with those retailers. We are managing, or we're partnering on forecasting so that we understand not only holistically what kind of volume we're thinking there's going to be, but even down to the store level because we'll make sure that we're hiring the right shop. Not just the right number of shoppers, but the right shoppers in the right locations. And then in addition, we are really focused between both the driven business and the marketplace on communicating that you can get products delivered the same day.
Joe:
And I think particularly in the next couple of weeks as other services are going to take longer to get products, we're going to communicate to customers that whatever product you're looking for, you can get it that day and at the last minute. Gifting ideas and through the holiday, ensuring that people are getting the products before the holiday arrives is a big opportunity that we're going to focus on from a Shipt marketplace standpoint. But also in partnership with our retailers on the last mile piece, because we can enable same-day delivery for those retailers as well.
Stephanie:
That seems like a really good opportunity there. And so many people are trying to figure out that last-mile delivery. What are some of the hiccups you encountered when setting that up? Because that once again seems like a very hard problem to solve, starting to work with all different kinds of retailers and solving that problem for them.
Joe:
So, fortunately, we've got such a great network of shoppers that on our side for the logistics that's the foundation is in place. I think what we find with retailers is they're standing that up, and how we work with them. Fulfillment costs can be daunting. And particularly on the last mile piece, the retailer needs to be prepared to collect those orders and ship those orders so that we can then drive at the last mile. So, we work with them to try to help them think through how to forecast and then how to plan for that fulfillment piece because that is an area that we have experience in. But in this model, they're going to be managing that. So that's one piece.
Joe:
And then, working with them on the operations and the handoff, it's not difficult, but we do put effort in there. Their store associates need to know who Shipt is, and why we're showing up at the store, and collaborating on how we connect with the customer to ensure that we're communicating effectively with the customer. Both on when is the order ready, when we're picking it up, when it will be dropped off, and if for some reason there are returns or other items that we need to communicate, setting up that structure so that we're all communicating effectively. So, that is a great customer experience.
Stephanie:
So you mentioned forecasting a couple of times. And you share those plans with the retailers to also help them plan for inventory, and like you said, fulfillment and everything. Is that a pretty standard process, or does every retailer in market ... Is everyone having a different kind of forecast or a training procedure to work through to be prepared this year?
Joe:
Yeah. So, we do collaborate with retailers, and we'll let them know what kind of volume we're expecting, and they'll share with us as well so that we can do what we can to manage inventory positions. Every retailer has their own process for that, but we have a dedicated team. We call it the Partner Success Team. They're phenomenal, and they work closely. Every retailer gets a dedicated team that supports them. And again, I think it's an area where we've invested more than a lot of other companies because these retail partnerships are so hugely important that we want to make sure they're getting the support that they need.
Joe:
And the feedback we've gotten from the retailers is that far and away, our commitment to details or thoroughness, and our communication exceeds what they see with other partners that they have. But on the forecasting, we'll work closely with them. We'll communicate the numbers that we're seeing. They'll share what they're seeing, and we'll review it, certainly right now on a weekly basis because if there's going to be spikes in demand, we want to be prepared for that so that we can create great customer experiences.
Stephanie:
That'll be interesting to see what happens this holiday season. So, where do you see the future of app-based delivery headed? What are you all planning for?
Joe:
So, everything we see through the pandemic, grocery delivery is certainly going to continue to be a huge part of the grocery industry. And I was thinking about there's in 2016, a lot of people in the grocery space didn't think customers would ever really embrace ecommerce that they needed to be in the store. They needed to see the produce they needed to choose it for themselves. And since 2016, so many things have changed. And so, grocery commerce is still going to be a huge portion of the business. I think projections are 2025. There'll be no more than 20% of the business. So we don't think I don't see anything changing there.
Joe:
The other ... But in addition, and we do work with retailers outside of the grocery space. What I think the pandemic has created is, retailers are building out a broad ecosystem of ecommerce solutions for the customers. They're recognizing that customers are going to want to interact with them and their products in different ways. And they want to let the customer choose how they want to get the products. And whether that's a third-party marketplace like Shipt, or if they want to do pickup, or having the retailers enable last-mile delivery through their own ecommerce programs. That, to us, feels like the winning strategy. That's what we're seeing, the retailers who are creating multiple options in allowing the customer to choose. Those are the ones that appear to be gaining a share and taking more of the business in the market. And that's where we see the future going.
Stephanie:
I've heard that quite a few times where the market is headed to where the consumers now know that there's options and they should have all the options and it needs to be the best option that they get to choose. And that wasn't something that even a year or two ago was something that may be a lot of consumers expected. So, I think that's a fun place where it's headed, though.
Joe:
Yeah, I agree. And I think that's it. I think awareness has grown so much so; customers are way more aware right now. And like everything else, they want to choose. It's the same if you go into a store, into a category. There's lots of options because consumers want to have the right to choose what they want. And again, I think the pandemic has kind of accelerated that mindset a little bit. Particularly as awareness has grown so much.
Stephanie:
So what kind of tech advancements are you all most excited about, or what tech enablements are helping your business the most right now?
Joe:
I think, again, I'll talk a little bit about grocery. But it's consumers want the ecommerce experience that's convenient and fast, and they want it to replicate their experiences in the store in the good ways. And so, some of the pieces that we're excited about substitutions, is a big portion of the shopping experience. It's about 76% of orders will have an item that's not available in the store. And so, substitution is an option there for the customer. So, we're enabling proactive substitutions to make that as seamless as possible. And we know it resonates because again, the customer wants to get the products and they want ... If you think if you're in the aisle, I can make a choice there because I'm looking across it. So how do we bring that to life through the ecommerce experience?
Joe:
And so we've enabled some features there, and we'll continue to build on that savings and loyalty programs continue to be a big portion. We look to integrate in with retailers' loyalty programs as much as possible. We know the consumers like that. And they want to get rewarded for making the purchase, whether it's inside the store or through Shipt. And so we're bringing that to life. And the other piece is continuing to find ways to enable exploration through ecommerce, it's still the early stage, but if you think about all the different touchpoints inside a store in which a retailer can speak to a customer, how do we bring that to life through ecommerce.
Joe:
And then the extension of that is personalization, especially in the food space, everybody's eating habits are very different. And so, how do we continue to capitalize on personalization so that the way my interaction in the app is different than yours based on my preferences? And how do we gather those preferences? But then also, continue to enable that, so that I'm getting access or information about the products that are most relevant to me. So, I think from a customer experience those are some of the areas that we're really excited about.
Stephanie:
Cool. It seems like imagery too, is, such an important piece of it. I know when I've ordered food before, if they ... I mean, why I go to the grocery store is so I can maybe look around and be like, "Oh, I didn't know I wanted that goat cheese and red wine type of thing. But it's so beautiful looking, and it's very enticing. I'm going to get it." And I think that's something where if it was in an app and it showed it right next to something, I would right away probably add to cart. But sometimes, it feels like that's still lacking of having the right imagery and being able to showcase it in a way that really makes me want it just like I would in the store.
Joe:
Totally. That's right. I mean, and image coverage is not where it needs to be. And again, part of it is for a lot of the industry they weren't really built for ecommerce. And so, they're moving quickly to enable elements like that, but you're right. I mean, that's such a huge opportunity. And then, even I think with the patterns that may be the pandemic have created there's a lot more eating at home. So how do you continue to find variety and give consumers various options that fit in with what they want, but they may not be thinking about on their own? And I think that will continue to be a bigger opportunity. And I think that'll last post-pandemic as well.
Stephanie:
Do you know what I want? I want a surprise me button. I want my shopper to know me so well where I'm just like, "Here's $3, surprise me with something." Because that's why you go to the grocery store. Sometimes, you feel like, "Oh, I'm pleasantly surprised by what I just spent on like ..." Can my shopper do that for me?
Joe:
Totally, absolutely. And so, you should try it out. We have a special request portion of our product when ... So you can ... If for some reason you're not finding a product that you need, or if you have a special request, you can put that in. And so, you absolutely should. And I think the shoppers would love that. They totally enjoy that. And I mean, we've got two dogs, and there's a handful of shoppers that we see regularly, and the dogs love when the shopper pulls up because they know that food is coming, which they're excited about. But also, the shoppers have multiple times picked up a little treat that they've seen for the dogs. Because they just think it's fun. And so, you absolutely should test that out.
Stephanie:
That's fun. And what about things like personal barcode shopping and things like that, or ways to make the shoppers more efficient? But then you have to partner with retailers to enable that. Are there any technologies in that area that you guys are exploring right now?
Joe:
Yes. And so, creating the efficiencies is a big focus area for us and will continue to be. And so, a couple of the areas, you had hit on like the product catalog, and imagery, and attributes for the products, that's an area. But for driving the efficiencies, we work really closely with the retailers and out of stock information. We have real-time data because we have shoppers that are in the store and they're looking for particular products. And so, we share that with the retailers to help them incorporate that in with their logistics information to try to reduce out-of-stocks. And we've seen some really good results with retailers where our data was helpful as an additional data point to solve some out-of-stocks. And so that's a big area that we focus on.
Joe:
Getting good IO location data is really helpful for helping the shopper navigate through the store. And so, we'll work with retailers on that. And then, I think your barcode scanning, we call it scan and go technology. We've enabled that with a couple of retailers, we're going to continue to build on that. And that is just so helpful for moving through the store more quickly, reducing checkout time, and reducing some of the labor costs in the store because the more that we can simplify the checkout process, that's labor savings with the retailers. And then, we're at the early stage of looking at other kinds of automated opportunities. And how do we take advantage of some of the investments that the retailers are to generate efficiencies?
Stephanie:
I see. And they should [inaudible] Bigger ones like Walmart were experimenting with having robots going down the aisles to map the store and take inventory. But having just so many issues depending on things were all jumbled behind the one that was near the aisle or how high the aisles were. And it seems like a big problem to solve, but something that could really help a lot of ... Especially larger retailers like the Costcos of the world, who just have so much stuff to inventory all the time and are constantly running out of things.
Joe:
Absolutely. And that's I think the bigger stores. But even the traditional grocery store could have 45,000, 50,000 skews. So it's such a big opportunity. I think there's going to be a lot of investments and especially as ecommerce has grown. Again, in many ways, the grocery industry is still early in the ecommerce space. And so, I do think there's going to be a lot of good technologies developed that will really help generate efficiencies, which will ultimately be a great win for the consumer because the efficiencies will drive down costs.
Stephanie:
Yep. I agree. All right. Let's move over to the lightning round, brought to you by our friends at Salesforce Commerce Cloud. This is where I'm going to ask you a question, and you have a minute or less to answer. Joe, are you ready?
Joe:
Yeah, I'm ready.
Stephanie:
All right. I feel like you're on a roll. So I'm going to start with the trickier question first. What one thing will have the biggest impact on ecommerce in the next year?
Joe:
Well, the pandemic is certainly going to continue to have an impact on ecommerce. But I think ultimately, it will be how quickly retailers can continue to build out a broad ecosystem. And I think that's what customers are looking for. And I think those who move quickly to enable that will be most successful.
Stephanie:
What is one of your favorite business or management books that you refer back to from time to time?
Joe:
Well, it's funny. I just had this conversation with somebody with one of my peers and we were talking about strategy, and Art of War is something that I have on my bookshelf, and I do refer to it on an ongoing basis. I just think it's ... I mean, it's a classic, but I find it to be really beneficial.
Stephanie:
I love that one. What do you not understand today that you wish you did?
Joe:
Oh gosh. There's not a limit there. I think the piece that I want to continue to more broadly understand is the customer buying patterns across retailers and how that will continue to change. Everybody's got their collection of retailers that they shop for. And I just had this conversation recently because we were driving down the road, and there was a little strip mall that we've never really gone in. Those stores, I'm sure, are great. It's all part of our pattern. So the psychology behind creating the patterns and the behaviors, and then what would it require to disrupt that.
Stephanie:
That's a good answer. I like that. If you were to have a podcast, what would the podcast be about, and who would your first guest be?
Joe:
So I-
Stephanie:
I think you've thought about this-
Joe:
I have. I think podcasts are awesome, and I'm so envious. So, an area that I've found to be more interesting of late, I kind of stumbled across this street art. And so, Denver has got a really good community of street artists. And so I think it's super cool. And if ... I mean, my goal and I would love to meet Banksy, who's a street artist out in the UK. And that's if I could have him on my podcast. That's how I would do my one episode, and I'd be done.
Stephanie:
Like mic drop, I'm good.
Joe:
Exactly.
Stephanie:
That'd be a good one. All right. And then the last one, what is the favorite app on your phone?
Joe:
So, my favorite app, I don't know if I should say, well, DraftKings is recently become legal in Colorado. I have two boys. And so, we like pro football. And so, every Sunday, we choose a game and put 10 bucks on it. And so that is ... It's probably not the best family forward kind of thing, but we're having fun with it.
Stephanie:
Sounds pretty family forward to me, so, you can do what you want, Joe.
Joe:
So let me know if you have any recommendations because we haven't been winning the last couple of weeks.
Stephanie:
Oh, man. You don't want recommendations from me. Trust me. I'll let you guys do your thing there. I'll trust you. All right, Joe. Well, this interview has been great. Where can people find out more about you and Shipt?
Joe:
So Shipt.com and download the Shipt app. And then I am on LinkedIn, and Joe Manning chipped up on LinkedIn.
Stephanie:
Awesome. Thanks so much for coming on.
Joe:
Thank you. I really appreciate it.
How to succeed on Amazon is a mystery that many DTC brands have tried and failed to solve. There are tricks to winning on the mega ecommerce site — tricks that no one tells you when you first put your product up for sale in the Amazon jungle.
That’s why we’ve invited Ju Rhyu on the show. There were a lot of things that Ju wished she knew before she and her co-founders decided to launch Hero Cosmetics on Amazon. Things like what is brand gating? And how do you win the buy box? And what do you do about counterfeit products that pop up right when you start to have a little success?
Ju found the answers to all of those questions and learned so much more as she grew Hero into one of the buzziest skincare brands on the market, which went from 0 to $1 million in year one, and now not only sells on its website and on Amazon, but is also featured in retailers like Target, Madewell, CVS Pharmacy and more.
On this episode of Up Next in Commerce, Ju spills the beans on what it takes to win big on Amazon, and how you can level up from there.
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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Transcript:
Stephanie:
Hello and welcome back to up next in ecommerce. This is your host, Stephanie Postles co-founder at mission.org. Today on the show we have Ju Rhyu the co-founder and CEO of Hero cosmetics. Welcome.
Ju:
Thank you. Thanks for having me.
Stephanie:
Yeah. I'm really excited that you took the time to call in from Paris. That's so fancy when I say Paris, maybe you're like, this is normal for me, but you feel fancy.
Ju:
It was a fun fact that I tell people, "Oh, by the way, I live in Paris."
Stephanie:
So tell me a little bit about Hero. I would love to hear the founding story of how you started it. I mean, it has tons of news coverage and I was reading so many different stories. And I want to hear from you though about how you came to found it.
Ju:
I mean, the story is I was living in Korea. I was working there as an expat in Seoul, South Korea, and I was suffering from adult acne. I don't know exactly what was causing it. Maybe it could have been the changing environment, the lower air quality change in lifestyle, or maybe stress, I'm not sure. I was really frustrated because I kept breaking out and it was always just hard for me to find a solution that worked for me. But in Korea I noticed a lot of people walking around with these acne patches on their faces. So I got really curious. I went to a pharmacy, I bought some, and then I was just amazed at how well it worked because it sucked everything out and protected me from touching the area and picking at it.
Ju:
It was really gentle on my skin. And then I immediately started wondering why I was learning about it then, and not like 15 years ago and why it wasn't more available in the US so I did some research and then that's when the idea of like, Hey, I should make this available in the US I think people would really like it.
Stephanie:
That's so cool. I mean, it seems like Korea, all the beauty trends right now are coming from there, everything when it comes to double cleansing and [inaudible]
Ju:
Well, the 12 step regimen.
Stephanie:
Yes. I try to follow the 12 step regimen. And I got a little overwhelmed. I'm like, Oh, this is a lot to clean my face. So you found this product in Korea. What did you do next? How did you have the idea? Because a lot of people find other products in other countries. I know, I at least have, or my oldest T brands really good, or Oh, this hammock is really good, whatever it may be. And I don't always think, I'm going to bring this back to the States and do this. So what were your next steps? Why was this the product that you wanted to bring back and start?
Ju:
First of all, for me, it solved a real problem that I was struggling with it worked better than anything else I had ever really used. And I just got to thinking if this is helping me, this could probably help a lot of other people state side as well. And then actually in Korea, when, if you're a cosmetics manufacturer or distributor, you're obligated to print the name of the manufacturer on the back of your package, that is not true in the US actually. And so the first thing that I did was I started contacting these patch manufacturers to see how much it would cost to buy them from them, how the manufacturing side would work. If they could work with me to develop something that I thought would be suitable for the US market. So I went to a bunch of pharmacies. I bought up a lot of packages. I looked at the backs of the boxes to see who the manufacturers were. And then I started my outreach.
Stephanie:
What were some of the biggest surprises when you're reaching out to these manufacturers?
Ju:
I mean, a lot of them didn't return my calls or my emails. I don't blame them. I mean something like random person contacting them about buying up a much of their patches for a business idea that was still very nascent. And so that was a little bit frustrating, but there were a few that did reply to and then there was a little bit of a language barrier just because I mean, I'm Korean American living and I was living in Korea. But my Korean isn't totally fluent. And so a little bit of a language barrier, but I got really lucky because I landed on the manufacturer that we work with today, who was more than happy to get my email was super easy to work with was very open and developing relationship. And that's how, probably how we got to where we are today. From that one cold email he happened to respond and we've been working together for now over three years.
Stephanie:
Oh, wow. That's really cool. So were they open to creating custom packaging? Because I know when I've looked into this space before, it seemed very black and white. You can have our packaging or something very expensive, but like it's still going to be our design. How willing were they to have something really custom?
Ju:
They were pretty willing. They were willing to customize design and basically customize anything that we really wanted. So they were pretty open to that. This is their business, they make products for other companies and other brands. And so they were pretty familiar with how that whole process works.
Stephanie:
And did you end up using a very similar or exact product of what you got in Korea that you started selling here? Or did you make any updates or changes?
Ju:
Yeah, I worked with the manufacturer to adjust to some things I thought were really important. So things like the adhesion or the stickiness or the absorption power of the actual patch of the hydrocolloid patch. So there were some customizations that were made for this product because I definitely wanted to create like the perfect acne patch. And that's how we landed on what we have now.
Stephanie:
That's great. And do you feel like you had a leg up because it looked like you've been working in the world of digital and e-commerce prior to Hero. Was there anything that you learned from your past life before Hero that you brought into founding the company?
Ju:
Oh yeah. All the time. So my background is I actually got my MBA at Columbia business school and then I worked in corporate America for a really long time. So I worked at Kraft foods, American express, I worked at Samsung. That's what brought me to Korea. And I mean, I still lean on my, on all those experiences. I lean particularly on my Kraft foods experience because that was in brand management where they train you in a certain way of thinking for marketing. So, consumer is always first to teach you about the retail landscape and there's a distinction between your consumer and your customer. They talk about like the brand ladder. There's so many things that I still fall back on and use to this day. And then for some of the other companies, things like processes or even knowing about email and open rates and how to really digest analytics like that, are things that I still use today.
Stephanie:
That's great. So I'm going to get a little crash course in craft methodology. So earlier you just mentioned distinction between consumer and customer. What do you mean by that and how do you practice that?
Ju:
Yeah, it's funny because in my mind they're very different, but I know sort of in the public, they both get used interchangeably, but the way that a lot of these CPG companies work is they didn't exist before at DTC world. So they always sold through a retailer like a Walmart or Costco or target, et cetera. And so those retailers were always referred to as the customer because those were the people that were actually buying your product. And then you would refer to the consumer as the end-user of the product. So the person who would inevitably eat your Oreo cookie or use your Clorox cleaning solution. Usually the consumer ended up being the consumer of the retailer. So it's really not like if you're working at Kraft foods the consumer is not technically your consumer. I mean, it is, but by way of the retailer. And so that distinction was always very important when it was written out.
Stephanie:
That's good. All right. So you've got your manufacturer, you've got your product being built. What next?
Ju:
Yeah. I have two co-founders Dwight and Andy, and then I do a lot of the product, the marketing, the PR basically the sales person. Dwight handles a lot of the supply chain ops. And then Andy, he does all our design and creative. So we had gotten together we decided the three of us were going to do this. We had the product concepts so it came. So the next thing was to come up with the brand and the product name, the brand name. And for me, it was really important that we choose a name that was very like evokes emotion or something emotive because I felt like acne was a very emotional category. There are a lot of people who feel bad about themselves or feel insecure when they have acne.
Ju:
And so I wanted a name that was really, I don't know like instilled confidence or was like a just evoked positive emotion. And so that's where we came up with the name Mighty Patch. And then we had to create designs does on the box really kind of create the whole brand feel of this product. And then the initial strategy was we were going to sell it on Amazon. So we launched it on Amazon. That was how we were going to distribute it. And then once we had the distribution part then came the other part, which is how do you sell it? So we had to get people to know about it buy it, leave us reviews and things like that.
Stephanie:
So let's dive a bit into launching on Amazon because I always hear very mixed emotions about selling on Amazon. And I want to hear your thought process about, starting their first. And did you do research on the platform to kind of see, what the space was like? Like what kind of things did you go through before deciding like Amazon's actually a good spot to start?
Ju:
Well, so we started this business almost like a side hustle. It was a side hustle and we were bootstrapped, we didn't raise money. And so for us, Amazon was like the most logical place to start because you have access to hundreds of millions of buyers. It doesn't take a lot of resources or investment to launch on Amazon. You can take advantage of their backend, like warehouses and fulfillment centers to help with the fulfillment part. So for us, like Amazon made so much sense and then also, back then it wasn't... we just had a hypothesis. And the hypothesis was that if we bring this product category to the US and position it more as a beauty product that it could do well.
Ju:
And so for us, the easiest way to test out that hypothesis was on a platform like Amazon. So rather than having to spend all the money to build a website and find a three PL and do things like that, the easiest and quickest way to test out our hypothesis was to put a page on Amazon. We said, let's see if people buy it. If people buy it, then we'll work on phase two, which would be launching a DTC channel.
Stephanie:
That's awesome. I think that's such a great way to have that, like MVP products. See if it works before investing too heavily into a big website and yeah, like you said, setting up three PLS. What kind of hiccups did you experience when you launched on Amazon or started that process?
Ju:
So one was we actually proved out our product market fit very quickly. And we actually ran out. We either I can't remember, but I think we almost ran out of inventory or we did run out of inventory. We had like our second order on a boat and it was supposed to be released, but like the timing didn't work out. And so it was really, really tight in terms of inventory planning. The other issue was we were getting people were now brand gated, but before we were brand gated, we're getting people attaching themselves to our listings as we were getting more and more popular. And so I don't know how many people know how Amazon really works, but a lot of times when you have a product page, it's not something that you own, unless you're brand gated.
Ju:
It's something that other people can sell that product, leveraging your product page. And then the idea is yeah, everyone has to win the buy box. And the buy box is when you're on an Amazon product page, and you add to cart, the person who's winning the buy box is the first person whose product you would add to your cart. So I didn't know any of this when we first started, I was like, why do you have to earn the buy box?
Stephanie:
I had no idea. I mean, I see that from a consumer side where it's like, you have other options, but I never go to those. It's like whoever's first is who I go with.
Ju:
Yeah. And it's really smart on Amazon's part, because as a seller, you have to earn it either by having really good reviews, like seller reviews or you have to earn it by having the best price. And so there are a lot of sellers, they'll price a penny cheaper, or like 5 cents cheaper, and then they'll win the buy box. Which inevitably is a very dangerous game because you can just sort of discount this product to zero. So anyways, we were getting people attaching themselves for a page, which wasn't good because we wanted to protect our products and our IP and all that. And then the other issue that we ran into was we started getting counterfeits mixed into our inventory. So there was a time where and I have a photo of it. It's like someone had literally ripped off our designs created like their own version of our box. I'll be at the designs were not like you could tell that it was fake. It wasn't a perfect copy. But somehow it had gotten mixed into our inventory. And then that fake product was getting shipped out to customers.
Stephanie:
How is that happen? I mean, was that like on the manufacturer or how does it get mixed into your inventory?
Ju:
I don't really know, but I think what happens is they probably attached themselves to our page at that time. And then won the buy box and started shipping this big products to these customers. I think some of them were returned, like people would return them and then it'd get mixed into our inventory that way.
Stephanie:
Oh, that's tricky. Yeah, because I've seen that in reviews on Amazon where people would be like, this is the authentic one. I've been buying this for five years and now it's a knock off. And I'm like well, how's that happened? But I guess he just didn't understand how that could happen, where I'm like well, the brand wouldn't have a knockoff, but yet now knowing how the buy box works and yeah, that can be really tricky. So how did you get those people off of your page when they started attaching themselves to your page? Like what did you do to rise above them?
Ju:
Yeah. So there's something that you can do on Amazon called brand gating. And you have to prove that you own the IP or the trademark to your brand name. So you present them, you submit all the evidence and then they will brand gate you, which means that you are sort of no longer a public page where people can attach themselves to your page. You and only you can can moderate or edit or sell on your page. And so that's what we did. And then since we've done that, it hasn't been a problem.
Stephanie:
Well, that's a really good lesson for anyone new trying to start out on Amazon. That is a possibility. Very good to know. So what's changed on Amazon since you launched there in 2017, what kind of things have changed?
Ju:
Well, our category now has just exploded. And it's funny because in September when we launched this September, 2017, it was us and maybe like one or two other products when you looked up acne patches, but now when you search for acne patches, there are like pages and pages and pages of acne patches that show up in the search results. And so sure competition [crosstalk 00:19:00]. We're the best seller, we have the best-seller badge.
Stephanie:
How did you get that? Just from actually being a bestseller or was there anything else behind that. I'm thinking way off course by looking at the Amazon page now.
Ju:
Yeah. So it's like a three-pronged strategy. One is you need to support your product and your page within the Amazon paid media ecosystem. As you need to run your sponsored product ads and your display ads. And so there's a whole advertising strategy. The other is you have to optimize your organic content. So your product titles, your page titles, your descriptions have the right key words, a plus content, video content, images. So that's the second strategy. And then the third part is kind of building your outside ecosystem. So having press point to your Amazon page or having influencers talk about your product and being available on Amazon and just sort of building your brand halo. So you have to be relentless. It definitely takes time. It took us about a year to get the bestsellers badge from the moment where we really started going after it.
Stephanie:
So let's talk a bit more about the competitive space, because like you said, beauty is very competitive. So many people are launching products. Like what do you all do to stay ahead from your competition?
Ju:
We will look at our messaging a lot. We always want to be sort of one step ahead in terms of how we message our products, why we're better really talking about our differentiation. We're also really evolving in terms of product portfolio. So we're best known for our patches, obviously that's whatever it is our bestseller on Amazon and elsewhere. But since then we've launched a lot of other products with like we have rescue bomb and then lightning won and then we're coming out with a bunch of other things next year to really build kind of a routine and regimen for acne. And so, I get the question a lot, like, why is your patch different from others? Like tell me about the patch. Like, they just want to know about the patch, but part of my job these days is really telling people that we're about much more than just the patch, we're really an acne brand. And so I think that tactic is something that is also differentiated from a lot of other competitors out there who may only have like a single patch product.
Stephanie:
Yeah. [inaudible] great because it shows that you're really invested in that whole market and you are always finding new products to offer to your customers, which is only going to help. Like how do you go about developing those new products and know what your customers want?
Ju:
It's a mix of art and science. It's some of it comes from well... We have a great PD team, product development team. Part of it comes from sort of research where we're always looking and reading at trends. And we're trying to react to white space that we see in the market. Part of it also just comes from our collective acne issues. Like sometimes I'll break out and I'll say, I really wish I had a product that did this. Why doesn't it exist? And then I'll talk to product development team. And then we'll create something that addresses that issue. Some of it also comes from research that we do with our customers or our consumers, excuse me. Well, we'll ask them what are you looking for? What else do you want to see from us? What other types of acne issues do you have that we could solve? So it's a little bit of like intuition comes from our own experiences. Some of it comes from data. It's kind of there's no perfect recipe, I guess we're coming up with your products.
Stephanie:
Yeah. Cool. So let's shift over a little bit into more wholesale deals and getting in retail, because I saw some of the retail locations that you're in, like Madewell and target J group. Very impressive. And so I'm sure everyone's like well, how did you get into those retail locations?
Ju:
Yeah. Okay. So we launched on Amazon September, 2017. I immediately started pitching retailers our product, and then anthropology was actually the first one to take us in January of 2018. And they took us as a-
Stephanie:
That's quick.
Ju:
Yeah. It was really quick which again, for me it just affirmed the idea that there was a need in the market for this type of product.
Stephanie:
What was your pitch? Tell us the magic.
Ju:
It was really like just a cold pitch email telling them what the product was, what it does, why it's gray included a picture in the email. So they had a visual really just use concise bullet points. And I mean, that's kind of it. I didn't attach a deck or anything like that.
Stephanie:
And did you have any data that you included that maybe won them over?
Ju:
I think I had talked about how acne patches in Korea were... so back then KBD was really hot. And I think I'd talked to them. I think I had mentioned that acne patches were really popular in Korea and that and there was a Korean brand that was quite popular. And so I wanted to bring like an American version of that product to the US so in a way that, buyers are usually trend seekers, they pay a lot of attention to the trends of their category. So I think she knew that acne patches a developing an emerging.
Stephanie:
That's great. So you got anthropology as your first retail partner. Was it easier to get the rest after you could point to anthropology and be like, see we're in here?
Ju:
I mean, it's definitely validation gives you street cred. But I think in 2018 when we launched in a lot of specialty retailers and I credit that to I'm a big believer in, if you build the demand, the retailers will come. And so once I started our PR push and we were mentioned in, into the gloss and business insider and Buzzfeed, I actually started getting quite a bit of inbound requests from buyers. So I remember like American Eagle was an inbound J crew, I believe was an inbound, Neiman Marcus was an inbound. So as we started getting more press and becoming more known on Instagram and things like that I actually started getting pitched from these buyers. They would email me and say, Hey, I heard about your product. I really want to try it. Can you send me some samples? And so that was sort of special.
Stephanie:
That's awesome. So how did you get this press to get in front of them? What kind of avenues were they finding you on, like, were they finding you from Instagram or was it actually in these articles that were somehow ending, ending up on their computer screen? How did that work?
Ju:
So there's a service that I used called Launch Grow Joy. I recommend to, I recommend them to like every entrepreneur that I've talked to, because it's sort of like DIY PR so you pay like a monthly or yearly fee, you log into their system and then they give you access to all these editors that are looking for content or products to talk about in their next article. I did all the pitching early on and like had mentioned before the first article that we really got was an into the gloss. And immediately after that article went up, I think I got like two or three inbound emails from retailers saying, Oh, I just read about your product. I really want to try it. And so I think if you know, what the buyers re like, usually depending on your category, they read certain things to know what the trends are and to know what's like new. So for beauty.
Ju:
And so the gloss is it's a publication that a lot of people read. And so I just got really lucky, I think with that first article and then just started pitching other beauty related publications and then sort of build [inaudible]
Stephanie:
That's really great. So now you're in many retail locations at that point? What kind of lessons did you learn that maybe you took to new retail partner you got?
Ju:
That's a good question. I think packaging is really, really important. I think that's why initially I think we stood out because our packaging was very colorful and it was very bright. And then it was pretty clear with product did on the packaging. And so for me, like anytime we make a packaging change, I always run it by our buyers. So when we launch new products and we're looking at a different color scheme or something like that, I'll always send it to our buyers to get quick feedback, because they'll know if it'll do well or won't do well. So that's a big one.
Stephanie:
Do you change packaging based on different retail locations whatever connects with anthropology might be very different than target.
Ju:
No, we don't, maybe we'll do different pack sizes, but we won't really change the design. So I think that's a big one. I mean, I've learned that working and staying close with the buyer is really important because they'll have a lot of input into your innovation too. Because, because sometimes like they're looking for a certain type of product and then they'll come to you and they'll be like, Oh, we'd love this. We'd love it if you made X, Y, Z product. And so I try to stay close with the buyers on innovation pipeline. I think it's really important to hold price. We started selling on Amazon. And then I actually was very worried in the beginning that no one would take us because we were on Amazon, because to your point, a lot of people have this love, hate relationship with Amazon.
Ju:
But actually what I found was that no one had a problem with it because we're three on Amazon. So we sell on their marketplace. Therefore we control the price because we could control the price. A lot of other retailers were okay with it. And in fact, they kind of see Amazon success as validation that it will probably do well at their store as well.
Stephanie:
Yeah, that makes sense. Very cool. So now with where the world's at today, and a lot of retail locations, declaring bankruptcy, what are you guys experiencing right now? And what's your go forward strategy?
Ju:
Yeah, this year has been an interesting year. We're luckily one of those businesses that actually benefited from COVID in a way and really two reasons, I think one reason is our distribution strategy. So the biggest channels that we sell in which are D to C, Amazon and Target are, they were always online or they never say it another way. They never had to close this year because like Target was considered an essential retailer, Amazon, they're online and then D to C is online. And so luckily we weren't a company that depended heavily on a retailer that did have to close so that, so we saw minimal impact. And then in fact, like, as these essential retailers, they get stronger. Our business actually just gets stronger as well. And then the other issue is since we all have to wear masks the masks because acne, and there's a term that people use is called [inaudible 00:33:08].
Stephanie:
Have not heard of that.
Ju:
Have you not? Its called [inaudible] And it's caused by either like the friction. So when you wear the mask, sometimes it rubs on her face and it causes friction and then that'll cause you to break out or I don't know if you've noticed this, but when I have the mask on it, it creates humidity when you talk like when you talk and when you breathe, it creates humidity. and that humidity gets trapped and creates bacteria, which causes you to break out. And so we've seen a lot of people suffer from mass MI looking for a solution and then they end up finding our products and our company. And so that's another reason why we've actually benefited from COVID in a way.
Stephanie:
Oh, that's good. So are you going after the masks masks me keyword or any other cameras coming?
Ju:
Yeah, actually when I first heard about maskne I don't know, maybe it was like April, like may or something like that, I immediately told my team and I said, Hey, we need to double down on this, on this word, let's write a blog post, let's do social content. We need to own maskne. I think we were the first ones probably to come up with like content around maskne and to do, to even create a bundle on our website for a mass me. And then since then I've seen some other people do that, but I saw that as definitely an opportunity for us.
Stephanie:
Yeah. That's, really good. So I want to move over into the mentorship category now, because I saw that you have Jamie Schmidt as your mentor and she created schmaltz and she started in a farmer's market and then ended up selling it to Unilever. So amazing mentor. I want to learn a bit about the types of things that she's guiding you on or the most memorable pieces of advice that she's given you.
Ju:
Oh gosh. So she helps me a lot with distribution because she also obviously had built and sold a company that's similar in terms of distribution strategy. Like they weren't just D to C. They also sold that big box retail and had a pretty extensive they had extensive distribution. And so I remember when we did a mentoring session for Inc magazine, one of the questions I asked her was around like succeeding at target and how to do that, how to ensure success because it's a really important relationship. You want to make sure you get it right. You don't really have a second chance. So she gave give a lot of really good advice and tips on that and also how they support it.
Ju:
I remember her saying that they ran a lot of geo-targeted ads and some of the top like 50 or a hundred stores to drive traffic to, to the target stores. So that was a really good idea. And even, even now I hadn't recently sent her an email about sort of international distribution, because I know they have quite a few international distributor partners how to navigate those relationships what those relationships should look like. And then people should definitely follow her on Twitter. She gives a lot of really good advice on Twitter for free. So I'm always following what she tweets.
Stephanie:
She's very smart. I follow her as well. So what kind of thoughts did she have around expanding internationally? And are you working towards doing that or are you already international?
Ju:
We're kind of international, like we sell on Amazon Canada, we sell at Liberty London in the UK. It hasn't been a big push for us just because US market alone is so big and then we already have so much work. But it's definitely something we have our eyes set on just because for us, acne, we want to make our products available for anyone who has acne. I think they really do help people who break out. And so that's obviously not just limited to the US it's really a global problem. Anyone who breaks out should be able to access our products. And so it is, yeah, it's in the strategy for sure. I think it's a matter of prioritizing it when we have the time.
Stephanie:
Cool. And so by taking a product that you found in Korea and bringing it back here, it seems like there'd be a lot of room to go other places and be like oh, and here's another product I can bring to the US and another one, like do you ever get tempted when you travel or traveling to buying other products and be like this worked once. Why wouldn't I just launch more things on Amazon?
Ju:
Yeah, I haven't had a product idea yet, but living in Paris I do see things here where I'm like oh, wow. I wish I could introduce this to the US. I think it could do really well.
Stephanie:
What are some things in Paris doing well, or unless you don't want people to steal your idea because we have many customers who might, I don't know.
Ju:
Well, I'll say there's a retail idea. There's a retail chain that does quite well here and that doesn't exist in the US and again, it was sort of the same thing. I'm like, why does it exist in the US? And I think you're right. I think that's like one of the great things about traveling is you get to really explore and learn a different culture and discover different products or different services that could be adaptable to a different country, a different market. And so I kind of have two ideas that are kind of like that already.
Stephanie:
All right. So I want to move into a couple more like higher level ecommerce questions because you've been in the industry for awhile. I want to hear what kind of trends or patterns are you most excited about right now?
Ju:
I think there's a lot of cool stuff in food that's happening. I think I'm really interested... For me personally, I'm really interested in the environment and sustainability, and I see a lot of cool ideas around local delivery by bike. So it's zero emission. It gets a product from point A to point B. It is a lot more sustainable. I think that's really interesting. I think food again is also interesting. And especially with COVID and this year and how I think the uptake with buying food online has probably skyrocketed. I think there are a lot of people who weren't used to doing their groceries online. So I'm really curious to see innovation that comes out with food. I'm also very interested in sort of this marketplace concept that I see coming up and popping up. There's a new marketplace called [inaudible 00:41:57].
Stephanie:
Yeah. I was just reading about that this morning.
Ju:
Yeah. So it's sort of like a D to C. I guess it's a good D to C marketplace or some marketplace for D to C brands, almost like an online mall, which I think sounds really interesting as well. So I don't know. I mean, there's just a ton of stuff going on. I think for sure, like ecomm is going to be it because we've seen the adoption just really increase in penetration over the past eight months, I guess. So I'm curious to see what the innovation is going to be like, but I already see a ton of ideas happening at the moment.
Stephanie:
Yeah. Awesome. All right. Let's move over to the lightning round, brought to you by Salesforce commerce cloud. This is where I'm going to ask you a question and you have a minute or less to answer. Are you ready Ju?
Ju:
I'm ready?
Stephanie:
All right. So what's up next on your Netflix queue other than Emily and Paris, obviously?
Ju:
Oh, I'm watching the Crown, the newest season.
Stephanie:
Is it good? Someone just said that yesterday.
Ju:
Oh yeah. Because it's all about princess Diana and Prince Charles. So yes, it's good.
Stephanie:
Awesome. Where are you traveling to next when you're able to travel again?
Ju:
I really want to go to Korea actually. I want to go to Seol.
Stephanie:
Find more trends.
Ju:
Yeah. Find more trends. I want to see my relatives. I want to meet my vendors. Yeah, I would really like to go there.
Stephanie:
Fun. What do you not understand today that you wish you did?
Ju:
I wish I could understand TikTok better.
Stephanie:
Do you guys use TikTok?
Ju:
We're very heavy on TikTok. It's one of our most important social channels, but I don't know. I find it so time-intensive to make the videos and create the content and stuff, but there's some people who are amazing at it.
Stephanie:
So what kind of what are your best performing videos on TikTok?
Ju:
Oh, the peeling off the patch and that video. Yeah, because it's like kind of like a doctor Pimple Popper moment. It's kind of gross, but satisfying. And those videos will get like millions of views in like 48 hours.
Stephanie:
I had a feeling that was going to be what it was. I can advertise those videos all the time. I don't know what I clicked on at one point in my life, but I can all that advertised to me on Facebook and wherever I'm at. [inaudible] stop following me. Cool. If you were to have a podcast, what would it be about and who would your first guest be?
Ju:
Oh, that's a good question, because I actually thought about having a podcast. I would have a podcast around entrepreneurship. I don't know exactly how it would be different from other topics, but something around probably entrepreneurship, maybe how people made the first million dollars or something like that. And then my first guest would probably be Jim [inaudible 00:45:11].
Stephanie:
There you go. That's to mean you already have that connection, it sounds like a hit to me. All right. And the last one, we talked a little bit about trends or patterns you're excited about. This is a little bit different. What one thing do you think is going to have the biggest impact on ecommerce within the next year?
Ju:
Well, I mean, I guess the pandemic has already had its impact. In the next year... I don't know. I mean I think probably this big sustainability push is... I don't know if it will be in the next year, but I think we will start to see it impacting ecommerce in a significant way, in packaging in your carbon footprint. And I think we're going to see a lot more of it in the next year for sure.
Stephanie:
All right Ju, this has been a really fun interview. I love talking about how you launched on Amazon and how to get into retail. I feel like there's a lot to learn. Where can people find out more about you and your cosmetics?
Ju:
You can find more about Hero cosmetics either on Instagram. The handle is Hero cosmetics website, herocosmetics.com. And then for me, you can find me on Twitter. It's just my first name, last name, J-U-R-H-Y-U, and then same handle on Instagram.
Stephanie:
Awesome. Thanks so much for joining.
From the baseball field, to the Nascar track, to the tennis court, in sports, ads can be found everywhere. Brands and sports have been linked together through sponsorship for decades. And now, with the rise of social media and influencers, athletes can create even more profitable relationships with brands than ever before.
But a sponsorship should be more than just a way for a brand and an athlete to make money. Today, more than ever, that message matters. The story you tell makes a difference. And the purpose behind a brand is what is drawing people in and converting them to loyal customers. At POC, that belief is what has been driving the company since its founding, and it is influencing its unique content strategy, which is successfully driving people to its website and into its ecommerce channels.
POC is a Swedish company that makes top of the line protective gear for athletes around the world. David DeMartini is POC’s Global Chief Marketing and Digital Officer and on this episode of Up Next in Commerce, he explains why the purpose- and data-driven content strategy the company has devised is working, and what other brands can learn from what they have built. Whether it’s more of a focus on original, serialized video, or a different approach to working with influencers, POC’s marketing strategies have far outperformed traditional methods. Learn how and why on today’s episode!
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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Transcript:
Stephanie:
Hello, and welcome back to up next in ecommerce. This is your host, Stephanie Postles, co-founder of mission.org. Our guest today is David DeMartini, the Chief Marketing Officer at POC. David, welcome to the show.
David:
Hi, Stephanie. Thank you for having me. I'm excited to be here.
Stephanie:
Yeah, I'm really excited to have you too. I just went into a Wormhole watching some of your guys' videos with the skiers, flying down the mountain at lightning speed and I was like, "Could I do this? No, probably not." But they were great to watch.
David:
Yes. Oh, well, thank you. And I sure you could do it. We have an amazing roster of athletes that do a great job of telling our brand story through their actions and our goal is to do everything we can to keep them safe. So, it's fun to create content or let them create content and it helps us tell our story.
Stephanie:
Yeah. I love that. We'll definitely be diving into all of that in a little bit, but first tell me or anyone who's listening, what is POC?
David:
Yeah. So POC is a Swedish company that was founded in 2006, 2007 timeframe. We are a protection brand. We're the world's leading protection brand, currently servicing athletes and participants across bicycle sports and snow sports. And so, we have a really strong mission and purpose to save lives and protect those pursuing their passion, and enable people to really find more joy in life through using our products to keep them as safe as possible when they're doing the things that they love.
Stephanie:
Yeah. And you have very nice looking products as well. I haven't been snowboarding in a while, but I'm like, "If I was, I would want this helmet here and they even have mouth guards nowadays, which is mind blowing to me." I mean, very helpful, but I have not seen any other companies. You have a helmet with a... Is it called a mouth guard? What is the word for that now?
David:
Yeah. Well, on the snow side, we have a couple of different disciplines that we service. And I think the product you're referencing is one of the helmets we have on the race side of our business. When slalom skiers or even some GS skiers are running gates. There's a chin bar that attaches to the helmets to make sure none of [crosstalk] end up smacking them in the face as they're making their way down the course. So, always looking for ways to better protect our athletes in our customers. And that's a pretty handy service with that chin bar because taking a slalom gate to the face is not much fun.
Stephanie:
Yeah. It does not sound like it. I also looked at them like this would be perfect for my two and a half year old, and he is always falling and hitting his face somehow, or his chin I'm like, "You guys need some kids versions of this."
David:
Yeah. That's a good point. We have an amazing children's line that we call poquito-
Stephanie:
Oh, cute.
David:
Kids helmets and there's some really cool safety pieces built into that. We found that the most accidents that happened with kids on a ski slope or on a bicycle are scenarios where someone larger than them, whether it's a larger kid or an adult just simply doesn't see them. And there's a collision that happens. So we have a really great visibility story built into our kids' products, but we hadn't thought about the chin or face protection for the children, but maybe we [crosstalk 00:03:28]. Yeah?
Stephanie:
Yeah. So when I was looking through your LinkedIn [inaudible 00:03:33], I also saw that you have a background in media and sports, and I was wondering what drew you over to POC?
David:
Yeah, so I of cut my teeth at an agency in Colorado working across an amazing book of brands that the agency Backbone Media service at the time. And it was really an amazing opportunity for me because I got to really dig in and understand some of the challenges that brands have really all maturity level, where we're trying to overcome. Everything from a larger, more established brand, like Eddie Bauer or YETI Coolers, all the way up to startups looking at how do they just continue to raise some money to propel their business
David:
And so, as I was working through and learning and absorbing and working with all these amazing people at Backbone Media, I was really fine-tuning the things that were interesting to me and knew I always wanted to be in marketing and direct-to-consumer but really found an understanding of what specifically in those areas were interesting.
David:
And then after about five years with Backbone, POC was one of the clients of Backbone for a long time. And one of the accounts I worked on and an opportunity came up to join POC internal as the marketing director for North America and I took that and I've been lucky to find myself in some opportunistic positions within POC. And my skillset has allowed me to rise to the ranks here as well which has been really fun and really rewarding.
Stephanie:
Yeah. That's great. I also love how POC has the same messaging across all the platforms. It was very clear about what you guys stood for. So tell me a little bit about... Did that draw you in when you saw, "Here's our purpose. Here's why we're here." How did that impact your decision to jump over to work with them?
David:
Yeah. I think that one of the key attributes that you see as particularly important and something that a lot of brands in the outdoor space focus on is purpose. And the term purpose can be applied to business or the way that a company operates in a lot of different ways. But I realized early on that a trend that I was seeing with the brands that I worked with at Backbone Media, the ones with a solid foundation, a clear purpose and a really clear and ambitious but not to the point where the brand platform and the mission of the vision didn't really mean anything. Those are the companies and the brands that were doing the best.
David:
And so, I quickly realized how important that was. And so, as I thought about what was next, I knew that, that was core to any organization that I could see myself at, for an extended period of time. And so I made that one of my priorities and starting to look around for whatever was next for me was that purpose has to be there. And I have to really be able to connect to that purpose in a meaningful way because if I can't, in a lot of ways you're trying to fake it to make it, and that just gets really taxing and is tiresome and hard to do. And it comes back to, if you can act to the purpose it's very easy to find the motivation to really give everything you have to the business and these days you have to do that.
David:
So, POC has had it. It's a really amazing a brand platform and admission and vision. That's been with us since day one and credit to the founder, Stefan Ytterborn who created the brand in 2006, to address a problem that he saw in the form of... His kids were becoming ski racers. And he looked around at the head protection at the time and said, "This doesn't seem all that great and I think I can do this better." And had the foresight to realize that spending the time and really ironing out what he was there to do and what their mission and vision looked like, was crucial to make sure he built something that could continue to live on and be successful.
Stephanie:
That's great. Your kids always seem to be a driving force sometimes with businesses or new products. And I love that story, having an actual reason to develop something and being like, "Oh, everyone actually needs us in this industry. And it's not good enough. I'm going to fix it right now."
David:
Yeah. He saw a problem that was specific to him and where he was in his life and realized that, he's probably not the only one feeling this way and really created something special and it's been a fun ride since then and continues to do well. So, again, it goes back to the core purpose of the business is real and meaningful. And that's really valuable and making sure that we make the right decisions on a day-to-day basis.
Stephanie:
So, since you've been able to see many brands, especially why you were working at the agency, what are tips or best practices around maybe a new brand coming up with their purpose, but then actually following through, because I think that's a tricky thing with a lot of these new companies popping up it seems like a lot of them say they have a purpose or here's what we're doing, but it doesn't actually come through. It's just like the messaging. You don't see actions behind it. Is there any advice or things that you saw when you were at the agency of like this work and this did not work, everyone should not do it this way?
David:
Yeah. It's a good question. And I think the answer to that can take many different forms but really what you're looking for is something that's balanced in something that is, it can stand the test of time. And so what I saw at Backbone was it used to be that you could identify a problem, find a solution for it, and then take that and run with it. And I think that that worked for a long time and that was the traditional approach to starting a business. But I think the consumer today has evolved so much to where they look for more than just helping them solve a problem. You really have to be invested in the solution and in the problem itself to a point where it's authentic and real.
David:
And so I think for anybody who's thinking about starting a business and can't stress enough, the importance of making sure you spend the time and put the work in on building a brand platform and then pressure testing that through all different mock scenarios thinking about where you're going to be in five years, 10 years, 15 years, and beyond. And making sure the verbiage you use in the core of that brand platform can remain constant. I see if a new company is... It's almost like you can't be too focused on the problem you're trying to solve, you have to think beyond that problem, that future problems, and make sure that your approach and what you're creating can solve future problems as much as it can solve the problem here and now.
David:
And it's a really hard thing to do, and it takes a very specific approach and creative mind. And it's not easy to achieve. And so I feel lucky to be part of an organization where, we were able to achieve that. And the founders that started POC went through that exercise and it's cumbersome and difficult. But I think it's super important.
Stephanie:
Yeah. I completely agree. It reminds me of... I don't know if you've heard of the, Clock of the Long Now, it's a 10,000-year clock, and it's all about encouraging long-term thinking. And every time I start thinking about longer-term thinking, and where is this headed? I always think about that clock, it's my motivation.
David:
Yeah. I think that's a great connection point. And it's really hard to visualize and come up with mock scenarios as to what could happen in 10 years because who knows what's going to happen in 10 years. But I think just going through the exercises and putting the time and the effort and we'll help you find the right balance between to immediate here and now, and then on the other end of the spectrum is... I don't know if you know a guy named Scott Galloway, but he uses the term, yogababble where you use so many buzz words and it's so conceptual that it actually completely loses all of its meaning. You got to find someplace in between there that is balanced and can stand the test of time to a certain degree.
Stephanie:
Yeah. That's a good mentality. I saw you have another title, which you didn't mention in the intro, and I'm not sure why, of executive producer. I was looking at the one video, American Downhiller, which is really good. I only got to watch 10 minutes of it, but I think it's a good segue Into some of your marketing and content strategies because the video was so well done. I mean, is it on Netflix? If not, it should be. Tell me a little bit about how you guys go about thinking about developing videos.
David:
Yeah. I'm really glad you brought that up because that's a really, really fun and amazing project that we just launched to the world earlier in... I think it was in October actually. I was going to say November but, launched in October with a world premier here in Park City, Utah, and then a distribution program with U.S. Ski Team and skiracing.com. And like I mentioned, we got our start in ski racing and it's incredibly important in Colorado business. Compared to other snow sports categories, or the bike category. It's relatively small, but it's so important because in the athletes... Really on any level that are competing or skiing gates on a consistent basis.
David:
I mean, that's where the stakes are at the highest. That the speeds are incredibly high. The snow conditions are ice essentially these days. You have skis with incredibly sharp edges and the possibility of things going wrong is quite high. And so, we work really hard to continue to innovate on behalf of the ski race community and find different ways to apply the different technologies and safety features that we develop to their world. And so, through the years we've become really close to this ski race community. Like I said, it's not a huge community, but it's very tight-knit one. And one that we're very happy and proud to be part of.
David:
And over the years, looking for opportunities and being very close with the U.S. Ski Team, we saw this story that was really amazing and hadn't really been told on a mass level around the men's speed team, and how brotherhood really formed through, I guess you could say it through unique adversity in the sense that no ski racing in the U.S. is not what it is in Europe. When you go to Austria, you go to Norway, you go to Switzerland, ski racing is... I mean, the Hanukkah in Austria is it's like the Super Bowl, it's a huge deal there. They have amazing massive fan bases and so being an American and on the American team, when you're competing, most of the races are in Europe. And so the challenge is that the U.S. team had to overcome were unique.
David:
And I'm not really qualified nor want to say that their challenges were harder or worse to overcome than some of the Europeans, but they were just different. You're not able to travel home on the weekends. You're spending so much time with your other teammates and it really cultivated this brotherhood that organically evolved into this story that became... They took the name American Downhillers, and that term became a tool to represent this brotherhood and the function of some of the veteran guys on the team working to help develop and help some of the younger guys that were coming up to the speed program navigate some of these difficult scenarios that they were in, where you're in foreign country, you're not able to see your family. You're not able to go home on a consistent basis.
David:
And really that story was just so amazing that we were working with skiracing.com, and we finally said, "Hey, let's try and tell the story." And so, it came to life and I believe it was 2017 where we started to do some short episodes in conjunction with skiracing.com. And we did that for two or three years, five minute, eight minute, 12 minute episodes, focusing in on different elements of this American Downhiller story.
David:
And towards the middle of 2019, we said to ourselves, "Well, these episodes are great but we haven't really done anything like telling the story from start to finish. Is something we haven't done and it would be an amazing piece for the ski race community." And so, we partnered with skiracing.com and a woman named Claire Brown, who's an amazing producer and has an amazing team of filmmakers. And she's been a part of the ski race community since she was a little kid and she raised competitively through college and I believe she was an All American. And as a staple in that industry and community. And so, we worked with her to tell the story. And so we were able to tell the story from start to finish and pull pieces from the different episodes that we had. And it turned into this really amazing piece that, gives some insight and some behind the scenes look into what it truly means to be an American Downhiller and then some of the challenges that they had to overcome.
David:
So a really, really fun project that Claire and Elizabeth Reeder, who's one of our Sports Marketing Managers, did an amazing job facilitating and putting together, and we're super proud of it. And we're excited we're going to continue on with this theme and this first one was focused on the men's team, and there's equally as interesting and amazing stories on the women's side. And we're excited to continue to tell these amazing stories that happen in American ski racing, and the next one up we'll be focused on the women's team.
Stephanie:
That's great. So, where does this content live? I definitely want to finish it. I mean, like I said, it seems like it should be on Netflix or something. It's very, very well done, very professional. It gets you right from the beginning with all the skiers hopping in and saying what it means to them. Where do you guys put this content after it's all made?
David:
So the distribution for it... We launched a lot of amazing new ski race product this season. And so, we had an objective to reach and engage and build our connection with the ski race community. So the initial rollout plan with this was to work with the U.S. Ski Team work with skiracing.com. and obviously we would support it as well, but we have it living on YouTube and we've seen really great results from an organic grassroots distribution plan. We are looking at some film festivals throughout the country over the next few months and have submitted it in a few of those and we are looking at some larger distribution. There's possibility that some of it might run on NBC, this winter, which would be amazing.
David:
And we're looking at the subscription viewers or platforms like Netflix and Apple TV and Amazon as well. And trying to figure out how we can get it up there. The goal with the larger distribution platforms is... Again, the story is what's most important and the story can help inspire the next generation of ski racers or particularly American Downhillers. There's a utility function to that and we want to make sure that, that's available to any and everybody that wants to see it on an ongoing basis. So there's a long tail distribution plan to this as well, to make sure that anybody who wants to learn and understand this story has the ability to do that through some of these larger platforms.
Stephanie:
That's cool. It seems like there's definitely a lot of angles. You've got the partnership thing going on. You've got... Yeah, being able to tell the story holistically, like you wanted to and then the long tail of possibly be able to sell products as well when people see them, yeah. At the perfect place, perfect time while they're watching it.
David:
Yeah. And we were very intentional about... We didn't want this to be something that felt like we were artificially trying to place product throughout it, the commitment was to the story. And like I said, we've been a partner with U.S. Ski Team for so long that now our product is visible, but you'll also see product from our competitors. And that's okay. We feel like if the story's great and we can help facilitate telling it we don't need a ton of branding. We don't need POC products sitting next to every interview or we don't need the traditional product placement in these stories, feel like we're doing a service to the community by facilitating telling it, and for us, that's what we're here for. So, we take a bit of a different approach to content than say some brands do or some brands previously have.
Stephanie:
Yeah. Well, how do you guys approach product placement? Because that seems like a very... I mean, it's always been around, but I see a lot of brands doing it way better now. I was just talking about it, the Netflix series of one about organizing and how well the container store did after that. And I don't remember really being slapped over the head with the branding, but it was more me wanting to check into it afterwards if like, "Well, what were they using to organize their entire closets?" And it was very organic. So I see brands doing a much better job now when it comes to product placement and partnerships around that. How do you guys explore that avenue?
David:
Yeah. So our sports marketing organization does an incredible job and partnering with athletes and getting our product on athletes has been core to our marketing strategy since day one. And so, again, do think it comes back to the purpose conversation we had and we are not delivering on our purpose if we are not supplying the best in the world with our products, because we truly do believe that they're the safest products out there. And so, as you mentioned it, when you take an approach of... We want personalities, we want athletes on our roster that have similar beliefs but of course their own brand and their own way of executing on those beliefs. But we want people who stand for innovation, progression, and we want to make sure that the partnerships we develop with athletes, we truly are helping them pursue their passion and helping them progress the sport that they've dedicated their lives to.
David:
And so, we have an amazing list of a roster of athletes that we're always looking at and adding to. We have some amazing development programs as part of our sports marketing strategy. We have a three layer level approach. We just launched a revised regional or grassroots athlete program that we call the Aspired Collective and that is solely intended to give up incoming athletes across both snow sports and the bike world. Give them opportunities and help them continue to progress in their careers to one day be the next superstar. And so, doing what we can to support the communities and support the activities in sports that we service through supporting talent within those categories you naturally find yourself with your product on the right people more often than not.
David:
And so, again, it's a little bit... We try and take a maybe a less manufactured approach and we don't go out and say next year we think so-and-so is going to be the best ski racer. So we've got to get our stuff on this person, this guy or girl, and then the next year it's someone else. And so we go after, we look for longer-term partnership opportunities people who truly believe in what they're doing and partnering with us helps them do what they're doing better. That's the stuff we look for.
Stephanie:
Yeah. It seems like athletes sponsorships, that's like the original [OG] influencers. Influencers are big now, but the sponsorships of athletes, it seems like it was already going on for a really long time. But what seems really hard to do is figure out how it's driving sales or how it's influencing your marketing campaign. How do you guys think about that when you're setting up these partnerships, you're picking out what athletes you want to work with? How do you think about what the end results should be outside of just wanting to work with a great person of course and making it long-term? What are some metrics you hope to achieve with these parties?
David:
Yeah. I think it's a really good question because I think the rise of influencer marketing has put such an emphasis on follower number and engagement metrics and all these things. And I think what we've seen is that those things are all important and I'll get into how we look at those, but you can't focus so much on just the numbers to where you lose sight of the individual, the personality, really the non-tangible that an influencer or an athlete or any partnership brings to the brand. And we've been very careful to... We have an objective to be results driven and measure what we can and take a data-driven approach of course but we also want to make sure we don't over index on that to the point where we lose some of the intangible stuff.
David:
So, when we look at an athlete, a lot of times their Instagram follower account or their YouTube page is an important metric and in the equation but they're also three or four other metrics that are equally as important. So we look at personality, we look at opportunity to have a longer-term relationship with this person. We look at how they compete, where they compete, these sorts of things and make a very balanced call on whether or not they should be somebody we should pursue or not pursue. But to answer your question about measuring influence that athletes or influencers have, it is difficult. And there are some data tools that we have, whether it's being smart about how you distribute content for them to work into their communication outreach with specific links and stuff that we can track through our website.
David:
But a lot of that stuff is specific to a single campaign or a single program and there's really not a great way going back to the equation that we look at, there's not a great way to measure the intangible stuff, but we know it's important and we know it's working and it's a core element of our positioning in the marketplace. And so, we measure what we can, but we also try and be real and be okay with... There's simply some things that are just hard and difficult to measure and we trust ourselves to say, "This is this things that aren't measurable, we can..." I trust our people and we trust ourselves to say, "This is worth the investment and it's providing a lift to our brand in a way that we just simply can't measure."
Stephanie:
Yes. What are some of your favorite marketing campaigns that you've done that you really remember, or that were most successful?
David:
Oh, that's a good question. Favorite marketing. The American Downhiller is definitely up there just because it was so different and new, and we'd never produced a feature like them but we've already talked about that one. Earlier this fall, we launched a signature series, excuse me, around Fabio Wibmer who's an incredibly talented mountain biker, whether it's trials or downhill riding or, dirt jump riding. He is arguably the most popular mountain biker in the world right now and we created a signature series with him that we launched earlier this fall. That's really, really cool and we took the approach of, "We're going to create the product for you, but we really want you to create the marketing and the messaging and launch this product in your voice."
David:
And that was a really fun approach to take to this because one, it took a little bit of the stress off us internally, and two, it allowed for our audience to hear a message that they're used to hearing from us, from somebody different, which I think in a lot of ways was quite refreshing and something different. And Fabio's team is incredible at creating highly engaging video content and his YouTube following is massive. And so, we basically said, "We'll help you make the product. We'll support some of the distribution of the content, but we want you to create that content." And so it was a different approach for us and a pretty fun one because it brought a different tone of voice to a launch than we're used to having.
Stephanie:
That's really fun. I mean, and a really good point because I can think of so many brands who work with people in their industry and they end up squishing their creativity by saying like, "This is our brand messaging. This is how it needs to be done." And you can tell you're like, "This is not Oprah Winfrey talking. This is not that Oprah does that." I don't know, but they squish the creativity of the artist or the influencer by all their rules. And it ends up not being very organic and then no one's following actually ended up connecting with it.
David:
Exactly. And the value that these athletes and influencers and anybody that we partner with bring to our brand is they have their own community and we want to help them build their own community. But if we come in and say, "You need to talk to the community that you've built in our voice and in the way that we speak and over-engineer that, one, their community is going to say, "This is stupid. I can tell this isn't new, or I can tell that this isn't the person that I committed to either through a click on follow or some other way." And if we give that freedom to the person to communicate the points that we're trying to get our audience to understand, and in the way that feels natural to them it's going to come off better, it's going to be a better end product in terms of the creative and again, it's going to resonate with the audience more effectively.
David:
And we lean on our athletes in our roster of partners very heavily because they're good at what they do. And for us to come in and say, "We know how to do what you do better," it doesn't feel right and I don't think it's right.
Stephanie:
Yes. So you had a good quote that I saw, but I'm probably going to botch it. So you can just tell me if it's wrong. It's all around data and you were saying that the data that you gather around your customers is your true North. And I wanted to hear a little bit about, what data do you look at and is that influencing your products, or how are you using it day-to-day?
David:
Yeah. I think that you got the quote exactly right so, thank you for that. And I guess maybe a little counterintuitive to my last point of the balance between tangibles and intangibles, but when we do have data available, we need to make sure we're using that. And we are still a growing organization and we are far from totally dialed in terms of our data management and pulling and curating as much data as we possibly can. But we have gotten a lot better at doing that, really the past three or four years. And part of being able to actually use your data effectively you have to start with your systems and your tech stack and we've been really lucky to be able to partner and use Salesforce suite of services with Commerce Cloud, Marketing Cloud, and Service Cloud.
David:
And the decision to run with those platforms was specifically so that we could start to organize our data and get our systems to speak better together and learn more about our customers. We have all kinds of different touch points with these customers. And the fact that Salesforce Commerce Cloud can speak with Marketing Cloud, and even with Service Cloud when we get a customer service inquiry that scenario really at least gives us an opportunity to maximize what we know about our customers. And so, like I said, we have a long way to go to be where I would say we're A+ rating in terms of data management,` but every day our team gets smarter and we make right the right decisions and we learn more.
David:
And I think in terms of using the data as your true north and bringing it full circle back to the idea of balance, you got to be able to analyze the data, understand what the data is telling you, but then put that information or that insight into the context of the other things you know about your customer base. I think one of the things I feel very lucky in that, we are a relatively small team, a marketing team of 25 or 28 people across both the marketing team and the digital team. One of the benefits of that is that, we don't have a lot of redundancy and every individual in the organization you naturally have to gain an understanding and you got to know our customer relatively well for almost everything that we do.
David:
And so, that contextual understanding and knowledge of our customer, coupled with some better data management and insight going actually does give us a pretty good understanding of our customer. What's important to them and how we can deliver on that. Whereas I think a lot of times in bigger organizations I've seen, if you have a lot of not necessarily redundancy, but a lot of very specified positions that do one thing and do one thing very, very well, it's a lot harder to understand the big picture and gain of an accurate profile of the contextual things that go along with your customers. And so, I guess what I'm saying is in a larger organization, it's very easy to look at the data and only the data and it's sometimes hard to bring your head up and look around and say, "Okay. Well, this is what this is telling me about this specific point or insight. How does that connect with what might be happening over here?" And so there's of course the challenges with being a smaller group but I there's also a lot of benefits and that's definitely one of them.
Stephanie:
Yeah. I completely agree. I mean, thinking about how do you get to that holistic approach where... I mean, I've been at larger companies before and things get siloed and you have your customer service team over here, and they're probably hearing so many good nuggets from customers about new product features they want, or something that might help the experience better or the unboxing experience. And a lot of times that they just get stuck there and you don't know how to incorporate into your new product launches and stuff. And so, I hear a lot of companies, especially smaller ones that are very quickly growing, experiencing issues like that, where things are all siloed and they don't know how to look at the data, but then also take a step back and use your gut and be like, "That's actually sending us in the wrong direction, or that's not really our customer who's saying that."
David:
Exactly. Yeah. Being a small group allows us to... Our customer service manager can easily stand up and walk across the room or these days, tap our Digital Director on the shoulder and say, "Hey, three of my team members said this and they're hearing this. What does that mean for what you do?" Those conversations are really, really important. And since we're lucky. It's a little easier for us to facilitate those just because we're a smaller team.
Stephanie:
Yes. So what digital trends are you excited about? Where are you guys headed over the next three years in the world of ecommerce?
David:
It's a good question but there's lots of them. I think one of the things that I'm seeing in and we're actually acting on is that, consumers are... Their expectations have evolved to a certain point to where the traditional tactics in terms of driving a sale, there's more options there. I think, you're seeing a lot of brands think about the needs of their customers and really looking at it and saying, we need to be able to add more value than we're looking to extract from our customer base. And to do that, you have to really think about what are the challenges or the struggles, or the other complimentary problems you can solve for your customers on behalf of them to help strengthen that connection they have with your brand.
David:
And I think what we're going to see is that, we're going to see a lot less mass trends, I guess, in a sense or mass tactics in the sense that brands that are going to be successful are the ones that are going to focus on building a community that is tight-knit has a very meaningful value prop for the members of that community. And ultimately places a little bit more emphasis on lifetime value and holding onto the customers that they have and building a better relationship with them versus turn and burn customer acquisition bring them in, make a sale, move on to the next.
David:
And so, we're really excited about that because we have a lot of the ingredients necessary to build a meaningful community and we have to do some ideation on this idea of providing more value than we're looking to extract, but it's a new set of challenges and one that I think is a little bit more fun because you're becoming a better partner to your community and keeping hold of that and looking for ways to solve other problems for them and make your brand more appealing and one that they want to connect with on a deeper level. And that's really fun, and so we're excited about that.
Stephanie:
Yeah. That gets back to the whole idea of long-term thinking. And yeah, I think the companies that'll rise above the rest, especially with so many coming out right now, we're going to be the ones who think longer-term like that. Think how to build that community and really engage your customers. That's not just driven on that quick conversion.
David:
Exactly. Yeah. And if you look at the mega brands out there right now that are being successful, they're looking at that exact equation, obviously in a different way than we are, but you see brands like Peloton and Lululemon's acquisition of Mirror, they're looking to check a series of boxes, whether it's vertically integrating owning the hardware, developing a reoccurring revenue model. All these things that compliment and go hand in hand with a tight-knit community of consumers that are truly committed to you as a brand.
David:
Yeah. I think literally Lululemon's one of the most amazing examples because they do such a good job of developing a community, creating these ambassador programs towards, there's one up here on main street, you walk into a store and you look around and the imagery they use our local ambassadors. You look up on the wall and you see your friends up there and it's like, "Wow, one, I didn't know they were in a massive, that's cool." But also to be that smart to actually integrate local ambassadors into their communication and retail is just such a cool thing and makes the brand feel truly invested in this area [inaudible] do that-
Stephanie:
Yeah. I didn't know they did that. That's really cool.
David:
Yeah. And so they're all in on the community thing, and I think this acquisition they made of this mirror product is a great way to continue to facilitate that at scale. And it'll be really cool, not really case study, but brand to follow over the next couple of years and see how they continue to evolve because they truly are the best in the biz.
Stephanie:
Yes. I agree. All right. Well, let's shift over to the lightning round, brought to you by Salesforce Commerce Cloud. This is where I'm going to ask a question and you have a minute or less to answer. Are you ready to go, David. All right.
David:
All right. [inaudible] this might be tough.
Stephanie:
I've done a done, I'll have to cut you off.
David:
Yeah. Cut me off. Don't be shy.
Stephanie:
All right. What's up next on your Netflix queue?
David:
Oh, Netflix queue. I don't know the name of it, but there's a film series about the Formula One circuit that has been recommended to me and I wish I could remember the name, but it follows some of the drivers Formula One and it's supposed to be really, really good. So-
Stephanie:
Drive to Survive.
David:
That might be it. I think you're right. It saved in our account, which is very helpful. Thank you Netflix. That's the one where we're super psyched to see next.
Stephanie:
Right. That sounds cool. Yeah. I think someone on our team actually recommended that as well. And I think they told me to watch it from a business perspective. I'm not really sure why. I need to check it out.
David:
Wow. Well, you have to let me know what you think.
Stephanie:
Yes. What's up next on your travel destinations when we can get out into the world and travel again?
David:
Man, that sounds so nice. Doesn't it?
Stephanie:
I know. That's why I asked it.
David:
Yeah. My wife and I have been talking about... And we originally were going to do it for a honeymoon, but things didn't work out the way we want it to at that trip, but we still have not skied in Japan. And that is on our list for when things settle down, is to go and Japan such an amazing place and it's such a great culture that we're super excited to experience that a little more in depth than my business trips have allowed. And you would also get an incredible amount of snow. So this seems quite good as well.
Stephanie:
Yeah. Well, that sounds really nice. And then you can go and hang out in the hot bath with this monkeys. Have you seen that?
David:
I have seen that. I think my wife might be more excited for that than she is the actual skiing.
Stephanie:
Oh, I'll go with her then.
David:
Yeah.
Stephanie:
I went to Japan and I missed that because we weren't in the right area and that's very sad. I'm like, "How fun would it be to take a bath monkeys?" I don't know. Maybe it's a tourist trap, but either way I want to try it.
David:
Yeah. It sounds pretty entertaining.
Stephanie:
Yeah. What one thing do you not understand today that you wish you did?
David:
Oh, man. I mean, so much. It's a good question. Well, here now, I'm getting ready to take the next level of avalanche certification and understanding how avalanches work so that we can ski and travel through the back country safely. I have some training on that, but there's a lot more that I don't understand. And so that is fresh on my mind as the snow is starting to fall and I'm excited to continue my education on understanding snow pops and risk assessment and making sure that we can [inaudible] snow, but do it safely.
Stephanie:
I mean, that's a good one. And that is a unique answer. No one else has said that so far. So David-
David:
Thank you.
Stephanie:
All right. And then the last one, what one thing will have the biggest impact on ecommerce in the next year?
David:
I mean, the thing that comes to mind feels a little bit like a cop out just because it's been so talked about, but I think 5G is really hard to ignore and when that fully rolls out the mobile trends that we're seeing are going to become even more important and pointed. So, it's going to put so much more emphasis on the computer you carry in your pocket rather than the one that you sit in front of it at the desk. We and a lot of other brands are still working on how do you crack that device in a way as meaningful as it could be in maximizing the value to the business that comes from a mobile device. So, I think that's going to continue to become more and more important and it's a tough one to solve.
Stephanie:
That's a good answer. Or it's not a cop out because no one else has said that so far. I thought you were going to say COVID-
David:
Oh, right.
Stephanie:
And then I was going to be like, "No. [inaudible 00:51:09]." So-
David:
No. I didn't think of that. It's the new normal, I guess.
Stephanie:
I'm glad. Yeah. Exactly. All right, David. Well, thank you so much for coming on the show. Where can people find out more about you and POC?
David:
Yeah. So, come find out more about us at pocsports.com. Can learn more about our product offering, our amazing roster of athletes and the things that are important to us and want to moment just to thank the amazing team of people, not just with marketing but everybody here involved with POC. Like I mentioned, they are as committed as anyone can be to why we exist and that permeates through our business and so many different ways on a consistent basis. And the people here and the talent that they bring and the drive and passion that they bring truly is what makes us an amazing organization. So, would rather say, thank you to them I guess than promote myself, if that option is okay.
Stephanie:
That option is okay. That sounds great. Thanks so much, David. Yeah. It's been great.
David:
Yeah. I appreciate it, Stephanie. And great to speak with you.
The ecommerce industry has historically been dominated by some familiar verticals: apparel, footwear, home goods. In 2020, the world of ecommerce exploded to include a few more at the top of the list, including grocery and fitness. One industry, though, hasn’t necessarily emerged as a leader in the ecommerce zeitgeist: home security. But just because you don’t always think about an industry as a part of ecommerce doesn’t mean that it isn’t making waves among its digital peers.
The perfect example of this is Ring. Ring was founded in 2013 as a company called Doorbot, which failed to get the investment of any Shark Tank sharks, yet persevered to become a leader in home security before being acquired by Amazon in 2018. Today, Ring is valued at more than one billion dollars and, through its website sales, is bringing home security to customers everywhere.
Robin Choe is the Head of Ecommerce at Ring, and on this episode of Up Next in Commerce, he explains how Ring has built a successful business through creating a community of neighbors and what it means to be driven by a shared goal. Plus, Robin touches on his past experience working in ecommerce overseas and what the differences are between the Asian market and what’s happening stateside. Robin also details why he believes that companies that are able to foster a sense of community and safety are the ones that will rise above the fray in the business world.
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Transcript:
Stephanie:
Everyone, this is the Up Next In Commerce Podcast. I'm your host, Stephanie Postles, Co-Founder at Mission.org. Today, we're chatting with Robin Choe, the Head of Ecommerce at Ring. Robin, thanks for joining us.
Robin:
Thanks for having me.
Stephanie:
So, I was looking through your background a bit. I wanted to start there, because I saw that you had worked previously at Mattel for a while. I think it's a good starting point. Then we go through your background in the world of ecommerce before coming back to Ring.
Robin:
Sure. Yeah, so I started in Mattel in 2008. My first role there was customer strategic planning, so everything around retail strategies and working closely with retailers to try and drive share of voice, market share, and ultimately, sales and brand growth at the retailers. What was unique around the starting point there was I had a hodgepodge of different channels and accounts. So, everything from Kmart, believe it or not back in the day, which is a much bigger retailer back then.
Stephanie:
Wow, bringing it back.
Robin:
Exactly. Also, working across what they call the emerging channels. Part of that emerging channel group, everything from grocery and department stores, drug channel, tried to grow our leadership share there. But Amazon was the one that really stood out to me back then, because it was still evolving, it was still smaller, but it was one that was growing substantially year over year and starting to catch the attention of our leadership and obviously something that I was preaching about internally to make sure that we're aligning and prepping ourselves to grow with them.
Robin:
From there, for about five years in the US, I moved to Hong Kong. I became the Head of Shopper Marketing or Customer Marketing for the Asia Pacific region. So, did that for about two years, and was also playing a hybrid role where I was the ecommerce excellence, best practice lead for the region, working closely with our regional accounts, our specific local accounts that are a lot bigger today like the Tmalls of the world, Lazadas, which are growing and ultimately trying to drive greater ecommerce best practices across the region.
Robin:
From there, I pivoted to a general manager role. So, I've had an unconventional career, where I was asked to take on the Country Manager role for Korea. So, everything from leadership across all the various functions, supply chain, finance, accounting to marketing and sales. And then my role expanded from Korea to North Asia. So, I had Japan, Korea, Hong Kong and Taiwan, which are all the best food markets, still residing in Korea. My role expanded to the North Asia cluster, again, driving all the sales and marketing commercial activities and leadership there.
Robin:
And then in 2018, decided to come back after being five years in Asia, and take on the role of Head of ecommerce for Mattel, which was quite unique. It was a newly formed role, where they consolidated a lot of different functions under one leader. Four different pillars that I would say we focused on, the first one was our direct-to-consumer site. So, think about Hot Wheels collector and Barbiecollector.com and trying to drive our sales and our engagement with them. Also, all websites across the world was under the first pillar. The second pillar was CRM acquisition, analytics and design to everything regarding fueling the acquisition efforts, engagement, and also the experiences on our sites. Also, even our retailer sites, believe it or not.
Robin:
Third one was digital operation. So, this is a team that really was sourcing the best-in-class assets and copy, everything that really fuels a great merchandising experience on our own sites, but also on our third-party retailer sites. So, we are basically managing all the PDPs, the brand stores for our bigger retailers like Amazon and Target and Walmart, and syndicating and deploying assets there. And then the last pillar was around digital customer marketing and digital shopper marketing, where we have a team that was specifically focused on growing our share of voice, our leadership share with Amazon.com, Target.com or Walmart.com.
Robin:
So, we had this full end-to-end scope of responsibilities where they were all connected. They were all in need of similar assets and strategies. Obviously, there was nuances between what we were doing internally and externally. But overall, it was a challenging experience but a great one, because it was broad, but also, we could see how things were lifting each other up as we're going through the process.
Robin:
And then about a year ago, made the move to Ring. Really the objective behind that was to go deeper into this ecommerce in general. I think I had a pretty broad role at Mattel. Even in my previous experience, I worked a lot with digital retailers. But being able to just dive into a brand that I love and that I was able to use as well before I even came to the company, just the mission around the brand of making neighborhoods safer, it was just one where everything just made sense for me to go in.
Robin:
It's pretty clear, and I made this clear with my boss back then. I'm not the most technical savvy guy. I'm not the guy that's going to be doing your coding and development. But I'm a guy that can come in and really drive some vision and strategy in terms of, "What are our immediate needs? How do we serve them? At the same time, how do we identify a vision for the mid- to long-term, so that we can be ready and planful and execute against what we believe to be the evolving changes that will happen and we can embrace them and ultimately deliver upon them in terms of customer expectations?" So, it's been quite a ride. Happy that I'm still here and that things are relatively going well.
Stephanie:
That's awesome. Yeah. So, I have Ring cameras around my house. Specifically, the one I love is the front camera with the floodlight on it, because it would blast people if they walk by and I think they're a little bit shady. But yeah, I really like Ring. It seems like a very different transition, going from Mattel to Ring, especially when you were for a little bit there focused in Asia, which in a lot of ways, I think Asia is actually very ahead when it comes to ecommerce and social stuff and community building. Were there any best practices that you learned throughout that journey that you're maybe bringing to Ring now?
Robin:
Sure, I think there is a ton to learn. Like you said, you had a variety of different business models out in Asia. For example, you had the direct model, which was unique. It wasn't normal like it is here in the US with Amazon, for example. But it's one where it's more of a marketplace model, where you're basically the manufacturer that's selling on a respective third-party platform. So, whether it's Timo, whether it's sites in Rakuten, in Japan or even in Korea, where you have coupon, you have such a dynamic and a different approach as it relates to how to connect with a customer.
Robin:
So, I would say some of the things that I was able to carry over here is you're right, it's very digitally connected in most of Asia. They are well advanced in terms of just being able to stay connected from a digital platform perspective, but also connecting with consumers in unique ways. So, I feel like maybe what they've done in terms of social commerce, for example, or being able to find ways to navigate supply chain challenges or complexities, they've done a great job to accelerate that. I think they've been ahead of the curve in terms of the US for probably another... They're probably ahead by one or two years, but I think the US has been catching up.
Robin:
So, I would say best practices, back to your question, it's basically how do you connect with the consumer in a way that is relevant for what they're looking for? For example, PDP pages in Asia are very long and extensive, meaning you could scroll for miles. That's what they're expecting there, because they want to make sure that they know what they're buying, that it's quality, that it's a trusted brand.
Robin:
Here in the US, it's not as long, obviously. You do have some scrolls to get to the bottom of the page, but you're not looking for as much. Maybe ratings and reviews are more important here in the US. It's also important there, but they're also featuring, "Is this the best seller? What's the ranking on the skew versus the category?" So, that's a good question. I think, for me, it's connecting with communities and also just best practices in terms of merchandising and how they do it differently and how we can take some of those and deploy that here in the US.
Stephanie:
Yes, yeah, I love that. I always think it's something good to watch, because I mean, they are much more mobile first. Whereas a lot of people here-
Robin:
Sure.
Stephanie:
... grew up on desktop. All those people actually just leapfrogged past desktop and have just been used to doing everything on mobile. I know especially around the podcasting space, it's an area that we also keep an eye on, because they have so many social functions that they're just used to. That I'm like, "Why don't we have that here?" So, it's always good to keep an eye on what other markets are doing.
Robin:
For sure.
Stephanie:
So, let's get back to Ring a little bit. So, Ring's owned by Amazon now, right?
Robin:
That's correct.
Stephanie:
So, I think that would be really good to talk about how that relationship is working, specifically around earlier you mentioned leadership. I want to touch on what that transition looked like from Ring being its own separate company to then being acquired. I'm sure you had new teams that you're working with. You had to really distill your mission and the shared values and everything that you had, the influence with the new team or company in general. So, I want to hear a little bit about how you led that or how you're leading it now.
Robin:
Sure, yeah. I think the beauty of Amazon and Ring is you're taking the strengths of each company and you're marrying them together. I've worked for big companies like Mattel. I've also worked for small companies and startups as well. So, I love the mash up between the two where you're able to be entrepreneurial. You're able to really be nimble and agile in this small setting of what Ring actually started off as, as a startup.
Robin:
And then taking the successes of a startup and then marrying that up with this successful company, Amazon, the biggest ecommerce company, at least in the US. In the world, I would say at least a leader. It's one where you're able to leverage the infrastructure, the resources, the mechanisms and the processes that they've been able to deploy, and they've been so successful with. So, that's something that I find to be very interesting.
Robin:
I think with Ring, we still are led by our founder today. He's our CEO and our Chief Inventor. It's one where he does drive a lot of vision and strategy in terms of not only the mission of establishing that, but also everything around products and services. That continues to grow as we speak. In terms of team and leadership, I apply the same model that I do in every circumstance that I've been in. It's like I spoke on earlier, I've moved to three countries in a matter of five years. That's not easy with-
Stephanie:
That's crazy.
Robin:
... a family of kids. Being able to embrace change and being able to pivot and establish yourself amongst different cultures and teams and environments and business models is quite hard, even with language barriers as well. So, I think coming into Ring, I applied a similar approach in terms of leadership. It's one where we have to pause as a team, because the team could be in any sort of condition in terms of their history. Whether they were without a leader in the past or they have gone through significant changes where they we're acquired, whatever the case may be, what I typically do is I come in. I spent some time, just parking time with the team and our leadership to say, "Hey, look, how do we get focused on what matters most?"
Robin:
The first thing I want to do is, "Let's establish a shared mission. Why do we exist? What's our purpose? Why are we here? Why do we get up every morning?" As an ecommerce Team at Ring, it's something that is really critical, because we're moving so fast. There's constant updates and changes and features and functions and migrations and transitions and new product launches, you name it. It's one where we got to slow down and establish, "Why are we here? Why do we exist?" I think that's even more important today, especially as we're navigating this pandemic.
Robin:
The second thing I also do is look at, "What's the shared vision look like? Where are we going? Where do we want to be three to five years from now?" Also, establishing values. So, we typically pick three values, whether it's trust, whether it's communication, whether it's collaboration. That's really what we center on. We'll spend time and it doesn't take a one-hour session. It takes multiple days and hours and dedication to really grind through and work through the rigor and discipline of saying, "Okay, this is why we exist. This is how it ladders up to Ring's mission of making neighborhoods safer. This is how it ladders up to Amazon's mission of being the Earth's most customer centric company." So that's really important.
Robin:
I think, because we did that and we do have an ecommerce Ring-specific shared mission, which is something that we identified and we have not just put on a wall, but it's really something that needs to live in our hearts. But I'll share that with you. So, our ecommerce group at Ring exists to communicate to our current and future neighbors, how we provide products and services that protect what is important to them. We do this by building strong relationships with our partners to deliver the best digital experiences for our neighbors. We call our neighbors, our customers, because it's just that important. So, that's really something that I do.
Robin:
I think what's been great is not only is it the shared mission and vision and values that you build upon and that you live by and you keep each other accountable to in terms of the way we behave and operate day to day, but it also helps to step back and say, "What are our key priorities? What are those big rocks that we need to move in the mid- to long-term? What are those things that we need to do in the short term to address the business needs and the evolving changes that are happening?"
Robin:
So, I would say that it starts with the team. It starts with having an aligned and a shared... It's not just my mission. It's a shared mission and vision and values. And then being able to build on processes like mechanisms, whether it's quarterly, weekly business reviews and roadmaps, and align that across not only the internal team, but across the organization. So, that you can drive success and make sure that your communication, your execution is as consistent and aligned to all objectives, at least the key priorities, that we deliver on a day-to-day basis.
Stephanie:
Yeah, yeah, I love that. I've definitely seen and heard of quite a few experiences that are full of friction when companies are getting acquired and on both sides. So, how do you work to garner trust from the employees who are getting acquired, where some people might not really want to go to a big corporation? They might want to stay at that startup vibe. On the other side as well, what do you do to actually get them to be on your side, be ready to move forward with the mission? Because I could see some people being not really on board with it, not really caring about the vision, being like, "Oh, that's just all words." How do you get in the weeds with them to really get them on the same page?
Robin:
Yeah, back to just leadership, I think it's really important that we stay in... This is my philosophy as well. It's servant leadership. It's also compassionate leadership. So, being empathetic, right? So, there's people that have come from all backgrounds and different experiences. Whether they were at the company before they got acquired, whether they joined afterwards, even for those that we haven't even seen in person post-COVID, it's empathy. It's about caring for people. People are people at the end of the day. They're not machines. They need to be cared for. They're not human doings. They're human beings.
Robin:
So, my philosophy and approach has always been around empathy and just trying to put myself in their shoes and understanding, "What are their goals? Are they aligned to our goals? How do I listen to them in ways that can really make them feel that they're heard?" That anything that may conflict or go against the mission or the goals or values, let's talk about it. If it's something that you feel differently and you're not aligned to this, maybe you don't belong here. Maybe this is not the right place for you.
Robin:
But in general, I would say the majority of the team and I guess the team overall, they are bought into the mission. I mean, we defined it together, which makes it powerful. I think that's where you nip that bud up front. You're able to just journey with each other through the ups and downs and challenges, but ultimately, the successes as well.
Stephanie:
Awesome. So, I was looking through Ring's website before this. I didn't even realize how many products you guys had, because like I was mentioning, I only have these two. I want to hear a little bit about, "What is the customer journey look like on the Ring website? How has it evolved, especially over the past maybe six months?"
Robin:
Sure, I would say the Ring website is quite unique, where Ring is not just the doorbell. Ring is a multitude of products that have continued to expand to meet and deliver that mission. So, if you look across our products, we have not only doorbells. We have security cameras. We have alarms. We have accessories too that attach to these various devices. We also got the Smart Lighting. We have third-party partnerships. I don't know if you recently heard about the announcement that we made, but we're coming out with even new categories, whether it's Always Home Cam, which is an autonomous drone that flies across the inside of your house.
Stephanie:
Wow.
Robin:
You can basically train it to go to certain parts of your house to check on whether your stove is on or your pet food has been eaten or any other areas where you may not have a camera setup. So, I think it's again innovation and evolving to a customer need or pain point that we're trying to deliver on.
Stephanie:
Okay, I need one of those.
Robin:
Yeah.
Stephanie:
Does it stay flying or does it go back to its little nest and then like get up-
Robin:
Yeah. So, it stays in the nest. And then based on whether if it's alarm, trigger or notification, it'll basically come out of the nest. There's obviously a sound so that you can hear it. We think about privacy always and security and keeping that in mind. It'll go to specific places of your house that you trained it to. So, you have to map that out-
Stephanie:
Got it.
Robin:
... and then ultimately, come back to its nest. So, I think it's going to be-
Stephanie:
Can it go outside?
Robin:
... amazing. Right now, we're not building it to go outside. I think it's one where it's not an actual design drone to go outside, but for now, we're keeping it in the house. We're calling it Always Home Cam.
Robin:
But yeah, so new categories, even car security. So, we're starting to expand there, because we're hearing a lot of times from our neighbors as well feedback around, "I wish you guys had car security that connected with my Ring app and my overall Ring ecosystem." So, that's really exciting as well. Whether it's your Tesla or card dash cam to even just the 99% of cars that are out there, just being able to have a peace of mind around bumps or doors opening are areas where you're not feeling as safe. So, that's another cool category we're entering into.
Robin:
Also, my favorite, which maybe is not everybody's favorite, but I love it, is like our mailbox sensor. So, imagine when you open your mailbox, you get a notification. That's also could be connected to your devices, whether your camera turns on in a specific area where your mailbox may be or your Alexa Echo Show 5 also is all integrated as well. So, that turns on. You can watch it and say, "Hey, Alexa, show me my front door. Show me my mailbox," whatever the case may be. It's one where you can again see and review and just make sure that you have a total sense of peace of mind.
Robin:
I would say also, to add to that, we also have our subscription plans as well, which you can view, record, share out, and also do professional monitoring. So, I think that's a really big benefit. We've heard countless stories. I also have my own use cases as well where neighbors are feeling so thankful that they had their alarm on at home. So, that they weren't going to show up when the burglar shows up or they're able to record specific event that leads to finding somebody or something or whatever the case may be. There's countless stories that you could find and you can hear about I'm sure when you talk to your friends and neighbors that do have some of our products that just really speak to the power of the brand and products and just the services that we provide.
Robin:
And then we also have our Neighbors app, which is great as well. That also lives within the ecosystem of being able to connect with your neighbors and understanding who they are and any notifications or alerts around the community and even also partnering with those in your community, especially in a time like this. So, I love the brand. I love the products, but I also love that it lives within this ecosystem that connects us to each other and gives us a peace of mind like never before.
Stephanie:
Yeah, so that was actually a perfect point where I wanted to touch on, the neighbors piece to it, because I think it's brilliant from a UGC perspective of your neighbors are generating this content that you don't even know them. I mean, I am addicted to watching what's happening to my neighbors. Like the other day, some dude was trying to break into their storage locker, someone's bike got stolen. I sit there. I will watch the video and see if I know the person. Obviously, I never do. But it's really good from a content generation perspective.
Stephanie:
I mean, I see you guys are using some of those videos on your website, which is very fun. And then also from, like you said, a community building perspective. So, I want to hear a bit more about, "How you guys are pursuing that UGC perspective? Is it mainly just for security, or do you see a community building aspect and actually turning into a social network is how it feels to me?"
Robin:
Yeah, I think it ladders back up to our mission, making the neighborhoods safer. It's one where it plays a role there. So, whether it's like public announcements around COVID to fires in your area or different ways to have safety preparations around different use cases. Yeah. So, I think it's a combination of trying to serve solutions for specific needs or things that may come up that we want to make sure that we are prepared for and also just connecting us with our neighbors.
Robin:
As people are home more than ever, whether it's working or school from home or shopping at home, it's one where our neighbors are critical for connection and also a peace of mind and watching out for each other. So, I would say that the Neighbor app definitely is a point of connection and also sharing relevant and pertinent information that can help to make neighborhoods safer.
Stephanie:
What's the craziest video you've ever seen? I guess that'd be real crazy.
Robin:
I think the fun ones for me are around animals. When a bear comes and just starts to get on top of a car and wants to get in there to eat some food. Where I live, there are a lot of coyotes. So, I get a lot of neighborhood posts and notifications that there's a coyote roaming around early in the morning. They're all in these different pockets and areas and just make sure I'm not jogging or walking that area during that early time in the morning.
Stephanie:
That's great. I've also seen little neighborhood tips breakout on my app anyways, where neighbors will argue about whether it was real or not. I don't know if you guys have seen that. It's pretty entertaining. Like I said, it feels like a social network sometimes.
Robin:
It does. I mean, it just shows you the reality of what people have to deal with and navigate every day. I think, if anything, it's like making neighborhoods safer. That's important to everybody. I have a family. I have kids. Especially as everybody's home more, it's like, "How do we help each other? How do we make sure that we can create a community that is in support of each other and ultimately safer neighborhoods?" So, I find that to be really powerful. It's one where I'll do everything in my power and I'm sure my neighbors will to help each other out during these times.
Stephanie:
So, maybe let's touch on the subscription model a little bit. So, a lot of people right now are interested, of course, in subscriptions. Everyone is thinking about trying it if it's right for their business. Tell me how you guys are exploring it and maybe any hiccups you've experienced and things that you've pivoted or changed, anything that other people could learn from?
Robin:
Today, we have two different subscription programs.
Robin:
I think as we continue to expand in various categories, we're constantly thinking about, "How do we offer a similar experience and that peace of mind, so that you can access and even store?" So, thinking about the car category, I'm sure they're thinking through what that could look like as well there. As we expand our categories and services, subscription will definitely be top of mind as part of the services that we'll look to offer.
Stephanie:
Yup, how do you position it in a way that a customer will sign up for a subscription before something bad happens? Because I know I've experienced this, before I had Ring, I had a bunch of cameras. I didn't feel the need to store things really until one day when I was like, "Oh, I actually wish I would have access to that." So how do you position maybe the language or the sell to actually get someone to sign up for that subscription before there's a catastrophe?
Robin:
Sure, I mean, the benefit is like when you buy device and you activate it, you'll get 30 days of free, call it, subscription. That's the Basic Plan. And then you get the choice after that to opt in or opt up to a Plus Plan. So, it's one where we try and make it as user friendly and in the control of the user, ultimately, to make that decision.
Robin:
I would say also that the benefit of the Ring subscription plan is that you're not locked into some contract. So, you get to basically opt in and opt out in any time of the month. Again, we're trying to create flexibility and user control, ultimately; versus locking them into an annual account where you pay hundreds of dollars, but you're frustrated because you're not being able to use it in a way that's easy and intuitive and also beneficial for your needs.
Stephanie:
Yeah. During that trial period, the one thing that I oftentimes see happening is that a user isn't interacting with the services until they're done. And then they're like, "Oh, I never got a chance to try it." Are there certain methods that you're trying to get the user to interact and learn and figure out the platform to see the benefits of it before these 30 days are done?
Robin:
Oh, for sure. I mean, that's really the efforts around different marketing levers that we're trying to deploy to make sure that they see the benefit of turning it on and the different features available. Whether it's a nudge here or email there or different types of messaging, that we're trying to make sure that they are not only purchasing the device, but they're utilizing it in its full capacity.
Stephanie:
Yup, got it. So, for your guys' website, specifically, tell me a little bit about how you guys think about selling on there? Are you selling mostly on desktop? How are you finding customers? How are you bringing them in? What does that process look like?
Robin:
Sure, sure. So, obviously, you have direct where they're showing up. I think Ring today is a very prominent brand, or at least, top of mind brand that has awareness, especially in a category that our Founder created, the video doorbell. Obviously, there's other folks that are in this space, but I would say Ring to me would be... That's the first thing I think about is Ring when I think about home security and starting at the doorbell and being across different parts inside and outside your house, for example. But I would say yeah, it starts with the direct.
Robin:
Also, there's a lot of obviously acquisition efforts to try and be on top of mind in terms of whether it's people searching for our products to different types of campaigns to drive traffic to our site, whether they're social related, UGC, like you said. We do a lot of social care types of activities to make sure that whether it's responding to different posts or things like that will point them to solutions that are being offered on our ecommerce site.
Robin:
And then as they come to the site, we want to make it as easy and seamless. I think this is the goal of every ecommerce company. As your portfolio grows, how do you make sure that you can train... Not train, so that's probably the wrong word. It's more around, "How do you help them find what they need?" That's the easy question to ask, but a hard question to answer. So, that's one where we're constantly thinking through user research and test.
Robin:
Yeah, I think what's different today is that a lot of companies are always trying to attach this or grow a market basket. It's all about increasing EOB. Those are all important. But to me, I think what's most important is that you're not just trying to upsell, but you're really trying to deliver on a solution. So, meaning, having a camera at your front door, for example, a video doorbell at your front door, that might be good for the first three months and then you may move to a bigger house. You'll need, for example, a floodlight cam like you have. So, that you feel a greater peace of mind that surrounds your house. So, you have this whole home solution, security solution that you could leverage and apply across different parts of your home as you continue to evolve and potentially move, or you want to just expand.
Robin:
So, it's one where we're thinking about, "How do we recommend the right products for you? How do we surface the right recommendations for you? How do we help you differentiate which doorbell to buy?" Because we do have quite a number of doorbells now. What's right for you basically, based on your use case? Or even the alarm, how big is your house? We have a quiz on our Alarm page, for example, that people engage with that they want to know like, "This is my square footage. This is how many windows I have. This is how many doors I have." How do we make sure that we get them to a place where we offer up a package solution that they can feel confident about and then purchase and ultimately experience the peace of mind that they were looking for?
Stephanie:
Cool. So, to talk a little bit more on Ring before we move into general ecommerce, I want to hear how you guys are staying ahead of the competition? Because there are other security companies out there, how do you really show that you're the best?
Robin:
Yeah, I mean, I can't really speak on the competition. I would say that our priority is to constantly push ourselves to empower users with affordable, effective ways to monitor and secure their home. So, back to the making neighborhoods safer, everything ladders up to that. I think about companies that offer a product or a specific service, and it's just that one thing. They're all about to selling that product.
Robin:
I think the mental model and the approach that we have is quite different at Ring, which I love, and I totally respect. It's one where we're constantly thinking about the mission. So, everything ladders up to that mission. So, whether it's a new product, whether it's a new service, whether it's a new feature on the site, or whether it's a new experience that we want to deliver that's thinking outside the box, that we're constantly trying to think outside the box, so that we can deliver upon that mission.
Robin:
That's the way that I would frame it up for you. That's different than just looking at the competition and saying, "What are they doing?" I'm sure we can learn a lot, but it's one where we're really focused on our customers and working backwards from them and ultimately inventing and delivering effective, affordable, easy-to-use products, all in pursuit of delivering on our mission.
Stephanie:
Cool. Yeah, I'm sure you guys get a lot of customer feedback. Do you implement that as you hear what customers are looking for? Does that have an influence on maybe products or the subscription model or the app or anything?
Robin:
Yes, we do get a lot of customer feedback. I think what's unique about Ring just even in my past year is our Founder's email is on every product. It's even on our websites. He is probably one of the most customer obsessed individuals that I know. I really respect that about him. It's one where he wants to hear feedback.
Robin:
We also get feedback internally that we can share and a way for us to facilitate that and hear it, because ultimately, our goal is we want to make the customers feel safer. Whether it's buying our products, calling into our customer service line, whether it's a recommendation on, "Hey, I didn't know that this product was featured with your subscription plan. You had this rich notification that comes with it," how do we surface that up in a way that's clear and transparent on our website, so that people don't have to ask a lot of questions that they can get everything they need in one place?
Stephanie:
Yup, cool. All right. So, you've been in the world of ecommerce for a while. So, I think you should have a good answer to this. What does the future of online commerce look like to you, maybe in the next five years or so? What does that world look like?
Robin:
Yeah, that's a great question. I think the reality is, is ecommerce and digital adoption has been accelerating rapidly. I hear all the time from colleagues in the industry, "The past six months, eight months, basically, we're able to accomplish what we would have in five years." A lot of that is just based on the times-
Stephanie:
Yup, a lot of guests have said that too.
Robin:
Yeah. I agree with that. It's one where, obviously, to lead in this environment, like in any environment, we need to embrace change. But I would say overall, the ecommerce future is bright. There's capabilities that continue to just wow me. It could be simple things to complex things, whether it's complex things like personalization.
Robin:
With all the millions of customers that are coming on your site, how do you make it as frictionless and just a great experience for them to get the checkout and personalizing that experience for them based on who they are as a cohort to even simple things. I see the simple things, especially in the area of digital retailing, meaning a lot of folks aren't going to stores as much, obviously. It's one where they're constantly thinking about how to pivot and embrace the change.
Robin:
I love recently what I saw with Target and how they were able to create this Halloween activation, where they are taking select stores. They're able to convert it into a Halloween environment and pass out some goodies and basically doing it all through the comfort of your car. So, imagine, Halloween is going to look very different this year. So, they're able to provide something that is going to be a memory and a delightful experience for users. But at the same time, they're directing traffic back to the site to say, "Hey, if you can't come to this event, maybe we're not featuring in your hometown. We got everything you need from a Halloween perspective."
Robin:
So, I think it's one where you can get very innovative and capabilities are there. The times today have forced us to really think bigger and to embrace the change and to pivot and be flexible and agile. No idea is a bad idea. I think any idea is relevant, just because we're trying to figure out how to address customer pain points and needs, especially as the times have evolved.
Stephanie:
Yup. Yeah, I completely agree. It's been fun seeing the levels of creativity that have come into some of these campaigns. Like you said, people now have to think on their feet and think of new ways to do things that they've never had to before. So, it seems like there's a lot of opportunity coming out not just in marketing, but just the way of doing business in general.
Robin:
I agree. The other thing I think there is boomers and how they're obviously being forced to shop online. I had my mother call me the other day, because she doesn't shop online as much. She was like, "Can I put my name and credit card number in there and shop?" I'm like, "Of course."
Stephanie:
No, mom. No.
Robin:
Yeah, exactly. So, it's one where they're not as digitally savvy, but they're being forced to be. It's one where how do you take the traditional models today, whether it's direct mail or whether it's phone calls or just the ways that are comfortable with the past and deliver that mixed with the digital experience?
Robin:
So, I'm thinking of things like virtual consultation. For example, the doctor, the hospitals, they call you now and they do a virtual consultation before coming in. It's one where how do you bridge the gap between folks that are coming on to the side for maybe some of them the first time, but getting them comfortable in ways that can help them transition into being fully digitally capable? So, those are things I think that are exciting as well in terms of getting back to a mix of the past but also the future.
Stephanie:
Yeah, that's exactly what I was going to say is that you've got this whole new group of people who never would have been your customers, probably at least not in five years. They're here. So, now, you have to adapt to that. But then I also think what's old is new. I mean, I've had quite a few people talk about direct mail. I think they'd have done some surveys of younger individuals who say they love direct mail, because they're not used to it. It feels very personal. It's fun to get something in the mail. Maybe older generations would be like, "What? That's normal. I'm used to getting catalogs, I'm used to that stuff." But maybe bringing that back might be a way of the future. It's a more personal things than maybe everything digital all day.
Robin:
I agree. I mean, I think some folks, especially parents, are probably limiting screen time for kids these days. Maybe there's some fatigue behind that, even for the younger generation, but it's one where I think companies are being forced to really think outside the box. Direct mail may be the way to go for certain categories.
Robin:
I just think about what Amazon has been doing. I was in the toy business before. Everything was digital, whether it was a holiday toy book. When Toys R Us and even the toy industry was disrupted with Toys R Us going bankrupt, that business model being gone from the overall environment, it's one where Amazon started doing physical holiday toy books along with the digital experience. They're trying to make it as they want to have the physical touch to the toy, because kids like writing down what they want for Christmas. They want to flip through the pages. At the same time, Amazon has a PDF toy book where you click on an item, and then it takes you directly to the PDP. You can purchase and add your products there.
Robin:
So, I just love seeing how things continue to evolve over the years based on the shifting of consumer demands. Also, it's staying true to what the patterns are in terms of behaviors around people using toy books and still wanting the physical touch and also providing it digitally. So, that you can transact and get it in your household in two days or one to two days.
Stephanie:
Yup. Yeah, completely agree. All right, let's jump over to the lightning round brought to you by Salesforce Commerce Cloud. This is where I'm going to ask you a question. You have a minute or so to answer.
Robin:
Okay.
Stephanie:
Are you ready?
Robin:
I'm ready.
Stephanie:
All right, the first one, what one thing will have the biggest impact on ecommerce in the next year?
Robin:
I would say, the supply. What I mean by that is we're always going to have Christmas holiday, which is very big for respective categories. But it's one where the demand has shifted throughout the years based on people or companies being able to pivot and offer up Black Friday in October, for example, and starting early and trying to manage the flow of traffic to the stores and being cognizant of that. So, I would say supply. The second one just to add to that is contactless and touchless experiences, I think that'll disrupt the ecommerce industry.
Stephanie:
Yes, completely agree. What do you not understand today that you wish you did? It can be an ecommerce or at Ring, whatever comes to mind.
Robin:
There's a lot of things from that list. I think we're all a work in progress in terms of learning and growing. I have a ton to continue to learn and build on. So, I don't think there's one particular thing I can put my finger on, on that question.
Stephanie:
All right. What's next on your Netflix queue?
Robin:
My Netflix is controlled by my kids. So, the next one is The Octopus Teacher.
Stephanie:
Sounds intriguing.
Robin:
Yes.
Stephanie:
All right. If you were to have a podcast, what would it be about and who would your first guest be?
Robin:
I value leadership. I have mentors across different areas that I reach out to. So, to me, I love leadership, because companies are about people and not profit in my opinion. This is why I love Ring. It's one where leadership is really what helps you to emerge and helps you to navigate whether it's crazy times or great times. I think that's what holds true and keeps you grounded and successful.
Stephanie:
Cool, love that. The last one, what piece of tech are you playing around with right now that you're loving? It can be just personally, or it can be ecommerce tools that you're trying out or having success with.
Robin:
Yeah, I would say that one that I'm being forced to use nowadays is chat bots, just because of the inability to connect with the customer service agents at different companies. I mean, some of that is obviously trying to drive efficiency and automation, but it's one where it is pretty fascinating in terms of being able to try and address your question or your request, for example, into chat bots. And then having this AI, back machine powered on the back end that try and answer and address solutions.
Robin:
Sometimes it works. Sometimes it doesn't. Some people prefer just the person on the other side of the phone. But I think the chat bots and that area in terms of automation is something that I've been looking at. That's been pretty fascinating, but also at the same time, thinking through, "What would somebody really need that they want to just call the customer service line?" That's even great as well.
Stephanie:
Yeah, that's definitely an interesting area. I think I was just reading a research report that was talking about how most consumers would prefer a chatbot, if nothing. If it's no chatbot or having one, they want one, but then also make sure that you get it right where I feel like there's definitely still room to grow to make sure you can at least answer a few questions, especially if they keep coming up. And then if not, okay, go to a human or call or something. So, that is an interesting area. All right, Robin. Well, thanks for joining the show today. Where can people find out more about you and Ring?
Robin:
Yeah, so you can look me up on LinkedIn. You can go to our website, ring.com.
Stephanie:
All right. Awesome. Thanks so much, and we'll see you next time.
Robin:
Thank you.
Some brands are lucky enough to have a built-in audience of millions, while others need to develop an audience from scratch. Chris Mainenti has been on both sides of the coin and he knows that in either situation, once you have a base of potential customers paying attention to you, the next challenge is converting those browsers to buyers.
Chris is the Director of Commerce Strategy at Discovery, Inc. where he is helping turn the millions of viewers who tune into Discovery’s channels such as HGTV, TLC, Food Network and more, into customers who buy across various platforms. On this episode of Up Next in Commerce, Chris explains how he put his history of building audiences at previous companies to work at Discovery — including some tips for young companies on how to utilize newsletters. And he discusses how to use the data you collect as a starting point for creating a more personalized, one-to-one relationship with your audience on various platforms. Plus, he looks into the future to predict how shoppable experiences will be made possible with universal add-to-cart and buy-now options.
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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Transcript:
Stephanie:
Welcome back to Up Next In Commerce. This is your host, Stephanie Postles co-founder of mission.org. Our guest today is Chris Mainenti, the director of commerce strategy at Discovery Inc. Chris, welcome to the show.
Chris:
Thank you, Stephanie. I appreciate you having me on and talking all things commerce here in the current climate that we're in.
Stephanie:
Yeah. I am very excited to have you guys on. I was just thinking about how long Discovery channel, and all the other channels, HGTV, and Food Network and Travel Channel have been in my life and with that, I want to hear a little bit about your role at Discovery. I mean, it seems like there's so much going on, so many digital portfolios that you guys have over there, and I think just a lot behind the scenes that an average consumer wouldn't even know. So, I'd love to hear what you're up to at Discovery. What is your day-to-day look like?
Chris:
Sure. So, I would say, first and foremost, for commerce specifically in the digital media space, we're probably slightly different than a lot of others. We're really multifaceted in terms of how we work, and who we work with across the org. Obviously, like you said, Discovery is huge, has a ton of major, major worldwide brands. So, we actually sit on the portfolio wide level with our lifestyle brands, and we're really in the weeds with them on the day-to-day basis. And, that really starts with, obviously, our editorial teams. That's our bread and butter, that's our voice and our authority in this space. So again, that's really where we begin, and that's obviously where we're doing our content output, and producing all of this great shopping content for our different audiences, and again pulling our experts from all of these different brands to come together.
Chris:
So again, folks are really getting the full spectrum of expertise in all of these different categories. And from there, it just really starts branching out into other groups. So, we work heavily with our ad sales and branded content teams, where we work on much larger partnerships and deeper integrations which we can talk about today as well. We have a licensing team, where we work on licensed products, and we take our learnings that we're seeing on our shopping content on a day-to-day basis, and analyze that, and then speak with licensing to see where there may be some room to actually create a new line with one of our partners.
Chris:
We also, believe it or not, and I know you don't know this, we have a video games team at Discovery, and we work closely with them as well on trying to find those shoppable moments, and again bringing our brand and our voice into those games when they're being built. So again, we're always serving the reader no matter who or where they are, and again pivoting as necessary. So, those are just a few groups, and obviously our marketing and ops, and audience development teams were heavily embedded with as well when it comes to promotion.
Chris:
So again, there are just, I would say, a lot of areas that we focus on. I know in the beginning it was always all about, commerce is part of diversifying your revenue streams at a digital club. But, we see it more as now, we're trying to diversify our commerce stream into all of these other areas. So again, a lot of exciting stuff has already happened, and we're working on some cool stuff too as we head into next year. So, a lot of exciting stuff in an area that's obviously blowing up for a variety of reasons.
Stephanie:
That's a lot going on there. It's actually really interesting because you just mentioned video games, and I just did a recap episode with one of my coworkers for the first 50 episodes of this show, and the one thing I was bringing up was like, "I think there's a big opportunity in having shoppable moments in these worlds or video games." And, we were mentioning Unreal and Epic Games specifically, that I hadn't really seen that yet. So, it's interesting that you guys are starting to explore that arena, because it feels like that's something of the future, but it's needed, and that's where everything's headed.
Chris:
Yeah. And again, I can't stress enough. I mean, our portfolio is just so suited for so many of these different, avenues that we could always find something where, again, we're not being gimmicky just to say we're there. This is our bread and butter, and we're making sure that we stick to our tried and blue, into who we are, and not shy off too much, and again just try to say, "We did something here or there." Really making sure we're always serving our audiences and giving them what they want on the platforms they want.
Stephanie:
Yeah. Which I think that's a really good jumping off point, then because that was actually my one biggest question I had of how do you strategically think about what an audience wants without disrupting the content? I mean, it seems so tricky, because you see a lot of shows, and whatever it may be where you might have product placement in a show or a movie, but it might not actually uplift sales, because it wasn't done correctly. Where I was also just talking about the Netflix original, the organizing show where they partnered with the container store, and how they had an instant, I think was a 17% uplift in sales after that show aired. That worked, and many others don't. So, how do you guys think about making those shoppable moments, and actually having it work?
Chris:
Sure. First and foremost, I think, you have to be honest and say, "Look, not everything is going to hit." And honestly, it's not always meant to always hit. So, I think we go into that, first being real with the current situation, and understanding not everyone is going to want every single thing. We're always talking about integrating, promoting, so on and so forth. So, I would say that's first. Secondly, again, we start with, what's our expertise? What do we believe in? And, what do we want to showcase to our various audiences across all of these different platforms? And then, from there is when we start to really start getting down to the nuances.
Chris:
And look, we have created what we dub internally as the commerce hub, where we're bringing in data feeds from all different platforms, our affiliate networks, our in-house reporting platforms, social, so on and so forth, bringing that all together. And again, understanding, what are people consuming? And, what is their mindset when they're on social, versus linear, versus a DTC, or our dot-coms. And, really starting to look and pull out trends from that. I always like to say I prefer the term data influenced versus data driven, because you can't just take a dashboard of data, and sort in descending or ascending order, and say, "Okay. Whatever is at the top or bottom, do or don't do." And, call it a day.
Chris:
We focus much more heavily on insights, and use that data as a jumping off point, but then do very, very deep analysis, and pull actionable insights out of that for all of our different brands and teams for when they're creating new content, or when we're optimizing old content. Again, wherever that is. And then, I think lastly with that comes, how do we visualize that to the audience. On digital.com, is it more about, again, really simple to read, simple call to actions to buy items. Again, on linear, what is that? A QR code experience? Is it some type of more deeper integration with a smart TV company on our TV E experiences? Is it more deeply integrated where you can actually tap to purchase within the app? So on and so forth.
Chris:
So again, there's just a lot of things that we're looking at. We never make it cut and dry, that's probably because personally I don't think anything is ever cut and dry, especially this space and shopping behaviors across, not only brands but the platforms those brands are on, and that's how we look at it. I know that's a lot, and that sounds a bit crazy, but we do really pride ourselves on, again, using these things as a jumping off point and then really diving in deep and making sure that we're serving our audiences, again, where they like to consume this content.
Stephanie:
Got it. Yeah. It sounds like everything is very custom, and every channel and project you start from scratch where you start figuring out what your audience might like. But, do you have any internal formulas where you're like, "Well, we always follow this in the beginning." and then, it goes crazy after that, because we find other things out. Is there anything that's similar among all the campaigns or projects that you're working on, at least from a starting point?
Chris:
Yeah. I think, honestly, it's probably not surprising whenever you're talking about items on sale, or whenever we're talking about certain merchants, or price points, or categories, like organizing and cleaning is always up there for us. We know very specific furniture categories that do very well for us. So, we do have our basic what we call playbooks that we start off with, but like you said, we still are always constantly learning and pivoting as necessary. I think a perfect example is in the beginning of the year, I don't think anyone in this world saw what was coming, so we were doing our thing, and then when everything started to unfold, we got together and we had to pivot. And again, the good thing about Discovery's brands is, again, we are so widespread in terms of the categories that we're experts in, that we were able to easily pivot and, again, make sure we're giving our audiences what they need at that moment.
Stephanie:
Do you see more companies starting to shift? Like media companies turning into ecommerce companies, and ecommerce companies turning into media companies. I've heard that saying quite a bit, especially over the past six months, but it feels like you guys have been there for a while. Do you see other companies looking to you for maybe best practices of like, "How do I make this shift?" Or, "Should I make this shift?"
Chris:
100%. I think, the beauty in that is that we can coexist and really do things that benefit each of us. I don't think this is an either, we succeed or they succeeded. This is, I think a space where we can coexist. The way I always like to frame this when I'm talking to our merchant partners, and talking internally, is we're really here to humanize the star review. When you come to us, you're not just going to see, again, this is a four out of five, or this is a five star, item, and that's it from the random ecosystem of the internet. We are heavily focused on saying, "Look, here are the things we recommend, and why." And, I think that's where our partners can really leverage us, and where you're really seeing us shine. Again, we don't have to just throw a bunch of random stuff out there and hope for the best.
Chris:
Again, given our brands and our standing in this space, we can really leverage our expertise and authority there when growing this portfolio with all of our partners. To be honest with you the thing that drove me to Discovery the most was, "Wow, these are huge brands, with huge audiences, and huge respect. Now, we just got to tie all of that together, and go from the moment of inspiration to action." And then again, that's what we've been working on.
Stephanie:
That's really cool. With all the data that you were mentioning earlier, since you joined have you seen any changes in consumer shopping behavior?
Chris:
So, yes. Obviously, the biggest one occurring this year, and that was with online grocery. I think it's no surprise that it's been building up now for a year or two in terms of mainstream, but it never really caught on. It's only a five to 10% of folks are really engaging and entertaining the online grocery space. But then again, obviously, earlier in the year when things started to shut down, and people were uneasy about going out, we did see huge spikes in that space, obviously, on our FoodNetwork.com site. And, I would say that continued for a bit, and did peter out a bit recent months which, again, is obviously expected. So, I think that's probably one of the big ones.
Chris:
The other thing that we have seen, not so much in terms of major shifts in shopping behaviors, just more increased sales in categories that we already know are performing. So, organizing and cleaning is always been a winner for us, and then as the months went on, we've just seen it doing better for us. I think we do a lot of buying guides where we talk about the best cast iron skillets on Food Network, or the best humidifiers on HGTV. We started to see those things gain more and more traction as we went, and we're attributing some of that to us really getting our audience to trust us, and now know that they can come to us as a trusted resource to really be a personal shopper for them.
Chris:
And again, we've seen that across the board in all of our main categories. The only other thing I'll say in terms of, not only, I wouldn't say shifts in behaviors, but just something else we've pulled out from the data is that, everyone loves a good deal and good price points, but our audience is willing to spend more, especially when those items are either offered at a discounted rate for a holiday or something, or if we've worked with the merchant to get an exclusive discount for our audience, so we have also seen uptakes in that as well. But again, holistically, we haven't seen any huge shifts outside of, like I said, the online grocery, which again is expected given the situation we've been in.
Stephanie:
Yeah. That makes sense. Yeah. I saw for the Food Network, I think you had a subscription platform and you partnered with Amazon. Was that something that was already in the works, or did that get sped up once everything was happening with COVID?
Chris:
Yeah. So, that was already in the works with our DTC group, and for folks who don't know that's our subscription platform on the Food Network side that we call internally FNK, because it's just easier. And yes, that was in the works, and again we're working more and more in getting that to more and more folks who are really looking to get more classes, get more recipes, just be more intimate with our brand.
Stephanie:
Yeah. It looked very cool. I was on there looking around at, "Oh, you can follow these chefs and have cooking classes with them, and then you can tell your Amazon Echo to order it for you the exact things you need." And, it looked like it would be really fun to engage with that.
Chris:
Exactly. It goes back to that 360 approach that we have really been focused on, when it comes to our shopping portfolio.
Stephanie:
Yeah, that's very fun. So, you've talked a lot about partnerships where you've touched on a bit. But, tell me a little about what does a partnership look like from beginning to end? What does that process look like when you're finding a partner, figuring out how to actually strategically partner with them in a way that benefits both parties? What does it look like behind the scenes?
Chris:
Sure. So, I think there's really two paths there, there's the partnership stuff that we handle directly with merchants through affiliate networks, and so on and so forth. And, for that we do a lot of research on our end, again we already know what type of product hits, what type of merchants hit. So, one thing we do is take that and then say, "Okay. What are similar merchants in this space?" And then, we'll reach out and discuss the opportunity of working together on that front. And then I would say, on the other side, bigger picture stuff is, again, we're heavily embedded with our ad sales team on much larger partnerships.
Chris:
And, I think a great example of that is our shop the look campaign with Wayfair, which is a deep integration that spans across linear and digital that, again, was really spearheaded by our sales team that we then came in and assisted with. But, for folks who don't know, basically what this is, when you go to any of our photo inspo on hgtv.com, you'll see a little flyout of all the products within the image that are shoppable on Wayfair.com. And obviously, that's not just a basic integration that you just wake up one day and do. So for that, we came together and we've said, again, "What can we do that is going to benefit both of us, that's going to serve our audiences for the long run, and really make a successful integration here?" So again, that's what turned into shop the look.
Chris:
It's one of our best partnerships that we have across our dot-coms right now, and it's super successful, our audience loves it. And again, I think It's always starting with, "Well, what is the goal? And, what do we want to achieve from this?" I think sometimes people get too focused on, "What looks cool?" And like, "Let's just do that." We wanted to really focus on, "Well, what's the goal here?" And, what do we think we can create that's actually going, again, to help our audiences that come to hgtv.com be inspired and feel comfortable, making purchases based off of what they're seeing.
Chris:
So, that's really how we approach these, we're super particular about who we work with, and what that looks like. You mentioned the Amazon partnership, we have a really strong relationship with them as well. And for us, again, it's always looking at the brand and our audiences first and saying, "What makes the most sense for them?" And then, that's when we start peeling the layers here, and figuring out what are those experiences that we could bring to them on different platforms.
Stephanie:
Yeah. I think that's really smart. Like you said, not to just do something because it looks cool or seems cool, but actually do something that you know the audience will like, and will convert into sales to also help the partner. What are some of the success metrics for the shop the look campaign for example? What did you go into hoping to achieve when you set up that partnership? Is it affiliate based, or what do you guys look for and be like, "Oh, this is a successful campaign versus the previous ones that were maybe okay, or good."?
Chris:
Yep. So, I think just simply put it, consumption and sales are the big ones. Consumption being, are we seeing more and more folks coming to these different integrations across our platform, and then again how are they translating into sales? Looking at things like, "Okay, so we are getting them to Wayfair.com, but once they're on Wayfair.com what are they doing?" So obviously again, looking at conversions, average order value, so on and so forth. Again, just to really gauge what these audiences are looking like, as the days, weeks, and months go by. I would say, one of the things that we were looking for, especially as COVID first hit was, "Are we seeing an increase, a decrease? What are we seeing in terms of shopping behaviors across our platform?" And again, the metrics we looked at for that was, obviously, click through rates, conversion rates, average order value. Because we even saw in some instances where experiences weren't driving as many views or clicks, but the average order value was much higher.
Chris:
And again, just goes to show that our audience is a very qualified audience that trusts us, and is willing to spend with us. So, we try to pull out all of these different metrics. I think one of the things with commerce that is either for better or worse, is that you can't just look at one metric and just live and die by that number. So again, that's why we have a handful. And look, we also pivot based on what that platform is, what the experience is, who the partner is, so on and so forth. So, we don't have a one size fits all solution, again, that was done by design. And, that's how we approach these things. And again, just making sure that we stay true to who we are, and we're benefiting everyone involved.
Stephanie:
Got it. How do you keep track of, if there's a TV viewer who's watching HGTV, and then you're trying to send them to maybe Wayfair to shop that look like, what are the best practices with converting those people, but also keeping track of them in a way that's not maybe creates friction? Are you telling them, "Go visit this URL."? Or how do you go about that?
Chris:
Yeah. So, totally right. I think, obviously, the most common ways of driving from linear to digital is the QR code experience. And, we're actually working on some of those solutions as we speak and trying to understand, again, what will it take to bring more linear folks from TV down to digital, and like you said, make this a frictionless seamless experience? So again, is that as simple as a QR code, or again is this more about a stronger deeper integration that's a bit more sophisticated and partnering up with folks who can actually understand what is on screen at any moment, and then surface that product on screen.
Chris:
Again, if you have a smart TV and allowing folks to enjoy that experience, or again, when it comes to TV E we have our go apps that you could log into with your cable subscription. And again, obviously, it could be more sophisticated on your mobile device. So, what does that look like? Is it again, while you're watching it at minute three or whatever, five minutes in, do you surface what is currently being seen in the screen and saying, "Look, shop this room?" And, what do you do from that point down to the device. Can it be as simple as just a tap to buy, or do you have to tap and then open up a new browser window? What do those integrations look like? Again, ultimately trying to find the most frictionless experience. So, I think we're still experimenting with that. I don't think anyone in this space has really nailed that down in terms of what is shoppable TV, or just shoppable video in general? And again, how do we go beyond what just looks cool and turn that into actionable?
Stephanie:
Yep. Yeah, I think creating a frictionless experience is key, and there's a lot of room for innovation in that area. I'm even thinking about just Instagram, where I'll find a blogger I like and I really like her outfit, and then it's like, "Okay. Well, now go to the link in my bio." And then, that's going to open a LIKEtoKNOW.it app, and then maybe you'll be able to find the outfit. But at that point, it's probably just on the home screen if that new app. And, it just feels like there's so many places for a customer to drop. I guess I was just really eager to look at that outfit, so I stuck with it. But any other time, I probably would been like, "Oh, that's too much work." It seems like there's just a lot of room for innovation around this shoppable moments, whether it's TV, social, video, audio, anything.
Chris:
Yeah. I mean, I think you nailed it right there. I think Instagram is a perfect example, and that's a platform we're looking at as we speak, and we have some ideas around that as well. Because like you said, our goal here is to, how do we cut out all of these extra steps that are unnatural? Normally, when you see a product you like, you want to be able to say, "Okay. Great. Let me buy that." Not let me go to a bio, let me click this link, let me wait for this page to load, let me do that checkout experience is completely different from the platform I was just on. And then obviously, you're playing around with browser settings and everything else.
Chris:
So, I think you're spot on, and again that's something we're heavily focused on, again, literally as we speak. And, what does a more integrated Instagram shopping experience look like for Discovery and our partners? So, there's going to be more to come on that soon. But, we are thinking about that, and trying to find, again, these ways to make it as frictionless and seamless as possible. Again, no matter where our audience is consuming our content.
Stephanie:
Yeah. Well, it seems like if anyone can figure it out, it would be all because it's not like you're trying to put your products on someone else's show, or having to utilize someone else's platform. You have your own platform, you have your own shows, you can build new shows, and try out different ways to influence. There's shopping behaviors. That seems like there's just a ton of opportunity for you to experiment with everything that you all have.
Chris:
Yeah. No. A 100%, and those are these ad conversations we're having with a lot of our partners as well, and understanding from their world how they see it, and then bringing our world into that, and marrying that together, again, so we can coexist here, and at the end of the day just create a better experience for our viewers.
Stephanie:
Yep. Love that. So, what are some of your favorite platforms that you guys are experimenting with right now? You said, you were looking into Instagram, but what's really performing for you, and what are some of the more moonshot platforms that you're trying out, and you think it will be good, but you're not so sure?
Chris:
Sure. Yeah. I mean, obviously, the bread and butter is our shopping content on our dot-coms, those are our top performers. But, I will say some of the more areas of interest, again we already spoke about Instagram. But, another one where we are seeing some really good traction, believe or not, is in the Apple News space, most notably on Food Network. We're getting a lot of traction on that platform, and seeing what our audiences are resonating with the most on Apple News, which I again I know it maybe a shock to some folks, but I think-
Stephanie:
Yeah. So, tell you more about that. I mean, I have an Apple phone, but I have not opened up Apple News probably since I got the phone, so tell me more about, what are you guys doing there?
Chris:
Sure. Yep.
Stephanie:
Because you're the first person who said this.
Chris:
Okay. All right. Again, understood I know that's not always the first thing that jumps into someone's mind when you're talking about commerce, and lifestyle brands, especially because they name Apple News. But again, I know you don't really use it, but again this is just the basic free version that's included with your device when you get it. And again, we're syndicating our day-to-day content onto that platform. And, we've built really strong audiences across Apple News. And again, it's a similar experience to our dot-coms, just slightly different because it has to fit obviously the specs of the Apple News platform. But again, we just have seen some really strong successes in different areas, again most notably in the buying guide space, or sales events that are happening, and dabbling with pushing notifications for that.
Chris:
Obviously, with some of the recent shopping events that occurred, we built a push notification strategy around that as well, and it did really well for us. So again, I think that's one of those ones that is also intriguing to us. But I think, again, the high level, we really are trying to be everywhere it makes sense, but also really tailoring our content and strategy based on what that platform is. So, for some of the stuff that's working on Apple News may not make sense for Instagram or vice versa, so on and so forth. So I think, again, those are two areas. And I would say, the last thing that we're really, or me personally is really intrigued by, is this universal cart experience/straight to cart experience that more and more folks are dabbling with. There's a handful of platforms out there that can help publishers do this.
Chris:
And for folks who aren't familiar with this, it's basically saying, if someone comes to HGTV, or FoodNetwork.com, or tlc.com, and they see an item they like on there, instead of saying, "Buy now on X merchant site." And getting thrown off to that merchant, you could hit buy now, or add to cart, and you could actually check out within our platform, which I think is definitely going to be a big piece of the puzzle for the future of commerce on digital publishers. I think the big question will just be adoption, and then what does that look like. I think, again, Discovery is in a perfect position for this, because folks are already coming to us for this expertise, and know and love our brands already. So, there won't be a lot of convincing in terms of like, "It's okay to check out with us as well."
Chris:
But again, we're anticipating some shopping behavior adoptions that are going to occur during that process. But again, I think that's an area where you really start to open up a lot of new doors here when it comes to shopping for digital media sites. And, I think that's when it gets even more exciting for deeper integrations with Instagram shopping for example.
Stephanie:
Yep. Yeah, I love that. I mean, I'm excited to look into the Apple News more. And, I was just intrigued by that, because I like hearing things that others have not said yet. Because I'm like, "Oh, that means there could be opportunity there if you know how to work with the platform." Especially, if you can set up a push notifications. That's huge to make it in front of Apple users. And then yeah, I completely agree about the being able to shop instantly from a page. We just had the CEO of Fast on, Domm. And, I thought it was really interesting how he was talking about how every website should have buy now buttons under every single individual products, and he went into the whole thing of, "You actually will have higher conversions." Because of course, I was like, "Well, then you have to get past the minimum shipping amounts, and maybe higher order values, if you let me add stuff to a cart." And he said, "Based on everything they've seen, people will buy more if they can buy it instantly." And, it'll batch it in the background and ship it out after the fact, all together. So-
Chris:
Yeah.
Stephanie:
... I think you said it.
Chris:
Yeah. Convenience is key. I mean, everyone likes convenience, and again that's our hypothesis as well here, that we do plan to see increased conversions by building a more intimate shopping experience across our dot-coms with a lot of our partners.
Stephanie:
Yeah, that's great. So, the one big topic I also want to touch on was about audience development. So, when you guys, you have these huge audiences that you can tap into, but for especially a smaller brand, I want to hear how you all think about building that audience to then eventually being able to sell some products to them as well. What does that process look like? And, how can a new brand do that?
Chris:
Sure. So, I think first and foremost, I think it's important to understand what is audience development as it relates to your brand and organization. I think the biggest misconception with the term audience development is, "Oh, yeah, it's just another word for marketing." But it's not, and this has been written about it as well. And, I think the easiest way to think about this just in a very basic form is, marketing is more about how you want to look to the world as you bring those audiences in initially. More on the branding side of things, whereas dev is now like, "Okay. So, who are we to the world?" And, really drilling down on understanding those audiences that were brought in and who they are, and then building those audiences through different engagement tactics and community tactics.
Chris:
So, I think that's always a good place to start, to understand how those two worlds kind of then meet. And then once that happens, to answer your specific question, again start with understanding who your audiences are, and where they are. I think sometimes and probably not so much now, but in the past when I was first getting into this space, I think a lot of people just thought that, "Well, content is content. It could be put anywhere, and it's going to work the same way everywhere. Obviously not the case, even more so for shopping content, and behaviors. So, it's really, again, drilling down and pulling out insights based on, "Okay. Who is my Facebook audience? Who is my newsletter audience? Who is my Apple News audience?
Chris:
And, really starting there, and once you understand high level who they are, what they like, what they're consuming. More specifically when you talk about newsletters, what type of keywords are working to increase open rates, and so on and so forth, then you could start drilling down on the specifics. Saying like, "Okay. High level, here are the different topics and content archetypes that are working, now how do we build out an editorial calendar with that in mind." Again, with the understanding that we're not just going to set this and forget this across the board. What this looks like in newsletters is going to be slightly different than how we're positioning it on Facebook for example, and so on and so forth. So, I really think that's the key right there, and using data to your advantage and saying, "Okay. Well, here's all the different metrics that we're currently compiling, which ones can we look at, and pull from to better understand what these audiences are coming to us for." And again, working with your editorial teams, and the branding teams to bring that all together and say, "Okay. Now here's the plan for output."
Stephanie:
Yep. Got it. So, if you don't have an audience, and you're starting really from scratch, where would you start? Because I read quite a few articles, maybe from your past life at other companies about you increasing conversion rates by 60%, through maybe newsletters or increasing newsletter subscriptions? Is that maybe a place that you would start? Or where would you recommend someone brand new, who's like, "I don't really have an audience. I have five followers on Instagram."? What's the best way to acquire an audience and then keep them around to build it?
Chris:
Yeah. So I would say, if we're talking about limited resources and funding, I do think newsletters are a great place to start. And that's really because, it gives you an opportunity to have this one-on-one intimate relationship with the folks on the other side that for the most part you're not having to be held against what the algorithm is going to decide to show at any given day. Obviously, you have to worry about, spam and junk mail and things like that. But for the most part, if you're running a really clean newsletter list or lists, you don't have to worry about that so much. So, I do think, starting in the newsletter space is a really low budget, friendly way to start growing audiences, and it's really great to use as a gut check to see what is resonating. You could look at your open rates, you could look at your click to open rates.
Chris:
Again, you can monitor what the churn is and stop to see if what you're producing is causing people to drop off for good, so on and so forth. So I do think, for publishers where it makes sense that is a great place to start. You can obviously acquire new users through a bunch of different audience development tactics, whether it's on site widgets or modals, or do some small paid spend to try to bring folks in, and do the sweepstake partnerships as well. Again, obviously I'm a little biased, just because that is part of my background. But again, over the years, newsletters, again, I know they're not the sexiest platform to talk about, but they have been the most consistent in terms of performance and really bringing your most loyal and engaged users from that platform.
Stephanie:
Yeah, I completely agree. And, you also get access to quite a bit of data that you don't on other platforms, and if you can figure out how to properly engage with them, you could have newsletter subscribers for years to come, which is everyone's goal.
Chris:
100%. Yeah. And, I think even to take that one step further, you could even start to get more and more personalized where you get to a point where you're launching a newsletter to half a million people, and no two newsletters are alike because it's all based on past user behaviors that you were seeing within email and the dot-com, and again adjusting that based on different predictive intelligence tools. So again, I think 100% there's a lot there, and if done correctly, and go a long way. I mean look, this has been tried and true in the space. We see a lot of folks who start there, we're even seeing in the news media space a lot of journalists, and editors, and things like that backing off from the larger brands, and going this newsletter route to get their word and opinion out. So yeah, I think email is here to stay, and it's going to be a huge piece of the puzzle moving forward.
Stephanie:
Yep. I agree. So, you've been in the media world for a while, I think I saw at least back to 2012, maybe even before then.
Chris:
Yeah.
Stephanie:
I went as far as I could on your LinkedIn, I think it cut off.
Chris:
No, you got it. Yeah. I have been in media basically since the day I got out of college. So-
Stephanie:
Okay. Well, this is the perfect question for you then. What do you think the future of online commerce in media look like? Maybe in 2025 or 2030, what does that world look like?
Chris:
Yeah. So, I think it's going to be an extension of what we talked about a little earlier about this universal cart experience, and turning digital publishers into this space where audiences can come and also feel comfortable making those purchases. And again, not being bounced off to third party sites, and really being able to start building an even stronger shopping relationship with your audiences, because again with a universal cart experience, also comes a lot more first party data where you could, again, focus on more one-to-one relationships with your audiences, again, specifically in the shopping space, which I think is key.
Chris:
And, I don't foresee a place where merchants are going to have a huge problem with this, because, again, you're just helping to legitimize their product. Like your previous guest said about increased conversions. I think that's another huge piece of this puzzle. So again, it's really just now, again, bringing this all together, this whole 360 approach and saying, "Look, you're not just coming to us for flat inspirational content, you're now coming to us for the inspiration, and the ability to take action immediately." Again, versus being bounced off to one, two, three other platforms depending on which platform you're on, like your experience with Instagram.
Stephanie:
Yep. Yeah, I love that answer. Really good. So, now that we're talking a little bit about the future, what do you not understand today that you wish you did?
Chris:
What do I not understand today that I wish I did? That's a that's a good question. So, as it relates to commerce?
Stephanie:
Yep. Or the world, where you're like, "I really just wish I knew more about this." But yeah, it could be a commerce one, that would be cool too.
Chris:
Sure. I would say, I think not so much about not understanding this, but more not understanding why it's not better. And, that goes back to, I would probably say, affiliate data, and what that data looks like, and what partners have access to, or don't have access to. Obviously, being a part of many different networks, and merchants being on all different networks and so on and so forth, it becomes, quite difficult to manage all of that data coming in, and really having a platform that can easily bring this all together in a unified way. We do have a really strong partner that we work with to aggregate a lot of this data. Again obviously, it's never going to be perfect, because you're pulling it from all different places, and you have to understand, "Well, how does this platform leverage conversion rates and click through rates, versus this platform?" And again, just like, "What do those measurements look like?" And, the methodology behind them.
Chris:
So, that becomes challenging. But, I do think that's probably one of the biggest things that I just wish. And, I know it's not easy, hence the reason why it hasn't really been done yet. But, finding a more universal way to bring all this data into one data warehouse. Again, we were working on some stuff along those lines, but just high level, just generally speaking in this space, I do think that's one of the more challenging situations that a lot of digital media folks are in when it comes to with the shopping space.
Stephanie:
Yeah. That's a great answer. It does feel like a lot of technologies in general started out in that way. Very chaotic, things are everywhere, data is everywhere, and then things eventually end up in a dashboard, or it starts coming together in a more useful way. So, I hope that world comes to be in the future as well.
Chris:
Yeah. I mean, look, at the end of the day, that's only going to help all parties. It's going to help the audience, it's going to help the media company, it's going to help the merchant, so there's definitely reason to really get this right. But again, then, to do a bit of a 180, I think that's why you're going to start seeing these universal cart experiences take off more and more, because it does make that a bit cleaner in terms of what you're going to have access to and when.
Stephanie:
Yep. Very cool. All right. So, we have a couple minutes left, and I want to jump into the lightning round, brought to you by our friends at Salesforce Commerce Cloud. They're the best. This is where I'm going to throw a question in your way and you have a minute or less to answer. Are you ready?
Chris:
Let's do it.
Stephanie:
All right. What's Up next on your... Well, do you have Netflix? I would say Netflix, and I'm like, "He's going to be like, "No.""
Chris:
I do.
Stephanie:
Okay. What's up on your queue? And then, you can also tell me what's up on your Discovery queue?
Chris:
Fair. So, I'll start with us first.
Stephanie:
All right. Go ahead.
Chris:
And, I think this is so obvious, but huge 90 Day Fiancé fans. And, I will say my wife actually started that. I wasn't always, but she was like, "Come on, we got to watch it." And, this was a couple years ago. And, once I started, we have been heavily invested ever since. So, from a brand standpoint, we're 90 Day through and through. So, I think again-
Stephanie:
I like it.
Chris:
Yeah. Probably obvious to a lot of folks just because of the success of it, but that is our thing there. And then, she's also actually a huge fan of Discovery ID, it's her favorite channel by far. So, we got both ends of the spectrum there, right?
Stephanie:
Yep.
Chris:
Discovery ID, the DLC. But again, that just goes to show the strength of our portfolio. And then, on a personal front, I would say, what we're actually currently watching is the Borgias on Showtime. If you haven't watched it, I highly recommend it. But, it's three seasons, so that's good for me. I'm not a huge binger, but I can get through a three season watch, so we're currently in the middle of that.
Stephanie:
Cool. I have to check that out. Yeah. 90 Day Fiancé, so I have a twin sister, and she's obsessed with that show, and she's been telling me I need to watch it. And, I've been like, "No, I'm not watching that." So, now that you say you also enjoy it, maybe I'll have to want to check that out.
Chris:
Yeah. Come on. It's only fitting now. You got to at least give it a shot.
Stephanie:
Yeah. I think I will after this. That'll be the rest of my day.
Chris:
Perfect. So, I've succeeded tonight.
Stephanie:
You did-
Chris:
I converted someone.
Stephanie:
You can tell everyone, "I got a conversion."
Chris:
Exactly.
Stephanie:
What's Up next on your reading list?
Chris:
On my reading list. So, this is also probably slightly depressing, but I'm actually currently reading the Plague.
Stephanie:
That's [inaudible 00:49:47]. I mean, I don't even know what that is, but I'm like, "No." I mean, is it good?
Chris:
Yeah. I mean, so far, I'm only maybe a quarter of the way in. it's just eerily similar to the situation we're currently in, and obviously this was not written recently. This is old Camus. But yes, so that that's what I'm currently reading. So, not exactly an uplifting read, but I do think interesting to say the least in seeing some of these parallels that, again, just six, seven months ago we thought were just crazy things you would read or watch on Netflix.
Stephanie:
Yeah. Well, if you enjoy the full read, let me know, maybe I'll check that out.
Chris:
Will do.
Stephanie:
Next up, if you were to have a podcast, what would it be about, and who would your first guest be?
Chris:
That is interesting. If I had a podcast. For me, I think I probably wouldn't fall into the current podcasting world that pulls a lot of talent from different areas, and makes that the centerpiece of their podcast. I would much rather try to get in the weeds with folks who are making a difference on a local level. I think especially in this political climate, I think that sometimes gets lost that we think it's only the top that matters, and nothing lower does, which I think is completely false. I think everything starts at the local level. So, I would love to give more exposure and light to those folks who are doing the dirty work on the ground which, again, sometimes gets lost in the standard media cycles, or across social media for example.
Stephanie:
Yes, I love that. It's also something we're exploring here at Mission is local level podcasts, because I think that's what people are leaning into now. They have lost that also a sense of community with everything that's been going on, and you might want to know what your neighbors or community is up to, and also what they're doing, like you said, on the ground level. The next one-
Chris:
100%. I think it's super important. Go ahead.
Stephanie:
Yeah. What does the best day in the office look like for you?
Chris:
The best day. So, when that was a thing-
Stephanie:
When you went to the office, and you weren't just in your house in New York.
Chris:
Exactly. Honestly, the best part about that is, being able to... And, now I feel it even more, is having that change of scenery, and being able to have those face-to-face interactions with folks. I recently read a study where, I think it came out that people were actually working longer hours, and having more meetings, while working from home, because they don't have those passerby conversations in the hall, or going in and out of the restroom, and so on and so forth. Which, again, I don't think people appreciate until it's gone. And for me, that's been a huge piece of the puzzle that's been missing during these times is that, human interaction. I think everyone wants to think that working from home is the future, I'm just not sold on that yet.
Stephanie:
Yeah. I think the flexibility, maybe, but I think a lot of people are eager to get back and see their coworkers, and have coffee together and whatnot. So, there'll be pent up demand, as economists would say.
Chris:
Exactly.
Stephanie:
All right, Chris. Well, this has been such a great interview, where can people find out more about you and all the fun work you're doing at Discovery?
Chris:
Sure. So personally, you can find me, Chris Mainenti on LinkedIn, and we can connect there if you'd like to chat further. But more importantly, if you love our brands, you know where to catch us on TV. And then, similar to dot-com, HGTV, Food Network, TLC, Travel Channel. We're everywhere and we look forward to continuing to serve our audiences wherever they are, and really helping them through these trying times that we're all in.
Stephanie:
Yep. And most of all, go watch 90 Day Fiancé, everyone. I mean, I feel like you need that fun.
Chris:
Exactly. For the handful who haven't yet, including you, obviously.
Stephanie:
Yeah. I know. Such a veil. All right. Thanks so much, Chris. It's been fun.
Chris:
Likewise. Thanks so much again. Bye-bye.
Entrepreneurs are, by nature, risk-takers. But most would still think it’s crazy to invest your entire life savings on 300 gallons of rosé. Nevertheless, that’s the true story of how Alix Peabody started her company, Bev.
Sold online and in-store, Bev is a made-by-chick alcohol company famous for its canned rosé. Alix says that Bev’s secret to success is built on some key pillars, the most important of which might surprise you: customer service. On this episode of Up Next in Commerce, Alix explains why ecommerce brands should be investing heavily into their customer service operations. Plus, she reveals how she is capitalizing on the huge percentage of buyers that come from mobile.
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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Transcript:
Stephanie:
Welcome to Up Next In Commerce. This is your host Stephanie Postles, Co-Founder at Mission.org. Today on the show, we have Alix Peabody, the Founder and CEO at Bev. Alix, welcome.
alix:
Thank you so much for having me.
Stephanie:
I'm excited to have you on. It feels like the perfect environment to talk about beverages with everything that's going on.
alix:
Oh, my gosh. Yeah, I mean, so much consumption in my world for sure. It's been a little bit of a crazy time.
Stephanie:
These days, I have to limit myself. Wait, did I just have wine yesterday, the day before, and the day before? I need to chill. I have to pull myself [crosstalk 00:00:39].
alix:
Yeah, 100%. I mean, it's funny too, because we've got moms with kids working from home and people trying to separate their days and all that kind of stuff. So, I feel for them, but glad we can be here to help.
Stephanie:
Yes, me too. So, I have read your backstory a little bit of it. You have a crazy backstory of why you started this. I was hoping you could start there where you go through, "What led you to starting it?"
alix:
So, it's a crazy story. When I first moved to San Francisco, I was 24. I'd been working in finance for a couple of years. I moved out there thinking I wanted to learn a little bit more about the whole startup world and all that stuff. I took a job as an Executive Headhunter helping startups place C-suite level employees essentially. Right when I moved there, I got pretty sick. So, I had a whole bunch of issues with my reproductive health system. I was totally drowning in medical bills. I was trying to figure out, how I was going to pay for all this stuff. I had to freeze my eggs. It was a total nightmare. I started throwing these parties. I was charging tickets for these parties, which people didn't realize I was using to pay down a whole bunch of medical care.
alix:
I went to a school that was very frat centric. I worked in finance, and I was in tech. I've always cared a lot about gender dynamics and drinking culture and how we interact with one another when our guards are down. I started to notice that there was just a really different energy when you're in a female-owned social space. At that point, I realized that I wanted to do something that addressed that in a way that was positive and fun and approachable. So, I started looking around, realized that I was going to really need a product to sell if I wanted to have a brand and a mission. Alcohol seems like the lowest common denominator. So, I weirdly ended up in wine.
Stephanie:
At the perfect spot to land. I mean, so tell me a little bit about you come on to this decision that you want to start in the alcohol industry. What happened next?
alix:
Yeah. So, I knew nothing about booze, I knew nothing about the industry. I really wanted to make a voice for women, and we say, good dudes, in a space where there just really hasn't been much out there. So, I tried to figure out, "How was I going to sell this product?" There's so much legal stuff that goes into the industry in general. It's so hard to get on a shelf, because you have to go through all of these different loopholes. So, I realized that there was a loophole to the system, specifically in wine.
alix:
The reason for that is basically that if you're a California vineyard, you can have a tasting room and a wine club. So, I realized pretty quickly that I was going to need to have a wine-based product if I wanted to be able to sell online. So, that I could have a proof of concept before trying to get onto the shelf. That's how I ended up with rosé in can as our first product.
Stephanie:
And beautiful can.
alix:
Thank you. Thank you so much. It's funny. My cousin's handwriting is actually what's on the side of the can, once our origin logo.
Stephanie:
That's good handwriting. I would not have known that's handwriting.
alix:
Yeah, yeah, we had to make our own font. It's funny, but anyways, yeah. Basically, at that point, I realized I had a 401k from my first job, but I'd forgotten about. I cashed the whole thing, bought 300 gallons of rosé. We were off to the races.
Stephanie:
That's amazing. Where did you even send these 300 gallons of rosé?
alix:
Yeah. Actually, I wasn't even... Don't tell anyone I said this, just kidding to anyone who's listening, but I wasn't even licensed at the time when I made our first proof of concept. So, I wasn't allowed to sell it. I technically purchased it from a winery under their license as a direct to consumer sale. So, I used the product to go seed investors basically. I would bring it to all of these different parties. And then a couple days later, I asked for an introduction from a friend to a potential angel investor. They'd be like, "Oh, my gosh. That stuff was everywhere." But I actually put it there. So, it was just the hustle is starting together original around the funding.
Stephanie:
So, since you bought that 300 gallons of rosé for $20,000, have you changed the product? Is it a new different wine now? From where it started, where is it today?
alix:
Honestly, we hit it pretty well in the beginning. Wine is so interesting, because there's so much chemistry that goes into the profile of making it. So, we basically done a whole bunch of blind taste tests of a bunch of different types of rosé and just went to our winemakers. We're, like, "Build us this backwards." So, there's definitely been some fine tuning and making sure it's as delicious as possible and sugar free and all that stuff. But it's pretty similar to what it was at the beginning. Now we have additional products as well that all have a similar profile but are different varietals.
Stephanie:
Okay, cool. What's the strategy behind putting it in the can?
alix:
Yeah, at the beginning, people ask me this a lot, because they're like, "Oh, cans are exploding. This is such a new category." When I did it, it was not normal. It was super hard to find somebody who would even can it. We're talking three years ago before you really saw any canned wine on the shelf. The reason I did it was pretty practical. I had no money, right? So, I was like, "How am I going to make something that is branded, and that people recognize if you pour it into a glass and you don't know what it is?" Right?
alix:
So, in my mind, I was like, "Well, if I make it almost like Red Bull-esque, where it's a really identifiable can, it's cute, it's Instagram friendly, the product will start to market itself." That's how it ended up in a can't honestly. It was no real strategy at first, but I also wanted to really be able to play against the beer culture, which that seemed to make sense at the time.
Stephanie:
Yeah, I mean, that seems like such a great way to get that word of mouth marketing working for you, just like it worked in the beginning with investors, but also, having something that people share where it's different. I mean, even thinking about the amount of bottles of wine, I wouldn't think to share one of them or even remember half the time where it came from or the brand that's behind it. So, it seems like a really unique way to get people to share for you.
alix:
100%. If it's cute enough and fun looking enough and whatever, people want to take pictures with it. They want to be seen holding it. I think, beverage is such an interesting category, because people don't realize how emotional it is. But brands really drive a lot of the purchasing power in terms of what people choose to consume, because it says a lot about who you are. Think about Monster versus Red Bull, Fiji or whatever it's called versus smartwater. It's more emotional than people realize off the bat.
Stephanie:
Yeah, I love that. So, how are you going about garnering that emotion and developing that community, which seems like a very important part of why you even started this company? How do you do that day-to-day now?
alix:
Absolutely. I mean, there are so many different ways. I think we really are digitally native brands, which is such an overused term, but we've really been able to build out a community online and get our message across through our social platforms and all those types of things, where people really know what we're about and who we are and why we exist.
alix:
Originally like last year, there was a lot of event-based marketing that we did, where we had actual events that people could really get to know the brand and obviously that all came to a quick halt in early 2020. But now we have brand ambassador programs that actually have community ways that they communicate with each other. They find people to go out with together, even like housing. It's really become more than just a brand ambassador in the traditional way, but a real community where they are communicating with each other as well as with the company.
Stephanie:
That's great. Have you seen any success with virtual things? I mean, you mentioned that brand ambassador and building a community online, but are there other things that you took your event budget and moved it over to something new to try out virtually?
alix:
Yeah, I mean, we've done a few virtual events. I think people got a little tired from them a little early on. I think, where we've seen a lot of word of mouth growth and that kind of thing is actually because of the form factor, it's so easy for social distancing, right? You don't have to split a bottle of wine and use glasses. It's sanitary, stuff like that. We've seen a lot of word of mouth coming from people ordering cans and being able to sit outside far apart and enjoying the same thing, which has been pretty interesting and not something that I would have thought of originally when COVID hit. But that's definitely been something that's worked in our favor.
Stephanie:
Oh, that's really interesting. Are you leaning into that trend once you started seeing it pop up, starting to create conversations around that and showing, "Hey, look at what our other customers are doing"?
alix:
Oh, for sure, for sure. In addition to that, in what we call on premise, like bars and restaurants and stuff like that, it's so much easier for takeaway, right? Ordering something, being able to throw a can in a bag and go do your thing has been something that's been helping the category all around.
Stephanie:
So, when you were building out your ecommerce platform and thinking about building out a shopping experience to sell alcohol online, especially one that caters to women, how did you think about setting up your website in a way that someone would go there and be like, "Oh, I want to order this right now," or "I really feel a connection with this brand"? What things did you implement or personalization did you implement on the website? What things did you build out that really worked?
alix:
Yeah, I think it's funny, because when we first built the website and my Head of Marketing, who also happens to be my husband... He's awesome. Well, that actually happened second. He was recruited once after we got married. He was telling me, "We have to invest in the website. We have to invest in the website." At the time, honestly, I didn't get it, right? I was like, "Our website looks fine. It's cute. It's whatever." I'm so glad that he did, because it's made frictionless buying... I've started to realize just how important that is. Things like Apple Pay and making sure that the website's easy to navigate has really converted for us.
alix:
I think the other thing, from an emotional perspective, it's been important for us to really makes sure that who we are and why we are is front and center and easily accessible. That's something that, I think, people start to poke around the website. They start to really get, I mean, I hope so anyway, who we are, and that brings them into the family more. We've seen that our repeat purchase rates are really strong, because people become such advocates of not just the product but the brand.
Stephanie:
That's great. Because we've talked about this quite a bit, on-the-shelf brands like Bombas or Yellow Leaf Hammocks. There's always this tricky balance between selling the brand and everything you're doing around the brand, maybe the social good aspects or things like that, but then also selling the product and making sure people know the products very good. How do you think about that balance, especially on a website where someone could quickly just come on there, look at something, and then hop off?
alix:
For sure. My favorite compliment is, "Wow, it's actually delicious," because that means that... We get that all the time, where it's like, "Oh, this is actually really good." I'm like, "Well, yeah. I mean, duh. I'm not going to sell you something that I wouldn't want to drink." But I love that, because it means people don't expect it to taste how it does out of the can. It's great. But I think focus is so important when it comes to that. I think the way that we really try to attack marketing is making sure that the messages that we're sending aren't too many. They're very focused on what we want to do, right. So, for us, it's really Made by Chicks, zero sugar product. Our mission is break the glass, right? That's what we really try to hone in on.
alix:
I think there's a lot of A/B testing that goes into, "Okay, what consumers are really looking at the products and are buying for the first time, because of the product versus buying for the first time because of the brand and the mission?" I think a lot of the times people are going to buy a product that they're excited about or that they've heard about or that they want to try. If they if they like it, that's just straight table stakes. That's when you start to see repeat and people really start to become evangelists. So, it is a fine line and one that I think is constantly evolving, but something I think the team has done a pretty good job of navigating and just making sure that it's focused.
Stephanie:
Yeah, that makes sense. The brand can draw people in or the purpose can draw them in, but then you have to have a good product. That's how you get your repeat buyers.
alix:
Oh, for sure. Yeah. It's table stakes, right? If it's not delicious, it's not actually delicious.
Stephanie:
Yeah, actually good.
alix:
Yeah. If it's not actually good, then you're not going to get what you want.
Stephanie:
Yup. So, earlier, you're mentioning about investing the website. What were some of the biggest changes that you all made? You mentioned frictionless buying, but what other things did you update where you were surprised by increases in the metrics you're watching or performance or buying rates?
alix:
Yeah, well, everything. I mean, we had to redo the entire thing. For us specifically, there was a lot of programming that had to go to the back end to make sure that everything was compliant, because we are alcohol. There's a lot of legislation rather. There was a lot of build out that had to go into that.
alix:
And then I think the other things that helps are having things like a chat on the site, where you can reach out to customer service and these types of simple things. We're continuing to expand on that and stuff like loyalty programs, because the repeats are so strong. People want to recommend it to their friends. There's been a lot of different things of that nature. Also, just making sure that the tech stack on the back end is strong, so that we're learning right and evolving as we see customer behavior.
Stephanie:
So, you built out this new platform. You're trying out chat bots and everything. What kind of metrics are you monitoring to see if things are going well? What do you look at every day or week?
alix:
For sure, I mean, obviously, top line, we're looking at AOV, average order value. Lifetime repeat rates are huge. We have a subscription service on our website as well, because people really love their wine. So, making sure we're keeping an eye on churn. Things of that nature are pretty straightforward, but I think all of that is really important in understanding the health of the online business and the brand.
Stephanie:
How do you keep customers engaged? Whether they're in a subscription or they just bought for the first time, what kind of methods are you using to engage with them and keep them coming back and keep them subscribed?
alix:
Well, we have a fair amount of email marketing that we do that we found works really well. We try to make sure that we have content that's interactive. I think one of the things that really surprised me at the very beginning of takeoff is customer service and how critical that is, right? You can turn somebody from a "Karen," if you will, into an evangelist with a strong customer service team. I think people underestimate how revenue generating that can be. So, that's definitely been a big thing for us.
alix:
And then in addition, we've been doing SMS and a lot of things that keep us top of mind without oversaturating people's inboxes and having them unsubscribe or anything like that. The other thing that I think is important is just... My husband always says this, "Say what you do and do what you say," right? So, make sure that we are delivering orders on time. If we go out of stock, people will drop their subscriptions, because they got their most recent one later than they thought they would. Now they have too much wine or stuff like that. So, really making sure that the execution behind the marketing is there is so critical.
Stephanie:
So, I want to dive a bit deeper into that, building out a good customer service team, because I think that's something that's really important that I don't see enough brands investing in. I want to hear how do you go about building a team like that, who can, like you said, turn a Karen into a loyal customer? What kind of training are you giving them? How do you think about building up that team?
alix:
Yeah, so that team is really at the end of the day, the heart and soul of the organization. I think a lot of places make mistakes and not treating it as such. They're the voice of the brand. They're the literal person that people are communicating with. So, we actually have a policy where anyone who starts especially on the marketing team has to do two weeks of customer service, they have to understand who our customers are, how we talk to them, how we interact. It's critically important. I think that team has to be so well-trained on culture and brand voice and mission and making sure that they're constantly getting better and getting better, right?
alix:
So, implementing new systems, pulling insights from our customers, seeing what they're asking for, which helps us decide what new products to develop, all of those kinds of things. So, I think a lot of the time, those positions can be undervalued. At the end of the day, that's where you're going to get so much information and so much communication with your customer and so much insight into what you should be building.
Stephanie:
I can see there being a lot of value too with, like you're mentioning, gathering that feedback and seeing what customers are asking for, seeing what the conversations are, and then doing a full circle back to the team. So, then they know, "Okay, here's what other team members keep having to respond to. You probably will, too," and just using it as a training method as you ingest that data and getting it back to them.
alix:
Yeah, exactly.
Stephanie:
So, with that customer servicing, when you're getting all the feedback and all the data, how do you go about organizing it in a way that you can make decisions off of?
alix:
So that is really the team lead, right? She pulls together reports for us on a weekly basis that are major insights. The team under her flag certain things in different categories, whether it's major complaints that we're seeing or major requests or what some of the positive feedback might look like. Obviously, to me, the negative feedback is more important, because that's where the real learnings are going to be. But we have a system of tagging in various categories to make sure that we're pulling those insights into the metrics that we find important. If people are choosing to cancel, why are they choosing to cancel thing, things like that. So, that's reported up. We have consumer insights meeting at least every other week.
Stephanie:
Yup, that's cool. What are some of the most surprising insights or complaints that you've gotten that you were like, "Oh, I wouldn't have expected that"?
alix:
Unfortunately, some of the ones that I've found to be the most upsetting are people who like the product but don't agree with how we communicate about the social issues we care about.
Stephanie:
Oh, I see.
alix:
Yeah. That's been a tough line, because we're here with a very specific mission and purpose. We are about women and women and men treating each other right and addressing toxic masculinity in a happy way. We're very clear about our communication around things like sexual assault in our industry and date rape culture and all that stuff. I've had moments where people... They're like, "Keep your views to yourself, I would have kept drinking your product otherwise," or whatever it is.
Stephanie:
Oh, my gosh.
Stephanie:
Well, I am happy that you guys stood up to those people, because I think there's going to be room for more brands to start speaking up against crazies, because right now, I do feel like a lot of brands actually sometimes get bullied by whoever's loudest on the internet.
Stephanie:
I think there's a lot of room for more brands to speak up like that behind the decisions that they're making, instead of just conceding to the loudest person on the internet, which might not even present the majority.
alix:
100%. I mean, the loudest people are the ones that drive conversation a lot of the time. I think brands fail when they try to be everything to everyone. That's not a brand. That's just a thing. We are who we are. We care about what we care about. That's where you're going to be the difference between a product and a brand that has real lasting power.
Stephanie:
Yeah, I love that. That's a good quote. So, with everything's going on with a pandemic, have you seen buying behaviors change? Earlier, when you were mentioning about reasons people are canceling, have you seen new reasons pop up for why they're canceling that we're different than months ago or why they're buying that's very different than six months ago?
alix:
Yeah, I mean, six months ago, it was harder to get people to buy alcohol online, right? It's generally you're going from one place to another. It's oftentimes an impulse purchase. You're on your way to a friend's house or on your way to a party. I would say we've seen an uptick in the way people are purchasing our products more than we've seen some of the difficulties that other brands are seeing during the pandemic, because they don't want to go out. This is not something that historically people buy in a forward looking predetermine fashion, if that makes sense. That's changed. They want things at home. They don't want to have to really think about it. They're not going out as much. So, that's been huge for us, where we've actually seen a huge lift in online purchasing and online subscription.
Stephanie:
That's good. How are you guys leveraging mobile? I know earlier, you had mentioned SMS. How do you think about that, especially when it comes to mobile ordering?
alix:
We definitely do SMS marketing. Like I said before, making sure that the mobile experience at our website. Honestly, I believe it's about 70 to 80% of purchases are made on mobile.
Stephanie:
Oh, wow.
alix:
Which is crazy.
Stephanie:
On your website?
alix:
Yeah, on our website on mobile, which is pretty nuts. Yeah. I was really surprised by that that people are buying on their phones, because they're seeing it on Instagram and TikTok and all of these different outlets, where they're sitting on their phone and they're clicking through. So, making sure that process is seamless has been really important.
Stephanie:
That's huge. That's a very big number. I wouldn't expect it to be that high on your website. So, where are these customers coming from? What are your best channels right now, where you're getting the most customers from?
alix:
We're really trying to diversify away from just Facebook and Instagram. Though obviously, that's a big funnel for many brands, but it becomes addictive. It can be fickle and expensive. So, we're really trying to diversify different ways that we acquire customers that are more organic, whether again, that's our brand ambassador program, influencer programs. We've actually seen a lot of success on TikTok. That's not paid, because we're alcohol. So, we can't actually advertise on TikTok. So, all of that has to be organic and influencer driven. Funnily enough, I was pretty surprised, but we've seen a fair amount of return on podcast advertising as well.
Stephanie:
Oh, that makes sense, because podcast listening is up as we know. So, yeah, that makes sense for that to work out well.
alix:
Yeah. Our email marketing is pretty strong. So, once people are in the funnel, we do see a fair amount of lift with emails. Just making sure that all of it is on brand and the brand voice is really consistent and makes people feel like we're not just a bot, but we're real people that are reaching out to them, we've found to be something that consumers get excited about.
Stephanie:
That's cool. So, earlier, you just mentioned about influencers and TikTok, how are you going about partnering with influencers? Who do you find to be the best influencer? How do you find those people? How do you work with them? Because we've got a lot of listeners ask about working with influencers and that people don't really understand, "How do you start those relationships? Do they actually have a good ROI? How do you find good ones?" So, let's start with that.
alix:
Yeah, I mean, it's tough, right? I think we're in a very lucky position, because nobody is going to say no to free product.
Stephanie:
Okay, that's how you get them in. You offer them free products.
alix:
For the most part. Do you want to try this out? Here's what we're all about. Here's who we are. Making sure that those interactions are direct and actually a real person, not templating things. Doing your research on what these people are about, who their following is rather, how engage they are. Really doing your homework and being thoughtful in the way that you partner. I'm a huge advocate of quality over quantity. So, I would rather have a longer term partnership with a fewer number of people, where they're repeating rather than just one huge post from a large scale influencer. We've seen bigger ROIs on the smaller people with the higher engagement.
Stephanie:
Yeah, yeah, I've heard that same theme. Is there a certain level where you're like, "Up until this point, if they have this many followers or less, free product will win them over. And then after this point, then they're just going to be looking for money or something else"? Is there a certain barrier maybe?
alix:
It varies. It really varies, because I think, for us, people get excited about us for different reasons. As I mentioned before, whether it's product, whether it's the mission and they just want to get behind it, whether it's just being part of the community, right? So, we've seen people want to post and engage for all sorts of different reasons. There isn't really a fine math to it. I would say, the more macro the influencer is, we found the more that they want to get paid. But also, it really depends on who it is. But by and large, I would say that the returns are not as good.
Stephanie:
Yeah. Yeah, that's good to know. So, what is a favorite piece of content that either you've created, or an influencer has created, where you're like, "This is really fun or funny," or drove a lot of purchases, anything come to mind?
alix:
So, we have a small silly thing that we do. We have this weird sub cult of grandma's drinking Bev.
Stephanie:
Oh, my gosh. That's great.
alix:
Which is funny. So, there's this one influencer we've worked with called Ms. PattyCake. She's done the funniest content for us, where she's just this fab grandma. She'll like dress up in full extra clothes and be drinking our cans of wine and stuff like that. So, I mean, that's one of my personal favorites. Whether-
Stephanie:
That's great
alix:
... it's going to drive the most traffic, I couldn't tell you. I mean, another partnership that we did that's been really great is Serena Kerrigan and her Instagram show, I don't know if you're familiar with that.
Stephanie:
I'm not. Tell me about it.
alix:
Yeah. Yeah, totally. So, during quarantine, she basically created like the first reality television show on Instagram. She started going on live dates on Instagram Live with random guys from her house. It became such a funny cult following thing, where people were just login. It's actually on Wednesdays at 8:30 most the time just to watch her go on a date, whether she goes on the second date or whatever. So, we sponsored her for her second season. I think that's one of the big things too. The bigger the influencer is, the more brands they're working with. We really like to find people who are fun and own themselves and very mission aligned and empowered that are earlier and up and coming. We found that to just be way more effective.
Stephanie:
That's great. I need to go and watch that. That sounds really funny. How did you find her? How do you find these smaller people? Because that always seems like the hardest part for me anyways. Think about like, "Oh, go find an influencer, who has a good following. These people will actually want what she has or he has, but they're not too big where they don't ask for crazy things." How do you find those people?
alix:
That is a great question. The team is really good at that. I'm not necessarily doing this all myself these days, but I would say that it's especially tough for younger brands, because there is such a capacity constraint in terms of time. It really, really is a full time job keeping your finger on the pulse on what's going on social, right? I think it changes so quickly. What people are doing online changes so quickly. I mean, they can change in the day, right?
alix:
Making sure that you're that you're responding without losing your authenticity, and also, just being engaged with your consumers and who are they following and what are they excited about and seeing if those audiences are like-minded people. It's a lot of keeping your finger on the pulse. Frankly, it's a lot. It's a lot of time.
Stephanie:
What are you seeing when you sponsor a series on Instagram like that, where it's more product placement, where it might not be something that that person is referencing but she's in the scene; versus the ROI on a platform, maybe like TikTok, where they're probably putting it more front and center? That's what their post is about. What kind of ROI should someone expect when utilizing these two different methods?
alix:
I mean, honestly, it varies, because a lot of the time in TikTok, it's not necessarily just about what the product is. A lot of the time, it is something that they just happen to be drinking while they're saying something funny. And then they might like off the cuff mention it. Whereas on Instagram, you're looking at more of a hard post. You can track the ROIs with specific codes that you're giving influencers and stuff like that.
alix:
So, it's something that I think we're really trying to fine tune in terms of, "How do you track those ROIs in an effective way?" But for us, we've seen that TikTok engagement in particular is really interesting, because it's still newer and the algorithms aren't as tightly figured out as Instagram is from what we've started to see. So, the ROIs can be much higher. But again, it totally varies, and it really depends on the content of the person.
Stephanie:
Got it. That makes sense. Are you working on any new crazy things like crazy marketing campaigns or channels that you're trying out or anything where you're like, "I have no idea if this will work, but we're going to try it"?
alix:
Absolutely. I mean, we're really trying to build out our own content marketing platforms. We launched a podcast that did quite well, that I was actually the host of.
Stephanie:
Nice.
alix:
It's called Made By Chicks. Yeah. So, figuring out we're trying to build out more of, "What does our newsletter look like? How are we bringing value-add content to people? How are we doing it in a way that's not necessarily just sales emails, but really addressing who we are and giving people value outside of our product alone?" Right? So that's one of the big challenges that I think we're going to see in 2021, is "How do we build that in a way that has a strong ROI? What do those ROIs look like? What kind of partnerships can we get involved with?" These types of things is something that we're really going to focus on for next year to get away from the Instagram addiction, if you will.
Stephanie:
Yup. Yeah, I think it's good to start exploring new things like that. Yeah, we work with companies all the time, who are thinking about building podcast or sponsoring podcasts. It's definitely a good avenue to explore, because it's only increasing. At least podcasting is only increasing, not people listening.
alix:
For sure, for sure.
Stephanie:
All right, so let's move over to the lightning round. This is where I'm going to ask you a question and you have a minute or less to answer. Are you ready, Alix?
alix:
I am so ready.
Stephanie:
Alright. First, we'll start with the hard one, what one thing will have the biggest impact on ecommerce in the next year?
alix:
What one thing was the biggest impact on ecommerce? I think the biggest thing that will have an impact on ecommerce is the social climate.
Stephanie:
Tell me a bit more.
alix:
I think it really depends on what happens with COVID and civil unrest and all those types of things, because that's what really starts to clog up people's feeds. They're seeing a lot of that. So, that's where we see tax increase dramatically is when there's a lot going on in the world around [inaudible 00:44:21].
Stephanie:
Got it. Makes sense. That's a good one. What's next on your reading list?
alix:
My reading list?
Stephanie:
Mm-hmm (affirmative).
alix:
Never Split the Difference, which is a negotiation book from I believe it's a CIA interrogator.
Stephanie:
Yeah, we just had someone else recommend that. I think it was just a couple of episodes ago.
alix:
Oh, really?
Stephanie:
Yeah, that's popular book. Definitely check it out now. What's up next on your Netflix queue?
alix:
Oh, I mean, obviously, The Crown, definitely watching that. The Queen's Gambit was amazing too.
Stephanie:
Yes, I'm watching The Queen's Gambit right now. It's so good.
alix:
It's amazing.
Stephanie:
I have to check out The Crown. I haven't seen that one yet though. I always just take recommendations from our guests. That's what guides my Netflix queue from all you guys, so.
alix:
Well, yeah, I would love any recommendations, because I feel like the whole world has just straight up run out of Netflix.
Stephanie:
I know. Yeah, we got to make more content. We need it.
alix:
Exactly, exactly. Give the people what they want, Netflix and Bev.
Stephanie:
What one thing do you not understand today that you wish you did?
alix:
Can it be about anything?
Stephanie:
Mm-hmm (affirmative).
alix:
I wish I had a better grasp on American history. I went to high school abroad. So, I actually missed my junior year when you're supposed to take American history. I was taking history abroad. So, I actually don't have a great background in that. I really wish I did, especially right now.
Stephanie:
Oh, that's a good one. I always say history repeats itself. Yeah, it's something I have to-
alix:
It does.
Stephanie:
... dive into deeper as well.
alix:
It does indeed. I wish I were better at reading biographies and historical books, but I'm not.
Stephanie:
Yeah. Well, hey, there's so much going on right now, but that's a good thing to lean into. The last one, what piece of tech is making you most efficient right now?
alix:
Superhuman with email.
Stephanie:
Oh, do you like it?
alix:
Yeah, I love it. It's definitely helped with my efficiency dramatically. Yeah, I wish I could say Asana. My team uses it very well. I'm a little bit of the slow adopter, but Superhuman has been really awesome.
Stephanie:
Cool. I have to check that out. Yeah, I've heard so much about it. Maybe something you can check out next. All right, Alix. It's been awesome having you come on the show. Where can people find out more about you and Bev?
alix:
Absolutely. So, you can check us out at drinkbev.com and follow us on Instagram, @drinkbev. Subscribe to our newsletters.
Stephanie:
Awesome. It's been a pleasure. Thanks for joining us.
alix:
Thanks so much.
They say that laughter is the best medicine. For Colin McIntosh, it’s also been a pretty good business strategy. After a couple of fits and starts in business, Colin found himself with no job but quite a few domain names in his possession, all of which were pun-based. So he cycled through what he owned and formed a plan to build a company in a disruptable industry where he could make a splash and earn some market share.
What he landed on was Sheets & Giggles, a direct to consumer bedsheets company with a social good component that became the most successful bedsheets company to launch on the crowd-funding site, Indiegogo. Since then, Sheets & Giggles has grown to millions of dollars in sales.
On this episode of Up Next in Commerce, Colin gives the behind-the-scenes story of building Sheets & Giggles, including how he worked backward to build an email list that led to an unprecedented 45% conversion rate. Plus, Colin dives into the pros and cons of selling on Amazon, and gives an exclusive preview of some of the ad copy he’s working on to bring more humor to the Sheets & Giggles campaigns across channels.
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Transcript:
Stephanie:
Hey everyone, this is Stephanie Postles, Co-Founder of mission.org, and your host of Up Next In Commerce. Welcome back. Our guest today is Colin McIntosh, the Founder and CEO of Sheets & Giggles. Colin, how's it going?
Colin:
Pretty good. Thanks so much for having me today.
Stephanie:
Yeah, thanks for coming on. I was very nervous about messing that name up. I'm sure you get that a lot.
Colin:
MacIntosh, McIntosh. Yeah, [crosstalk 00:00:28]-
Stephanie:
Oh, I meant your company name.
Colin:
Oh, Sheets & Giggles. Yeah. No, of course. Yeah, sorry. I feel like I've gotten so used to it now, I don't even register it anymore. But yeah, you can call it S&G for short, so that way you're not laughing every time.
Stephanie:
There you go. I like it. So, before the show started, we were going a little bit through your background, which I think people would like to hear before we get into Sheets & Giggles. So, I'd love for you to kind of start there. How did you come to founding Sheets & Giggles, and what came before that?
Colin:
Well, a lot came before. It depends on how far back you want to go. I graduated from Emory University's business school back in 2012, and I started my career at the world's largest hedge fund in Connecticut, a place called Bridgewater Associates. And, the founder there, a guy named Ray Dalio, is pretty famous nowadays. And, I got fired in about five months, which was great being 22 and losing your first job in a strange state that you don't know anybody in. And then-
Stephanie:
What happened?
Colin:
Well, I was terrible at my job. So, [crosstalk 00:01:33]-
Stephanie:
Five months is not enough time. How did they even know?
Colin:
No, Bridgewater is usually... They're famous for two months or two years.
Stephanie:
Okay.
Colin:
And so, I kind of had a weird little in between stay, where after two months we were all pretty sure it wasn't going to work out, but they were like, "Ah, this should work out," and they didn't want to really pull the plug. And then, eventually I remember, they were arguing in front of me one day about... I'll never forget this. They were re-interviewing me for a different role inside of the company, and... That's how they do it. You lose your "box," and then they try to find you a new box before they totally get rid of you, because they think you're a culture fit.
Stephanie:
Yep.
Colin:
And so, they were arguing in front of me. I'll never forget, these two guys, the two managers. One said, "You know, I think Colin is a six for this role," and the other manager says, "Well, I think he's more like a seven, and I think we should hire him into it." And, they're arguing six, seven, six, seven out of 10. And then, the arbiter goes, "Look, guys. He can't get hired into the role if he's not a seven. If he's a six, we can't give him the offer." And then they agree, "Okay, he's a six-and-a-half, and we'll need to have another meeting on it." And, I just remember I raised my hand and I go, "Guys, let me do this. Today's going to be my last day at Bridgewater." I just couldn't deal with that type of [crosstalk 00:02:50]-
Stephanie:
Yeah, rating you.
Colin:
It was crazy. Yeah. And so, that was my first job experience. And, from there I became a recruiter, a third-party agency, recruiting for banks, and hedge funds, and startups. That's where I got into technology, and startups, and software. Taught myself a lot about software development and software engineering, and ended up hiring a bunch of different engineers at a bunch of different companies. And, I ended up hiring myself at one of my clients in Seattle, in a really interesting B2B software space called Application Virtualization, which was really hot in 2014; it's still pretty hot.
Colin:
And I ended up moving up to Seattle. And then, about a year and a half later, I got an opportunity at a company that I helped co-found with some friends called Revel R, which was a wearable tech product that got into Techstars, which is for those listening, a really famous worldwide accelerator for startups. They give you a $100,000 for 6% of your company, and put you in a room with nine other companies for three months, and give you all the training, resources, connections, and mentorship that you could possibly need.
Colin:
And so I dropped everything I was doing in Seattle, drove 19 hours down to Denver on a week's notice, and became a Coloradan about five years ago. And, that company... I ended up working there for about two-and-a-half years. We all got laid off at 1:00 PM on a Sunday, as startups unfortunately go. And, it was really sad. We had raised millions of dollars, and we're in Target, and Brookstone, and HSN, QVC Deals, T-Mobile stores. But, that product, unfortunately, didn't have all the legs that we thought it did. And, three weeks after I got laid off xI incorporated Sheets & Giggles, and now it's been three years since that date. And, it is now the longest I'd ever worked anywhere in my career.
Stephanie:
That's great. So, what is Sheets & Giggles, and how did you have the idea to start it?
Colin:
Well, for anyone who hasn't heard of us, it's okay; although, I will hold it against you.
Stephanie:
Very rude.
Colin:
Very rude. We sell bedsheets that are sustainable, and they're made out of a material called Lyocell, which is made from eucalyptus trees. And so, if you Google or Amazon eucalyptus sheets, we're generally the first results. Lyocell sheets is another query we rank high for. And what our sheets do is, they actually save up to 96% of the water that cotton sheets use, which is about 96%... sorry, 1,000 gallon reduction. And then, they also save in energy, they use no pesticides, no insecticides; whereas, cotton can use 16-24% of the world's insecticides just by itself, as a crop.
Colin:
They also biodegrade faster than cotton, they're hypoallergenic, they're zero-static, and they're naturally softer and more cooling. So, if you're a hot sleeper, they're the best possible material. The eucalyptus Lyocell is for hot sleepers. And so, it's a really wonderful product. We began manufacturing at about two a half years ago, and we now have shipped tens of thousands of orders. We raised a couple of million dollars in capital, although we are mostly revenue funded, and we grow according to our revenue. And, we are just loving life right now. We're a very socially conscious company, and it's really wonderful to be able to have fun, do good, and make money at the same time.
Stephanie:
That's great. So, with your company, did you see an opportunity in the market from doing research, or did you just wake up one night sweaty like "Oh, I need to build better sheets. This is [crosstalk 00:06:32]." How did that happen?
Colin:
So, whenever I hear founder interviews from Brooklinen, or other bedsheets companies... And, I hate to throw Brooklinen under the bus. They're a great company, and I really respect... No, I really respect what they've built. They get $100 million dollars in trailing 12 months revenue. They're a wonderful company. But, their co-founders go on these-
Stephanie:
However.
Colin:
... podcasts, then they're like, "Oh, we were staying in these hotel sheets, and we were like, 'Oh, they're so lovely. And, let me find out how expensive they were,' and we were like, 'There had to be a better way.'"Nobody starts a company because they stayed at a hotel. They saw a really good business model. They found a manufacturer who would make really good products for them at an affordable price so they could resell it a higher price, and they went from there. And that's great, and they should be proud of that.
Colin:
And so, that's sort of, more or less, what happened with S&G, where it was actually a business model play first. And, I'm a big... a big, big advocate of sustainability, and climate change is one of my hot buttons. I've always had a bleeding heart. I've worked at startups trying to end animal euthanasia. My last startup, the wearable tech startup I talked about, we were trying to fight sexual assault and violence. We actually sent out 60,000 emergency alerts, saved a bunch of lives, which was really a wonderful... wonderful thing that the company did. But you know, this company, I really wanted to have a sustainability mission. And so, I kind of sat down and I wrote out my perfect business model with a sustainability mission.
Colin:
This is a true story. I looked at all the domains that I owned, and I owned SheetsGiggles.com because I thought it'd be a funny name for bedsheets company. I have a lot of pun-based domains that I own.
Stephanie:
What's some other ones? I want to hear them. Any others come to mind?
Colin:
I've got a few really good ones, Bodcasts.com...
Stephanie:
Oh my god.
Colin:
... B-O D-C-A-S-T-S.com. I love that. I would love to do podcasts for exercise, where you don't have to watch YouTube videos, and you can just have a platform for exercise physiologists and personal trainers to do listening-only routines. I also own SunglassesHalfFull.com for a sunglass company, GiraffeCarafe.com for carafes in the shape of giraffes. I own WorkFromRome.com. Why work from home when you can work from Rome? That's a travel company for remote work. I buy a lot of domains [crosstalk 00:09:13]-
Stephanie:
So many companies to start, so little time.
Colin:
Yeah. Romanhemperor is probably my favorite one that I'll probably start one day, a CBD company.
Stephanie:
That's good.
Colin:
My nephew's name is Roman, so he'll be my little CBD mascot.
Stephanie:
Perfect. I like it.
Colin:
Yeah, I'm sure my sister will love that.
Stephanie:
Yeah, I think she will.
Colin:
Yeah. But yeah. To answer your question, a lot of them. I owned SheetsGiggles.com. I thought, "Does bedding fit my criteria?" and it fit perfectly, $12 billion U.S. market growing 10% year over year, highly fragmented, the top five players only own about 27% of the market, and it wasn't fully online at that point. It was still mostly physical retail. I kind of just put my head down, and I fell in love with this brand. That was the other thing, is I just fell involved with the idea of a funny brand in a very boring space, especially if it's a sustainable, premium product and you can still do a funny brand. That's a really hard tight rope to walk, and I really fell in love with the branding challenge.
Colin:
That was kind of when I put my head down in October 2017. I created a brand, Identity Map, for this pun-based bedding empire, is what I would call it to people. Me and a couple of contractors just designed a logo, and I built my own website, wrote every single word of copy myself, would stay up until four in the morning, writing, wake up at 8:00 AM, start writing again, and just totally fell in love with this weird, little company that I was creating in my bed, in my underwear. In May 2018, we did our crowdfunding campaign on Indiegogo, raised $284,000 crowdfunded, love those crowdfunders and have a very special relationship with thousands of people who brought the company to life, and it's all been history of since there.
Stephanie:
That's really fun. What was your experience on Indiegogo? How did you get found? Because a lot of times on those crowdfunding platforms, it seems like there's so much noise nowadays. In the early days, it was [crosstalk] to get found.
Colin:
Yeah.
Stephanie:
Now it's like, "Oh my gosh, if I put something up there, there's thousands of other people trying to raise money for something." How did you make sure that people found your potential product?
Colin:
Yeah, absolutely. Even in 2018, it was still a pretty difficult task. There were still thousands of projects being launched every single day. 2013, 2014 would have done prime time to do a crowdfunding campaign. That was actually when, fun fact, I'm going to brag a little bit, Brooklyn did their Kickstarter in 2013 or 2014, and they did $236,000. We did ours in 2018, $284,000.
Stephanie:
Hey.
Colin:
Yes.
Stephanie:
Hello.
Colin:
Basically, there's a few hacks for crowdfunding campaigns. If anyone out there is thinking about doing a crowdfunding campaign, generally speaking, you want to do a few things. First and foremost, you want to set a goal that you can hit on day one because their algorithms reward percentage of goals hit in a period of time. They don't reward dollars raised. You don't want to go too low because then you've set expectations for people that, "Wow, you've blown away your goal, and now I expect the world from this company," but you don't want to go too high either and have a goal that takes you the full 30 days to hit because then you won't trend. For us, for example, internally, we wanted to do $100,000. Externally, we set our goal as $50,000. We thought that we could hit that in a couple of days based on our preparation.
Colin:
The second thing you want to do in order to come out of the noise is prepare. A lot of people... It's kind of sad. I see them launch a crowdfunding idea for something that maybe is a really cool idea or a cool project, but they don't do any preparation whatsoever, and they don't stop the think that even if they have 1,000 Facebook friends and 30 friends and family and 500 connections on LinkedIn and whatever it is, you just got to always assume a 3% conversion rate with anything, even your friends and family. If you have 1,000 people that you think you can count on, you're talking about 30 people that are actually going to pull the trigger and give you their credit card information when you end up buying. You don't want to rely on the friends-and-family model for crowdfunding. It's just not a good way to do it.
Colin:
What you want to rely on is an email list. I get asked all the time, "Where do you find your email list? Do you buy it? Do you build it?" The answer is, "You build it." You want to build it and get people to give you their emails who are interested, qualified leads, who are interested in buying into the brand that you're building. What we did was we worked backwards from our goal of $100,000 and said, "Okay, $100,000 in 30 days, generally speaking with the crowdfunding math, you want to make 30% of that on day one." That's just the way the crowdfunding works, big boost in the beginning, plateau in the middle, boost at the end. You want $30,000 on day one. We knew our sheets were going to cost $70 on average, which was a really low price. I really under-priced them. We knew our average order was probably going to be 1.5 units, so $100 average order value. If $30,000 on day one at $100 average order value is the goal, that means we need 300 customers on day one.
Colin:
If an email list converts at 3%, then that means that we need 10,000 emails in order to get 300 customers on day one. That became our singular focus, singular goal from February through April of 2018 was gathering those 10,000 emails, doing it at an affordable price that would end up translating into a low cost of acquisition, and we ended up spending about $9,000 to gather about 11,000 emails, converted at about a 45% rate, which was really unheard of. That was the first time I was ever very, very-
Stephanie:
That's really high.
Colin:
Yeah, I was very, very excited and confident that the crowdfunding campaign was going to go well when we saw the 45% email capture rate. We ended up converting at 4.5% on our email list on day one, and we had a $45,000 day one just like clockwork. Then we [crosstalk 00:15:05].
Stephanie:
That's awesome.
Colin:
Yeah.
Stephanie:
I like the idea of working backwards. I think enough people don't think of, "What do I want my end result to be, and how do I make sure to get there?" Like you said, they rely on, "I have enough friends who will buy," which I've also experienced does not work. Friends and family [crosstalk] can only go so far. Yeah.
Colin:
People forget. People get busy. They have busy mornings. They forget. You need a big boost all at once to come out of the noise on crowdfunding. We ended up being the number two trending topic on Indiegogo.
Stephanie:
That's awesome. How did you go about building your email list? Because acquiring emails for the price that you did is very good. Conversions are very good. You can get a ton of emails these days, but a lot of them probably wouldn't be qualified if you don't do it the right way. What kind of tactics did you use to get good emails who are qualified buyers to make sure that they actually ended up converting when you launched?
Colin:
That's a great question. First and foremost, if you're going to do a crowdfunding campaign, I would recommend hiring a digital agency that specializes in crowdfunding, but I would be very careful about whom because there's a ton of sharks and predators in this industry who will take your $2,000 set up fee, and they'll promise you the moon, right?
Colin:
There is one agency I'd recommend, my buddy, Will Russell, he's the man, Russell Marketing in New York. And I trust him with my life, so I hired Will. I had known him tangentially through the last place I worked at. And he basically flew out the boulder. We sat down and we white boarded things out February, 2018 about our plan for the crowdfunding campaign. And basically the method was he had these emails from past campaigns that were early adopters, right? There are people who had backed Kickstarter campaigns before, and you can get lists like that in other places. Then you begin to build one, two and 3% lookalike audiences on Facebook. From those lists, you're able to advertise to other people who are likely early adopters. You build a landing page. We use kickoff labs as the software for our landing pages that hooked into our Google analytics. We did a photo shoot all in for $500 with me and all my best friends in Denver, Colorado. We were smoking cigars, drinking whiskey, having fun in bed, playing with dogs, eating pizza.
Colin:
Basically, whatever makes us laugh is what put on camera. And so, that was what we did in February 2018. We built those landing pages and that content with our first photo shoots, and all the copy that we wrote was just coming from my two fingers or 10. And then we just basically ask people, Hey, do you want to walk into the best price you're ever going to get on the best bedsheets you're ever going to feel? And we had three core value propositions for any crowdfunding campaign. You generally need three core differentiation propositions. One was that it's literally softer and cooler than cotton. And I led with that because I think that people are selfish and won't buy a sustainable product, if it's not better than the unsustainable version.
Stephanie:
Yep.
Colin:
Value prop number two was that it was sustainable, and value prop number three was that because I knew how all these retailers worked, and I know the margin share that Bed, Bath and Beyond takes from this category, which was about 40%, the price that you're paying is going to be traumatically lower than the price you pay for comparable luxury, sustainable options in the store. And those were our three value props and it really resonated.
Stephanie:
That's great. So what is your customer acquisition strategy look like now that's different than maybe what you did with Indiegogo?
Colin:
Now? I mean, now I have an in-house marketing team, a four person team. They're absolutely wonderful. And Sarah, our VP of marketing, is total genius, and she is someone who on the performance marketing side I think is unmatched. And I basically give her, to be completely honest. I give her free rein at this stage because a founder's skillset is fundamentally different than a CEO skillset. And I'm doing my best to transition from founder to CEO. And part of that is not micro-managing. And frankly, being okay with a much more boring job of facilitating, supporting, financing and managing versus being the creative, being the brand voice, being the copywriter, being the photographer and the videographer, and the Facebook data analyzer, and the Amazon ads creator. I can't do that anymore because it just doesn't scale. And it's also a good way to get talented people to leave when they feel like they're being micromanaged.
Colin:
So in terms of our actual strategies, basically, it's all direct to consumer on our website, sheetsgiggles.com and Amazon. And we've got a core channels of Facebook, Instagram, Google, and Amazon as our digital spend. We do some podcasts advertising, so definitely get in touch about that. And we also do radio advertising on Colorado Public Radio and a few other stations. And then we've tried direct mail, we tried a few other funky things. Nothing has the [inaudible] that digital tends to have.
Colin:
And in terms of email strategy nowadays, we actually don't email people nearly as often as we used to. In the very beginning, when we launched them Indiegogo, we'd email people maybe once a week. Now we're probably emailing people once a quarter, which is really crazy for a direct to consumer brand. Like every direct consumer brand in my inbox blows up my inbox four times a week like, buy more of our shit.
Stephanie:
Yeah.
Colin:
And so, the amount of sandal emails that I get from my sandal company is ridiculous. And so we email people only when we want them to take a very specific action. And that leads to open rates of high forties on emails, which is really, really stellar for open rates on emails. And we make sure that we use that wisely and we don't over innovate people.
Stephanie:
Great. So what are your favorite channels right now? Of everything that you just mentioned, is there any channel that you're maybe putting more budget into, or that you're seeing higher success with?
Colin:
I can find a row ad that beats Facebook, I will pull all my Facebook tomorrow, but they're definitely the highest row ads. Branded search is obviously the thing that's going to be best in the long run. So we spend a lot of time building up our brand recognition with people and our brand affinity, and then just earned media is really good too. We have a PR agency that we employ and we got covered yesterday by the Daily Beast, and we've been covered by Real Simple and Forbes and Apartment Therapy. We are Apartment Therapy's Best at 2020 picks, and a lot of other publications. We've been on today.com and Amazon gives us a lot of shout outs because of the philanthropy that we do.
Colin:
And so that's been really helpful to have Amazon as a big partner in our PR and in our discovery and exposure. So overall I would say Facebook and earned media are probably our two biggest ones. And then I do love radio and podcasts advertising, and I'm trying to figure out how to make that funnier for the listener. And so I'm currently recording a few new podcast ads that I think are going to be really funny and not in a really bad Geico, not funny at all way, but actual bits on the radio.
Stephanie:
Oh, give me a bit. What are you working with it? [crosstalk] You can practice in here. There's no judgment.
Colin:
Okay, great. Great. Great. So, I've got one that I think is pretty funny in a meta sort of way where I want to go on a podcast and be like, hi. Have you ever the CEO of Harry's do his thing?
Stephanie:
Yeah.
Colin:
I'm not famous, but I'm the CEO of Harry's.
Stephanie:
Yeah.
Colin:
So, I'm like, hi, I'm Collin, the CEO of Sheets & Giggles. That's probably means nothing to you, which is depressing, a little sad. We're a young company, we're based in Denver. We do some good stuff. Oh, we sell bedsheets. I should probably lead with that. God, how does the Harry CEO do this? And basically go with that. And then, somebody in the background goes 10 seconds. 10 seconds? And I'm like we sell eucalyptus bedsheets. They're sustainable, they're softer than cotton. Go buy them at sheetsgiggles.com. And that's the end of that. And then-
Stephanie:
That's actually catchy. I like that because a few people were like, "What is this dude going to say?" And then [crosstalk 00:24:12].
Colin:
And then I want to record four or five versions of that, that run on different roles. And basically, it moves from okay, they gave me a second take, I got it this time, I'm calling, CEO Sheets and Giggles, again, we sell bed sheets. I feel like that's obvious, maybe not that obvious. I don't know. If it was just called sheets without the giggles, it'd be a little more obvious. And then somebody's like, "10 seconds. And I'm like, "Oh, my God," and then get back into it again. And so, I think that those little bits and the nonsequiturs and stuff is very much our comedy and the trailing off and the tangents. And so, I really want to write a few different bits like that, that really flow with one another.
Stephanie:
Yeah. That's pretty great. I can't wait to hear this on radio or other podcasts as I think those will all do well. How do you-
Colin:
Well, you heard it here first.
Stephanie:
Yeah. You heard it here first everyone. This is special. Do you ever feel like selling through humor, like that could hold you back in a way because sometimes I see some brands where that's so much their angle that it gets away from the product because they get so funny where you're like, "Wait, what are you actually selling again?" So, how do you guys balance that to make sure you're still selling, but in an innovative, new way, that's setting you apart from others.
Colin:
It's actually a stellar question. I see that all the time when I see an Instagram brand that's just pure, pure, pure, funny without ever talking about their products in any way or ever talking about their reviews or their sustainability. It's just, "Buy our shorts because we're funny." It's like, "Dude, they're polyester shorts. I'm not going to buy your polyester shorts because you're funny."
Colin:
But the thing that we do, I think, that is not unique, but I think is smart is we basically let our reviews do the talking for us. So, we always say we're not serious, but the sheets are. And that's our mantra is, "We don't need to sell the sheets. Our reviews sell the sheets. Our stats sell the sheets." The amount of water we save, the pesticides and insecticides we save, we plant a tree for every order. We've got 3000 reviews on our website, 4.8 stars and we don't hide our one star and two star reviews like a lot of other consumer brands do. We have 845 reviews on Amazon as of this morning, I check every single day. I personally, as a CEO, read every single review that comes in, we have a Slack plugin that pulls every single review and puts it in front of my face. Every time we get one in live time on Amazon, we're four and a half stars on Facebook. We're 4.7 with 116 reviews, I think.
Colin:
And so, that type of cross channel confidence in terms of review score is really important for the consumer. And then the sustainability, the planting of a tree for every order, we give you 10% off if you donate your own old sheets to a homeless shelter, we pledge 1% of our profits, time products and equity, to local Colorado charities, we've donated $40,000 this year to Colorado COVID-19 emergency relief. The stuff that we do, I think, really speaks for itself and we don't have to really broadcast it and advertise it, even though I just obviously did. Instead, we just lead with the humor and then let people read more if they want. And truth be told, I think the most limiting thing, and you kind of touched on this, is that not everybody's a reader, especially when you're talking about Americans, no offense to... I'm a red blooded American, but we don't read.
Colin:
My old mentor at a toy company told me with the packaging that they made, their mantra is, "If you're asking people to read, you'll lose." And so, that's probably the biggest limiter is that a lot of our comedy is very copy heavy. A lot of other people are more visual or meme based or slapstick and video and we're much more copy heavy. And so, I like to think about us as sort of like the Seinfeld of bedding brands, which is probably the first time that's been uttered in the sense.
Stephanie:
Was that your Techstars YC type of thing of I'm [crosstalk 00:28:24]?
Colin:
We went to Techstars. They were like, "Why should we have a bedding company in Techstars?" And I think I was just like, "Why not?" And they were like, "We never thought about it like that." I was like, "You're in." But yeah, the Seinfeld of bedding companies was the way that I always thought about it. It's a brand about nothing. And by being a brand about nothing, it really is a wonderful way for us to be a brand about everything. And that was the beauty of Seinfeld, which has been my favorite TV show obviously, is that every episode was about its own little subtopic and it didn't have to have this overarching theme or story arc and that's great with us.
Colin:
As one day, we can donate $12,000 to the world wildlife fund to save koalas, another day we can donate 40,000 to COVID-19 relief, another day we can donate thousands of dollars to Black Lives Matter organizations, another day we can plant 20,000 trees for last year's orders. And we don't have this kind of overarching thing that we push on people. Instead, they can just discover it if they want to keep reading. And then we just try to make the copy entertaining for them to find their way through our website.
Stephanie:
Cool. Yeah. That a good way to explain it and yeah, it makes sense how you guys do it. So-
Colin:
It is limiting though. Yeah. When you're building a brand, you want 20% of people to really viscerally resonate with it and 80% of people to either be mad or react poorly to it and then that way you just don't want indifference. That's the biggest thing is I see so many direct to consumer brands that are the next shiny thing like, oh, the best apparel you'll ever buy or the best makeup or the best food or... They're all the same exact brand and it bores me to tears. The white stuff on the white walls with the white curtains and the white room. It's like, "Oh, just kill me."
Stephanie:
Yeah, completely agree. So, how do you encourage reviews? You were mentioning that you have a ton of reviews. How do you get people to follow through and actually take the time to give you your reviews?
Colin:
We, again, brand about nothing. We give to people who leave reviews free pizzas every week for no reason. It's just like, why pizza? I don't know. Pizza's good. You like pizza.
Stephanie:
Okay.
Colin:
Does it have anything to do with bedding pizza? People eat pizza in bed, I guess.
Stephanie:
I guess. Yeah. Not on my nice eucalyptus sheets though I'm not going to.
Colin:
But they wash real easy. So, it's okay if you spill on it. No, but that's how we incentivize it is we just say, "Hey, if you leave a review there's a chance that you'll get two free pizzas this week," and who doesn't like free pizza? Communists that's who. And so-
Stephanie:
That's good.
Colin:
Actually, we say capitalists that's who. And so, we do bits like that and it's stuff like that, that I think really drives people into the brand and we get people who are like, "This is insulting. I'm a capitalist." And I'm like, "It's a bit. It's just a joke about free pizza." And so that's how we incentivize it mostly. And then again, really engaging copy. The subject line is good, we have high open rates on our review request emails, we make it so you can leave the review directly in the email-
Stephanie:
Oh, that's a good one.
Colin:
We don't overpay for review software. I can't stand the stuff that's thousands of dollars a month. There's really good, affordable review software out there
Stephanie:
Okay. Cool. How did you think about moving on to Amazon? Because we've had a couple of [DVC] companies on here. Quite a few. It's been kind of mixed where, some were very excited about Amazon. Some were like, "Oh, I pulled it off because it kind of walked down the brand and they could end up just copying us and making a white label," and so there's been a lot of mixed thoughts around working with Amazon. So what led you to wanting to utilize their platform? Obviously they're featuring you and helping you guys. What are your thoughts around having a DVC company on Amazon?
Colin:
Amazon is Amazon. It's the best partner you'll ever have and the worst partner you'll ever have, and exists simultaneously in the same platform. That's why you hear this sort of debate or dichotomy amongst founders where it's like, "Do you want to go on Amazon?" And the pros, right, are that 54% of Americans. I think it got up to 60% of Americans now start a product search on Amazon. They've trained the American populace to, when they're looking for a thing, go to amazon.com. Google has lost that battle. So it's a massive channel that you really... It's hard to avoid. You have discoverability. You could have channel dominance. If you rise to the top of search returns for a high volume query, you can just rack in cash with no marketing spend whatsoever for years, until somebody tries to come beat you.
Colin:
It's a really solid platform. The negatives are, of course, that Amazon is extremely impersonal as a company. It's hard to get people on the phone there, although we do have account managers now. It is expensive. They take 25 to 30% margin share all in when you end up calculating all the fees from most companies, which is a really, really difficult thing for a lot of small businesses to swallow. And then you wind up paying them more to advertise on their platform to give them money when you make a sale. And so they're really a good partner in a number of ways. They do a lot of really great things for their companies, especially the small business partners, but, overall it's a love, hate relationship for sure. And you can do one thing wrong and get your whole listing pulled. And that can be really devastating too. So overall for me, it's a no brainer because if more than half of your audience is starting a product search on a specific channel, you have to be on that channel, period. End of story. Even if you're only doing it for branded searches.
Stephanie:
Completely agree. So earlier you were talking about working with PR firms and different efforts to bring new people, new customers, your way. How do you guys have your backend set up to be able to handle fulfillments? What does your tech stack look like to be able to handle any surges in demand?
Colin:
Surges in demand are actually difficult because we... forecasting demand is extremely difficult. Forecasting inventory becomes extremely difficult and then you put those two things together and you have to forecast the amount of people that you have working on your warehouse team at any point in time, which is extremely difficult. And so when it comes to surges and spikes, we use a 3PL, third party logistics provider, to ship out all of our orders, both on our website and on Amazon. We do FBM on Amazon, instead of FDA. And so we are basically able to get probably 99% of orders shipped out within a 24 hour period. But when we do have big surges and big backlogs it can slip to 72 hours.
Colin:
Because we are paying for that 3PL service, they have a finite amount of people that they've forecasted to work on their thousand brand partners that use that share of the warehouse space. And it's a really good way to lower the cost overall and then, from a small warehouse operation, if you're running it yourself, because you're sharing that square footage with so many other brands and you're sharing a labor with so many other brands And it's a pretty straightforward process nowadays in terms of hooking up a 3PL. In the beginning for the first six months of the company, October 2018, through March 2019, I was shipping out almost every box myself, along with a three person team in Denver, Colorado. We had our own warehouse space. We had 1,000 square feet. We were packaging. We could do maybe 250 orders a day maximum. And we were just trying to burn getting through holiday 2018 on our own.
Colin:
It was crazy. It was so [crosstalk] hectic. I think I shipped 3,000 boxes in a three week period at one point in time with the rest of my team, working eight hours, 10 hours a day in the warehouse and buy everybody lunch every day. And it was great. I had my customer service team and they're working with me. But yeah, it was definitely a lot easier when you can scale up and use the 3PL. I do have some companies that run their own warehouse space that actually wind up with all the headaches that it comes with and migraines that it comes with. They do wind up having a lower cost per unit in terms of fulfillment than we do, so there's certainly something to be said for that. But I think that right now we're at the 3PL stage for sure.
Stephanie:
Yep. That makes sense. All right. So we have not too long left, so I want to jump into the lightning round because I think you're going to have some good or funny answers. Lightning round is brought to you by Salesforce Commerce Cloud, our sponsors. They're amazing. This is where I'm going to ask you a question and you have a minute or less to answer. Are you ready?
Colin:
Okay, I am ready.
Stephanie:
The first one, what is the biggest fail that comes to mind when starting a DTC company that you experienced?
Colin:
Our packaging was white in the beginning.
Stephanie:
Were they white walls, white sheets, white, everything?
Colin:
Well, the inside of the packaging was purple and the outside was white and our packaging was lovely. We've got knapsacks to wrap the sheets. We've got free eye masks in every box. It's lovely, but a white exterior box sent through any postal service is going to get absolutely destroyed. And so that was our biggest fail was we had boxes just showing up, just beat the hell from FedEx and UPS. And so we moved in, I believe, mid 2019 to purple exteriors and that's allowed us to be much more efficient with our shipping and have much better customer experience.
Stephanie:
That's good. I can imagine getting a white box knowing that my bedding is inside it going, "Ooh."
Colin:
So dominant. And so to protect them, we had to put them in polymailers and in brown cardboard boxes, which was a huge waste for the first six months of the company. Then we had people call us out on it. And I was like, "You're absolutely right. This is so dumb. Why are we doing this?" And so now we just slap a label on the outside the purple box, and it's so much better. Additionally, minor thing, a major thing, minor thing. We had plastic in the packaging for the first six months. We had a little plastic sheet around the sheets, inside the knapsack to keep them safe from any water damage during transit. And we got a couple of complaints from people, really peaceful, nice messages saying, "Hey, I expect better from a sustainability company to put plastic in the packaging, even if it's recyclable." And we said, "Okay." And so we removed the plastic and we put in tissue wrap now for a final piece of protection.
Colin:
So there's no markings on the sheets and I'm thrilled to have eliminated that plastic. And now we've shipped out tens of thousands of orders since then with zero plastic packaging. In fact, we're the only bedding company in the world that does not vacuum seal our comforters. And they ship in the box, ready to go directly on the bed straight from the box, no [crosstalk]
Stephanie:
That's a good one. I hadn't even thought about that and I was wondering, are you having issues so far? But if not, more people should be doing that.
Colin:
Oh, we had issues. We just replace them. I mean, it costs us money. Like, FedEx will rip a box and then they'll get damaged and they'll leave it outside in the rain and it'll get waterlogged, so we definitely have that. But I think it's worth it to eliminate the amount of plastic that we're saving.
Stephanie:
Yeah, I like it. What's up next on your Netflix queue?
Colin:
Oh. I just started Ratched last night.
Stephanie:
How is it? It looked too scary for me. I'm a baby.
Colin:
It's really good. You know, I like stuff like that that's a little trippy, and I'm also a huge Marvel nerd, so I'm still waiting for the next Marvel series, but that's a Disney Plus queue, so I cannot wait for WandaVision and Falcon and the Winter Soldier and the Mandalorian is in two weeks as well, so I'm really excited for that.
Stephanie:
You've got your whole queue set up. I like it.
Colin:
Yeah, I love that stuff.
Stephanie:
Well, I know you said people aren't readers, but do you have anything coming up on your reading list?
Colin:
Yes, I just started The Everything Store.
Stephanie:
Oh yeah, that's a good one.
Colin:
And I'm surprised I haven't read it yet, actually. And then I'm trying to read things from a different cultural perspective because I'm a 30-year-old white male who mostly hangs out with other 30-year-old white males, and so I've got a book called Well Behaved Indian Women that I just started, and I'm really enjoying it. It's a totally different cultural perspective. It's so foreign to me and it's really, really great to immerse myself in that. I'm trying to think if there's anything else up next, but those are the two big ones.
Stephanie:
I'll have to try that out. What new E-Commerce tool are you trying out right now or having success with?
Colin:
Oh, it's something called Gives, and I should get a referral fee for this. So basically, it is this really cool thing we're doing to allow people after check-out to, when they buy something, donate a percentage of their order to the charity of their choosing. So we just tested it this week for Prime Day because we had our Prime Day deal on Amazon and we had a lower percentage off on our website, but you could donate another percentage of your order as well, so it actually ended up being a lower price but part of that was donated versus just going into your pocket and it's really cool.
Colin:
So now, our customers moving forward, and we're trying to decide if we want to do this on only special occasions or on every day type of thing. We already plant a tree for every order, now we're going to be able to let our customers donate 10% or so of their order to a cause of their choosing, which I think is a really, really, really cool thing. I just don't know if the dollars and cents work, so we're testing it out to see what that looks like.
Stephanie:
Awesome. Yeah, that sounds like a good implementation. All right, the last one. What one thing will have the biggest impact on E-Commerce in the next year?
Colin:
I mean, COVID. COVID.
Stephanie:
Yeah.
Colin:
No doubt. It's blown up E-Commerce on a five to six year type of acceleration. The amount of people that are shopping online versus in-store has just grown dramatically, and I think that we're probably in this environment for another six to nine months, until a vaccine rolls out. So I think that this trend will only continue, and I think that that's been a huge, huge driver of E-Commerce, and I think it's both good and bad, obviously. It can be good for some industries and horrific for others, so it's also a logistics issue and everybody listening out there, when you order stuff online right now, it's not the brand's fault if it takes 14 days to get to you. FedEx is trying to hire 70,000 people by Christmas and they're not going to hit that, they're going to hit like 50,000, which is still a dramatic undertaking. But the amount of packages going out right now is just overwhelming the system that we built.
Stephanie:
Completely agree. All right, Colin, this has been a fun interview. Where can people find out more about Sheets and Giggles and yourself?
Colin:
I'm a pretty private person. I do have a public Twitter, Colin D. McIntosh. Sheets and Giggles, you can google us. SheetsGiggles.com is the website, no "and" in the URL, just SheetsGiggles.com, and then we're also on Amazon if you want to search for our sheets there, Sheets and Giggles. [inaudible] the sheets. And yeah, pretty easy to find. And then our social media, SheetsGiggles, so it's just at SheetsGiggles everywhere. On Instagram, Twitter, Facebook. We're a good follow, we promise. We don't just post pictures of our products all the time and people buy them. And we just hit 10,000 followers on Instagram, which I'm really excited about. We've never paid for a single follower, so it's fun to build this organic following over time.
Stephanie:
Oh, that's great. Yeah. Nice work there.
Colin:
Thanks.
Stephanie:
All right, Colin. Thanks so much for coming on. This has been a blast and we'll have to have you on again in the future.
Colin:
Thanks so much for having me. Hopefully when I come back on next time, we're a much bigger company and everybody's like, "Oh yeah, I've heard of that brand."
Stephanie:
They will have heard of it. Don't you worry.
Colin:
I hope so.
Ask and you shall receive! We did a survey of our audience a few months back, and the number one requested topic was influencer marketing. And for good reason! Influencer marketing has infiltrated every industry and has the ability to drive large ROI if done correctly. But many new or smaller brands are wondering if they can take part in this marketing channel. And the answer is yes! Eric Lam, is the co-founder of AspireIQ, and he is here to explain how the industry has become democratized and any brand can take part in it, as long as they go about it the right way.
On this episode of Up Next in Commerce, he gets into all of that and more, including why he bet big on the idea of influencers when it was still a radical idea used mostly by large companies with large celebrities.
Today, Eric says that there are certain mistakes that many companies are making when it comes to working with influencers, and he details exactly how you should go about measuring the ROI from your influencer strategy. Plus, Eric explains why he thinks platforms like TikTok are undervalued and he predicts the future of how the world of influencer marketing will grow.
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Transcript:
Stephanie:
Welcome to the Up Next In Commerce Podcast, I'm your host, Stephanie Postles. Co-Founder at mission.org. Today, we're talking all things influencers, but the co-founder of AspireIQ, Eric Lam. Eric, nice to meet you.
Eric:
Great to meet you as well. Thanks for having me.
Stephanie:
Yeah, I'm excited to have you on so no pressure, but we did a survey of our audience, and the number one thing that everyone wanted to hear about was influencers. Early, like we got dozens of responses of [crosstalk 00:00:32].
Eric:
Love to hear it.
Stephanie:
Yeah. This is the perfect interview.
Eric:
Fantastic. Well, that's really helpful for me to hear, especially for my team work in sales.
Stephanie:
There you go. Tell me a little bit about what is AspireIQ.
Eric:
We're a platform for brands to build and engage communities of influential people from traditional social media influencers to top customers and brand fans to experts and more. We actually started back in 2013. Even though it's mainstream now, back then, influencer marketing was a pretty new concept. Frankly, the idea of businesses using Instagram back then in a meaningful way was pretty rare. Of course, now 93% of brands and kind of based on your survey, it sounds like that's increasing, are using influencer marketing as a core part of their digital and social media strategies, and we're lucky to be partnered with over 300 brands on the platform from some of the biggest names like Samsung to leading [inaudible] brands like Glossier and Purple Mattress.
Stephanie:
Amazing. Tell me a little bit, how is the platform design? If I'm a new customer, what would I experience when I enter a platform and what do I get out of it?
Eric:
Yeah. Even back in the day, I think pretty much from the beginning, some of the biggest problems we've tried to solve in influencer marketing have come down to three parts, finding the right influencers to work with in terms of creating content and promoting your brand, to managing the complex workflow between your brand and potentially hundreds of influencers in your community, to analyzing the impact of these influencer communities on your marketing goals. I think that where we've really made our bread and butter is that second one, the building workflow. That's because if any of your listeners have built influencer marketing programs, and actually in our early days, probably our first two years, we didn't have our own software, so we experienced this ourselves when we were running influencer campaigns for our clients.
Eric:
The real work that goes into this is all the communication and the cumbersome project management, the data organization, the contracts, the product shipping, the payments, and just keeping track of all this stuff in one place, especially if you're working with more than, say 10 influencers at a given time, like that's where the real work is. That's where we really focused on building a platform that can provide meaningful scale to clients building this in a sophisticated way. I think at this point, we've got a range of sophistication levels from fortune 500 companies who have seven different teams working across different countries with outside agencies and the corporate office, to some of the biggest DTC brands in the world who have kind of built their secret sauce in influencer marketing, and almost need to design this customized system within our platform for how to do influencer marketing. So, it's come a long way in terms of the sophistication level that a lot of our clients have had.
Stephanie:
That's awesome. Since 2013, what kind of shifts in the market have you seen? Because when I think about influencers, especially back in the day, it's like, if you don't have a Kardashian, you don't have an influencer. Now it seems like way more about like micro influencers who have a trusted audience and people actually buy what they want. What kind of things have you seen like shifts in the market?
Eric:
Yeah, it's evolved in a lot of different, really interesting ways. You're exactly right. I think in the early days, well, frankly in the really early days, when we first started, almost no one was doing influencer marketing, which was obviously tough for our business because we were trying to go to every brand and convince them to spend even like a hundred bucks on an influencer.
Stephanie:
They're like, no, thanks. Out of budget.
Eric:
Yeah. I think that was already like pulling teeth. I think, back then, I think the only brands doing this were probably these emerging ecommerce brands where ... they can't compete on traditional advertising, so Instagram had become this place where they discovered already consumers were coming there to learn about what to buy, what to do, where to go. That was true, even though back then Instagram wasn't this kind of commercialized or sponsor place the way it is today. But even in our early days, what kept us going is that we talked to so many ecommerce brands and consistently what we heard was the biggest channel that they were focusing on was social media and specifically influencer marketing.
Eric:
Then I think, yeah, after a few years, maybe like 2015 and 2016, the industry kind of evolve to what you were talking about, where everybody was trying to work with Kardashians. It was all about working with the biggest fashion bloggers, the biggest celebrities. The bigger, the better. And you're thinking about these vanity metrics, like how many followers someone has, or how many likes they have, regardless of if they saw meaningful returns on investment. Those were the early cowboy days of influencer marketing. I think because of a lot of the mainstream brands got involved there, you started to then see an evolution of how a lot of the DTC, a lot of ecommerce brands were starting to think about influencer marketing because they were kind of getting priced out of these big macro celebrities.
Eric:
So, they started honing in on more specialized micro influencers, like you mentioned, who, they might not have as big of a following, but they were a lot more targeted, a lot more focused in the concept of created, which meant they were a great fit for more personalized experiences, more authentic content in terms of the segments they were trying to reach among their customers. I think the second thing that was really interesting about the way this evolved is that these same ecommerce brands started using influencers for more than just trying to reach their audiences like in an advertising way, and they started looking at them as holistic content creators, because when you think about what an influencer is, they're kind of like this studio photographer model all wrapped into one person, whose literal job it is to make engaging content for this generation.
Eric:
These brands started re-purposing a lot of their content and using it in all their different channels, from paid advertising, to ecommerce website, to email marketing and more because content became this King of everything they wanted to do across digital. Today, I think that's kind of even more the case where you're looking at even more long tail influencers, and even people that aren't considered traditional social media influencers, but are really important to the brands and their strategies from marketing perspective. Brands might be building programs where they're combining influencers, but they're also combining those with top customers, power users, experts, working professionals who do customer referrals, whichever groups of people who have the greatest word of mouth impact on the customers and trying to win over, regardless of if they have a social media following or not. I think it's a really exciting phase of influencer marketing we're heading into, where it really includes, even democratize, where brands are kind of looking for these authentic voices, no matter where they come from.
Stephanie:
Yep. I love that. Yeah, I was just going to say, it feels like now there's so much more opportunity for anyone to have an influencer if you find the right person, whereas before, not so much. But if you're thinking about finding an influencer in your space or finding someone to partner with or using your platform to find some, what kind of metrics would you look at to make sure they're a good fit? What should a brand be looking for to be like, "ah, this is my perfect person?"
Eric:
Yeah. I think a lot of it comes down to what the goals of this influencer program is. But I think, at the end of the day, a lot of that comes down to subjective type of qualities. Obviously, you can see if they have a big following, you can see if they have really high engagement rates, but at the end of the day, you want to look at, what are people talking about in their comment section? What's the type of narrative they're kind of build with their audience? And does that really resonate with the type of nuanced audience segment that you're trying to build with your audiences? Because that tells you a lot about how they're going to co-create this narrative with you.
Eric:
That's really what we tell people when we give them advice is, you should really be building relationships with these influencers and treat them as a part of your community rather than looking at it as a transaction. I think that one of the biggest mistakes I see a lot is that, people will look at influencer marketing almost as like buying ad space, and it's really not like buying ad space because content creators are people.
Stephanie:
Yeah, these are people.
Eric:
Yeah, these are people who have these like nuanced feelings about the content they make, what they feel comfortable with, what's authentic to them. This is like their livelihood. Communicating with that level of empathy is really important, and if you can find people that really match your brand values and are going to be true advocates for you, that really translates into the authenticity, both from what they're saying, but also the kind of content they make because influencer marketing is pretty mature now and audiences can smell inauthenticity from a mile away. So, it matters a lot to find people that really believe in your brand.
Stephanie:
How do you go about making sure that a relationship is built on your platform and that someone's not just going through and being like, "Okay, bye. I want this." How do you develop or encourage a relationship to be built before they start working together?
Eric:
Yeah, I think a lot of times, frankly, sometimes it starts not necessarily with a kind of a official collaboration or with an official contract or anything like that. A lot of brands, what they do is they'll do what's called product seeding, and they'll send these gift bags out to influencers or micro influencers. A lot of people try out the products. If they like the products, they'll have them give feedback, they'll invite them to some events, they'll have them be part of some community activities before they really kind of like level them up into true ambassadors for the brand that have these more formalized contracts and agreements and payment structures and things like that. I think, obviously not all of that is necessary, but it kind of creates this much more organic experience, where ambassadors almost like come to you or are built with you, rather than just saying to every person, hey, we've got this $10,000 campaign and here you go, who wants the money? Kind of going based on much more of a transactional experience.
Eric:
That's one way to go. I think other ways to go are influencers who can come to you and are creating a more of an inbound experience. What we see a lot is brands setting up kind of these programs and looking for new ambassadors and new influencers to the program. A lot of times those might be smaller, but getting people to kind of sign up when they're small, when they have smaller followings is a great way to almost like build this farm system of up and coming influencers that are working with you in their early days so that when they become really big and famous. Obviously they've been kind of long-term supporters, long-term advocates of your brand for quite a while.
Stephanie:
Yep. That's great. Yeah, I think I've mentioned a few times in different episodes that I was ... I forget who I was listening to, where they're discussing influencers and how to pick them, but they said you should zero in on the comments and how their followers are actually engaging, because if they're engaging in one way where it's just like, oh, that's pretty, I like that shirt or something, that might not actually be an influential person you should work with versus someone who's saying, "Where can I buy that shirt right now?" If you see a lot of that in the comments, even if they're small, like they have people waiting to buy whatever they wear. I thought that was always a good reminder.
Eric:
Yeah, totally. I think that a lot of times, that that comes from some of these smaller influencers, because they're so focused on the type of content they make and their audiences really trust them with that messaging. I think a lot of influencers just understand that when they take these sponsorship deals, they're doing it in a way where they really need to make sure it looks, and it is the fact that they really care about this brand. They believe in the values, they believe in the product. I think audiences are really attuned to that, and I think they can pick up on that.
Stephanie:
Yep. I agree. In previous episodes, we've had a lot of guests tell us that it's been really hard to accurately measure the ROI of an influencer campaign. A couple of people have tried it or quite a few of them have tried it, but they just didn't know if they got the results or they didn't know how long until I see results. What do you advise around, how do you make sure to measure things in a way that you can see an ROI or not, and when should they expect to see some kind of success?
Eric:
Yeah, that's a great question. Yeah, it is actually challenging. I think it's because, the reason is because I think influencer marketing sits at this unique intersection of brand and performance marketing where it's a little bit of both. I think if you're looking at as only one or only the other one, you're almost like undervaluing what you have in your influencer program. We actually have this internal marketing strategy team that works with all of our clients, and their job is basically to design this type of thing. Like, how are you going to measure the overall ROI of your program? Because it's so unique to every client. In terms of brand awareness, obviously that stuff is relatively straight forward. Like, how many views am I getting? How many video minutes are watched? How much engagement there are? What's the audience demographics that I'm trying to reach?
Eric:
Obviously this is an ecommerce podcast, so most people are interested in, how am I generating sales? That's where it gets really interesting, because like you said, it's not the easiest thing in the world to build the full attribution funnel for influencer marketing. Why is that? It's because all of this content sits somewhere that isn't pixel. It sits not on your own channel, and not even on your own Facebook. It sits on the influencer's Instagram page or their YouTube, and not all the time there's easy ways to click out of links. What we typically do is we build a combination of indirect and direct metrics to give you a sense of how your program is performing. There's definitely lots of ways to measure direct conversions. There's link tracking, coupon code redemptions, affiliate links, landing page sign-ups.
Eric:
Typically, those are very good ways of seeing directly attributable sales. Especially if you've built kind of this really great long tail of ambassadors who are all doing, like I said, whether your product seeding them, you're seeding them these gaskets, and you're not necessarily asking for anything, where you're building potentially hundreds or thousands of ambassadors who are ... you might not have a ton of following, but they really believe in the product and they're kind of posting about you. You'll start to see a lot of return in terms of referrals on that program, just based on kind of their channels clicking into those links and go into your website and buying things, something like that. But a lot of the times, when you're talking about influencer posts, because there's not an easy way to click out of this, of the posts, we tend to look at more indirect measures because a lot of times what happens is a consumer sees a post, they see the brand and then they exit to a browser and they go directly to the website.
Eric:
We say is that, hey, look at the indirect measures like referral sources from social channels, and that includes things like the Instagram shopping and checkout, which Facebook is investing a ton of money into all types of ways of commercializing your social channels. Then of course, there's the value of the content itself, which has been really interesting. Like I said, a lot of ecommerce brands are looking at these influencers as content creation vehicles, and so there's obviously the cost that it would've cost to create, potentially hundreds of purpose-built photos and videos, but what's even more is, what's the value of having 10 times the number of assets to personalize all these digital customer journeys from your paid ads, your ecommerce, your email marketing, and almost always what we see is our performance marketing clients will have an overall increase in their ROAS, but thanks to this kind of ongoing pipeline of constant.
Eric:
I think the last one that's super interesting thing has been really game changing over the last couple of years is actually using influencer channels themselves as paid ad vehicles. There's actually ... obviously there's easy functionality to boost posts that perform well, but there's actually, for in channels like Instagram, if an influencer has a business account, there's an option to grant advertiser access to a third party so that you can actually run a wide diversity of paid ads using the influencers content, where the ads are coming from the influencers channel themselves. This actually gives marketers almost this infinite number of channels to test on and has been an absolute game changer for brands looking to build more sophisticated paid social strategies. All those things are kind of like in combination, obviously are this complex web of how do you value the ROI of an influencer, but it's because there's this huge diversity of the ways that you could utilize them depending on your marketing strategy.
Stephanie:
That's great. Yeah. That's a really good summary, especially that last point. I don't think I have heard that, or I was not aware that you could leverage their accounts and kind of post from under their accounts. Yeah, that seems to be interesting.
Eric:
Yeah, it's little known, but it's become a lot more popularized, I think recently. Obviously you want to make sure that you have a firm agreement with the influencer. This is something that in our platform we kind of wrap up in a bow for you to be able to request, but obviously you're using their content, you're getting the right approvals from them, so they don't have their channel advertising to people or using content that they're not comfortable with. But assuming that they are, it's actually a win-win for both parties, because essentially what's happening is, as a brand, you're kind of leveraging them as a voice for your brand to kind of new audiences. For them, they're reaching new audiences themselves and in a way that can kind of get them more followers and more reach.
Stephanie:
Yeah, that's great. I could see there being a bit of like, making sure that whatever you write is in their voice, or is it like pretty transparent that this is a brand takeover of their account?
Eric:
I think it's typically a collaboration, and a lot of times what we'll advise is that, definitely having the influencer sign off on all the language and making sure that they're comfortable with what they're saying, because you don't want to get ... definitely don't want to misrepresent what they're saying, and it is in a partnership between brand and creator.
Stephanie:
Yep. Got it. All right. A little story time. First, we'll start with, what are some of the biggest missteps that you've seen brands experience when they've tried to set up their own influencer partnerships? What are some horror stories that you've heard in the industry? You know I like failure.
Eric:
Yeah, definitely I think a couple of common things that I see, and again, they kind of relate to this idea that, hey, these influencers are ads basically, and that leads to behaviors, like I said about not building relationships. I talked about that one already, but I think another one is basically taking too risk averse of an approach in the creative process. I won't name specific brands, but I think, especially when you're talking about like the bigger brands in the industry, the Fortune 500 brands, a lot of them struggle with the idea of kind of like merging their influencer strategy with their creative strategy, because they typically have this really rigid process of guidelines and brand safety that they apply usually to kind of $25,000 to $50,000 photo shoots, and they want to apply that same framework to influencers.
Eric:
And they're like, cool. They have to do this set of 20 guidelines, they have to check all these boxes in terms of what they're going to say, they have to say it in this way, and in this tone. At the end of the day, that just doesn't work because people are smart. Consumers are smart. Consumers know when something is super forced and inauthentic. At the end of the day, the whole point of working with influencers is that you're co-creating a narrative. You're supposed to be harnessing the personality and the creativity that's unique to each person, and by forcing them to kind of fit in this tightly defined box that is so clearly branded, that just leads to poor performing content. It's kind of defeating the purpose of using influencers in the first place. I would say that's the biggest misstep I tend to see, and it is typical among, I would say like the bigger brands in the industry.
Stephanie:
Got it. I could see brands, especially smaller ones, trying to find, of course, untapped influencers. What industries do you think there are a bunch of influencers that maybe you guys haven't even tapped into, and what's maybe bringing this question about, as I just did a recap episode with one of my coworkers around like the first 50 episodes, and we were talking about shoppable gaming and unreal and how there's influencers in these game worlds and how shopping is going to be in there soon. I was like, oh, it seems like there could be a lot of virtual influencers that maybe aren't tapped, but are there any industries like that where you're like, oh, we're exploring this or we see this being big in the future, but we haven't actually fully gotten it yet?
Eric:
Yeah. Well, I would say, even though it's been incredibly popularized in the last year or so, I would say TikTok is still wildly undervalued. I think not enough brands understand that TikTok has this enormous breadth and depth of not only audiences, but content creators, because I'm 38 years old and I look at a lot of like Parenting TikTok, I look at a lot of the Home Depot TikTok. It's so different than I think most perceptions are of, oh, it's just funny videos or teenagers dancing and things like that, because there's such a diversity of content and audience within TikTok that I think only a handful of brands are really taking advantage of. That's definitely, I would say a big focus for us going forward, is kind of getting in deep with tech talk and making sure that our brands can be successful there.
Eric:
I would say more to specifically your question around industries, I would say a lot of industries that we've seen that have kind of more emerging, I would say "influencers," not necessarily traditionally defined influencers, are more like professional fields. For example, one of my friends from business school named Trina Spear, she's founded this company FIGS Scrubs. I think they've had the strategy probably for ... maybe since they were founded, where they've almost created influencers out of nurses and doctors where, when they first started, there were no nurse influencers or doctor influencers or anything like that. But they started partnering with all these people that could just create really great content, and they might just be people in that professional field people that might have 500 followers, but posted really cool content and they would send the product, get them involved, get them bought into the mission and the vision of the brand.
Eric:
Now a lot of those people, they have tens of thousands of followers because of the partnership they've done with FIGS, and FIGS is an incredibly popular brand among the healthcare industry now, and has a really, really loyal following across ... up and down nurses and doctors and everything else.
Stephanie:
That's really cool. Yeah, I think we had FIGS on our list. I have to check with Hillary on that, but I think we had them potentially coming on maybe so. Yeah, that's really cool to hear how they do that.
Eric:
They're great. I look forward to listening to that one.
Stephanie:
Cool. How do you onboard new influencers, and who are some names of people that I would know? Because even though it's kind of vanity, I'm sure everyone listening is like, well, who are some names that I would know in your platform?
Eric:
Yeah. Interestingly, we don't really take that kind of approach when it comes to influencers, because a lot of times our influencers are brand-driven. What we try to do is we try to provide a system of record and a platform for our brands to manage all of their influencer programs themselves. This is actually an industry choice we've made, I think back in the founding of the company, where we decided pretty early that we were not going to win based on us having the most influencers or us having access to talent agencies or communities of people, because frankly, we were basically four guys who came from either a gaming company or a hedge fund, and so we were not going to win based on who we knew.
Eric:
What we decided to do is we said, okay, what we're going to do is we're going to build a platform that has incredible workflow and ability to scale up these influencer programs and have brands build the tools they need to manage them, and those brands will essentially onboard and essentially, almost onboard the influencers onto our platform themselves. It's actually played out pretty well where we now have hundreds of thousands of influencers on the platform. I think in a 95% of cases, those influencers were brought by some brand that we had on our platform who essentially invited those influencers themselves to the AspireIQ platform. This has been a really great way of feeding.
Stephanie:
Oh, that's smart.
Eric:
... a marketplace where when ... in [inaudible] teach about like, when you start a marketplace, you have to create standalone value for one of the sides, and that was our [inaudible] standalone value for the brands that they would essentially attract the influencers to the platform because we just didn't have them.
Stephanie:
Let's talk about the early days a little bit. I saw that you had worked at Pocket Gems, and I think it said you led a very large team who was mostly accountable for like 80 million in annual revenue. I want to hear a bit about your background and what you did at Pocket Gems that maybe helped influence AspireIQ.
Eric:
Yeah. I started my career in finance actually before business school, which is really disappointing for my dad because my dad was a computer science professor, so I didn't get into technology immediately the way that he wanted. But yeah, after business school, I went to Pocket Gems. Yeah, started as a product manager, built a couple of games there. Pocket Gems, for some background, is a mobile app gaming company. Really, it was an incredible experience because gaming, especially back then, I mean, you think about like, this pre-Zynga IPO and all the kind of the rise of mobile gaming, and everything was extremely data-driven and fast paced. It was a great environment to learn about how to build products that can grow and scale really quickly.
Eric:
But I think the biggest thing it taught me was essentially how much mobile and social were going to change the world, and pretty much changed the world so much more than I had ever conceptualized, I think, before joining, in almost a similar way with the way the internet changed everything in the late '90s. It's because of the fact that we have this super computer in our pockets that's like a high-definition video camera that makes any of this stuff possible. I think, as we were building games there, as we were building apps, as we were doing user acquisition, I could tell, based on the things that were working and the channels that we were working for, for our own growth, that all this was happening here organically. When you looked at social media, everyone can create this amazing content that's just as relevant and meaningful as what's done in studio, and it's completely democratized, giving a voice to anybody with a mobile phone and social media.
Eric:
I wanted to work on something following that, that could take advantage or basically capitalize on the fact that the world is essentially changing from what I call companies to people. Because when you open your phone, you look at most content nowadays, chances are it's something that a regular person made. It's not a company. It was kind of obvious, at the time, to a lot of us that were founding the company that people were going to be at the center of how these businesses or brands were built. That's what we were focused on doing. We didn't have it all figured out in terms of what we would do or the product we would build. We started with social media and went from there, but we just knew it was around this idea that brands and building a brand, building a marketing strategy needed to be much more people oriented, and around this idea that mobile and social were going to change the world.
Stephanie:
When you launched into aspire IQ, what were some maybe hiccups or missteps that you guys made in the beginning when trying to figure out this marketplace and building the platform, anything happened there of note?
Eric:
Yeah, it was funny because again, it was for people who didn't come from the marketing industry and we're trying to get into ... which I think, when I gave people advice, people would always ask me like, "Hey, are you going to ... should I start this company? I really want to do a startup." A lot of times the advice I give is, "Look, if this is something you have to do, it shouldn't matter what I say, that you're going to do it." I think this was really interesting thing where we all had this intense belief that this was going to be a thing, that this would work, even though none of us had come from the industry. I think, because none of us had come from the industry, that really put us at this disadvantage for, who to talk to. We were really scrapping trying to find our first sales and talk to any ecommerce brands that would listen to us, talk to any brands that would listen to us.
Eric:
It was such early days that we couldn't even charge any money for the product we made. We built this product in about a year, and we basically had to give it away for free because people just didn't value it. They didn't understand why they should pay a platform for influencer marketing. I think we actually had to create ... is really funny. In our first outreaches to influencers even, we were trying to scrape together these first influencer campaigns where we had to pretend that we were the platform, but actually underneath, it was just the four of us trying to run and match-make with different influencers. But we were saying like ...
Stephanie:
[crosstalk] service.
Eric:
Yeah, but we were saying like, oh yeah, there's something really like technological going on under the hood. Don't worry [inaudible] the brands. But it was actually just us trying to run the different influencers saying, "Hey, look, can you please join this campaign?" We had to use the pseudonym actually, because nobody would respond to our emails among influencers. They didn't believe that we were a real company. We had to use pseudonyms of people that sounded more legitimate to make sure these influencers would respond to us.
Stephanie:
Oh, that's crazy.
Eric:
In the early days, again, not only were brands not really doing a lot of influencer marketing, but the influencers themselves weren't doing a lot of "influencer marketing" among sponsorship opportunities. This wasn't as much of a business for them, where they're already and set up to take a lot of these inbound requests. In the early days, that matchmaking process, like you said, was quite difficult. Of course, nowadays, it's almost like a machine where everybody ... if you have like 5,000 followers, you might even have a manager at this point. Yeah, in those early days, it was a lot of a lot of talking on the phone to explain who we were and what we were trying to do.
Stephanie:
Yeah. That's great. I think that also is such an advantage that when you don't come from the industry, it reminds me of like us building up this media company like none of us really knew what we were doing in the early days, but from your perspective, I could see a lot of people thinking about building an influencer company and being like, I need to partner with Hollywood, I need to go to CAA. There's a certain way things are done around here. I think that's actually a huge advantage when you don't really know what you don't know and you just move forward and figure it out, and maybe do it differently.
Eric:
Yeah. I think that, that definitely helped us, I would say in the later stages of the company, because by the time, like I had said, in 2016, 2017, when this took off as an industry, we were one of the few companies that have built this as a true software platform, because all of this came from technology. So, how are we going to win? We weren't going to win because again, we were connected to the right people. So, we were just heads down, really building as much of the product we could essentially understand based on our own running of these campaigns. When the industry took off, we had assembled this immense product advantage versus a lot of our competitors that were essentially glorified agencies. Back then, I think a lot of companies were effectively ... because you might come from an agency, so you think that an agency is the way to solve this problem, this matchmaking problem.
Eric:
But what we saw was something much more nuanced, which was, okay after you've solved the matchmaking problem, what are you going to do with these influencers, and how are you going to make this a scalable program that will last the test of time? All those things were built into, essentially how do you create almost like a CRM workflow with analytics and all the different automation that we built into it that would be relevant, frankly, for people that weren't really doing anything back when we first started. We were basically lucky that we survived the first few years with almost like making no money, that we could make it to the maturity of the industry when our product became more relevant.
Stephanie:
Yeah, that's good. Because some people are a little too far ahead and you guys were ahead, but you ended up making it work, which is awesome.
Eric:
Yeah, absolutely.
Stephanie:
Now that we're talking a little bit about the future, I want to head into the future. What do you think the future of influencers looks like maybe in like five to 10 years?
Eric:
Yeah. I think that, like I said, I think influencer marketing is going to keep diversifying to ... just not people who necessarily have social media following it. I think it's going to be around who is influential for your brand specifically? Again, it could be professional, it could be experts, it could be customers. I think a lot of the brands we talk to that are on the bleeding edge, like a Glossier for example, is the gold standard, I would say, of this, who's one of our favorite partner customers. They figured out, I think first that, it doesn't really matter if you have this massive social following. They've built this community of fans, employees, even healthcare workers, things like that, and regardless of who you are, they do an incredible job of making you feel like a part of the community, probably because the brand started out of this shared love of Emily Weiss's beauty blog.
Eric:
Regardless if you have a following on social media, they highlight a lot of their community members in their marketing. They give them exclusive first looks so they can get feedback and build buzz around new product launches. They take an active interest in pretty much what all these different communities, how they respond to products, and that shapes a lot of the strategy that Glossier has as a brand. I would say they're one of the first, I would say community led brands. I would say that that's going to be, what I would say is the future of, not just influencer marketing, but building commerce brands in general, because what you see now it is there's such a dependence on third parties for a lot of ecommerce companies on generating leads from places like Facebook ads.
Eric:
That's almost becoming this increasing tax on the cost of doing business of running ecommerce. When you've built an advantage for a brand like Glossier, where you almost have your own channel of your community that generates all this buzz and brand awareness and referrals that, that becomes this competitive advantage, because you can build growth without relying on third parties doing all of your lead generation. I think that's what I'm really excited about as kind of the future of influencer marketing, but also the future of kind of commerce in the way brands will start to own their own communities and their own channels.
Stephanie:
Yeah. That's a great answer. I think that's the gold standard that a lot of brands probably want to figure out is like, how do you build that community that you can leverage and not always having to rely on external customer acquisition? But it'd be interesting to dive into their model of like, how do they actually build that up and build that community of fans to then have that network to launch to with their products and whatnot?
Stephanie:
All right, cool. With a few minutes left, let's dive into the lightning round brought to you by Salesforce Commerce Cloud. This is where I'm going to throw a question your way and you have a minute or less to answer. Are you ready, Eric?
Eric:
Fantastic. Ready.
Stephanie:
What's up next on your reading list?
Eric:
Ooh. I think that one book that I really love and just read is a book by Carrie Melissa Jones called Building Brand Communities. She goes into a lot about how you ... similar to the Glossier example, you really need to co-create an experience of communities with shared values, kind of mutual benefit, how is your community going to interact with you as a brand? I love that book. We actually sent it to I think all of our customers.
Stephanie:
Oh, nice. I'll have to check that out. That sounds like a good one. What is the best piece of advice you ever received?
Eric:
Yeah, I think the best advice I ever received was either from like a personal or professional level, are you growing as a person? Are you scaling? Are you developing new skills? I give that advice either to employees at the company or people who are asking you for advice. A lot of it has to do, its just kind of acceleration in any way that makes sense or is meaningful to you.
Stephanie:
I love that. That is good. What's up next on your Netflix queue. What are you enjoying these days?
Eric:
Oh, wow. Netflix. I just started watching Killing Eve. I think it's an older show, but that's ...
Stephanie:
Okay, is it good?
Eric:
Yeah. I love that show. I don't know if I'm as big of a fan of Sandra Oh, but it's a BBC show, and I love pretty much all BBC shows.
Stephanie:
Okay. I'll have check that out. I have not even heard of that one. What do you wish you understood better right now? It could be a trend, it could be a piece of tech, anything.
Eric:
I think the thing I wish I understood better is how Silicon Valley works. What's funny is we've never been kind of the favored child, I would say, of the tech industry here and in terms of raising money and things like that. I think marketing has never been the sexy object, the way crypto and those things were. I think I wish I understood the way VCs thought better.
Stephanie:
All right, Eric. Well, this has been a really fun interview. Where can people find out more about you and AspireIQ?
Eric:
Yeah. Definitely you can check out aspireiq.com/upnext. Yeah, we've got some interesting reading there. We've definitely got a case study on Purple Mattress and a bunch of other cool stuff to read.
Stephanie:
Ooh, nice. Awesome. Well, thanks so much for joining. We will have to have you back for round two, maybe even in person in the studio in the future.
Eric:
Hopefully the world works out that way. Thank you so much, Stephanie. It's great to be on. Fun time.
Rachel Drori has come a long way from the days of filling a shopping cart at Trader Joe's and packing up healthy, frozen meals for delivery to customers all around New York — all while being nine-months pregnant. As the Founder and CEO of Daily Harvest, Rachel bootstrapped her company from the very beginning, and eventually had a few big names reach out to invest, including folks like Serena Williams and Gwyneth Paltrow. In 2019, Daily Harvest generated more than $125M in revenue and the company is growing. So what makes her meal-delivery service different from the others? The heavy focus on customer-centricity.
When Rachel founded Daily Harvest, her goal was to build a customer-driven company that connected people with food that was designed specifically for them. But what did that look like from a practical standpoint and what can others learn from Rachel’s journey? On this episode of Up Next in Commerce, we’ll give you the answers to just that, so stay tuned!
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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Transcript:
Stephanie:
Welcome back to Up Next in Commerce. This is Stephanie Postles, your host and co-founder of mission.org. Today on the show, we have Rachel Drori, the founder and CEO of Daily Harvest. Rachel, welcome, welcome.
Rachel:
Hi, thanks for having me.
Stephanie:
Thanks for coming on. So yesterday in the mail, I got an amazing box of Daily Harvest. And it was the perfect way for me to understand exactly what it was and enjoyed this morning. But to kick it off, maybe I'll let you explain what Daily Harvest is.
Rachel:
First of all, I need to know what you tried first, and then....
Stephanie:
I tried a smoothie, and today I'm going to be trying one of the soups in there. I think there was a lentil soup that you just add water to. I'm like, "This is what I need in my life, something that you just add water to or just add coconut water to make a smoothie and it's done."
Rachel:
I love it. Yes. So I started Daily Harvest about five years ago. And the mission is simple. It's really to take care of food so that food can take care of all of us. And we do this by starting at the root with our farmers. And we grow the best fruits and vegetables in the best way possible. And then we make incredible food, which I'm glad you got to try. [inaudible] smoothies and flatbreads, ice cream, alongside with people who eat it, our customers. And the idea is that you can then stock your home with convenient, but also clean and delicious food that's built on real fruits and vegetables. And part of our magic is really connecting people with food that was designed specifically for them so that you're really always stocked with a whole food kitchen of clean food when you want it and it's ready in minutes.
Stephanie:
I love that. I think on my Twitter, I posted a picture of my freezer and what it looks like. And it was kind of sad because there was like waffles next to one of them. I'm like, "What?" This is my life. I have waffles and then now a new experience that I don't think I'll be able to step away from after this.
Rachel:
Well, that's what I like to hear. But it's interesting, people buying additional freezers in the last few months. And I'm like, "I support this message. I support this very much."
Stephanie:
That is awesome. So tell me a little bit about the early days of when you were starting it. I mean, I'm thinking about all the different logistics and the supply chain and working with farmers. And I want to kind of hear how it all got started.
Rachel:
So as I started pulling on the strings really trying to figure out why the food that I wanted didn't exist, what I realized is that it was because food is not customer driven. The way food is created is actually really far from that. And the reason food is not customer driven is actually a true systemic problem. So as I set out to start Daily Harvest, part of what I wanted to do was really solve some of the systemic challenges with food. Not only the convenience and the health factor, but also why do we have to choose between preserving ourselves and preserving the planet all of the time with packaging and sustainability and regenerative farming practices and all the stuff that makes our food systems so broken? So back in those early days, I had these really grand ambitions, still have the grand ambitions, but less power to actually make them happen in those days. And what I did was I faked it all until I was actually able to do them.
Rachel:
So I was buying our ingredients at Trader Joe's. I wasn't telling stories of things that were going to happen in future but buying ingredients at Trader Joe's, got a commercial kitchen in Long Island City. And my right hand and my left hand were my first team members, bagging all those ingredients up into food that I knew solved all of the customer problems that I had surfaced to myself but also in friends and family, and started delivering across New York City and really trying to see if I was solving problems for people other than myself. And it turned out I was. And I'd quit my job and dove in head first.
Stephanie:
That is amazing. So were you personally delivering a lot of this items in the beginning?
Rachel:
I was delivering everything.
Stephanie:
Oh gosh. Any crazy stories of the delivery days?
Rachel:
Yeah. So I was nine months pregnant towards the end of the bootstrap MVP period. And I could no longer get behind the wheel of my car. But I had a 16-year-old nephew who could drive with an adult.
Stephanie:
Oh my gosh, getting his permit hours with you?
Rachel:
Yes, yes. It was ridiculous. So I would pick him up. I would pay him like $15 an hour to drive around and hop in and out. And I would sit in the car like a beached whale. And he would run these boxes up to people's apartments. And I would be like, "Nope, can't give us a ticket. I'm in here."
Stephanie:
And I'm pregnant. So even more of a reason. Don't try. That's awesome. So then around that time, it looks like you were also... Was that when you were also raising money?
Rachel:
So I did raise money... well, so I'd raised a few rounds at this point. I actually tried to raise money for a Series C at that phase and it didn't go very well to be honest. People didn't really understand how I had this grandiose vision and I was delivering smoothies. They just couldn't connect the dots. And I guess it was too much of a leap for people. So I decided to bootstrap for as long as I possibly could. And when I say bootstrap, I think people assume you have money to burn. When I say scrappy, literally doing things like having my nephew deliver the food, and I created the website entirely by myself and the packaging and printed everything. There was no money spent to be clear.
Rachel:
And raised money officially right after I had my first child and decided I needed... I was kind of choking off growth and needed to take it from the MVP stage to something much bigger. And we launched nationally in 2016, which was almost like a year after that period, and then raised our Series A actually when I was pregnant with my second child, which was super fun.
Stephanie:
What kind of experience did you have being pregnant and raising money or trying to raise money? What happened during that? Because I know I have some personal experiences that maybe weren't always the most positive of people just being like, "How do you plan on running a business and you're pregnant?" Even now, knowing I have three kids, people saying, "How do you plan on running a business with three kids?" And what kind of stories do you have around that? Hopefully, I'll get one. So I'm interested to hear.
Rachel:
Yeah. I mean, the positive and the negative. The positive was that I had no time to worry about being pregnant. I was just like, "Oh, yeah, this is just happening and I'm going to keep moving." And I think a lot of people in that moment of life and in that phase kind of stew in the moment. And it was great. Nine months later or 10 months later, a baby popped out and I was like, "Moving on." And the negative is it's funny exactly as you just phrased it. The question that came up not actually as frequently as I thought it might, but once or twice, I definitely got the question, how do you plan to be a good mother and run a business? And I'm like, "Interesting question that I'm not going to justify with an answer. But if what you're trying to ask is if I'm 100% committed to making Daily Harvest successful, the answer is yes."
Stephanie:
Yep. That's great. That's a good way to do it like, "I'm not even going to answer that."
Rachel:
What a ridiculous question?
Stephanie:
Yeah. I always say like I could never imagine someone asking like, "Oh, man, how do you plan on still working if your kids are on the way?" I can do that.
Rachel:
Totally.
Stephanie:
So I saw you have some really impressive names as investors like Serena Williams, Gwyneth Paltrow. Tell me a little bit about how you got these investors on board.
Rachel:
Yes. So each one is kind of its own story, but Serena is my favorite because I got a random email from Alexis Ohanian who's now her husband, at the time was Serena's boyfriend. And he was like, "My girlfriend and I eat Daily Harvest every day. We would love to talk to you." I had no idea who his girlfriend was. And the next thing I knew, I was on the phone with Serena Williams like, "Wait, what?"
Stephanie:
Oh my gosh. That is actually insane. I mean, I wouldn't have known that either because I don't really know names and stuff like that. So how did the conversation go?
Rachel:
I had no idea. I mean, it was amazing. She's so cool and was incredibly down to earth. And she was just saying how Daily Harvest really helped her eat the way that she wanted to eat, the way that she needed to eat in a pinch. And she loved the idea. And this was super early on. And I was like, "First of all, how do you even know about us? But amazing." And she asked if she could invest. And I was like, "Let me think about this for a second. Yes, absolutely."
Stephanie:
Oh, that's great.
Stephanie:
So after you landed Serena, did other investors come along when you could kind of point to like, "I've got Serena Williams. You win her out." How did the other ones go?
Rachel:
I mean, it's funny. We weren't really public with it until much later. So we had other investors reach out to us with interest, but it had nothing to do with Serena. It really was people finding us in pretty organic ways. And people just getting excited about the idea and the concept and seeing the problem that I stated earlier in their own life and seeing that we don't have to compromise, we can have it all, at least with our food. So each story, as I said, is pretty unique. But they really all were people who found us, which was pretty remarkable.
Stephanie:
Yeah, that's great. I mean, that's a testament to the product. Very, very cool. So when thinking about new customers finding you in organic or non-organic ways, how are you getting in front of people right now? And I'm asking this question because I went on your guys's Pinterest, and I saw you have like 4 million views a month. And I was like, "What? How are they getting 4 million views on Pinterest?" So I want to hear a little bit about your customer acquisition and how you're getting in front of people.
Rachel:
Yes. So we have a really robust marketing mix. My background is marketing. So we always started with the goal of, how are we not beholden to any one channel? Right? Because I think that that's just asking for trouble. And we built it in a really nimble and agile way so that as trends and algorithms and all sorts of things change, that we can then be nimble as a result. And we're lucky that we have a really high amount of our customers come in through word of mouth. But we've also done a lot of things to make that easier, to remove the friction of people sharing when they have a positive Daily Harvest experience.
Rachel:
But there are other things that I think have made us stand out on... I mean, literally, you name a marketing channel, we are on it. There's nothing that's like secret saucy there. But I really think it comes down to our differentiated messaging and our differentiated photography and really focusing on connecting with universal human truths where people are just like, "Oh, you get me. Yep, I understand. I'm going to learn more."
Stephanie:
Oh, that's great. So tell me a little bit about that differentiated messaging that you're talking about? How do you go about figuring out what you want to message and how do you know what will connect and what won't? Because what you might think is going to be a universal truth, I might be like, "Oh, that's not my truth." How do you guys go about making sure you're speaking to your customer?
Rachel:
Absolutely. It definitely is trial and error to understand what works, but we obviously have a mission. So we're looking for customers with whom our mission resonates. And there's just a lot of different ways where when you remove your marketing hat and you're like, "How would a normal human say this?" Or, "What is the way of saying something that gets somebody to stop their scroll or perk their ears while listening to something that they might otherwise fast forward past?" And then it's the same thing on the visual side, really focusing on photography and imagery that's visually arresting and beautiful. And also stuff that looks delicious. You can't underestimate the salivation factor of... I don't know if that's a real thing.
Stephanie:
I like that. Now it needs to be.
Rachel:
It totally does. How much of a photograph actually makes you salivate? Because that's tied to how hungry it makes you and how much it makes you want something.
Stephanie:
Yeah. I mean, pictures are everything. Even on your packaging and things like that, I mean, that's what makes me want to buy something, even when I'm on DoorDash or something, if an item doesn't have a picture on it, I'm like, "No, I'm not so sure if I want it," even if it sounds amazing. I want to see what it actually looks like. So it seems like you have very, very smart to have pictures on everything, especially Pinterest.
Rachel:
Yep. And because people have such short attention spans these days, and because there's so much media being thrown at you constantly, we also really focus on simplicity with it. So not only is it beautiful and drool-worthy, but it's also simplistic.
Stephanie:
That's great. So earlier, you mentioned also removing friction of having customers share their stories. How did you go about ensuring that a new customer or existing customer would share their stories and keep doing them?
Rachel:
Yeah. So what we have found is it's not so much about giving the customers places to share their thoughts and feelings. It's more about showing that you respond to them. So one of the things that we did really early on is we built a quite agile supply chain. And the goal of that was really to be able to respond to customer needs. We wanted to create a customer driven company. We had to be able to respond to customer needs. And it's one thing to have these amazing insights and to be innovative. And a lot of companies have the ability to do that. But if you can't respond in a timely manner, does it really matter? I'm not so sure.
Rachel:
So by showing customers, not just telling them, that we are actually listening to them and creating the food that they want to eat with them, and then connecting people with the food that was created for them, it sounds pretty simplistic. But there are really few companies that actually do it. So we're able to bring something to market in six to eight weeks from the time our customers tell us what they want. And I think that that is why customers love to share with us. And that is why we continue to be able to build these connections with our customers, those relationships.
Stephanie:
That's such a good point actually to show someone like you're not just submitting something into a black box and nothing's ever happening. What does the process look like? Where are they submitting their feedback? And then how do you interact with them in a way that is one on one, but then also shows your entire customer or new customer base, "Here's what we did for this one customer?" What does that process look like from start to finish?
Rachel:
Yeah. I mean, literally any channel that you can think of, we've built a way to interact. So whether it is through our app, whether it is through text message, whether it is through social media, you name it, we've made the conversation two ways. And what's interesting about it is if you think back to the story I told you earlier where kind of faking it till you make it, I'm air quoting, which you obviously can't see, but you're faking it but kind of faking it.
Rachel:
In the early days, our way of talking to our customers was every single team member at Daily Harvest would follow the Daily Harvest hashtag and every single day, it was the expectation that they would scroll through. And when somebody wrote something about Daily Harvest, the team engaged. Every single person on the team was asked to engage. So everyone from an engineer who might not under normal circumstances have any interaction with a customer directly to somebody on our culinary team. And it depends on what the customer put out there. But if it was something like your app is X, Y, Z, then an engineer would jump in and say, "Hey, can you tell me more about that?" And really just empowering the team to forge those relationships and to have those conversations I think is really what started it from a team culture perspective.
Rachel:
And then as we've grown, we've built tools in this way that allow it to happen. [inaudible 00:20:08], obviously, not everybody is scrolling through every single Daily Harvest hashtag these days, but we've empowered everybody to really think about how we maintain our vision of being truly customer driven.
Stephanie:
I love that. I mean, that's such a good experience. It's so different than, of course, corporate culture where you're probably told you are not allowed to engage with someone who tweets at us, and it has to be approved by PR. And there's so many rules and stuff. A lot of us had been taught in the past like, "Just don't say anything." And I can imagine how great of a culture you build by saying, "Everyone get on there. Respond to these people. It's on you to actually keep our customers happy." That seems like a transformative environment.
Rachel:
Absolutely. And then you have it scaled too. People really are thinking customer first at all times.
Stephanie:
Yeah, that's really cool. So when it comes to product request, I mean, it seems like there'd be an area that could be like a leaderboard where people can vote on the next products they want and actually determine that. Is there anything like that that you have going on to kind of create more social engagement and also people having an input in the product that maybe they wouldn't have just tweeted at you and said like, I want to have more figs?" They might not have that idea on their own, but they would like to maybe vote on it?
Rachel:
Totally. Yeah. I mean, we have all sorts of engagement opportunities for customers. But the important thing to know is that none of our skews or collections at Daily Harvest are created to be generally accepted. So we really focus on what people want from the perspective of their taste affinities, which is really differentiated.
Rachel:
So if you think about traditional product cycles and product development tools, people will look at things like demographics, psychographics, household income, credit card swipe data, and all of these things that when you kind of zoom out really never made sense to me because I can tell you, my husband and I live in the same house. We have the same household income. We share credit cards. We have the same credit card swipe data, same education, we met in school. But when it comes down to it, he orders from a very different restaurant than where I order from at night when we order in. So we really try to focus on what taste preferences are. And we try to create food for specific groups of people that have similar taste preferences, so nothing that we create is meant for general consumption. And that's where it gets really nuanced and really differentiated.
Rachel:
So yes, we will say to people, "We're thinking about creating X, Y, Z, and we would love your input." We take that into consideration, but we also take into consideration that, "Who is actually answering that question and where they're coming from and what their taste preferences are." Because I might like something that is, let's say, filled with greens, and you might like something that has no garlic in it or whatever it is because you might be allergic to garlic. And we're not going to like the same thing. So why should we try to make food for both of us?
Stephanie:
I love that idea of making sure that you actually focus on your customers because I think it's very easy, especially with all these new B2C companies that are launching right now to get distracted and not remember like, "Who did you actually build this for? What is your customer base? And what are you trying to do in this world?" Instead of being like, "Oh, and this person wants more sugar added to the matcha. Okay, I didn't really want to add a bunch of sugar to it, but this person wants it." It's a good reminder to not get distracted.
Rachel:
Right. But if we do have a group of customers that tell us that they want that same matcha that's a bit sweeter, we can accommodate that. It's just we would never target the same food to... We would know who we're targeting what to.
Stephanie:
Yep, very cool. So I'm very interested in the partnerships that you have with farmers and what your supply chain looks like behind the scenes that you can make these really quick product pivots or new products coming out in like six-day weeks. So can you speak a little about, what did that look like forming those partnerships? And any hiccups that you experienced in the early days of trying to get that worked out?
Rachel:
Yeah. I mean, as I said, it started with Trader Joe's because every time we reached out to a farm, they were like, "Who are you? Can you guarantee this entire crop?" And I was like, "I don't know."
Stephanie:
They were asking you to guarantee whole crops for them?
Rachel:
I mean, sometimes you have to if you want to be in control of how sweet it is, what the nutrition level is, you really have to be. And that was the vision because the way that I always envisioned taking care of food was really at the systemic level. So really to make change, you have to go to that level of scale in your purchasing. And we're incredibly meticulous about the ingredients that we use and how we source them. We actually have an entire team that's dedicated to finding the best farms. And we have over 400 farms that we work with directly. So we set incredibly rigorous standards that ensure not only are our partners using regenerative practices in their farming, things like increasing biodiversity, improving the water cycle, using organic farming practices, strengthening the health and vitality of our farm soil, using fair labor practices.
Rachel:
But we also are really particular about when we harvest our food. We want to make sure that the fig or the blueberry that you're eating is unparalleled not only from a nutrition perspective, but also from a taste perspective. So that means that we have to let every single ingredient reach its full nutritional and flavor potential on the vine or on the tree. And then we freeze everything within 24 hours of it being picked, which is really differentiated. And because of that rigor, our food is actually more nutritious than the stuff that you buy in the grocery store, which is something that a lot of people are surprised to hear. I think a lot of people see frozen as not as nutritious or inferior, when in fact, unless you are picking something straight from the farm and consuming it within three days, that's just not the case.
Rachel:
And we work with these farmers to also create entirely new supply chains, which is amazing. Our customers told us that they really wanted something with celery root last fall. And we worked with the farmer to create an entire supply chain of frozen celery root that had never existed before. And what's cool about a frozen supply chain is there's actually 50% less food waste and there's just so many benefits to the system overall. But we really think a lot about how we create the most nourishing, best tasting food and it really all comes back to those farm relationships.
Stephanie:
Wow, that's really cool. Yeah. I mean, I think a lot of people like you said don't understand the frozen aspect of why it's better because I know a while back, I heard that about fish too. But it's better to have frozen fish that's frozen right away when it's caught than getting something fresh. Fresh feels like it's healthier but actually it's more nutritional if you get the frozen one that was frozen right on the ship or boat or whatever it is.
Rachel:
When you think about the frozen aisle in the grocery store, most people associate it with like dinosaur shaped chicken nuggets.
Stephanie:
Yes, which may or may not be in my freezer right now.
Rachel:
I don't judge. When you ask most people what's in their freezer, it's like ice cream and vodka and ice cubes. I'm like, "These are not bad things, but it just shows you how the food system has evolved." And the microwave dinner was created not because it was healthy. It was because it was convenient and it was because it was created during this Industrial Revolution when food and science melded together in ways that is just so unnatural and we kind of just stayed there. So I think there's been a lot of... not I think. There's been a lot of education for customers to help them understand the benefits of frozen not only for themselves, not only for their taste buds, but also for the food system as a whole.
Stephanie:
Got it, that's great. So the one thing I'm thinking about too is working with farms, I can see them being on older tech stacks I'll call them or no tech stacks.
Rachel:
What tech stacks?
Stephanie:
Yeah. I'll just say non-existent tech stacks maybe unless they're like the very advanced farm with the drones going on.
Rachel:
No, [crosstalk 00:29:55].
Stephanie:
You're working with 400 farms. How are you placing these orders and getting things to happen quickly and making sure that it's up to your standards and that nothing's going to get backed up? How do you do that with farms that don't have a tech stack?
Rachel:
I mean, we built the technology for it.
Stephanie:
Tell me a bit about that. What did that process look like?
Rachel:
Yeah. So in the beginning, we only had a few farms, and it was easier to manage. But obviously, once you hit a certain scale, it becomes a little unwieldy and it's not just 400 farms. There's four crops a year and different ingredients. One farm might have six ingredients that they're growing for us. So it can get really complicated. But as I said, we have a large team that really focuses on this, and they're incredibly passionate. So what we did is we thought about how technology could make their job easier, how we can leverage technology to remove some of the friction in managing the quality of our food and the supply chain in general. And we really built a verification system that... I would say a trust but verify system where we set certain quality standards. Because we can't [inaudible] people who are on site at every farm with every harvest, and then there's like a verification system where they're sending us samples constantly to make sure that that everything is as we say it needs to be. And we're verifying nutrition after something is frozen to make sure that it's as it's supposed to be. And through every step, we are trusting and verifying. And all of that is rigorously notated in our technology stack.
Stephanie:
That's really cool. So it seems like you're bringing a lot of farmers online. Have they asked to reuse the technology with other partners too? They could be a whole separate business like, "Here's technology that you can now have with anyone else ordering from you."
Rachel:
Totally. I mean, we work with a lot of small farmers. So a lot of farmers don't have a lot of other business. We've really grown to a scale where most of our farmers are Daily Harvest farmers.
Stephanie:
Mm-hmm (affirmative). Oh, cool.
Rachel:
Really cool when you think about it. But yeah. I mean, we've definitely had people ask, but we've got to focus on our core competencies and what we're trying to achieve.
Stephanie:
Yep. That's great. So everyone's obviously looking into subscription businesses right now. It's always top of mind like, "Should this business be a subscription or not?" Everyone wants one. How do you think about retaining your customers and enticing them to stay with you for the long haul?
Rachel:
Yeah. So one thing that's interesting about Daily Harvest is on the outside, we kind of look like a subscription, but we're actually not a subscription. We're really what we call a replenishment business because once you sign up for Daily Harvest, our goal is to make sure that your freezer is always stocked. And it's not because that's good for us, it's because that's how we make sure that you have the food that you want when you want it. At that moment when you're hangry, when you're reaching for that bar, you need to have the right food in your freezer. Otherwise, you're going to make a different choice, right?
Rachel:
So we think a lot about what that replenishment looks like. And we also never want you to get an order of Daily Harvest that you don't want. Right? So we actually communicate with our customers ad nauseum to make sure that we're never sending them anything that they don't want, and they're only getting food when they do want it. And that's what makes us different from a subscription business where you have to consume your food or use your razor or whatever it is within a specific period of time and it's only good for that period of time. Because we're frozen, we're really not perishable, which is a huge benefit and allows us to be even more customer centric, but really thinking about maintaining our customer base.
Rachel:
Removing friction for our customers and making things as easy as possible for them, making their account as easy as possible to manage making sure that they're getting the food that they want when they want it. And we found that there's a direct correlation between removing that friction, being customer driven. We don't even think about about retention. We think about how can we be more customer driven? How can we get our customers exactly what they want? And what we found is that those things correlate really nicely.
Stephanie:
Yeah, I completely agree. So what does that back end account management look like for your customers? And one thing that's coming to mind is like the past couple interviews I've done, we've touched on one click ordering and how that's a big thing that a lot of people are expecting now. And I could see that maybe coming into play for you guys too where you're more about replenishing items. If I'm out of my matcha, or smoothie, or whatever it was that I really just enjoyed, going on to my account and just ordering that, and not having to have minimums or anything. Just being like, "That's what I want," and just doing it one off. How do you guys have the back end working?
Rachel:
Yeah. So we don't do that. And the reason why is because we really think of ourselves, as I said, as replenishment. So our customer behavior is much more going to shop at Costco, let's say. You don't go to Costco to buy one thing. It's never worth a shot.
Stephanie:
I need 10 pounds of butter when I go there.
Rachel:
Totally. But you have certain things that you go and you buy a lot of. So our customer really thinks about, how can Daily Harvest fill my entire freezer? When your inventory at home starts to dwindle, that's when you make your next purchase. So for us, one click ordering is not a thing. And we find that actually there's tension between how much cognitive load you reduce and how much customer friction you reduce, and people really getting the food that they want. So there's definitely a balance there. But what we do instead is we have an app and our app is incredibly customer driven. And it's about communication with our customers and making sure that, as I said, they're getting the food that they want when they want it. But it's definitely as easy as humanly possible, but not so easy that you're going to get something that you don't want.
Stephanie:
Mm-hmm (affirmative). That's great. Yeah. And I think that's a really good reminder, too, that everyone might be obsessed with a subscription model because that is good for businesses to lock people in. But that might actually leave a bad taste in a customer's mouth. And your model is completely different, which is like focus on what they want and what they need and make it easy for them to order and refill quickly without having to come back a thousand times.
Rachel:
Yep. And make it as easy as possible honestly for them to pause and cancel and do all the things they want to do because when you do that, they come back.
Stephanie:
Yep. I love that. Low friction, it's worth it. So to go to little more general commerce questions, what kind of disruptions do you see coming to commerce right now maybe in the next couple years?
Rachel:
I mean, look, I think COVID has been... it's been an interesting few months. But what it has done is it's really accelerated a bunch of trends that we've seen. And we've seen this huge adoption of ecommerce and people's willingness to stick around once they've tried it. So as you had early adopters previously who were signing up for food delivery or whatever it may be delivered to their home, what we're seeing now is people who are not early adopters, so more of the mainstream signing up. And there are different needs, and there's a different level of education, and there's all sorts of nuance to take into account with that trend. So we're thinking a lot about that, how we continue to remove friction for this different type of customer.
Stephanie:
Mm-hmm (affirmative). That's really great. So we have a couple minutes left and I want to jump over to the lightning round brought to you by Salesforce Commerce Cloud. This is where I'm going to ask you a question and you have a minute or less to answer. Are you ready, Rachel?
Rachel:
No.
Stephanie:
Prepare yourself to get some deep breaths. Get in the game. All right. We'll start with the easier ones first. What's Up next on your Netflix queue?
Rachel:
Oh, wait. I can't remember what it was called. It's The Man and the Company Castle. Hold on.
Stephanie:
Oh, that Amazon? The Man in the High Castle?
Rachel:
Yes. Not Netflix.
Stephanie:
That's okay. Yeah. Have you started it yet or?
Rachel:
I haven't but I am such a history nerd. And I don't know how I missed that this show existed, but I cannot tell you how excited I am to watch it.
Stephanie:
Yeah, it's very good.
Rachel:
Yeah. And I also feel like there's something about current state of affairs and dystopian society is that it really resonates. So let's see what it's got for us.
Stephanie:
Yeah. I mean, I like that one a lot. I think it's a good reminder I'm always very biased and ask about Netflix but Amazon, they've got some good stuff. I mean, I've binge-watched I think it was like Marvelous Mrs. Maisel if you knew to balance yourself out of it from dystopian to fun and cute. Also a very good series that I loved.
Rachel:
That show is amazing.
Stephanie:
Oh, you like it too? Yeah. It always leaves me with the happy feeling like, "Oh, this is cute. I love this."
Rachel:
All the time that I remind them of Rachel Brosnahan, and I'm like, "That is a huge compliment. Thank you."
Stephanie:
That is. She's awesome. Good. What's up next on your reading list? And it can be business or personal.
Rachel:
So it's Never Split the Difference which I've actually read before, but I like to read it every few years because I think it's the best negotiator out there and I'm not a natural negotiator. But it's obviously a huge part of my job. So it's coming up on time to read it once more.
Stephanie:
That's great. What is one thing that comes to mind when you think about that book? One lesson or principle where you're like, "Yeah, I'm not going to split the difference?" Anything high level other than what I just said which is just jacking the title.
Rachel:
So my favorite takeaway from the book, and it's just a reminder, it's really about listening. It's funny. I think a lot about toddler psychology these days because I have a three-year-old and a five-year-old. And there's a lot in common with the tactics in this book and toddler psychology, but it's really about validating people's emotions and feelings and creating trust and safety to be able to negotiate better.
Stephanie:
Oh, that's good. I like that. It shows that so many things are similar in life. Dealing with toddlers is the same thing as negotiating for your salary or investment money. Same thing.
Rachel:
It really is. It's crazy.
Stephanie:
I have to check that one out. What app or a piece of tech are you using right now that's making you more efficient in your life?
Rachel:
Okay. So this is such a weird one, but my husband just introduced me to the app for my cable provider. And I had no idea that this existed. I never watched TV ever. But given that we're in day three of the sit and wait for the results of our election, I've been able to just pop it up and have the news on live stream behind me. And it's been incredible because previously, I was refreshing my Twitter feed every 20 minutes or whatever it was. But just kind of having it in live feed behind me has been a huge unlock for my efficiency in this crazy time.
Stephanie:
That's great. I haven't even thought about apps from cable providers. So it's a good reminder for everyone. I like that.
Rachel:
It never occurred to me that one would even exist, and I'm very happy with it.
Stephanie:
That's great. What's one thing that you wish you knew more about? It could be a topic, a trend, a theme, anything.
Rachel:
Let's see. I really wish I knew more about human psychology. I feel like every time I read something or learn more, I get really excited and I want to dive in more but I really never have time to. And it's something that I feel would make me better at what I do every day if I really understood the psychology behind it.
Stephanie:
That's a good one. Yeah, I completely agree about that. Something I always want to dive into more and haven't had the time yet. So Rachel, this has been such a fun interview. Where can people find out more about you and Daily Harvest?
Rachel:
At dailyharvest.com.
Stephanie:
Awesome. Thanks so much for coming on the show.
Rachel:
Thanks for having me.
Keepsakes, momentos, treasures, heirlooms — whatever you call them, everyone has certain things that they hold dear. For many people, hand-written notes fall into that category. In a world filled with 240-character tweets, rapid-fire text messages, and a stuffed email inbox, getting a hand-written note means more than ever. Even if it comes from a brand.
Personalization is one of the buzziest words in ecommerce, and every business is trying to find a way to give its customers the best, most personal experience possible. David Wachs is helping them with that.
David is the CEO of Handwrytten, which uses robots to send personal, hand-written notes, which have a 300% higher open rate than other types of communication. On this episode of Up Next in Commerce, David explains why personalization is the way of the future. Plus, he dives into the thinking behind subscription-based services and what it takes for your subscription to stand out to investors. David also shares the advice that he received from Conan O’Brien that has stayed with him his entire life.
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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Transcript:
Stephanie:
Welcome back to Up Next In Commerce. This is your host, Stephanie Postles, co-founder of mission.org. Today on the show, we have David Wachs, the CEO of Handwrytten, spelled with a Y. David, welcome.
David:
Thank you so much for having me.
Stephanie:
Yeah, I'm really excited to have you on the show. I just went down a great wormhole of watching your robots write letters. I think that's a great starting point to hear how you came to be at Handwrytten. What brought you to found it?
David:
Yeah, so this is actually my second venture. My first one was in the text messaging space. So, I started that one before the iPhone came out. We rode the wave of mobile technology with the iPhone and all that. By the end, we were sending millions of messages a day on behalf of major brands, like Toys R Us, a lot of brands that are now bankrupt, but no fault of ours, but Toys R Us, Sam's Club, OfficeMax, Abercrombie & Fitch, etc.
David:
What we did was we helped them connect with their customers through text messages. And then we also did iPhone apps and Android apps and all that, but our core was really text messages. What we found was, it really, really worked. I mean, these were not spam messages. These were people opted in, so they actually wanted to receive Abercrombie & Fitch offers, etc, straight to their cell phone. When we sent out those offers, they'd have literally lines out the door.
David:
We worked with Tropical Smoothie Cafe, which is a big smoothie shop chain. Every time they sent out an offer, I'd walk into a Tropical Smoothie. I'd say, "How's this mobile thing working?" They didn't know who I was, and they'd say, "Oh, my gosh. Every time we do it, we have to staff up, because we sell so many smoothies." So, I knew we had something good. But at the same time, I helped create a monster, because everybody nowadays is getting inundated with probably 50 text messages a day from family and commercial texts and right now, political texts, several hundred emails a day.
David:
I think the average office workers receives about 150 emails a day and spends 28% of their time sorting through all that email. And then you add stuff like Twitter and Facebook and Slack and all the Instagram, all these other electronic forms of communication. Maybe I'm just old, but for me, it all just becomes noise.
Stephanie:
It's very noisy right now, especially with the political texts that I'm getting.
David:
Oh, my God.
Stephanie:
I'm getting like five a day. Stop it. I don't want that anywhere.
David:
I know, I know. It all just becomes noise. The average 35 to 44-year-old receives nearly 1,600 texts a month. The average 18 to 24-year-old receives 4,000 a month. So, what I know and what you know is no matter how personalized that email or that text looks... Hey, David, thank you so much for your purchase of this coffee grinder or whatever. ... that text was automated or that email was automated. We immediately discount the value of it, right?
David:
Half of them or way more than half, I never even read, because you just know it's automated junk. And then junk mail, the slick stuff that comes in your mailbox goes directly to your trash can. But what I realized right before leaving, my last company, is handwritten notes not only do they get opened, but they get treasured. I have a bookshelf behind me at my last job that had the handwritten notes I received. My salespeople had all the handwritten notes they received. What I wanted to do was when I sold my last company is I wanted to send handwritten thank you notes to my employees and send handwritten thank you notes to my best clients, thanking them for helping me build up this company and sell it and all the rest.
David:
I started doing that. I sat down with the best intentions. Very quickly, my hand got sore or I ran out of stamps or I screwed up a card and I had to get another one. I just realized there had to be a better way. So, that's a long explanation on how I ended up with Handwrytten, which is what we have today. What Handwrytten is a combination of software on the front end and then robots on the back end. So, you visit handwrytten.com or use our iPhone app, Android app, Zapier, Salesforce.com Integration, which is a big integration for us, and I know a sponsor of the show, HubSpot integration, all these ways to get your handwritten notes into the system.
David:
And then we use robots, real robots that we have a patent pending on and I can get into how we develop those, but they're custom robots we built, robots holding real ballpoint pens that actually then write out the notes and mail them on your behalf. The end result is completely indistinguishable from a human.
David:
We're doing this for large brands and small brands and individuals. Consumers can go on and send their mother a birthday card, for example, all the way up to major brands.
Stephanie:
Though your mom might know. She'd be like, "That's not your handwriting, Stephanie." Do you guys have any tech that maybe could mimic handwriting, where I could go in there and write up a couple words, and then your robots come in and write it similar to my handwriting?
David:
So, not exactly. What we do is if you really want your handwriting recreated, we have worksheets for you. It's like you're back in middle school. You have to fill in all the letters and all the numbers multiple times, because we need multiple variations, and we need ligature combinations. So, like two Os together, two Ls together. Do you cross your two Ts with one crossbar or two? We take all that into account. We create a very robust handwriting just for you, but it's an expensive onetime thing. So, pay for it once, it's yours. It's in the system. You can use it as much as you want, no additional charge. So, yeah, but most of our clients or businesses not you sending to your mother. So, for them, it doesn't really matter as much.
David:
Honestly, I dissuade people from creating their handwriting style, because it is so expensive.
Stephanie:
Very cool. So, tell me a little bit about maybe some case studies or the ROI that some of your clients are seeing when they send out a note that looks personalized versus just a typical letter, something that's written up by a computer and is very obvious?
David:
Yeah, absolutely. Well, I have a bunch of stats here, but I don't want to constantly give you footnotes on the stats. So, if I say any stats that are of interest to any of your listeners, just visit Handwrytten.com. That's Handwrytten with a Y. You can pull up all the resources and double check, be a fact checker, etc. But handwritten on envelopes, just the envelopes, have a 300% or a three-time greater open rate than printed envelopes. You just Google that stat and that pops up everywhere. And then also response rates are anywhere from 20 to 50% higher.
David:
We work with a bespoke suit company based in Canada. They send out coupons every year around the holidays. Those coupons come with a handwritten note from their CEO and his handwriting style with his signature. Those coupons have an 18% redemption rate when usually the company's coupon redemption rate is closer to the 3 to 5% rate. So, it's been very effective for them.
David:
We have other clients... Let me see here. We have some retention improvements. So, we have a client that does meal box or actually snack boxes for offices. Basically, they'll send you a huge box of snacks every two weeks with like beef jerky or crackers and cookies and all that. What they do is if they accidentally send your office the wrong snack box, they'll follow up with a handwritten note and the right snacks. Now, obviously, the additional snacks help increase retention, but the handwritten note doesn't hurt.
David:
What they find is if they screw up a client and they send them this snack box, that customer ends up having a greater lifetime value than if they never screwed up in the first place.
Stephanie:
That's smart. I mean, not only are you getting more times to get in front of that customer, but then you can show them how great the customer experience is even when things go wrong. Yeah, it seems like you'd be a lot more memorable by actually messing up. That's pretty smart.
David:
Yeah, and then we have some side effects of these, because most people just get one or two handwritten notes a month now, not like the good old days when they receive a bunch. People literally Instagram and tweet these things. So, we work with a company called VNYL.
David:
What they are is they are a vinyl record subscription service. So, if you're really into old school vinyl, they will look at your Spotify account and your other... I don't know about Pandora, but your other music services. They'll see what you listen to. And then they'll send you vinyl records that they recommend based on your habits. With those vinyl records, they'll include a handwritten note written by us. So, every day we'll write up a whole bunch of their handwritten notes, send them back to VNYL. They'll get inserted with these orders. Not only people love those notes, they then post them on Instagram and on Twitter. That creates a viral aspect that then helps drive more business back to VNYL.
David:
We've seen the same thing with a morning YouTube show. It's one of the largest morning YouTube shows on the planet. They're a client of ours. They were launching a fan club, where you'd pay 5 or 25 bucks a month or whatever to be a part of their fan club. The first thing they'd send you was this handwritten note from the two hosts of the morning show.
David:
What's funny is they didn't change up the language on that note at all. Everybody got the same note with the exception of dear Stephanie or whatever, but the rest of the note was identical. All these people are posting these photos of this note to Twitter over and over again. I mean, it's the same note just different names over and over. People were so upset if their note did not arrive within a few days. You know what I mean? They were so looking forward to receiving a note from these two YouTube guys.
Stephanie:
Are there any backlash on that? Because I could see some people feeling like maybe they were tricked, or especially earlier, when you're talking about retention. If someone is sending out a set of vinyl records every month and see similar handwriting or the exact same one every single time, it seems like there could be a risk of someone saying, "Hey, this isn't actually authentic. You tricked me." Have you seen that backlash, or how do you guys approach that when it comes to a subscription model with someone who's maybe sending out a same snack box every month with a note in it that people will eventually be like, "Oh, yeah, this is obviously not a person writing it. It's the same every single time"?
David:
Yeah, that's a great question. So, with VNYL, they've got a number of personalities that are the box curators. So, there's like 10 some odd people that are responsible for making these recommendations. Each one of those people was assigned one of our handwriting styles. So, if you get a note from Cody, it'll be in Tenacious Nick. Our handwriting style is called Tenacious Nick this month. And then next month, you get a message from Suzy, it might be in Chill Charity. The following month if you get one from Cody again, it'll be back in Tenacious Nick. So, you'll associate Tenacious Nick with Cody. And then that's how that works.
David:
We have not seen a backlash. With the morning YouTube show, I was shocked that they didn't see it because they weren't... We vary stuff on the notes. So, in fact, we worked with a home fitness gym thing. They wanted a note from their founder included with every one of their products. They were annoyed with us that there was variation in the writing. We said, "Well, this is-
Stephanie:
A good thing.
David:
"... this isn't a print product. Every line's not supposed to identically look like the other card." They were just not a great client for us, because of that. They wanted everything to be exactly... That's not how people write.
Stephanie:
Yeah, that's actually the exact question I was going to ask. Do you incorporate errors or smudges? How do you think about building the technology behind the scenes to make it more real?
David:
Yeah, for sure. So, we actually built our own font engine for one, leveraging some best of class technologies underneath it all. But we do stuff like the left margin of the card is not straight. So, it's not like every letter of every line starts on the same exposition as the line above it. There's what we call jitter. It moves in or moves out very subtly, but a couple of points. A point is a 72nd of an inch for those that don't know, but yeah. So, we move those letters in and out, so that there's some variation there. We also do the same thing with interline or intraline, I always screw that up, but the spacing between lines.
David:
So, one line might be slightly closer to the line above it and slightly farther from the line below it than the next one and vice versa. So, there is some line spacing stuff going on there. Then, like I said, the letters themselves alter quite a bit. We've got at least four or five copies of every letter plus ligature combos. So, you might have three copies of an L, but then we also have three copies of two L's together. So, there's a lot of variation in going into our handwriting. We get this a lot. We don't curve the text. So, there is a little bit of maybe over precision on the text is fairly straight.
David:
Now, the page might be slightly rotated, so that the text runs up the page ever so slightly or down the page ever so slightly, but it's not like the text is going to be on a roller coaster and go up and then down and back again. It's relatively consistent. We are working on that, but it has not been a problem. It's still very much passes most people's internal Turing tests of what looks human versus what looks robotic. So, yeah, we don't want to overdo it. The line jittering and the left margin jittering is all very, very subtle. So, that it's not like creating some uncanny valley that looks totally bogus. You know what I mean? So, those are some of the things we do there. We work with a mattress company. In every mattress box, there's, "Thank you so much for buying our mattress."
David:
And then there was what I call a doodle. So, they made I think like eight of these little pieces of art. So, the words, "Thank you for your mattress," were not in one of our handwriting styles. It's a direct replica of somebody writing that. And then below that, the doodle is a direct replica of somebody drawing a doodle. So, it could be moon in the stars or there's one of somebody sleeping in a bed with a little thought cloud showing what they're dreaming of, a little cat.
David:
What was cool about that is with eight variations, if you buy two mattresses from them, one might have one little note from one guy in it and then the next mattress might have a note from somebody else in it. So, it looks really, really real. And then you post those to Twitter. It really shows up well there. So, that's what I recommend doing. If you're doing the same note over and over in volume, let's just mix it up a little bit. It doesn't cost you really anything more after you get going. You have some great variation.
Stephanie:
I saw you guys moved to having a subscription model, which a lot of guests who come on the show, they talk about thinking about doing that or some of them have recently. How did you guys know it was the right time to move into a subscription model?
David:
That's a great question. You're the first person to ask me that.
Stephanie:
Good.
David:
Yeah, so there's a number of reasons we did that. I will be bluntly honest, because I think it's of most value to everybody. Number one, I've self-funded Handwrytten to date for the last six years. I intend to continue doing that. However, we were just written up in the Inc 500. We had a good placement in the Inc 500. That created a lot of interest by investors. One thing investors are looking for is a recurring revenue model. While most of our clients recur every month, we have like solar panel installers that send thousands of messages a month. It's not structured as a recurring revenue model. It's just whatever you do, you pay for the next month, you don't do anything, you don't pay anything for it. So, we wanted to come up with a structure for a subscription model that would work.
David:
This is more the PR-friendly answer, but they're both totally true. On the flip side, we have customers that wanted to send a lot of notes a month but didn't want to do them all at once and didn't want to do a huge pre-pay buy. So, before this, there were two ways to get discounts. One was to do a huge pre-pay, where you say, "Okay, I'm going to send 10,000 notes for the next couple months, and I'll pay for that at a discount;" or go on our website and bulk upload a spreadsheet of 10,000 notes. For a lot of people, those two models don't work. What if I'm sending 10 cards a month, but they're spread out over the course of a month? I mean, I'm still sending 10 cards, can't they get a little bit of a discount on that?
David:
So, we tried to come up with a model that serves them. It's tough, because unlike an email provider or a CRM provider or anybody else, we have hard costs. Forget about the cardstock and the labor that goes into every card and all that, we have a 55¢ stamp on every card. That's expensive. You know what I mean? So, it took us years to think of a way that would make this work. What we decided was you prepay for credit. That credit, it goes on your account. So, you pre-pay 35 bucks, you get 35 bucks of credit on your account. But that credit also gets you a 15% discount on all orders for the month, so not just on the orders you spend the $35 on. After you exhaust that 35 bucks, you still get that discount moving forward for the rest of the month.
David:
So, that was the model that we came up with, because we wanted to provide value, we don't want to rip anybody off, but we needed a recurring revenue option. It is strictly an option. You can use our service for the rest of your life without ever using one of these subscription models.
Stephanie:
I think the one thing that came to mind was I've been listening to a lot of different interviews of SaaS founders, talking about how the subscription model, the future is not as much about getting into a long-term contract. It's more actually pulling back to where you only pay for what you use. It's not actually locking you into a contract anymore, because a lot of people are nervous about that or maybe prepaying. So, were there any surprises that maybe you guys have seen within the last week and a half as you implement this or pushback from customers or anything where you're like, "Oh, we weren't expecting that"? The consumer maybe thought this one thing, but actually, our plan was different. We adjusted it. Anything that you had to change after launching?
David:
Yeah, there's a few things. Nothing that was a got you and nothing we're really changing. It was more interesting. Okay, so we had somebody cancel their plan today. They signed up and then immediately canceled. So, if you sign up and you get the 15% off, that's 15% off the cards. That's not 15% off gift cards, which should go without saying, but maybe we have to add some language to the FAQ and all that, because I mean, that would be an arbitrage opportunity for somebody. You go on our website. You buy a Visa card for 15% off. You then take that Visa card and buy more Visa cards for... You know what I mean? So, that's just crazy town.
Stephanie:
It's good you didn't figure that out the hard way.
David:
No, no, this pre-pay for a while has always locked you out. I mean, when you pre-pay for something, you're pre-paying for the service, not for gift cards. It clearly does not work. I mean, it could be a huge issue. So, that was one. We had a woman that was very upset that she didn't get a discount on her gift cards, and we refunded her. We have a money back guarantee. So, if anybody uses our service and they don't like the service, they don't like the handwriting, they don't like the card quality. They don't like the subscription, whatever, we'll just give you your money back.
David:
I think more companies need to broadcast their money back guarantee, because even if they don't think they have one, they have one. On our website, we have our money back guarantee. Before that, if anybody called and complained, we still gave them their money back. We just didn't advertise that we had a money back guarantee. So, we gave the service without getting the benefit, if you know what I mean. Side point. So, point number one was people were shocked that you don't get a discount on gift cards creating an arbitrage.
Stephanie:
One person, but yes.
David:
Yeah. Point number two, I'm surprised that... So, we have a 10% plan, a 15% off Plan and a 20% off Plan. We might go 25%. But I'm actually surprised so many people subscribed for 10% off. I didn't realize 10% off would move the needle where people would be willing to subscribe. But if you're in that area where you send that many cards, why not subscribe? So, that's great. I'm glad people are using it. In fact, it's our most popular plan right now.
David:
So, that was two, and then three, which I expected. But my expectation was realized was people we have a cancel at any time type offer. So, we have a lot of people signing up for the 10% off plan, sending five cards, and then canceling the plan. That's fine. If they want to do that, I'm not going to stop people from doing it. It's more important to us to be transparent and create a plan that has no lock in and deal with the people that are just trying to take advantage of it. If they want to do that, fine.
Stephanie:
Yeah, I mean, it also seems like that you're still getting that sale and you'll probably be remembered in the future. They're like, "Oh, that was a good experience. Okay, I'm going to go back again.” So, maybe it's not as harmful as... Even though initially, you might be like, "Oh, that's annoying," but maybe the future customer that you wouldn't have otherwise had.
David:
Oh, yeah. No, I mean, it's totally fine. I've still sold them five cards or whatever it is. So, it's no big deal. It's funny how people will go out of their way to save 10%, 10% for me doesn't really move the needle but whatever.
Stephanie:
I know. Yeah, that's very interesting that, 10% moves people to act like that. I think the biggest thing that you are also saying is like the clarity in the subscription model, which I think is really important and that a lot of companies don't get right from the start, because they can make really confusing ones.
Stephanie:
So right now, it also seems like there could be... Well, twofold, either a big opportunity in direct mail or it's noisier than ever, because brands know that people are home and they're starting to do direct mail where maybe they weren't doing that a year ago. So, how are you thinking about direct mail right now and making sure that your notes are getting opened? Is there still an opportunity, or is that dried up with where we're at right now?
David:
So, I will say we are the largest handwriting provider in the world. Based on our volume, I will tell you there is room for improvement. We have very large brands using us, but it's still just a drop in the bucket of everybody that could use us. I think a lot of brands just don't even know it's an option.
David:
There's the BCG matrix, which is like the hardest thing to sell is a new product to a new customer. If you're an office supplier and you start selling your existing customer a different type of pen, well, they're an existing customer and they've already bought a pen from you. So, that's an easy sell. If you're selling a new customer a pen, people know about pens do an easy sell. But if you're selling Joe on the street that you've never met a handwriting service, it's very hard. So, there is a bunch of that. We're doing our best to raise awareness. That's been targeting quite frankly, a lot of Facebook advertising. We used to just go after Google and SEO, SEO, that type of stuff. But now, we're trying to drive awareness through Facebook and LinkedIn and all the rest.
David:
But yeah, I think there's a huge opportunity for brands to do this, because nobody is doing it or very few are doing it in a consistent, structured manner where some of our clients come to us and do a one-off campaign or one-off promotion, and then they'll say, "Oh, that was the greatest promotion we've ever done. We'll reconsider it again next year." You're thinking, "Why is it a promotion in the first place?" That should be an ongoing part of your CRM outreach strategy." Right now, we're developing a whole program just for automotive dealers to do just that, where you buy a car, you immediately receive a handwritten thank you. A couple weeks later, you receive a service offer, birthday card, happy holidays card, etc. It just repeats without the dealer even having to think about it. I think that model of moving it away from being a promotion to being a part of your CRM strategy is really what needs to happen.
David:
But a lot of other online brands actually have the advantage over traditional retail, because they have the home addresses of the clients where the retailers may or may not depending on if they're in the loyalty program. So, online brands have this huge benefit of creating a one-to-one personalization opportunity through handwritten notes that brick and mortars might not. So, there's that. And then also right now, it's at the disservice of large B2B brands, because they might have your work address, but then they don't have your home address. So, they're left out of the shuffle too. But even before this COVID crisis, we were seeing online brands take much better advantage of this than in-store.
David:
I can give you a perfect example here. We work with a very high-end perfumery that makes a very expensive cologne and very expensive perfume. Everybody that's buys this cologne and perfume from their website, they received a very beautiful handwritten note, thanking them for their purchase, etc. But if you walk into a department store, I walked in there with my wife and kids. We're walking through the mall, and we walked into this department store prior to COVID. I found the product and I was showing it to my wife. A store rep came over and said, "This is the product." I said, "Oh, yes, thank you. I'm just showing to my wife because we send out your handwritten notes." She said, "No, you don't, I have to send my own handwritten notes." I explained what I meant.
David:
She said, "As a store rep, we're supposed to send handwritten notes, but we're too busy talking to customers like you, finishing up a sale, cleaning up the merchandising of the department, doing whatever else is required. We never get around to it. So, even though we have the best intentions in place, because it's not automated for us, we don't get to it." We've been pushing this perfumery to offer the same service to their in-store experience, which would create a much better personal one-to-one experience than the online only.
David:
Where we've done a really good job of this or really the client that we have... It's all about the client. It's a high-end luxury leather goods company. They make handbags, purses, shoes, that type of thing. Every time you make any purchase whatsoever in one of their retail outlets, a handwritten note goes out from our service. But it's signed by the store clerk that you worked with or it has their name and their phone number at the bottom of the note. So, we automated what this perfumery didn't, basically. We tied it to the end. But short answer your question is I still think there's a huge opportunity here. Quite frankly, people are very lonely right now. Any handwritten mail I think will get savored and opened and really showing that-
Stephanie:
They need a good handwritten note.
David:
They really do.
Stephanie:
Now's the time
David:
Yeah, people have the time for it. I think at an abstract level, so two things. One, maybe they might not believe it's actually handwritten if they start getting thousands of these a day or something, which will never happen. But they might say, "Oh, gee, this is not actually handwritten." But that doesn't stop people when they get their Christmas card from the president, depending on what election year it is. But if they get their Christmas card from the president, they probably realize the president didn't sit down and sign a Christmas card to them. But it almost doesn't matter. It's the thought that counts and there is that they went above and beyond just laser printing a note. They figured out a way to send me something that seems really personal.
Stephanie:
So, I wanted to circle back to what we were talking about earlier about investors and how you were self-funded for the last six years. I want to hear a little bit about why you're thinking about bringing on investors now and what that thought process is like.
David:
So, this really has more to do with David Wachs than Handwrytten. So, this is my second venture. My first company, that text messaging company, also was self-funded. I built that up and I was able to sell that off and do pretty well. That was a true startup. There were a lot of nights where it was just me in an empty room with a two-liter diet Mountain Dew sitting by my side as I program.
Stephanie:
Nice, healthy.
David:
Classic, stereotypical startup image, I lived that. But that company actually took off a lot faster than Handwrytten. This time, I decided, "Okay, well, I'm just going to invest my own money, I'm going to build it up." I never really considered venture until this year when we got on the Inc 500. The problem is or the problem I see is we're in a bit of a doughnut hole. Had we gone for venture early on, we would have been great, because then we would have had an idea and no track record. We would have built up this company.
David:
We would have taken up an S ton of cash, garbage truck cash. We would have invested all of this advertising and built it up really fast. But instead of doing that, I grew profitably and organically, I reinvested profits back into the company, so our growth trajectory is much slower. Because of that, now venture capitalists don't even really want to talk to us. Oh, you've only grown at this rate, not 50 times. I'm like, "Well, yeah, because I've grown smartly and profitably."
Stephanie:
That seems to be a focus, the tides are turning a bit. I mean, there was, for a long time, just grow as quick as you can, we'll give you a bunch of money. You don't even have to figure out the business model. Do you even have a business? If you want to pivot halfway through spending all the money, it's fine, but I am starting to see a shift now, where, yeah, they're looking for companies actually grow sustainably, at least some VC firms around here. So, I don't know if you experienced that yet.
David:
Honestly, I've been so busy. So, we entertained a few VC phone calls. They were very, very nice people and very, very big firms. They basically said, "Oh, well, you haven't grown enough this year." I said, "Well, COVID has been going on. So, there's that." Because not a lot of our clients were retailers, so we lost that business, etc. So, to answer your question, part of it was I've actually worked in VC. I've worked for two different VC firms, but I've never taken VC.
David:
I thought it would be good for me personally to go through that experience of receiving VC, having somebody else to report to from a funding perspective. And then potentially down the road, really working for a VC firm as a partner or something like that. I thought that would be my next transition, because this is company number two. I don't see myself going through this process again. So, that was the thought process of, "Well, if I take VC now, we could really blow this up, because I've got a well-oiled machine here that just needs money to scale, that needs to scale advertising."
David:
The technology is pretty much done, although we're doing some really innovative stuff in machine vision, machine learning, which I can talk about. The idea was, "I haven't done it before. Let me give this a go, if anybody's interested." I had a handful of conversations, they all went the same way. I'm short on time these days. So, I was just like, "Well, let me get back to the grindstone and maybe worry about that later."
Stephanie:
Got it. Cool. Yeah, thanks for answering that. I was wondering where you left off with that. All right. So, we only have 10 minutes left. So, I was going to shift over to the lightning round brought to you by our friends at Salesforce Commerce Cloud. This is where I'm going to ask you a question and you have a minute or less to answer. Are you ready, David?
David:
I will do my best.
Stephanie:
All right. That's all I ask for. What one thing will have the biggest impact on ecommerce in the next year?
David:
Personalization. Whether it's a handwritten note or an experience that's personalized when you visit a website or anything else, I think standing out through personalization, there's been study after study by companies like Segment that say that's a huge opportunity.
Stephanie:
Do you name your robots?
David:
No, we name our handwriting. The robots are numbered. So, it's 1 through whatever, 95 right now. We used to have an animated robot, and he still is on our website. If you buy a card, you'll see this little animated robot at the end. His name is Pinbot 2000, because when I was growing up, things that ended in 2000 sounded very futuristic even though [crosstalk 00:44:47].
Stephanie:
Yeah.
David:
His name is Pinbot 2000.
Stephanie:
I like it. What's your favorite handwriting?
David:
I like Tenacious Nick. If you visit our website, it's a very sweeping block print.
Stephanie:
[inaudible] check it out. What's up next on your reading list?
David:
It's funny. I've got a bunch of books here. This one is by the head of sales for HubSpot, Mark Roberge? I hope I'm pronouncing that right. It's called the Sales Acceleration Formula. It was recommended to me. So, I figured I'd read it tomorrow when I have to fly to Chicago.
Stephanie:
Very cool. What's up next on your Netflix queue?
David:
My brother actually is a bigwig at Netflix, but what I'm watching right now is on Amazon. It's The Boys. I'm trying to finish season two.
Stephanie:
Oh, is it good?
David:
Yeah. It's a dark superhero tale. The one I liked on Netflix... It was 40 minutes and was great. I think it's called Cubers. It's great. If you don't care about Rubik's Cubes at all, which I really don't, it was still wonderful. It's the story of two Rubik's Cube masters. One of them is autistic, and the other Rubik's Cube master, who is just a really nice guy in Australia. The friendship that evolves through these two Rubik's Cube masters. That's really good.
Stephanie:
That's interesting. If you were to have a podcast, what would the podcast be about and who would your first guest be?
David:
That is a great-
Stephanie:
It can't be about handwritten notes.
David:
No, no, I think it would be about one-to-one marketing though, which is very much in the same vein and probably a sucker answer that I'm giving you. But it would be how do you market to people on a personal level that doesn't come across as junk, because everything's looking like junk?
Stephanie:
Yup, I like that.
David:
That would be what it is, and I apologize in advance for that answer.
Stephanie:
No, I like that one. I mean, I think it's much needed now. Who would you bring on as a guest?
David:
Joe Polish, who's a marketing expert. He's quite good. Dean Jackson who he works with would be a good guest for that. There's probably somebody from Segment as they have a lot of data that backs it up. So, I'd want to talk with them.
Stephanie:
Cool. All right. And then the last one, since you've started a company before and you've sold it and started another one, what piece of advice would you give to a new entrepreneur who's starting up a new commerce company?
David:
Commerce or not, the one piece of advice that I give to everybody was told to me in person over dinner. So, this is a little bit of a humble brag by Conan O'Brien. So, when I was in college, I used to be in this group that would bring speakers to campus and we brought Conan O'Brien. So, the guys that organized got to sit down and do dinner with him. This is a long time ago. So, he was relatively starting out on having his own talk show back then.
David:
But the advice he gave us was, "Always get in over your head." That has stuck with me for 20 some odd years now, always get in over your head. I mean, people give you advice every day, but how much of it sticks for 20 years. The way I interpret that is if you don't get in over your head, you're never going to grow. You're just never going to pull yourself out of your comfort zone and really do something bigger than you thought you could do. So, I think about it all the time.
Stephanie:
I like it. Okay, Conan, coming in with some good wise words, pretty good. All right, David. Well, thanks so much for coming on the show. Where can people find out more about you and Handwrytten with a Y?
David:
Handwrytten with Y, so you can visit Handwrytten with a Y, H-A-N-D-W-R-Y-T-T-E-N.com. We have @handwrytten on Twitter, Handwrytten on Facebook. Personally, I'm @DavidB, as in boy, Wachs, W-A-C-H-S on Twitter. You can find me there, although I don't tweet very much. If anybody wants to try the service, there's two things I'd say. If you go to the business page, you can actually request a samples kit for free. That samples kit will have all sorts of different handwriting styles for you, including Tenacious Nick, my favorite, but they're all good.
David:
The other thing is if you sign up and you sign up with an email and password, you can enter a discount code. Enter discount code 'podcast', and you'll get $5 in credit that you can then use to send yourself a card or somebody else's card or send your first card, whatever. So, that's available for you too.
Stephanie:
Awesome. All right. Well, thanks so much, David. It's been fun. We will have to have you back in the future once you can see more about your subscription service and all that. So, thanks for coming on.
David:
Awesome. Thanks, Stephanie.
In the world of ecommerce, there is no greater thorn in the side of shop owners than cart abandonment. When you look at the data, which reveals that cart abandonment is somewhere between 80 to 85% across the board — it’s clear that this is a problem aching for a solution.
The reason cart abandonment is so high is because the checkout process is often over-complicated, requires too many clicks, asks the customer to provide too much information, the list goes on. There is so much friction involved that customers with intent to buy never reach the point of conversion. But what if that process could become seamless?
Domm Holland, the CEO of Fast, believes he’s achieved that frictionless experience thanks to a democratized one-click checkout solution that works across the internet. On this episode of Up Next in Commerce, Domm explains how that one-click solution works, and why it isn’t the answer to a payment problem, it’s actually solving an identity problem that permeates every industry.
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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Transcript:
Stephanie:
Hey everyone. Welcome back to Up Next in Commerce. This is your host, Stephanie Postals, co-founder at mission.org. Joining us today, we have Domm Holland, the co-founder and CEO of Fast. Domm, welcome to the show.
Domm:
Hey Stephanie. Thanks so much for having me.
Stephanie:
Yeah, I'm really excited to have you. It's actually perfect because I was just going through a very poor checkout process, and I was like wow, what a perfect interview I have coming today. I think it took about 25 fields to fill in [crosstalk] and I was like I need Domm in my life. So tell me a little bit about Fast. What does Fast do, and how are you guys different?
Domm:
Yeah, so the simplest way to think of us is we're a one click checkout for the entire internet with no passwords. So it's a button that you'll see on websites that says Fast Checkout. When you click it, you'll instantly buy whatever you're looking at. And that could be a single item, so our button often sits above the add to cart button. So you can click Fast Checkout and just by the product instantly that you're looking at. You don't have to go add to cart, view cart, checkout and then go through 20 fields like you did, and then get to payment. It all happens in one click.
Domm:
Or you can click add to cart and sort of buy 20 items on the store and then use Fast Checkout at the end. Once you've used Fast Checkout to buy something, then you can track all your deliveries in one place. You can download all your receipts in one place. You can instantly reorder items you've ordered before through Fast from your Fast feed. So we have this fantastic and aggregated post purchase experience, which means again, you don't have to scramble to go back to remember the name of a site you bought something from a month ago and click a link from Gmail and then log in with a password you created for one store to try and find delivery date or something else. So yeah, we just try and make life easy and fast for consumers.
Stephanie:
That's amazing. So what led you to creating Fast? Was there a problem that you encountered yourself or what excited you about the payment ecosystem?
Domm:
Yeah, so originally it wasn't a payment problem. And fundamentally I think what Fast is solving for is actually an identity problem and payments is just one component of that. The original inception was I'm married with two little kids and my youngest child was in hospital for a few weeks, so we had my wife's grandmother staying with us and helping us out. One night she was sitting at the kitchen table ordering groceries for us and forgot a password and just couldn't order groceries. One of the largest supermarket chains in Australia, turn over $70 billion a year, just couldn't figure out how to charge a little old lady's credit card a couple hundred dollars for some food because of some broken string of text.
Domm:
It was just like a hard lockout. For her to be able to buy food, it didn't make sense. So at the time, I've got a [inaudible] of a passwords authentication system that can be used on ecommerce sites. The idea is granny could've just identified herself and then easily logged in and bought the groceries. But I think that I put it online, I had tens of thousands of people use it in a couple days and realize this is a big opportunity.
Domm:
But fundamentally, passwords aren't a problem, they're a symptom. Again, the problem is that each business requires us to re identify ourselves, which means create new account, create a new password. Login with this password created for one store. Fill in all these fields and forms from scratch. Give them payment information from scratch. Again, from a subscription standpoint, if you lose your credit card, suddenly your Netflix subscription doesn't work. Your [inaudible] subscriptions don't work. Everything is cut off because everyone has these siloed pools of data for us.
Domm:
So that's fundamentally what we solve for is just you not having to continually tell everyone who you are. I'm 33 years old. My name and date of birth and basic information hasn't changed in over three decades, yet I have to keep filling in forms and telling people as if it's brand new information. It doesn't make sense. So we solve for that and make that really easy. And payment is a part of that, an integral part of that, because it's part of the consumer experience. A lot of our consumer interactions involve financial transactions.
Domm:
But a lot of the time, it's just fundamentally making it easier for people to leverage their identity online.
Stephanie:
That's awesome. So earlier you were mentioning about your name and age not changing. What does the back end look like to solve for identity, and why hasn't this been done before?
Domm:
Yeah. Look, I think that there are companies had the opportunity to do this before. I think Facebook really had that opportunity. But [inaudible] didn't go down the identity space, they went down the advertising road. So rather than use your data to make your data portable and easy for consumers to use, they chose to your data for advertising.
Domm:
I don't think that from Facebook's perspective, I don't think it was a bad decision. Facebook makes a lot of money from doing that. But it's just a different... they can't then become your trusted source of data, if they're using your data for advertising as their primary source of revenue, then it's not really your trusted source for holding your private and sensitive information.
Domm:
So I think that there's been opportunities like that and I do think that advertising tends to kill identity products really quickly. But I think the other reality is that people have just kind of thought about things differently, or they've been solving their own problems, or they've been solving for business problems instead of consumer problems. And things like Apple, Apple building an ecosystem that you can now do log in sometimes, you can do check out if you're on Apple device on some sites and with some cards and that type of thing.
Domm:
They've got limited context, but basically they've got solutions to make it easier for people to perform certain actions if they're within their ecosystem. Same thing is kind of true of Google. Same thing is true of other ecommerce platforms for stores that are on those platforms. And basically what these companies are doing are reinforcing their existing ecosystems. Or further monetizing their existing base of merchants. But they obviously don't want to reward people who aren't in their ecosystem, right?
Domm:
And so they're fundamentally solving a different problem. Like for us, we're trying to solve the problem of granny being able to buy groceries, like how can we make it fast and easy for people to buy things? And how do we make it fast and easy for people to login? How do we make it fast and easy for people to securely use their data online? And it's just a very different value problem. Our product strategy differs because we're out there trying to solve a consumer problem and most of these companies aren't. I think that's the primary difference that you see shine through in products.
Stephanie:
Got it. I read that you are a self taught engineer, so tell me a little bit about that, and are you doing the engineering at Fast or no longer are you doing that?
Domm:
Yeah. Yeah, I've been programming since I was 13, 14. I'm 33 now, so a long time. I always liked to build things, always been fascinated with computers and programming and technology in general. I learned C programming when I was 13, 14 and been building ever sense. I fell in love with it. I built the original Fast V.1. Up until recently actually it was completely built and maintained by me. We now have a very big and strong engineering org and I can say unequivocally that no, I no longer build the Fast infrastructure. The team keep me far away. I don't think I'm the enterprise grade engineer that we need internally. But I'm still very technically involved and involved in a very close level at the product side. Very opinionated as how products should work, obviously.
Domm:
Allison, my co founder and I, both have very strong visions as to how we think the future of identity, future of payments, future of commerce should work. And really want to see that come to life through our products.
Stephanie:
That's great. So what was the first thing you built when you were 13? Do you remember?
Domm:
Yeah. So the first program I ever wrote was a script to determine if a word was a palindrome. My ex stepdad actually was a computer scientist and a programmer. He, myself, and the sys admin of a university in Australia, each wrote our own version of the script and then measured the speed and had a competition to see whose script would perform the fastest calculation. It was the first-
Stephanie:
That's great. How it all got started. I love that. So with everything that's happening right now with the pandemic, I can see a very big problem happening around new scans that are coming back because you have a lot more people who are now using digital payments that maybe they weren't doing that in the past. It seems like there's a big opportunity there for people to take advantage. So how are you guys approaching this landscape now? Is it different now than it maybe would have been a year ago, the problems that you're having to solve around security?
Domm:
Yeah. Internally, we've been absolutely focused on security since day one. So we hired a VP of security before we hired our first engineering manager. We really built out the security function very early. Honestly for a company of our stage, I would unequivocally say had the most sophisticated security posture of all. We have a lot of different programs in place. And really it's because we're managing data and payments. It's essentially our business. So we're just very intentional and have been about embedding into our culture as a culture of security and privacy from day one.
Domm:
And it's a really important piece. The reality is that it's not that interesting from a consumer's perspective. They're far less interested in security than they should be. So that doesn't mean that we shouldn't care about it, it just means that we don't talk about it a lot. It's not a benefit that's going to drive consumers in droves to sign up for Fast. One click check out drives consumers and drives to sign up for Fast. But the reality is, we need to keep them safe when they do, and security is an integral part of that. Same thing is true of merchants and in reducing fraud and charge [inaudible] and so forth.
Domm:
So we invest a lot into that at every level of our product from application design perspective and a system design perspective and infrastructure and internal policies and whatever else. We think about it a lot. The reality is that our product is extremely well poised to reduce both consumer fraud or merchant fraud and identity theft and so forth because we sit as an identity solution, as first and foremost. So when it comes to making a transaction, typically everyone's transactions are siloed. Everyone's data vaults are siloed. So every store is operating independently. They're kind of only looking at their own historical data primarily as the determinant risk. Whereas the beautiful thing about Fast is that because we sit across every store, because you can use your identity hold with Fast at every different merchant and all the different sites across the internet, we can in a really sophisticated manner, help to reduce that risk because we can gauge risk against your profile and past purchases and log in history and so forth, and identify anomalies. So it really means that we can keep consumers far more safe than basically any other solution.
Stephanie:
Yeah. That's really great. I think anyone who is working with you would feel really good about having those safety measures in place because I was just reading about how many people are now using debit cards, especially with contact less payments. But that a lot of merchants aren't asking for pins anymore because it's too much friction when it comes to payments. And I never even thought about that, that a merchant can be like, "Ah no, I'm not going to ask for the pin for your debit card because it takes too much time." That's a huge risk. Your debit card can be linked to your entire savings.
Domm:
Yeah. Look, absolutely. In Australia, we launched [inaudible] chip cards earlier than the US and really years ago [inaudible] chip cards were mandatorily introduced throughout the country, so we've been using them for a long time. We have less than $100 you don't use a pin, and over $100 you do. That's standard across the country. Whereas here, it's almost like the wild west where some stores enforce a pin on any transaction, so a dollar or something like that, you still have to use a pin.
Domm:
And then some stores, I've done hundreds of dollars in transactions and had no pin. Yeah, I think there is something to be said about having a set of standards and a strong set of standards to protect both consumer and the bank or the merchant. One is, your risk as a consumer and suddenly not having food in your account. And that's right, it's a debit card linked to your real money. And if that account is drained, even if you've got protection from the bank or whatnot, it's not going to come instantly. And so there's a real risk for people, and then again from the merchant's side, from card fraud.
Stephanie:
Yeah. Very scary. So when it comes to ecommerce shops, what tools are you integrated with right now? Who can actually use you? Or [crosstalk] in the future who do you plan to use, or who do you plan to partner with?
Domm:
Yeah, good question. So we launched last month in a partnership with Big Commerce. So every one of Big Commerce's 60,000 merchants can offer a fast checkout to their consumers and to their shoppers. Next month our launch with support for Woo Commerce, another large platform with over a million and a half active merchants. And Magento after that. And then next year we're going to be launching support for a Sales Force [inaudible 00:14:39]. I'm really excited to work with the Salesforce team and take their launch on commerce cloud.
Stephanie:
Amazing. I'm not biased or anything but I do think they're probably going to be the best partner.
Domm:
Without a doubt. The reality is, a lot of the world's favorite brands really do see it on Commerce Cloud, so it absolutely is a key partner and one we're excited to get off the ground.
Stephanie:
Love that. So to shift over to the merchant mindset a bit, because that is who listens for the most part to this show, I was looking on your co founder Allison's twitter and she had a stat on there saying that 50% of cart abandonment occurs at the payment stage in the US. And I wanted to hear a little bit about maybe a case study or metrics that you guys look at to see where a merchant should be looking at to see if their payment process is going well and how maybe... what is the average? What should they say like, "Oh, this is normal cart abandonment around this percent is normal, and this is too high"? How can a merchant think about whether they're doing well or not?
Domm:
Yeah, great question. I think that there are so many ways to look at this. The average cart abandonment is 80 to 85% across the board.
Stephanie:
Oh wow. It's higher than I thought.
Domm:
It's phenomenally high. And so the reality is, if you're doing less than that, than you're doing above and below industry average, so maybe you think that's good. The reality is, it's appalling. 80 to 85% of your customers who have given clear intent to purchase are leaving without buying something. So even if you're below that, I don't think it's good enough. It's not good enough because one, you're missing out on a lot of sales. And two, your customers are just having a terrible experience.
Domm:
Some people, like my granny story, it's just actually a hard [inaudible 00:16:24]. They're just unable to buy from you. Other people, it's just so long and inconvenient that they're just leaving. And the reality is, like we said, the typical flow is this add to cart, view, like everyone kind of thinks of checkout as a final stage of checkout. But it's not. The process of buying something is add to cart, view cart, checkout, and then you typically ask them for your email first and then you try to work out if they're a customer or not. If they are a customer, get them to log in. If they're not, then say, "Do you want to do guest checkout?" Then you give them a whole bunch of forms to fill out. And then at the end you ask them for payment.
Domm:
So Fast is really different. Every single site that has Fast on it, you will see a Fast checkout button on the product page. And you can also see it on the cart page, and you can also see it on the checkout page. But it's on every product page. And this is really the biggest difference because the fastest way, the easiest way for somebody to buy something is from the point that they're looking at what they want to buy. It's one click to be finished and order from the point that you're looking at the product with Fast. And that is just such a big difference. It's an actual one click check out. Whereas every other solution isn't one click anyway. The payment, it's normally at least two or three or five clicks or whatever. But it's one or two or three or five clicks after you've done like ten steps to get to the payment section of checkout. And it's really slow.
Domm:
So as a merchant, you can see very clearly in your analytics every stage of drop off. So from add to cart, how many people leave? From view cart, how many people leave? From checkout, from the email form, how many people leave? And so forth all the way down the train. Now if you've got 15 steps in that process, if you've got five steps in that process, then that's a lot more than one step. It's hard to have that levels of abandonment from a one step process. So that's why Fast is really just so different in market because we take what is a much, much longer process and just simplify it to the NTH degree.
Stephanie:
Got it. Are you advising the merchants when it comes to minimums? Because I could see me finding, I don't know, a mascara, it's only a couple of dollars, having fast check out on there, how do you set that up for the merchants so that they're still doing things and their profitable way but also allowing for that fast checkout, especially if they have lower priced items?
Domm:
You're talking about my favorite point here. The fear of merchants, and absolutely warranted, the reason that they would not put any other payment buttons on the product page. So it's not like no one else has ever asked to be on the product page, but merchants typically just say no to having PayPal, Apply Pay, Google Pay, like pick your payment button. They just say no to having it on the product page. And it's because the fear is, and an absolutely warranted fear, is that it will reduce average order values. It will reduce the average items per order. It will increase delivery costs. It will increase shipping costs. And they don't want to do that. Merchants don't want to reduce the amount of money that they're making.
Domm:
And the reality is, if you put an Apple Pay button onto a product page and a consumer uses that button, the merchant is guaranteeing that they're only selling one item. So if it's mascara for $4.99, then they're only selling mascara for $4.99. As a consumer, it also means that a consumer is going to pay individual shipping costs for an item. So typically the shipping might be six, seven dollars or something. So a five dollar mascara is suddenly more than double as expensive. So as a consumer, it's not a great outcome either. So it doesn't make sense.
Domm:
Even on higher value transactions, even if the product was $50, a merchant still wants to bundle multiple products into a transaction. So they still aren't incentivized to be pushing payment, like individual payment buttons onto product pages. The difference of Fast, and we spent a long time engineering something with this exact use case in mind, and it makes us absolutely different from every single payment button on the market because we're not just a payment button, is that we natively integrate batching. Which means, as a consumer, when you click Fast checkout, you instantly buy whatever you're looking to buy. The mascara, it's yours. Now you can keep browsing.
Domm:
And then a couple of minutes later, you decide that you want to buy eyeliner, and you click Fast checkout on the eyeliner, and now you've got one order with two products on it. Not two orders of one product. So for the merchant, the average order value is now increased. The average items per order is now increased. They only have to fulfill one order. So they only have one box. It's going to go out to the consumer, and so it's only going to be one delivery cost to them. And they're only going to be charged one transaction fee. So the consumer only has one charge on their credit card. The merchant only has one charge from Fast.
Domm:
It keeps average order value high, [inaudible] order. Even though we're on every single product page, and I can tell you that between 75 and 80% of every single checkout on Fast is from the product page. So it is absolutely overwhelming the impact that it has to businesses, to every single business that takes on Fast, that the majority of these sales coming from product page. And it makes all the sense in the world, yet our average items per order is over two. And a lot of stores, the average items per order, even without buttons on the product page, is less than two. It's like, 1.7, 1.6. So we are driving people, we are making it easy for people to buy things. People are buying things. People are buying more things. So businesses make far more money, can increase their order values, can increase the average items per order, can decrease their shipping cost, can decrease their payment cost, and yet still be increasing conversion rate much higher than they are now. And decreasing abandonment.
Domm:
Yeah. The button on the product page, the Fast checkout on product page, with our batching functionality, is just a next level for ecommerce.
Stephanie:
That's really cool to hear, how that works behind the scenes. And I can definitely see that working well. I mean I'm even thinking about how many times I've added a bunch of things to a cart, especially on my phone, and then just forgot about it and came back and it wasn't there anymore. And even within Amazon, I mean they have that Buy Now button, and I will buy the smallest things, just buy, buy, buy. I'm sure maybe they also batch that in the background, but it doesn't matter to me because I'm just going through quickly buying things that maybe otherwise would have sat in the cart for a week.
Domm:
You've hit the nail on the head. So Amazon is the only other company in the world that batches like we do. And they only batch like that for Amazon.com. So Amazon Pay doesn't do this. So what we have done is take that same functionality that the world's largest ecommerce site built for themselves and given it to every single other merchant. And it's just natively integrated out of the box. Merchants don't have to do anything. They just integrate Fast and we do the rest. So it's very, very sophisticated technology that decreases costs for business and everyone gets it by default. Yeah.
Stephanie:
Wow. That's awesome. So I also just read that you guys raised 20 million in funding, and I wanted to hear a little bit about what you plan to do with that.
Domm:
Yeah. So we raised $20 million dollar series [inaudible] by Stripe. Obviously Stripe is one of the largest payment processors, payment infrastructure businesses. And in fact, Strive recently just partnered with Sales Force and Strive is going to be integrated into Commerce Cloud as well. And they're sort of key partner of Commerce Cloud.
Domm:
Really, our goal is to enable as many consumers and as many businesses as possible to use Fast. So the money we raised is really to speed up that expansion. Our mission is to put these buttons on every website in the world, and partnering with people like Stripe, a huge distribution partner for Fast, and great partners for us. And we use Stripe's payment processing, which underpins Fast. But yeah, we're deploying the capital to build our network of merchants and offer Fast to every internet connected consumer in the world.
Stephanie:
That's awesome. So how are you approaching international markets? Have you started doing that yet? How are you thinking about that roll out plan? Because it seems like it could be tricky since everyone has a different idea of how payments should work, or what they're comfortable with, or how they pay.
Domm:
Yeah. It's a good point. So we already have merchants in five countries. We can support merchants in 42 countries. So we're expanding our roll out. And we support buyers all around the world, obviously. Ecommerce is kind of inherently global because you can buy from stores all around the world and have items shipped internationally quite easily these days. So there is definitely a large global component to our business.
Domm:
The reality is that typically payment processing has been dictated by merchants. And it's a cost driven exercise. It's more of a commodity product. And a consumer has no idea who Stripe is or [inaudible] or Braintree or these companies sit in the background that process money. Consumers don't know them. The consumer just interfaces with the business, gives them their credit card details, and away they go. The reality is that with Fast, we're a button system on the front end. Consumers get to know who we are, they choose to use the button because they get one click check out. It means that they get this entire post purchase experience for free that they didn't get before. Finally they get all of their orders in one place, all of their products in one place. It's a great experience for a consumer.
Domm:
And the consumer is now driving the decision as to how payment processing should be, rather than business. Now that's not to say businesses don't have a choice, obviously they get to put Fast on their website. But the reality is, the consumers are being far more active into which payment provider is being used because it's being driven by that front end decision. And I think that that's the biggest change that you'll see moving forward is that a lot of payment decisions get remade by consumers as opposed to businesses.
Stephanie:
Yep. I love that. So have you heard any feature requests from these new customers that you're onboarding that maybe you weren't expecting? Since you just launched six weeks ago, I'm sure you maybe have a couple people being like, "Hey, I would like this or that," and you're actually building something that you weren't planning to build before launching.
Domm:
Yeah. Look, our two biggest features that we get asked for all the time by merchants and consumers is returns and subscriptions. And we're going to be supporting both of those very early next year. We want you to be able to manage your subscriptions through Fast, and as a consumer, this means we put all of the power in a consumer's hand. So that all of the control, stuff that they don't have. At the moment, they don't get to see all of their purchases in one place. They don't get to see rich receipt information. They don't get to reorder products easily, so we're giving them that.
Domm:
But the same thing is true for subscriptions. Where are all the subscriptions managed that come out of our accounts every month? It's horrific, the state of subscriptions. And so we're building that support for our subscriptions for consumers. And obviously for business as well, that means that it comes very easy. One click for customers to sign up for a subscription with you. So it's a really great experience for both. And then returns as well. We want to make it easier for consumers to return things when they need to return things. And give them instant refunds on the money. Let them spend the money again straight away.
Domm:
And then the last one that I find really exciting is so we already offer the one click reorder from Fast from our online dashboard, but we're going to be bringing out instant reordering of physical products. So you can scan a code on the back of your shampoo when you run out and more shampoo will come [inaudible 00:28:09]. You can do the same thing with ketchup in your fridge, and more ketchup will come. So basically, every consumable good in your house you'll be able to reorder just by scanning the code on the back of the product.
Stephanie:
Wow. It feels like you guys are tackling a lot of different really important areas. I'm even thinking about some of those finance apps where they're like, "Let's analyze all the subscriptions that you're subscribed to." It seems like you guys are kind of building a dashboard that's going to cover that, cover the reordering of things, covering returns. You guys seem to be doing a lot that a lot of other individuals have maybe tried to build one off products to solve.
Domm:
Yeah. Exactly. And I think that you think about all these spaces. This has been the problem. Everyone has thought of all of these things as disjointed problems. Again, the core thing that we're solving is identity for consumers. When you walk into a doctor, you still have to fill in a paper based form. It's crazy. Everyone just has these siloed information. Move address, you've got to tell everyone your new address again. The state of the world, the world is broken because of identity. So that's fundamentally what we're solving.
Domm:
So we're giving consumers a home to manage their information. And that means when you buy things, give you a home to manage those purchases. When you subscribe to things, give you a home to manage those subscriptions. We really just think, "How do we provide a really secure and centralized spot for consumers where it puts them in control of their data?" As opposed to leaving businesses to being in control of their data.
Stephanie:
Yeah. Even thinking right now about every time I take my... I have six month old twins, I take them into the doctor, and I have to fill out the form twice with the same information. I'm like, "Ah. This is horrible."
Domm:
Exactly. Yeah. One hundred percent. I think of doctors as the best use case for us, as to how annoying it is and how frustrating. Yeah.
Stephanie:
So what channels are you all using to get the word out? What do you see success? And I'm asking this because I was looking at your website and then on Instagram, bam, there was Domm talking to me saying, "Hey. You checked out our website. Where did you go?" And I was like, "Whoa. That was quick and awesome retargeting." So what are you guys finding success in right now to get the word out about Fast?
Domm:
Yeah. So obviously social channels are great. We use all the major social channels. And a lot of different data retargeting tools. Especially for business customers, so these tools like [inaudible] really effectively target our core demographic. Really, for us, distribution actually comes through sellers. Sellers put the button on their website and really that's the biggest window into consumers. That's where we grow our fastest consumer generation. So we don't typically have to try and actively build or really drastically, productively build the consumer network, because it comes through sellers. 90% of buyers, our first time Fast customers, they come to us through a merchant site.
Domm:
But now, after the first time that they fill in the form once, now they have one click check out everywhere else. Even on that site. Once they click Fast checkout on a mascara, then they fill in their details, then they keep browsing and then they buy the second product, and the second product is one click. And then the same thing is true if they come back a month later or a week later or whatever, they can buy again. So for us, it's all about how do we bring on more merchants? And great thing about ecommerce is that every ecommerce site in the world is public. We can identify our entire market from [inaudible 00:31:44].
Domm:
We use Sales Force for our engine and we track virtually every ecommerce site in the world and know what technology they're on and know what payment processes they use and target them accordingly. Through both sales and marketing. And partner with platforms Big Commerce or Sales Force, Commerce Cloud or so forth to better selling to those ecosystems. But yeah, I think really just want to make use of all of the tools and channels available to us, all the relevant ones at least, and reach people wherever they are.
Stephanie:
Awesome. So it seems like also that you guys are very far ahead of certain topics. Certain products that you're building just feel far in the future that I didn't think those problems would get solved in a year, but it seems like you guys are tackling them. So I wanted to hear what the future of online commerce looks like to you. In 2025, what will the process look like and how should merchants be preparing right now?
Domm:
Yeah. Great question. It's so amazing to see all the value that you can unlock by enabling frictionless commerce. Is the idea of this sort of click and buy. And really it's been this nirvana or the epiphany of what people really want, and we've never gotten there. And that's exactly was Fast has delivered. So suddenly you can open up ecommerce opportunities everywhere. Not just through your site and then through some ten minute checkout process. If it's one click check out, it means you could just pay 50 cents and read an article, or subscribe to the Wall Street Journal in one click. Or watch a movie in one click, or you can land on a site after seeing an Instagram ad and actually just check out in one click once you like the product. Or check out from an ad itself. Some frictionless. Maybe it is a mascara, a bundle or something that you see in an ad, and just one click purchase from the ad itself. That has been the nirvana of advertising for a long time.
Domm:
But it also means through social media, one click purchase through social media. If you do see an influencer promoting a product that you like or something that you do want, then just unlocking the value a lot sooner, and having less barriers for consumers to actually buy the things that they want to buy and enjoy the things they want to enjoy. So there's a whole Rolodex of opportunity.
Domm:
I think things like our physical reorder product is going to just unlock a whole new wave of opportunity again. Because it's not limited to the [inaudible] who bought it originally. You could go to the supermarket and buy ketchup off the shelf and then take it home, and then when you're finished, then scan the code. Anyone in your house could scan the code and instantly more would be delivered. So it's not tied to a person, it's tied to a product. I think having that ability to mix real well to digital transactions that simply will just unlock opportunities that we can't even think about at the moment.
Stephanie:
I love that. I also think Tik Tok is big. My team always laughs at me about that, but I think about how many people I follow on there. And I was watching this one girl's video where she had some cup off Amazon and she was just doing a silly review, and apparently millions of people bought this cup just because of her review. But she didn't get any attribution back. And it would have been nice to have a Fast button in there where [crosstalk] buy that. I want that too.
Domm:
Yeah. Absolutely. We're going to run tests of one click check out just from links in Twitter later this year. But yeah, Tik Tok 100%. We'll be able to do it later this year from a QR code embedded in the Tik Tok videos or Instagram videos, which would give them attribution and affiliate fees and whatever else. But yeah, I think that there's so much we could do and we'd love to really expect to work a lot more closely with some of the large social networks over the next 12 months.
Stephanie:
That's really cool. Yeah, I'm excited to see where it transforms to. All right, so I want to shift over to the lightning round brought to you by Sales Force Commerce Cloud. This is where I'm going to ask a question and you have a minute or less to answer. Are you ready, Domm?
Domm:
Okay.
Stephanie:
All right. What's up next on your podcast list? Do you listen to podcasts or do you just join them?
Domm:
Yeah. So actually I'm listening to Business Wars at the moment. I am really enjoying hearing about one, the war of two companies I think is kind of interesting. But the history of companies as well. I had no idea that the founder of Adidas, one, how Adidas got its name, and then two, the brother of the founder of Adidas started Puma. Anyway, I find these stories amazing, so I'm digging my way through the many seasons of that podcast.
Stephanie:
Oh, that's great. So we have a podcast called The Story and we did a whole episode on the brothers and how they were building Adidas together and yeah, how they shifted over to having competing companies. It was a very interesting story.
Domm:
Yeah. Yeah. Amazing.
Stephanie:
What's up next in your travel destinations when you can travel? Where are you headed?
Domm:
I am Australian as you can hear, and I'm just addicted to the sun. I'm like a lizard. So it's always tropical beach. I'm hoping to be able to get to Hawaii. I'm optimistically, maybe naively optimistic about getting to Hawaii for Christmas. But anywhere with sun and water is my dream destination.
Stephanie:
That's great. What is your most recent impulse buy? What did you hit Fast checkout on recently?
Domm:
So solo [inaudible] great merchants now, but at a product that we actually just used at a beach last night. And it's a solo stove, so it's a fire pit. Beautiful fire pits, and they are really an amazing product and we went down to Ocean Beach last night and busted it out for the first time. We bought that with Fast checkout from the product page. But yeah, that was a really, really nice product to buy.
Stephanie:
That sounds nice. I need one of those. If you were to have a podcast, what would it be about and who would your first guest be?
Domm:
Oh. We're thinking about this at the moment. Who would my first guest be? I do think that there's lots of opportunity in ecommerce and a lot of the companies doing really interesting things, especially in the age of Covid. The world has changed so dramatically. I think Nike has been doing some really interesting things and rapidly changing their business model. Their CEO has come from a tech background. I think that would be a very interesting discussion to hear more about Nike's ongoing strategy and what the brand looks like moving forward.
Stephanie:
That would be a good one. All right and the last one, what one thing will have the biggest impact on ecommerce in the next year?
Domm:
Well I mean, I'll give you two things. One is the obvious, which is Covid. It is drastically shaping ecommerce. The second one is logistics. Again, [inaudible] because of Covid, but with increased ecommerce demand. But logistics is definitely going to be interesting to see how logistics plays out and changes ecommerce. Especially democratizing the Amazon effect across the internet.
Stephanie:
Yep. Yeah, I completely agree. Well Domm, this has been a very fast interview. I think we did your brand justice by how quick and how many hits we had in here. Where can people find out more about you and Fast?
Domm:
Great. Yeah, thanks. I had a blast. People may have to listen at a slower speed because I know I talk quickly. Fast, F-A-S-T dot co. You go on our website, have a look. Sign up as a consumer. If you're a merchant, hit us at sales@fast.co. We'd love to get in touch, or go to fast.co [inaudible 00:40:08]. Sellers, you can hit us on social media. We're very active on Twitter. We're active on all the channels, but Twitter is definitely our number one channel. You can go to twitter.com\fast and you can engage with the business. If you want to talk to me directly, twitter.com\domm, D-O double M.
Stephanie:
That's a good handle. Perfect. Thanks so much, Domm.
Domm:
Pleasure. Thanks for having me.
The best way to chart a path forward is to understand the state of the industry and the possible changes that could occur in the near future. In business, that means keeping an eye on all of the trends in your industry, analyzing data collected by yourself or others, and letting the insights be your guide.
One of the most popular places to find insights is through industry reports put together by large organizations that have access to billions of data points, which can be graphed out and analyzed on a deeper level. The Shopping Index is one of those reports. It is put out quarterly by Salesforce and it contains information about consumer behavior, shopping activity across numerous platforms, and a look into how different industries are performing.
In one of the most recent Shopping Index reports, Salesforce collected information from more than one billion global shoppers in order to paint an accurate picture of what the world of ecommerce looks like. On this episode of Up Next in Commerce, we break down some of the key findings in the report with the two people who helped put it together, Caila Schwartz and Ann Marie Aviles. Caila is the Senior Manager of Strategy and Insights, Retail and Consumer Goods at Salesforce and Ann Marie is the Senior Associate of Industry Strategy & Insights at Salesforce. So what’s ahead for the holiday season? How much of the consumer behavior adopted during the pandemic will stick around? And why do people stay loyal to a brand? Find out on this episode.
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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Transcript:
Stephanie Postles:
Welcome, welcome to our very first roundtable style episode. This is Stephanie Postles, Co-Founder of mission.org and your host of Up Next in Commerce. Today, we are chatting with Caila Schwartz and Ann Marie Aviles. Ladies, welcome to the show.
Caila Schwartz:
Thank you.
Ann Marie:
Thanks for having us.
Stephanie Postles:
Yeah, I'm excited. It should be interesting having a three person call, like I said, it's the first one. So we'll see where it goes. It'll be fun. So, Caila, can you first introduce yourself? Tell me a little bit about you and your role?
Caila Schwartz:
Yeah, so I'm Caila Schwartz. I've been with Salesforce for six years now. I am on the Industry Strategy and Insights team focusing on retail and consumer goods. And I am responsible for several initiatives throughout the year that our team puts out into market, which include our quarterly shopping index, as well as all of our holiday reporting. So really utilizing real shopping data to understand the consumer and help put together some insights that can help our customers make some strategic decisions.
Stephanie Postles:
Amazing. And Ann Marie, what about you? Tell me a little bit about your role?
Ann Marie:
Yeah, happy to. So I'm also on Caila's team, but I have a slightly different focus. So I've been at Salesforce for just about a year and a half now by the way of Forrester research. So my background is definitely in research. And so I'd like to think of the shopping index as a fine line and I provide the cheese and the consumer perspective on what their priorities are, how their habits are changing through a lot of in depth research work.
Stephanie Postles:
Amazing. So that's a good place to start, then I really want to dive deep into the shopping index. So maybe Ann Marie, if you want to start there telling me a little bit about how long is the shopping index been around? What is it? And how can a customer or any shop owner use the shopping index to further their business?
Ann Marie:
Sure. So for this one, I think Caila, since she actually created the shopping index would be the perfect person to describe its origin story.
Stephanie Postles:
Perfect, Caila, take it away.
Caila Schwartz:
Thank you, Ann Marie. Well, I can't claim the genius behind it because it was actually created by someone much smarter than myself, a several, several years ago. I would say about maybe its seven years ago. So we've been publishing, like I said, the shopping index quarterly for the past ... I want to say six or seven years. So it's one of our longest running assets. I inherited it about four years ago. And it came out of a project or initiative to understand the consumer. And back in the day we were from the Demandware. So I worked for Demandware, before I got acquired by Salesforce, and we had access to all of this data from our platform.
Caila Schwartz:
And internally, we started asking questions about how we could potentially use this data to help give insights to our customers on consumer behavior. And the shopping index was born. So it's really become the bedrock piece of content that helps us start to ask questions that then lead to a lot of these other great pieces of content and research that we do. So like I said, it's our longest running asset. But as far as how consumers or customers are using it, it really is a benchmarking tool. And it's meant to be like a sounding board.
Caila Schwartz:
How are you performing against your peers? Is there opportunity for improvement? And using it as a way to uncover some of those questions for customers, about their business, and areas that they can focus on?
Stephanie Postles:
[inaudible 00:04:51]. That's a good point to go through what are some of the really key metrics that people find the most value in and maybe we can talk through maybe what Q2 look like. What are some of the things that people really rely on?
Caila Schwartz:
That's a great question. I think it really depends on the individual business and what their unique challenges are. I know that right now, everyone's experiencing some really big searches in digital activity on their websites. So the biggest question that we have right now is, is this normal? Am I doing well, compared to my competitors? Am I not doing as well? So, bringing it back to those core metrics around traffic growth, spend growth, conversion rates. So really bringing it back to the basics almost, of understanding and getting really a basic understanding of performance compared to the market.
Stephanie Postles:
Yes, this report sounds awesome. I'm looking through it right now, it looks like it's in a really cool Tableau dashboard, which is really fun, and easy to digest. Some of the things that I'm looking at now are when it comes to computer and mobile growth, it seems like ... now it seems obvious, but a lot of people have shifted to mobile, but then maybe the cart abandonment piece has not increased as much, maybe if you can talk a little bit about that. I'm trying to think if I'm a shop owner, and right now all my traffic has been on desktop, and now it's shifted in to mobile, but then I'm not able to convert the customers as well. What are you seeing behind that data to maybe help with that piece?
Caila Schwartz:
Yeah. In an example like that, where we can break it down by device and say, "Hey, we're seeing a lot of traffic coming from mobile, but it's not converting as well." Mobile traffic is up, traffic overall is up. The conversion is far down, or looking at your add To cart rate or your cart abandonment rate to see, are consumers getting to that cart? And are they finishing that checkout process? So, trying to identify those points of friction within the shopping journey, using this data, and so if we see that there's a high level of cart abandonments, or checkout abandonment, that would lead me to believe that there's something about that checkout experience that isn't ideal. And we see that, especially on mobile.
Caila Schwartz:
The mobile shopping experience, at least the checkout experience it's come a long way in recent years, but the whole tapping in all of your little form fields on your mobile device is really cumbersome. And so, thinking about ways to flatten that funnel through mobile wallets, whether it's through Pay Pal, or Apple Pay, or Google pay. So those are some of the ways that a shop owner could utilize that data to see, okay, where are the points of friction within that shopping journey? And mobile is the number one driver of traffic and orders. And we've seen over the past several years mobile really accelerate as the number one device for consumers.
Caila Schwartz:
So as a business owner, if you're thinking about what device to prioritize, creating a great mobile experience is going to be the top of your priority list. But what's interesting about 2020 is that even though we're still seeing this massive shift to mobile, which we still are, computers have actually had a resurgence. And it really highlights the need to have a great experience across all of your touchpoints. So even if you're focusing on mobile, you have to think about providing a great experience, no matter where the consumer chooses to engage with you. And I think that's something that is really easy to forget, because sometimes you can get so hyper focused on one particular device or channel or tactic, and it really is about the big picture.
Stephanie Postles:
Yeah, I completely agree. I can also see some of these ... like you said, these are things that you can benchmark your business against, and it would give me peace of mind anyways, if I could say, "What is the average?" And it's nice that on your [inaudible] report, you have it, or you can select it by vertical. So I was just looking at a footwear vertical because we've had Puma and Little Burgundy shoes on and being able to see what is the average order value and the discount rate that other people are offering and the cart abandonment like, "Oh, okay, maybe 80 something percent is actually has always been normal, so what can I do to become better than that?" Or if I'm worse than that, at least I know what the average is. So it seems like you could not only give peace of mind, but then also see areas where a shop owner could improve, which is great.
Caila Schwartz:
Exactly. Remember, these are just averages so and there's people that are doing better, there's people that are doing worse. So where do you stand amongst that? And then where are those opportunities for improvement?
Stephanie Postles:
Yeah. Tell me a little bit about the social traffic data you guys collect? Because I'm looking at that now, and it shows the social traffic share increasing by mobile. And I think I know what that means, but maybe detail that a bit so I can see what the opportunity is, by that share increasing?
Caila Schwartz:
Yeah. So our social data that we collect is coming from the social referral data. So data from a social platform, whether it's Instagram, or Facebook, or Pinterest, any channel that's directing traffic to an ecommerce website, as a referral. It's also paid in organic. So we're collecting that visit data and we're looking at it through the lens of, okay, is this social referral from a mobile device, is it from a computer? And then we look at it overall. And then the percentages within that chart are looking at the share of traffic, against all other sources of traffic. So if it says, 10% of mobile traffic, or 10% social share for mobile devices, that means that 10% of all mobile traffic came from a social referral channel.
Stephanie Postles:
Yeah, that makes sense. We've actually heard that theme, quite a bit from many previous guests, where they're talking about the social shopping experience and how they're relying on influencers, and how, of course, there's a lot of platforms Instagram, TikTok that people are looking at right now. But that seems like if a shop is not playing there or a brand is not there, you should probably be there, because it's rising.
Caila Schwartz:
Oh, totally. And Ann Marie can really go into more detail on this, but in our snapshot series, research, we did some research on just the different types of pieces of content that consumers are engaged with, and I know social was right up there. Ann Marie, can you elaborate on what you guys found from that?
Ann Marie:
Totally. Yeah, happy to. So you're totally right. Social is the talk of the town right now. Typically, we see social referred traffic hit around 9-10% around the holidays, which is when you see all of those peak online numbers. But now that's just the usual during quarantine times when everybody's IRL lives have been pushed online. And through the snapshot research series that we did, where we surveyed thousands of consumers every two weeks to see how their shopping habits were changing, how their emotional states were changing over time. And we found that since the onset of the pandemic, 63% of US millennials, said they had made a purchase over social media.
Ann Marie:
So it's really turning into ... we like to call it the mall of the 21st century because social media platforms are where you can congregate with your friends, you can chat and you can discover new artists and new products. So as you called out before, we're seeing Instagram, Facebook, TikTok, all definitely cash in with awesome new features, which just continues fueling the fire. The easier it is to sign up for a product drop, or learn about a new makeup line, the more consumers flock to it, and then the more innovation these companies provide on the back end. So it really is exciting.
Stephanie Postles:
That's great. Are there any new channels that you guys saw popping up that maybe others wouldn't be aware of right now?
Ann Marie:
So one big trend that we're seeing, explode over in Asia was shoppable videos. So during the pandemic, I love this example because it was so wild to me. Rural farmers started live streaming their different produce because they no longer had access to things like farmers markets. And I believe the stat now is on ... In Taobao, we have over 50,000 rural farmers that will sell their different fruits and vegetables and produce to an online audience that will just see the video and immediately click tap and make the purchase. We even saw that Shanghai did their fashion week, all online where you could stream models coming down the runway, and immediately say, I definitely want that dress or those shoes and make the purchase in real time.
Stephanie Postles:
That's great. What platform was that, where you can actually click and make [inaudible 00:15:25]? Because I still feel like there's a bit of friction on some of the social platforms that I use anyways, that it's not always very easy to buy, I'm even thinking about Instagram, I follow a bunch of influencers, and they talked about the outfits but then you have to go to a different app to maybe find it, and then it opens up again in a different browser. And it's like, oh, my gosh, I don't even remember what I was looking for. So is there a different app? Maybe [inaudible] they're using it makes it more frictionless.
Ann Marie:
Totally. Yeah. So in China, it's all about Taobao. But in the US, we're starting to see tech companies make investments there. So Snapchat is now launching a bunch of shoppable like video series, where they will announce new product drops, and you can buy it in app. I know, Google has something in the works called Shoploop. And a couple other tech companies are starting to release new programs so that in the US or in Canada, we'll be able to have a more seamless experience. Because you're totally right. It feels like a webpage hopscotch where you just want to learn more about one product, and then you get rerouted, four different times, definitely not optimal.
Stephanie Postles:
And it's out of stock. Lop off.
Ann Marie:
Yeah. Don't get me started.
Stephanie Postles:
So with all these new tech investments that are being made, and a lot the larger players are investing in this area, is there anything that a brand can do to start preparing for this, either with their tech stack, or just making sure that they're ready when Google comes out with their new technology that can maybe be implemented? What should a brand be doing right now to prepare for this?
Ann Marie:
Totally. So I think one getting a sense of your audience and what they want. It's a very basic statement, but maybe you don't need to be the earliest adopter on this technology if your consumers aren't streaming as much videos. But I would say the most important thing is just one, you alluded to it earlier, but making sure you have a really solid set of ideas about what products you actually have, inventory and fulfillment, if this huge journey is just going to end up in an out of stock. That's a really bad experience. So I would say that before launching into shoppable videos, make sure you have a handle on the basics. And that's a huge issue we're seeing with fulfillment period, where stores are having a hard time getting a sense of where their inventory even is. Is it locked in a warehouse? Is that in a store, do they have it available? So I would say, step one, just make sure you have a solid order management system, a good handle on where your inventory is, and how you can access it before moving further down the road.
Stephanie Postles:
So if your inventory is a mess right now, and you're still like, this company is like, "Oh, man, I don't even know what to do, my retail store closed down." And like you mentioned, it's probably in a warehouse somewhere, but how much do I have? Our team hasn't been able to go there in a while. How would you recommend them starting from scratch right now to start building a good inventory system where they can tap into that, know what they have and not have out of stock issues that I have actually been seeing a ton recently?
Caila Schwartz:
That is a great question. I think it really first starts with a great order management system. And being able to share information across multiple systems. So thinking about data integration, and not having any data siloed of any one system and then implementing processes and procedures to make sure that you have the stock available in your stores, and then you have your emergency stock set up so that you're not servicing inventory visibility on the website that isn't truly there. When we think about the holiday season, inventory is a huge player because ... and a huge topic of conversation because fulfillment is going to be such a challenge, last mile delivery is going to be such a challenge. There's such a huge shift to digital. There's a huge shift in B2C parcel delivery right now.
Caila Schwartz:
The system is overloaded. So how does a brand or retailer get packages to consumers when they don't even know if they can rely on traditional parcel delivery? So thinking about moving inventory closest to the source of demand. And that's really all about utilizing your data, understanding where that demand lies, and getting it there and in order to facilitate shipping from store or fulfilling from store, and all of those things, or utilizing some of these newer tactics like crowdsourcing, Uber and Lyft, to deliver packages. So it really comes down to having a really great system, forecasting your demand, and not just forecasting your demand or forecasting where your demand is going to be, and making sure you put your inventory there. And making sure that all of your systems are able to communicate with each other so that you can have a really well rounded view of your customer, your organization and what steps you need.
Caila Schwartz:
You can then use that information to understand what necessary steps you need to do to get your business to where it needs to be in terms of inventory management.
Stephanie Postles:
Yeah, I love that. It seems like there's definitely a lot of room for companies to look at their back end processes. I know we were we had a previous guest on the show that was talking about every order that comes in it has the rules behind the scene that say, "Okay, you're calling or you're buying from California, so pull from the warehouse in San Francisco. Or you're in Maryland pull from the D.C. one." And I had all that setup in the back end, but they had just recently implemented that. And it hadn't been something they had before. I'm like, "Wow, that's really smart. Why doesn't every company have that?" Because why would you ship something across the country if you could pull from a store or a warehouses that's right near that customer?
Caila Schwartz:
Exactly.
Stephanie Postles:
The other thing I was looking at right now was the average order value. And I was surprised to see on average that it had decreased in Q2 2020. And I guess I was a little bit surprised by that. Because I hear everyone's moving online, and people were buying a lot of new things that maybe they hadn't bought before, whether it's around toys and home improvement. There's a lot of new needs have sprung up when everyone's at home right now. So can you walk me through a bit about why the average order value went down in Q2?
Caila Schwartz:
Yeah, I think that what we saw in Q2, we saw massive growth in digital spend. So 71% year over year growth in actual spend. So people were buying more, or buying more online. What's interesting about AOV, its average order value per order. What we saw, at least in terms of consumer behavior in Q2 was a shift to ... Yes, there was the essential purchasing, which happened in March. But in Q2, we saw a shift towards non essential purchasing. And so there was this cup for purchases.
Stephanie Postles:
That was on me.
Caila Schwartz:
Yeah.
Stephanie Postles:
I want a new make up, I don't know why. I don't go anywhere, but I want it now.
Caila Schwartz:
Exactly. So, I probably have a package coming every day from Amazon, like "Oh, look at this cool new contraption. Let's try it out."
Stephanie Postles:
[inaudible] the dopamine now, we can't go in and see people and have fun conversations. So we just want a new package every day.
Caila Schwartz:
Exactly. So I think that what we saw this decrease in average order value is really a function of people just placing a quick hit order, a satisfying psychological needs to ... just seeing like, your Amazon guy or your UPS deliverer show up was like, "So exciting."
Stephanie Postles:
Yeah. Hi, friends, how you doing?
Caila Schwartz:
Exactly. So I think there is a component of that. And so I think when people are ordering more frequently, or average order value tends to be lower. Also, what we do know is that average order value on phones tends to be lower. And so we saw significant increase in mobile orders, like I said before, makes up the majority of orders by device, when we look at it compared to computers and tablets. So consumers are likely not doing a big shopping list on their phones, they're watching TV and scrolling their social feeds and buying. So I think that was a function of that type of behavior. And that's why [inaudible] probably dipped a little bit in Q2.
Stephanie Postles:
Got it.
Ann Marie:
But I will say that we might expect this to change too because the reality is very similar to you both where I'll have a different package coming in every day. But that's incredibly expensive for retailers, if you think about all those shipping costs, and then layer on the fact that a lot of logistics companies are ramping up their prices for the holiday season. So I think increasingly we're going to see retailers implement more bundling, or just higher minimums, to make it worth all of those shipping fees. So we're watching their numbers closely to see, of course for the holiday season next quarter and the quarter after that, how the average order value does evolve over time.
Stephanie Postles:
Yeah, that's really interesting thinking about a lot of people right now do want things, even if they're smaller and are starting to get used to that two day shipping and free shipping, I know at least myself want to go somewhere. And it's like, pretty high order value to get free shipping, and like, sometimes I'll just like give up and go look somewhere else. So it seems like there's an interesting balancing act between making sure that you're running a business in a profitable way, and that you're figuring out how to ship things and not just shipping these little one off things here and there, but then also not scaring away your customer to where they come in and they're like, "Whoa, $75 minimum before free shipping." I don't know, that's too much.
Stephanie Postles:
Another thing I wanted to, anyway, maybe you can touch on a bit more is the snapshot series you were mentioning. You talked about how you were getting a read on consumers every two weeks, but I didn't hear too many details around what you were actually seeing now versus maybe even a couple months ago or last year, like what are the biggest changes that you've seen among consumer buying behavior and sentiment?
Ann Marie:
Sure, yeah. I think some of the biggest jumps were, So a couple of things we were tracking was adoption of new shopping habits. And so it's no surprise to hear that curbside pickup or buy online pick up in store rocketed up in popularity alongside contact, plus payments. But it was really great to see numbers to those statements. So in the initial weeks of the pandemic, we saw curbside pickup grow, I think it was close to 38% in popularity as entirely new categories of shoppers, I'm thinking my older parents were trying these new means of getting the essentials home. But another really cool thing that we tracked and we saw evolve over the course of the pandemic itself too, which is priorities. So one of the questions we were asking and tracking was when it comes to loyalty or how you choose which brands and retailers to purchase from, what are some of the most important factors?
Ann Marie:
And early on when we're hearing a lot about core years and unrest with certain brands and their shipping practices, and health concerns, one of the top priorities and be more loyal to a brand was how they were treating their employees. And over time, we saw that shift to a more, I would call it inventory focus and also accessibility focus, meaning that the number one reason to shop with a certain brand at the end of the day was, do they have everything I need in one place? Because those out of stock notifications were definitely driving everyone crazy.
Stephanie Postles:
So when you said how they were treating employees, what do you mean by that? Because when I walk into the store, I probably wouldn't know or when I'm looking at a e commerce shop, I don't think I would really know how they're treating their employees. Like I wouldn't have the nitty gritty. So what do you think people are looking for when they're looking for that metric to stay loyal to a brand?
Ann Marie:
Sure, yeah. So for that, it was employee health and wellness. So are they ensuring that people are wearing masks? Are the hours reasonable? It's not something that you would necessarily see [inaudible] aside from the mask when walking into a store, but there are a ton of news reports and of course, I won't name names here, but there are a lot of news reports about disgruntled employees having to work overtime or not having the same health benefits during the crisis and yet having extremely public facing roles if you think about in-store associates at a grocery store or a pharmacy. And so that was something that rubbed consumers the wrong way and did impact some purchasing habits. But over time really, that number one reason to be loyal to a new brand or website was about of course price, but really number one was availability and in stock.
Stephanie Postles:
Earlier you mentioned these new customers that are coming online and had been coming online the past couple months. How are you guys thinking about retaining those customers? Are they going to be here after the pandemic is over? Will these new shoppers still be wanting contactless delivery and being able to pick up curbside? Is this going to stay or do you think quite a few of them are going to revert back to their old habits?
Caila Schwartz:
Yeah, I can take this one on. We know from our research and looking at our data that whenever we see big spikes in digital adoption, which is historically typically seen in the holiday shopping season, but more specifically CyberWeek, we see huge rates of digital adoption during this weeks. And what we know is that when consumers adopt new digital behaviors, they tend to stick around. So every holiday season, we see a huge surge in that new digital shoppers. And at the end of every season, we see what we call a new digital baseline. So it's like a weird set of stairs, where digital spend, digital traffic is pretty flat for most of the year. And then during CyberWeek, it spikes way up. And then it starts to fall towards the end of the season. And then once we hit January 1, it spikes back down. But it never goes back down to the level that it was before CyberWeek.
Caila Schwartz:
So we see it's like a stepping stone or set of stairs. It just keeps creeping up after every CyberWeek. So what this tells us is that consumers are adopting behavior that they might not have otherwise adopted, if they had not been enticed to shop online. And they're shopping online because there's a lot of great deals online, there's a lot of incentives online, there's a reason to know no longer ... not say no longer, but people aren't lining up outside of their local stores at 5 am on Black Friday anymore. It's becoming less and less of a thing, because people can shop from anywhere all throughout CyberWeek and get great deals from the comfort of their homes.
Caila Schwartz:
And so what we know from that is that when consumers adopt new digital habits, they don't typically just go away. And yes, people will want to go back to the store, but the conveniences of curbside, especially for buying groceries and other types of goods are really going to ... I don't think we're going backwards, we saw buy online pick up in store search to really take hold last year and that was a non pandemic year. So I think that what's happening in 2020, none of this is going away and it's going to continue to ... it's not going to accelerate at the same pace, but people are still going to retain these behaviors that they've learned.
Stephanie Postles:
I think that's a really interesting point too when it comes to thinking about if a brand is starting to see that there may be having higher profitability when it comes to maybe mobile orders, or they're just seeing higher conversions or something, maybe giving the consumer an even bigger reason to shop a certain way so that they can retain them in the long term. Because it seems like once you get them there, then you've captured them on that platform. And if you have a platform that you prefer them to order on or a certain way to order, it seems like they might want to incentivize them to do that, even if it is having a slightly higher sale price or something to bring them there, so then they can have that customer longer term where they want them, if that makes sense.
Caila Schwartz:
Exactly. It's all about the entire customer journey too. It's not even just about that purchase, it's about thinking, how do you engage that consumer and provide them with great content? And that was something that we really saw come out of the pandemic through those Instagram Live sessions. You could take a class of the loo lemon superstar, like athlete, and do that live on your phone. How cool is that?
Caila Schwartz:
We saw these really great pieces of engagement that came out of it. And then not only that, but thinking about how you service that customer after the sale, and making sure that you're offering many different types of ways to resolve problems, whether it's through a self service type of a knowledge base, or live chat or bots to really like ... bots might seem impersonal but sometimes people just want to know like, where's my order? How do I return? And it's things that you can really offload easily so that you can focus on giving a really great personalized experience to some of your more challenging cases and so really thinking about retaining the customer after the sales, just thinking about the entire journey, recognizing that it's not linear, there's a lot of different paths and twists and turns that that shopper is taking, and continuing to be there for that customer and embedding yourself where they are.
Stephanie Postles:
Love that. Ann Marie, what were you going to hop in and say?
Ann Marie:
Just to wrap up the last statement in terms of, are people going back to normal? The reality is that, at least in the United States, plenty of states are re-opening. And we're seeing in the shopping index that instead of, there's this huge climb of hockey stick growth in terms of digital orders, but it's not going back to normal. It's not bell shaped at all. It's exactly as Caila described that leveling off in that step shape. And one question that we had asked earlier on in the pandemic is, do you think you'll go back to buying in person after all of this is over? And we found that at 60% of consumers said that they were likely to continue buying essential goods online [inaudible] subsided. So there's definitely a significant amount of stickiness there.
Stephanie Postles:
That's great. Were there any surprises in the data or anything maybe? I don't know if you guys ask long form questions or get answers in that format, but anything surprising, or funny or interesting, that you weren't expecting?
Caila Schwartz:
Ah, that's a good one. Ann Marie, do you have anything that surprised you?
Ann Marie:
It's funny how none of these trends are brand new, right? Like Caila mentioned, buy online pick up in store has been around, so has contactless purchases and buying online. It's really just the sheer acceleration of all of these habits that was mind blowing to actually see in the numbers. So our data set contains the clicks and taps of over a billion shoppers. And we saw that data set increased by 40%. So we saw 40% net new online shoppers since the pandemic. And so well, yes. We know that people obviously are doing more shopping online as their quarantine, it was really wild to quantify it in that way.
Stephanie Postles:
Yeah, that's great. Yeah, very interesting to see. So, I want you guys to predict the future now. So what are you thinking Q3 results are going to look like?
Caila Schwartz:
Well, we're digging into Q3 right now as we speak. So we just ended Q3 yesterday. So I don't have any updates to share yet. But looking at the data, initially, a few weeks ago, and seeing where we were, we're still we still see a massive acceleration to digital. And we saw huge, huge growth in Q2, we're seeing a little bit of a leveling off in Q3. I think it's a function of people just not shopping as much for back to school this year, because a lot of kids are home, and also waiting on a heavy promotion filled fall and winter.
Caila Schwartz:
The growth is still very significant, much greater than we typically see in Q3. And so while I don't know final numbers, I think we're going to see a lot of the trends that we saw in Q2 continue to shift into Q3.
Stephanie Postles:
That would be good to see. Ann Marie, anything to add?
Ann Marie:
One trend that I'm excited to continue tracking frankly for next quarter is just this embrace of social. So, not only are consumers really flocking to buy new products, signing up for product drops, but the flat platform forums themselves. And brands themselves are doing such cool things on different social media platforms. The other day, I saw Marc Jacobs was launching a new product, and they had this huge Zoom party and you could walk into different Zoom Rooms.
Ann Marie:
And one of them, you could get your portrait done over Zoom video. Yeah. And so they had a lot of great user generated content, because people were tweeting about their portraits and Charlotte Tilbury, which is a makeup brand, they're doing these free 10 minute makeup tutorials that you can have either over FaceTime, or they can just stream it as well to learn how to bedazzle your eye just because eye makeup is where it's at now that half of our faces are covered with masks. So, the creativity is something that I'm just amped to see especially as we gear up for the holiday.
Stephanie Postles:
Yeah, that's a really good reminder to figure out how to stand out like that, because there are a lot of creative things you can do, you just have to think differently about the platforms that you can utilize. So, that's really fun thinking about the Zoom Rooms. I also think it's interesting thing about how you can maybe leverage influencers and incentivize them to sell for you through these platforms. So like you're mentioning with the makeup videos, how can you have maybe people that you can tap into to do maybe one on one quick tutorials to people so they walk away with an experience that they're like, "wow, that was memorable. And I'm going to talk about it right afterwards," to get that UPC content.
Ann Marie:
Absolutely, yep. Influencers are a huge plan. We're seeing a lot of video views coming in from influencers more so than brands themselves. So it's definitely a powerful tool to rely on. A trusted advocate for your brand to draw people to your content.
Stephanie Postles:
Yeah, completely agree.
Stephanie Postles:
All right. Cool. I will jump into the lightning round brought to you by our friends at Salesforce commerce cloud. This is where I'm going to ask you both a question, and you have a minute or less to answer. But I should probably just give you 30 seconds or less to answer since there's two of you. Are you ready?
Caila Schwartz:
Yes. I hope so.
Stephanie Postles:
All right. Caila, I'll start with you. What one thing will have the biggest impact on ecommerce in the next year?
Caila Schwartz:
Oh, I'm going to say that fulfillment. Fulfillment, last mile will have the biggest impact on ecommerce.
Stephanie Postles:
All right, Ann Marie.
Ann Marie:
You know what? I was going to have the same answer. So definitely fulfillment and also continually improving that checkout flow make it as easy as possible to get shoppers from their daydream product to having it at home.
Stephanie Postles:
Yep, completely agree. All right, what's up next on your reading list? Ann Marie first.
Ann Marie:
Oh man, for commerce or in general?
Stephanie Postles:
In general.
Ann Marie:
Oh my goodness. So, I just started a new book called On Earth We're Briefly Gorgeous by Ocean Vuong, which is the story of an immigrant moving to the US. And it's like a journey of self discovery. And it's really beautiful. So highly recommend.
Stephanie Postles:
I like that. That sounds good. I have to check it out. Caila, how about you?
Caila Schwartz:
I have two children. So my reading list these days consists of children's books.
Stephanie Postles:
[inaudible] there.
Caila Schwartz:
Pete The Cat is up next tonight.
Stephanie Postles:
I like it.
Caila Schwartz:
Oh, yeah. We're all booked with the cat.
Stephanie Postles:
I'll have to check that out. [inaudible] all about Max and Ruby over here. So I'm trying something new to get away from that.
Caila Schwartz:
Kitty Cat, it's like straight out of the 1970s. They use a lot of like, it's groovy.
Stephanie Postles:
Oh my God.
Caila Schwartz:
So, my four year old is running around saying, "It's groovy."
Stephanie Postles:
I like that. Bring it back.
Caila Schwartz:
Yeah.
Stephanie Postles:
[inaudible] turns back. That's good. What about commerce news? What kind of things do you all pay attention to stay on top of the trends other than internal research?
Caila Schwartz:
I'll go first. Say definitely there's a lot of commerce experts on Twitter. I love just scrolling through Twitter and seeing what the sentiment is and what people are talking about. It really gets a good pulse check on that to see what other industry leaders are thinking about. And I'm a data nerd, so I love reading through like e-marketer and statistics and seeing what the latest results are.
Stephanie Postles:
Great, Ann Marie.
Ann Marie:
Yeah, I would say, Twitter is a great curated view of what's hot. I love following Michelle Grant, Jason Goldberg, Brendon Witcher. But in addition to that, I do stay on top of a lot of the data, but I have a definite favorite newsletter and that's Retail Brew. It comes out a couple times a week, it's incredibly well written, really thought out, and it's not necessarily about being the first to report on a trend but they go really deep. So, it's a really great explanation to what's going on and why.
Stephanie Postles:
I like that. Yeah, a lot of people are ready to do newsjocky type of newsletters, and I like the ones that actually go deep on topic where I walk away and learn something from it.
Ann Marie:
Same. Absolutely.
Stephanie Postles:
What's Up next on your Netflix queue? Ann Marie first.
Ann Marie:
I would say I haven't been Netflixing. I've been trying to get away from the screens as much as possible.
Stephanie Postles:
That's good. That can be an answer. That's good. Caila, what about you?
Caila Schwartz:
Great question. So I recently heard of this on the radio this morning, actually, after dropping my kids off at daycare. There's this true crime series. I think it's called The Family Next Door.
Stephanie Postles:
Yeah.
Caila Schwartz:
Yeah, I heard it was really interesting and creepy. I'm going to try and convince my husband to watch that later.
Stephanie Postles:
What is your favorite ecommerce tool that you see people using or that you may be tested out a bit that you think is really impactful?
Caila Schwartz:
You want to go first Ann Marie?
Ann Marie:
Sure. Yeah, I would say I have a lot of fun with the AR like makeup try ons. I think they've come a long way. So big fan of L'Oreal's ModiFace. And also just Apple Pay. It sounds really nice. It could be able to just scan my finger and then just have everything be checked out and done with instead of filling out 100 different fields and messing up my zip code has made my life as a shopper much better.
Stephanie Postles:
That frictionless experience, just like you said, super important.
Ann Marie:
You have it.
Stephanie Postles:
What about you, Caila?
Caila Schwartz:
Yeah, I'm a big Apple Pay lover, because I do most of my shopping on my phone. So I love just being able to double tap and be on my merry way. And I have to go find my credit card hidden somewhere under the couches. But for me, I love them. So I am a terrible decorator. And so I get all my ideas from Instagram. So I love being able to use the searchable images. So you can search the image and they'll make recommendations. Wayfair has an app that does this. It'll pick out recommendations from your catalog based on the image that you put into the search box, and so I think that's so cool, because I've been able to find a lot of things that like, oh, where do you source this? How do you find this? Who carries this? So I think that's a really cool feature that I am totally loving these days.
Stephanie Postles:
I love that. Alright, and the last one, if we were to have a Caila and Anne Marie podcast, what would you both want to talk about? What would the show be about and who was your first guest be? This is where you have to collaborate a bit.
Ann Marie:
Oh, wow. Oh, boy, Caila should it be the highs and the lows of social media or what are you thinking? We have a lot of conversations about this.
Stephanie Postles:
Oh, it sounds like there's already one brewing behind then.
Ann Marie:
Always up to something.
Caila Schwartz:
I know, right? Yeah. We've definitely had a few rounds of the impact of social, positive and negative.
Stephanie Postles:
That would be a good one. And who would your guest be for that?
Caila Schwartz:
If we could have anybody?
Stephanie Postles:
Anyone.
Caila Schwartz:
Oh, man. Well, you could just go right to the top and get Mark Zuckerberg and ...
Stephanie Postles:
There you go. Yeah, why not? We'll get him on.
Ann Marie:
Let's do it.
Caila Schwartz:
Yeah c'mon.
Stephanie Postles:
I'm on the new show. I like it. That's a good one. Okay. But Ann Marie, this has been a very fun roundtable. Thank you for being my first guest to try this out with me. Where can people find out more about the shopping index and your work and the two of you?
Caila Schwartz:
Yeah, well, we are both on Twitter, where we publish all of our content. My handle is Caila Schwartz. I also launched an Instagram page. We're publishing all of this content as well. It's called Data_Candy, Data underscore Candy so you can follow along with me there. Ann Marie, what about you?
Ann Marie:
Sure. Twitter's a great place to find me @AviAnnMarie. So, A-V-I-A-N-N-M-A-R-I-E. And also check out Salesforce's blog, Caila and I are always writing up the what it means behind all of the data on the shopping index. So you could do a quick Google search for Caila Schwartz or Ann Marie Aviles at Salesforce blog to see the latest in commerce trends.
Stephanie Postles:
Love that. Thanks so much for joining.
Haven’t had a chance to listen to our first 50 episodes yet? Never fear, you’ve got time and they’re not going anywhere. In the meantime, we’ve created an epic recap episode to keep you up to date with this ever-changing world. Throughout the first 50 episodes of Up Next in Commerce, we’ve chatted with some of the fastest-growing startups - like Thrive Market and Haus - to the more well-known companies like Puma, Rosetta Stone, Bombas, and HP.
Our guests have shared everything from their toughest lessons, to their secrets to success, to the must-know advice for every ecomm leader. And while every company is different and every story unique, over the last 50 episodes, several common themes have emerged.
On today’s special episode of Up Next in Commerce, host Stephanie Postles is joined by Albert Chou, the VP of Operations at Mission.org, to dive into some of these top trends.
The two discuss the supply chain shakeups companies have had to face this year, and they do a deep dive into the world of influencers and how brands can work with them in a way that leads to lasting ROI. Plus, they look into their crystal balls to try to predict how DTC companies will work with and compete against Amazon, debate on how voice search will impact shopping, and discuss what the future of shoppable worlds might look like.
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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Transcript:
Stephanie:
Hey everyone, and welcome back to Up Next in Commerce. This is your host, Stephanie Postles, co-founder of mission.org. Today, it's a new and interesting episode where I have our VP of ops, Albert Chou on the show, where we're going to go through the previous 50 episodes and talk about highlights, and then talk about future trends that maybe no one has talked about on the show so far. Albert, welcome.
Albert:
Yeah, thanks for having me. But to be clear, we're not going to go by the 50 episodes one by one because-
Stephanie:
We're doing one by one.
Albert:
No, that's terrible. We can't do it. Cannot do it.
Stephanie:
So, Albert, tell our listeners why did I invite you on the show?
Albert:
Well, I do have my own ecommerce business, www.[inaudible 00:00:41].com, I've also helped out on a couple others. The biggest one got to 10 million a year. And I worked for an ecommerce startup. One of the co-founders was a guest on the show AddShoppers. So, been working in the game of ecommerce probably since 2016 and still operating today, so learned from painful mistakes, as well as seeing other people have great success.
Stephanie:
Yeah, you always have some really good feedback and comments on our prep docs. Our amazing producer, Hilary, will put together an awesome prep doc for every episode for me, and then you come in along with all your other job responsibilities at mission, with the VP of ops, you do everything here, but you also come in and add some good questions and comments, and that's why I thought it would be fun to bring you on. So, thanks for hopping on here with me.
Albert:
Yeah, let's do it.
Stephanie:
So, to start, I thought we could kind of go through just some high level trends, because through all the episodes that I've had and all the guests we've had on the show so far, there's actually quite a bit of similarities that I heard. And starting with the first one, I think talking about supply chains is really interesting, because so many of the guests who've come on have talked about the shake up in supply chains that they've seen and how they're kind of pivoting and what they're experiencing, and I think that might be a good place to start.
Albert:
Well, when they talk about supply chain, everyone's competing against what Amazon has created, right? Amazon has created this expectation that you can get what you want, when you want it pretty darn fast. And so if you're any direct consumer brand, or any brand out there, if you're a retailer, that's what's becoming the now norm, right? Can you send it to your customer really fast, and can you take it back? That's like probably the most painful part of ecommerce is the fact that you do have a percentage of tolerance for returns. So, the tighter your supply chain is, the more margins you can create in the process, the more able you can take a return without losing everything. So, it makes total sense that every business is trying to figure this out, how to get closer to the consumer, how to make things closer to the customer, how to make sure that they can take back whatever is being sent back. So, it's just matching what the new customer expectation is.
Stephanie:
Yeah. I think it was also very interesting, talking to the ShipBob guy where he was talking about how you can basically tap into different fulfillment centers by using them, whereas before, everything with COVID, a lot of people actually were shipping all the way across the country and not really looking at maybe location based ordering. Maybe some people were, but I found that kind of a good shake up that now people are starting to think about how to do things more efficiently and how also not just to rely on one supply chain, because a lot of them maybe are going out of business right now, a lot of the warehouses are having issues, there's a lot of inventory issues. So, it's good to have not all your eggs in one basket.
Albert:
So, it's not just that. So, there's companies out there that are investing into logistics infrastructure specifically for other people to share. So, similar to ShipBob, there's other competitors in that field. But it goes further than that. If you take a look at some of the publicly traded companies, one of the larger ecommerce platforms, they have invested heavily in infrastructure and warehousing. I know that ChannelAdvisor did the same exact thing. They literally bought a warehousing logistics company. And ChannelAdvisor, for the longest time, has been a company that helps you as a merchant, list your products across the different marketplaces. So, if Stephanie's t-shirt company wants to list their product across Amazon, they want to list it across Rakuten, they want to list it across eBay, and maybe some others, she would still have to ship and fulfill from her own store.
Albert:
Now, why did ChannelAdvisor build that tool so you can list one product and get it plugged in everywhere? So, why did they invest in all these warehousing companies? Now, it hasn't come to full service yet but you can kind of see it down the road like the supply chain is where the innovation is going to occur. And I think you're going to continue to see that, you're going to see more entrance in it, and it's just non stop, that race will never stop. Basically, a customer can never get something fast enough. You know what I mean? There's always going to be this push to get it there faster.
Stephanie:
Yeah. It's also interesting hearing about certain companies trying to compete with shipping models against Amazon and trying to have one in two day shipping. It feels like such a hard thing to create from scratch now, but if you can figure that out, you're going to win.
Albert:
So, I don't know if you know this, Steph. I've also sold through FBA Amazon.
Stephanie:
I think you told me that?
Albert:
Do you know [crosstalk 00:05:37]?
Stephanie:
What did you sell, first of all?
Albert:
It was an adult card game.
Stephanie:
I don't want to hear anymore. This is a kid friendly show.
Albert:
It was not kid friendly. But how it worked is, so I got my order in China, and I had 5,000 pieces, literally shipped it to an FBA Center in New Jersey, never touched the product, and then Amazon automatically redistributed it across as its fulfillment network. And I would get updates like, "Oh, we're moving two boxes to Texas." "Why?" Because we predict, in Texas, someone will buy this, and therefore by moving it closer to the customer, we can reduce the shipping with our internal [crosstalk 00:06:20]."
Stephanie:
Do you have an influence over that prediction model.
Albert:
No.
Stephanie:
Because now more than ever, I'm like, how can anyone predict anything? I mean, there was a really good quote about like, should we be preparing for more people to buy Inkjet printers because they're all working from home, or extra freezers to prepare for the worst? It feels like there's no way to predict for that, so how do they even know that there's a couple in Texas who might want that?
Albert:
So, add to cart. I think add to cart is what they're doing, right? They're looking at how many people are adding to cart and then they're also looking at the percentage of conversion over time of people who do add to cart. So, if you see a bunch of cart adds for this product or a bunch of search volume increasing for a product in a specific area, you can automatically assume that that product is going to be in demand in that area. They've probably gotten it down to a super exact science.
Stephanie:
Yeah, I'm not going to question them. I'm sure they got it.
Albert:
Yeah. And since they're always moving products within their own fulfillment network everywhere, they see that there's a probability that this is going to happen, they just move it closer to you so that when they finally rely on last mile logistics, they've got it as close as possible so that they don't have to pay so much.
Stephanie:
Yeah, that makes sense. All right. So, the next one I want to kind of move into is influencers. So, first, we did a survey of our audience and a lot of people wanted to hear about influencers. How do I use influencers? What's a good way to actually get a good ROI on it? And a lot of our guests actually mentioned influencers as well. Some people were trying it out and were like, "I don't actually know if this is even working." Other people were having great success but were trying different models. So, I don't know if you've listened to the fancy.com CEO, Greg Spillane episode.
Albert:
I did.
Stephanie:
Okay. Well, first of all, that guy's a badass. I mean, making that company his stories. Like did you hear about how he went into a warehouse or a storage locker and found a bunch of credit cards that the founders were giving away with like $1,000 on it, and they were just giving it away to influencers just to try and get them to use fancy.com? Did you hear some of the stories that he was going through about what he experienced when coming into the company to try and turn it around?
Albert:
I mean, it's the classic, right? It's the classic problem in marketing, right? You're pretty sure some of it is going to work, some people say it's up to half, you just don't know which half, right? And so you're just blowing money trying to get more movement, but I get what they were originally trying to do makes total sense. I mean, you read about the stories of businesses like Gymshark, which built their whole business model off of influencers, and I think they just got a private equity valuation into the billions, so everyone wants to jump on that train.
Albert:
The problem is influencers themselves have created this marketplace, right? So, if you claim you're an influencer, and you have hundreds of thousands of followers on Instagram, now influencers, they don't want to work on commission, they want to work on upfront fees. So, there's this new network which you're now going to see tools come into place of helping merchants buy influence. And so that's the next wave, right? Because I mean, there's a lot of influencers that are frauds or they have no influence on their audience whatsoever, they just have a big Instagram following for whatever reason.
Stephanie:
Yeah. They just [crosstalk 00:09:30].
Albert:
That's why the merchants are so frustrated.
Stephanie:
Oh, yeah. I mean, it's hard to know. You can see someone with a million followers, and something that I saw that was actually a good reminder for anyone with a small business was they're talking about how you can see if those followers have an intent to buy. So, if you have some influencer on there and they're showcasing some purse, or some lipstick, or whatever it might be, and the people in the comments are like, "Oh cute," or, "Pretty" or just liking it, they actually don't have followers who have an intent to buy. Versus you might see more micro influencers, like people that follow from around the area or something, and the people in those comments are like, "Where do I get that jacket from?" Like, "Please link up your shirt."
Stephanie:
And those are the kind of influences you want to go after because you actually know that if you're in front of their audience, they're ready to buy because they trust that person, which seems like it's kind of shifting, whereas before it was like just get the big name, the big followers, and now it's more like, "Let's make sure we get an ROI. How do we make sure to track this stuff and see some good conversions from it?"
Albert:
Yeah. I mean, you don't know what you don't know, so all you're looking at is what you assume is a big audience. And so that's the biggest misconception in social media, it doesn't determine their purchasing behaviors. It's just, "I like this person because I think she looks good, or I think he looks good, or I think he's funny. I'm not going to buy anything.
Stephanie:
Yeah, I can definitely see tools coming out soon, or maybe they're already out in the world, showing like here are kind of the demographics of this person's followers. So, you can sign up with an influencer and also see the income level, the job title, so you know that what you're getting with that influencer is going to have good results because you can see the profile of their followers.
Albert:
So, interesting, right? Platforms now that are creating marketplaces of influencers. So, I'll name one. We have not had their CEO on the show, but grin.co, you should join the show.
Stephanie:
[crosstalk] here.
Albert:
Yeah. GRIN is pretty fascinating, because they've built this marketplace where you as a merchant can then log in and you can see all the influencers, you can search by category. Let's say I want surfing, or you want food, or you want outdoor, whatever it is you want, it'll pull up a list of influencers and then it'll show the basic vanity metrics. But it also has ratings of probability of sale, because they've already maybe done a campaign for another brand, so you as a brand kind of see those numbers. Now, the problem always is, as a consumer is, you kind of always get drawn to the big numbers, right? So, you'll see like, let's say, the superstar TikToker, girl Charli D'Amelio. How do you pronounce her last name? D'Amelio?
Stephanie:
I don't know, and I'm surprised you know anyone on TikTok.
Albert:
But Charli D'Amelio, you'll see her name and it'll show you significant likelihood to influence dollars, it'll be significant, right? But then as a brand, you have to determine can you afford her, because she doesn't tweet or TikTok for you for nothing, right? It'll be hilarious. It'll say her agency, and of course, she's repped by a huge agency. So, that's where even tools like that, the problem is, let's say, the signal to noise ratio is still overwhelmingly noise and the ones that have tremendous signal, well, the problem is you can't afford it. So, I think the tools have to try to figure out by budget, almost, like how much ROI are you going to get per $1,000 of spend or something like that? That's probably going to be the next wave of measurement.
Stephanie:
Yeah, I agree. I mean, I think also the platforms are trying to catch up to be able to actually attribute sales to these influencers. I know TikTok is trying to do that right now. Instagram's been trying to do that, but I think they are still implementing a lot of features to actually allow the influencers to get paid. So, I think with that, you'll see a whole new wave of new influencers and micro influencers as well because now they can actually get paid.
Stephanie:
I mean, I saw someone, they were talking about some... I think it was some coffee mug or, I don't know, a cup or something on TikTok, and it was on Amazon, but didn't have any links or anything, and it sold out on Amazon because this one girl was talking about the functionality of it and how much she liked it, and people were like, "Oh, how do I buy through your link? I want to make sure you get a cut of it." And she was like, "I don't need that. I just review stuff because it's fun." And so it's interesting seeing how you have influencers who really do care about that attribution and won't work without it versus the people who maybe are big influencers but aren't actually looking for that, at least not right off the bat, or maybe because there's friction right now, with setting up that model.
Albert:
Well, I think the bigger you get as an influencer, the more you could charge for your time than results. So, if you're a superstar, like, let's go with professional athletes, the original influencers, right? If you're LeBron James, you're Michael Jordan and someone wants to buy your name, you just charge them for the name. Like you're like, "I don't know if you'll get $1 of sales, I'm just telling you right now that I'm not repping your product unless you pay me this much money." Right?
Albert:
So, it's still this push and pull where brands want all this information, they want to know your audience, they want to know all that stuff, and then influencers themselves are getting so big. Like, we're reading about how these people on TikTok, kids, I call them kids, I'm old, but they're making 100 grand a month, and that's considered an average influencer. What are talking about? 100 grand a month to make TikTok dance videos, and yeah. So, I can see a brand wanting to be like, "Well, how much will I get for sales," and I can just see how tough it is when the kid on the other end says, "Well, I won't TikTok dance for you for under 100,000."
Stephanie:
I just read that the next generation is getting paid more than ever right now, not just for being influencers but just for a lot of things. They're demanding higher payment than any other generation before them. That's good, good intense though.
Albert:
Yeah. Listen, ask for whatever you want. If you can get it, you might as well ask for it. Why not?
Stephanie:
Very, very true. So, I think the high level summary for that one then it's just that most brands should be exploring influencers in your market, but also making sure that you're setting up the ROI and tracking it correctly, and maybe looking for those new tools that are coming out or that are already out to make sure that wherever you're devoting your budget to you actually can track it, where in the past maybe it wasn't as required by your company or yourself to have that many metrics behind it, but now you actually can, so I think it's worthwhile.
Albert:
Yeah. I actually think some of our other guests that really talked about investing significantly into the product and making sure that the customer experience from the moment that they sign up, to buy it, to they receive it, that that experience is airtight, because that's where you're going to find your influencers, right? I think a couple of the men's shaving companies like Supply and Beard Brand talked about how they built a community of people who move these products. Well, that's the ultimate influence right there, right? Constant good reviews of your products. And if you get lucky enough to find a Dogface 208, then you win.
Albert:
Dogface is the guy that skateboarded while singing Fleetwood Mac and drinking cranberry juice.
Albert:
Well, cranberry juice sales, all time high. So, this wasn't a paid campaign or paid activation, sales are at an all time high. They're talking about it might see Wisconsin cranberry farming industry. That's how much in demand cranberry juice is right now. So, if you have a great product, your likelihood of catching a wave I think is much greater than if you're just constantly paying influencers.
Stephanie:
Yeah. And I like that idea of make sure all your other ducks are in a row first before you start going after influencers. I think we've had a couple of guests who talked about you really need to make sure everything from start to finish, to unboxing, to follow up, that needs to be airtight before you start trying a bunch of other things, because then you are at risk of getting distracted and actually not being able to focus on, not only your core product, but also your customer experience.
Albert:
You got it.
Stephanie:
All right. So, the other thing that I think was interesting that a lot of people have talked about is, of course, like omnichannel, and one of our guests is talking about the reinvention of brick and mortar stores, and talking about how it's now turning to be more about experiential experiences instead of just going there to buy something, because so many people now are shifting to a place where they're actually very comfortable buying online, even if they never did before, and going into the store is more about having a good experience and something to draw them in there versus actually making a purchase in store. I think it's all about experiences now and people are going to expect something very different going forward than they ever expected before.
Albert:
Yeah. I mean, that's the magic question, right? People are trying to... I've read articles about re-envisioning the mall of the future. If I think about current present retailers that are doing a pretty good job, I mean, obviously, Apple Store seems to be like one of the leaders where I had not admittedly walked by an apple store recently, but I do remember back when I did, six months ago, there were a lot of people in there, a lot of people in there touching the products, getting a feel of the products, they made it a very hands-on experience. I can think of other businesses that have done a really good job. Like, why does every Bass Pro Shops have a giant aquarium in the middle of the store? Because they want you to go and look at it. You know what I mean? To pull you in. They know you're a hobbyist. So, I don't know how good businesses are going to be at doing that, but I know that they're all trying. I mean, they have to.
Stephanie:
Yeah, yeah. I mean, when we had little burgundy shoes on, they were talking about how they were actually partnering with other people, other shops or people that are on the same street as them, even if it was a bank they're partnering with, and they were kind of doing giveaways or doing just different social business events or things like that, to make sure to get people in the store because they're like, "We don't really mind if you buy, but just coming in and getting that customer experience that we have, and being able to get in the vibe of the music, and actually experiencing our brand, even if it's only for a moment, is worth so much more than... Buying online is important, but we also want you to know who we are, and if that means partnering with other brands around us to give you an added benefit..." I mean, that's where I can see a lot of other brands doing that partnership strategy to try and get different customers that you would maybe never touch before in the same place.
Albert:
Yeah. Really, it remains to be seen that it'll work, because I always think, when I hear about the people with the rain experience, I don't question it at all, but I think also to Borders Books or Barnes and Nobles books, I felt like those are really inviting places. They got nice couches, good coffee, it smelled great, there's always baked goods there, you can read whatever magazine you wanted, or check out books, and they never kicked you out or nothing if you're hanging out there, but it didn't work. There weren't enough people buying the books, they were just chilling, I guess. So, I guess that's the real delicate balance, which is how do you educate, entertain and inform but also do it so much in a way that a person purchases the product versus, I don't know, coming in there and staying all day long?
Stephanie:
Yeah. That makes me wonder just about the business model, though, of like, are you encouraging people to buy, because... I mean, I don't know how the Amazon bookstores are doing now, but when I went in to them when we were in Seattle, it was just a very different experience because what you could get in the store was not what you can get online, not what you would get at any other bookstore, because there was actually, "Here's a review that we picked out," so you can kind of get a feel for this book, or, "Here's some of our top charting books right in front of you."
Stephanie:
So, it was kind of like it was bringing an online experience offline as well but in a very different way where I wanted to go in there, I wanted to hang out, but then I also found myself buying online afterwards. I was taking pictures of books and then I was just going on Amazon and buying. So, it seems like they figured it out there, and they don't have too much inventory to where they're holding a bunch of books and expecting them to sell, but it seems like it needs to move more to that model instead of thousands of books hoping someone comes in and buys.
Albert:
I can see that in a more curated... I know Amazon's experimenting with their five star stores where it's only physical products that have earned an average of four and a half, five stars. So, it's more of a curated experience, which is what we're more used to online, instead of looking at your whole catalog of crap, we see exactly what we're looking at what we want to see or the best stuff right up front.
Stephanie:
Yeah. And that's also something a lot of guests have mentioned, it's about that personalized experience and making sure that what you're showing the new customers, what they want to see. And I think the idea of curation too. I mean, people are trusting, not only these influencers, but also just people that they trust in general, where it's like, "Oh, my friend likes this." So, making sure that you can kind of show that or have that curated experience I think will be important going forward.
Albert:
Yeah. So, this is interesting, because I think this is actually a self-fulfilling prophecy of what's happening with consumer behavior and curation, which is, the more curated things become, the more likely or the lower the tolerance a person's patience becomes for browsing. Because I've read stats about how the average web browser, or consumer, whatever, spending less time on pages, clicking through less links, because they're constantly being served, let's say, what they want sooner, faster, so then they react that way. So, it's like feeding itself, right?
Stephanie:
Feeding the beast.
Albert:
Yeah. The consumer expectations. Like, if you don't know what I want within two clicks, I'm bouncing.
Stephanie:
You're done.
Albert:
I don't got time for those three clicks. I'm out.
Stephanie:
Yeah. That's tricky. I mean, it is kind of like building up a monster in a way where everyone's going to have to keep leveling up their game with how their new customers or current customers experience their shops.
Albert:
Yeah, it's going to be painful for merchants to do this, I think, it's going to be very painful. Or they can look at it the other way. There's an opportunity for a technology vendor that can do it. You know what I mean?
Stephanie:
Oh, yeah. Anyone who's got those good recommendations, yeah, they're already ahead of the game if they're implementing that.
Stephanie:
All right. So, the next trend, which actually no one really talked about, but it's more around partnerships, but I saw a very interesting partnership. I don't know if you have heard of that show on Netflix called Get Organized. Have you? Where they were going into homes, Reese Witherspoon, and they're organizing her house, and it's very popular now. Maybe your wife watched it. Have you heard of that?
Albert:
I can conceptualize what it is but I have not seen it or heard of it.
Stephanie:
Okay. So, they partnered with a Container Store, and they did it in a really good organic way where, of course, they're putting everything in containers and organizing it, and it made the container sales jumped by like 17% after this series went out, and I thought that's a really good example of not just product placement, but doing it in a way that wasn't annoying, and having, not only a partnership from the product perspective, but they also partnered with Netflix in the marketing aspect.
Stephanie:
So, it's like a good, well-rounded approach, but it also didn't make the content suffer. And I haven't seen a lot of companies do it that well. You always can think of other companies... I mean, there's product placement in almost everything, but you don't walk away being like, "Oh, I really need that to complete my experience." And I can just see a lot of more or a lot more unique partnerships forming like that in the future, where people are thinking outside the box and are not just doing the typical like, "Oh, let's just try this and see how it works." I can see more people experimenting with this, maybe not on that large of a level, but I thought that was a really unique partnership, and especially being able to see the sales jump right afterwards, it shows that it paid off.
Albert:
Do you think that was because they were actively solving a problem? Right? You're disorganized. I'm going to show you how to get organized. So, inherently the audience that watches it is looking to solve that problem, so inherently they then go purchase those products, or source those products.
Stephanie:
Yeah. I mean, they definitely, of course, nailed the perfect person who would have an intent to buy as someone who's also trying to get organized, but I think the way they did it just wasn't like hitting you over the head with it, it was kind of like, "Well, here's what we use." It was like, "No big deal, if you want to use it too, this is what we use."
Stephanie:
And I think that's actually the perfect strategy of like, "We're not going to push this on you, and we're not going to be annoying about it, this isn't an ad, but this is just exactly what we use to make this look perfect." And I think there's a lot of opportunity for other brands to think about that, like, how do you do it in a way where the content is still good? It's not making you feel pressured, but it's in the back of your mind of like, "Oh, this is what I could use to be like Reese Witherspoon," which she's the best.
Albert:
It's the classic, like, is this a threat or is this an opportunity, right? Because it just depends on the eye of the beholder. But one of the things, to your point, that makes it a threat to existing brands is if they're not good at it. One of the opportunities influencer see is that it's now easier than ever to make and source their own products under their own brand labels, right? Think of the power that Chip and Joanna Gaines have gained, right?
Albert:
Now it's to the point where it's like they're going to be almost impossible to buy because Magnolia products is coming, and it's already here, and it's going to keep getting bigger and bigger, where they're going to... You already know they know how to organically insert their products into all their content of you already think their style is the best, you already think their builds are the best, you already think their personalities are the best, now they're not even doing the partnership deal, right? Now it's not like, "Oh, go to Target to get the Magnolia collection?" No, go to Magnolia to get the Magnolia collection, right? They're going to cut the distribution network out and just be like, "We're the distributors of this." And that's always a challenge, I think. I do think that's something that the brands get nervous about is because like, if you sponsor somebody and they do a really great job, well, what stops them from cutting you out of the equation?
Stephanie:
Yep. Which is also what a lot of brands are scared about with Amazon. I mean, we heard mixed messages about that where some people were very excited about partnering with them, they were getting championed on that platform, Amazon was promoting them, and they weren't really worried too much about it, they're like, "Why wouldn't you be on Amazon, because that's where everyone said you should be selling on there?" And then we heard quite a few other ecommerce leaders who were like, "No way would I get on there. You're not going to make as much money. You can't control the experience. You can't control where it's being seen. And I want to make sure my DTC company is being portrayed how I want it and I don't want it to be knocked off on Amazon." So, the same kind of thing there.
Albert:
Yeah, that's it, and that's never going to stop. Constant threat market share takeover.
Stephanie:
Oh, I know. Constant battle, but interesting to watch. I think those people should be on Amazon, though, because I do think that is where so many people are. It seems like, yeah, it's where you need to be.
Albert:
Yeah. Here's what's interesting. The biggest players have kind of stepped off, but like Nike, Nike has got so much... Nike has enough power, I think, to step off that platform, but if you're trying to be discovered, I mean, it just does seem overwhelmingly hard to do it without that distribution network. I think it's just tough.
Stephanie:
Yeah. When we were talking about ShoppableTV, I'm also thinking about... I mean, you might know this better since your kids are on some of these gaming type of platforms, but having Shoppable worlds, whatever that may be, seems like something that could be coming in the future but we're not there yet, probably. I mean, I know we are when it comes to virtually shopping for things, that like, "Oh, I want to make sure to get this. Whatever this is in this world, I want to buy it," but it seems like there could be an opportunity as well for implementing your products into those worlds that are being built up right now.
Albert:
Yeah. Personally, I'm not as bullish on that because I still think people want to... I don't know. I don't really know, maybe because I just don't do it myself, because I definitely see my kids being drawn in when they're playing games, like they recognize products. What's weird is, when kids. To me, it's what's weird. So, for anyone who has kids that play Roblox, my kids see things on Roblox and they want to buy them, and they're digital products.
Stephanie:
Yeah. What are they? What are they buying?
Albert:
Like the new sword? They're like, "I want this sword." It's like, "What sword?" It's like, "The digital sword." It's like, "What do you mean digital sword." It's like, "My character can carry this sword if I buy this with real cash." And that makes no sense to me. What are you talking about?
Stephanie:
Exactly. I think it could be transitioning eventually. I mean, yes, people will always want those digital swords, I heard that people are buying t-shirts in there. I want to make sure my little avatar guy is wearing the coolest t-shirt. I don't really understand that, but then I don't know if you heard about Fortnight had Travis Scott do a virtual concert and was watched by millions of people.
Albert:
Yep.
Stephanie:
There's a very big reason why people would be like, "Whatever he was wearing, I want to wear."
Albert:
Now, did you hear about Travis Scott's McDonald's deal?
Stephanie:
No. What's that?
Albert:
It was like the number one selling meal for the last couple months.
Stephanie:
Just McDonald's in in general or what's his meal?
Albert:
The Travis Scott meal. I don't know. It's literally his meal. You know what I mean? You can have a number one, you can have a number two, you can have a Travis Scott.
Stephanie:
It says the Travis Scott meal is a quarter pounder with cheese, lettuce, and bacon.
Albert:
I'm just saying that's the power of you talking about a digital world. Yeah. There's the power of influence too, but he's already a mega celebrity, right? But I view it as this, it's like, what people are into, and this is why, like I was saying before, I feel like I age out of this stuff very quickly, and we're talking about ever evolving change. I came from a time where if I didn't have a physical product in my hand, I didn't think was real. I remember when mp3s first came out, I was like, "Why would I buy an mp3?" It's like, "It's a digital version of your songs." "What if I lose it?" They would be like, "What if you use your CDs?" "But at least I'm in control of my CD." You know what I mean? Like, that's my CD. I know where it is. I take responsibility for it. I was slow to convert there.
Albert:
And I feel for me, I'm always slow to convert to digital products, but when I watch my kids, it's just unbelievable. I don't even think they're interested in physical products. They keep wanting digital things. They want more games, they want more currency for their players, they just want this stuff. So, that's why I kind of didn't answer that because I was thinking simultaneously in my head, this is never going to work, but I think I mean this is not going to work on me but this is going to work on my kids, because it's happening right now. I get things all the time on my Google Play app, iTunes account, like, "What is this?"
Stephanie:
Why don't you buy one more virtual sword?
Albert:
So, will company start integrating like t-shirt... All right. So, let's take one of our t-shirt clients, right? We've kind of asked our guests on Up Next in Commerce, we've asked this to all of them. How do you convey that your product is soft, silky, whatever their product descriptors are, to someone without them touching it? And so it makes you wonder, in the future, is someone going to see a yellow hammock in their virtual world and be like, "Huh," and it'll pop up a ding like, bing. "Not only can your character have a yellow hammock, you can have one too." It's like, "Oh, okay, cool."
Stephanie:
Yeah. Especially if you can kind of see it blowing in the wind, or you can see that shirt like, oh, that's form fitting on this person in my virtual world that I really like. If you can kind of see things and details about it that mimic it. I mean, it seems like there's an opportunity there, it might not be here just yet, and you definitely have to figure out the demographics behind it, because, yeah, I mean, like you said, you might not be interested in that.
Stephanie:
However, I was listening to a pretty good interview with this guy, Matthew Ball, he was the former head of strategy at Amazon Studios, and he had a really good episode talking about how he was the same as you like, "Oh, this just isn't my world, however, I see actually a lot of companies, they will start being able to adapt these same types of technologies to where the older generation will actually start adopting as well, they just are trying to figure that out right now like, what will they feel comfortable with and what are they looking for? Like, what problems can you solve to get them there?"
Albert:
It's going to be pretty fascinating when someone's upsell customer journey path is actually get the digital avatar to consume this product first and then offer the physical. You know what I mean? When we talk about the hammock, can you imagine that, like, "Oh, my avatar really likes this hammock. He seems great. I think I might get one for myself in real life." What?
Stephanie:
I mean, I kind of would. I would do it. You need to get in these worlds to really experience it, but I mean, it does just seem like that is where the world is trending right now, around these games. I mean, a company I follow really closely is Epic Games, I think they're-
Albert:
They're in out neighborhood. [crosstalk 00:35:26].
Stephanie:
I think their leadership team is brilliant around what they're doing with their platform and how they're essentially giving away almost all the underlying technology that other companies have been charging for for a really long time, and they're kind of building this really big moat to be able to expand in a bunch of different ways. So, I kind of keep tabs on them, and that also, of course, influences my commerce hat when I'm thinking about too like, "Oh, wow, these two worlds could blend together in a really unique way and whoever gets there first..." Usually, the first movers are the ones that can get that arbitrage. So, seems like an interesting spot to watch.
Albert:
Yes, the Unreal Engine, for our listeners that are not familiar. Epic built a platform called the Unreal Engine of which you can build your gaming world on so that you could use... think of it as less code, you had less code, less character development, it's all built for you, you just add your characters and they can build worlds for you. How they do it is they charge you a royalty fee, I believe it's like 5%, but only if your sales are over a specific number.
Stephanie:
Yeah, it's very beneficial to creators, and that's why a lot of people are moving to that platform now because they're used to having these apps where certain stores, they're taking like 30 and 40%, and if you move to Unreal, you're essentially keeping the majority of your sales.
Albert:
Yeah, and you don't have to pay until you reach a certain number. So, by the time you're paying Epic, you've already made it, and then you're fine with it, I guess. The number is tolerable. By the way, if you follow Epic Games founder, Tim Sweeney, on Twitter right now, he's in a constant fight with Apple over [crosstalk 00:36:56].
Stephanie:
Oh, I know.
Albert:
He does not like it.
Stephanie:
I wouldn't either.
Albert:
It's a fun follow, though. It's a great follow.
Stephanie:
Go, Tim. I'm going to follow you right now.
Stephanie:
All right. So, the last one that I want to talk about is... I think this is interesting. You might be like, "That's weird." But I think there's such a big opportunity for optimizing, not only your website for voice searches, but also potentially building out custom Alexa skills to solve a problem. I see people doing that right now, but not really in ecommerce as much, but think about having an Alexa where you're like, "Hey, Alexa, tell me what wine goes best with this kind of recipe." Or, "Hey, Alexa, suggest some outfit for me based on the weather today." And you kind of build a tool that's actually helpful that's also you know, of course, very close to your brand. And so you can become top of mind by building out those skills or just implementing voice search in general. I just think the world is headed in that way because the technology is starting to get better, but I don't see a lot of brands jumping on that right now.
Albert:
I think the ability for AI to understand intent and meaning isn't quite there yet. I'm trying to think of myself using my own consumer behavior, right? Do I use voice to text right now to enter searches? Yeah, because it's a lot easier than typing it in or swiping it in, right? So, if I want to ask Google a question, I will just click the mic button and talk. Would I do that to solve problems? I don't know, but I think I haven't yet because contextually, it's very difficult, but it won't be far, right. So, right now, I think a lot of people Google best. Do you know what I mean? Like you said, best way to do X for Y, right? And then the next level is going to be can NLP technology, AI technology, whatever it is going to be that understands the nuance and intent and meaning start making it super personalized recommendations?
Albert:
So, can you imagine if you went to Home Depot, because what you're talking about would be super cool, if you go to Home Depot and say, "Hey, my garbage disposal broke. How do I replace it?" And it just comes up with like, boom, "You're going to need this, this, this, this," and then it gives me a how-to guide of how I buy a garbage disposal, I'm going to need these tools, I'm gonna need the sealants, and getting them-
Stephanie:
Can you imagine saying that, like, "Here's exactly how you're going to fix it. Let me send you a video to your phone." And like, "You need like Albert's brand of screws." Like, they're literally dropping your own products in there like, "This is how I would fix it, and also, here's a how-to video," and you walk away being like, "Wow, I not only bought that brand stuff, maybe, or I didn't, but they're top of mind now. They actually helped me fix my garbage disposal." How cool would that be?
Albert:
So, speaking of this, there was a while ago where I believe it was the president of O'Reilly, I'm pretty sure it was. The O'Reilly Auto Parts basically came out and said that Amazon was not a threat because buying car parts is very complicated. I'm not saying he's wrong, right? Right now car parts really aren't bought on Amazon because you have to know what model you have, you have to know the year, the make, the model, you actually have to know something about fixing cars to even begin to find the part. But can you imagine a future where you can ask it a question like, you go to O'Reilly or wherever you go and you say, "My air conditioner is not cold," and it remembers your car models, "Oh, you're going to need X, Y, Z. Would you like me to book you an appointment if you can't do this yourself?" Like, "Yeah, book me one. I don't want to do this?"
Stephanie:
Yes, please. Yeah. No, I mean, that's where I think the world is headed. And I mean, we did have a good interview, it wasn't our first 50, it was one of our more recent ones, talking about the world of identity and how you should be able to go places and you shouldn't always have to refill in your info, it should know maybe what's your brand of car if you put it somewhere else before. I'm trying to think of what episode that was.
Albert:
Fast.
Stephanie:
Oh, yeah, Fast. Yeah, that was such an interesting episode. I mean, now it's coming up right after this one drops, but [inaudible 00:41:10], so interesting where he was going through. Not only are they doing payments and identity, but where the world was headed around you should always have a Buy Now button on every single one of your products and that you shouldn't just make people add stuff to cart and then do the shipping and all that, you should let them buy when they want to buy it. And he was talking about the conversions behind that. But all that gets back to the identity piece, which is what you're talking about, going into an auto part store, you should be able to say, "Here's what I'm looking for," and it should know, "Okay, based on the information I have about you, here's what I'm going to recommend for you," and make it seamless and frictionless.
Albert:
Yeah, everyone wants that.
Stephanie:
My future. I don't know what yours is, Albert?
Albert:
Well, I think it's going to get there. It's not a matter of if, but when, but I still know that NLP... for anyone that's used an AI chat bot yet and been frustrated because you asked a simple question and it's like, "I don't know what you're saying," it's like we're not there yet, but I think it's coming, for sure it's coming. The technology providers, though, are going to be the ones focusing on that the most. I don't know when the merchants can start tapping into that resource.
Stephanie:
Yeah. That's why it's interesting to kind of keep an eye on these new startups and new tech companies that are launching around this stuff, like Fast, or even like the technologies like GPT-3. When that came out, I was just reading a whole article about how this guy created a program where you essentially can just talk and it'll build a website for you. So, you can say, "Create a red button, have the drop down say this, have the picture do this, grab the picture from here." And it is no code. You are speaking and it is coding for you in the background.
Stephanie:
I think the world is headed there but you just have to try and stay on top of those trends or the companies and try things out, honestly, experiment with it and see if it could work without bogging things down. I know you have been the first to say that the amount of plugins that you add on your website are just going to bog it down, and website speed is number one, so there is that balance, but I think it's interesting to stay on top of the trends outside of just your current industry.
Albert:
Yeah. Are we going to get to the part where we all have our own Jarvis? I don't know. But if that happens, it will be cool. Jarvis from Iron Man, for anyone that's not familiar with what I'm talking about, right?
Stephanie:
I was actually familiar with that one.
Albert:
Yeah? There you go. Look at you watching movies and stuff.
Stephanie:
I know. Look at me. I'm so trendy.
Albert:
It's not trendy. It's definitely very old. I think it's like a decade old now.
Stephanie:
Yeah. Still great, though.
Albert:
Yeah.
Stephanie:
All right. Are there any other forward looking trends that you think are interesting right now. So, we essentially covered the things that were in the 50 episodes, which were awesome and really cool, high level themes, but all the episodes had really good, juicy nuggets in each one. And then we looked at some of the forward thinking themes that maybe weren't covered, but I just think are interesting. But anything else you can think of where you're like, "I think a lot of people aren't thinking about this or aren't paying enough attention to this world that could help an ecommerce store owner"?
Albert:
Well, we got to do a big shout out to my awesome producer, Hillary, who loves Peloton.
Stephanie:
She does.
Albert:
Because Peloton is a very fascinating-
Stephanie:
[crosstalk 00:44:23].
Albert:
So, I bought stock in Peloton, and here's the reason why. I've never encountered a brand that I can think of where people so emphatically talk about it. Peloton and maybe CrossFit. Everyone says, "The first rule of CrossFit is you can't stop talking about CrossFit," I think that's also applicable to Peloton, because people who have Peloton love Peloton. So, I think this concept of building community so that your product extends beyond the purchase of the product, meaning like you buy a physical bike but you would stay subscribed to Peloton services. Because I think every brand, or not every brand, because could you do it with a ball? I don't know.
Albert:
But brands and products companies are probably trying to figure out how do I create a subscription community? I think that is going to be a trend that you can capitalize on now because it doesn't require, I don't think, as much technology that doesn't exist, but it's more like how do you build ongoing services at a price point where customers never want to leave you? So, like, I don't know. Let's use my example of kitchenware. Should fork, and knife, and bowl companies have active cooking communities? I think they should.
Stephanie:
Yeah. I mean, that was our interview with Food52, Amanda Hesser, that's exactly what they did. They built up this huge online community first and then they started reselling other people's products, drop shipping them, and then they created their own brand, and they did it in a way where they're like, "By then we had this huge community that we were doing cooking things together."
Albert:
Yeah. They could already forecast their sales. They were like, "Oh, we can automatically assume how many people are going to buy this."
Stephanie:
I know. And that was a long haul for them. I mean, she was the first to say that, however, I'm like, you essentially are launching to an audience that trust you, trust your content, you have this love for just anything that you're doing after you build this community, but trying to figure out how to do that right or figuring out what actually keeps people coming back and how to keep them engaged I think is really difficult without being annoying and without pushing your product too much. When you start in a more content focused way, it seems like it can be a lot more organic to build up those followers to then shift into a product where you have that trust. But it does seem hard when you're launching a new like DTC company and also trying to do content at the same time, it seems hard to figure that piece out.
Albert:
Yeah. And if we go back in time, right, Michelin figured this out. Michelin figured out that people weren't driving enough, so they created their star review system because they wanted people to drive and experience things all over the world, to the point now where here we are today, people still talk about Michelin star ratings for restaurants. It's still that important. People can't put two together and say, "Why would a tire company create that?"
Albert:
So, if you have that today, I think that's probably the next biggest trend, and you can already kind of see it happening. I think more products are going to try to create worlds or problems that their products and services solve, or whether it's exploratory or problem solving, I don't know. But when it comes to Peloton, I just think about the community that they've built, the fact that people just rave about the product. We got our buddy Hillary here, she's got a bike, it's not broken. She says, "They launched a new bike. The screen tilts so I can do yoga and then get back on the bike." It had a price point, a really high price point. I mean, Hillary was considering getting a loan to get this thing, which, by the way, they offer, they offer financing.
Stephanie:
We're going to put Hillary's... her like affiliate code, I don't know if she one. She needs one.
Albert:
Well, I'm telling you, the brand love that she has... But it's not just her. I say Hillary because, Hillary, we obviously work with her, but people love this product.
Stephanie:
There you go. Are you looking at our prep doc? She says h_tag24. Peloton all the time.
Albert:
Okay. If you want to buy, h_tag24. If you want to follow our buddy Hillary on Peloton, not only will she kick your ass in all these calories, or I don't even know what you guys measure.
Albert:
However you score points, she's scoring all the points.
Stephanie:
I don't know if that's a thing.
Albert:
Outputs. I don't know.
Stephanie:
Okay, outputs got it. This has gone into a bad hole. I'm not sure what we're talking about here.
Albert:
Well, we were saying like, what's the next thing to be aware of? I mean, I think that is closer than all those voice searches and things like that that you talked about, which I think are coming, I think you're going to see more companies build communities, and I also think you're going to see more companies burning out customers by trying to make everything like SaaS. Because one of my favorite Twitter handle to follow, everyone check it out, it's called the Internet of Shit, it's just non stop products that don't work if you aren't subscribed to their services. So, businesses out there that try to make me subscribe to make my refrigerator work, I'm anti-you. All right? Definitely anti-you, don't want to hear about it. So, follow the Internet of Shit, if you guys are curious.
Stephanie:
I have follow that one.
Albert:
But that's the delicate balance, right? How do you build a community of value that you charge for versus, I don't know, putting someone in entrapment where you're forcing funds out of them every month just to use your product?
Stephanie:
Yeah. I especially think after everything with COVID, people are also going to be dying for that community, even if it has to be online, I think it's going to be bigger now than it ever was before, because people have been cooped up and haven't been able to have that community like they may have been used to or they're actually maybe cherishing it in a different way now and they're trying to look for that. So, I think it'll be a big opportunity.
Albert:
There you go.
Stephanie:
All right. Anything else on your mind? If not, I think this was a fun episode. It was a good one.
Albert:
I hope so. I can never tell.
Stephanie:
You're really not, yeah. You're almost like, "I'm not sure." But yeah, I think this episode was awesome, it's really fun just kind of reminiscing through all the episodes we did. I can't believe we've already had 50. If you have not given us a review and a rating and subscribed, please do, because that helps spread the word, and we would love to hear how we're doing. We also have some really good interviews coming up, like we were mentioning earlier, the CEO Fast is coming on, we have a really cool company, Handwrytten coming on with [inaudible 00:51:04], Sheets and Giggles, Ring. We've got some big names coming up here, and yeah, I'm excited to do this next recap after the next 50.
Albert:
Until then.
Stephanie:
Right. Thanks, Albert.
Every shopping experience is unique, and every shopper has specific wants and needs. That is one of the biggest struggles brands face in the world of ecommerce. How do you create a customer experience that resonates with and meets the needs of drastically different customers?
This problem is magnified further when you run a marketplace that sells literally millions of different products to tens of millions of different users.
eBay has 180 million active users, which, according to Bradford Shellhammer, means that there needs to be 180 million different eBays to meet each of those users’ exact needs. Bradford is the Vice President of Buyer Experience at eBay, and part of his job is to make every eBay user fall in love with their eBay experience.
On this episode of Up Next in Commerce, Bradford explains what that looks like in practical terms, including how they approached a home page redesign, the importance of testing and experimentation, and the methods they have used to build trust among users.
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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Transcript:
Stephanie:
Welcome back to another episode of Up Next in Commerce. I'm your host, Stephanie Postles, co-founder of mission.org. Joining us today is Bradford Shellhammer, the Vice President of the Buyer Experience at eBay. Bradford, welcome.
Bradford:
Thank you. Thanks for having me. Excited to be here.
Stephanie:
Yeah, I'm really excited to have you on. eBay, such an awesome name brand. I'm excited to dive into all things eBay. I've been a long time buyer there. But first, I want to go into your background of what brought you to eBay? I see that you founded a couple companies, a couple ecommerce companies and I was hoping you can touch on that before we jump into eBay.
Bradford:
Yeah. I think it's super cool to talk about because it's actually super personal. For me, it's a pretty interesting story. So, it's a love affair, essentially, between myself and eBay. I've been a buyer on the platform since 1999 because we can trace back and see in our internal database how long we've been shopping and when we created our account.
Bradford:
So, I've been a customer of eBay for over 20 years. And the companies that I started, two of the three were marketplaces. And they were marketplaces that were really founded on two principles, both of them, one was for buyers, helping them find treasure, awesome stuff, unique things, feeling some passion or interest and for seller is propping up the little guy.
Bradford:
Both of the companies that I found at Fab and Bezar were both heavily in the design space, in the modern design space, so that's furniture, graphic arts, posters, lighting, jewelry, handbags, accessories and things so fashion design, but my personal love affair with collecting.
Bradford:
I have over 400 pairs of shoes. I have a massive art collection. I have probably more chairs than most people. Most of these purchases over the last 25 years have been made on eBay. And so, for me, I've inspired by the hunt on eBay what we call internally the eBay a power user, a power customer.
Bradford:
And now, I have this awesome responsibility to help other people fall in love with and use eBay the way that I do. So, I was hired four and a half years ago. I met the chief product officer who had some interest in one of my companies, Bezar.
Bradford:
Turns out I sold that to another company, an Australian company, and I became a free market... was on the market and I was a free agent. And I'd never really worked at a real company before, a big company, the previous 12 years is doing my own thing.
Bradford:
And so, they said, "Well, come join eBay." And my first role was the chief curator of eBay. And frankly, it was a made up role. And everyone thought I had great taste. And when I got to eBay, I really thought my job was going to be curating through eBay and surfacing that up to consumers.
Bradford:
And what I quickly realized is that eBay scale is so much bigger than one person's taste. And that some people are curating parts for a vintage Mercedes on eBay. And some people like myself are collecting design, and maybe other people are just using eBay because they have six kids, and money's tight and buying them all new iPhones is just not possible, so they're looking for great deals.
Bradford:
And so, I really quickly just became very empathetic to the eBay customer's journey and it said, "Wow. Bradford, this is not about you. Can you help build tools to help other people find the things that they love rather than forcing your point of view or something that you love on people?"
Bradford:
And then, I moved into our product org, my second year and the first project I took on was our homepage. We redesigned it. We built a lot of new algorithms and it became a science powered hub for you. And the goal was that there's 180 million active buyers on eBay.
Bradford:
There should be 180 million different eBays because everybody's eBay is different. It's not like other big box retailers or other mass market ecommerce players where we're buying commodity products or everybody's buying the same thing.
Bradford:
And my team really builds the experience that should adapt and respond to customer's interest and helping them find what they're looking for.
Stephanie:
That's great. So, taking on the homepage design seems like a lot of responsibility. Tell me a bit about what that looked like. I mean, what are the customer buying behavior look like before and what do they look like now and how did you get there?
Bradford:
Yeah. That's a good question. So, I inherited an experience that was about five years old and it was called the Feed and that was the homepage. And it was a Pinterest-esque experience. And so, when customers would save things, we have this concept called saving, there's a little heart, you click on it and it saves.
Bradford:
You can save a search. You can save a seller. You can watch a single individual item. It would populate a visual grid of like products that are related to that. The problem with that is that it required customers to groom their own experience. And so, for power customers, the feed was awesome.
Bradford:
Because like myself, I have 150 saved searches and it's just this beautiful grid of new products populating every day of hitting all the either brands that I'm following or the sellers that I love what they're selling. But for the normal shopper, not your power customer, they were really missing out on personalized content because we literally required them to do work to curate it themselves.
Bradford:
So, the project that we decided to do is, was there a hybrid of that? Could you still have some of that content for the power user be front and center on the homepage?
Bradford:
But could you have machine learning and science pick up behaviors patterns of just what people are clicking on or searching for or which emails they're opening and have that be enough to curate a homepage experience without them having to do the explicit work of saying show me more of this on clicking on a heart or saying I want to save this.
Bradford:
And so, what happened was more people with as a result of that first product we launched, more people ended up having personalized content which was a win. Because previously, it was personalized content mostly just for power customers. Now, a more casual customer still gets that benefit.
Stephanie:
Got it, that's great. So, when it comes to projects like that, internally, I'm sure there was a lot of stakeholders and a lot of people had a lot of different ideas. How did you rally everyone around getting a homepage launch without taking, I mean, I could see that project taking maybe like a year at other companies [crosstalk 00:07:10].
Bradford:
Yeah. Well, first of all, I don't want to give away too much of the sausage making, but eBay is surprisingly entrepreneurial. We move pretty fast. And we don't, I think, have a lot of the bureaucracy that probably a lot of companies of our scale have.
Bradford:
So, first of all, I almost felt like, "Wow, they gave me the keys to the car." And for the most part, we have a very strong test and learn culture. So, we don't just flip the switch on something and see how it works. We test and learn and we do lots of hundreds and hundreds of AB tests and we're constantly testing everything.
Bradford:
So, we would never launch anything that didn't resonate with our customers. So, there were safety, I think, baked into all of our hypotheses knowing that you have to actually prove that something that an idea you had is worthy of launch. But I think that that's where I think my entrepreneurial background and my non tech background.
Bradford:
I've started companies, but I don't have a formal technology education at all. I have a fashion design degree and a communications degree. So, this is where I think just the hitting the pavement and telling a story and crafting a vision and getting people to march along with you whether they're marketers or engineers, or designers, or whatever I think suited me in this role in the early days.
Stephanie:
Yeah, that's really cool. See, when you were talking about the AB testing, how you guys test everything, were there any surprises of something that you thought was really going to work and it actually failed?
Bradford:
Oh, that's a good question. I'm trying to think of, you know what, I have to be honest, I don't want to say this because my team is super smart. But I think that the best product managers and the best designers and the best experiences out there are ones that are really rooted in want something super simple, just listening to your customer.
Bradford:
And so, if you're literally baking all your hypothesis and lit really listening like combing through feedback, we have myriad of surveys on different pages. We do lots of focus groups. We do tons of research, user research. We do tons of dogfooding internally.
Bradford:
You weed out the things that aren't going to work way before you even start to build them usually. And so, for us, it's like if you have that real commitment to just listening to your customer through the process rather than having someone come in and just say, "I want to do this thing."
Bradford:
Because when you listen to your actual customers, there's a real great respect for them and you actually don't want to break their current experience, you just want to make it better. And I think a lot of times where I've seen products fail, and I'm not going to go into the details of what they were.
Bradford:
But I have seen maybe not so much in my team, but I have seen this happen both in and outside of eBay is usually when someone that doesn't really have the customer's voice in their head is just like either taking something that's their personal preference or looking at a competitor that may look like a competitor from the outside, so a lot of companies are compared to eBay because they sell things online.
Bradford:
But if you really look at eBay and why people shop at eBay, it's a very different customer than a lot of the big players. So, constantly comparing ourselves to, I think, other competitors who aren't really competitors other than they compete for wallets share not with the heart and soul of our customers.
Bradford:
I think sometimes is where I've seen product managers go off and usually go somewhere that's at the end of the day, it just wasn't what our customers were asking for and that's our job.
Bradford:
Our job is to literally listen to our customers and build experiences for them, and take the things they love, make it better, and take the things they hate and change it. And I really think that if you ground yourself and your whole organization in that just like real deep customer empathy, you don't make too many mistakes.
Stephanie:
Yeah. I'm thinking about surveying customers right now. How do you frame questions in a way that will actually get you what you need when it comes to like how to shape an experience? Because I could see framing in a way that actually gives you maybe the wrong [crosstalk] customers tell you something that leads you down the wrong path.
Stephanie:
Or, it's like, "Oh, someone says they want that." But actually, no one's going to really use that or we see that no one uses it. How do you think about framing questions in a way that will actually be successful [crosstalk 00:12:11].
Bradford:
It's a great question. We have teams of people that focus on that at eBay. So, the feedback we get is that we actually have feedback forms on specific pages of the site. So, I'll give you example, there's this thing called My eBay. It's like your profile hub thing. But because eBay, you could be a buyer or seller, so you have a place where all the things that you've bought live but also all the things that you're selling or sold live.
Bradford:
It's like the hub of the eBay customer. If you just sent an email with a survey of how do you feel about eBay or like an NPS survey, you're not going to get the detail feedback they'll make that product better. And so, here are some of the things that we get like very specific feedback like purchase history.
Bradford:
There are people that literally because they're business buyers or let's just say they're resellers. People that are buying thousands of records a year and then reselling them and we don't have the functionality to let them search through their purchase history.
Bradford:
So, they can't literally search David Bowie and find the things. And this is a number one complaint of our customers and you only would find that out because then we're literally asking very specific, what would you do differently to this exact experience or page?
Bradford:
I think that's where you get awesome feedback. You can get that through just general feedback collecting too if you're able to actually come through and pick up the patterns and scour through them. Because you're right, you might get one or two people that are really vocal about something that a lot of people don't want.
Bradford:
But the things that are like really, really asked for they rise to the top very quickly on eBay. There's also a myriad of forums out there, seller forums, Reddit boards, where people are talking about both pain and opportunities for eBay to be better.
Bradford:
And oftentimes, those are through the lens of a vertical lens. So, you have these sneaker enthusiasts or watch enthusiasts, or who are literally talking about where eBay fails them. And it might not be something that we'd see if we're looking at eBay just really generally.
Bradford:
But for very specific customers, there are some things that matter more than others. And so, one of the big changes in our philosophy this year has been to start thinking about what are those enthusiast groups. And oftentimes, they're aligned with verticals or categories, so watch lovers, sneaker lovers, streetwear lovers, stamp collectors, comic book collectors.
Bradford:
And really understanding like are there unique needs that are outside of just the normal shopping experience that we have to either fix or introduce for those customers too. But it's nonstop, just taking in feedback like we actually need more.
Bradford:
But I would say probably 10% of my team's job is to literally spend 10% of their week is just combing through that stuff to gleam any insight into what we should be working on or what we need to focus on.
Stephanie:
Yeah, that's a really good point about going to different sites like the Reddits of the world and looking at what different niche audiences are talking about. Because I've always wondered when I see or I have an issue and I see a lot of people having that issue, I'm like, "Oh, why isn't this company just looking on this Reddit forum and seeing that there's thousands of people all trying to figure out the same thing that's probably like an easy product fix."
Bradford:
It's an easy product fix. And I'll tell you what else is really super cool about that is that it also makes your competitive analysis because you can see the customers that are buying... your customers talking about you and you also see the customer, the other companies that they reference as competitors, so you really get to see.
Bradford:
And for eBay, as I said, it's super verticalized. There are people that buy hundreds of thousand dollar watches on eBay there. There are literally people that spend thousands of dollars for watches left and right on eBay. And guess what, they're not going to, I'm not going to say their names, but the big marketplaces to buy that they're more verticalized player.
Bradford:
So, we also have hundreds of competitors. When you slice it vertically, it's also a great place to just hear them talk about either the good or the bad of our competitors through a lens too, so you can stack, you can see the sentiment of how they feel about you versus them. And they can also see where are we winning and where do we have to be better very clearly in those forums, too.
Stephanie:
Yeah, that's such a good point. When you're talking about these vertical players and how to think about that, it reminds me of... I read an article about the unbundling of a lot of platforms whether it's Reddit, or Nextdoor, Craigslist, how turning it into separate products.
Stephanie:
I don't know if you've heard about this, but how do you think about that at eBay right now? Because it sounds like you're doing that with these different niche audiences in a way like pulling them apart to give them a more personal experience.
Stephanie:
For example, like with Reddit, maybe there's thousands of different conversations going on around different topics. And then, there's a picture that shows, okay, this topic here is all around neighbors and things like that. Oh, what do you know, Nextdoor popped up and pulled that off the platform in a way.
Stephanie:
And then, oh, they're talking about like gaming here. Oh, here's a gaming platform that popped up. So, actually pulling apart a platform to give it unique experiences for the people.
Bradford:
Yeah. So, I mean, you can look and see there's I think a lot of... we're the original. We were [crosstalk 00:19:25]. Yeah, we really are, seriously. Before we were the gig economy. We were the niche marketplace. We were the vertical marketplace. We still are like we literally invented or we're one of the originals.
Bradford:
And so, you can look around. And you can see even fab.com, it was a marketplace for design like some of them come some of them go. Some of them have really great staying power and a few of them have been super successful. Here's why I think we're uniquely positioned and why I think going back to building verticalized experiences.
Bradford:
And when I say that I want to make sure that it's not niche. It is building horizontal capabilities that can flex and you might need the ability to have high ASP or high payments. Sometimes, you're buying things that are $20,000, $30,000, $40,000, that's our high-end art, that's high-end collectibles, that's high-end watches.
Bradford:
That's also like business and industrial equipment. Tractors, we sell a lot of this. So, although those like shopping experiences wouldn't be the same beginning to end, there might be a piece of that, like a payment, the ability to have some payment support for large purchases as part of your strategy.
Bradford:
So, for us, it's about I think building horizontal capabilities that can benefit multiple verticals then you slice up, we're calling them platforms, a vertical platform. You slice up a piece of that and a piece of this one, a piece of that one and suddenly you're basically stacking, it's like a menu.
Bradford:
For this shopper, you need these five things. And for this one, you need these six things. And so, it's not separate branding. It's not like suddenly, you're in an experience that doesn't feel or work like eBay, but it's just building different kinds of capability into the shopping experience and that's our strategy right now and it's super cool.
Bradford:
And I think that the great thing about eBay is the scale. So, for small upstarts and small vertical players, they got to spend a ton of money to get people to come onto their platform. I mean, a ton, they have to bleed millions, hundreds of millions of dollars like eBay has an audience. We have traffic.
Bradford:
We have global reach. We have hubs of really major or an iconic brand in Germany, in Australia, in Israel, in Canada, in the UK. So, there are all these benefits to being this large platform that are mostly traffic I think and just like a giant active enthusiast customer base.
Bradford:
I think it's on us to just crack what is the end to end product experience. And maybe there's other things that have to change, policy, how we rate our sellers, how we rate our buyers. There's probably other things where we're thinking right now too that's more than just experience. But I don't think it's the reinvention of eBay. I think it is the morphing of eBay for certain types of customers. Yep.
Stephanie:
Yeah, that makes sense. Have you seen over the past couple years buyer behavior is changing? Are you pretty preparing for something new over the next couple years or adjusting strategy a bit after seeing changes with COVID? I think I read that eBay did pretty well. Is there anything new that you're preparing for now?
Bradford:
Yeah. I mean, the COVID is a horrible thing. And but what was like got a lot of us through it in the early days at eBay as supply chain was shutting down, warehouses were shutting down, it was hard to get things.
Bradford:
The one thing that was working was just how distributed the inventory of eBay was and how this sector of the country or the world may have shut down but there's all these parts over here that can ship things around. And it was super cool to witness that eBay worked.
Bradford:
And it allowed like some people who are home to make some money, come in and sell for the first time. They allowed businesses that maybe struggled during the time, they might have closed physical retail down or something like that, it gave them another channel.
Bradford:
We have a new CEO. His name is Jamie Iannone. He was an eBay veteran that went and worked for Walmart for many years and he's come back with such a force
Bradford:
And so, the great news about our new CEO is he is really setting a strategy that honors eBay's past meaning going back and valuing our sellers who without, we literally don't have a company and literally saying publicly that he's focused on eBay being the seller's platform of choice.
Bradford:
And on the buying side, it's about going back and listening to our enthusiast customers. We're like strategically positioning ourselves to be there for those buyers and sellers more than ever.
Bradford:
And so, I said in terms of this like what we're seeing right now, we're seeing a lot of people looking at eBay for the first time. We're seeing a lot of people reconsidering eBay, and we're seeing our best customers continue to shop with eBay.
Bradford:
And it's on us right now to take advantage of this time and I think go back and really listen to our customers, as I said at the beginning of the podcast was not just like... yeah, I was talking about like listening to very specific feature feedback or page feedback in our experience or app feedback.
Bradford:
But like we as a company are just listening to our buyers and sellers in a way that we haven't during my time and much of our strategy is just emerging from that. And it's super cool to have new leadership that is all about customer, customer, customer.
Stephanie:
Yeah, that's really great. When it comes to the new customers who maybe still have an old perception of what eBay is like, "Oh, it's an auction site." Maybe haven't visited in a while. How are you appealing to these new people who are starting to think about you?
Stephanie:
I'm sure you have very different messaging to someone who is new versus your current customers who are sticky. And once they start buying or selling, they're probably going to stay there for a while.
Bradford:
Yeah. I think that this is a part of what brought me to eBay. I love eBay and I feel a lot of people don't know enough about our goodness. And I think a lot of that is because I think previous years before Jamie came on board, I think we were not really owning what we really were.
Bradford:
eBay is really an awesome place to buy non new and seasoned merchandise and that means refurbished products that means outlet products, that means used products, that means new and not in box. And so, I think that there was a lot of confusion probably for especially young consumers because I think that there wasn't a clarity of message around what eBay was just externally, it wasn't necessarily clear internally.
Bradford:
And so, I'm very optimistic that this clarity around where we're going to compete and the buyers and sellers that we value. I think you will see we have to earn it. We have to earn it with every single sale. We have to earn it with every single seller that comes back onto the platform. We have to earn it with a first time buyer.
Bradford:
But I think that it's less about how we're going to talk to our existing customers versus our new customers, I think in my eyes, because I actually think we need to say the same thing which is there's a lot of magic into eBay and it's not your typical shopping experience and that's okay. That's cool.
Bradford:
I think about eBay when I'm thinking about comparing Airbnb to hotel chains. It's like Airbnb, there's a little something for everyone there. You can rent a mansion. You can rent a cot in a yurt and everything in between and it's high and low and it's all around the world.
Bradford:
And there's something that's like I think of eBay in the same way that it's super inclusive and there's something here for everyone. What I don't think people realize is that eBay is full of, I say to the two things, also for buyers, awesome deals and really great treasure which is unique, hard to find or are super interesting stuff.
Bradford:
And I think that those two things probably appeal to really broad set. It's on us to tell that story. It's on us to tell that story vocally in the press. It's on us to tell that story in our branding, in our marketing. And it's on us to tell our story in our product and I don't know if we've done that well enough up until recently where we're starting to pivot towards that listening to our best customers and buyers and sellers and building things for them.
Stephanie:
Yeah. So, with marketplaces, there's always a question around trust. How are you guys going about showcasing that and convincing especially maybe new buyers that this can be trusted and our sellers can be trusted. Because I think at least back in the day, that was something, I mean, even on Amazon, people are still worried like, "Is this a good seller?" So, what are you guys doing behind the scenes?
Bradford:
Yeah. I think that trust is probably one of the biggest things we have to work on and have worked on. I'll just speak a little generally and then I'll tell you about a very specific thing that we're doing for trust, but I think will be super exciting to talk about.
Bradford:
So, one and it's just loans. So, for trust, I think we're aware that when the scale of eBay and just the diversity of seller of inventory of even condition that we probably have, it's even more compounded, the trust issues at eBay, there's just so many variables here.
Bradford:
And so, we are taking it very seriously right now through planning for next year especially and talking about all the things that we're going to do to combat trust. So, it's everything from doubling down on some of our policies that protects buyers.
Bradford:
So, we have money back guarantee. We essentially for most products on the site guarantee that customers are going to get what they want, get what they're expecting. And so, I don't think a lot of people realize that most of the things you buy on eBay are we have this baked in protection.
Bradford:
But I don't think that's enough. And so, I'll give you an example of why I don't think that's enough. Here, I'll give you example. I'd mentioned it earlier and it's launched and is live now as of a couple weeks ago. If you're buying a watch that's over $2,000 which is a high-end luxury watch, these are like the Rolexes, the Omegas, they can go way higher than that.
Bradford:
eBay is one of the biggest places to buy these watches, it's massive. It's a business within a business. The biggest concern that our buyers tell us is that they're afraid that like, "Am I really getting a Rolex? Am I getting the real thing?" Authenticity really matters.
Stephanie:
Yeah. For $3,000, we've got to be real.
Bradford:
$3,000, I mean, I've seen some of the sales $30,000, $60,000. You don't want to take a chance of, "Am I not going to get it? Is it going to be fake? Is it going to be scratched?" So, we decided to tackle trust through a vertical lens. And it's not just a category because it's not all watches but watches over $2,000.
Bradford:
We have launched a new program that's called authenticity guaranteed where eBay is guaranteeing that any watch sold on its platform domestically. So, in the United States we have plans to expand. But currently in the United States that's over $2,000 that we will guarantee its authenticity.
Bradford:
So, what we've done is we've partnered with amazing partners who vet it that can verify and authenticate high-end luxury watches. We force an intermediate shipping. So, the buyer, when they make the purchase, they see very clearly badging program details say this watch is covered under our authenticity guarantee and you have nothing to worry about, it's going to be authentic.
Bradford:
We have the seller ship the watch to the third party verification service. They look at it. They compare it. If it's not in its original boxing because a lot of these watches are sold with the original boxes. If it's not on its original visual boxing, we repackage it in eBay box and then we express ship it out to the buyer.
Bradford:
And we catch any problem with counterfeits or other kinds of issues before it gets into the hands of the buyer. And so, it's really meant to stop buyers getting fake products or damaged products. For the seller, it's also a really awesome thing too because oftentimes people will buy a watch and we have buyers that have scammed our sellers.
Bradford:
So, us being in the middle of both the buying and the return process, it basically is our way of just ensuring that both buyers and sellers are protected and it's third party authentication of luxury goods.
Bradford:
And so, we rolled it out and we're going to be expanding the program even more. And like that is very real and very different eBay, us literally getting in the middle of a transaction and protecting both our best buyers and our best sellers. And we're going to do more of that next year.
Bradford:
And when I say more of them, I'm not just talking about more things to authenticate, but I'm also talking about just more picking apart like a very important customer base and their buying behavior and where they have concerns with eBay and a lot of it goes back to trust, frankly.
Bradford:
It's like, I don't trust eBay as a buyer. I don't trust eBay as a seller because you don't offer these protections. And we're literally going to be bringing those protections through a vertical lens more often.
Stephanie:
Wow, that's great. I mean, that seems really smart and strategic because, I mean, I trust eBay as a brand and I would trust whatever you guys say, but I might not trust the buyer or the sellers.
Stephanie:
So, what recommendations would you give to other ecommerce companies around developing trust? What do you think is most important? Is it reviews? Are there things that other companies right now maybe are missing out on that they should be doing?
Bradford:
Yeah, it's interesting. You bring up reviews and I think that that is also a unique eBay opportunity too. Our catalog, we have so many listings like in every condition. From every year, from all over the globe.
Bradford:
It's really hard to comb through it all. Reviews I think are interesting.
Bradford:
But I really love the review of the seller. So, where a lot of ecommerce companies are reviewing an individual product, like an actual item like this cooler or this microphone, or these pairs of shoes. I think that eBay has that opportunity where we have the right catalog and I think that we're leaning in there in certain categories.
Bradford:
But I think a more interesting eBay opportunity is to really celebrate the seller and to talk about, are they trusted? Because a lot of the stuff that eBay sells, a lot of stuff on our site, you can't actually get a review. Much of it is not that product.
Bradford:
A good example like comic books like I know I want this spider man whatever it is. The thing that I care about is, do I trust this seller that the condition that they're saying it is as is. And so, I think a concept of reviewing a seller and trusting them, I think is super interesting to lean into. I think it's super interesting to lean into especially where a lot of our... and eBay is a little different all over the world, so I don't know how much you know about that too.
Bradford:
So, in the US, the business is very different than the way it looks in UK. It's very different than in Australia. So, for some of those places in Australia like I'll give you example. We have a lot of brands and the top brands and top retailers selling direct on eBay.
Bradford:
So, it's like we are a channel for them. So, there, the trust opportunity is about like is this one of these iconic brands that I trust, I know their inventory. But in other parts of the country, there's a lot of small businesses, a lot of people who have built cult followings on Instagram.
Bradford:
A lot of people that literally have brick and mortar stores and small towns and main streets. And they have been able to survive in a world of big box retailers and mega malls because they've had this outlet to sell things from their physical location on eBay globally.
Bradford:
And so, I think we should show that off more. I think if someone knew they were buying a record or a bunch of records from a record dealer who's had a shop since the early '80s in Downtown Buffalo and I'm making that up but it probably does exist. Like that would be a level of trust, right? You know that this person is the real deal.
Bradford:
And there's something about that that I get excited about, thinking about when you say reviews is leaning in and it's less about reviews, but more about like, "Can I trust this seller? Who are they? Where do they exist?" Like, "What is their point of view? What do they specialize in? What are they experts in? How can I communicate with them?" I get excited about that.
Stephanie:
Yup. I love that. Because I mean, even from a human perspective, it's like what do you remember? Are you going to remember like you said the product? Or you remember the person, the face like the story behind it and then that would come top of my next, I'm like, "Oh, I want to go to Bob's record store and get another record from him because he did a great job last time versus-"
Bradford:
[crosstalk 00:42:38]. And that's difference between like us. I talked about Jamie and our new pivot, our new strategy like what you just said is super important. I don't know if you're buying diapers, or if you're buying toilet paper, or you're buying replacement batteries that that person to person connection matters that much.
Bradford:
It's about price right? Is this the thing I'm looking for and who has it at the cheapest and sometimes it's the cheapest bust the quickest. And I think a lot of times eBay just because of this, like the diversity of our inventory sources, we get to compete there too.
Bradford:
Because we have all these different sources of inventory and oftentimes, we're the best price. But when you talk about things like collectible sneakers or vintage handbags, or coins, or antiques, or vintage camera equipment, or car parts, suddenly, who you're buying it from matters. It not only matters from the feel of good I'm like helping the little guy community aspect of eBay, but it also matters from the trust.
Bradford:
And part of people that do have passions whether they're collecting or enthusiasts, part of the joy of that whole thing is not just the accumulation of things, it's the connections to people that come with the process of accumulating those things.
Bradford:
And that is where eBay, that happens just naturally because it's our DNA, but we need to tap into that way more than we do currently, and we will. And that's the stuff that we're talking about internally right now.
Stephanie:
Yeah, I love that. I think that's also just such a good point for any new like do they see companies coming out right now that like the story behind it. I mean, I know a lot of people sometimes are like, "Oh, I don't want to talk about myself." But I remember going to certain websites and looking at that page and seeing like, "Oh, it's like a certain family member is behind and here's how it was inspired. "I think like Charles Webb comes to mind and a couple other ones.
Stephanie:
But you remember that story of why they're doing what they're doing and that's way more of a spot to connect on than maybe just the product. Like you start to have a good product, but I think [crosstalk] some of that story is important.
Bradford:
Yeah. You're absolutely right. It's not one or the other, it's both. And when it's both it's like, pow, that's where the magic happens. And again, we're coming back to that more than we have probably in the recent history of the company.
Stephanie:
Yeah. Very cool. So, you were just mentioning earlier about international audiences, like you guys have a global presence. How do you think about developing your website and your offerings and telling the story behind different, maybe like catalogs and things like that, how do you think about approaching that from a global perspective?
Bradford:
Prior to COVID, I spent I would say a half of my time not in New York City. So, I have a global role and obviously worked for a company that's headquartered in California. But I really, really spent a lot of the last four years on the road and really listening to customers.
Bradford:
And when I say customers, I mean, also. So, eBay is like we have global functions. So, product and technology is one of the things that are global. It's based mostly although we have people that work on and distributed across the world, it's headquartered in California and that's the epicenter.
Bradford:
But we also have markets, regional teams. So, because of the scale of our business they're like big companies within a really big company. We have an Australian headquarters. We have an Asian headquarters. We have an Israeli headquarters.
Bradford:
We have our Russian headquarters. We have German headquarters. We have an UK. And a lot of the business, merchandise, marketing like just operations, the people that are closest to the customers and market are in those countries. And you do see nuance of differences of how people use products like it's super interesting.
Bradford:
I'll give you an example. We launched the ability to create an account on eBay with Google, Facebook and now Apple. This is nothing revolutionary. It's been around since 10 years, but we launched it finally in eBay a couple years ago. And we've seen a lot of adoption because that's just the normal way a lot of people create accounts.
Bradford:
They don't have to think about a username and a password remembered for individual websites. They just click a button they link to Google and it's one click sign in. Germans don't want to do that. And you realize that like suddenly, this product that there are parts all over the world, and then you realize that there are very real differences.
Bradford:
There are very real differences in how people want to pay for things. Germans again don't use credit cards the way that a lot of the west does. There are very specific payments forms in China that we just don't have in the US. And see nuance in the categories they shop globally, country to country often.
Bradford:
You see nuance and payment choices. You see nuance in privacy. Some countries care a lot less than other countries about it. It is really interesting to see the outliers where something just doesn't make sense or doesn't work somewhere. We test things and sometimes like something is a runaway hit in one country and it's just the... sometimes negative and others.
Bradford:
And really a fascinating part of our job is how do you launch global product by respecting local nuance. And what we have done is we have actually a team of... it's a pretty decent sized team. But we have a team that actually takes our global product tech platform and sometimes builds newer experiences that are market specific on top of the example is you can buy groceries in Australia on eBay.
Stephanie:
Oh, interesting.
Bradford:
Yeah, anywhere else. But because of just the size of the country and the epicenters of where people actually live and partnerships with the top grocery companies there. We actually built like a grocery shopping experience on eBay which no one would ever think of that.
Bradford:
So, we do sometimes build different things in different markets depending, but by and large, I would say 95% of what we do is global audience is shopping view eBay at the same way, so it's not too much.
Stephanie:
That's pretty great. I mean, are there any international trends or shifts that you see happening right now that you guys are preparing for or leaning into?
Bradford:
No. I mean, I think that the shifts that we see are, again, I think this vertical approach, looking at different verticals and really understand that customer's journey end to end, how they landed on eBay. How they browse and shop and search for eBay.
Bradford:
How they consider what they expect in terms of protections and trust us and how they want to pay for it and what to expect, what returns and guarantees. We're doing that everywhere. What's different is that there may be some verticals that matter here and don't matter there and that's what we're working on right now as like I mentioned the watch business in the United States and that's definitely a global one.
Bradford:
But there might be some that are more US focused. There might be some that are more European focused. There might be some more that are more APAC focused. But other than that, I think it's just applying the same playbook. It just might be a different vertical or a different category focus in certain countries or regions.
Stephanie:
Yeah, that is great. All right. So, we have not too much time left, but I want to jump into the lightning round unless there's anything else you want to talk about.
Bradford:
Yeah, this was great. Thank you. I mean, it's so funny. Like I said, I like really drink the juice of eBay and like just talking about eBay gets me excited. So, thanks for letting me just riff on how awesome place I work is.
Stephanie:
Yup. Yeah, I like that excitement. That's what I love to talk about and have people come on the show, be passionate about where they work and what they're excited about. So, it's been perfect. All right. Lightning round brought to you by Salesforce commerce cloud. This is where I'm going to throw a question your way and you have a minute or less to answer. Are you ready, Bradford?
Bradford:
Yeah, okay.
Stephanie:
All right. So, this one I think you'll have a great answer to, what is the either best or most memorable purchase you've ever made on eBay?
Bradford:
Oh, my God. Well, I'll tell you what, I just found out what my first purchase was and it's really embarrassing, it was an MC Lyte who you don't even know who that is, I'm sure.
Stephanie:
Nope.
Bradford:
An MC Lyte cd.
Stephanie:
All right. Okay. So, what is this? Tell me a little bit more because I do not know.
Bradford:
MC Lyte is like one of the earliest female hip hop artists and was very famous in the late '80s, early '90s, did some rap like Queen Latifah. And that was my first purchase on eBay. But I-
Stephanie:
Well, do you still have it? I hope so.
Bradford:
I don't still have it. [crosstalk] anymore. I have a Warhol collection and I have bought probably five or six of them on eBay. So, I'm someone that actually buys high-end art on eBay. And those are oftentimes steals.
Bradford:
I mean, they're not inexpensive, but in terms of just the actual cost that would be out in the market of the art market through dealers and door and at auction and I got great, great, great deals.
Stephanie:
That's awesome. Yeah, very cool. Well, I have to see some pictures of some of your art.
Bradford:
I can send [crosstalk 00:54:04].
Stephanie:
That would be cool. I'd love to see it. So, once we can travel again, what's up next in your travel destinations?
Bradford:
It's so funny. Right before we're grounded, I just gotten back from a wedding of one of my best friends in South Africa. And then, I went to Rwanda and Zanzibar. And I flew 300,000 miles last year, so this is really hurting that I'm not traveling. My favorite two cities in the world are Berlin and Rio de Janeiro and I am dying to get back to both of them probably especially Rio.
Stephanie:
Okay, cool. We need to follow you on Instagram or Twitter wherever you are to keep up with where you are at in the world.
Bradford:
It used to be more interesting. I was at a beach every weekend and not anymore. [crosstalk] and I got to travel to really cool places for work. You get to go to Sydney. You get to go to Tel Aviv. You get to go to Berlin. You get to go to London, it was a really luxury. I don't know, I'm sleeping better now, so maybe it's not all bad.
Stephanie:
Yeah, there you go less jetlag. If you were to have a podcast, what would it be about and who would your first guest be?
Bradford:
Oh, my God, it would totally be like completely not about the covers. It would probably be about music and drag queens and gave up culture. And my first guest I think it would have to be RuPaul.
Stephanie:
That sounds awesome. Hey, I mean, not all podcasts have to be about ecommerce. I mean, we have the best one. So, [crosstalk] anymore. There you go. You don't want to compete with us. You don't want this. All right. And last, harder question. What one thing will have the biggest impact on ecommerce in the next year?
Bradford:
Obviously, the answer is COVID. I think it's completely changed a lot of consumer behavior. I think it's really changed a lot of the industry. I think a lot of people that didn't sell or buy a line are now doing that. And I think I'm curious as we hopefully pull ourselves out of this globally.
Bradford:
And I hope get to a place sooner than later some normalcy in the world that I think that for ecommerce, just the playing field has shifted, it's going to be a different game. And I think we have some signs, early signs of what we think that looks like for eBay.
Bradford:
And I think a lot of podcasts and article I read are pontificating on it, but I don't think we have the answers yet. And that's probably the answer for this life to not just ecommerce life, but definitely COVID.
Stephanie:
Yup. Yeah, completely agree. All right. Bradford, it's been a blast talking. Where can people find out more about you and your work?
Bradford:
They can shop on eBay and see it live and flesh most of the things that a buyer touches. And you can follow me on Instagram, youngbradford, if you want. I'm boring on Twitter, I'm a more visual person.
Stephanie:
All righty. We will try and find you there then thanks so much.
Bradford:
All right. Thank you. This was a pleasure. Thank you so much.
It is rare that a brand has such reach and such impact that people all over the world can not just recognize it, but have memories of using the product for generations.
Crayola is one of those rarities. Of course, Crayola was built around the production of crayons, but throughout its more than 115 years in business, Crayola has vastly expanded its product offerings and worked to build a community of consumers who gather around the idea of creativity. But how do you sell that expanded brand and provide opportunities for customers to find and interact with you in new ways?
On this episode of Up Next in Commerce, Josh Kroo, the Senior Vice President Brand Marketing and Digital Strategy at Crayola, joined us to discuss some of the strategies he is putting into place to increase brand awareness, expand digitally, and offer experiences for all kinds of audiences. Because whether your company is a century-old or a brand new startup, finding ways to adapt and expand will always be important.
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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Transcript:
Stephanie:
Welcome back to Up Next in Commerce. This your host, Stephanie Postles, co-founder of mission.org. Today on the show we have Josh Kroo, the senior vice president of brand marketing and digital strategy at Crayola. Josh, welcome.
Josh:
Hi, good to be here.
Stephanie:
It's really exciting to have you on. I was actually just playing with some crayons with my two-and-a-half-year-old right before this, trying to get [crosstalk] for the interview.
Josh:
Excellent, that's good. I like that.
Stephanie:
Yeah, it's top of mind now, yeah. So, I want to hear a little bit about what led you to Crayola?
Josh:
Sure. So, I grew up kind of in a traditional brand marketing capacity. I started my career at Kraft and Danon, and had spent a lot of time building businesses there, but when the opportunity came calling to come to Crayola, which is one of the most iconic brands in the world, it's one of those brands where people ... you say that you work at Crayola, and everyone sort of has A, a memory, and then B, their face lights up, and they generally ask you a fun question like, "Oh, who names the colors?"
Josh:
It's just one of those brands that has touched so many people, and pretty much everybody along the way, and so for me to get the opportunity ... I joined Crayola to lead the marketing communications group. It was an opportunity to be a part of that brand, part of the mission, which I think is really wonderful, which is all about celebrating, and nurturing, and helping to spark the creativity in children, and giving parents and teachers the tools to do that, and then the chance to bring some energy to the brand, and I don't want to say revitalize it, but contemporize it, make it relevant for today's kids and parents, and lead a great team through that process.
Stephanie:
Yeah, that's great. So, I mean, Crayola's been around since, I think it's the 1880s, right?
Josh:
Yeah, we are over 115 years old. So, started with eight little crayons. Edward Binney, our founder, his wife wanted kids to be able to color the world as they saw it, and so we launched with eight crayons. That's actually where Crayola comes from, cray meaning chalk, and ola is sort of like oily chalk with the colors. So, a lot has happened over the last 115 plus years in terms of the brand, but what's amazing is that the mission and the purpose of the company has still always really remained the same.
Stephanie:
Yeah, that's really cool. So, what does your day to day look like at Crayola, because I'm sure you've seen a lot of shifts happening over the many years that you've been there, or throughout the brand as a whole I'm sure you've heard of shifts, what are you doing now that maybe was different than a couple of years ago?
Josh:
Wow, there's a lot for unpack in that, I think-
Stephanie:
Yes.
Josh:
... first of all, my role has certainly evolved, but no, I think you can go ... or I personally can go from a meeting where we're talking about ecommerce marketing strategy, to looking at pieces of creative or creative work that we're building out for holiday, to a meeting where we're looking at what our strategy is going to be going forward from an annual planning perspective. I manage our interactive business right now, so it could be a meeting where we're looking at what are the next updates for the plans for our apps, and how are they performing? So, it really it can touch all different parts of the business, and I think that's part of the joy of working for a brand like this, and in my role. It's everything from all the brand marketing, but now most recently digging deeper into the digital and ecomm side of things, and helping to guide the company in that way. So, you never know what's going to come on any given day, but I think that's what keeps it fun.
Stephanie:
That's great. So, you were just mentioning apps, and I think that would be fun to kind of dive into Crayola's mobile efforts, because I think when I think of Crayola I, of course, think of the crayons that we have in our living room, but I'd love to hear how you guys think about building out apps, and how do you know what's going to work, or what doesn't? How do you think about what you want to invest in when it comes to that area?
Josh:
So, that's a great question. I think it's been a really interesting journey for us in the app space. We've actually been making apps for over a decade now-
Stephanie:
Oh, wow.
Josh:
... but the way that we've been doing it has really evolved. So, this predates my time even, but we had what we called here physical to digital apps, which was this idea of how do you merge physical creativity and digital creativity, and bringing them together in an app. We were working hard at that, we had the first augmented reality coloring books that were out there, we had augmented reality based animation, we had all these products, and I think ultimately what we figured out was we have to be okay with kids being creative in a digital space.
Josh:
I think overarching what you recognize is that if you look at kids' free time in a pie, they're spending more and more time with technology, depending on the age of the kid it can be upwards of 30 plus percent of their time with technology, and certainly within that, they're being creative. So, what is the best way for Crayola to play there? And we evolved from this kind of idea that you had to do something physical, or physically creative, which is at the core of what Crayola's been about for well over 100 years, to what does modern creativity look like for a kid? And I think that's really where we set out to build from, from an app perspective.
Josh:
So, looking at it, and then you start to ask yourself, and we've got a variety of different apps today, we've sort of got a flagship app called Create and Play, which is really the premium Crayola experience, everything that you could want for digital creativity that's sort of targeted to younger kids in that three to five space. And then we've got other apps that are out there that are supporting different brands or IP of products that act as a marketing vehicle. I think for our flagship app, what we really wanted was to create an experience that was if you think about opening a crayon box, what is the magical experience that a kid gets from opening a crayon box? I'm sure your two-and-a-half-year-old can relate to the smell of the crayons-
Stephanie:
I was going to say, the smell, yes.
Josh:
... the excitement of the color, so you've got all of that there, and how do you bring that into the app space, and how do you also empower kids to express themselves creatively? And what we wanted to do here was help kids learn through creativity, but without really knowing they were learning, so it's all through play. I think from a parent perspective, so two and a half maybe or maybe not be a little bit young for your kid, but parents want to feel good about what their kids are doing on an app, and so how can we give a wholesome experience as well? So, that was really the approach that we took there, and we built out a variety of different apps, and continue to expand on the content, and it's a really great way to foster digital creativity.
Stephanie:
Very cool. Do you have any tips or things that you found out along the way when you're trying to make sure that you're staying true to the brand that everyone loves, and like you said, being able to do things in the real world, like actually draw on stuff is an important part of it, while also moving forward in this digital arena?
Josh:
Yeah, so I think the fun part about being in an app is being okay with the fact that there are fantastical things that you can do to express yourself in the app space. So, for us, it's always about staying true to the essence of the brand, but our brand is really all about creativity. So, you can color with a crayon and make marks on paper, and that's wonderful. How do we exaggerate that in the app space so it's delivering that magical experience for a kid? So, you can color with flames in the app, for example, or you can express yourself in different ways.
Josh:
So, we have a whole area in the app that's all around pets, and pet play, and pet care, and you can dress them up, color on them, make music with them. It's all creativity in a different way, but I think for us it's really it's all about letting kids express themselves, whether it's physical or digital. I think for us, the other thing that is true about any, whether it's physical or digital creativity is there is no such thing as bad creativity. So, we celebrate everything, whether you made a random circle on a paper, or whether you painted a Picasso, it's all celebrated, it all goes into the gallery, and every kid should be proud of what they create.
Stephanie:
That's great. How do you stay ahead of what kids are looking for? It seems ... I mean, when I think about my kids I'm like, I have no idea, sometimes they like certain things that I'm very surprised by, or I think they're going to love something, and I buy them this really cool gift, and then it's like a flop. So, how do you guys stay innovating in that area and stay inside the kids' heads of knowing what they're going to enjoy and like?
Josh:
Well, certainly there's an aspect of just being immersed in the world of kids apps, and playing with other kids apps, and understanding what's out there, but then you're also always looking for what's trending, and making sure that we're staying on top of that from a trends' perspective, and you can sort of pick it up by just the amount of research that we do with kids, and talk to kids in general, you can sort of get a flavor for what they're doing. And then we also do a lot of user testing as well along the way to validate the concepts and the content that we're building out.
Stephanie:
Mm-hmm (affirmative), very cool. How do you think about like you're building these apps that, I would say, encourage the kids to play around for a long time, are you mostly focused on having someone really engage with these apps, or are you also building apps that are focused on conversions of maybe selling actual products, or is it kind of a little bit of both?
Josh:
It depends on the app. So, our flagship Create and Play app, that's actually a subscription app, so you can go into that app and you'll be able to play with, call it, a quarter of the app for free, but if you want the full experience we're monetizing it through subscription, and I think if you look at the app space in general in the kid space it's really moving in that direction from premium and freemium, and it has been for a few years since the subscription. The win for us there, certainly I'm happy that we're monetizing it, but we see kids on average playing 25 to 30 minutes a day deeply engaging in your brand, I mean, that's sort of hard experience to replicate.
Josh:
And then there are other apps where it is just free, so I think the most recent one we launched was probably nine or 10 months ago, it was called Scribble Scrubbie Pets, which is an IP that we have that's actually a toy-based app, and that really is ... it's a totally free experience. Again, we want kids to immerse and connect with the brand, and we'll see them averaging 20 plus minutes a day with it, and there are different things you can do. So, there's, call it, almost 40 different Scrubbie Pets in there, you can unlock them by either buying the product, and that's a shortcut to unlocking pets, or you can just continue to play and engage with the brand and do activities, and unlock the pets that way. So, the conversion will happen more down the line, and it really is about generating that brand awareness, and brand love.
Stephanie:
Cool. So, when thinking about your ecommerce and your website experience, what are you guys doing on that front right now, and what are you seeing that's working? Well maybe, what step of, or what stage are you guys in with selling online? Whereas I guess I still think of you as I would go to the store maybe to buy some crayons right now.
Josh:
Yeah, it's really interesting, it's been a total evolution for Crayola. If you go back 10 or 15 years ago, or maybe even shorter, two of our biggest customers were Toys "R" Us, and Kmart, and you know where they are-
Stephanie:
Yep. Yeah, Kmart.
Josh:
Exactly [crosstalk 00:11:59]-
Stephanie:
Forgot about them, yep.
Josh:
No, so we made a very concerted effort at Crayola probably three or four years ago recognizing that ecommerce and specifically Amazon were going to be a huge factor in how consumers shop, and we really pivoted the business, built out a totally siloed ecommerce team to grow that that was partnered with my team on the marketing side and the content side, and put a huge amount of organizational effort and resources against growing that part of the business. So, I'd say I feel like we're pretty far along from an ecomm perspective, both from just where our sales are coming from, and how consumers are buying our products, but also internally from a talent perspective, from a process perspective, from a knowledge-based perspective in terms of grabbing growth in that platform. But it's been a three, four year evolution in getting there, and now you see how things are playing out and it's even more accelerated when you look at the onset of the COVID pandemic, and I feel really good about the place that we're in right now to be where consumers are. Ultimately, that's kind of what we have to follow, right?
Stephanie:
Yep. Yeah so, what platforms did you guys move towards, and which ones are you seeing the most success with right now?
Josh:
So, we've had a DTC business for maybe close to five years right now, but I think we really prioritized growing with our retailer platforms, Amazon being the number one focus, but not far behind that are the Targets and the Walmarts of the world, and I think in the last six months we've seen just every retailer become an omnichannel retailer. But I'd say we put a tremendous focus on probably, if you can think about where our Crayola business goes through, those three players, with Amazon kind of leading the way obviously from a share of an ecommerce perspective, but I think we've taken the lessons from there and really extrapolated them and leveraged them across all the other selling platforms to put our best foot forward, and be everywhere that consumers are from an ecomm perspective.
Stephanie:
Yeah. So, what kind of lessons did you learn from Amazon that you're applying on the other platforms now?
Josh:
I think certainly understanding how to leverage search and paid search was a big one, and understanding how that sort of ... and even organizationally, we're a company that's been built on brick and mortar sales for 100 plus years, just adapting the mentality internally of understanding that there's an endless sea of products, and when you're buying search, or when you're buying those placements, you're basically merchandising yourself, and it's all about, call it "physical availability in the digital space". So, we spent a ton of time learning how to optimize that experience and finding the right partners to help us get there, and then have really leveraged those learnings. And then I'd say from a content perspective too, so Crayola ... I think when you're walking down a store you look at a shelf and you experience all sorts of different connections to the brand and triggers based on the products that you're seeing on a shelf.
Josh:
When you're shopping online it's a little bit harder, and so from a content perspective we've worked really hard, first of all, from a discovery, just written content, and driving traffic, and a lot of effort there in understanding that, but also from a visual content perspective, and now evolving much more into video content, because we want our products to come to life. At the end of the day, we want a parent or a kid who's looking at our product detail pages or seeing any visual content that we put online to have a connection and inspiration to what they can actually create with our products. So, there's been a lot of effort put around visual and video content to bring the product to life, and drive that conversion.
Stephanie:
Yeah. So, when you're making this video content are there any specific platforms that are working really well, whether it's YouTube, or what are you guys utilizing to get that content out into the world to be found?
Josh:
We'll typical host on YouTube, but we've spent more time, especially from a parent's perspective, focused around social platforms to drive a lot of the content, but then I think what we've found is that our consumers, when they get onto the product detail pages, are really looking through all of the images and videos, and now you're starting to see it be more prevalent even played up, call it, before you get to a product detail page. So, the use of videos on Amazon is certainly growing. So, we're kind of ... it really depends on where the audience is and what stage of the funnel they are, but we're leveraging video as much as possible everywhere, whether it's in our paid marketing or organic marketing on social platforms, and throughout ecommerce.
Josh:
I think YouTube is becoming a bigger and bigger focus for us, specifically from a kid perspective, and if you just look at ... I think there is a recent study that came out, 70% of kids are on YouTube. It depends on the age, obviously, but kids are literally spending upwards of 90 minutes a day on YouTube, and if you want to connect with kids it's kind of hard to say, "You shouldn't be there." You've got to be there, and I think we're seeing a tremendous amount of content focused to kids there, and we're no different in terms of how we think about specifically video content.
Stephanie:
Yeah. What about TikTok? Are you guys trying out the good old TikTok, or not yet?
Josh:
No, we actually have. So, most of our products are geared towards younger kids, the real sweet spot of Crayola is kind of in that, call it, four to seven, three to seven range, and I mean, some of those kids are on social media, although they shouldn't be, but we do have a few product lines, and certainly I think with the adult coloring phase that happened, if you remember that in 2016?
Stephanie:
Yes.
Josh:
I think it really inspired a lot of adults and teens and tweens to get back into the creative space and sort of find their own creativity. So, when TikTok came out we've been certainly dabbling in that space with a variety of our different brands. We have a line of writing tools called Take Note! that's all about expressing yourself through colorful note-taking, and we've played there a little bit. And I think there is a ton of just organic user generated content around Crayola, and it can be everything from the weirdest product we've ever launched like something called Globbles, where someone posts a video, it catches on virally, and all of a sudden it's selling out on Amazon like crazy. So, I think we're-
Stephanie:
What is a Globble?
Josh:
A Globble is a small ... I don't even know how to describe it. Think of it like the size of Silly Putty egg, but it's sticky, you can sort of mash them together and throw them at walls, and they'll stick to ceilings, and kind of just be creative in a weird way, but-
Stephanie:
That sounds very therapeutic.
Josh:
It is, it is therapeutic, and you can sort of get creative with them in ways to play with them. But it's the power of these different platforms you can see it in something as silly as that where we're still seeing a spike in search on Globbles on our DTC site.
Stephanie:
That's great.
Josh:
But for the most part to reach our audience I would imagine that similar to what we've seen with Facebook and Instagram you're already seeing it throughout the last six months that TikTok ... there're older people getting onto TikTok, and parents getting onto TikTok, and there's a place for us to continue to experiment there, for sure.
Stephanie:
Yeah, that's what was coming to mind. So, I'm on there, but I follow a lot of other moms, and right now a big trend is trying to figure out ways to keep your kids entertained with all the kids who are home and not going to school. I'm like, "Oh, it seems like a good opportunity to connect with fellow moms out there who are like, 'How do I keep my kids occupied?'"
Josh:
Well no, that's great, going back to your question about video content, I mean, what we're looking at is what social platforms can we get it out there, and for the last six months the team, from a content perspective, has been really focused on appointment programming, so this idea of, "Hey, we are going to have a creative activity for you every day.", and whether that's Crayola filmed or whether we're partnering with a ton of different, call it micro influencers that are out there, it can be in the crafting space, in the calligraphy space, in kids crafts, adult crafting, and so it's a great point that you raise of folks are at home, whether it's themselves or their kids, and looking for creative inspiration, and we're doing our best to be across all platforms to share that. So, I think it's a great point.
Stephanie:
So, you just mentioned micro influencers, how are you guys parenting with them, and how are you measuring if it's successful or not? Because that seems like a topic that a lot of people are trying, and we've had some guests say, "Oh, that doesn't work.", and then other guests say, "Oh, it's working really well for us." So, I want to hear how as a legacy brand partnering with someone like that, how are you guys tracking if it's successful or not?
Josh:
Yeah, I guess for me I don't necessarily look at that as performance marketing, for me it's all about generating brand awareness, and connectivity with consumers. I think part of the job that we have in the marketing group at Crayola is most people do think of us as the crayon company, and so even you yourself said at the beginning of the call, "Crayons.", but we have hundreds of other products in the space, and so for me I look at this as more upper funnel activity. So, we're looking at viewer engagement, video completes, and things of that nature, but I'm not necessarily trying to correlate it all the way through to conversion. I think still, throughout much of the year a large part of our conversion is going to happen at retail, and it's just not big enough necessarily to track back to that performance. But ultimately I want as many eyeballs on it, and watching as much of those videos as possible, because that's generating brand awareness for me.
Stephanie:
Yep. So, are you guys making an active effort to kind of be known as not just crayons but other things, or are you kind of just okay with being like, "We're being out great things, and if people are using it we're okay with not everyone associating us with those products.", like how are you think about that branding?
Josh:
I think we'll always be known as the crayon company to a degree, but no, not okay with it, I think our job is really to help consumers understand that we have everything from a full range of arts and crafts products to creative toys. I don't view our competitive set as crayons per se, I think our competitive set is really kids free time, and the more that we can help showcase all the different range of options and great products that we have available the more it will fit into kids' lives. I think when I think about what we're really enabling, and what we're about, we're about self-expression, and creativity, and we're a creativity company. So, I wouldn't want to define that by crayons, as we talked about before, we want you to be creative with Crayola in an app, I want you to be able to paint, or I want you to be able to color, and recolor your Scribble Scrubbie Pets, and be creative and express yourself in that way. I'm good with all of it.
Stephanie:
Great, yeah. That's a good answer. So, for going forward over the next couple years, or before this call you were mentioning that you were in a meeting talking about how to maybe invest around ecommerce, and I wanted to hear your thoughts on where are you guys headed, what are you looking to invest in, what new things are you trying out to meet the market either now or in the future?
Josh:
Yeah, so that's a great question. I think in the here and now when I think about the ecommerce space ... it was hard in the beginning to figure out what is the right amount to invest, and you heard all sorts of numbers thrown around, is it just whatever you can carve out of your budget and dedicate it there, is a percent of net revenue, a percent of gross revenue? But I think when you think about ecommerce, and it seems kind of silly looking back on it now, it really is a math model. It's the number of eyeballs you get times your conversion rate. So, how many eyeballs can I get to the product pages, and then what am I converting them at, and then what is my average sales price, or what are the products are they selling for?
Josh:
And that's eventually going to be how you generate your growth and your numbers, and so the way that I've been looking at it and been pushing the team to look at it has been, all right, what is the traffic that we need to drive, and look at every element in this, what's the traffic that we need to drive, and how are we going to get there? So, I think for us on many of the ecommerce platforms, whether you're talking about Amazon, or walmart.com, it's first and foremost, search is the lowest hanging fruit. How do we maximize that as much as possible? And we have enough historical data over the last few years that we can figure out and invest in that model on what it's going to take to get there.
Josh:
I think beyond that as we look towards the out years, because eventually we haven't reached nearly a point of diminishing returns there, but we're always trying to figure out, "Okay, if it's ecommerce, how do I drive those page views? Is it experimenting with different tools on Amazon's platform? Looking at them as a DSP, so am I looking at AMQ type tools, addressable TV, what else can I do to drive those eyeballs, but it comes back to the math and the return on ad spend, which certainly in the ecomm world we're very focused on.
Josh:
And then I think it's also about pulling the other levers. So, if I can move my conversion rate on a big business by a half a point, that's pretty significant. So, what are the areas that we're going to invest in from a content perspective as well to try to drive and pull every lever to ensure that we're continuing to drive growth. And I think broadly the mentality that we have as just a marketing team, I won't call it digital marketing, because I just think it's marketing, we embrace the test and learn mentality, and we're always looking out there, whether that's talking to our peers in the industry, partnering with agencies, just generally being consumers ourselves, what are the things that we're seeing that we should be testing? So, a great example now would be shoppable social, right?
Stephanie:
Mm-hmm (affirmative).
Josh:
If you think about our brand, and we're putting out all this inspirational content, how do we try and shorten that funnel and make the content more shoppable? I don't know if it's necessarily huge yet, but I believe it will be, and so how do we start to build our knowledge base and our skillset in that regard, too? So, I think there's different ways to look at different spaces of investment, but that's kind of how we're approaching it.
Stephanie:
I really like the point about shoppable experiences. I've actually thought that that seems so behind to me, even right now when I'm on Instagram, I mean, I know Pinterest is doing it now, but it seems like this is something that should've been around a long time ago, and it's just starting to pop up, but the experience still isn't there. Any thoughts on why it's been such a slow transition for something that I think should've been here ... well, it feels like a long time ago.
Josh:
I think it's all ... it's interesting for why maybe it has or has not caught on, certainly everyone's investing behind it, like interest ... sorry, Pinterest and their partnerships, looking at Instagram and where they're trying to go, I think it's got to be all about convenience. So, I'm curious to see what the consumer behavior is. Sometime you might be in a shopping mindset, other times you might just be looking to scroll through and do you really want to leave the platform. So, I'm sure, and we're seeing it, the investment, and how do we just create a more seamless, convenient experience that doesn't disrupt what you're trying to do?
Josh:
Ultimately, with anything in the digital space, I think kind of comes back to that, what mentality are you in, and how convenient is it going to be? I think we see that with the general ecomm growth that we're seeing, like the pandemic forces you to all of a sudden adopt new buying habits, whether you're on Instacart or wherever else, and then all of a sudden it's convenient, and so those are the types of things that stick. So, I'm just wondering if from a shoppable social perspective, have we truly hit the peak of convenience and ease, but I'm sure it's going to improve YouTube now investing in this space, so I think it's clearly an area of opportunity, but it seems to be that the industry's moving that way.
Stephanie:
Yeah, it also seems like there's a strategy there of building content that's focused on conversions where someone's going to be watching it, and they're going to want the things that are in that video, versus like you said, maybe someone goes to a video and they're not really in that mindset, but also maybe the content is not focused towards a conversion, or towards you need the products that are in there to be able to even do this.
Josh:
Yeah, and I think we're going to continue to see those two worlds blend, right?
Stephanie:
Mm-hmm (affirmative).
Josh:
The idea of sort of that kind of performance marketing mixed with content and converting the content into commerce. I know that's an area that we've been talking about for years from a Crayola perspective, because it's hard to look at a box of, making it up, metallic markers and understand what you can do with it, but if I can connect those metallic markers to a beautiful piece of what we call Crayoligraphy, and then I can connect that to a bundle that will teach you how to do it, now we're really starting to merge those things together, it's engaging from a viewing perspective, and there's a practical outlet for you to now go get creative and do it yourself.
Stephanie:
Yep. Yeah, and I think that also kind of circles back to what you were talking crating daily, in a way, lesson plans, or something to keep someone engaged constantly, but then it opens up a whole thing of like, "Okay, let me get my supplies for this digital lesson plan that I'm going to be following along with.", and it kind of creates a mote where you need to have Crayola's products wield up, go through this lesson plan, and have fun, and enjoy every step with the right products.
Josh:
Yep, and that's exactly kind of the areas that we've been experimenting in. So, we had a summer craft series with one of our micro influencer partners out there, and we're selling a craft box to get everything you need for that week of crafts along with it. So yeah, I think there's a world where, yeah, those things start to make sense, and the more we can inspire you, that's really winning for us. We want to inspire that creativity and give you the tools to do it.
Stephanie:
Yep, I love it. So, are there any brands that have been out there for a long time that you guys watch, or that you partner with, to kind of keep tabs on how they're doing things, or how they're going through maybe a digital transformation, or just kind of learning from them and watching where they go?
Josh:
For me, I think one of the best out there certainly is Lego. I just think they have absolutely mastered it from everything from entertainment, to community building, to best in class content, to leveraging user generated content, and tapping into passion points of consumers. So, I really love what they do, they're probably the number one brand that I would watch out there, and just look at ... I mentioned YouTube before, I think they just eclipsed 10 billion views of their videos on YouTube, I mean-
Stephanie:
Wow.
Josh:
... truly doing a lot of things right to grow their business. So, I think they're a really great case study out there of how to build out content, and really surround consumers, both kids and adults, with your brand, and then products to boot to go along with [crosstalk 00:32:44]-
Stephanie:
Yeah, I completely agree. I mean, even thinking about that Lego movie, which to me is so smart because I mean, it connected with kids, but I think it actually was very sticky with parents as well, I mean, that was the first thing that comes to mind when it comes to content that they were creating. Has Crayola thought about creating something like that, or backing a project like that, that would connect with kids and adults, but then also leave people talking about it?
Josh:
Yeah, I think it's certainly a place where there's opportunity. We haven't necessarily ventured there yet, but I wouldn't say ... I would say anything's on the table, certainly as, I think, the world of content is constantly evolving. And so, while it maybe is not necessarily entertainment in that sense, we actually have five Crayola Experiences that have opened up around the country, and that's depending on where you are that could be four to five floors of immersive creative experiences where parents and kids are coming in and spending three to four hours there and just delving into the brand. So, there's all sorts of ways from an experiential perspective to connect with consumers, and I think what you'll see from us, certainly in the YouTube spaces, starting to dip our toes into the water of content in that sense. So, I wouldn't say it's anything that is imminent, but certainly, you never know where it's going to go, and I think Crayola's one of those brands that can play in lots of spaces like that.
Stephanie:
Mm-hmm (affirmative), that's a really good point about creating experiences. I think there's going to be a lot of pent-up demand after staying at home for as long as we have, and having places that you can go to experience the brand and the product and have fun, it seems like a really strong strategy going forward after all this kind of calms down.
Josh:
Yeah, I think when you look at just general consumer sentiment and what they're saying, and it's been trending this ways for years is that people are looking for experiences. What's interesting is they can be physical, so in a store, or in a location like a Crayola Experience, but I do think there's an opportunity for digital experiences coming to life, too. I think I saw the other day L'Oréal sort of introducing a new way to buy your cosmetics and makeup, and making it more experiential. So, I think experience, and what that consumer experience is, and how they can engage with your brand in deeper and deeper ways once they're sort of at that interest point in the funnel, or at various points of the funnel, is going to continue to be an area of focus.
Stephanie:
Yep. What about community? How are you guys thinking about curating and building on a community to where I'm sure a lot of parents and kids would all want to talk and hang out, and show projects together, and I could see you guys having a really good angle there. How are you all approaching the community aspect of your brand? And building that up?
Josh:
It's a good question. I think with kids it's a little bit more challenging in that you've got all sorts of privacy regulations there, and so creating a closed community and getting kids to join that is a pretty tall order I think. From a parent perspective, we've actually really been more focused on that sense of community on social platforms rather than trying to create our own, and pushing out our content there, and engaging with consumers in that sense. So, I think we're trying to be where consumers are, versus necessarily building something big and trying to get them to come to us. I think we have the type of brand that can be relevant in all sorts of ways in peoples lives every day, and so following their lead and where they are, and that can be everything, again, from social platforms to native content that we're developing, et cetera. But I'd say that's kind of how we've approached community versus necessarily building it ourselves.
Stephanie:
That makes sense. So, I want to think a little bit higher level around just the ecommerce playing field in general, what kind of disruptions do you see coming to ecommerce?
Josh:
I think the demand of convenience will just continue to set the bar higher and higher for brands, and put more and more challenges on brands, and probably more retailers than brands themselves, but ultimately then it starts to come back to the brands themselves, or the suppliers in that in terms of how we supply product, where the inventory's being held, all those types of questions. So, I think we'll continue to see that push on convenience, and I think those are going to be the folks that win. I think Target's a perfect example right now of how they approached it, but I think it'll only continue to expand.
Josh:
I think ... it's hard to say it's a major disruption, but I think just this change is going to force a lot of organizations to look at themselves a little bit differently. There's all these organizations that have been built on brick and mortar businesses, and how does that ... it's going to continue to evolve, ecomm is not going away, I think to that earlier point of what becomes a part of peoples shopping habits is there, so how do you adapt internally as an organization to continue to put out product and content at the speed of which consumers are demanding it in that space? And then there's, I think, as more and more shopping shifts online, how does buy online/pick up in store disrupt what we're doing? How does a lack of impulse purchase disrupt what we're doing from a company? So, I think it's just going to be an evolution of how we go to market.
Josh:
I guess the other interesting thing that I've been thinking about recently is just the power of brands in this space, and again, the shift to ecomm, it's always been coming, maybe it's been accelerated, but it's coming more, but can bigger brands ... there's been a resurgence in bigger brands in this space, and is there a renewed emphasis on brand building as everyone starts to move online, will the big brands win? Will they win the search? Will they win the share of space, sort of the infinite shelf space? They're winning in the pandemic, can that continue?
Stephanie:
Yeah, that's a good point. I think that bigger brands seems like they would, of course, have a leg up, because the people who are coming online who maybe weren't always there before, they're already top of mind, or that's already someone that they trust, but it does seem like there's also a lot of room to kind of gather that new trust, or get that brand awareness out there in a way that wasn't done before.
Josh:
Yep. And I also just wonder if the standards are going to change for what that experience is going to be that you expect from a big brand. Sometimes digitally native brands can be more nimble, deliver more personalized experiences, so what are those ... is it a more experiential experience that you're looking for, whether that's in store or in the digital space, how do the expectations change from a go-to-market perspective? And I think that'll continue to evolve.
Stephanie:
Yeah, with so many of these new brands popping up now, I mean, it sounds like ... I mean, there's a lot of new great companies that are popping up, but it also seems very noisy, and that could also maybe hurt the consumer experience if they have a couple bad purchasing experiences with smaller brands. So, how do you guys stay focused, and not kind of get caught up in all the noise, and have like your true north of like, "This is where I'm headed, and this is what we need to do.", without getting caught up in maybe the trends, or the quick things that are going on right now?
Josh:
Yeah, I mean, for us I think it always has to be true ... our true north ultimately is the mission, and that funnels down into everything that we do. So, what kind of experiences do we want to give to people online, it's going to be in service of that mission. When we think of giving personalized experiences, it's how do we make that a better experience for you, but again, always in service to the mission. The creativity that, or the messaging, or the crafts that I offer up to someone who's coming in that's an adult with no kids versus a parent with a three-year-old, those should be different experiences. So, I think for us ... but it always comes back to inspiring creativity in the best and most relevant way possible. So, I think if you've got solid ground in that regard you can kind of cut through the noise and say, "Hey, these things are extraneous, but these things are in service of a better experience that brings our mission to the forefront.
Stephanie:
Yep, I love it. All right, so I want to shift over to the lightning round brought to you by Salesforce Commerce Cloud. This is where I'm going to ask a question, and you have a minute or less to answer, Josh.
Josh:
Okay, let's see how I do.
Stephanie:
Dun-dun-dun. What new ecommerce tool are you trying out and having success with right now?
Josh:
Interesting. I think one of the tools that ... I don't know if it's a tool. I do think shoppable social is an area that we have been focused on, as I mentioned. So, I think we've seen in our little test and learns some success in that space as we try to merge content and commerce, and we'll probably continue to expand on that.
Stephanie:
Cool. What is a favorite piece of tech or an app that makes you more efficient?
Josh:
That makes me more efficient?
Stephanie:
Or that you just love.
Josh:
I was going to say, I went to what app do I love right now-
Stephanie:
Yeah, there you go, what app are you loving right now?
Josh:
So, I would say it makes me more efficient ... you know what? I wasn't a fan of Teams in the beginning, but I have actually found that Microsoft Teams has really helped from a connectivity perspective during this time, and it really has become a very frequently used tool. The app that I'm loving right now is a tiny little app called Readwise, which I think is super fun, and Readwise basically, if you ever read on the Kindle and take notes, or if you're reading books in general, you will actually take the highlights and things that you've taken out of those notes, or if you've read a physical book it'll just take the most highlighted sections by other people of those books, and serve them up to you in whatever increments you want every day. So, if you wanted five highlights a day, seven, and it just helps to build and reinforce those memory structures of the things that you're reading at there, and that can be whether that's articles, or whether that's books, I think it's a neat app that I've grown to love over the last few months.
Stephanie:
That's cool, I'll have to check that one out. So, what are you reading these days?
Josh:
Man, a lot of books during the pandemic, some of the most recent ones were a couple of Brené Brown books, which is sort of all about workplace culture, been reading a bunch of the Tim Ferriss books that are out there, The Lean Startup, is a recent one that I read. So, I don't know, I can probably keep going on a bunch of other ones, but there's ... for whatever reason I've been reading a lot more recently.
Stephanie:
That's great. What's up next on your shopping list, or ... Actually, no, I have a different question, what is a favorite new product that Crayola just released? What is your favorite newer product that maybe a lot of people don't know about yet?
Josh:
Oh, my favorite product that a lot of people don't know about yet. So, I mentioned Scribble Scrubbie Pets-
Stephanie:
Yep.
Josh:
... I think that would be one of my favorite ones out there, and the other one is a line that we launched last year called Take Note! I mentioned that, that was sort of writing tools for teens and tweens, so it's got erasable highlighters, incredibly vibrant dry erase markers, gel pens, the whole works, and I really have grown to love that line of products and have many, many of them sitting on my desk in front of me and in my office here.
Stephanie:
Very cool. Well, Josh, thanks so much for joining us on the show. Where can people find out more about you and Crayola?
Josh:
So, certainly finding out about Crayola you can go to crayola.com. For me, I can't say that I'm a huge Twitter or LinkedIn poster, but @JoshKroo, you could follow me there, and yeah, generally just look for Crayola wherever you'd be looking for creative inspiration.
Stephanie:
Cool. I love it, thanks so much.
What comes to mind when you think about the relationship with your manufacturers? Chances are you have the same picture in your head as so many other brands. You see a series of events that starts with opening a purchase order, and goes down the line of tasks including paying for your items, getting them shipped and then starting the process all over again. It’s a transactional relationship that has seen very little disruption through the years.
But the times are changing, and a company called Italic is leading the charge when it comes to developing a new framework around partnering with manufacturers. Italic is a membership-based brand that gives customers access to products produced by the same manufacturers of the top brands in the world.
Jeremy Cai is the CEO of Italic, and he likes to say that Italic is a marketplace-inspired supply chain. On this episode of Up Next in Commerce, he explains exactly what that means. Jeremy describes new and different kinds of partnerships with manufacturers that, for the first time, makes them true partners in business. Plus, he explains why that partnership is leading to a better end product and happier customers. He also dives into new ways you can leverage manufacturers that many aren’t aware of, and details the metrics and strategies that subscription companies need to be focused on to rise above the competition.
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Transcript:
Stephanie:
Welcome to another episode of Up Next in Commerce. This is your host, Stephanie Postles, cofounder of mission.org. Today, we have Jeremy Cai on the show, the CEO of Italic. Jeremy, welcome.
Jeremy:
Thanks so much for having me.
Stephanie:
I'm excited to have you on the show. I was mentioning earlier, but I've read quite a bit about you guys. I see you in a lot of the eCommerce newsletters that I follow, so it seems like you're growing in popularity at least when it comes to people writing about you right now.
Jeremy:
I don't know if that's a good success metric, but we're doing I think a good job on media coverage right now.
Stephanie:
There you go. I think it's a pretty good one. Tell me a bit about Italic for anyone who hasn't heard about it, doesn't know what it is. I would love you to give a brief overview of what it is.
Jeremy:
Sure, so Italic is an annual membership that costs $100 a year and our members get access to hundreds of products that we design and develop inhouse, ranging from cookware to bedding to towels to apparel and accessory, footwear and many more coming soon, but the difference is we sell them at prices where Italic it doesn't actually make a profit. This actually results in pricing that is dramatically lower than both direct-to-consumer companies as well as traditional incumbents, oftentimes in the 40% to 50% to sometimes 70% to 80% range. We've been around for about two and a half years, but we've only launched the membership about a month and a half ago, and so far, it's been a pretty good start.
Stephanie:
Very cool. You have membership and you're not making money on the actual products. Tell me more about what would be an example of something you're selling and how are you encouraging people to sign up for a membership to get access to everything that you just mentioned.
Jeremy:
Sure. One example of the product that we sell, and this applies to all their products, is let's just take our slumber cotton sheet set, for example. The sheet set sells anywhere from I think ... Actually, I might have to actually look at this for cross reference, but I think it's like anywhere from $80 to $120. Those are prices where we're not actually making money. Those prices do include things like freight and warehousing and fulfillment fees, but generally it still comes out substantially lower than the prices that our competitors would set. Then in terms of how we're actually attracting new members, really I'd say it's from two general ways.
Jeremy:
One is I think the goal is for our members to be saving money on their first purchase. This oftentimes comes through the lens of product marketing. If we would do a great job of really letting the products tell their own story of saying how great quality they are, the same manufacturers of so and so brands are, which certifications these manufacturers have, what specific details of the products really sell the product itself, I think that actually helps sell the membership for us because we don't really have to say like, "Hey, with this membership, you're saving all this money." instead it's like, "Hey, this product is obviously really great and it's really high quality."
Jeremy:
Then once you look at the price point, the perceived value is like, "Oh, I'm going to save pretty much the entirety of my membership fee in one or two purchases," which we see in the vast majority of cases. Typically, 93% of our new members will break even on their $100 fee in one order, but on the flipside on the membership, this is different than the standard transactional model in which you have to be a paying member in order to purchase anything. I think we do have do a fair amount of education in terms of showing to our members or showing to our audience who might become members, "Hey, this product, you can only buy it if it's a membership. This is how the platform works. This is why it's different than a brand. I think we have to put out a lot of content in terms of actually sharing like, this is how we were able to put together this offering that doesn't really exist elsewhere."
Jeremy:
We do a little bit of both, but I would say right now we lean a little bit heavier towards product marketing since we have a lot of new exciting launches coming up.
Stephanie:
That's awesome. Talk to me through a bit about what was your thinking behind creating a membership program for because I think I saw you started out with it and then maybe you stopped doing it and they started again and feel free to correct me if that's not right, but tell me about what was that journey like.
Jeremy:
It was not easy. I would say the way I like to view it is the first two and a half years of our business, we've really been focused on the supply side of operations, building out that product assortment, and exactly like you said, we did launch in 2018 with a membership product. Within basically a month or two, we decided very, very early on like, "Hey, we had three manufacturers in three categories at the time, handbags, scarves and eyewear. As you can imagine, those are not necessarily high frequency purchases to substantiate a membership value proposition.
Jeremy:
We actually never actually charged anyone for the membership. It was always a test to see how the response would be. Overwhelmingly, we saw that the product response was great, the quality was great, but I think the offering was too limited at the time. Instead for the following two years, we ran a transactional model in which we made money through marking up our products, albeit not as much as a brand would. Our products might be marked up two to two and a half times, whereas our competitors will mark them up five, 10, 15 times sometimes. That's how we made our money.
Jeremy:
Really the incentive was, "How do we build a product assortment that's large enough, so I guess wide enough and deep enough to attract the member to actually convert?" Around, I would say, Q4 of 2019, to be totally honest, I think we saw two things happen. One was the structural, I guess, implosion of the venture direct-to-consumer model in which a lot of brands, I think, who had been raising money and then going out with this one playbook that hadn't been set maybe back in 2013 to 2017, I think suddenly realized, like, "Hey, we are not technology companies. We are a brand and we make money through transactional volume." Basically, I'm just trying to say we saw the writing on the wall if we were to continue that model.
Jeremy:
Then in Q1, we also took a hard look in terms of our user behavior. We saw frequencies of purchases, our lifetime values get to a place, our product reviews, our NPS scores all get to a place where we felt confident in our product assortment to date. When we first started, we might have had maybe 30 or so skews. Now, we have over 1,000 skews. It finally got to a point where the product assortment felt mature enough to launch a membership product. We tested that, and then basically right when we started testing it, that's also when COVID hit.
Jeremy:
We figured there's either two options. One was we just pull that and just focus on building the transactional model again and getting it into a sustainable place which is still the goal, right? We don't want to build an unsustainable growth model or alternatively stress test the model in the peak of, I think, consumer uncertainty in which we would see like, "Hey, does this value proposition of saving money resonate in the time when it would matter the most. Thankfully, it did and I think from April to May, June and July, we monitored our cohorts and user behavior really closely and wanted to make sure that the membership was something that we had conviction in.
Jeremy:
Eventually, we got to a point where we realized like, "Hey, this is ..." I guess the way I like to put it is our customers always liked us, but our members absolutely loved us. We decided to go all in and then finally released the public version of the product in July.
Stephanie:
That's great. That's good seeing quick pivots and seeing like, "What is the market telling us? Where are things headed?" and trying out different models. How are you going about building out maybe a financial model because I'm thinking if you have only a membership subscription-type model, there's probably only a limited market? You can't scale indefinitely. There's only a certain people who will be on that versus making profits off of each product. I'm sure those are two very different models. How to do think about it financially when trying the two different ones out?
Jeremy:
That's a very valid point and I think we knew going into it that there is a lot of subscriptions out there and a lot of subscription fatigue and at least the states in the US in which everyone has a Prime membership or a Spotify subscription or Netflix and to add one more to that is always asking a lot. I think we knew going into it like, "Hey, this is all or nothing in which you can't launch a half-baked type of membership product." I think to the financial level, I think two things are worth noting before we decided to do this. One was the fact that we are capping our upside to $100 very literally for pretty much the extent of the year and the incentive in that case is, one, can we launch products and provide a service that our members love so much that they'll stay for years to come in which our LTV or lifetime value in that case would become quite substantial and hopefully our churn would be low and retention would be high and so on and so forth?
Jeremy:
I guess that's one area is we really were aware of the fact that if we cap our financial upside that the immediate short term would be that we're limited to $100 for the year, but the amount of utility and value that we could provide to a member would be so great that they hopefully stay for years to come in which our LTV would grow to a point where we would actually outperform our transactional type of behavior. Then the second point, exactly like you said, memberships aren't for everyone. We're very well aware of that, but I think something that has been exciting for us to see is if we're able to build this type of product, I think it is genuinely massively different than anything close to us.
Jeremy:
Whereas most of these direct-to-consumer brands, they're basically providing products and a story to a customer which is an incredibly, incredibly competitive market. We have a product where it's like, "Hey, for $100, you get access to all the products we sell at a price where we don't make money. I think that's a genuinely differentiated product in which we know it's not for everyone, but we think value-driven commerce, it's not sexy per se, but it is something that is very attractive to a very large segment of the American consumer base. I think we were willing to take that bet.
Jeremy:
Of course, we wanted to monitor really closely so that we weren't losing money on transactions at least and at least that we were breakeven and we were able to accomplish that within the months of the pilot, so we felt confident in rolling it out more broadly, but I think to answer that more directly, if we didn't see user traction, if we didn't see members using the platform or membership or if we saw our NPS or product reviews drop or if we saw an increase complaint rate, increase return rate, etcetera, then I think we would have actually probably returned back to the transactional model, but it was something that we felt confident enough in just off of a couple months of data that we've decided to go all in.
Stephanie:
That's awesome. I think that's so great, because it really shows a longer term vision and commitment to be around where I think actually a lot of B2C companies right now are missing that. I don't know if it's because of the VC stage where it was like grow really quickly, but it seems like a lot of people are more ready to just quickly make as much money as possible, maybe sell the company off, see what happens afterwards, but I really like the idea of actually telling your customers, "Hey, we're only going to make $100 profit for the year off you that essentially cover some of our costs." I could see that really helping a customer want to also support you guys along with just wanting it because maybe it's a very good service and some platform they use.
Jeremy:
Thanks. That was pretty much the bat. The reality of the business right now is if you're a direct-to-consumer brand and you're starting out nowadays, you might raise one round of financing, let's say anywhere from $500,000 all the way to like $3.5 million or something of the sort if you want to pursue that route. That's pretty much all you're going to be able to raise or at least assume that's the last capital you're going to raise, and then subsequently, you're going to try to sell. Nowadays, what I've seen whether it's a PE firm or a conglomerate or a larger direct-to-consumer brand that might be interested in acquiring one of these assets, it's now valued off of EBITDA, as opposed to revenues or run rates which is what we saw in between 2014, let's say in 2019.
Jeremy:
I think the reality is nowadays if you're trying to build a venture scale business in this model, it's really, really tough. I think the actual advantage of doing so is doing so sustainably with growing off the business off of cash flow as opposed to equity raises and going that route. Then, I think for the companies that have already raised that are in this tricky spot where we were for sure, we had to look ourselves in the mirror and just say like, "Hey, what is something that would be significantly differentiated in the market that has technology scale outcomes that would be potentially accessible if we were to do everything perfectly right.
Jeremy:
I think that's the only reality where we can actually like continue as a venture scale business. I think that's what we had to really just operate with the mentality of. I think in terms of like the customer empathy too, we always knew that our prices were good, that we always came maybe 15% to 20% lower than the next direct-to-consumer brand, but truth be told, if you were to compare our products which were objectively great products next to a brand's products that built all of their community messaging, advertising, copy, etcetera off of that single category, 15% to 20% off might not be enough to sway one of their customers to decide to purchase the value option, whereas nowadays to go much, much lower into the 60% to 70% range, that's a lot more powerful sway.
Jeremy:
I think for us we knew that it was a risky bet, but I think the customer would ultimately like it a lot more and so would the investors and I guess, business community at large. I know the brands don't like us, but that's another story.
Stephanie:
Well, that's actually a good segue. I wanted to hear some of the behind the scenes of partnering with these manufacturers and thinking about the psychology behind, "This is also bought," or let's see, "It's manufactured at a factory that also produces Prada." I saw that on your website mentioning like, "It also manufacturers this, this and this," and I was curious to figure out like, "What was the process to partner with these manufacturers and then also be allowed to say, 'These brands are also built or manufactured at this factory as well'?" It seems like that'd be a tricky area to play in.
Jeremy:
I can't deny that. I think we have a unique value proposition in that case. That's really what drove I think, a lot of our early interest in the brand over the first two years. In full transparency early on, I was personally quite nervous about it since it is a pretty radical statement, especially since like we position ourselves not so much as an individual brand, so much as, say, a platform or a marketplace or a retailer. I think in the early days we were very careful. All these things, it's not to say that we've loosened up on this. We're still very, very careful about auditing all of our partners, making sure that we're working with the best of the best in each category, regardless of where they are in the world.
Jeremy:
Oftentimes, that comes along with saying, "Hey, this product is made in the same manufacturer as X, Y and Z brands." That's part of the selling points of the product. I think in terms of the tricky part was obviously on the manufacturer side. We have an interesting relationship with our manufacturers in which it's not like a normal brand in which they're a vendor and we're a client, where we just place a PO and then we'll mark up their products and then that's how we profit. The best we can do in that case is like get letters of credit or Net30, Net90, etcetera.
Jeremy:
Instead we actually have a financial relationship with our manufacturers in which they actually are taking on inventory risk and we're taking on the marketing risk of this inventory in which their incentive is to take inventory risk for a higher yield or higher rate of return on the inventory that they're producing and owning. Then our risk, of course, is making sure that we can sell that to our members at a price point that is still radically lower than the competition, but at a place where they'd be happy with the profits. I think that was actually the tricky part because manufacturing, and this is actually my personal like family background is a really hard business and margins are already razor thin.
Jeremy:
On a final sale, a DTC brand might take like 80% of the margin and cost might be like 20% and the manufacturer might actually take like 5% of that cost. That's honestly how it works. It doesn't matter if you're like a legacy brand or a direct-to-consumer brand. Manufacturers treat them all the same because it is the same for them. I think on the flip side for the manufacturer, they are not oriented to take capital risk. They have predictable revenue. If you place a PO, we expect payment certain date, whereas on Italic, there is no legitimate end date for a certain PO to be paid.
Jeremy:
It's a little bit nuanced and that was actually the hardest part I would say of convincing these manufacturers to join. It really wasn't the brand piece. The brand piece we're always very careful of ... We always do very careful audits to make sure that they're factual claims. We always do audits with our general counsel as well to make sure that we're making claims that are factual. On the trademark side and then on the copyright side, we have a development system when we're merchandising that there's at least a number of differentiating points on the product, but we've actually never really run into major issues on this.
Jeremy:
Perhaps that's because we're a smaller brand right now. As we grow, the issues might pile up, but at least for now, it hasn't really been, that the legal side hasn't been a big issue. I would say it's actually more so convincing the manufacturers to take on this new type of model, but I think now that we've been around, we have over 50 manufacturers we work with. I think we've had a really good relationship with all them thus far. Yeah, I think other brands always come into question, but it's never actually been like a point of contention.
Stephanie:
I could see that being really beneficial for you having the background in manufacturing for those manufacturers to also feel like, "Hey, this guy gets me he understands. He knows that we don't have big margins." I want to talk a little bit more about that piece. I could see a lot of the manufacturers really liking that you have a background in manufacturing because you understand that tight margins and you're not trying to maybe push them too far. I was wondering, one, had they ever done this model before where they're taking on inventory risk? Then two, were any of them scared to work with you because they didn't want to make the brands that they work with upset?
Jeremy:
I can answer the second one first, which I think it's actually pretty straightforward. That has never been a reason why a manufacturer wouldn't work with us. I thought it would be, I guess in actual practice, I think it hasn't been. The reality is most of these manufacturers have a number of clients and I think they will readily offer new clients the current client list and say like, "Hey, this is who we work with. You should trust us," as part of the vetting process. What we're doing is bringing that information that all the brands already know and offering that to a customer as well, so one more layer of information that a normal brand would never offer.
Jeremy:
The bigger issue with the manufacturer is actually more so just capital. It's like, "Hey, you got to fund hundreds of thousands of dollars for this first run and you're not going to see a payback until we start selling it, and depending on when we decide to launch it or decide to really invest in growing that category or product offering, the return might not be immediate." I think that was actually the biggest problem. Every so often what we'll hear that'd come up is like, "Hey, we prefer that not to happen," but with regards to the brand names being mentioned, it's never been a reason as to why a manufacturer wouldn't work with us. It's always been capital related.
Jeremy:
Then I think to the point of the model itself, I think people have tried different approaches to this over the years. In the States, at least, there is really no one doing anything like us right now because it is an extremely ... I would say like you really have to be aware of how manufacturing works, how to communicate with them, how to work with them, also how to partner with them. That's not something that like the vast majority of American brands will ever understand and for good reason. They really have no reason to because the entire business model of commerce is built on markups, as opposed to us where you can basically just treat them as a vendor. If it's not working out, if you need better pricing, you can always counter source and so on and so forth.
Jeremy:
The relationship there was always rather fragile, whereas for us it's very strong from day one because we have to be in which we become basically financial partners immediately. I think they haven't necessarily ... We work with manufacturers in Asia predominantly, in Europe, in the US and for the majority of them, these are not small mom and pop merchants or artisanal shops. They are pretty professional large scale production houses for very large runs. We work with like five different public listed manufacturers. I think for them, this model is, I like to call it like a private label as a service in which they can experiment very rapidly if it works.
Jeremy:
We do all the design and development in house, so we take care of pretty much all the heavy lifting on the stuff that they don't have, but if it works, great. If it doesn't, the downside is basically the capital that they put into it. We haven't had that happen yet. I think it's a new ... We like to think of it as like a marketplace inspired supply chain which none of these manufacturers have encountered before, but it is something that I think has promise.
Stephanie:
It's so interesting thinking about everything that's going on behind the scenes and I honestly have not even gone deep into the world of manufacturing, so I have so many questions, but one that comes to mind which is probably maybe a more basic one, but how did you even go about finding out who manufactured what products? If I owned Prada, which I do not, I definitely don't, but if I did, and I was like, "Hey, who makes this? This is really nice," I want to find out what factory it's coming from or who's actually behind the scenes making it, how did you even start that process of finding that out and then finding the next one, the next one and maybe getting referrals?
Jeremy:
Well, you just named it. Sourcing is a weird business in which it's still and this ... Not just sourcing, but a lot of the supply chain is still heavily relationships based in which it's like, "Who do you know? Who do you know? Who do you know?" and that's who you're able to work with. In the early days, I personally met and lived between China and Italy for the first year of the business and I met with hundreds of manufacturers, many of whom are now our partners, but in the beginning, were very skeptical, "Who is this guy? Who is this company?" I think the best way to put it, it's like in terms of sourcing, the best way to do it is through referrals.
Jeremy:
We've tried everything from digital platforms to sourcing companies to even trading companies just to see what type of quality and price point we can achieve, but ultimately, we've always found the best option would be to do direct sourcing ourselves. We actually have an internal team coming from the likes of Patagonia, Arc'teryx, Zulily and Amazon, really focused on sourcing the world's best manufacturers in each given category. Each time we want to enter a new category, we will always ask for referrals from our existing manufacturers. There's digital products that help you find manufacturers through other sources but generally we found the best have always come through referral.
Stephanie:
I think I've looked online before looking into, maybe this is a 3PL that I was looking at. Either way, that whole world seems pretty behind the times when it comes to trying to find things online and get details about it. It does seem like referrals would be the best bet in that industry.
Stephanie:
I was going to ask when it comes to inventory risk, you were mentioning that the manufacturers take on the inventory risk, do they also have a say when it comes to the pricing of the product?
Jeremy:
Yup, they definitely do. We are hand in hand with their manufacturers at every single point in the development journey, from material selection, color dyes and sample reviews and so on and so forth in which if we are talking about cost structures and cost payments, or sorry, sample reviews, we're always thinking about price and we're always very transparent with our manufacturers in terms of what our research tells us. If we believe a certain price threshold is too high, we'll tell them, and vice versa, they'll tell us like, "Hey, this is getting expensive. Do you think your customers or members will still want that?"
Jeremy:
Ultimately, the incentive for manufacturers to earn a higher than normal profit margin on Italic sales because they're taking on the inventory risk, so there, we're able to pay them out substantially more than they would ordinarily make. I think they're very in tune with our orders, sometimes even more than we are in terms of the performance. We've also built a lot of internal dashboards that we'll share with all of our manufacturing partners for them to log into, review the performance. Sometimes, we'll need to set price points that are lower, so that will encourage a product to move faster and they're able to cut down on their margin, but still again, it's at price points that are pretty much close to cost.
Jeremy:
It doesn't really moving the needle too much nowadays that we're past the transactional model. It's easier to do that on the development side when we're actually developing these products, or on the flip side, if a product is actually performing way too well, they might actually ask for us to develop a more premium version or a version that uses a high quality or a more expensive material, not necessarily higher quality, just a different material. For example, we started with cotton sheets. It was sateen. Now we offer percale and we're looking into linen. Then we also offer eucalyptus lyocell sheet set as well. Those were examples of where we saw their consumer demand really expand what our manufacturers want to develop and as a result their price points were able to change quite a bit depending on the product.
Stephanie:
I was thinking about that these manufacturers probably have a ton of insights into what's selling with their other brands, what consumers are interested in. I'm wondering, are they even allowed to share that and help influence your guys product designs and say like, "Hey, we see this plain shirt with like a lion on it and selling really well with Anine Bing," which we just had on the show?
Jeremy:
I guess there's two ways to look at it. One way really is from the lens of like, "Hey, the manufacturer has what I call like extraordinarily delayed insights into performance," in which the only time the manufacturer actually knows about how well a certain skew or style is doing. We're primarily talking about fashion and apparel and other soft goods and home for example. It's a little less seasonal or trend driven, but in apparel for example, a manufacturer will only know the performance of the line after the season or after the client comes back and places the reorder in which their insight is already delayed by a whole, let's say six to nine months.
Jeremy:
By then, it could already be out of stock or out of favor with the client. The second point is actually much more interesting in which this is the dirty secret of a lot of these brands is the manufacturers nowadays have significantly improved and really, really sophisticated design and development inhouse capabilities. Historically, let's say 30-40 years ago, a lot of the design and development and pattern making and so on and so forth was always done on the brand side. Nowadays, I really call it more of a partnership in which the design and R&D talent inhouse at a manufacturer is so great that sometimes, and this is like extraordinarily ...
Jeremy:
This is not just like startups. This is like huge multinational brands, all the way to brands just starting out in which their buyers and merchandisers or product developers or designers will walk into a showroom that a manufacturer has made for a season. They'll pick like four or five styles from the manufacturer's design books or pattern books and then say like, "Okay, let's make some small tweaks, but pretty much, it's the manufacturer's design that we're iterating on."
Stephanie:
Oh, wow. I definitely would never have thought that.
Jeremy:
It saves a lot of time if you think about it because developing patterns from scratch is really time intensive. You have to ship samples back and forth all the time, whereas if a manufacturer already had a lot of these samples ready to go for you and you just had to tweak, let's say, the material or stitching or whatever it is on apparel specifically that it cuts down development time significantly. It happens pretty much everywhere and really the designers at that point in time are not really designers, but they're just iterating on the final versions of products. I think-
Stephanie:
That's a good secret that I never knew about.
Jeremy:
[crosstalk 00:33:15].
Stephanie:
When you're thinking about getting maybe inspiration though and you're looking around at some of the more luxury brands, how much of that can you actually take and use? Because when I'm thinking about, there's certain things that without a logo on it, you probably be like, "Is that from Walmart?" Sometimes the logo makes it where if it didn't have that, I don't know, personally, why anyone would ever buy it. I sometimes don't know why they would buy it either way have you ever had an experiment like that where you've been trying to maybe let a brand or popular brand influence products where then you're like, "Oh, actually, the logo kind of made that one."
Jeremy:
I think the way I would respond, one thing we really care about a lot at Italic is having a data-driven sense of merchandising in which we're using our customer insights to really drive the product decisions that we're making, both on the technology front as well as the product development front for our physical products. I think what we realized is, to your point of, "Does a logo make a product or does the product make the logo?" which is actually maybe a good way to think about it, is the fact that logos matter to some people and it doesn't matter to other people, but everyone has a specific category in their lives in which they care about having a logo and then vice versa like that same person might not care about having logos on other products that other people might.
Jeremy:
I guess a better way to put it is let's say you really care about having a logo on your handbag, but you actually, and I don't know if this is true or not, but let's say you don't actually care about having like the top of the line logo on your bedding or all-clad cookware or Le Creuset Dutch ovens or what have you, right? Let's say that's actually the mentality. On the flipside, I think there's a lot of people out there who would actually have the alternative approach which is like, "I don't care if I have a big fancy handbag, but I am really into cooking and I want the fanciest cookware and I need to have like X, Y, Z brands cookware in order to feel good about my purchase.
Jeremy:
What we found through a lot of our, I guess, our surveying is, one, the main reason why people buy from us is quality in terms of the product and the second is design and overarching, I guess, the main reason why you sign up is because you're getting quality at cost. The price point and the value you're getting out of your products is really, really high relative to pretty much any other option out there because we're not making money on the products that we sell. I think what we found is the people who sign up, if you're a fashionista for example, you're probably not going to buy our fashion products, but you might actually sign up for your home goods and then vice versa, someone who really cares about that specific type of bedding or having really great towels or candles or what have you, but doesn't really care about having a logo or the next trendy thing.
Jeremy:
The way we look at merchandising is really anti-seasonal in which we're trying to find products that are always evergreen. They might not be always in style or in vogue, but we know that they're consistent things that people will always want to buy. That's why we try not to fall too hard into having a specific branded look on our products. The product should be able to stand for their own.
Stephanie:
I like that. I'm just going to say quality always matters, I would think and I'm definitely your person because I'm a logo-less person. I don't care about the brand or where they come from. If the quality is good, it doesn't matter to me who makes it as long as the quality is good and something lasts. I like that. When we're thinking about metrics for subscription business, yours is very unique, of course, because right now, you're like, "We're not going to need more than $100 per person," but how are you guys tracking things? What metrics are you looking at right now to see if things are going well?
Jeremy:
We've changed our metrics a lot as we transition from a transactional model into a subscription basis as you can imagine, but what was interesting for me is because we run this type of membership in which it's not a ... I guess before I get there, in my mind, there's three types of consumer subscription products. One is you get something in a box every month and it's on a set frequency that you can customize. Secondly is you're paying a subscription for a discount. Then thirdly, as you're paying subscription for access to a certain product, whether it's digital or offline or whatever it is. I think we fall into the latter two in which you're paying for Italic because you want a discount on your products, but you're also paying for access to even shop those products in the first place.
Jeremy:
I think when we actually transitioned into this model, we realized like, "Hey, all this transactional revenue, metrics that we're tracking are actually great indicators of engagement. Now, those are our leading indicators of, "Are these members happy? Are they getting the most out of their membership? Are they unhappy because they're not using it? Are they logging back in? Is the conversion rate high for members? Is our average order value growing as we add new products or is that actually shrinking in which the products we're adding are actually lower price points?" so and so forth. It's a pretty sophisticated, I think, model that we've had to build in order to actually price these products at a price where we're not losing money on each sale but also not making money.
Jeremy:
It's on the engagement side all the things that historically eComm companies would track, your conversion rate, your LTV, your frequency of purchase, your contribution margins. These are all things that have now become like performance indicators on a membership basis as a cohort of how we track a certain cohort doing overtime, but now what matters on the company side is actually, "Are we adding new annual subscribers happily? Are they staying? What's our opt out rate? We offer like a 30-day period in which if you sign up and you decide not to place an order and you want to get a refund, we'll provide that, no questions asked. Right now, it's 5%.
Jeremy:
I think like those questions or metrics that we've done a pretty deep dive in terms of like what we actually want to see. Now really that the core metrics are like, "What's our new annual recurring revenue because it's an annual plan?" and then secondly what is ... We don't have retention yet since our first cohort is still seven months out from renewing. The second indicator of that is like, "What are all the engagement metrics telling us? Does that suggest that they're likely to churn or stay?" I think those are like the metrics that we've transitioned towards. There's a lot more that I could dig in there, but that's at a high level how we think about it.
Stephanie:
That's great. Are there any methods right now that you're experimenting with and seeing success around when it comes to keeping your users engaged or staying top of mind to them or even like different things that you're changing for the website that's connecting more with the customer when they're coming there? Any tests overall?
Jeremy:
I think we aren't great about testing and I'll be really forthright about that. We don't have much testing infrastructure built in. We don't have the ability to test their pricing. AB test for us are really just like, I think, very, very incremental changes. I think the biggest [inaudible] which is the transition from the transactional model and I guess the best way to really put this is like for example, during our pilot, we saw behaviors and frequency and lifetime value that we would expect on a transactional customer at month 12. We saw that on a membership level between weeks four to six. It was a literal 10x increase in utility activity for that member versus a customer who would otherwise purchase the product as a standalone.
Jeremy:
I think that's what I meant going back to the point of customers liked us, members really love us. That was something that we really saw. Then I think in terms of metrics that we're looking to test or at least improve with our customer that can improve the experience for them or at least hopefully it will increase our retention rates, I think that really comes in the form of, "What are the products that ..." The main four reasons why people opt out just for full transparency, one is it's international and we only serve the US, so they actually sign up through eagerly and they're like, "Hey, I didn't know that it's US only." That's actually the number one reason.
Jeremy:
Number two is financial. It's like, "Hey, I got furloughed or I was laid off," which happened a lot in the early days in April and May. Nowadays, it's less common, but the last two are ones that we can directly address. One is, "The product offering is currently not broad enough. You don't have a product that I want to see or a category that I wants to see." Lastly, "The products that I want are out of stock." This are directly in our control. For example, we'll show now in the coming soon page like what products are coming next for our members and that keeps them excited.
Jeremy:
Secondly is what products are being restocked. We're placing much, much larger orders, so that hopefully we don't have these out of stock issues. Really the reason was like our members just purchase at a substantially higher frequency than the nonmembers did. We actually underordered prior to the membership, because we didn't know what to expect. I think those are things that ... There are certain features like that that we developed for that use case, but really the only thing that we can solve for in a long-term basis is just develop more products, order more deeply, and hopefully as a result, acquire more members.
Stephanie:
I love that. I think that's a really good point too about how to keep people engaged and coming back to see like, "Okay, what's coming next? What's the new t-shirt that's coming out that I can get really excited about?" because I could see a lot of members maybe, at least in my head, I would think like if I am in a subscription or a membership, I would probably frontload a lot of purchases right away to get that value and then I might forget. I think that's really smart to find ways to keep someone like me engaged coming back maybe a couple months later if I forget, so that I will renew after the year.
Jeremy:
Exactly. I think for us really, the goal isn't necessarily to make you buy more stuff if you don't need it. The goal is to hopefully show that, "Hey, you're going to get enough value out of this membership, so that you're going to stay another year, or two or three or four or five in which there's a constant drop of new or a constant allure of new products that will be down the line such as products in travel. For example, we just launched our jewelry line last month and that sold out in a week's time. Now we know, "Hey, there's a lot of demand for that. We should order much deeper in it" I think constantly testing on the product side is something that we do a lot, but now that we're not making money on the transactions, we're not trying to force you to use it unless you want to.
Stephanie:
Very cool. I saw that you guys had a signup list. I think originally it was over 100,000 or something along those lines. I was wondering, how are you going about acquiring new customers? What kind of channels are working well for you right now? What are you finding success in?
Jeremy:
The hardest question for anyone in eCommerce nowadays. In 2018, we had a strong waitlist going into the membership, and then once we launched, we were like, "Hey, the membership is not going to work. We dropped it in, and instead all those people on the waitlist became our email subscribers and we were ... Fortunately, they eventually became customers as well. That was where a lot of that 100,000 original list went to. Then more recently, we actually had another waitlist. This time, it wasn't for marketing purposes, but it was actually like a legitimate operational waitlist in which we simply didn't have enough inventory to serve all of our members to a great experience in which if you've logged on in the third of all the products were sold out, that's not something you want to see as a first time experience.
Jeremy:
We have the waitlist up for a while, up until we can restock more deeply to address those issues which we've recently done. In terms of the new customer acquisition, I'll be like totally honest. It's a mix of performance marketing and brand marketing. We internally separate our marketing team into two. One is brand which is everything nonpixel-based or nonattributable to a pixel. Everything growth is pixel-based in which it's pixel through Google and the intention of growth is to grow the membership base. The intention of brand is to keep our cost per acquisition on the growth side low, so that hopefully it's not the first time that you're seeing, let's say, an ad from us, but instead it's actually a recall.
Jeremy:
Examples of that would be like influencer would be in brand. TV would be in brand even though I know there's pretty good models for tracking nowadays and attributing podcasts we still put in brand. All these things ... I guess I'm being hypocritical because those do have pixels nowadays, but really the intention of those is to get in front of you first, so that by the time that you see a Facebook ad or a Google ad, that you're already aware of where we are, so your interest is already piqued.
Stephanie:
Cool. All right. We have a lightning round coming up. Before I move on, is there anything that you were excited to cover that I forgot to ask?
Jeremy:
Well, our basics are dropping tomorrow-
Stephanie:
All right. Well, tell me more about the basics.
Jeremy:
We've had a line of recycled t-shirts for a while and those were really, really popular through a lot of quarantine. The number one requested kind of products for us for years has been a line of just great Ts, plain really high-quality t-shirts. It's finally coming out. I've been waiting literally a year for this. I'm super excited, but that's all. That's it.
Stephanie:
That's great. I love a good t-shirt. Actually, maybe it's always been a trend and I just haven't paid attention, but now it feels like it's really coming back to just wear a normal plain t-shirt or just something like simple on it. It feels like it's coming back strong, but maybe it's always been here.
Jeremy:
That's not surprising. I feel like a lot of people nowadays ... I'm sure there's a lot more people out there who could speak much more eloquently on why basics are great, but basics are always in vogue and our members have been requesting it very actively, so I'm excited to finally get that out.
Stephanie:
I will definitely have to check into that when it drops. All right, let's move on to the lightning round brought to you by our friends at Salesforce Commerce Cloud. This is where I'm going to ask you a question and you have a minute or less to answer. Are you ready, Jeremy?
Jeremy:
Yes.
Stephanie:
All right. What's up next on your reading list?
Jeremy:
Well, I actually just got a copy ... This is going to put me in a bad light, but I don't always read business books, but I just got a copy of Reed Hastings new book. I'm excited to begin. I literally just got it right before this interview. That will be next.
Stephanie:
Cool. What's the title of it? I don't know if I know which one that is.
Jeremy:
No Rules Rules.
Stephanie:
I'll go check that out. You have to let me know if you like it.
Jeremy:
Yeah, will do.
Stephanie:
All right, what's up next on your Netflix queue?
Jeremy:
I've been actually watching The Legend of Avatar which is-
Stephanie:
I don't know if I've actually seen that one.
Jeremy:
It's an anime, cartoon that used to run on Nickelodeon as a kid and I forgot how good it was, so I just watched that again.
Stephanie:
That's great. Netflix probably knows not to advertise that to me. They're like, "You just probably won't like that one." All right, if you were to have a podcast, what would the podcast be about and who would your first guest be?
Jeremy:
I've actually been thinking about doing one.
Stephanie:
You should.
Jeremy:
It's been on the list. That's actually why I have this fancy bike here.
Stephanie:
You do sound great, though.
Jeremy:
I think I wanted to do like a podcast show where ... I live in Park City, Utah. There's a lot of great ... I took up fishing during quarantine. I haven't really caught anything, but it's really relaxing. I thought it'd be fun to go out and go fishing and then do an interview at the same time. I think guests-wise, there's so many people out there. One brand I've admired for a long time is the, and I like loosely know them, but I've really liked the Buffy team for a long time. I feel like they're pretty unique. They have a lot of success, but they've still been humble about it and low to the ground. I think it'd be really cool to have them. My background isn't just like eCommerce and retail. I think it'd be a mixture, but yeah, that'd be a cool one.
Stephanie:
I like it. I can only imagine you catching a fish while trying to interview and how that was found. Interesting. All right, what is the favorite piece of tech that is making you more efficient right now or that you're enjoying?
Jeremy:
Oh, man, that is a tough one. I use a lot and the whole Italic team makes fun of me for it because I always add something new every week. I think the one that stuck with me for years is this company called Missive. It's a collaborative email inbox that allows the entire team to work in conjunction on emails. Let's say it's an email with a vendor or an email with a YouTuber who we want to advertise with, we can collaborate in line without having to go to Slack or take it to another email thread in the same place. Missive and Front in the same vein does the same thing. I think those two products are ones that I really couldn't live without.
Stephanie:
That actually sounds really good. Can you send it out? If I was one of your employees, could I say, "Send this out under Jeremy's email because he gets better responses as the CEO than I will"? Personal question. This is something I actually want to know for myself.
Jeremy:
There's actually a setting to do that in which you can share an address and other people, like let's say an assistant can send it for you, so yes.
Stephanie:
I like that. I'll check that out. Awesome. The last, slightly more difficult question, what one thing will have the biggest impact on eCommerce in the next year?
Jeremy:
I'm not going to give you the cliche answer and say COVID changed everything, which it did, but-
Stephanie:
We all know that now.
Jeremy:
I actually think it happened last year and then I already alluded to this earlier, but I think the biggest change will be the transition from ... People have been talking about these like DTC waves. The first wave was like the Bonobos, Warby, Everland 2008 to 2012 era, and then, the second wave was like everything thereafter. A lot of the direct-to-consumer brands you see nowadays, it's the category leaders per se, but I think now people ... Let's say from, I don't know, 2014 to 2018-2019. I think there's been a big change in the operating mentality of these newer brands in which if you're a new brand starting out, you can't go out and raise these massive rounds that these companies used to off of revenue growth because people have realized now, this is not technology revenue growth. This isn't like an 80%, 90%, north of gross margin product.
Jeremy:
There is a saturation level to performance marketing. I know I'm sounding like quite cynical here, but I mean that actually in an interesting opportunity in which you can actually raise that money, but I think if you're creative about cashflow and you're creative about how you grow the business, you can build a huge business. I guess Gymshark would be a great example of this in which you can bootstrap to a really large volume without having to raise equity financing. I think you can do it through focusing on cash conversion cycle which is what Gymshark has with its founders or you can have in any case of owned supply chain like House or Buffy does.
Jeremy:
I think there's different ways that you can frame the direct-to-consumer model that allows you to still grow, but I think the era of venture-backed DTC, getting into the series, A, B, C and onwards is probably over. I think that's already happened and I think that will probably be the biggest impact on the ecosystem.
Stephanie:
I completely agree with that. If you sound cynical, then I think cynical too, because I completely agree with that. That's a really good point. All right, Jeremy, this has been such a fun interview. Where can people find out more about you and Italic?
Jeremy:
Italic is on italic.com and I am @jjeremycai, J-J-E-R-E-M-Y, C-A-I on Twitter. I think that's the easiest way, but we'd love to have anyone as a member.
Stephanie:
Awesome. Yeah. Thanks so much for coming on the show.
Jeremy:
Thank you.
Brand loyalty is something that every company wants but few actually attain. To build a loyal customer base, you need to provide the best experiences possible, offer unique products or services, and deliver on quality and in a timely fashion. It’s a tough ask, and for those in the grocery industry, it’s even more difficult since differentiation between product selection is not as easy as it might be in other verticals.
But when it comes to customer loyalty, there are ways to separate yourself from the pack.
And that’s where Rachel Stephens comes in. As the Vice President of Marketing, Digital and Loyalty for Stop & Shop, a major grocery chain with more than 400 stores, she thinks about this every day. Thanks to a new online platform and through a loyalty program that customers actually want to engage in, Rachel explains that Stop & Shop is finally gaining access to some of the dark data it couldn’t access in the past.
On this episode of Up Next in Commerce, Rachel explains why that kind of data is a true game-changer for any brand. Plus she reveals some of the consumer psychology that she looks at when building loyalty programs, and she peers into the future at how the use of A.I., machine learning and natural language processing will further advance not just Stop & Shop’s ecommerce experience, but the entire ecommerce industry.
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
---Transcript:
Stephanie:
Welcome back to Up Next in Commerce, I'm your host Stephanie Postals, co-founder of Mission.org. Today we have Rachel Stevens on the show, vice president of marketing, digital and loyalty at Stop & Shop. Rachel, welcome.
Rachel:
Thank you very much for having me.
Stephanie:
Yeah, I'm really excited to have you on. I saw a little bit of your background before hopping on here and I got very excited when I saw that you have worked at the TJX companies, which I was hoping we could start there with your background.
Rachel:
Are you a brand fan?
Stephanie:
Oh, yes. I mean, I love TJ Maxx and when I saw that I'm like, "Ooh, this is my interview. This is the one."
Rachel:
Yeah, I was actually the assistant vice president of CRM Loyalty [inaudible] within TJX. And that really matched the TJX rewards program ... was a program that fell under my group and my responsibilities included the day to days and ensuring that our customers really wanted to participate in our program, our loyalty program so that we had clean data at the end of the day. And we were able to provide additional value in savings on top of what customers were already saving with the strong value that TJX stores provide.
Stephanie:
Very cool. How did you first get interested in the world of loyalty marketing, what lead you there?
Rachel:
I started actually in loyalty marketing at Pet Smart in their corporate headquarters in Phoenix and I think the thing that really appealed to me was marriage of data and customer communications, so understanding what customers say and what customers actually do is vital, I think, to the success of an organization because customers can say, "Yes, I have intent to purchase X,Y,Z." But when you look at the actual data, the data doesn't lie.
Rachel:
So, loyalty programs give you a vital tool for success within your organization to take a look at consumer data and then apply your marketing tactics really that are from acquisition, retention or reactivation perspective based on what that consumer is doing in a particular moment. So it's really, to me, such a great marriage of a lot of different areas within marketing and it just was something that I developed an immediate passion for. When I started there on the Pet Perks Program and then went to TJX to work on the loyalty program for TJ Maxx, Marshalls, Home Goods, [inaudible] Trading Post, and HomeSense, I feel like when I was there honed in on my skills within the loyalty space, so the position at Stop & Shop to really develop the role and develop what the new program was going to look like was incredibly appealing just because of my passion for this space and for retail.
Stephanie:
That's so much good experience to be able to bring to Stop & Shop. How have you seen consumer behaviors or loyalty programs having to change since you started?
Rachel:
Since I started in loyalty or since I started at Stop & Shop?
Stephanie:
I'd say in loyalty program, in loyalty overall. Since you started back in the pets days.
Rachel:
Yeah, I think there was a transactional nature to loyalty programs in the past. I think it was you give and get and that was usually based in points programs whereas today obviously I think more experiential programs have come about and providing more omni-channel experience, which wasn't really the case back when I first started within the loyalty space. I'd say that there's a number of people that really do a great job at this. I think Sephora's loyalty program is top notch. They do an excellent job at marrying the in-store and the online experience, really making it truly omni-channel tied in with their loyalty program.
Rachel:
I think that a lot of retailers have caught up and are doing a good job and I still think there's a lot of room to grow. And I think grocery retail was stuck in the loyalty stage of two tier pricing and I think we have a to model grocery loyalty programs more after what a lot of other retailers are doing in the loyalty space and even hotels. Airlines, I think that soft benefits and providing experiential benefits are really critical to the success of a program.
Stephanie:
Yep, yeah completely agree. Now that we're touching on grocery a bit I would love for you to explain what Stop & Shop is for anyone who doesn't know.
Rachel:
Sure, Stop & Shop is actually a grocery retailer with over 100 years in the industry. It started out as a very small grocery in the east coast and now we have over 400 stores and of course our online experience at Stop&Shop.com and the Stop & Shop app.
Stephanie:
That's great. And Stop & Shop, you guys just started moving into e-commerce, right? I think I saw that you launched a new platform just in a couple months ago, am I right?
Rachel:
We did actually, on July 28th in fact. We launched ... we had Peapod with a partner company. Peapod actually was owned by Ahold Delhaize, which is the parent company that owns Stop & Shop and we have integrated Peapod into Stop & Shop now. So, within Stop & Shop's footprint to order grocery delivery or to get pickup you actually now go to the Stop & Shop website or the Stop & Shop app versus Peapod. That integration occurred again at the end of July, and it's been going incredibly well so far.
Stephanie:
What was that transition ... what did that look like behind the scenes of not only integrating a current path that people are using but also I'm sure adding on additional functionalities that maybe weren't already there. What was the process behind the scenes or any maybe hiccups that you guys experienced when you were going through all this because it sounds like a big project.
Rachel:
Yes, yes. In fact, huge project. And all of our sister brands went through the same scope of work at the same time. We work with an internal agency who actually is responsible for all of that development work. And the agency actually had to develop the platform for all the brands. There was Giant Martin's out of Carlisle, Pennsylvania and Giant Foods in Maryland, also went through the same transition.
Rachel:
And there was obviously ... it requires a lot of work to marry the database, really marry those platforms. There was a Stop & Shop website, a Peapod website and H Brands app, so marrying those together was a huge, enormous undertaking that has taken approximately two years. And when I first started two and a half years ago actually that was really when we had worked on all the business requirements for this project. And it just takes a significant amount of time to match up all the data on our customers and combine those platforms and ensure that everything is running smoothly because if you think about the number of transactions that the Peapod site had going through it before and the number of customers that were going to the Stop & Shop site, you can imagine that there's just a tremendous amount of customers that we wanted to ensure were not left behind in this transition.
Rachel:
So, there's definitely a lot of work that went into this project and in terms of hiccups, of course there was a lot of those. But I think you try and block out all of the things that went wrong during the launch and you just only remember the good, right?
Stephanie:
Yep, that's great. And I'm also very familiar with Giant. I'm from Maryland. I'm sure everyone else is like, "What's that?" I know very well what that is.
Rachel:
Oh, great. That's great.
Stephanie:
Yeah, so when you guys are thinking about launching this new e-commerce platform, what kind of opportunities were you excited that it would open up? I'm sure you get access to new kind of data and you can have new offerings and you can send that data maybe to your other partners and maybe they can give you deals. What things were you most excited about that you didn't have access to before?
Rachel:
I think that what I'm most excited about is omni-channel data access. We did not, again, have that before because it was Peapod who really had all of the data for delivery and pickup and Stop & Shop who had all the brick & mortar data. The combination and looking at a consumer from an omni-channel, to me, is what's most exciting.
Rachel:
If I'm going to do a marketing campaign using digital tactics or any sort of in-store tactics I really need to know what you do as a customer. You could channel switch, you could go from pick-up to in-store to delivery all within a very short period of time. And so, I think the efficiency in marketing, by having that data to me is really what's most exciting. And being able to actually accurately talk to our customers is something that really interests me because how many time have you received communications from a company where you're like, "Wait, I was just in there. I just bought X, Y, Z and now they're sending me an offer for something," or the communication just seems out of left field.
Rachel:
And I think of years past when Starbucks didn't have a fully integrated data solution. If I was a coffee drinker and I always drank coffee once in a while I'd get tea offers and it just didn't make any sense to me. I think it was just bad use of data.
Stephanie:
Yeah, I still get that right now. I'll get things marketed to me around pregnancy. I'm like, "I am not pregnant and haven't been for a while."
Rachel:
You're not pregnant.
Stephanie:
In a while. Come on, about six months ago, stop that.
Rachel:
Right, exactly.
Stephanie:
That's smart. So, what are you excited for omni-channel in general outside of Stop & Shop. What do you think that landscape's going to look like in the next couple of years?
Rachel:
I think that COVID has certainly advanced a lot of, specifically in retail, advanced a lot of retailers. I think their technology and their offerings, I think omni-channel, to me, has to be that seamless experience in-store, online. And it has to be being able to look at you from a customer lens and understanding that you may channel switch and your experience or the offers that you're given or you're customer service shouldn't change. There shouldn't everybody anything remarkably different about whatever channel you're in.
Rachel:
So, for me I think that the omni-channel landscape is going to continue improving and COVID has definitely advanced that.
Stephanie:
To dive back into the loyalty program conversation, because I'm very interested in that, we haven't had a ton of people on the show who've talked about that, so I'll probably keep circling around that for a little bit.
Rachel:
Sure.
Stephanie:
I want to hear how you think about developing a successful loyalty program now. How do you get people to engage? How do you get them to be excited about it?
Rachel:
The most important thing is research. You have to understand what customers want first and foremost of course. That's the first step in any real loyalty program whether you're launching a loyalty program or enhancing a loyalty program or just completely transforming a loyalty program. You have to understand what research, what customers want. You have to look at the data and understand what they actually do.
Rachel:
So, it's the this is what I say I want and then this is what I actually do. And you rally have to be a data scientist and understand what it is that is bubbling to the top. If I know my to customers are coming in and I'm looking at the data that tells me they come in X amount of times per week and they shop for key products, then I can understand and I can translate that back into transactional offers. I can say, "Okay, these are the top products that I need to make sure are relevant to that consumer base on a regular basis."
Rachel:
But it doesn't get at really what drives them and motivates them to be loyal to the brand. So, I think that that research is such a critical step in really understanding how consumers really feel about your brand. You don't want to be the brand that customers just feel like you're on the corner and you're convenient so they have to shop you. You want to be the brand that they want to shop at. Loyalty isn't just about the program, it has to be about the total solution that retailer provides and your feelings about that retailer.
Stephanie:
It seems like there would be a lot dark data out there, especially for maybe grocery stores because I'm thinking, would my local grocery store even know that I go in and out because I don't interact with them online right now. I sometimes put my phone number in, sometimes don't. How would you make sure you have a good sample size of people to use for your research when building that out if maybe you still have quite a few of your customers that you don't even know yet.
Rachel:
No, I think that's a great question. I think you have to ... There are panels that you can go, usually your consumer insights team has access to panels of customers who volunteer to participate in research studies, so that's typically the first place that I go if we don't have enough data within the database. If there's enough data in the database to start with, usually that does require an e-mail address or a physical mailing address and not just phone number.
Rachel:
So, if your local grocery store only requires phone number and ... I'll say actually that was the case for Stop & Shop prior to the transformation of our new loyalty program where we really just ask for phone number point of sale. And that gave customers access to that two tier pricing. That doesn't do anything for a company, just having phone numbers and actually going to build off your database of course. Then you don't have a way to really round out that customer experience and understand. You got to be able to tap into that customer and ask them what they want.
Rachel:
It is really important that you're coming up with a program or if you have a program that it's enticing enough that customers want to give their data, they want to give you the right e-mail address or they want to give you the right mailing address so that they do participate in the program but they also are willing to give your opinion when you ask it.
Stephanie:
Yep. It also seems like making sure you have a seamless experience when asking for that data is really important because I can think of a number of times different stores have been like, "Oh, can you type in your e-mail?" Or just, "Read it off to me and I'll type it in very slowly." I'm like, "Ugh, just don't worry about it," or "I don't want to use your old type pad that's not really working and I'm going to have to delete it 10 times to get it right."
Rachel:
Right, exactly. Yeah, you're absolutely right it has to be simple, seamless. I think digital cards is a great way to make it simple and seamless. It's easy enough for a POS to scan a digital barcode that ties back to your loyalty card or phone number, provided the fact that the number actually is tied to a valid e-mail address or valid mailing address. Any way that you can provide convenience for consumers to access their program seamlessly, quickly is really important.
Stephanie:
Yeah, I completely agree. When you're setting this up, even If you don't have access to maybe huge amounts of data, are there any unifying themes that people just generally when it comes to loyalty or rewards programs where you're like, no matter where I've been it seems to always get someone to sign up if we have this or this offering.
Rachel:
Well, I think a based program, it has to be about savings, right? Every program is at it's core about saving, so hotel, airline, you're earning points to get free something or to save on something. And so, at it's core you have to have a savings in the value proposition. And then I think everything else that goes on top of that whether you have a tiered program where you're providing your top tier customers with more of those experiential benefits or more of those softer benefits is really, it's dependent on the industry and your ability to provide different levels of benefits to customers.
Rachel:
I think in the supermarket industry you don't see a lot of tiered programs. I think that that's mostly because there's not a lot of experiential benefits that you can provide that consumers really are interested in. I think a lot of customers look at grocery shopping as a chore. There are, there's certainly a core of customers who really enjoy it but for the most part a lot busy consumers today do look at it as a chore and I think that lingering in a store is not something that a lot of people are really interested in.
Stephanie:
Yep, yeah I completely agree. Is there any research that y'all have done when to what really matters from a savings perspective? What percent actually drives someone to purchase something they maybe wouldn't have purchased prior to seeing that savings? Maybe 5% eh, maybe not, 20% probably so. Anything that you've seen around that?
Rachel:
It's funny that the higher up you go in savings, a lot of times customers say they don't believe that. When you say save 20% or 25% or whatever, it seems somewhat unbelievable and I think a lot of customers question it. With our go rewards program we actually know that customers saved 15% or more. We did a lot of research because the and more was actually the savings is more like an average of 20% but customers really felt like, "That seems high, that seems really unbelievable." So, 15% we're like okay, let's just actually take that down because that seemed to be more palatable percent for customers for some reason.
Stephanie:
That's really interesting.
Rachel:
Isn't it?
Stephanie:
I know. I mean, when you see these shopping sites when it's like 75% off it actually makes you just one be like, "Well, was it ever worth the price that you listed it at?" And then are you going to get a 90% off. So I do question brands that have huge sales like that more than I do with someone who's consistently like, "You get 15 or 20% off no matter what promo code or coupon or anything that you get, it's never going to be higher than that.
Rachel:
Right, yeah. You start to question the quality and you say, "Oh, geez." I mean I'm sure the average consumer doesn't think in terms of margin but I start thinking about margin.
Stephanie:
I do too. Like minds, very like minds. [crosstalk 00:22:05]. "How much were you making before this?" Okay.
Rachel:
Exactly.
Stephanie:
That's great. How do you think about metrics when it comes to these loyalty programs. Are they unique and very different than maybe metrics for other e-commerce business or other programs that you might set up?
Rachel:
Well, I think first and foremost most companies will look at sales as a huge metric within their loyalty program because it's an investment for the organizations, so ROI is going to be important. But the ROI actually comes from retention and in some cases reactivation. You know that a lot of times it's true, the cost of getting a customer is equivalent to retaining eight.
Rachel:
So, I think if you can look at ... most organizations look at sales from the program and incremental sales from the program. I think that that is the real true metric. Engagement of course is also important. And customer satisfaction is vital.
Stephanie:
Yep, that makes sense. Are there any memorable campaigns that come to mind. You're like, this one was my favorite marketing or any other kind of campaign hat I've done that you want to share? I'm always interested in stories around that.
Rachel:
Yeah, no I think that I worked on so many great campaigns but the ones that are truly, fully integrated across every channel is that's what's really exciting. When you see a campaign, for example right now this might sound silly or small but we have this pizza campaign. We've got a commercial on air about the best pizza is your own pizza and we've got that campaign in every other channel, so digital, e-mail, social media, through my go rewards program, we throw in extra points when you buy certain products within the category. That's really what excites me is I think when you see it come to life and you see really the full ecosystem within marketing utilized to support something. That's when you really see the power of marketing come to life and you see how it actually makes sense obviously to have one point of view and to be more customer centric in your campaigns.
Stephanie:
Mm-hmm (affirmative). And it's like a better way to measure things as well if there's this one initiative going across many channels and you can look at it without having a bunch of other players messing the data up.
Rachel:
Right, right, exactly, exactly. I see some marketing campaigns right now and [inaudible] there's some big players out there that did all of these back to school campaigns and it drove me nuts because it's like we are not back in and it showed all the kids walking down the hall and of course I know that they had all these commercials shot in the can well before a lot of this happened but I feel like you're talking to a consumer base that is in a very different place right now. I think that obviously understanding what consumers are looking for and really being relevant like that pizza campaign. There's so many people who are at home cooking together right now. I feel like that's really where I get most excited is when I see obviously that relevance and then more of that omni-channel and cross channel campaign. I think that that's really where you see some good results from marketing.
Stephanie:
Yeah, that's as good point about people still running their commercials that they maybe shot a long time ago. The only one that I think has done really well in my mind that I've seen recently is either Trader Joe's or Target that had grab your back to school supplies and it was at a line rack. I'm like, "That's good, that's relevant and I'm going to get some [inaudible] now."
Rachel:
That's perfect.
Stephanie:
Yeah, really good. We had someone on this show who was also mentioning you should have different scenarios, especially at a time right now where you don't really know what's going to happen and you should be ready to pull your campaigns and slot something in really quickly. And it seems like a lot of larger brands or especially older brands just didn't think that way or maybe just thought, "Okay, let's just release this and see how it goes anyways." Why do you think that's the case? Why do they still put this out into the world when many of them probably knew it was not a good fit?
Rachel:
No, and I think it does more harm to your brand than anything to be honest because obviously if you're not relevant and you're not listening to what's going on in the world then I think that it does more home. At the beginning of COVID we did a lot of work around providing at-home solutions. We had a chef who actually did a cooking show within social media. I worked with this chef to come up with a series of cooking shows within Facebook and we did a number of other just activities to do with the kids at home and there was more relevance to our campaigns and it really resonated. Customers really appreciated the fact that we were giving them content that actually was valuable, interesting and just relevant to what was going on in the world.
Rachel:
You can't be deaf to what's happening and you have to really just make sure you're always paying attention and listening to what customers are saying.
Stephanie:
Yeah, completely agree. Earlier you were talking about the pizza campaign and how you put on many, many channels. Which channels are you finding are most successful or are there any new ones that you're experimenting with that you're finding some early success in.
Rachel:
I think that we do a lot within social media and I think that the channels in social media that we're finding some early success in would be Next Door and TikTok to some degree. I think with TikTok, youth are still clear we haven't done a whole lot there but I think that the brands that have been on TikTok and have done some really good work and have seen some great results. And I think the social media channels are probably the ones that give me the most excitement because I think there's such a great way.
Rachel:
We're working towards integrating commerce into social media. That's a big project that my team is working on right now and it's such a great way to capture an audience when they're just in their downtime. They're in a different kind of mindset and they're more open to maybe looking at inspirational content, recipes, things like that within Pinterest or within Facebook or Instagram. And they may want to buy it right then and there and they may want to say, "I want this recipe, I want it delivered to my house. This is great." So, I think that any of the campaigns that we've done in social have really been my favorites.
Stephanie:
You mentioned integrating commerce into social media. Are you all taking that initiative on yourself or are you more relying on the platforms to develop the solutions to tap into? What does that look like?
Rachel:
Yeah, we are relying on platforms. Obviously we have to, there's a lot of work that needs to be done still in this area. And I think that's a little trickier just for a supermarket because you're not going to buy just a tomato.
Stephanie:
[crosstalk] tomato from Stop & Shop.
Rachel:
Right, it's not like when you see a pair of shoes on Instagram and you have to have them. You don't really have to have that tomato on Instagram but you may want that full recipe so making sure that there's enough content that is actually worthwhile to the customer I think is the challenge and that's what my team is trying to figure out right now.
Stephanie:
Got it. When I'm thinking about commerce or social media, has Stop & Shop explored ... or maybe you guys already have this like your own products where it's like you can only get it from here. It's not a generic brand it's actually like ... I mean, that reminds me a lot of what Trader Joe's does. It's like if I want this one, well they discontinued this prune juice I really loved. [inaudible 00:32:00], yep. I love their prune juice, they discontinued it. Anyways, I knew that they were the only ones that I liked it, that's the only one I wanted to have. And so, have you explored something like that of creating certain things that will be top of mind where it's like Stop & Shop is the only one that actually has this kind of recipe of whatever it may be, prune juice.
Rachel:
Yes, actually in fact we have our own line, Nature's Promise is a proprietary line across the Ahold Delhaize brand. And we have our private label brand of course and then we have Taste of Inspirations which is a really nice higher end private label brand for us. And we are definitely doing more within that space, integrating with go rewards with our new program. When you buy a recipe that is all Nature's Promise ingredients you earn extra go points.
Rachel:
We have these recipes called take five that were featured within social media and we've got them in our circular and in other areas. And if it's all our Taste of Inspiration products you earn X amount of go points. We have a lot of those types of promotions that we're doing now and that's definitely what we'll be integration into our social media commerce platforms in the future.
Stephanie:
Very cool. And I feel like there's a lot of interesting opportunities too as you now explore ... you're going to have this new e-commerce platform to get new data and to see what people are really like and what's maybe swaying them to buy one thing versus the other. It seems like there's a lot of opportunity that'll come up around building new offerings that maybe you wouldn't have thought of otherwise.
Rachel:
Yeah, absolutely, absolutely. And I think if you look at solutions that's definitely really important to our customers right now. There's so many families that are just so busy and providing meal solutions, even a night, a couple nights or a week of meal solutions is such a huge time savings for a lot of families.
Stephanie:
Yes, I feel that with three boys now. I'm like anything to not have to cook from scratch would be appreciated. [inaudible] it's frozen, whatever it is. If it's edible it's cool. Where does personalization come into play or you guys? How do you think about showing offerings throughout your e-commerce experience or your apps that really connects with the person who's looking there?
Rachel:
Well, personalization [inaudible] success, so I think whether or not we get it right 100% of the time I think is something that remains to be seen. I think we have made some huge advances in personalization with the new platform, with our program. The more data we have about a consumer's shopping behavior, what they like, the better the offerings that we'll be able to give them.
Rachel:
So, if I purchase Doritos all of the time, hopefully I'm not getting a offer for something else, Lays potato chips, I should be getting offers for Doritos. So, that relevancy is really, really important. And that's something with this new program that we're providing customers whether it's through product coupons, which today now that I look in my coupon gallery on my app, I have six products that are relevant to what I purchase every week which is really great, so I know the algorithm is working correctly.
Rachel:
Then on top of that we also have more of those category offers. So, if I'm somebody that always buys fresh produce now we're actually doing more of the $5 off your purchase when you add a fresh produce. More of those category offers that are relevant to what I purchase every day. I think it's incredibly important. And then through the e-commerce journey this is really where I'd like to see us make some improvements. It's on recommendation engine type of logic, so if I'm putting a pizza dough in my basket on my e-commerce platform then hopefully somebody's going to be recommending some mozzarella and pizza sauce to me.
Rachel:
That type of a level of personalization is something that we strive for and want in the future. We have some degree of that today but that's certainly where I expect we will be going in the near future.
Stephanie:
Radical. When it comes to those recommendations are there any tools that you're relying on to build that out or is it everything you did in custom or how is that working behind the scenes?
Rachel:
Yeah, the recommendation actually is homegrown, so that's where our internal partner actually has been using all of the data from the loyalty program and understanding what customers buy, and there's propensity models that we have in place. So, somebody who has the same profile, who typically purchase X, Y, Z. "We actually build a model to say here are look alike customers and here's what we should recommend to them because it looks like that customer is similar so they may be interested in these types of products." And that's something that our internal data scientists have been able to build out for us.
Stephanie:
That's great. Is there anything when it comes to machine learning or the world of data that you guys have access to that you're maybe preparing for or different capabilities that you're building out right now that may be other grocers or other e-commerce stores are maybe a little bit behind on?
Rachel:
Yes, there definitely at the Ahold Delhaize level. I think that AI and certainly machine learning is something that everybody is going to have to be prepared to work on in the near future and be prepared to have teams working on that in the near future. And Ahold Delhaize does. Stop & Shop as a brand doesn't but at the Ahold Delhaize level we do.
Stephanie:
Very cool. And do they usually come up with something at the higher level and implement it within all of their stores or do they test it out and say, "Okay Stop & Shop you're going to pilot this and we'll learn from you and then we'll have our other brands try it as well," or how does that work?
Rachel:
That's exactly what it is, yeah exactly. And I see a big trend in experimentation and learning done with artificial intelligence, natural language processing. The first steps into conversational commerce and customer service. I think individually each of those is interesting but when you string it together it becomes really compelling and AI is now being given enough transactional information. And when combined with data science can match and predict customer behavior at a level not previously possible. So, natural language, processing and conversational tools really make it possible to help customers during the purchase journey and even more importantly in many aspects of customer service.
Rachel:
So, these previously somewhat academic technologies are being put in the hands of digital commerce managers and we begin to see the results. So, I fully expect that within the next couple of years what we're testing at a Ahold Delhaize level will be brought down to each of the brands.
Stephanie:
Yeah, it seems like there could be an interesting ... that you would get interesting results from the different brands because I can see very different consumers who are maybe shopping at Good old Giant back in Maryland.
Rachel:
Yes, you're absolutely right.
Stephanie:
How do you approach that when you're trying out different things and maybe you're like, "Oh, we see this with our customers at Stop & Shop, let's try this at another brand." And you're like womp womp that actually failed at that [inaudible] are so different.
Rachel:
Yeah, no it's a great call out and I say that all the time. I say what matters to somebody in the food [inaudible 00:40:18], so what matters to somebody maybe in North Carolina is different what matters to somebody in New York City. So, we have probably the toughest competitive market not only from a grocery retail perspective but even just from a media perspective and trying to ensure that our voice is heard within these difficult tough media markets.
Rachel:
So, for Stop & Shop really it's a little bit tricky and we do have to take a look at every single opportunity that comes our way and say, "Does this resonate with our consumer base?" Because a lot of times it won't. I think that there were a couple of examples of trying out even just a walk-up pickup service. In a city location you can walk to get your groceries handed to you. There've already been shop for you versus the traditional pickup where we load it to your car. That doesn't work everywhere obviously. [inaudible] work in the suburbs, it really only works at urban locations. That's one thing that comes to mind, there's a number of them that come to mind but each brand does have an option to opt out if it's not something that resonates within their base.
Stephanie:
Yeah, it makes sense. Try and implement that in New York city and all of a sudden these cars are being towed and then they're mad.
Rachel:
Right.
Stephanie:
[inaudible 00:41:48]. So, to go a little higher level I want to talk about general e-commerce themes and trends. I wanted to hear what kind of disruptions do you see coming to commerce that are not just from COVID or not just COVID because I think a lot people on here are like, "Oh, COVID's the big disruption." What else do you see happening in the world of e-commerce that's maybe coming down the pipe right now?
Rachel:
I mean one that's already here really is one stop shopping like Amazon. So, the retailers who adapt and constantly expand their options, shorten the supply chain, enhance customer service and develop great options for delivery and pick-up have the most success. So, I think that the model that Amazon has and Wayfair, the direct to consumer shipping is not as much as a disruption to e-commerce. That's here to stay and I think we have to learn from that and we have to adapt in order to stay competitive. And I think a lot of retailers are going to have to adapt in this new world. Everybody's going to have to be able to figure out how to provide that one stop shop because it's similar to brick & mortar shopping. You don't want to go to multiple locations on a Saturday afternoon.
Rachel:
It's the same thing, if you're going to pay for shipping you're going to pay for it once from one retailer or get free shipping, of course with a subscription service or promotion. And I think that's definitely here to stay. I think that convenience and the ease of finding everything in one place is that it's that big box retail mentality from back in the 80s when the big box retailers really exploded.
Stephanie:
Yep. Figuring out delivery and trying to compete with Amazon, man that seems very, very tough.
Rachel:
Very tough.
Stephanie:
Consumers have very high expectations now of what they want and yeah, it seems like they are quick to get upset if it's not one, two day shipping and, "Oh, it can't be here within two hours? Okay, I'm going to have to cancel the order."
Rachel:
Right, exactly. And "Oh, you don't have all the other things I need to? I need my face lotion and my bread. Wait, you don't have that?"
Stephanie:
Yeah, "Why would you not have that right next to each other?"
Rachel:
Right, exactly.
Stephanie:
Yeah, this has been awesome. Is there anything that I missed that you wanted to highlight before we jump into the lightning round?
Rachel:
No, I don't think so.
Stephanie:
Okay, cool. Well, I will pull us into the lightning round brought to you by SalesForce Commerce Cloud. This is where I'm going to ask a question and you have a minute or less to answer. Are you ready Rachel?
Rachel:
Oh, boy.
Stephanie:
All right, first one, what does the best day in the office look like for you?
Rachel:
Best day in the office today is at home.
Stephanie:
There you go. What does your virtual best day look like?
Rachel:
My virtual best day is when I actually have time between meetings to go get something to eat [inaudible 00:45:01].
Stephanie:
That is actually a big problem I've heard from a lot of my old coworkers and talking about their whole day is now filled with meetings that maybe would've taken just a couple minutes to have a quick catch up and instead it's like, "Okay, 30 minute slots to discuss maybe one question."
Rachel:
Absolutely and you use your hour to the fullest extent and you're not moving around from meeting room to meeting room anymore. You're literally just sitting at your desk all day, so my best day is when I actually have a break to get up and go get something to eat because food is important to me.
Stephanie:
That seems like a crucial part of the day, so what's up next on your Netflix Queue.
Rachel:
That's a great question. I've actually blown through almost everything.
Stephanie:
And what was your most recent then?
Rachel:
I just watched the Enola Holmes.
Stephanie:
I'm watching that now, it's so cute.
Rachel:
Oh, it was excellent, I loved it, it was really great. I love Millie Bobby Brown, I think she's fantastic.
Stephanie:
Yeah, she was really good. Highly recommend that one. What's up next on your travel destinations when you can travel again?
Rachel:
Oh, gosh I want to go to Scotland so bad.
Stephanie:
Oh, fun. What do you want to go there for?
Rachel:
I want to golf. I love the countryside, just looks amazing, beautiful. I want to go hiking there. I have a lot of grand plans for Scotland and Ireland too as well.
Stephanie:
If you were to have a podcast what would it be about and who would your first guest be?
Rachel:
It would definitely be about true crime because I'm obsessed with true crime, which I know everybody is right now but I really do find it fascinating and I always have. This isn't just a fab for me, I always really liked it.
Stephanie:
Mm-hmm (affirmative). You started it, everyone else followed.
Rachel:
Yeah, exactly. I'm a trendsetter of course.
Stephanie:
Yes. And who would your guest be then? Will it be a serial killer?
Rachel:
Yeah, absolutely. I would love to interview a serial killer. I just want to know what goes on. I want to get deep for sure with a serial killer, name any one.
Stephanie:
All right, I mean I would listen to that. I hope they're behind bars when that happens.
Rachel:
Yes, yeah. I could do the interview behind bars for sure.
Stephanie:
There you go. And if you were to pick a virtual event right now for your team or if you already had one that you've done recently, what would it be that you think is engaging in these times?
Rachel:
I think there's a women's conference coming up in Boston that I would love for my team to attend. I just attended a women's leadership conference that was really amazing. It was very inspirational, even virtually I was really surprised at how well done it was and how just thought provoking the virtual conference could be. It was really fantastic.
Stephanie:
That sounds awesome. All right, and then the last one, what is a favorite app on your phone right now that you're loving?
Rachel:
This is bad but I have the CARROT app, which I don't know if you know, CARROT is the weather app.
Stephanie:
No, I actually don't.
Rachel:
It's a weather app that actually gives you a really sarcastic, snarky message every day when you open it up, so ...
Stephanie:
Oh, my gosh. That's great. I like that, that's really good. Well, Rachel this has been such a fun interview. Where can people find out more about you and Stop & Shop?
Rachel:
So, Stop&Shop.com Stop & Shop app and me, my LinkedIn profile, so Rachel Stephens, S-T-E-P-H-E-N-S.
Stephanie:
Awesome, well thanks so much for joining the show.
Rachel:
Thank you very much for having me.
When it comes to decisions brand leaders have to make, choosing the typeface that will live across your website and on all of your products is a pretty big one. Customers are going to see and interact with your copy throughout the life of your brand — and making a change to your design style will cause a ripple effect with lasting impacts.
Monotype is the largest company that is dedicated to typefaces. According to Jonathan Zsittnik, the Vice President of Commerce Channels at Monotype, the company has the world's largest library of typefaces, and thousands of type families, many of which are the backbone of key brands.
On this episode of Up Next in Commerce, Jonathan explains the intricacies that go into running and selling that massive inventory of fonts. Plus, he dives into the importance of choosing and properly licensing a font style and how it can impact a brand.
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
---Transcript:
Stephanie:
Welcome back to Up Next In Commerce. I'm your host, Stephanie Postles, co-founder of mission.org. Today on the show, we have Jonathan Zitnik the Vice President of commerce channels at Monotype. How's it going, Jonathan?
Jonathan:
Very good. Thanks so much for having me, Stephanie.
Stephanie:
Yeah, thanks for coming on. We were just mentioning that today's a special day. It's your 19th anniversary. And how lucky are we to have you on the show?
Jonathan:
Oh, man. It's crazy to have been here so long, but I've enjoyed the ride. And what better way to kind of celebrate that anniversary by talking about Monotype and all the things that I've done and see coming, than being here with you today. So thanks for having me.
Stephanie:
Yeah, it's going to be really fun. I think you're the first person we've had on the show that's been somewhere this long. So I think it'll be a really good conversation where you've actually been able to see a company evolve, and grow, and change. So I'm excited to dive into it.
Jonathan:
Awesome.
Stephanie:
I was hoping we can first start at Monotype. So I was reading a bit about it. But then I saw that you employ, I think it was somewhere around like 700 people and had really high revenue numbers. And I was wondering, what do you guys actually do? What is Monotype? And how do I think about the company?
Jonathan:
Sure. So I think probably your audience is largely not familiar with Monotype, but would recognize many of our flagship products. So if you've ever worked with the fonts Helvetica, Arial or Times New Roman, then you've worked with some of our key offerings. Monotype is the largest company that's dedicated to type. And we have the world's largest library of typefaces, where you'll find thousands of type families, many of which are the backbone of key brands. So the list of typefaces goes on quite a bit that that brands rely on every day.
Stephanie:
That's awesome. So are you guys purely a typeface design company or do you do other things as well?
Jonathan:
So type is really at the core of what we do, but we do have some other supporting businesses that all relate to helping brands express themselves and make sure that their digital expression is on point and translates across their various mediums that they communicate over.
Stephanie:
Very cool. So when I'm thinking about fonts, I guess maybe I'm a newbie when it's coming, or when I'm thinking about fonts, but oftentimes, I'll maybe go and look for free fonts or trying to see like what's out there. So how does Monotype make money and monetize these fonts?
Jonathan:
Sure. So the majority of our revenue comes from creative professionals that are working with type and those creative professionals could be internal, so working on behalf of the brands, at the brands, at those enterprises, or working at agencies, or even individual creative professionals that are in freeline design spaces. So we're really supporting the creative space and these are the people that know about type, care about type and know how to leverage it within their design projects. And understand that it can really be the backbone of a brand. So these are the people that are willing to spend the value in a typeface.
Stephanie:
Awesome. And I saw I think you guys developed some fonts I know like Times New Roman, huh, that's a favorite. Is that you guys who created that one?
Jonathan:
It is, that was a custom typeface at the turn of the century for the London Times. And so it's gone through many, many iterations over the years to catch up with digital times to make the progression that the type has gone from over the years from metal type through phototype and now it's a digital type.
Stephanie:
That's cool. So how do we think about types transforming over time? Like, what are the levers that make you guys want to change a font, or typeface, or edit it, or make a new one? Like, how are you staying on top of these trends and actually deciding like, "Ah, this would be a new way to maybe shift the fonts or create something new or even transition an old font into something more relevant."
Jonathan:
Yeah, that's a great question. A lot of our successful typeface releases come from either new opportunities based on the way that type needs to be used or updates to existing typefaces to make sure that they're catching up with the digital needs of today, right? So take Helvetica as an example. Last year we released Helvetica Now, and it was an update for Helvetica, which cleaned up some of the idiosyncrasies that had caught up with the typeface over the years and make sure that it has all the necessary characters that are used today, some adjustments so that the type looks great on screens versus some of the way the characters were drawn originally, and which didn't translate as well.
Jonathan:
So those types of updates are really common. And as I said, previously, when you're thinking about a new typeface, you want to think about the challenges that designers are having today and make sure that you're designing it for those needs.
Stephanie:
So what are some of those challenges, if a brand is thinking right now about I mean, what first comes to mind is maybe creating a logo or something like that? And I think for us, we're pretty, like easy standard. I think we just use like Futura or something like that. But for people who are looking to actually develop their own typeface, what are some challenges they might encounter down the road when it comes to maybe designers trying to use that?
Jonathan:
Yeah. So if you want to think about all the places where the brand needs to be represented, right? So if you are going to be using your type in an application, like a mobile application, you're going to make sure that the type performs its small sizes, that it looks great on screen and that the readability remains strong when it's presented that way. And you also want to think about your audience, right?
Jonathan:
So if you're selecting a typeface, and you know that you're going to be communicating with an audience that's global, you have to make sure that you have the necessary characters to ensure that you can communicate in all the languages your audience uses. So those are just a couple of the considerations, but those are big ones.
Stephanie:
No, that's some good things to keep in mind. So when I'm like... what are some of the maybe top typefaces right now that you see a lot of brands going with? Like, is there anything new that's happening or shifts happening in the world of fonts that maybe hasn't happened up until now?
Jonathan:
So I mentioned the remaking of typefaces and updating them and that's a big trend. A lot of the big name typeface families like Helvetica and you mentioned Futura are used by these major brands because they know them, they're familiar with them. They know they perform well. They're versatile typefaces, and they're just beautiful designs. And so these updates that are happening, it's a trend that you're seeing more and more of, and what the audience is getting is a broader range of typeface suites which can be exciting so you can extend the family to include more decorative designs so that you can extend the family designs to be more creative with your work.
Jonathan:
You're getting broader character ranges, which is excellent for taking your brand to different places and geographies. And also some visual adjustments to make sure the performance is there, regardless of what the typeface is. So that's a big one.
Stephanie:
All right, cool. So I wanted to get into your role a bit. Being at the company for 19 years. I want to hear how it's evolved and what your day to day looks like right now.
Jonathan:
Sure. So when I started back in the day, it was still really at the dawn of Ecommerce. It was kind of an exciting place to begin, certainly for Ecommerce marketing. Pay per click advertising was just emerging. So I don't think even Google had introduced AdSense at that point. So it was kind of an exciting time and we used all of those things really to establish our Ecommerce business, which when I started, had really just launched.
Jonathan:
And so at that point, we developed myfonts.com and through my time we've gone through numerous acquisitions. So we have a host of commerce properties, myfonts.com the largest of those today. And so it really went from an Ecommerce marketing roll up into managing operations for an Ecommerce business and took a brief turn in that to focus on a subscription offering and then helped build out a customer success and support organization to help the greater Monotype business grow and ensure that our customers including our enterprise, customers, really have the support that they needed.
Jonathan:
And more recently kind of turned my focus back over to the Ecommerce world. So now the role is managing the global digital commerce business, which includes our font sites, some of which I just mentioned, a little bit of our indirect business and a relatively new business that's fun and growing, which is called flip font. And it's an application that runs on a mobile phone unless you've changed the UI typeface to one that you purchase from a store.
Stephanie:
Oh, very cool.
Jonathan:
Yeah.
Stephanie:
So what does that look like overseeing the different Ecommerce channels? Like are there different maybe learnings that you're getting from having different websites to be able to like see trends on or see like which ones are doing things successfully, and which ones maybe need to have a little help. What kind of things are you seeing by having that oversight of multiple websites?
Jonathan:
Yeah, well, that's certainly one of the challenges right? Because it's a lot of businesses rolled up into one business. But there's advantages of that too, right? Because you can test out different techniques on one website. And then if it works out, you can roll it out to others. And one of the challenges is that they all have slightly different audiences, the customers coming from different places, like if you look at the different customer segments, they're not identical. They have different preferences and so you have to act and think in the interest of these different audience segments.
Stephanie:
Got it. So where are these customers coming from right now? Like, what kind of acquisition channels are you guys using to find new customers and then how are you treating them differently depending on the source of where they came?
Jonathan:
Yeah. So most of our customers, one of the advantages that we have is that a lot of our typefaces have been in use for many years. And so when a typeface gets, it's purchased and sees used within a project, and that project will spurn additional use, right? Especially if it's in the hands of an agency and an agency might use it with multiple clients.
Jonathan:
So a lot of people will come to the channels already knowing exactly what they need. And so a lot of the focus is on making sure that we can get that customer who already knows that they need to use this particular font, get them the font, get them in the cart, make sure that they know what license they need, so they can get back to designing as quickly as possible. So that's a lot of the emphasis there.
Jonathan:
And then the other point of emphasis is really on the discovery phase, and this is for the designer that knows that they need a particular type of typeface, they might have a classification in mind or a couple of different qualities in mind that will suit the needs of their project. So what are the tools that we can provide them, how can we help them filter down the inventory of a hundred thousand plus fonts so they can get down to the one that's really going to be the perfect design, perfect choice for their design.
Stephanie:
How do you go about personalizing that because I could see it being quite a bit of consulting and education depending on maybe the industry and I could see people also coming in with quite a few wild ideas where when I was looking at design recently it's like, "Okay, don't go too crazy. Don't go too designery or too out there because that stuff will probably got out of style soon." And like, how would someone go about recommending what kind of font a brand should use?
Jonathan:
Yeah, so I think there's a couple things you can focus on. One is just the making sure that you provide enough tools to help someone navigate the inventory. And so if you understand the attributes of your inventory, you can make it easy to filter down. And also you can go take a look at just the Sans Serif fonts. And then you can look at the Humanistic Sans, not to geek out too much on type here. No, but you can kind of narrow down your selections by the various characteristics of the typefaces for the person that has an idea of what they're looking for.
Jonathan:
But I think the more fun thing that we do is making sure that we give our customers a sense of how the typeface is going to perform before they purchase, right? So you need a lot of tools that allows the designer to experiment with the typeface before they purchase it. So before they lay their money down, make sure they understand what it's going to look like. And the visuals that we supply are critically important. So making sure that we have the images that don't just show the range of the typeface that's important, but also some fun examples of what it might look like when it's designed. So really just show off the characteristics of the type.
Stephanie:
Yeah, that's really important. I was just thinking when we're going through making website changes and stuff, I always wish they could just be an easy, quick switch of like, what does it look like with this font, this font, and maybe you guys have this functionality, and I just never knew it. But oftentimes, it's me like trying to preview and going back and changing again, previewing again. And after maybe changing it a couple times, I'm like, "Oh, I'm kind of done." So do you guys have that functionality? I think you mentioned it with the app earlier. But do you have that for desktop as well?
Jonathan:
Yeah, there's different ways that you can do that. And depending on what tool or what subscription you might have, there's different ways that you can experiment with typefaces. And that's always been a huge problem for the type industry, right? It is sort of, how do you allow someone to experiment with your product, but make sure that you're not cannibalizing your sale? So that's kind of the trade off that we have to work through.
Stephanie:
So I'm interested in thinking about metrics when it comes to changing typefaces. I mean, I'm sure you guys have case studies where different fonts produce different results, can you speak through some of that?
Jonathan:
Well, it's difficult to predict. So unless you're working with a typeface that has a track record, and you're doing a new version, you're actually not certain what you're going to get, right? So typefaces are a lot like music where there will never be enough created to satisfy the creative needs, both on part of the person that's doing the creation and the designers that are consuming what's created. So a lot of it is strategic, right?
Jonathan:
So we know that there are certain needs that need to be served so we'll do a release there. And some of it is creative expression.
Stephanie:
Got it. And you mentioned that a lot of people come to you knowing what they already want. Do you also do paid acquisition for getting customers to find out about you. Like if it was someone like me and I'm looking for a brand redesign, how would you go about targeting someone who maybe I don't really know much about fonts or for me if I wanted the font I might open up maybe Adobe Photoshop and get it in there and like I wouldn't actually know the process of maybe even buying one and licensing and stuff like that.
Stephanie:
So how would you go about maybe pulling in a new customer like me with very low awareness?
Jonathan:
Yeah, sure. So for targeting individual creative professionals, paid search of course is huge and all the typical advertising methods and affiliate programs, which bring people in and will, on the paid search side will also invest in terms where that are not product specific unless there's someone that's looking for a particular style of typeface we can bid on those terms or using terms like something that's more broad like font or by fonts as well. And for the larger customers that we work with those might come in to the agencies that we partner with as well.
Jonathan:
So if we doing a, involved in a big brand design, it's not uncommon for us to partner with the agency that's working with the brand. So some business comes in through that way. And in other cases, we might see that a brand has started to work with one of our typefaces, and we'll get to know them a little bit better and see if we can expand the relationship and then help them with the next steps in their brands. And maybe there's different ways that we can help them as they prepare to make that move further down the digital path.
Stephanie:
Got it. So you mentioned partnerships earlier, and I wanted to maybe touch on that a bit because I think maybe in our prep notes you'd mentioned partnering with other technology providers to basically have a more creative and collaborative approach when it comes to design and the whole ecosystem in general. I was hoping you could talk about what those partnerships look like and how you guys are thinking about the design and not just typeface, but the industry as a whole.
Jonathan:
Yeah, so I think on a more practical level, there are lots of Ecommerce providers that we partner with to put great quality type in the hands of their end users, right? So if it's an Ecommerce platform that has their own templates, you might find Monotype typefaces built in there. So when you're doing your design, you don't have to choose from the standard website, web safe typefaces that you know, are going to be resident on just about everybody's machine, right? So you have a nice variety of selections to choose from. So that's one way that we partner with which puts our type in the hands of more end users.
Jonathan:
But I think that like when you're thinking more broadly about collaborations with Ecommerce, the industry has just evolved so much. And today Ecommerce when you're thinking about your Ecommerce experience, it's not really just about those few precious minutes that the customer spends on the website, right? To do it right, you really have to be thinking about how that Ecommerce site supports the brand and what are the key elements of a brand that you want to inject into that Ecommerce experience. And then that Ecommerce experience really broadens beyond just shopping.
Jonathan:
It's all the things that you're going to do to retain that customer and get them to think about you and create that positive sentiment when they're not shopping. So when the need arrives, they're right there going back to your site to purchase something new.
Stephanie:
Yeah, that makes sense. So talking about retaining customers, a bit and what came to mind was actually licensing for some reason, because that's also an arena that I don't fully understand. And it sometimes scares me of like, "Oh, is there certain licenses we should have around this? And like, how do you protect yourself and your company?" So I was hoping you could touch on what are some of the failures a new Ecommerce company might be making right now, when it comes to typefaces and licensing and not having the right licenses. What do you see happening right now that could be prevented that a lot of people might not know about?
Jonathan:
Yeah, font licensing is complex, and it's always been complex. And I think that's something that the industry Monotype included, needs to work on to simplify that and make it easier on our customers. And so a traditional font license, the traditional found license that we've been selling forever is a desktop license. So that allows someone to use a particular font on their machine, possibly multiple machines depending on the license. They do vary. And that's one of the bits of complexity right there is that... so take my fonts, for example, we have thousands of partner foundries that sell their products on our site. Many of which have their own licenses.
Jonathan:
So that puts a lot on the customer to look through and actually read the license and understand what they're getting. So one of our strategies there is to consolidate on fair industry standard terms there. So that the user is going to be more familiar with the license that they're purchasing. But even looking beyond that, it gets more complicated when you look at different use cases for the type, right? So if you want to use a font on the web, that's going to require slightly different font file as well as a different EULA, excuse me a license agreement and you have to pay attention to the amount of distribution with the font as well. So, are there limitations on the page views associated with the font?
Jonathan:
And, so really additional use cases oftentimes are tied to additional license types. So if you want to use a font in a mobile application, or you want to use it in digital ad, you might require a different license to go along with that. So there's a lot of different formats there that they have to pay attention to. And it's our job as a marketplace to make sure that we educate our customers when they come to the site and help them find the right license. Especially people that are looking to be compliant with that. [crosstalk 00:24:46].
Stephanie:
Yeah, licensing is definitely tricky. I mean, how do you... like if I'm using photoshop, for example, and they have all the fonts in there, and maybe I'm using that to build my own logo, or build a page or something or some kind of like PDF, or if you're using a website builder tool that already has a bunch of fonts like is very different type of licensing thing you should think through, or are you kind of already covered because maybe Adobe already has like an unlimited forever license?
Jonathan:
Sure. Speaking in generalities here, right, because there are different font license agreements. But typically, a font license for a desktop font license is going to cover use on your machine. And as long as that font file isn't traveling to another user, you're good, right? So the output of that font as long as it's static text that is no longer leveraging the font file can be distributed. And that's the case with most, not all, but most font licenses.
Stephanie:
So I want to kind of touch on some higher level Ecommerce trends because you've been in the industry for a while. I think you could have some fun answers for them. First one is what kind of trends or patterns are you excited about right now in the world of Ecommerce?
Jonathan:
I think the thing I'm most excited about right now is machine learning. And it's application for recommendations. So recommendations within Ecommerce has been a problem that we've tried to solve collectively for 10s of years now. And I feel like it's really turned the corner in the past few years. The recommendations you get on store and your music service or other places where it's being leveraged have really gotten good, it's impressive, and it's exciting. So you can go from a place where you're making recommendations that maybe weren't well informed, and just come across as noise to recommendations that are personalized and accurate and are really helping your customers solve a problem. So it's interpreted really well and I think there's a lot of potential there.
Stephanie:
Yep. I completely agree. What about COVID? Have you guys experienced any kind of impact from COVID right now? And how do you see the industry moving forward after this?
Jonathan:
Yeah. So I think everybody's feeling some sort of impact. I think the companies that have really seen the most positive effects of it are the companies that have the brick and mortar locations where their Ecommerce businesses is taking off, because that's where the activity is moving. And we have digital goods and digital delivery.
Jonathan:
So we didn't see that. We saw some initial impact and as our customers spend is really tied to marketing and the agency world which was hit pretty hard. But we've since seen a lot of recovery, which is great. We're seeing a lot of positive signs. And when you look at the various products that we sell, we're seeing some really encouraging and some growth signs, particularly on the use of type on the web which makes sense that kind of speaks to the broader industry of Ecommerce. So that's been a strong point.
Stephanie:
Yeah, that's really interesting. Are there any other surprises that you've seen through all this where you're like, "Oh, now there's all of a sudden an industry around this, or people popping up asking for this that we didn't have before."
Jonathan:
The ripple effects of this are huge, right? And so, I think initially, it was kind of hard to put two and two together and see what the impact would be. But you think about it, it makes sense when you see companies like Zoom or DocuSign having success that they are and all of this and so we've kind of seen the effects of that as well and are just trying to cope with it like a lot of companies.
Jonathan:
And I think in some regard, it's been easier than then we anticipated. I'm very thankful that we're here today and not in 2010, right? If you can imagine trying to do the things that you go through on a daily basis, without the collaboration and communication tools that we have today, it would be incredibly challenging.
Stephanie:
Yep. Are there any challenges that you guys are facing? Of course, it wouldn't be 2010 levels challenges, but is there anything right now where it's kind of like, feeling a little tough to do X, Y, or Z based on the changes in the market or the increased demand?
Jonathan:
I don't think that they're market driven. I think if you look at the things that we need to do, everything is totally accomplishable. But that doesn't mean it's not without challenges, right? So you have a team and you work together. There's just something. It's difficult to put your finger on, but I don't know if it's the morale of the group or just that whatever you get from being able to socialize in person, so you feel the effects of that when you can't meet in person and just have that initial catch up. But you know, you can kind of do that informally but it's definitely missing something.
Jonathan:
And so I think everybody kind of has to find different ways to make sure they get that in their life, in their day to day. The other thing that I think is more challenging is when you're trying to solve a difficult problem, and you can't collaborate the same way. So like I said, Zoom is great, but there's really no substitute for getting five people in a room together with a whiteboard and just working through a problem with everybody's undivided attention. So I do long for those days. And hope that we can do those types of things again soon.
Stephanie:
Yep, I long for the happy hour day where you can just get together again and not worry and catch up on all things work or not work if you don't feel like talking about it.
Jonathan:
Absolutely.
Stephanie:
So I want to hear a little bit about more about Monotype and the successes behind your guys brand. What do you see is working? Like how do you portray your company in a design oriented, beautiful way.
Jonathan:
One of the things that we've had success with is putting emphasis and attention into our communication materials. And if you look at the newsletters, they're very heavy with imagery that shows the type, shows it off, shows how it can be used. And it's really gratifying when our customers tell us that they find these materials which are ultimately marketing materials that are designed to sell, and inform, and educate that they're inspirational to them. Now, so it checks a lot of boxes there and I definitely perceive that as a victory.
Stephanie:
How do you go about building those materials? Like how do you know what's going to connect with the customer? How do you know... what one person might think is beautiful another one might be like, "Urgh." So how do you build something that connects with the majority of your customers or prospects?
Jonathan:
Sure, well, you certainly aren't going to please everyone. You need to rely on talented people that are great with type and see the unique value in an individual typeface and know how to use it and design that shows off its characteristics and present it in a way that shows how it might likely be used by a typical project that would work well for.
Stephanie:
Got it. Do you ever have to educate new customers in a way of like, "Well, here's what we did with this font, like look at that little curlicue there, that's newer," like showing people why something special?
Jonathan:
Yeah, so I think, readability, legibility might be a good example. And you could read all day on the various aspects of a typeface that can aid or hinder readability. And so we'll put a lot of time into the generalities of what makes a typeface more legible, more readable. And then certainly, if there's an individual typeface that has some of those characters or those properties we would point those out.
Stephanie:
Yeah, there's a email newsletter, I can't remember who it is, but they essentially show just how subtle design tweaks and fonts make a big difference in like portraying whatever you're talking about. And it was displayed in such a way that made it be like, "Oh, of course, this one looks better," or, "Oh, we're talking about food in this one." Like you can kind of get a feeling depending on the type of font and I just thought that was a really nice way to just show two things up against each other and it'd be general accepted like which one looks better, which one connects with the brand depending on what the product was.
Jonathan:
Yeah, that's a great way to present it because great typographic often goes unnoticed.
Stephanie:
Yep. I think that was kind of their point is like, you wouldn't think anything if you just saw this by itself. But if you saw a random font next to it, or a font that was just like so off brand, it would be very obvious and you would not feel disconnected with it. So I like that.
Jonathan:
Right.
Stephanie:
All right, let's jump into the lightning round brought to you by our friends at Salesforce Commerce Cloud. This is where I'm going to throw a question your way and you have a minute or less to answer. Are you ready, Jonathan?
Jonathan:
I am ready.
Stephanie:
All right, what's up next on your Netflix queue?
Jonathan:
Cobra Kai, high recommendation from my wife. So she's jumped in and I'm trailing her. But that's gotten her through the pandemic.
Stephanie:
I like it. I saw that being the trailer playing and I was just about to watch it. So I'm glad that it has good recommendations from your wife. What's up next on your reading list?
Jonathan:
It's a book I think it's called Writing Down The Bones. And it's a practical guide to doing more writing and getting more practice at it and ultimately improving your writing skills.
Stephanie:
All right, cool, I like that. I thought it was going to be A Practical Guide To Typography. And I would say, "Man, Jonathan, you are a lover of typography."
Jonathan:
I'm all in.
Stephanie:
I like it. Where are you traveling to when you're able to go out and about again?
Jonathan:
Oh, Cocoa Beach, Florida is my happy place. And I'm looking forward to getting back down there again.
Stephanie:
I love Florida. And the last one, if you were to have a podcast, what would it be about and who would your first guest be?
Jonathan:
Oh, wow. Let's see. Well, I guess I can't steal your idea and talk about Ecommerce.
Stephanie:
You can just keep coming on the show.
Jonathan:
I might have the chops to talk about fonts with an Ecommerce audience, but I don't think I could handle it there. So let's see, I might do something just on creativity in general, because I love the arts. I love expression. And so it'd be fascinating to pull in different people from different genres and have them speak about their art form. And who would my first guests be?
Stephanie:
Yeah.
Jonathan:
Let's see, I'll probably pull in a musician. And let's see. I'm really excited about the new Deep Sea Diver album that's coming out next month. So Jessica Bazzi.
Stephanie:
Cool. That sounds great. All right, Jonathan, well, thank you for coming on the show and teaching our audience about all things fonts. Where can people find out more about you and Monotype?
Jonathan:
So you can follow me on twitter @Zitnik and for Monotype, it's just monotype.com. And you can learn more than you ever wanted to know about fonts from there or you can go to our flagship Ecommerce store myfonts.com.
Stephanie:
Awesome. Thanks so much.
The COVID-19 pandemic has turned the world upside down, and there is a lot of talk about when things will go “back to normal,” or whether this is the “new normal.”
Christoph Schell, the Chief Commercial Officer at HP, is spending a lot of time thinking about what this new world will look like. He’s responsible for setting the company’s path and making sure HP is ready to go-to-market in the best ways possible. How he does that is by looking at emerging consumer behaviors and combining that information with hard data, which leads him to design strategies and solutions that, recently, have needed to be deployed faster than anticipated.
The pace of change is quicker than ever before, and the five-year roadmap that companies had previously planned for are now taking place in a matter of months. On this episode of Up Next in Commerce, Christoph explains how this acceleration has forced a change in HP’s roadmap and sales model, and discusses why the new plan is so focused on subscription-based services, supply chain resiliency, and data.
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
---Transcript:
Stephanie:
Welcome back to another episode of Up Next in Commerce. This is your host, Stephanie Postles, co-founder of mission.org. Today on the show, we have Christoph Schell, the Chief Commercial Officer at HP Inc.
Stephanie:
Cristoph, welcome.
Christoph:
Thanks for having me.
Stephanie:
If it was any other time, I would have you in studio, I'd have you walk down the street to come here but here we are, on Zoom, even though we're basically neighbors.
Christoph:
That's true.
Stephanie:
So I want to hear a little bit about your journey. I saw that you have been at HP for more than 21 years which I was like, "Whoa." That's a long time. So I want to hear a little bit about how you came to HP and what that journey looked like to becoming a Chief Commercial Officer, which is where you are now.
Christoph:
Yeah. So look, you probably can hear this. I'm German. I started with HP in Germany, in '95, as an intern. I did a six month internship in the business school that I went to and I worked with HP as a business analyst and then back for another year to school. And yeah, then actually graduated and I wanted a job at HP but HP had a hiring freeze back then and so I went to P&G in Germany as well. And then one a half years into it, went back to HP. Moved with HP to the middle east. I was eight years in Dubai and then Australia, Singapore, San Diego, back to Singapore. Then I left HP again. I went to a company called [Phillips] and I stayed there for close to two years. And then in 2014, came back to HP. This time, in Palo Alto. And yeah, since then I've been with HP here in Palo Alto.
Stephanie:
That's amazing. So what does your current role look like now?
Christoph:
Look, it's a new role. I mean for all these years that I was in HP, there was a lot of change. But actually, one thing that never changed, we always had the globe organized into three regions. These regions were the Americas, Europe, Middle East, and Africa, and Asia, Pacific, and Japan. And we decided last year that we will change that and we did away with the three regions and moved to ten markets. These ten markets are reporting now into a central structure that we call The Commercial Organization and I'm heading the team of The Commercial Organization.
Christoph:
And we're basically responsible for all go-to-market, and from category management, we do the product management. We're responsible for basically the revenue and the margin and positioning the products correctly to get with our marketing teams and global business units. So in a classic marketing term, you would say we manage the four P's, the four P's of marketing. And we do that globally.
Stephanie:
Got it. So tell me a little bit about behind the scenes of why you moved the org structure to the ten markets instead of the three regional one. Like what was the driving force behind that?
Christoph:
The driving force to me, and I was leading that project from the get-go when we designed this new structure, was a change that we saw in how our customers wanted to consume our technology and how they went shopping. And actually it's interesting to see that COVID-19 has accelerated a lot of this.
Christoph:
So a lot of our go-to-market has moved online. Either to marketplaces or to online businesses, these can be partners or even our own store. And customers go back and forth between these. They get some of their information during the journey, on the marketplace, on HP, with the partners. Some of them go obviously to publications, they listen to podcasts. And they form an opinion. And when you want to be there with them all the way, you need to be very consistent. Very consistent in how you show up, very consistent in how you manage additional assets. And very consistent in how you get your value proposition across, globally, internationally. And we thought that the structure that we had of three independent regions resulted in too much decentralized decision taking when it came to four P management but also basically, basic definitions of value proposition.
Christoph:
And so, we centralized this a lot more. We took a lot more control in how we manage it. And that was the big, driving force behind the structural change. There is, hand-in-hand with this, a move to go more and more into subscription-based engagement with customers. And we can talk about this a little bit later. And that's also a lot easier to do in a digital go-to-market, and digitally engage with customers.
Stephanie:
Got it. Yeah, that makes sense. So you mentioned COVID earlier and I've heard from quite a few guests that their tech or product roadmaps that were maybe for three years to come, that sped up into three months. So what kind of changes has HP seen when it comes to COVID?
Christoph:
Yeah, look, I will echo that. I really believe that what we've seen now happening in five months is what our plan, our roadmap had to schedule to happen in five years. So there was a huge acceleration. Basically, the way I would summarize it is this move to digital has been accelerated, the move from transactional engagements to subscription-based engagements has accelerated. The request of customers to have more personalized experiences has increased. And that has a profound impact on how we design products. It has a major impact on our roadmap that has clearly changed if I compare from February to now.
Christoph:
But it also has a significant impact in how we think about talent, how we think about culture that we want to build within HP. It's actually very exciting. The core of our business is around personal systems and printing. And there are categories within personal systems and printing that have become essential during COVID-19. You know, the good-old PC is very hip right now. A lot of people need it to work from home or to learn from home and even home printing which a lot of people stopped even looking at as a desirable purchase, has been coming back in attractiveness. And it's essential, again, for people that work from home and that learn from home.
Christoph:
And so that helps us a lot to offset some of the headwinds that we see clearly in an office environment with people working from home. Obviously the office business is a little bit neutered right now. So those are the big changes.
Stephanie:
So how are you guys handling these big changes? Like what were some of the biggest pivots that you had to make over these past couple months and how are you aligning team members and everyone around a big cause like that that is probably shifting a lot of the plans, like you had mentioned, and condensing them into a very short time.
Christoph:
I'm going to answer this across a couple of headlines. So the first one is really, roadmap. So if you stay with these essential categories of working from home and learning from home, what is really interesting to see is that COVID-19, to me, has created a new customer segment. I call this the consumer segment. And what I mean by that is that you have employees that work from home and expect enterprise type of deliverables in their home. Their CIO's want to make sure that they can work securely and in a compliant way from home. And that required us to think about how can we bring assets that we have usually in an enterprise go-to-market, how can you bring that into individual employee's home? So that's the first change in roadmap that you see. A lot of investment into workflow. A lot of investment into security.
Christoph:
The second notion under this headline is, when you run an employee's home, you are also participating in how the family entertains itself. And that gives you a boost in how you think about your consumer value proposition and your consumer roadmap. And so, we saw these two things merging. We had to, in the past for example, a product called Instant Ink. It's a replenishment service where your printer sits in the cloud and you pay $2.99 or $4.99 or $9.99 a month and you get a certain page amount based on the subscription that you pay. When your ink levels in your cartridges are at a certain level, we will replenish those and send them automatically to your home. So you don't have to leave the home to go shopping for ink.
Christoph:
And that has, during COVID-19, really hit a nerve and we saw subscriptions going up. Now the cool thing about this is that you build a very loyal engagement with your customers. And the loyalty that we have on this product is really very impressive. We like the numbers and we have really thought about how can we take this and engage on it from an enterprise point of view and satisfying some of the CIO needs of having employees print from home? That's number one. It requires a bit of infrastructure investments that we're thinking about how can we take this program and scale it further globally from the countries that we're in today to get a more complete coverage. So I think that's one point.
Christoph:
The second point is, around the headline of supply chain. I think, my generation, we have learned how to optimize supply chain for cost. But we had to now learn that you need to also optimize supply chains for resiliency. And that is a very complex topic to do that when you manage a global business and when you produce some of the products that we have, some of the portfolio that we have, we own the manufacturing. Some others, we do that with equipment manufacturers. And so coordinating that, working on strategies and how to, on the one-hand side, still be cost-effective but on the other-hand side, be more resilient, is actually very interesting. And so that's an ongoing project but clearly something that COVID-19 has required us to do.
Christoph:
And then the third element is how we manage customers and how we allow customers to really enjoy our technology and consume our technology and I said this before, COVID-19 has been for families, but also for businesses, a concern. A concern to their bottom line, a concern to their cashflow. And so moving from Capex investments to apex investments around subscription engagements and contractual engagements is something that is super important right now and we're bringing those business models to the forefront of our offering. So those are the three headlines I would like to touch on.
Stephanie:
Cool. Yeah, maybe let's start with the prosumer shift as you call it. I want to hear a bit about how ... So you were focused B2B and on enterprises and maybe not as much on consumer prior to this. How did you shift your mindset and really understand what the consumers are looking for and what they need? How did you change that sales model to be more consumer-focused and at home and working at home and learning at home?
Christoph:
We very quickly saw an increasing need of customers to become productive working from home. And it started really with a lot of global accounts, enterprise accounts. Think about the financial service industry. Think about call centers that all of a sudden had to move thousands of people that they had in call centers to working from home. And to do that in a compliant way to the enterprise, in a secure way, with cyber attacks going through the roof during COVID-19 because home networks are not as well protected as our usually office networks. That created an immediate request from our customers to come back with solutions, how can we do that? How can you enable us doing that? And can you please do this in a way that we don't have to transact with you but we in through a service [inaudible] engagement? That was the very first thing that happened.
Christoph:
The second thing that came right on the heel of that was, hey, we need the kids to go back to school and they need to do this online. How can we do that? What's the best ecosystem? It's not just a question of what device you buy but you have to actually think about with school districts, how is it best to move a curriculum online? What's the best way to partner from a technology point of view, what solutions do we have in the ecosystem? If I think about Microsoft, if I think about Google, if I think about other service providers we have? And then again, how do you package that? In the beginning there was a lot of demand for mobility products. And right now, I actually start seeing a shift to a more desktop products because I think kids and their parents are learning the hard way that if you sit six, seven, eight hours a day in front of a small screen, it's not very easy to stay focused and concentrate. So getting them the best possible setup to learn, to read from a large display, to maybe have the speaker set, to have a good microphone for voice. All of this becomes very important.
Christoph:
And how did they learn this to life from a business modeling point of view, again, was very interesting. In the US, a lot of the education business is still transaction for us but we have other countries where we are letting kids and school districts consume on a subscription model. And so this is something I think that COVID will further.
Christoph:
So I think those are the two clear items I think that I have seen evolved here in COVID-19. If you then look at our go-to-market, we are a company that does close to 88% of our revenue through partners. And what our partners needed to do, they need to shift their engagement, very often from a physical engagement with a store or a demo room or a sales force, basically there was [inaudible] on feet on the street, to a more digital engagement, to a more call center driven engagement. In the past we talked about we have feet on the street sales people and we have inside sales people. Today, everybody's an inside sales rep, okay? And sometimes they go out and meet a customer but everything has cocooned back into our employee's home as well and the way they engage had to change. So we had to learn how to virtually sell. Which is not easy. I mean right now, I'm talking to you with our video off so I can't read your facial expressions, I can't read your body language, your [crosstalk] either.
Stephanie:
I'm happy, don't worry.
Christoph:
It's one thing to do that in a podcast but imagine you have to sell and you have to engage. So you need complete new skills on how to do that. And we've also, I think, had to learn how to become better. Each of our sales consultants become better in social media interactions prior to a call with a customer just to learn a little bit more and to get a little bit more in touch with decision makers of companies.
Christoph:
So just a couple of ideas but that is really playing out right now.
Stephanie:
Well that sounds like a ton. So when it comes to prioritizing things, I could see there being so many things. Like everyone's popping up now. Like I need security, I need to be able to work from home but my kids also need to be able to be on. How do you think about what to invest in? Because it seems like some of this could go back to maybe a little bit of how it was before. Like kids might start going back to school eventually, people might start going back into the retail. How do you make sure you're making an investment that's for the long-haul? Like what are you guys betting on to make sure these are good investments?
Christoph:
That's a great question. I actually think this is just the risk and the bet that we are taking here. We think that while things will correct in the future, a lot of things will stick, okay? And that is informing the priority that we have from a product, a roadmap point of view, and also from a sales force point of view.
Christoph:
The team and I, when we discussed about this, we think that travel will come back, but it will never come back to the same levels as prior to COVID-19. So that has an impact. It has an impact in how people communicate. It has an impact of how people meet. It has an impact how people design. And overall, how we engage. And so the skillset to invest into virtual selling, into social selling is probably a good investment. Not just during COVID, but it will stick, okay? That's one.
Christoph:
Then a second one is, commercial real estate. Absolutely fascinating topic, and yes, people will go back to offices but I don't think that all people will go back to offices. And I think that the people that will go back to offices maybe have learned that they don't have to go back to offices five days a week. There are certain things that we will do in offices in the future, but there are also things that we will do from home because we've learned that, you know what? It's easy to do. I don't need to be in a traffic jam, I don't need to rush to get the kids back from school. I'm at home, okay? I also think that some kids will continue to stay home. I could imagine that college students and more of them will move to online classes because it's more convenient. In particular, for this generation.
Christoph:
So again, these are certain things that will stick and I think your talent, your skillset, the processes that you adapt to and the roadmaps of products that you sell, they have to cope. And so I think the bet that we're talking about here is an informed bet and basically we're just looking for, hey, what is going to stick. I also think that not all of it will happen globally. I think there's going to be different degrees by markets of how travel will evolve, of how real estate will evolve, how working and learning from home will evolve. But overall, I think COVID-19 will have a cosmic, a really big impact, on some of these things and I think that's opportunity for tech companies.
Stephanie:
Yeah, completely agree. So you just mentioned globally, and I'm pretty sure that you're able to see a lot of consumer behaviors across the globe and I wanted to hear a little bit about what kind of trends that you're seeing. Like what do you see in different areas that's maybe different than the US?
Christoph:
Yeah. So for me, the most interesting actually when you heard from my intro in the beginning that I've spent a lot of time in the Middle East and Africa, in Asia, amazing to see how quickly customers have moved to online business engagement and to services like business engagements. That has happened a lot faster than it has happened in Western Europe or the US. And so that again is something that will stick and it will have an impact on retail structures. It will have an impact on financing of services like business models. Super exciting, but it's also obviously requiring for certain infrastructure to be in place. I talked about the investment in infrastructure that we are making to bring some of our subscription models to life in those markets. So that is overall a very exciting thing that I see.
Christoph:
I also see that in our partner landscape, there's consolidation going on. And the consolidation is going on for two reasons, I guess. One is, the overall health of business. And also, the second reason being, that different partners need to get access to different capabilities. Partners that in the past, prior to COVID-19, were focused on value-add reselling for example in the enterprise segment. They have an opportunity to learn how to be involved in consumer business. And the opposite is true as well. Retailers have an opportunity now to be involved in working from home and learning from home and to thinking about a consumerization of IT in the professional world. And both is happening. And it's super exciting to see. Super exciting to see how different partners are taking different strategies and running with it. We see significant impact on our business lead by global system integrators. These are companies that help the large companies, enterprise companies, with outsourcing projects and outsourcing in certain [inaudible] and certain geographies has become very ... Has been increasing quite a lot from a customer demand point of view. And so we see more and more of our funnel and more and more of our business going through global system integrators.
Christoph:
So there's a lot of movement in the overall go-to-market structure of HP and of the IT industry in general.
Stephanie:
Got it, that makes sense. So move over to your second point about subscription-based services. Everyone wants to create a subscription service because obviously that's very good for revenue prediction and just good for a business. But not everyone can do it. So what kind of lessons do you have or have you learned around this is how you create a good one, like people actually want this versus we tried this and this is not good. Any lessons there or advice?
Christoph:
I think it's like any product, you know? If you just do it because you think you should or you can, that's not a good enough reason, okay? So at the end of the day, it all starts with the customer. So you need to hit a nerve. You need to solve for an outcome that a customer wants.
Christoph:
Let's think what subscription's all about. You are now in an outcome-based engagement with a customer. And I think that is probably a very traditional definition. I think what you need to add now to it is, okay, it's an outcome but the outcome needs to be personalized. And if you can do that, then the likelihood of getting and loyal customer engagement, I think is quite high, regardless of what you invest into. That's number one.
Christoph:
In order to do that, you need to ... We needed to think differently about how we approach our categories. So what I mean by that is, it's less about the hardware engagement, the hardware sale that we traditionally have in printing and personal systems, but it's more about, okay, here's the outcome. It requires this workflow. It requires this software engagement, if you want, and sometimes the capability of the hardware, they take a bit of a backseat because you're really trying to get involved into a workflow. You're trying to get involved into some productivity element or an entertainment element that your customer is seeking. So I think that shift in mindset as you design the value proposition is very important.
Christoph:
And then thirdly, I guess you need to adapt the value proposition culturally and by market. So what I described earlier on around Instant Ink. I gave you the US example because we're both here in California in Palo Alto. If I would talk to you and you were in Germany or you were in France or in Singapore, the value proposition would actually look different. And I think that's important that you have the understanding but also the technical means to adjust to a cultural environment and to a specific market environment.
Christoph:
Yeah, I'll stop there. But I think this is very general answer but I think this is kind of the A-B-C of ... Yeah.
Stephanie:
Yeah, I completely -
Christoph:
Having a successful shift to a subscription-based business.
Stephanie:
Yeah, I agree. I think COVID-19 definitely helped with that because before all this, even myself thinking about entering into a subscription I'm like, I'm going to forget. Is it going to be worthwhile? But I think now, because a lot of people are at home and they're trying to make things easier, there's a lot more things on your plate when you're at home with your kids and you're working and all that, it seems like people are more willing and as long as you deliver on that value proposition, golden.
Christoph:
I agree.
Stephanie:
How are you staying on top of, like you were talking about the cultural trends whereas places in Europe, it's very different there versus in the US, maybe people are more eager to get into a subscription. How do you stay on top of what different cultures want and what's valuable to them and what maybe is a little bit too far? Maybe like you mentioned in Germany, they might not maybe their [inaudible] information in there or something. I know privacy there is a very big thing whereas here it's like, okay, charge my credit card and if something happens, credit card company will take care of it. How do you stay on top of that?
Christoph:
That's actually a very important topic. In particular, when you talk about personalized experiences where we look into customer's data in order to project what the outcomes are, do they want in the future, and to offer, we call it a second of one value proposition. And we are taking a ... When it comes to data, we're taking a very informed decision, understanding local contacts and local laws. We want for our customers to opt in. If they don't opt in, of course, we will not be able to give a personalized experience but we will respect the data privacy concern that they have.
Christoph:
It does help to have local teams and local setups in key markets so you have your finger on the pulse. We obviously have as well very capable teams that think about trends, design our global business units. And it also helps if you have the ability to not always go and launch a program globally at the first instance but if you start in one market and have a pilot, pause, fine tune a little bit, and then go for a rollout, that can actually be quite beneficial. So I have quite good experiences with that.
Christoph:
But you are absolutely right. Understanding the local context, understanding the local laws, understanding what is culturally acceptable, beyond laws even, is very important.
Stephanie:
Yeah. I think having people on the ground who can kind of guide you on that, definitely the only way to go about that. So how are you approaching holiday season? Like what kind of things are you changing that maybe you had a plan six months ago but now is completely different? What are you guys doing around that? Or what trends do you see happening around the holidays this year?
Christoph:
The holiday season is super interesting because I think it is flavored by how COVID is actually being managed by certain countries and by certain markets. We have a very different playbook by markets because we see in some markets COVID coming back in the second wave and some maybe even a third wave, you could argue. And by the time Black Friday and holiday approaches, that will definitely be the case. And so how do you manage holiday in that context where supply chains can be disrupted. Where you might have another lockdown. Where also then, whenever that happens, all of a sudden the essential categories I've talked to you about earlier, they will come again, even more top of mind from an essential point of view because kids understand, okay, this is going to last longer. We're going to be at home. Parents understand, okay, the office is not going to open up in my city, in my country, I have to have better equipment.
Christoph:
And so you see this constant, very fluid situation, on demand. And so for us, the biggest topic is actually how to manage forecasts, how to manage supply chains, how to make sure that we have the right product at the right time in the right place and of course, I could have said that before COVID but all the historic data that we had on this, is kind of obsolete. All of that is up in the air because of COVID. We've learned a lot and the challenge that we have sometimes is that you cannot just turn on a dime here. We work in ecosystems, in proponent ecosystems and manufacturing ecosystems. And so reacting to that is not easy. You need to pull a big shift of an ecosystem with you.
Christoph:
And so we're trying to be agile, trying to be as flexible as we can. We're trying to communicate more with our customers, communicate more with our go-to-market partners. And basically, are planning a lot more to be able to cope. But ask me that question again in January, after this over because clearly, I don't have a crystal ball either on how all of this is going to play out. So it's all about being agile.
Stephanie:
Yeah, completely agree. Well how are you guys going about forecasting? Because we did have an earlier episode where the guest kind of mentioned don't even try to forecast certain scenarios because you don't know what's going to happen. You can either just ... I don't know. It's different ways of thinking around forecasting where he just said don't try and place it on those scenarios. Like if this happens with the election, this will happen. He said all of that doesn't really matter. What are your guys' viewpoints on creating a forecast that can at least guide you in the right direction, even if it's not right?
Christoph:
Yeah. Very good point. So maybe that's exactly the point. Maybe your endeavor for the forecast should not be to be accurate but to have a forecast that supports your game plan. And then you execute the game plan. And I actually think that's at least how I think about it. That's number one.
Christoph:
Number two, we are ... We did do scenarios for Black Friday and for holiday. We have to. Just to come to an agreement of what products we will sell and what go-to-market in what country, what does this mean from a component point of view. What does it mean from a factory point of view. What does it mean from an ocean shipment and airplane capacity point of view? So we need to have scenarios. We cannot just leave that open. But interestingly enough, we tried not to boil the ocean. And when it came to how many different criteria do we use in coming up with this forecast? We centered very much around COVID and how COVID might play out in different markets from a timing point of view and from a consequence management point of view. We are going to be more lock downs or not. The kids go to school or go to school from home. Scenarios like that.
Christoph:
We also learned that from a component point of view, different countries have been impacted in different ways during COVID. Manufacturing capacity went up and down in different manufacturing countries of ours based on how COVID rolled out. So trying to anticipate that is very important too. I hope that answers it but unfortunately, we did have scenarios. There's only three but we had three scenarios.
Stephanie:
Yeah. I think that the way you guys are going about it is really smart. Not getting too much in the lead and having higher level themes around the scenarios because I can just think about the number of models that I built back in my finance and product phase and it's like one person could question one little variable like oh that shouldn't be 10%, that should be 15. And it got too much in the weeds and the conversation would always go astray and sort of like you said, kind of keeping it at higher level things that you can influence, would actually give you some kind of scenarios that could be semi-correct. So seems really smart.
Christoph:
You said this much better than I did, yes, thank you.
Stephanie:
The third thing I want to touch on, because I can tell, you are so excited about supply chains. So I wanted to touch on that a bit about making your supply chain anti-fragile. Like how are you guys ... Like how were you before COVID-19 and what does your supply chain look like now? Where are some of the big changes you made that are making you more resilient?
Christoph:
It's actually interesting because already prior to COVID, we had to think about our supply chain strategies because of tariffs. And so that was actually quite a good preparation for COVID because we kind of learned about different options from a supply chain point of view and moving to different cities, moving to different countries, using different logistic strategies, not just ocean and trucking and airplanes but also looking at railway. It's really interesting, interesting scenarios.
Christoph:
And what COVID then did is kind of play a filter over this possibilities that you have from a resiliency point of view, okay? Which countries and which geographical setups have been coping with the pandemic better than others? And that actually had a material impact on supply chains. It still has material impact on supply chains.
Christoph:
And so now we're looking at all of this, we've made some moves already, but I think if this project is just started really, it's something that we have to continue to work. It's also not easy just to move from one factory to another. It takes deliberate planning. But I really believe that in a weird way, the whole tariff discussion gave us a bit of a headstart in thinking about how to disrupt our own supply chain for print.
Stephanie:
Yeah. It seems like it would be pretty tricky figuring out, is this partner going to be resilient and agile, especially if you're starting from scratch with someone new, like building out some new partners. How would you think about finding a partner that you can trust if you haven't worked with them before?
Christoph:
That's a very good point, maybe even at a higher aggregated level countries. You can have a very good partner, somebody that is super resilient, but if the government in the country where they operate doesn't allow them to manufacture, then that's that. Okay? So it becomes very complex very quickly. You can have a country that wants to manufacture and a partner that is very capable but if the components can't be shipped to the factory for whatever reason, you are head in the water again.
Christoph:
And so looking at this holistically, assessing country risk, secondary component supply risk and then forming a strategy is super important. Of course, when we do this, we have a very elaborate process to qualify suppliers and to qualify component suppliers as well. I think that COVID-19 has sharpened our senses a little more again.
Stephanie:
Mm-hmm (affirmative). Yeah it's probably good to have a little bit of that. We'll shake up every once in a while to make sure all the internal practices are good, right?
Christoph:
[inaudible 00:35:10], yes.
Stephanie:
Yeah. So what kind of ... What do you think the future of online commerce looks like in the next year or in the next five years? What other things are you guys preparing for right now?
Christoph:
I'm super impressed by what I see marketplaces doing for our businesses. So it's not just in a business to consumer environment but also be in the business to business environment. In the US, we all daily in touch with these marketplaces be it Walmart or [inaudible 00:35:44], anything with a [inaudible 00:35:45]. Or Amazon. But that's a very US-centric viewpoint. When you look a little bit more globally, there are also other marketplaces. In Southeast Asia, there's a marketplace called [inaudible] that I think is very interesting. In China, you have Alibaba or JD.com for us that are very interesting.
Christoph:
And at the end of the day, it's super amazing to see how the idea of having tailor-made value propositions to your customers, how marketplaces are dealing with this, how they're dealing with being very customer-centric, moving to a subscription-based business models, moving to outcome-based business models. Anticipating what the customer wants to experience next and what they want their outcome to be next. So I think that is setting the bar, I think, in our go-to-market and it is setting the bar on how close you can be to a customer. So what we require to do is, we obviously participate in these marketplace opportunities but we're also keen to learn and think about how we can get to the sharp partners involved. And also get our own direct go-to-market [inaudible] involved. And basically think about how we think about the relationships that we have with customers but also with partners. And so, we recently launched a new channel partner program and said early on that we do close to 88% of our business through channel partners.
Christoph:
And in the past, we defined the relationship that we have with partners basically based on two pillars. One was your overall performance your overall size of the relationship that we have from a business point of view. And the second pillar was really around capability, think about certification for example. And we left those. They continue to be important. But we added a third one. And that third one is really collaboration. Collaboration on going to market together, going to market in services-lead models. Going to market by sharing important information, obviously with customers opted in. In order to be able to move to subscription and outcome-based services. And so that is a Herculean task to do that across the tens of thousands of partners that we have. Across the whole global coverage that we have. But it's also super energizing to have discussions with partners and to see what their capabilities are. And as I said to you, I think prior to COVID, launching that third pillar would have been a very tough sell-in into my partner landscape. But with COVID-19, everybody gets it. So everybody understands why this is something that we need to evolve on together and why our customers are expecting from us.
Stephanie:
Yeah, yeah that makes sense. So with all these changes that you guys are experiencing, what kind of new metrics have you started to have to review that maybe you weren't reviewing before?
Christoph:
Oh my God.
Stephanie:
Your favorite ones that you want. Doesn't have to be every one.
Christoph:
It's a great question. The biggest challenge is that yes, you have data from these digital footprints that your customers leave behind but which of these data are really important? How do you use the data? And let me maybe say this, the data is interesting, but what is fascinating is how you get to the data and how you treat the data. What I mean by that is, a lot of companies, they do A-B-C testing but then it's some executives that can overrule the results of A-B-C testing.
Stephanie:
[crosstalk 00:39:41].
Christoph:
Exactly, based on the gut or user experience or whatever. But that's actually a problem. So I think you cannot be a data-centric company and then have a process that allows for data-centricity to be overwritten. So that's number one and that requires actually a huge cultural shift.
Christoph:
The second cultural shift is on and around data analytics. And I think we had to really double down on data analytics and capabilities within the company both from an employee skillset point of view, but also from a digital transformation point of view on the tools that we use and the infrastructure that we use. And I think nowhere is this more visible to me, the progress but also still what we've left to do than it is on pricing, one of the four P's. We've come a long way, but more to be done here. So I think that has a significant impact and I think COVID-19 has explained this even more, informed us even more.
Christoph:
And then the third piece is really this personalization and I think we're starting to offer more personalized experiences. This is clear in the future of where we want to go. And doing that in a partner-based go-to-market where the partner owns the value proposition together with HP to a customer, doing that consistently requires a lot of collaboration. So this is why this third pillar in our HP amplified program is so very important.
Stephanie:
That seems really tricky -
Christoph:
Yes.
Stephanie:
... trying to make sure the partners are able to personalize the experience based on their platform and how they know their customers. Like how do you ensure there's a level of quality and that they're actually getting an experience that you guys want while also letting the partner influence it based on what they know about their customers?
Christoph:
Exactly. I think that last piece is very important and it's a joint responsibility if you have an indirect go-to-market. And so we have some part of the information, they have some part of the information. We have a clear understanding about what our brand stands for on what value proposition we want to drive, but they need to ... It needs to match their philosophy as well. So being in close contact, having good communications around that is super important.
Stephanie:
Very cool. All right. So let's shift over to the lightning round, brought to you by Sales Force Commerce Club. This is where I'm going to ask a question and you have a minute or less to answer. Christoph, are you ready?
Christoph:
Wow, okay, yes.
Stephanie:
Yeah. I know it's 5 o'clock but bring that energy, all right? I'll start with the hard one first. What one thing will have the biggest impact on ecommerce in the next year?
Christoph:
What one thing would have the biggest impact on ecommerce in the next year?
Stephanie:
Yep, only one.
Christoph:
COVID-19.
Stephanie:
Yeah, I would think COVID-19. Everyone says COVID-19. So is there anything else that you want to say?
Christoph:
I guess probably the stickiness of what we've learned during COVID-19. So even when it's over, how much of work from home, how much of learn from home will stay? And how much more blending will we see between consumer and professional lives into this prosumer segment. I think that will have a huge impact. And as I said truly before, I think this is here to stay.
Stephanie:
Okay. I like that. What's up next on your Netflix queue?
Christoph:
My Netflix queue? That's a very good question. I moved out of Netflix. I'm currently watching Succession on HBO. Quite entertaining.
Stephanie:
Okay, that works. I will have to ... Is it good?
Christoph:
Yeah, it's good in a weird way.
Stephanie:
Okay, I'll have to check it out. What's up next on your reading list?
Christoph:
On my reading list ... So there's a book that I really want to read. It's in German. It's about the Weimar Republic. So that's a period in Germany between the two World Wars. And my wife just did a college course on that and it's intriguing. So I'm going to read that book about the Weimar Republic. I'm not yet sure exactly what to expect but it's something that I really focused on when I was in high school so I would like to go back to that.
Stephanie:
Very cool. If you were to have a podcast, what would it be about and who would your first guest be?
Christoph:
It would be about drumming, because I play the drums. And it would be a famous drummer. I mean maybe Ian Paice from Deep Purple or Jess Drummer, the [inaudible] maybe. I don't know. One of those guys.
Stephanie:
Is it just maybe drumming the whole time? Like I can do that. I'll do that for you. I got you.
Christoph:
Well then you can be on the show, that's great. You can be my first guest.
Stephanie:
I don't think many people would listen after that. They're like this is what it is? Okay.
Christoph:
You never know. Maybe.
Stephanie:
Everyone likes something different I guess. What new ecommerce tool are you trying out right now that you are loving? Anything come to mind?
Christoph:
Well I'm trying to shed all that weight that I gained during COVID so I have this. Ecommerce tool is maybe too much to say but it's a diet app and I take pictures of all the stuff I ear. So it's actually quite entertaining to relate the calories to the pictures and doing so slows me down on my eating habits which is great. It's all good.
Stephanie:
Oh my gosh. I mean, yeah that might not be an ecommerce tool but I like it. So it tells you you just lost ... Or you're eating this many calories and it looks like this and it shows you a piece of food like a bag of chips or [crosstalk] -
Christoph:
Exactly. You take a picture and then it suggests how many calories that might be in there and that in itself is such a negative experience that you stop eating.
Stephanie:
You're like, ugh, maybe not. I like that.
Christoph:
I'm not hungry anymore.
Stephanie:
All right, now last one. When you can travel again, what's up next in your travel destinations?
Christoph:
Oh my God. I would really need to show up at my parent's place. That wouldn't be too bad. And then Germany. So I would love to see family in Germany. I also wouldn't mind going skiing in Canada, if possible.
Stephanie:
That sounds great. I need to get back to Germany too. I have a lot of family there, so ...
Christoph:
Good.
Stephanie:
Very pretty place. All right Christoph. Well this has been such a great interview. Thank you for coming on the show. Where can people find out more about you and HP Ink?
Christoph:
All right so look, if you want to be in touch with me, please try and find me on LinkedIn. I spend a lot of time on that platform. And obviously, if you want to learn more about HP, please go to HP.com.
Why wouldn’t someone like free swag?
That’s not a rhetorical question. In fact, Jeremy Parker has been trying to answer that question since he co-founded Swag.com in 2016. Jeremy knew that swag and other promotional items were becoming key marketing tools, and he saw an opportunity to build a business that brought those items straight to the people who needed them.
On this episode of Up Next in Commerce, Jeremy takes us behind the scenes of what it was like building Swag.com, including how he went from 3,000 organic site visitors in a month to more than 40,000 organic visitors. The journey to that success was paved with many hiccups, including the difficulty that comes with building an ecommerce platform from scratch, and trying to land their first big-name customer by walking around that company’s campus until they found a buyer. But today, Swag.com can handle unlimited orders, and that first customer was a little company called Facebook. How did it happen? Learn that and more on this episode.
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
---Transcript:
Stephanie:
Welcome back to Up Next in Commerce. I'm your host, Stephanie Postles co-founder of mission.org. Today on the show we have Jeremy Parker, the co-founder and CEO at Swag.com. Jeremy, how's it going?
Jeremy:
Hey, thanks so much for having me.
Stephanie:
I'm excited to talk all things swag. You saw my shirt hoodie. I was ready for you this morning. I have everything branded mission.
Jeremy:
Every everyone needs a little schtickle of swag in their life.
Stephanie:
I agree. What is the first piece of swag that you remember?
Jeremy:
Oh, wow. For myself, I've been going to a ridiculous number of trade shows and events over the years. Honestly the earliest swagger member was stuff that I ended up throwing away and that's one that gave me one of the ideas for Swag.com and we wanted to make sure we only offer products that people actually want to keep. That was my main mission from the very beginning.
Stephanie:
Yeah, same here. I remember getting a bunch of stuff and throwing it away, but I remember being so excited it was back I think in 2010, it was like my first finance conference and I got like a Koozie. I was so excited because it was like the first thing that I'd ever gotten for free maybe and finances a little bit. Sticklers is about giving stuff away for free. And I look back and laugh now because I would go and collect all this stuff and it would ultimately end up being nothing that I really used.
Jeremy:
100%. From the very beginning of our business, we were thinking of swag as an amazing marketing tool if it's used right, so obviously that's a big caveat. And when you think of just marketing in general and you have TV commercials and everyone's trained to now fast forward through commercials and you get a magazine, you flip through the ads, or you put your ad blocker on your computer. If you give somebody really high quality swag, they say, “Thank you.” It's really a powerful tool if it's done really right. And it has to be something that people are actually going to want to use. We don't really like to push the flashiest thing or the new hottest thing. It's all about what are people that actually use every day and get those impressions of.
Stephanie:
Yeah. I love that. Before we dive way too deep into Swag.com, I want to hear a little bit about your background because I see you've done a lot of things in your previous life. And I wanted to kind of hear what your journey was like before founding Swag.com.
Jeremy:
Sure. I was a documentary filmmaker actually in college, that's why I went to school for. I actually never wanted to be a filmmaker when I went to Boston University. And I looked at the curriculum and I really wanted it to be in high school my whole … Before college life I always wanted to be a marketing guy. I was always into branding and commercials and how to tell stories through marketing. When I went to school and I looked at the syllabus of film and marketing, they really were the exact same thing, except for film taught me how to make videos. And this is right at the onset of like YouTube. I thought that would become valuable. I became like probably the first filmmaker at BU history that never actually wanted to be a filmmaker.
Jeremy:
But as I was in school for those four years, I ended up making a feature length documentary that ended up winning the audience award at the Vail Film Festival. And I was [inaudible] and I walked down and the brunch the next day after the award ceremony and half the room are these major celebrities and half the room are these struggling filmmakers. And I did kind of an internal gut check of, am I good enough? Is this what I want to do with my life? And it wasn't, so right after I won this award, when people primarily feel like on a high, they're like, “Oh, I'm going to become the biggest filmmaker,” my thought was, “What else am I going to do? What's my plan? What's really my plan? What am I good at?”
Jeremy:
And when I graduated college, I didn't know what I was good at. I had no real experience in business or anything, but I thought maybe I should start something and just learn what I'm good at, what I enjoyed. I started a t-shirt company right out of college when I was 21, 22. And really I thought t-shirt sounds so simple, but really you're learning manufacturing, PR, marketing, building an Ecommerce experience, all the different aspects of business, fulfillment, all these different things. And I tried to figure out what I was really good at.
Jeremy:
And over the last 10 years, I've done a lot of different things. I started the company with my brother and Jesse Itzler. Jesse is the co-founder of Marquis Jet, private jet company. He sold ZICO Coconut Water to Coca-Cola. He's one of the owners of Atlanta Hawks. I started a company with him where we partnered up with different celebrity influencers and we owned their celebrity rights to Twitter and Facebook feeds before people knew how valuable it was. This was nine years ago or so.
Jeremy:
So [inaudible] a lot of celebrities, buying their rights. That company ultimately got bought by a publicly traded company. I then went on to start a social networking app that ultimately failed. Never start a social networking app, I'll tell you that. Extremely difficult.
Stephanie:
Semi-hard.
Jeremy:
Yeah, it's semi-hard to do. And we built an app called Vouch. That basically was about like Oprah's favorite things democratize for everybody. You could vouch for your favorite movie and book and charity and anything you'd want to vouch for and people who follow you really get to know what you like. Really kind of making the like button with its own platform. We ended up having 100,000 plus users. We had tons of influences. It just never materialized. And after doing that for three years, I realized that the next business I want to start, it needs to be something where we made money from day one, I could give a service and a product and I started Swag.com.
Jeremy:
So, it's been almost five years at this point with Swag. We were just named the 218 fastest growing company on the Inc. 5000. We have 5,000 companies from Facebook, Google, Amazon, Netflix, TikTok, Spotify buying on our site and we spent a really big portion of that building is automated experience for purchasing swag. And now it's about, now how do you handle the distribution of swag? It's more than just making it easy to buy. How do you get into the hands of people? And especially now with this pandemic, that's really the most important thing.
Stephanie:
Yeah, I was just going to touch on that. I know everyone's probably wondering with everything going on, where conferences are being obviously canceled and not coming back for a while. How are you guys handling that? Because I'm that the swag industry right now is down overall. What are you guys doing right now to not be part of that downward spiral?
Jeremy:
Yeah, that's a 100% true. They just came up with numbers. ASI, which is like the big organization for promotional products, just came out to number that over 92% of companies in our industry are down approximately 50% in Q2 this year versus last year. So, it's really bad. And then obviously it makes sense on the surface where you have our core buyer was like the HR manager buying for onboarding of new hires. That was one of our big purchases and no one's hiring right now. That business goes away. And then you have the marketing teams buying for trade shows and there's no trade shows happening, so that business goes away.
Jeremy:
Then you have the office manager buying for internal office and company culture, and no one's in the office right now. You have all these different buyers that really are not buying swag for the normal, the typical reasons to buy swag. So like everyone in our industry, we were very nervous like what's going to happen. And what we've been able to do is take this platform, our swag distribution platform, which is what we're really pushing and what we're really excited about. We'd been building this really amazing platform over the last two years, specifically for marketing managers. That was the initial idea of it. Allowing marketing managers to easily be able to buy swag and then send swag to the remote customers or to best leads to close sales.
Jeremy:
That was their initial intention. But obviously with this pandemic and everyone's working remotely, it's transitioned to office managers and HR managers really buying swag in bulk and sending it to the remote employees addresses to keep the company culture thriving, even when no one's in the office, so much so that not only are we not one of the 92%, that's downloading over 50% our Q2 this year was more than our Q2 of last year and July was almost double our last year July. And it was our best month ever and August is even better than that. We're really growing frankly in a crazy time for everyone.
Stephanie:
That's amazing. Now, I'm thinking about it. I ordered swag for our team maybe two years ago and the process, it was crazy. It was so much back and forth of like, “Here's your quote. Oh, you want to more of this? Okay. Here's your new quote? Here's what the design might look like.” It was just a lot. And then of course the big box came to me and then I had to maybe ship things out individually or wait until I saw people in-person if I was being a little cheap. What does it look like now I'm thinking about reordering hoodies and shirts for our team members? But of course I would have to individually maybe shift them out again or are you guys different? What is your process look like that's so different than others?
Jeremy:
Really simple. On our site, we have very curated selection of products. You're not going to be overwhelmed with too many options. Say the top 25 mugs, you find a mug you could use our filtering tools, really easy to search by color or price point or your type of brands. You find the product you upload your logo. Our system will detect how many colors are in your logo, in the nearest Pantone match. We're making sure we're printing, Coca-Cola red and not Staples red. Once the logo is uploaded, you can maneuver the rounds, you can mark everything up. You select on your quantity price adjuster in real time and checkout. It literally takes less than three minutes to buy swag. There's no back and forth. You can also use our instant quote tool, if you wanted to quote things out before you want to go through the design process on our site, you can upload your different variables, the quantity that you're looking for, how many print locations, the number of colors in the print. It takes two seconds and you're coordinating things out.
Jeremy:
So, there's no back and forth emails, there's no phone calls, there's no presentation decks. It's none of it. It's really completely automated streamlined. And then when you're going through the checkout flow, obviously you can input your own address, so we'll ship everything to your office. Or if you want us to handle all the distribution for you, there's a pink button on that shipping page that says, one is to hold your swag and inventory easily distributed, [inaudible 00:09:29]. You click on the button, you follow the onboarding and then we hold all of your swag in this online Swag closet if you will, where you can manage all of your inventory in real time. If you're ever running low in stock, we'll send you smart notifications to restock. If you want to send 1,000 different locations, you upload a CSV file we'll calculate the shipping costs in real time, based on the product you selected, where they're going.
Jeremy:
Once you pay for that, we grab those products off the shelf and we're shipping it all over the world for you. We really streamlined the entire experience. We take it a step further if you wanted it, some companies want this, some companies don't, but we have a whole ability to create different inventory closets for location or for a department. You can have a marketing closet versus a sales closet, versus your London office or New York office. Different people should get access to it. There's different permission settings, approval flows, et cetera. You could really break it down by department, by location and we're doing this with a lot of global main companies all over the world. Also, a lot of small startups who just want to use our service as a way to distribute swag.
Stephanie:
I was looking through your site and I saw products there that I haven't seen in other swag companies. And I wanted to talk a little bit about how you guys go about picking your products because all of them seemed high quality where oftentimes, I'll go through it and I'll find 50 different shirts on a custom t-shirt company website. And I'm like, “Oh my gosh, actually let me look through all the reviews. Let me see if they're good. Okay. 95% of them are all bad. They all have bad reviews, bad fits, whatever.” How do you go about making sure that you only have high quality stuff there that people will actually want?
Jeremy:
That's a great question. And that was the challenge. And it's an ongoing challenge, always. From the very beginning, me and my co-founder, each invested $25,000 of our own money. That was our first startup budget. What be used primarily for that was buying samples. We went out and we went to different trade, shows all over the country and we bought samples from tons of different suppliers. And we saw exactly what customers typically see when they buy from sites. A lot of this stuff was really poor quality, would end up in the trash and we would never feel comfortable selling it. We were really kind of laser focused on only offering a curated selection of products that we would actually want to keep ourselves. It's a lot of testing, it's constant testing.
Jeremy:
How we kind of look at the whole process is we want to have the best of what's out there. It could be the relatively inexpensive, or it could be premium. It doesn't really matter we have to have stuff in all price points. We don't want it to be known as the premium quality supplier. We want to be known as the quality supplier. We have a lot of products there high-end brands, Public Rec, Rowan, Top Wood Designs, Patagonia, different products like that. We also have no name products that you had never heard of, but they're really, really quality. We have a product sourcing team that's constantly contacting a lot of direct to consumer type of products and brands that are not traditionally found in the promotional product space and going after them as well, because we want to be known as the company that has products that no other company in our space offers.
Jeremy:
What we've been seeing is that a lot of companies that are okay featuring their stuff on our site or are happy to feature their stuff on our site like Bellroy Backpacks, they've never done it in other promotional product sites because the other sites, feel schlocky or throw away or cheap in some way. And we are really, really not that. We're really trying to focus on quality products, stuff that people would be proud to show off, stuff that when you get it, you're going to want to wear it every single day because that's really the only real reason why Swag is a true benefit is that people actually want to use it.
Stephanie:
Yeah. So, now that you can't go to trade shows and try things out, and are you still going through that process when it comes to finding new products, like just ordering things that you think are great and trying them out, or is it different than what it used to be?
Jeremy:
No, it's exactly that. It's less expensive in some ways and more expensive in other ways. We want to make sure we have the right products that we're constantly spending a ton on samples. And now at this point in the business also, we're almost five years in and we're somewhat known in our industry. We're the fastest growing company in the promotional product space. A lot of different, great suppliers and direct to consumer brands have heard of us, so they're willing to send us free samples. We don't necessarily have to pay for it anymore. But we're just constantly sourcing more products and taking some products that maybe were cool last year, but we don't think they're going to be good this year and replacing it with new stuff.
Jeremy:
We don't want to keep just adding and adding and adding because it then makes it very complicated for customers to make a decision. So, we're constantly, always looking at our site and saying, “Is this the right blend and mix of products?” And we're always never happy. We're always constantly trying to improve it.
Stephanie:
Very cool. I'm guessing there's also a bit of like a data element where you can probably look into the data and see what people are either enjoying. Do you do reviews? Do you use customer feedback to also influence the products that you choose?
Jeremy:
Yeah. 100%, yeah. After everyone places an order, we always have a survey that automatically goes on the time of delivery, very basic. It's like one question like, “How satisfied were you?” So we can get our ranking and see how people like the products and how they turned out. If we ever get any sort of bad or not 100% amazing feedback about a product, we'll look into it and maybe there's something wrong, maybe the print quality wasn't great for that order or maybe the product itself wasn't as great as what we thought and we'll just remove from our site. We're constantly listening to our customers, understanding do we have the right products at all times? Because that's very important for us. We need to have that.
Jeremy:
We're constantly testing more and more products. And obviously we're learning what people are adding to their cart. How many products are being … What products together go? We sometimes find that if somebody buys a tote bag, they're going to buy other products that could fit into that tote, like smaller products. Or if they buy a backpack, other types of products are usually bought with backpacks. We're constantly looking at data and trying to make sure we have the right mix of products that go with each other, so we can start positioning certain products. When you buy a backpack, the products that are featured as you might also like actually make sense. So, not just what we think, but what the data is telling us.
Stephanie:
I love that. Along with maybe getting personalized recommendations, depending on the product they chose, are you also personalizing the experience based on maybe what company is looking around? If a LinkedIn's looking versus Google, maybe you know that Google always buys hoodies where LinkedIn buys coffee mugs. I don't know. Are you personalizing it based on who's actually browsing?
Jeremy:
At this point, we're not. And we've been constantly thinking about that. The challenge is that there's so many different buyers within companies. Even if we worked, let's say with LinkedIn, which we do or Google, which we do, there's so many different divisions within Google that are completely different. We're selling to the HR team or the marketing team or the sales team or office manager, or just somebody who's buying it for their local team. Everyone's looking for different things. We've done for Google complete stuff, obviously the normal stuff of notebooks and t-shirts and sweatshirts, backpacks and water bottles. But we've also done custom Allbirds Sneakers. It's hard to kind of match up always and all the buyers are necessarily not always the same.
Jeremy:
So, it's constantly changing, but as we're growing as our processes and we're able to handle a lot more orders and we're analyzing more data, I think that will be a shift in the future of really making the experience as personal as possible and that might be not making it personal at all based on companies or that might be going the opposite way and making it super, super personal. We're kind of learning what's the right mix at this point.
Stephanie:
So, to talk a little bit about maybe the backend, the tech stack, it seems like there's a lot going on behind the scenes. I first wanted to start with, I saw that you were quoted saying the platform's able to handle unlimited orders in a day. And I was wondering, is that because you guys are leveraging cloud infrastructure or have you built some kind of scaling methodology? What does that look like behind the scenes to allow you to have unlimited orders?
Jeremy:
Yes. We do work with AWS, which for the cloud obviously makes things a little bit easier, but our entire platform is fully custom. Every single aspect of our site is custom. We're not using any other services. Obviously we're using like Intercom live chat. We're not going to be building our own chat, but the entire platform itself and all of our pricing is very complicated. That's why there's not a lot of companies in the space that could do what we do because it's fully dynamic. Every price tasting consideration, the quantity that you're looking to buy, how many print locations, the number of colors in the print, all these different variables that have to be in play. And now if we have 3,000 products on our site and 200 core products, they all have different pricing structures, they all have different under base charges, they all have different kinds of printing methods from screen printing, embroidery, laser engraving, all of these come with different complications.
Jeremy:
So, we really had to build our site from this place from the very beginning we couldn't just take an out of the box solution. And frankly I would have loved to take an Ad Box solution for this because it's been taking me five years to build [inaudible] building. We have a 15-person tech team and we're growing, we keep developing more and more and more because it's important. And we want to always stay one step ahead. At this point, like yesterday we did north of a 100,000 in sales all through our Ecommerce site. Things we could really scale and that same day. The day before we did 50,000 in sales and then hopefully today we do more than a 100,000 sales. Every day could literally be completely different and it's completely the same automation. Somebody could buy 5,000 notebooks or they could buy 50 notebooks or 15 notebooks or 20,000 notebooks. And it takes the same processing ability, same exact time for checkout.
Stephanie:
Very cool. Yeah, that's great. When you're thinking about back in the day, starting out with a custom website versus maybe pulling something like using a platform that is already out there, how did you go about deciding that you wanted something custom and then what did that process look like? What were some of maybe the mishaps or failures along the way where you're like, “Oh, if you guys are trying to build something custom make sure you don't do this or that you avoid this.” What kind of learnings did you get from doing a custom?
Jeremy:
Actually the truth of the matter was in the very beginning of the business, we went all in on Shopify. And we went all in say, “You know what? Why are we building our own Ecommerce experience when somebody else could do it significantly better than us or is worked through all the kinks?” The challenges, when we start to really build a Shopify, we realize how complicated our specific industry is in terms of pricing. And there's no really easy way. There's no Ad Box solution that could really do it. We spent literally two and a half months building the Shopify store only to then realize, which was a big mistake on our part, that the pricing was not able to be done.
Jeremy:
We had to really scrap it and start from scratch. And we realized it's going to take us a lot longer to get where we want to be, but we're still not where we want to be, but it makes the most sense. It's really the only way to streamline it as much as we want to streamline it. Now, the typical process of promotional products, as you mentioned before, it's a lot about phone calls. It's back and forth, this quote versus that quote. You change one little element, the whole quote changes. We didn't want to deal with that. We wanted customers to be able to do it themselves, no talking to anybody. If you don't want it, obviously if you want to call us, we love to hear from you, but you don't have to. You could do every single thing yourself and we want it to make that effortless.
Jeremy:
You want to hold things in inventory, click on the button and now it's all in inventory. You want to distribute swag, upload this and it ships out. Every single thing on our site, we wanted to make it as easy as possible and historically, and traditionally it's not been easy at all. And it makes sense because of how custom the product offering is.
Stephanie:
If you would have, maybe on day one started out with like, here's the kind of things that we're most interested in. Did you know that you wanted this custom pricing option and did you go and kind of look at different platforms to see if they could do that? Or did you just jump right in?
Jeremy:
Yeah. From the very beginning, honestly, we spent a year before we built any platform. Our initial idea was we don't really know the platform to build, we knew that the industry needed to be shaken up a little bit. We knew how old and fragmented the industry was, but frankly, I think most entrepreneurs could agree. You honestly know what the right answer is. Most people don't, they think they do, they don't. From the very beginning, our idea was let's just learn as much as possible. Let's reach out to as many office managers, HR managers, people that we know within industries by swag. And let's ask them what they like and hate about the current buying experience that they're having. And we would show up at meetings and we would literally say, “What sites you buy from?” And they would give us some site names and we would look over their shoulder really.
Jeremy:
This is what we did for the first year. We spoke to over 200 different office managers, HR-related buyers. And some ended up buying became customers of ours for many years and some moved on to other things, but just to see how they purchase swag was a big tell for us, really what the process was. Looking at their email back and forth 40, 50 emails with a rep just didn't make any sense to us. We kept kind of thinking. That was kind of the first six months of our business. The second six months of our business, the remainder of the year was about, “Well, let's do it the old school way. Let's just launch a landing page. Let's go out there. Let's be a traveling salesman and try to sell some stuff.” And we really learned how painful it is. It's like it takes forever to quote, there's a lot of manual labor.
Jeremy:
Every single thing that was painful for us, we then figured out a solution to automate it. And we kept just chipping away at it.
Stephanie:
That's so important. I think it's Paul Graham who said do things that don't scale. And that's how you actually learn, like what's working, what's not working and what to build going forward. That's really smart.
Jeremy:
Exactly right. And that's the same thing with even getting our customers. Now, I haven't made a sales call in four years, but in the beginning I was doing everything. Me and that co-founder, Josh, we would show up at offices and try to sell. And we sold to Facebook as one of our first customers. First customer, really actually. We had a friend who worked at Facebook, got us in the door. We ended up walking around Facebook's office in New York just speaking to whoever we could to see somebody who would buy swag. Ultimately ended up selling them a couple of t-shirts, like 100 or 200 t-shirts. We barely broke even on it. I think we made like 5% margin, like barely anything, but didn't matter to us. It was just about getting that Facebook logo. I remember two days later we showed up at WeWork in New York and WeWork asked us who else we work with? And we said Facebook.
Jeremy:
They assumed we probably had thousands of others because we had Swag.com brand and Facebook, but really it was just Facebook. And we got, WeWork and we continued that cycle to get that really five core blue chip companies. It was doing the really unscalable things like showing up, showing the products in-person, making the sale, really learning the process as much as possible, and then automating the experience and making that whole buying experience effortless. Now, people don't need to speak to anyone if you don't want to, that's really what our main goal was.
Stephanie:
That's great. Yeah. I think we've had a couple people on the show. Who've talked about just finding that first customer that you can kind of leverage as the brand name and then just pointing to them and be like, “Yeah, they work with us. Like you should too.” So I think that's a good lesson for a lot of companies starting up. If you find that one brand name and you can reference them, it'll probably help with all future sales.
Jeremy:
100%. It's all about social proof, at least what we have learned, it's everything. People are not going to work with you if they don't feel confident. To build up the confidence, obviously you have to have a great platform, but that doesn't happen overnight. That takes time. You have to have a great brand and a great design, make people feel confident, but other ways are who else you've worked with? A lot of our shirts and what's big reason why we've been able to scale with very little money is a lot of our t-shirts and apparel has a Swag.com in your label. We do our own products.
Jeremy:
When people [inaudible] t-shirts that's 5,000 people knowing about Swag.com. They see the t-shirts, they see the quality, they feel how great it is, they see the print, they have the instant social proof that Facebook uses them or Google uses them, whoever is getting the product and they see Swag.com and it drives a ton of traffic to us. That only really works if the products are great as well. Obviously people are getting really poor quality and everything's says, “Swag.com,” no one will use us. It'd be opposite [inaudible 00:25:52]. Every single thing really has to work hand-to-hand
Stephanie:
Yeah, that's a really.
Jeremy:
Yeah. We were thinking about it initially because I wear jeans a lot. I was thinking like I buy one pair of jeans for like three years. It's kind of looks cooler, the more you wear jeans, it gets more faded. But with Swag.com or swag in general, people buy stuff for a specific reason. You're buying it to give it away and then you need more stuff. If they're buying it to give it away, we have to make the experience of giving away products that other people actually want and see. And then that new person, that person who just bought that 5,000 t-shirts now they need more stuff for the next event. It's a completely different kind of business. And we just try to figure out, we have to make sure that our logo is everywhere that it can be, obviously within reason.
Stephanie:
I love that. Let's talk a little bit about the backend when it comes to warehousing your inventory. How does it work behind the scenes? If you're able to allow someone to essentially have their cart saved and then say, “Okay, ship this to one person in California and then ship this to one person in Florida.” What does the backend look like to make those logistics work?
Jeremy:
Yeah. Upfront in terms of the actual buying swag and bulk, we have integrations with different kind of the best vendors in each industry. So, like the best one for drink wear, best one water bottles and obviously we have a big selection of product. When somebody buys 1,000 mugs or something on our site, it's automatically connects to our supplier network that produces the highest quality mug with their logo and then drop ships it directly to the customer's office or wherever. But if they're holding stuff in inventory, it ships into our 3PL. We have four strategic locations all throughout the US and we're adding more locations in Canada and Europe right now to make it cheaper for global distribution. Once the products are in our fulfillment center, then they log into the, my inventory portal and they see all of their inventory in real time.
Jeremy:
So, if you're ever running low in stock, we'll send you smart notifications to restock. They can easily upload their CSV file. We'll calculate the shipping costs in real time. They pay for it. We grab it off the shelves and we're shipping it to 1,000 different locations. We also have this feature called the Swag Giveaway. Oftentimes, especially now, people don't necessarily know where their remote employees are living. Say you went to a trade show. God willing the world opens up, we have trade shows again, and people go to your booth and they give you their email address. You'll know what t-shirt size they are. You'll know where they live, but you still might want to engage with them. We built the Swag Giveaway feature, where you can create a fully recipient branded landing page. Let's imagine Google just uploads their logo and their colors.
Jeremy:
And they could easily blast out to a CSV file of just having the person's first name and email, that recipient will click on the link. It will be branded with Google, they'll select their t-shirt size or they'll select their mug, or water bottle, they'll be able to choose which product they want. Input their address, submit. It all speaks to our system. And now we have the address that we can distribute. We're building all of these tools to allow people to distribute if they're shipping to one address, thousands of addresses, or even if they don't have the recipients addresses, but easy way to capture that and also distribute.
Stephanie:
Wow, that's a lot going on behind the scenes.
Jeremy:
Yeah.
Stephanie:
How are you thinking about the front end part of the website because to me when you're ordering swag or something where you really want to see the details of like, is that embroidery right, are the colors right and also just like making sure that you have people who are converting and not just sitting on maybe their design or their shopping cart? How are you moving people along through the website and what kind of best practices have you seen when setting up the front end user interface?
Jeremy:
Good question. It's probably the most challenging thing for our business because it is custom and everyone is somewhat concerned about, is this going to come out perfect, is it could be the right logo color, is it going to be the right positioning. What we've learned is obviously we built our patent technologies is one of the first things we built to detect the number of colors and the nearest panto match in your logo when you're uploading it. So, to make people feel really safe, they're going to get their exact color. Now, obviously it can never be 100% because web colors are not the same as Pantone colors that are used for printing and t-shirts, but it really gets to the closest match. And if you want, and if you know your Pantone, which a lot of companies do, it allows them to easily input their exact Pantone, so it overrides everything and it makes it really easy.
Jeremy:
Obviously they can maneuver their logo, they can mock it up. And what we say is, after you place your order, we're always going to create for them a virtual production mock-up to approve before we ever start to print. We'll never go into production until they give us the green light. Really customers should feel super safe that even if they upload their logo and they're not sure is this straight or is this exactly the right position. It doesn't really matter. We're always going to create that mock-up and they can make as many revisions as they want before we start with the print. That makes it really easy. And in terms of our distribution, obviously they can always just add this stuff to inventory and just easily distribute. The process on the front end, we try to make it really effortless and streamlined.
Jeremy:
It's taken us four years. We're constantly adding more and more features to make that experience better. We're launching a feature very soon called the Company Art Folder. Imagine you bought something and 20 other people in your company buys different things. It should lump all of your artwork together as a company art folder, so you never have to really hunt down the designer to make sure you have the right file or is this the right logo, is this the approved logo for swag? You can always, when you're uploading your logos, select the pre-approved designs that have been used and purchased by other people in your company, so you feel more safe. Or unlike my orders page, let's say Jennifer on your team is out sick one day, you can log into your account, you'll see all of your orders and then there's another tab that says company orders. You see everyone else in your company what they purchased, so you could easily reorder what somebody else ordered and easily subtract and make sure you're using the exact same artwork.
Jeremy:
We're trying to build this platform as effortless on the front end to make it really, really streamlined. And in terms of getting people through the funnel, what we've seen is our platform really does work well. I think that the more simple features that really solve a problem. And as you mentioned before, Paul said, “Do things unscalable before you scale it.” Every single thing we do, it has to be super painful for us, for us to spend time developing a solution for it. Once it's overwhelmingly painful, then we build the solution to make it easy.
Jeremy:
Then obviously we see their abandoned carts. We can track everyone's abandoned carts. And then we have our SDRs calling all these abandoned carts within like 10 minutes of the time that they'd been in to make sure that there's no experience that's wrong. Sometimes people say, “The shipping is too high.” Or, “It doesn't seem I can get in my in hand date.” There's certain things that we could actually help out and maneuver possible. And if it's not possible, we'll let the customer know it's not possible. But getting in front of them right when they're thinking about, are they going to purchase or not and they might have issues, that's really, I think we found the most important thing for us.
Stephanie:
Yeah. That's really smart. Have you seen people pick up their phone right away or have you experimented with texting instead?
Jeremy:
We haven't done texting and I've been researching some companies and I think it's actually a really good idea. We've seen a lot of people if they're actively looking on our site or they've just left in 10 minutes, they're likely to pick up their phone. Even when people fill out a form on our site and we have a lot of … Obviously our core business up until this point was Ecommerce experience adding it to distribution, but we have a whole ‘nother business where people could buy swag boxes in bulk, giving a really great unboxing experience for new hires or engaging with your best clients. That's fully custom branded boxes inside the boxes, as custom notebook and water bottle and pen and custom note card, crinkle paper. We've allowed people to custom build those boxes effortlessly through our site.
Jeremy:
All you have to do is upload your logo, the same process as buying and adding to your cart, you click on the button that says, “Build a box,” and it lumps, all those products together as a box listing. It makes the entire experience super simple. And we've seen with those bigger box orders. A lot of times it might be like a two to three week sales cycle. When Ecommerce could be like they land on a site and they check out that same day, boxes, they're fairly larger sizes. Typically, they're usually using our distribution platform for distributing because no one has room in their office for boxes or wants to boxing up themselves. So, they actively use our distribution platform for that. And that cycle takes a little longer. Getting on the phone with them, really talking through the challenges or what their issues are and what their questions are, we find is really, really important.
Stephanie:
Yeah. That's really great. Oftentimes when you're talking or this can happen, when you're talking to a customer, they don't always tell you exactly what they need. One example you gave there was, you want to be able to go into a library where your logos are there, which is huge. I remember ordering swag back in the day at other companies and it was always kind of a review and escalation process of like, “Is this the most recent logo? Are these the right colors? Is this our team logo?” Okay. How would you find out something like that that maybe a customer wouldn't know to tell you, but it would just make it easier if they did have that there? How do you go about getting in your customer's head?
Jeremy:
Yeah. I think it's just like just being their teammate. We like to think of in all of our customer success likes to think of it, is that we're an extension of your brand. Obviously if you're buying swag on our site, it has to really be the quality, but it's only going to be quality and only what you like, if the logo is right, the positioning is right, it's exactly what you want. Especially dealing with bigger orders, we like to jump on a call with customers, have a conversation, try to understand what the use case for their swag is, what their budget is, what their timeline is who the audience is. And we like to suggest ideas and obviously customers can go on the site and not talk to us if they want to talk to us and use our filtering tools and our search tools and just our browsable experience and find what they want.
Jeremy:
But if they want our help, we want to be there to help them. I think it's just constantly trying to understand, the reason for them buying swag and with the use cases. And then we constantly offer different suggested items that we know that we work with that other companies in the similar space have worked with. And we give other solutions for them to kind of play with. And I think it just gives a great experience where they could do their own kind of sourcing and they can also use us as a guiding tool to find them exactly what they're looking for.
Stephanie:
When you're thinking about getting new customers, what kind of acquisition channels are you using or finding success in right now to get these large companies using you guys?
Jeremy:
Yeah. I like to think about marketing and it's not always going to be the same traction channel is always going to work. Now, from the very beginning, we were doing a lot more Google ads because we wanted to get paid back fairly quickly and we've realized early on, at least for our business prospecting on Facebook is a little more challenging when you're dealing with B2B buyers. But for Google, when is looking specifically for swag it's quite challenging [inaudible] Google, obviously it's very expensive. In the beginning it maybe makes sense to do Google just to get those early wins and get the credibility. But then maybe you kind of shift away from Google and you do some more SEO. SEO for us has been tremendously successful. We started really diving deep into SEO about 18 months ago, just to put things in perspective.
Jeremy:
Last January, we had about 3,000 organic visitors to our site, in 2019 January. January of 2020, we had North of 20,000 organic visitors. And last month we had nearly 40,000 organic visitors. Really growing the base in terms of organic, putting out tons of content, always it's content that maybe has stuff to do with swag buyer like buying swag or maybe just has to do with the audience, HR managers, the best HR solution tools. Doesn't necessarily have to be about swag, but it's a valid topic related to the buyer. And then ultimately when the buyer comes on our site, reads about it and then is going to Facebook or Google or any of their other properties, we can re-target them. That's been a really great driving force for us, but also partnerships.
Jeremy:
There's a lot of different companies in our space that don't necessarily sell swag. They sell other products to the office manager or other products to the HR manager, that we could really parlay and work on. We could promote them to our audience. They could promote us to their audience. We've been trying a lot of different things, affiliate marketing, a lot of different stuff, but usually it's always the one or two kind of traction channels that are the most beneficial at that time. And right now it's SEO [inaudible] hands down has been the best driver of customers for us.
Stephanie:
Okay. I want to dive into that a bit then, because I hear people are always talking about SEO. There's so many SEO agency, they'll do all this SEO stuff for you. I think there's like tons of bar jokes, maybe not bar jokes. Maybe just be regular jokes about SEO agencies and consultants and stuff. I want to dive into, what are you guys actually doing when it comes to your SEO strategy because it sounds like it's been successful? How are you finding out what topics to write about? What are you seeing work? Give me all the nitty-gritty on what you all are doing behind the scenes.
Jeremy:
Yeah. I think from the very beginning with SEO, it was about making our site compatible and making it work for Google traffic. Our site, at the very beginning … I'm a branding person. My background is in branding and user experience design for the customer. There's a lot of things that are behind the scenes that Google looks at, that the customers don't even realize. And frankly, it doesn't even mean anything to the customers. I had to learn that. I didn't know anything about that. Frankly, I'm fairly new to SEO. We started really 18 months ago and I realized our organic rankings should be a lot higher based on our brand, based on these experience. We're getting a quality product out there and it should be getting a lot more traffic. The first step was just analyzing our site and realizing, “Well, how do I make the site faster?”
Jeremy:
Or, “How do I make the site make more sense in terms of Google?” So for example, on every single product page, 18 months ago, we had no other associated products below the fold. Now, most people don't necessarily look at those below the product the fold because they're trying to upload their logo, mock-up things. There's a lot of stuff for them to do on the product builder page to add to cart. But you need to add those other products below the fold, so that in terms of Google, they see that that product listing is connected to four other products or so, right. There's all these small kind of tweaks or theoretically, you want to keep adding and making your site feel refreshed. You're not going to be refreshing your homepage every single two weeks. It doesn't happen.
Jeremy:
You're not going to be redesigning your product builder page every two weeks or your browsable experience every two weeks. What you can do, is you can maybe put like a blog post in your footer, make it like the latest blog posts. Every time you update your blog, every day or every two days, your site is getting refresh constantly. There's all these kinds of small kind of tweak things that you could do in terms of overall site. And then it's about kind of pinpointing the content that you really want to go after and saying, “Well, who is our buyer?” So, really understanding who your customer is and trying to write really good content, not just like throw away stuff, really good content with great subject lines that get people to read something and learn something, get real value out of it that might not be about swag related, but has to do with swag adjacent, if you will.
Jeremy:
If someone's looking for office holiday party ideas. They might not be looking for swag, but maybe we could get swag in there somehow. Or best ways to engage your remote employees or something like that. Or what healthy snack food to have in the office, literally has nothing to do with swag, but the person who is looking for that is ultimately going to be looking for swag. And we don't necessarily need to convert them today, at this point, we could convert them a month from now. When they are looking for swag, just be on the top of mind, re-target them and ultimately convert them. Just putting out consistency. I think in general, whether it's SEO or whether it's being a startup founder or whether it's anything you do in life, I think it's just really all about consistency and just trying to have more good days than bad days.
Jeremy:
Constantly just trying to keep pushing as hard as you can because at the end of the day, you're going to get to a much better place if you're consistent with it, you keep pushing forward and no small setbacks really affect you.
Stephanie:
Yeah. I completely agree. Are you all doing the content creation and things like that in-house still? Or have you hired that out? At what point would you say like, “Oh, it's about time to hire this out,” to have someone else work on it instead of maybe an entrepreneur doing it all themselves?
Jeremy:
So, initially it was all me writing the content, then it became use some freelancers and now it's becoming, now we have the resources we're hiring actually this week, a full-time writer for our own team to be writing content and doing all of the stuff that we want to do. I think in everything, it always starts with the founders. Me and my co-founder, I think we've done really ridiculous, crazy things over the last four years to get to where we are. We've driven u-hauls 11 hours making deliveries at 11 o'clock at night. Having my family and my grandma, my aunts and uncles rolling t-shirts for three days straight trying to win these big deals and having no resources to do it. You're always kind of founder, CEO and head intern all at the same time. Now, at this point we're able to hire some of those roles that doesn't really make sense for us to be doing at this point or frankly, people who are just a lot better at it than we are. And that's where we're really excited to get to.
Stephanie:
I love that. I'm sure your grandma thanks you. Poor grandma, she's a real VIP over there, rolling t-shirts.
Jeremy:
Yeah. She was making fun that she hurt her back and that's why her back is messed up because of the [inaudible 00:43:33].
Stephanie:
All because of you, Jeremy. Jeez. That's great. Before we move into a lightning round, is there anything that you wanted to cover today that I missed?
Jeremy:
No, no, this has been great.
Stephanie:
Okay, cool. Yeah, it has been a blast. All right. So, let's move onto the lightning round brought to you by our friends at Salesforce Commerce Cloud. This is where I'm going to throw a question your way and you have a minute or less to answer. Are you ready, Jeremy?
Jeremy:
I'm ready for it.
Stephanie:
All right. What's up next on your Netflix queue?
Jeremy:
Oh, cool. I started watching … I was in the Hamptons this weekend.
Stephanie:
Fancy.
Jeremy:
I know, very fancy. My mother-in-law's in town and she wanted to go out. [inaudible] and there's all these ads all over the place for million dollar beach house or something. I think I started watching some real estate show.
Stephanie:
There you go. I saw that also on Netflix. I was watching Selling Sunset, though I need to finish that one first.
Jeremy:
That's fine.
Stephanie:
All right. What is the best promotional item you've ever received? And what's the worst one?
Jeremy:
Well, okay. The worst one is obviously easy. It's all about the schlocky pens that don't write.
Stephanie:
Oh my gosh, yes.
Jeremy:
Pop socket, lighter. There's some of these things, stuff when they do the hybrid stuff, it's just kind of ridiculous. Like the highlighter that also acts as a compass. It's like, “No, that's not the right thing.” So, a lot of those. And a lot of people trying to sell me on selling their stuff and it's not good.
Stephanie:
You're like, “No, this is no.”
Jeremy:
Yeah. I don't want to be mean to anybody. I just say, “I don't think it's the right fit,” or something like that, but it's not good. And the best stuff I think is honestly anything really you're going to keep it. A really high quality water bottle, something you're going to see every single day it's could be on your desk and you're going to get those impressions. I'm really proud of that, but obviously we've done bicycles for companies. We made fully custom bicycles. A company came to us and they had their whole executive team. They're very into health. They want to do something a little bit different, unique. They have a campus. We create a really cool custom, fully custom logo, colors, everything bicycles. That was a really cool project to work on. And obviously we've done really cool backpacks. We did a backpack for Facebook, which I thought was really cool where the logo was nowhere on the outside.
Jeremy:
[inaudible] was we wanted to make the product so kind of premium. These are like very nice backpacks, that it didn't like scream Facebook. No one even know about it, except for the people who are wearing it. So, it was black-on-black logo on the inside of the backpack, so like when you open, only the people who are wearing it, see it. That's, I think is very important. I knew this was going to happen because frankly I started getting a sense that socks were going to become very popular. We sell [inaudible] socks and clearly socks is very … No one really sees it, but it's all about the person who's putting on the socks, is wearing it, who were seeing your logo. It starts to feel that kind of connection to your brand and eventually becomes that brand evangelist. It's all about that internal.
Stephanie:
Yeah, that's awesome. What is a new Ecommerce tool that you're trying out that you're loving right now?
Jeremy:
New Ecommerce tool? We're using a company called [Tend 00:46:36]. It's very early in it, but you're able to kind of track all the different people who are coming to your site without them inputting real information, which I think is kind of spooky, but kind of cool, just to see who's checking what.
Stephanie:
Cool.
Jeremy:
For me, it's kind of the core stuff. It's the Intercom, it's the HubSpot, it's just the marketing automation, streamlining things. And there's two different things, obviously with Intercom, which is our real life customer success. People are always here to help and jumping on the phone call. Then you have the HubSpot, which is really automating the experience. Having both sides for our type of businesses is very important.
Stephanie:
Great. All right. The last one, a little bit harder. What one thing will have the biggest impact on Ecommerce in the next year?
Jeremy:
Wow.
Stephanie:
Yeah.
Jeremy:
That's a good question. I'm still laser focused on swag. I don't necessarily always think about the broader industry as a whole. I think for swag, I think it's easy. I think it is swag distribution. Everyone's working remotely. I don't see people getting back into the office anytime soon. Even if they do, it's going to be somewhat of a new normal, maybe not every day. People are still going to be able to need to engage with the remote employees or the best customers. And who's going to want to fly across the country, maybe to that trade show. They might want to do things a little more remote and automated. For Swag, that's where we're going and we're going to be automating the distribution of Swag. I think that's our next phase.
Jeremy:
Or somebody's one year anniversary, send them automatically Swag in the mail. Or somebody's had a baby, send them Happy Mother's Day or Happy Father's Day type of swag in the mail. So, really automating different life activities where you want swag.
Stephanie:
Awesome. Love it. All right, Jeremy. This has been a blast. Where can people find out more about you and Swag.com?
Jeremy:
Yeah. You can obviously reach out to me on LinkedIn Jeremy Parker, and obviously come visit us at Swag.com. That's S-W-A-G.com and we would love to work with you on your next order.
Stephanie:
Awesome. Thanks so much for joining.
Jeremy:
Thank you so much for having me, guys.
Although many brands were forced to invest a bit more into their ecommerce operations in 2020 than they expected, many still have brick and mortar stores that need attention, too. Foot traffic is down at local malls and on Main Streets all over the world, but there is a way to bring people back to that in-store experience.
Audrey Gauthier is the Vice-President of Marketing and Ecommerce for Little Burgundy, a multi-brand footwear retailer owned by Genesco. She believes that an omnichannel approach and some creative partnerships are the answer to this widespread problem.
On this episode of Up Next in Commerce, Audrey, (who called in all the way from Montréal) explains that customers who are comfortable with both in-store and online shopping will ultimately be your highest-value customers. She dives into how Little Burgundy is driving conversions in both areas through partnerships with local creatives and businesses that bring more in-store traffic while also providing new and exciting online shopping experiences. Plus, Audrey reminds us why concentrating on the basics of logistics and shipping is what ultimately builds confidence with your customer base.
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
---Transcript:
Stephanie:
Welcome back to another episode of Up Next in Commerce. I'm your host, Stephanie Postles, co-founder of mission.org.
Stephanie:
Today on the show, we have Audrey Gauthier The vice-president of marketing and ecommerce for the Little Burgundy division of Genesco. Audrey, welcome.
Audrey:
Hi. Thank you.
Stephanie:
Thanks for coming on the show.
Audrey:
Yeah, sure. My pleasure.
Stephanie:
It feels like you're so far away. Where are you calling in from today?
Audrey:
I'm in Montreal, actually. That's where my accent is coming from as well.
Stephanie:
I love it. Are you guys opening up your retail stores of Little Burgundy or are you still strictly working from home?
Audrey:
We opened up the office. In Montreal, actually, we're allowed to have 25% of the employees working from the office, so we manage our calendar for people that want to go back to working from the office, but also everyone can actually work from home if they prefer as well.
Stephanie:
Very cool. So before we dive into Little Burgundy, I wanted to go through your background a bit. I saw that you've worked in the world of ecommerce for about a decade, and I wanted to hear what drew you to ecommerce, and a little bit about your journey.
Audrey:
Yeah, sure. I mean, I first started my career after a master in administration. At the beginning after my studies, I really wanted to work for ad agency, but after interviews had gotten me really into retail world, so I started for La Vie En Rose, which is also a Canadian-based retailer out of Montreal. It's a lingerie retailer, could be similar at the smaller case to Victoria's Secret. And I quickly fell in love with all the opportunities at ecommerce and the endless possibilities and creativity that goes really beyond the activation that we're doing, but also in terms of troubleshooting. So, really it's what got me in ecommerce.
Audrey:
And then after I got an opportunity within the Aldo Group and then continue my career in footwear since about seven to eight years now.
Stephanie:
Very cool. So what have been some of your favorite campaigns that you've worked on over the years?
Audrey:
One of my favorite campaign was actually the first time we shot abroad. We went to Mexico City and worked with combination of talents that we brought with us from Montreal and some others that were local based. That was just an amazing experience to be able to shoot abroad for a campaign that was going to live both in store and also in the digital side, so really exciting. And I would add to that that's recently just navigating to COVID and our new reality, coming up with our fall-winter campaign and trying to really connect with the customer with this new reality and just reinvent ourself was really fun and different and challenging, but a good end for me.
Stephanie:
I'd love it if you could highlight what Little Burgundy is.
Audrey:
Yeah. Yeah, sure. Little Burgundy is a multi brand retailer. We started back in 2008. We were initially launched by the Aldo Group and acquired by the Genesco Group back in 2015, so about five years ago. And, I mean, we're really boutique sale retailer, so we only have 38 stores. We're pretty strong on ecommerce as well. But even though we're a nationwide retailer, we really tend to do things locally and try to connect with local communities. Our stores look a bit different from every region. We try to partner also with local influencers, local artists and ambassadors. So, I would describe us as, really, a multi brand retailer that carry brands like Dr. Marten's, Converse, Vans, brands that you can get in a lot of other retail stores, but we even though we're multi brand, we really have a strong artistic brand DNA.
Stephanie:
That's great. So, when it comes to forming partnerships with the local talent or the artists, how do you guys approach that? Because I think that is really important when you're walking into a really fun, nice shoe store, you've got good music going, you've got good art around, but how do you guys think about finding new artists or finding people that are a good fit?
Audrey:
There's a lot of searching, I would say, especially if they came into consideration that doing business in Canada and most specifically in the Quebec province, we always love to do everything in French and English. And that goes as well for even the music in our stores. There's certain laws in Quebec that you need certain amounts of songs that play in your playlist in the store that needs to be in French, so we need to manage our playlist in store so we enough French songs and local artists from Montreal. But that goes as well from people that are connecting with artists. Our musician, for example, from Toronto or Ottawa are really different than the people that are connecting with more local based Montreal and French artists.
Audrey:
So there's a lot of researching from my team, either through connections and contacts or Instagram, Facebook ... just always trying to be in the know of who's up and coming. And also, we're still a pretty small player, so budget wise, in terms of collaboration, we really love to just be highlighting new artists that are up and coming, and [inaudible] the ones that have been seen around by every other retailers or partners.
Stephanie:
That's really fun. That seems like such a great way to lift up the community and really help out a lot of people, like you said, the artists and people who are doing really cool work.
Audrey:
Yeah, absolutely.
Stephanie:
Cool. So tell me a little bit about how you're thinking about, so you have your retail stores opening back up soon, and you also have your ecommerce stores going. Tell me a little bit about how you're thinking about the omnichannel approach and how you want to sync them together so it all feels similar.
Audrey:
I see really that regardless of the channel, we really need to provide the very best experience we can to our customer. In the recent months, there've been a lot of customer that for the time they shopped with us online. They used to be in-store customer. And we saw from the data that the customer that do shop in both channels are the one that are bringing the most revenue to the company if they're active in store, but as well online.
Audrey:
So I think moving forward, we're not only going to try to drive our business either online or in store, but really convert them both. And some initiative in regards to that, for us in our end will be solution like we call [Book Us 00:09:28] for example. So you buy it online and then you can go within the next hour in your favorite shop and maybe spend a bit less time in store, but at least it's reserved, it's for you, you can try it, try your size, especially in footwear, because it could be quite tricky in terms of size. So you can go in store, have that experience, but it's more fast and easy because you've done your pre shopping online, you reserved your item, you know it's waiting in store for you. The store's assistant is there to maybe offer you an alternative product if that doesn't work for you.
Audrey:
So, I think all of that omnichannel experience and improving both the in-store, but as well, the online is going to be key, same thing with just the shipping and return as well. So, I mean, if you decide to go in-store, try the product, we don't have it. We currently order it for you and then it can be delivered either to the store or your home. But we need to do a better job of just shipping faster, same-day delivery without pain, returning it the way you want, either in-store or to a delivery location without any cost, without any trouble to go through, or you don't have to call customer service.
Audrey:
So, I think on the logistic end, that's where we're actually going to win in the upcoming years of ecommerce.
Stephanie:
I love that. And I saw on your website that it said you could return shoe within 365 days. Is that right?
Audrey:
Yeah, exactly. That's something we always been actually doing with Genesco. The only thing is we've never really been pushing it, so through COVID and the culture of our stores, that was the type of messaging that we were putting up front of the customer, just to reassure them in their process, especially for the new digital customer that were used to maybe buy in store and become more comfortable with returning in store the next week or within the next two weeks.
Stephanie:
Yeah. I think that's so important to get someone to feel like there is no risk with buying if you can't get it back in a year. It sounds such a good idea, to have people come back and store so they can get comfortable with the experience and get a part of the in-person experience that you guys have built up. So how are you thinking about other ways to drive them in the store that maybe isn't competing with the free shipping? Because it seems like it'd be hard to want to go in store if I know that I could buy something online and ship it back for free for a whole year.
Audrey:
Yeah. It's been an ongoing question, to be honest, since we've been reopening our stores. I mean, traffic has been, even prior to COVID, it was a little bit down in malls, and it was already hard to get customer to actually go in-store. So, our job is even tougher in terms of really just increasing that traffic and really making sure that the customer do show up as well in store. So we're looking at doing special launches, special partnership as well. I think a good way of winning, especially in tough situation like we are is doing partnership maybe with other retailers. We recently done a partnership as well with RBC Bank in Canada. So that was a way to get new customers.
Audrey:
I mean, downtown is pretty much still dead for us in Montreal, as well as Toronto. The traffic has significantly decreased overall, not just in shops, but in restaurants and bars and every places, but for the ones that are still going downtown to maybe give a special promotion that they can get on their lunch break or something like that.
Audrey:
So we're really just trying to work more closely with other retailers, other partners, the malls also itself, or if it's a street store to work with, like the neighborhood, that store to find partnership and ways that we can all together bring more traffic to our stores.
Stephanie:
Very cool. So, what kind of launches or partnerships are you seeing success with right now? What kind of things are you trying out that are working?
Audrey:
The RBC partnership that we've done, it was basically giving an exclusive offer to the RBC Bank members. It was successful in the way that it brought a lot of new customer to Little Burgundy and they were also high-value customers that were spending more than average. So in a time where businesses is tough, definitely that was a good win for us.
Audrey:
Another one is we have this student price card in Canada, it's called SPC. And it's giving discount to members of SPC when they are student and could be applicable in multiple retail location. So that's another way that other partnership that we're seeing, that it doesn't change the entire business, but it does add up at the end with multiple type of partnership like this.
Audrey:
And I think another good way of winning is working closer definitely with the malls, because at the end of the day, we're in the same boat. We're all seeing either decrease of traffic and difficult business. So I think we need tighter communication with the malls and the partnership, if they're doing an event to really involve the retailers as well. With one of the mall regroupments here in Canada, Cadillac Fairview, they're doing a incentive during the holiday, so if a customer buy Cadillac Fairview $100 gift card, then they can get special items in certain participant store. So that's another way of, again, in terms of traffic and partnership, try to get more customer into our doors.
Stephanie:
Yeah. That seems like definitely the way of the future is figuring out how to partner with people who are around you to create really good experiences. Yeah. It seems very smart.
Stephanie:
Are there any metrics that you pay attention to when you're forming these partnerships and these spatial launches?
Audrey:
Mm-hmm (affirmative) As I was saying, with RBC, the average order value, the revenue it's bringing, but also in terms of long term, are they staying customer? The acquisition that we're doing through that partnership, are they going to redo a purchase in the next six months and then next year, or that was really just a one-time to get the promotion, so it's a little bit less valuable for us? So, these are definitely metrics that we're paying attention.
Stephanie:
That's great. So how do you keep customers coming back? Because there are so many shoe stores, so many competitors out there. How do you engage with your customers in a way that keeps you top of mind?
Audrey:
Yeah. Good question, and definitely a good challenge being a multi brand retailer, and with also increasing competition in terms of just the offer out there with the multiple retailers and also big players, even from the States that are coming in.
Audrey:
So, I mean, for us, a thing we've always been good at is showcasing the product in a different way than our competition does, but also than even the brands are doing themself. So we showcase a Vans product in a different style or different aspirational look than what Vans would do or what a Footlocker would do. So, I think that's what one of our advantage, because it seems to work with our customer, and from previous survey or focus group that we've done in the past, they always say that at Little Burgundy, we do things differently, but in a good way. We succeed to stand out, even though we're not the biggest player.
Audrey:
And even though we don't carry all the product, but we have the reputation of carrying a good selection of product. If you want a footwear that is on trend, it's maybe not the most fashion forward that you would see on a red carpet, but at the same time, it's a safe choice in terms of being on trend, so we're being one step ahead of maybe the core people, but at the same time still being affordable price. So we are in a good position in terms of our offer and all we presented.
Stephanie:
Yep. I think that's a good space to play in, because who really wants to wear the red carpet stuff anyways? Most of that looks a little crazy.
Stephanie:
So, on your website, you mentioned that you have a magazine that goes out every season. Tell me a little bit about that.
Audrey:
Yeah. Our magazine, we actually launched it since the very beginning of Little Burgundy. And it's always been at the heart of who we are. And I remember when we were part of Aldo, everyone wanted to work for the Little Burgundy division, because it was with our magazine and all our artistic direction, we're doing things always a bit more edgy. And that was just a really good vehicle for our brand DNA and to show Little Burgundy, again, differently than other multi brand retailers.
Audrey:
That being said, about three seasons ago, we stopped doing the printed magazine and really went more with digital version. So we still do those strong artistic direction campaign every single season, and we create a specific team for a season where we're going to do articles and work with artists, et cetera.
Audrey:
So, similar content with what we would have done for the magazine, but we're really doing it more for the digital. So assets are optimized for digital, we're doing more video content as well, we're uploading articles on the website. So we move away from the print and magazine, basically because of the cost of printing, but also we were just able to track a better return on investment with everything we're doing online.
Audrey:
So then a tough decision when we first started the magazine, because it's been part of our DNA and heritage of Little Burgundy. Even in the office, we have all our covers of the magazine that are showcased in the hallway. So we've all been super proud of it, but just with the world changing, we took a more digital direction in terms of content. And I'm not saying that we're never going to go back to a print version of the magazine, but for now we're really more focusing on still creating good content exclusive to Little Burgundy that has always a really defined angle, but then really optimizing that content more on the digital side.
Stephanie:
Yeah. So to dive in a little deeper on the digital magazine aspect, what kind of engagement are you seeing on that? When you send it, I'm guessing, through your email or wherever else, how many people, or how many of your customers engage with it and read the entire thing?
Audrey:
It's not a magazine like it used to be, a full issue. It's more we're releasing content as we go throughout the season. So it's more going to be through blog article and just a newsletter that is more informational. But it's not in a format of a full magazine, like page one, two, three, et cetera.
Audrey:
So, we see that like people are ... It's just funny to look at engagement of people in certain articles versus others. The latest one we released, I don't know if you got a chance to see it, it's really, really small article, but it was just of these dogs, so the dogs of people working at Little Burgundy, and obviously it involved dogs, not at all related to the shoes, but it was interesting because we got a very wide reach of people engaging with that article and just spending more time on our website. So at the end of the day, in terms of KPIs, we had a good returns, even though it was not direct sales. But again, it's content that are just making us a little bit stand out from the crowd, and our customer just going on our websites, spending time with us and engaging with Little Burgundy instead of spending that five minutes on Footlocker, for instance.
Stephanie:
I love that. I think anything with dogs or animals probably would perform we.
Audrey:
Yeah, definitely.
Stephanie:
So when you create content that, how do you also keep Little Burgundy branding on there so people know who brought this content to them without hitting them over the head with it? How do you make sure it's engaging, but also does the job?
Audrey:
In terms of letting the customer know that it's from Little Burgundy and this content that is brought to us through, let's say, paid advertising ads or ad on Facebook or Instagram, that's why we really launch campaign that are very different, that are very [inaudible] driven, that are a little bit more edgy than what you would see on maybe another retail or a medium. So we're really trying to have our ads running, but really with a strong artistic direction. So, if you see a Blundstone ad on your Instagram, and then you see a similar ad with the same background or the same artistic direction but for Vans on your Facebook, you can still relate that it's probably from Little Burgundy, just because of the artistic direction.
Audrey:
But it's really important for us, and I think it's one of our strength as a multi brand retailer to be able to tell a story to our blog, our newsletter, our in-store window, with our own tone of voice, even though we're going to market Dr. Martens, Adidas, Nike, like any other brands.
Stephanie:
Yep. So previously you guys were owned by Aldo, and then in 2015, Genesco acquired you, which is an American brand, what did that change look like? Did you have to change your tone of voice or your design, or were there no changes at all?
Audrey:
No, there was definitely tons of changes. And it's been a big journey, because, I mean, you're detaching a business that was already very tightly attached to another business and then you're reattaching it to another strong structure. So it's been a couple of years, actually, just going through that process and being able to be fully running on new platforms.
Audrey:
We've pretty much changed everything, like the POS in store, our shipping carrier, our warehouse, every single aspect of the business has been scoop out and look at, and we needed to confirm that, yeah, we're moving forward with that third party or not. So it's been a lot of work, I would say, in terms of acquisition from both and even from people working from Little Burgundy, but also with Aldo and the Genesco folks as well.
Audrey:
In terms of business, I feel really fortunate that it's actually Genesco who acquired us in terms of they're a multi brand, their expertise in retail, they've been around for ages. And being part of the Journeys family, they're a multi brand retailer, as well as us, while Aldo was a first class business. So we were always a little bit like the outsider within that structure.
Audrey:
Joining Journeys, they're really more similar to us in that sense of being a multi brand retailer. So for a small player like us from Canada being only 38 stores, I mean, it gave us access also to the management of certain brands we're working with. So we have always had our good, strong relationship with all our brand partners in Canada, but now we also have access to getting more involved and knowledgeable of this strategy more globally from our brands. So that was definite win for Little Burgundy within this acquisition, actually.
Audrey:
And if I can add to that, I'm also glad of our Aldo heritage, just because of I put us knowledgeable at footwear being from a first class company, that were working with manufacturer all around the world and creating their own line of products. So I feel we're the perfect situation that our previous family was actually making shoes and our new company, they're really strong in retail and with brands. So I feel we're really gaining from Little Burgundy in this acquisition.
Stephanie:
Yeah. That's great. I'm sure that Genesco and the brands within Genesco are learning a lot from you all, but what are some of the biggest insights that you learned from being able to see into these other brands that were similar to you?
Stephanie:
Like maybe where you have been able to see how other brands do things or how they track things or how they do things with retail where you were like, "Oh, we weren't doing that before, and now we're going to start implementing them."
Audrey:
I would say one of the big learning that I saw from being part of the Journeys family, they always have this tagline of "Journeys is a family with an attitude that cares." And that's true. They're really super transparent, sharing data, involving the team from the coordinator to the designers, the part time employee in store to the store manager, they're really involving everyone from the company to almost sit at the same table and really share knowledge.
Audrey:
An example of that is at the POS level in store. We have a button that is called Feedback Button. So anyone from the store employees can hit that button and send directly their feedback to the various team from the head office. And even all of the management team, we have access to the feedback from the store.
Audrey:
So I feel that transparent communication that we have within the company is such a eye opener for everyone, actually. And there's just a lot of transparency between what's actually happening from the sales floor to the office decisions that are being taken. So that's definitely a good learning with joining Journeys and seeing really that family vibe is just to connect more with people that are from the stores to know their reality, know their feedback from the customer, because they're really at the front line. So I feel that within this company, we do succeed with just bringing back together and the office team and the sales team, which has beneficial even for the web business, so many feedback that we get from the stores, then we're like, "Oh, okay. They hadn't thought of that even for ecomm so we can apply some changes as well for the website," from insight we're getting from the sales associate, in-store comment from a customer, for example.
Stephanie:
That's really smart. It seems like that's a great way to empower the retail employees, because I think we've all been in a retail store before where you can just tell the employees there are not happy, they don't feel excited to come into work, they don't feel a strong connection with the brand, but it seems really smart to start empowering them so then they feel like they are a part of the success.
Stephanie:
So what kind of disruptions are you preparing for within ecommerce?
Audrey:
There's been a lot of I mean, upgrades, like with the store closure in March, and just really putting all our focuses on actually the web business for a couple of months and seeing how it's overall helping the business, we've been fueling and investing a lot in ecommerce upgrade.
Audrey:
So, on our end, we've been even launching, for example, affiliate program or working with partners like Curalate for more UGC content on our website. We're going to do soon launching with PayBright, which is allowing to pay multiple payments as well. So for us, our average order value for goods, it's going to be quite good in terms of just helping overall conversion in the website.
Audrey:
Other big changes we're going to be seeing is in terms of just the inventory management, and being able for the customer to not only, again, make a purchase online and then add ship it to the store, but also go and pick it up within the next few hours at their favorite store to try them on.
Audrey:
So, those are some of the disruption in our model that we're seeing for the upcoming months and that we're just trying to fast forward and act a little bit faster than maybe we would have expected at the very beginning of the year, knowing that there's definitely a lot of opportunities with ecomm right now and that we're really on the hill that we're going up quite fast. I'm not sure if that sounds right in English.
Stephanie:
Yeah. We've actually heard that from quite a few brands, of the plans that they had for maybe three years are now happening in a matter of months.
Audrey:
Yeah, exactly.
Stephanie:
While you're doing all these ecommerce upgrades, are there any new pieces of technology or tools that you're implementing that you're excited about?
Audrey:
Yeah. So, PayBright, I'm actually quite excited about it. And funny enough, I think that the solution we're using in the US is Klarna. I'm excited about it. Prior to COVID, I was a little bit not sure about implementing a solution that will allow our customer to pay in multiple payment. I just felt doesn't necessarily feel right for just a pair of shoe enough like a big, so far or really expensive purchase, but now, a little bit the economic situation we're in, the uncertainty, the fact that so many people lost their job too, I feel a bit more confident and sure about adding it, and I'm curious to see also the result if it have conversions. So this one I'm quite happy.
Audrey:
But overall, our buy online, pick up in store and more real-time inventory is definitely the biggest change. I think there's a lot of good AI solution and a lot of good front end customization, but most of the retailers still have a little bit of trouble with their back in and just decreasing their numbers of cancellation or shipping faster or having good return process. So, the improvement we're doing more in terms of inventory management and being more reliable in that sense, that's definitely what I'm looking for the most, not the prettiest thing that we could see on the website or things like that, but it's really something that on the long end, it's just give confidence to our customer that we're able to commit to a fast delivery or just that if you order from us, you're actually going to get through your product and it's not going to get canceled, et cetera. So I'm really excited about just the basics.
Stephanie:
Yeah. That's cool. I mean, real-time inventory seems really tricky when you have multiple brands that you're working with.
Audrey:
Yeah, but at the same time we own the inventory and it's being either shipped from the stores or the warehouse, so it makes it a bit easier to manage.
Stephanie:
Cool. All right. So I'm going to shift this over to a lightning round. So the lightning round brought to you by Salesforce Commerce Cloud. This is where I'm going to ask you a question and you have a minute or less to answer. Are you ready, Audrey?
Audrey:
Yeah, I think.
Stephanie:
What's up next on your reading list?
Audrey:
Next on my reading list is a book from Margaret Atwood that I've been looking up for ages and just didn't took the time to read it, so I was always reading something else. It's called in French [Foreign Language 00:40:03], and English it's The Handmaid's Tale. I just never got to read it. I know everyone read it before, but it was never on my table. So that's the one I'm currently starting.
Stephanie:
That's great. You'll have to let me know how it is.
Audrey:
Yeah, sure.
Stephanie:
What's up next in your travel destinations, or where did you just go, since you were just on vacation?
Audrey:
I just come back from vacation on Monday at noon, actually. I went to, it's a small Island in Quebec, actually. It's called Magdalena Island. It's a fisherman island, really cute, red cliffs, and you're surrounded by the sea. There's tons of just really welcoming people. They have even a weird French accent, so for an Anglophone, it might be a little bit tricky, but it's definitely worth going there.
Stephanie:
Oh, that's fun. I'll have to check that out. What app are you enjoying most on your phone?
Audrey:
Currently, I've been spending a little bit too much time on TikTok, because we recently for Little Burgundy just launched a TikTok channel. I didn't even add it on my phone; I obviously knew what TikTok was involved, but I never spent time on it. So recently my team has been just pushing me videos to watch and just to be more aware of that platform and our customers that are on it. So I've been spending a little bit too much time on this app, actually.
Stephanie:
I feel you there. I end up going down a wormhole where I start with just a couple of videos, and then all of a sudden I'm like, "Whoa. I just spent 20 minutes watching dancing and makeup tutorials and organizing your house videos." But it seems a perfect platform for Little Burgundy.
Audrey:
Yeah, exactly.
Stephanie:
All right. And the last one, what one thing will have the biggest impact on ecommerce in the next year?
Audrey:
Tricky. There's so many things that are happening right now, but I think, for Canada, the cost of shipping is so expensive here. Obviously Amazon and big players are just setting up the bar very high for fast shipping, very low cost, et cetera. So for smaller retailers, for us, expectation from the customer is just getting higher. I think shipping carrier and negotiating prices will be very challenging but could be a key changer.
Audrey:
One of the company that you should actually maybe include in your next podcast, a guest from Canada, they're called [inaudible 00:43:18]. I think they might even be in their 30s, if I'm not mistaken, two guys from Montreal who launched that ecommerce website, and they just announced that they're doing same-day delivery currently in Montreal, but they're looking to launch as well in Toronto. So if you're from Montreal and you purchase before 1:00 PM in the afternoon, you're safe to get your order the same day. So these type of services are definite game changer, but I just think it's hard to get there still being profitable. So that's definitely an area that we're going to keep a close eye on.
Stephanie:
Yeah. That would be interesting to hear, the economics behind that business and how they guarantee that. That would be a good interview guest.
Audrey:
Yeah, definitely.
Stephanie:
All right. Audrey, well, this has been such a fun conversation. Where can people find out more about you and Little Burgundy Shoes?
Audrey:
Yeah. So about me, definitely on my LinkedIn, so Audrey Gauthier, if you can spell that right. And Little Burgundy, well, I invite you guys to go on our website, littleburgundyshoes.com. We currently don't ship in the US, but we're really looking forward to it eventually. So it's still worth to stay tuned and look at what we're offering.
Stephanie:
Very cool. Thanks so much for joining.
Audrey:
No problem. Thanks to you.
Why don’t more companies offer affordable international shipping? The answer is because navigating the world of VAT, customs, international duties, and other intricacies make this too much of a headache for most eCommerce operators. Additionally, technical components, payment options, logistics and, yes, varying holiday calendars are all variables that a company needs to consider when it is expanding globally. It’s nearly impossible to do without some sort of help. So the question becomes how do you face this nightmare ready and prepared?
That’s where Matthew Merrilees comes in.
Matthew is the CEO, North America for Global-e, and they solve these problems. On this episode of Up Next in Commerce, Matthew shares the ins and outs of what it takes to equip your ecommerce brand for international expansion.
Whether you need to address currency concerns or want to understand the data that drives your competitors to success in the market, Matthew shares those secrets and more on today’s episode.
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
---Transcript:
Stephanie:
Welcome back to another episode of Up Next in Commerce. I'm your host, Stephanie Postles, co-founder of Mission.org. And today on the show, we have Matthew Merrilees, the CEO of North America at Global-e. Matthew, Welcome.
Matthew:
Hey, pleasure to be here Stephanie. Thanks so much for having me.
Stephanie:
So, I want to dive in a bit into your background. It looks like you've worked at a lot of different logistics companies. Before we touch on Global-e, I was hoping we could go over your background a bit and how you got to where you are.
Matthew:
Yeah, for sure. It gets a bit about me, and my background, definitely started, I would say from call it my family history, just the family history of fathers and brothers. And call it family members who grew up in operations logistics, and obviously [inaudible] Ecommerce. So, I think as I followed the family tree and fell into place, I think all in all it definitely did kick off and start my career at DHL Express, where I spent quite a number of years in various different positions, leadership roles, and such. And then made the transition to FedEx where I definitely did a lot of the same. And obviously, now here at Global-e. I think when you look at the background, straight from university into the logistics arena, was quite exciting.
Stephanie:
Yep. Very cool. So tell me a little bit about Global-e. What is the company? And what kind of customers do you guys have? And how do you interact with them?
Matthew:
Yeah, for sure. What we are is a cross border enablement platform, right? We focus primarily in three different arenas that support our brands, which is in boosting international conversion rates, which is boosting overall sales and revenue of course. And then most importantly, boosting customer satisfaction for an international transaction. Right? So I think when you look at the vast portfolio of brands that we work with from a global perspective... I mean, we worked with over 350 enterprise global brands, right?
Matthew:
So when you look at some of the likes of, let's just call it Forever 21, Reformation and Anastasia Beverly Hills, Marc Jacobs, Hugo boss, Versace. But, I think when you look at the broad gamut of brands, I mean it is something that is, for me, always eye opening. Just how we're able to help take an international transaction and really, truly localize it to a way that consumer in that individual market would really expect to buy online. And I think there's a lot of barriers when you look at the international market and how we help these brands really position that data, that knowledge, that insight, and that expertise is really I'd say where we come in and help.
Stephanie:
Cool. And what stage does a company need to be at to partner with Global-e? Do they need to be as big as Forever 21, or could a new DTC company also utilize your great services?
Matthew:
Really it's any size, shape or brand. I would say just over I think seven years ago now we deployed the business, right? And I think we came out of the gate with a very strong enterprise focus. But, I think as we evolved we saw the demand in market for small medium enterprise type brands. Really it's any size, shape or brand who has let's just call it an Ecommerce platform running an online digital storefront. And it is someone that obviously has an Ecommerce strategy in place today. So it's not just the Bigs that I think you see in the market that we continue to focus on and then come into the portfolio. I think it's also those brands that are digitally native, that are really looking to capture revenue outside of their home market. So I think it's really any size, shape or size customer that could lead to that discussion.
Stephanie:
Cool. I was hoping we could kind of start the episode there around what are maybe some international fails you see happening with brands right now, or hiccups that maybe new companies would encounter if they don't use a solution that figures out all the different challenges when selling across borders.
Matthew:
Yeah, for sure. I think sales are important. Obviously, I think brands all have different approaches to sale, right? There are some heavy sale brands by design. There are some flash sale businesses out there that really drive high, heavy traffic to a limited amount of inventory. And then I think there's your typical sale holidays where everyone's on sale, which is typically your Black Friday type periods that we recognize here in the North American market. But, I think as brands start to think internationally and think what sales exists outside of just this US home market. For us, we start to really get into the education process, which is number one; what are the holidays that are happening outside of the USA? Is it Singles Day? Is it Boxing Day? Is it Click Frenzy in Australia, for example? Which I think is the beginning part for a lot of the brands that we tend to work with.
Matthew:
I'd say number one, what are the holidays? What and where do these holidays exist? And then number two, how do you get prepared in order to approach that consumer? Is it a similar approach that we have to a domestic customer here in the US? They're going to need to be spoken to and treated in a unique way that more relates to them in that market. So I think sales are critically important. But, I think with branding awareness of when they're happening, why they're happening, and how to really give that consumer, let's just say the customer satisfaction experience that they would expect, is important.
Stephanie:
Yep. Are there any holidays that come to mind that you've seen a bunch of brands missing? Because I've heard of a couple of them like Singles Day. I think especially more recently, we started hearing about these other sales that go on around the world. But, is there any big opportunities or a time when you say, "Hey, there's a sale happening." And a lot of brands are like, "Oh, I've never heard of that." Or, "That's never come across my radar before." But, it's like a big important one?
Matthew:
Honestly, the three I listed, and the reason for listing them is because they are the most important, that typically I would say a lot of brands are just not aware of. And believe it or not, don't have strategies planned around. They used to be sales, and I think that specifically the two in both Boxing Day, and I'd say most importantly, Click Frenzy, is probably the one that is most highly missed out of the portfolio of brands. Just saying, "Wow! Click Frenzy, I didn't realize how large it was." And it's something that we absolutely want to help tailor to our market, which is such a key focus market for a lot of US brands in Australia.
Stephanie:
Got it. So what kind of strategies are you maybe suggesting to them? Maybe we'll focus on those two. How would you walk a brand through these holidays and maybe how to approach it to get into that market?
Matthew:
I think it all begins with the communication. So number one, we talked about the education, the awareness, which is obviously going to be key. And then I think with the brand. Every brand, as I mentioned earlier, the approach sale differently. So I think when you look at whether it be a flash sale business, whether it be a traditionally just natively sale business, who's very highly discounted down to high luxury brands that like to go on sale at certain times per year, typically two times or so per year, I think it all begins with their engagement. And obviously a lot of the brands, they free up their time for these marketing efforts. And we help break down a lot of barriers to get them to focus their time on the strategy. But, I think it begins with a setting strategy for each one of these markets.
Matthew:
And it begins with communication. How are you going to touch that consumer? How are you going to touch that consumer in a way that relates locally to them? And then obviously making sure that you have all the tools in place to execute on that sale so that when that consumer hits for an Australian day like Frenzy, they're seeing their currency in Australian dollars. They're aware of GST and the 10% that has to be captured on every single order that is being built in your product price. These are things that you need to communicate, "Hey, we've got a great sale going on. But, hey, also we accept your local currency. You can come buy with confidence." So I think as long as the marketing strategies within the brands are executing them the way they typically do, I think the next step there is to make sure that they've got the tools and the site in place to then obviously relate to that customer.
Stephanie:
Got it. And are you helping them implement those technologies? Or are you more giving avenues of like, "You couldn't implement this tech stack or you could go with this one."
Matthew:
So we typically implement it. Right? So all of our brands, even all of the ones that I've spoken about in the entire portfolio, basically what Global-e is doing is helping, let's just say arm and equip their site to be able to speak to an international consumer. And I'd say a lot of brands, come to us and say, "Hey, we view you as our international outsource Ecommerce team." Because we need to understand not only that I need to equip my US site to be able to speak to a consumer in China versus Singapore, versus Thailand and Canada and Australia and so on but, I also need to know what's the right proposition. How do I take insights and data and duty and tax? And what do I do with all of these different elements that are barriers to that customer buying? And how do we break it down so it's local to that consumer and market? And these are when I say quick to site and be ready for that type of volume to be hitting your site so that you're able to convert that customer, that's where Global-e comes into play.
Stephanie:
Got it. It seems like, you mentioned data earlier, it seems like you would have access to a ton of data from working with all these brands and seeing what works and what doesn't work. Tell us a little bit about some of the insights that you guys are seeing and also teaching your brands when it comes to selling internationally.
Matthew:
Sure. So I think the first thing that in an engagement with a brand that we have, right? Because there's brands of all different verticals, as you can imagine whether it be fashion and retail, whether it be beauty, whether it be footwear, streetwear and so on and so forth. So I think the one biggest insight in a lot of brands I would say, come to us for is, we want to understand what the rest of our vertical's doing. How are they being successful? What are they doing to target consumers? And let's just say all these parts of the world. So we really, I think from a data perspective, we consolidate it. And we sit on mountains of data that we can then drive from an insight's perspective to the brand that, "Hey, based off of where you're selling today and based off of where you should be selling tomorrow, we're going to help you build a strategy on let's just say end to end perspective. Right?
Matthew:
So it all starts from when the consumer hits the site, right? Currency, how are you going to show it? How are you going to also locally round that currency to make sure that it's a number that that consumer can relate to in that market. Down to duty and tax strategies, shipping propositions, and all of the elements that we know are going to have an impact to a consumer buying. And as an example of that for a few key markets that we can at least relate to, Canada. Canada is a market that acts very much like the US. And I'd say far too many US brands that we tend to see will typically treat, let's just say a Canadian shopper as they would a shopper within Singapore. And basically just take that product that they're selling and sell it at the same experience worldwide and say, "Okay. But, did I think that a Canadian customer is used to paying tax when they hit a local shop to buy the shirt?" They never ever see the term duty in market experience.
Matthew:
So on your site, you should never ever display duty and taxes as part of an overall transaction. Otherwise, that consumer's going to be shocked to see extra costs and abandon. And there's other elements to, how do we factor in duty into the product price? Because that's typically going to be a conversion driver for that Canadian consumer. And that goes even into markets like Europe and the UK, where it's that inclusive. The typical buying experience for a European consumer. So the second that a US brand now puts at the point of checkout duty and tax and breaks it out, it's going to cut their conversion in half. So these are the insights on a market by market basis where every country is and has to be looked at independently. And as far as too many times when we come into these conversations, our brand's just taking a single strategy for the world. And I think that's kind of one of the biggest opportunities to help our brand succeed.
Stephanie:
Got it. Yeah. That's great. How are you all staying on top of consumer preferences or making sure that you're staying on top of what's hot? You can think of WeChat, it came up pretty quickly. And how people are using it changes all the time it seems. How is you guys' company able to stay up with what people are expecting in different markets, and how they're buying?
Matthew:
Yes. I think honestly it has evolved over the years. I think as a mature business with a lot of mature brands that obviously we rely on and rely on us. Depending on which aspect you're looking out of the business, we've got a lot of robust technology internally that will help with that. So from a payment perspective, this is not going to be a single payment provider that's going to be able to take it to offering every single payment method that you need in your arsenal to be able to let's just say, service the world. I mean, enabling WeChat, Alipay, UnionPay into China's is critically important. But, to be able to enable that is a big challenge. So I think typically what we do to stay ahead of let's just say that front is we work very closely with our brands.
Matthew:
Like I said, there is a knowledge base out there with our brands that we've built up over these seven years that really drive and are a piece of driving our overall roadmap. So I think the voice of our customer is so critical that we continue to evolve, to adapt and definitely change. And then I think also internally with our focus only being cross border and international, we've built out the expertise, the knowledge and the data to understand that. And I think between the combination of the two, I think what we tend to do is always stay multiple steps ahead where a US brand can then focus their efforts on marketing on their US domestic market. And so for European brands, which is also no different.
Stephanie:
Yep. Makes sense. When I'm thinking about everything that's happening right now, it seems like there is a lot of buying shifts happening. But, I haven't really thought about maybe internationally, how the buying behaviors are changing. So I was hoping you could maybe touch on any trends or opportunities that you're seeing overseas right now that maybe other people can't spot because they don't have access to all the data that you do.
Matthew:
Where I was heading with it a minute ago is having a chat with myself. I think when we look at the brands, I think there's a lot of elements that we do bring from an insight's perspective. So when you look at the data, it's really a methodology around duty and tax we talked about. That's one very big element. How and what to do with duty and tax in every single market to showcase it. I think when you look at payments, another very big element like Alipay, you mentioned WeChat pay, UnionPay, all very important into China. But, then into other markets like Germany, where Klarna is a highly adopted installment type pay methods on all throughout the Nordics, it's critical and key. And you have to have that there in your arsenal to be able to convert a consumer or even acquire a consumer within that region.
Matthew:
And then I think we even get into let's just say the Netherlands, over 58% that as we see through our platform of all odors or within the Netherlands are paid with ideal. I think these are the elements when you look at duty and tax strategy, when you look at payment strategy, when you look at overall shipping strategy, right? You mentioned logistics carriers and the challenges that they're having today.
Matthew:
I think another element of that is from a logistics suite, offered your consumer a checkout, you need to make sure that that multi carrier approach is ready, equipped, and able to handle the volume that is going to be coming their way, especially as on a daily basis that can tell you our operations team is keeping up with the overall feedback from every single carrier from lane closures to lane impacted. Even just down to value, limitations and free ship thresholds and when to offer what. So I think as you look at the price strategy, the payment strategy, the duty and tax strategy, and you bring literally all of this together from a full end to end solution, that's really what obviously makes this a successful approach to brands.
Stephanie:
Cool. And are there any opportunities you see right now that are popping up? Or you're like, "I see a lot of maybe consumers internationally looking for this type of product." Or there's an unmet need here that could be solved. Any secrets that you have about these international markets?
Matthew:
I think for me, and typically what we tend to see in our market here is yes, brands come out of the gate saying, "Okay, I'm going to go international." What does that mean? That to a lot of our brands ends up meaning I want to focus my efforts on English speaking countries, such as Canada, UK, and Australia. And I think that's a good approach for brands to splash with. But, I think when you look at our business globally and we start to look at markets and regions, and then you call it... Any insights of secrets, I think right now what we've seen is the Gulf region. The Gulf region through COVID is a region that really has not decreased at all. And only seen a positive growth trends since, call it January of this year.
Matthew:
So when we let's just call it, are reaching like the peak of April, we saw over a 575% growth in year and year sales [inaudible 00:19:48], which basically the trend has only continued and accelerated May through June. So I think for me and a lot of what we're seeing, even specifically in that Gulf region with luxury with the UAE really accelerating with Saudi Arabia, with Kuwait, with Qatar. These are markets that brands never think in the US markets to put a strategy behind them. We're seeing such a huge growth globally that I think they're starting to rethink their strategies.
Stephanie:
Oh, that's a good one. And have they always been part of your arsenal or is that something also that you guys are pivoting a bit more into that area?
Matthew:
So, I think the beauty of what Global-e does with our brands is literally with a single integration, whether it be the currency, the hundred plus currencies that we enable. Or whether it be the 150 different payment methods that we offer, the duty and tax guarantee for limiting risk and liability to our brands, all of that pulled together in single integration, opens them up to the world. So the first thing is, make sure your site is set up for success. So that should a consumer from a certain market hit your site, then they're able to convert. And that is what Global-e does. And that enables let's just say, even the Gulf region out of the box.
Matthew:
And then it becomes, "Okay, now we've got a proper offering. Now conversion and sales is accelerated where we want it to be." And I think those second level conversations begin with the brands, their digital marketing teams, and how do I start acquiring new customers? How do I start really pushing my efforts to markets where I know that the demand is there and that I should not just waste my time trying to cover off all 220 countries and territories out there. Let's focus in major and majors. And let's really get a strategy together. This can have an impact to our overall celebration for business.
Stephanie:
Cool. So I'm thinking when it comes to international sales, the metrics that maybe you're providing back to your customers, or that you guys are looking at frequently, maybe differ a bit than US centric sales. What kind of metrics do you guys look at to see if things are going well?
Matthew:
So I think from our perspective that the major metrics that we tend to focus on with our brands is always going to be conversion rate. Conversion rate is something that as a hosted checkout solution, Global-e has a full impact on. So our brand's checkout is powered by Global-e as simply put. Meaning that we have hyper localized every element of that overall checkout. Which means if they're going to put in all of the effort from a marketing perspective to get that consumer to a point of checkout, we are going to make sure that they are going to buy. And I think when you look at the ability and the approach of that let's just say localization, conversion rate is always a forefront of what we look at with our brands.
Matthew:
And then I think sales growth, right? Sales growth as revenue is always going to be a second team metric that we 100% I would say, study and operate, and look at with our brands. And just full circle rounding it off as customer satisfaction. Even down to NPS scores with our brands that we share. And we look at down to the market level to make sure that if we're getting from some negative feedback in a certain market, why? How do we help better equip that experience from an Ecommerce perspective, to make sure that we're not just seeing and hearing that feedback but, we're actually it.
Stephanie:
Cool. When talking about negative feedback, I was just thinking about when launching a new product, it might be easier to think like, "Oh, I should go international." But, oftentimes people internationally don't like the same things maybe as the things that we like here. So, is there any advice or guiding that you do for these brands who maybe are like, "We want to go international, we want to go everywhere." Is there ever a time when you're like, "Actually, I'm pretty sure people in Asia would never use that." Like they don't like that.
Matthew:
No, I think from a brand perspective our approach is typically always going to be as a brand, it's the continuing drive to say the way that you've invested and looked at the domestic market. Not just from a fragmented perspective but, from a full end to end perspective, from the way that you talk to your customer, the way that you show them products, the way that you position products, the way that you promote products or free ship thresholds or show tax into certain markets. You can't do anything differently when it comes to international. The way that your strategies are built here domestically are not different than that of international. And when we really interact with our brand, it's specifically to help educate them on that overall fact because you're right, consumers expect different things in different markets.
Matthew:
And if you're not setting up your site for success to complete that, which is obviously what our biggest value add is, is that when our platform sits on top of your website, you don't have to worry about that anymore. Right? And you can now focus your effort on acquiring new business and new customers, which is really where brands want to be spending their time, especially the small and midsize ones who don't have these robust teams as some of the larger brands out there. You're talking to owners, you're talking to founders, you're talking to literally the folks that built this business from the ground up.
Matthew:
So they're involved on every single ticket that every single consumer puts through the site and they're reacting to it. That's why I think for them to not have the burden of thinking about currency, thinking about, "Hey, I have to now register my business in Australia or Norway, or Switzerland." Or what's happening in the UK with Brexit and how are duty in that threshold changing in a market like Canada, which is so important. This is stuff that they no longer have to think about. That's typically where we see the brands heading and we opened them up to the world so that they're truly giving an amazing experience for their consumers the first time it ever hits their site.
Stephanie:
Got it. Yeah. So it's essentially on the brands to make sure that they have a product that's good and that will sell internationally. Then you guys come in and take care of everything else. But, it's kind of up to them to do that due diligence and make sure that the product that they're about to bring internationally is actually a good fit for that market.
Matthew:
Absolutely. And I think when you look at the brands, obviously, product placement performance, they own and control the brand, right? At the end of the day the customer is the brand's customer. It's their data. They have access to all of this data. It's not ours, it's not our approach with the brands. It's always "Listen, we're going to push and give you all the bits of information that you need in order to market to that consumer." And then we also help through partnerships and other marketing channels, even let's just say bringing eyeballs to their site. And I think those are elements when you look at how can you help brands and how can you obviously look to convert that brand, it's super important.
Stephanie:
Cool. So you just mentioned bringing eyeballs to their site and that piqued my interest in what kind of effective channels are you guys seeing right now to bring new international customers to these brands?
Matthew:
Yeah. I'll give you one example that I think is a relevant one. And we mentioned because it kind of ties into the overall payment perspective that we mentioned with offering Klarna in Germany and the Nordic region. And Klarna is getting very active in the payment space, which we've just been following very, very closely. But, I think Klarna has done a very nice job of securing some dominance in that European market. So one of the elements that we've done is we've partnered with them. We said, "What can we do from a payment perspective to outreach to consumers?" How can we take our brands and put their products within the Klarna network of consumers that exist out there to let them know that this small little mid sized brand in the US exists? And that is something that we've done to help the brands just as an example, that is super important. And we've seen a lot of value and a lot of return from that where this is something in a market that just typically these brands have not even thought about putting dollars into.
Stephanie:
That's really interesting. It reminds me of earlier, when I was talking about products and may be opportunities. I mean, you hear that stuff happening, of people going on a vacation to Thailand, or like the guy who created red bull. They're oftentimes overseas, when they see something happening, they're like, "Oh, I see a method of doing this." Or I see something that people really enjoy. And they may sometimes bring it back to the US. But, that's also really interesting, kind of creating in a way an exchange that says, "Hey, here's a bunch of brands that you may not know about." And these overseas brands actually might want to tap into them as well.
Matthew:
Precisely. And then I think you get into a whole digital marketing effort that the brand really at that point takes a strong hold on, which we even sometimes will help them with. And I think when you look at it as, what are you doing from a marketing perspective? Is it Facebook? Is it Instagram? And how are you taking it from that digital perspective? And a lot of the brands that we market are specially through the times that we've had now, just really focusing hugely on Ecommerce. And how to tap into Ecommerce in two ways, either domestic or international. Because that's the world we're living in at this time which is supposed to really push the brands that had not had a firm strategy in Ecommerce to get there even quicker.
Stephanie:
Do you see any successful marketing efforts that are going on, that are similar themes among brands where they've shifted their marketing to this effort or another effort? And you see traction happening that maybe wouldn't have happened before COVID?
Matthew:
I think just more of the adoption of digital marketing efforts and spend into more markets outside of the US, Canada, Australia, and the UK. I think the first thing is really getting that digital marketing effort through whether it be Google, whether it be Instagram, whether it be Facebook. I mean, that is the traditional trend that I see as highly adopted right now across the brands that we work with. Each of them do it very differently. That's for sure. But, all in a unique way that's unique to their brand, where they build a personalized approach to build that trust with the consumer to get them to return.
Matthew:
So, I think for me, the channels have been pretty consistent in the adoption, like the ones I just mentioned. And then I think it's more about how do I now start focusing on where to do this next? And that is traditionally what I spend a decent amount of time with our brands, just talking about what is your strategy? What's the next market that you're going to push money into, where you can get a return? And here are some that we see as focus markets for your industry, leveraging what we've seen globally across the vast portfolio brands that it is that we work with.
Stephanie:
Cool. So when thinking about some of the challenges with cross border shipping, I'm thinking about the high shipping rates and maybe local return options. And like you mentioned earlier, duties and taxes, how would you go about stack ranking these priorities for a new Ecommerce shop? And starting to think about this, what are the things that you just need to have as number one priority because if you miss that you're done, whereas the other ones can get figured out along the way?
Matthew:
Yeah. So for me, I think the biggest aspect is having a full end to end approach. I know we talked about it a bit earlier where the customers from a US perspective are not going to miss a single instance of the way that the customer needs to be communicated to, talk to. And even down to the element of shipping checked out with. But, I think when you look at the backends and prioritization of what's most important internationally, I'd probably put a duty and tax pricing strategy first. I think when you look at the overall elements and barriers that may differ between that of a domestic transaction and that have an international one, duty is not something that many brands are equipped to handle.
Matthew:
And I think duty is something that brands can most likely understand how to find a solution to calculate. But, then I think the question comes into, how do I calculate duty and tax into every single market throughout the world? But, then most importantly, how, and what do I do through being taxed to make sure that the consumer see it in a way that they will buy. And we mentioned Europe being a really key market for that. If you're in Germany and you want to buy a sweater, you go into your sweater store and you buy that sweater, the experience that you're going to receive is that sweater will be valued at a hundred euros. And you're going to have nothing more to pay outside of that a hundred euro, call it VAT inclusive experience.
Matthew:
So, if you now try to talk to that German consumer in a way where you're saying, "Hey, check out my website. And I'm going to go ahead and I'm going to break out duty for you. I'm going to break out tax and another line item for you." That consumer's not going to relate to it. So I think if I had to stack rank them all, even though I think pulling the full end to end is necessary to truly make it work from payments to currency, to communication, to customer satisfaction, all of those elements, even down through checkout and translation of checkout. And the ability to recognize city where there is a city, or recognized state where there is a state, or province where there is a province. These are all elements that should be pulled together. But, I would put the duty and price strategy first because I think it is the biggest barrier that brands struggle with.
Stephanie:
Cool. Yeah. That's great. It's always good to know where to start. But, agree on having an end to end solution. So this is a little bit of a higher level question. But, I know there's been obviously a lot of shakeups when it comes to logistics, like we mentioned early on. Is there any new ways that you hear brands or that you're advising brands to prepare for? If there's another pandemic, if there's something else that happens that maybe interrupts the logistics and supply chain and all that kind of stuff, do you hear anything behind the scenes of like, okay, going forward, we have this new kind of model or strategy to kind of future-proof us a bit more?
Matthew:
That's a good question. I would say through COVID, what it's taught me and where I spent a lot more, let's just say time conversing than I thought I would have with brands was building contingency plans, when I came to realize that a lot of portfolio brands out there heavily reliant on a single logistics fulfillment center to manage their DTC business. And I think that as COVID hit and volumes doubled because stores closed and then fulfillment centers' staff had to be cut in half, I think that posed for a huge logistics challenge that not many brands retailers or 3PL fulfillment centers were quick to handle. Basically double peak volume in a non peak period, completely unannounced. So I think when you bring that all together, I spent a lot of time with our global brands specifically, who really came to us and said, "Hey, we have some opportunity here. Meaning we've got product in many different markets throughout the world."
Matthew:
So, if in fact, my facility in New Jersey shutdown tomorrow, obviously Global-e controls the technology elements of it but, the fulfillment piece they still own. So can we point our website for every single transaction, not change a thing for the consumer so that they're not impacted. Let's start pulling that product out of Hong Kong. And the answer is yes. I mean, it's something that we could have easily done and we did do. And I've built more contingency plans than I ever thought I would have had to with our brands to support them should this have happened. But, as I landed my plane, I think the biggest kind of lesson learned here for me, if I'm sitting in on the brand side is to say, what is my contingency plan? Should something like this come up again. And do I have... Or can I turn inventory, or one in another market or another destination or location should my facility in New Jersey get shut down?
Stephanie:
Yeah, that's great. So are there any disruptions that you see coming maybe to Ecommerce after all this kind of settles down a bit, that you've built contingency plans around?
Matthew:
I think for me, the acceleration that's going to continue, that started the second COVID hit to continuing to let's just say accelerate as each one of these markets, typically that got hit hard. Six to eight weeks post that time, really, we saw the recovery. And it's almost like the far East started and then Europe happened and then the US was kind of the latest to the table, which was super interesting. But, I think for me, what I'm seeing a lot of now is I speak to all of our brands on a regular basis, is we're seeing a lot more brands now equip their business to be more digitally native. I think the old model of taking product and putting it in inventory, in market next to that consumer and having a very highly driven brick and mortar strategy, has changed.
Matthew:
And I think that the more personalized brands that are equipped to continue to accelerate their digital strategy, is either doubling down or it's accelerating. And I think that that is to me, the biggest disruptor that I see coming in this landscape, which is the digitally native brands that exist out there that are highly emotional and personalized to their consumer, are really thriving during these times. And I think that we're seeing a lot of the larger, more complex brands that are out there start to really build accelerated strategies to make sure that they keep up.
Stephanie:
Very cool. So, if I'm a newbie with, I'm building my new Ecommerce company and I'm starting to think about going international, where can I actually look to find out what's happening behind the scenes at some of these brands? Maybe to see how are they operating their logistics or what is their playbook? Is there anywhere or communities or anything like that, that I can learn from other brands or see the behind the scenes of how it's working?
Matthew:
Yeah. I think typically there's going to be, from an education perspective, we see a lot of brands adopting different cross-border publications, different cross-border strategies through a lot of the conferences that have now become digital and more I would say highly even access. It's in the past, these trade shows and all these things that used to really thrive on required a lot of time, a lot of dedication, a lot of effort, a lot of money to be able to access.
Matthew:
And I think now what I'm seeing with these all go virtual is you're starting to see a lot more of adoption into these channels which is a lot easier to access. And I think when brands typically come and they're looking in the enabled arena, they learn quite a bit. And I think that is one of the things every time we do talk to a brand it's the first thing that they ask us. How is our peer group performing today? And are you happy with our conversion? And what changes can I make to be able to improve? And I think that's just one of the biggest I'd say value adds from a data and an insight perspective that brands look for.
Stephanie:
That's great. Yeah. I really liked the idea behind the virtual events are leveling the playing field. So now everyone can get access for either cheaper or free and not have to travel. And that's a really good point and a great place to start.
Matthew:
Yeah. For sure.
Stephanie:
Before we move on to the lightning round, is there any topic that you really wanted me to touch on or cover that you were hoping I would bring up?
Matthew:
No. I think a very wide gamut of everything, which is great. No, I am fine.
Stephanie:
Okay, cool. Yeah. I do like to go in different areas of the conversation.
Matthew:
All good.
Stephanie:
Yup. The lightening round, which is brought to you by Salesforce Commerce Cloud. This is where I'm going to ask you a question and you have a minute or less to answer. Matthew, are you ready to go?
Matthew:
I am as ready as I will be.
Stephanie:
Alright. What's up next on your reading list?
Matthew:
Poof! My reading list, I would have to say Peppa Pig is one of the next books because my daughter is begging me to read it to her. So I will be most likely reading that this evening with her. It's between either Peppa pig or Star Wars books. I'm trying to twist one way, I'm not going to say which way.
Stephanie:
Peppa Pig.
Matthew:
Exactly. Peppa's super popular right now.
Stephanie:
Oh, I know.
Matthew:
That is the next step on my reading list. I have to be very honest.
Stephanie:
That is probably mine too. I like it. Yup. My son is obsessed with that as well. Alright. What's up next on your Netflix queue?
Matthew:
Netflix queue?
Stephanie:
No kid stuff.
Matthew:
No kid's stuff. Right now, I would say Dexter has been recommended highly to me and seems to get a lot of good ratings. So I think that with COVID now in place, my wife and I will saddle in and watch. And begin to accelerate the number of views that it seems [inaudible 00:42:42].
Stephanie:
That's cool.
Stephanie:
So, if you were to have a podcast, what would it be about and who was your first guest to be?
Matthew:
I think if I were to have a podcast, I would say my podcast will probably focus something around sustainability. I think that right now with everything that's happening in the world today, and when you look at just the impacts of COVID, and everything else that has happened in the world, I think that you're going to see a lot of brands really adopt sustainable activities and life in general. Even down to our arena, which is call it shipping and how to package materials and stuff. So I think when you look at it, that would be for sure my approach. Who would my first guest be? I think my first guest would probably be my mentor and my father. I would give him the opportunity to be the first guest on my show and at least jump in and be able to share that memory should that podcast take off. And I know that I could say that I started with a family member.
Stephanie:
Well, I like that. Yeah. We have been actually talking about starting a sustainability podcast. So now I have a perfect host. You're it.
Matthew:
You let me know.
Stephanie:
We'll call you up. Alright. One more. What is A, your favorite piece of tech or a new Ecommerce tool that makes you more efficient, or you're having success with?
Matthew:
What is the most? I would say right now for me there is a tool called Monday that we had used that has brought us a lot of efficiency in the overall arena of project management. So I think managing the level and the amounts of projects at a single time can be at times overwhelming. So within our project group it is a tool that we've adopted that I actually find very insightful because it really gives me a nicer view and a view and a clean view of the overall working structure of what we currently have to deploy and make sure that we continue to support each one of the brands in the queue, whether it be small, whether it be large. And get them out on time to hit their overall deadline to celebrate their Christmas.
Stephanie:
That is great. I will have to check that out. Well, Matthew, this has been an awesome conversation. We really did go all over the place. And I think our listeners will love it. Where can people find out more about you and Global-e?
Matthew:
So for me, I would say Global-e obviously hit our website, www.global-e.com. I think you'll learn a lot, right? I think a lot of the statistics, a lot of case studies, a lot of country market reports, a lot of different case studies and things that we've done is going to be there. You can engage us there. And obviously, we are happy to help any brand of any shape and size. So, if this becomes something that you'd love to engage us on, hit the website, submit your information, and we've got a team member in pretty much any part of the world that's going to be able to help you. This is an incredible thing to be part of at such a cool global brand that we are.
Stephanie:
Amazing. Cool. Well, thanks for effort. Thanks for listening everyone. And we will see you next time.
As 2020 continues to throw curveballs left and right, the only thing we know for sure is that we have no idea what is coming next. That’s a tough pill to swallow, especially if you are a business owner trying to plan for the next quarter, or even the next week. Consumer behavior continues to shift in varying directions, and every industry in the world seems to be in a constant state of flux.
With so much volatility, what is an entrepreneur to do? Taylor Holiday has some ideas. Taylor is the Managing Partner of Common Thread Collective, an agency that helps eCommerce companies grow from zero to millions. Recently, the companies he works with have been forced to change the way they operate.
On this episode of Up Next in Commerce, Taylor takes us through what it means to build an antifragile business, and how that mentality can lead to a thriving business despite what the market or current environment has in store. Because, as Taylor says, there’s no point in trying to predict what the future holds, and instead, founders should be creating many different models so you can prevail even during volatile times. So what does that mean for your Q4 strategy? How should you be preparing for Black Friday and Cyber Monday? And what data should you really be looking at when developing a Facebook ad strategy? Find out all of that and more in this interview.
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
---Transcript:
Stephanie:
Welcome to another episode of Up Next in Commerce. This is your host, Stephanie Postles, co-founder of mission.org. Today, we have Taylor Holiday join the show, the Managing Partner of Common Thread Collective. Taylor, welcome.
Taylor:
Thank you so much for having me. I am excited to be here.
Stephanie:
Yeah, I'm really excited to have you here as well. I have followed your Twitter threads and I think we're going to have a lot to talk about today.
Taylor:
Okay. That's good. Now I feel accountable to everything I've ever said. So here we go. Let's see what I can dig up.
Stephanie:
Yep. I've looked at everything back to 2008, so we're going to cover all of it.
Stephanie:
I wanted to start with your background a little bit. I saw that you were in the world of sports.
Taylor:
Yeah, I did many [crosstalk 00:00:50].
Stephanie:
And I wanted to hear how you evolved.
Taylor:
Another lifetime ago, I was a professional athlete. I played baseball in the Yankees organization for a couple of years, and that was my life for the first 25 years of my life, was committed to that pursuit. Then one day I got a call and they told me that they were no longer interested in my services and I had to figure out what on earth I was going to do from there. That sort of set me off onto the second phase of life. I'd like to think I'm breaking my life in this sort of 25 year chunks. I'm about halfway through the second quarter.
Stephanie:
That's awesome. What did you decide to do after that?
Taylor:
Well, I didn't really decide much. I was finishing up, so I got drafted when I was a junior in college, so I had some school to finish. I was sort of in the off season. I would go back to school and take them at a semester at a time. When I got released, I started trying to figure out, okay, well, what was I going to do? And I was a political science major with a minor in psychology, and I loved to argue, and so I figured, well, I'll try and be a lawyer. That was sort of what I was prepping to do. I was prepping to take the LSAT and head off to be a lawyer. Then I had a good friend that had been a childhood friend, and is still now my business partner named Josh, who was starting a company. In between class, he would let me come to their office, which was him and his brother in a garage, and print the orders off the website and take them to the post office, and that was my job part-time.
Stephanie:
Sweet.
Taylor:
One day, day one, there was one order, and then within a year and a half we had done 60 million in revenue and that became my business school, and how I got into entrepreneurship.
Stephanie:
Wow. That is crazy. That's really good growth, and I'm sure you learned a ton while working there.
Taylor:
It was wild. But it sort of met everything in me that being an athlete did. There was a team of people that I love, working towards a common goal, every day you showed up and had something to do intentionally to be better. I was single, I was young, I had nothing else to do. We just lived at the office, and it was everything. As the business was sort of growing, we got asked this question of like, "Well, this is a real company. What's your job going to be?" And they went, "Well, you're the young person. Why don't we figure out Ecommerce, social media, and you know some famous people, so how about influencer marketing?" And I was like, "Okay." Then I started Googling, how do you set up a Facebook page. And just had no idea what I was doing, but learned, got to play in a sandbox, where suddenly I developed a skill that mattered in the world. I got really lucky in that sense that they entrusted me with that responsibility.
Stephanie:
That's great. What kind of famous people do you know? Now I'm intrigued?
Taylor:
Oh, so many famous people. No, not really. I had played professional sports, so I had a lot of relationships with athletes and agents and people like that. Our product was built for that community, and so it was just literally Facebook messaging friends and being like, "Hey, can I send you this product? Would you wear it?" That snowballed really quickly. We ended up building an incredible athlete team with ... at one point, we had all four MVPs of the major sports. We were brokering deals with Kobe Bryant and China, Shaquille O'Neal was a business partner. It was wild. We got involved in so many things in that first business that we had no business doing as 26, 27 year old kids, and made every mistake you could possibly make, but just learned so much that has sort of been the foundation for what we get the chance to do today.
Stephanie:
That's great. Yeah, that's a really good story. So fast forward to today. Tell me a bit about Common Thread Collective. What is it and what is your role there? What's your day to day look like?
Taylor:
Yeah. Common Thread Collective is an Ecommerce growth agency. We help consumer product Ecom businesses grow from zero to $30 million. That's sort of the range that we focus on, and we do that through a combination of paid acquisition services, email, SMS retention and landing page development, and then creative for that whole customer journey. So, we really see our role as the guide for our clients along that growth trajectory that we've lived ourselves and are currently living alongside them with the brands that we own and operate. So, we sort of approach growth from an operator's mindset, which we think really sets us apart from a lot of marketing agencies. My job is to be the CEO of that organization. It is certainly a very different job than when I started where I was doing the work. I spend much more of my time now thinking about organizational structure and culture and hiring than I do about marketing. That has just sort of been my own personal evolution, which I'm learning to love. But yeah, that's what it does.
Stephanie:
That's cool. So how do you go about picking who you want to partner with, which companies you want to?
Taylor:
In terms of the clients?
Stephanie:
Yeah, clients.
Taylor:
Yeah, so our mission for Common Thread Collective and really for our whole ecosystem, and I think Andrew talked a little bit about this on your podcast, is to help entrepreneurs achieve their dreams. That is our heartbeat. It's what drives us because we ourselves have experienced the transformation that comes from being a successful entrepreneur, what it offers you in life. So, we love to partner specifically with founders and entrepreneurs who are in that range of business. Usually, when clients come to us, they're somewhere between two to 10 million in revenue, and we're helping them sort of reach that next phase of growth along the way. That connection to the person who is passionately committed to the product or idea that they have is what motivates us. It's what keeps us engaged, because the reality is, when you work at an agency, you're not going to love every product that you're working on.
Taylor:
You're not going to care as deeply as the founder about hair care and sports wear and fitness equipment and beauty products and vitamins. There's just no way, but what we learn is that, what really works is when we care about the people. That's when our people internally are the most inspired, that's when they wake up in the middle of the night and think about ideas for the product, is that when they fall in love with the humans on the other side of it.
Stephanie:
Yeah, that's great. I want to jump right into something I've been following. You were discussing a little bit about how brands should be approaching holiday season, Black Friday, Cyber Monday, and how they should be thinking about their marketing and advertising efforts. I think it was on Twitter, maybe as an email thread, but I was hoping we could dive right into that, because we hadn't actually talked about that on the podcast so far, and I think it's a perfect time to kind of discuss how you think brands should be prepping for Black Friday and Cyber Monday and how it's different than in the past.
Taylor:
Yeah, absolutely. This is a crazy time, right? It's never been a more volatile moment in the history of Ecommerce, which is not necessarily the longest history in the world. I would put it right up there with every business season in our country's history, certainly in terms of the volatility of the moment. When you think about trying to forecast into an environment that is this volatile, there's huge error bars on any prediction that you're going to make as a business owner. If you think about some of the things that we're looking at, as we think about Q4, is retail going to be open? Are people going to be able to shop in stores? We have no idea? Is the USPS going to be able to handle the influx of demand on the infrastructure? We have no idea.
Taylor:
What is the social position of our country going to be after this election? We have no idea. As you think about that, what you have to sort of agree or accept is the idea that whatever you think is going to happen is likely going to be wrong. What that means is that, unlike years before, where we were in a more stable environment, you need to have plans that account for different possibilities. As you think about something like your Black Friday promotion, which in years past, maybe a very simple exercise of just going well, we're going to try and bundle some products and do a discount, you need to consider the possibility, well, what happens, what would our discount be if USPS doubled their rates? Would we still be able to offer and afford free shipping?
Taylor:
I would start to have multiple plans. The same is true for the tone of your messaging. If we come out of an incredibly hostile election on November 4th, and three weeks later we're in holiday season, and the country's significant unrest, what is the right message for your brand to have to sell products into that environment? Rather than trying to guess which one is going to be accurate, I would begin to have a multitude of plans for this moment in ways that we've never really had to consider that level of volatility before. That's one of the big things we're talking with our clients about, is this idea of how do you deal with the idea that you are most likely going to be wrong about whatever you think is going to happen in the future?
Stephanie:
Yeah, that's really good. I like the idea of making scenarios so you don't have to predict the future. How are you thinking about advertising? I think you were mentioning that you can actually prep in a way that you know it's going to be expensive to advertise during those times, and so how brands can actually start prepping early so maybe they're not being met with these really high costs.
Taylor:
Yeah. I would just contend that I don't actually know that it's going to be expensive. I think that's a theory that people have, is this idea that big retailers are going to be allocating a bunch of money into the platform and CPMs are going to be through the roof. But we have seen really dramatic things happen where like, last time when the pandemic got peaked in April, all of a sudden cell phone usage goes through the roof, the inventory allotment for ads goes really high, CPMs plummet. The idea that we know for sure, this is, again, sort of that idea of the contingency planning, I think is really hard. What that means, and I think what you're driving me towards is this idea that, how do I build revenue in a more predictable fashion when the ad environment could be incredibly volatile?
Taylor:
What I would say is that, when I think about forecasting, we described Ecommerce forecasting like a layer cake. The base layer, the foundation with the least variability is your existing customer set. You know that when you acquire a customer, they're going to produce future revenue for you as well as present revenue, and they do that really predictably. It's not subject to CPMs, it's not subject to the levels of volatility based on any sort of thing. So you can always start by my existing customer side is going to produce future revenue, and you can look at cohort specific LTV data and figure out exactly how much future revenue. That's the foundation of your forecast. Then the next layer is owned audiences. If I think about like organic SEO, my keyword rank of position two on keyword, CrossFit sports bra is going to produce for me a certain volume of traffic that will lead to revenue.
Taylor:
That's more predictable, even than advertising CPMs. The same thing with my remarketing traffic is going to be more predictable than my prospecting traffic. My email database that I've collected ahead of the moment that aren't yet customers, but they're people that I can speak to for free is subject to less volatility than those environments. The more that ahead of this Black Friday, Cyber Monday, you can develop owned audiences of communication that allow you to forecast more accurately your future revenue, the better position you're going to be in, and the less subject to that crazy volatility you're going to be. The end tactic there, out of that sort of ideology, is that right now you should be accumulating as many emails and YouTube subscribers and Instagram followers and website visitors that you possibly can to help you build a foundation for that future revenue in a way that's less volatile.
Stephanie:
Oh, I love that. Are there any specific examples of creative campaigns that you're working on with your brands right now, or that you know of?
Taylor:
Yeah. So, one of the big things that we love as a vehicle for this is quiz funnels. A lot of our brands are running these quiz funnels, and what I mean by that is you come to the website and there's like, hey, let me ask you some questions to help make a perfect product recommendation to you. And it's email gated. So, you're saying, hey, give us your email, and at the end of this, we'll send you a specific product recommendation. So, what that does, what we've been able to see is that, with many of these quiz funnels, you're able to prospect at virtually the same return as your general campaigns, but you're collecting emails at four to five to six X the rate. In those examples, what you're doing is you're almost able to match your present value, but you're banking a lot more future revenue off of all of those owned audience emails that you're capturing.
Taylor:
That's one example of the way that we think about this, of like, not just like the singularity of how much revenue I'm making now, but what additional assets are being accumulated to drive future value. Another example I would use, and this is something we talked a lot about last year, is that website traffic. So, when you go to do remarketing, which most of your revenue in the holiday period, specifically Black Friday Cyber Monday, is going to be driven out of your remarketing audiences. What that means is that website traffic today has a high future value. The more website traffic you can generate now, the better. Let's say you have two Facebook ad campaigns, and one has a 50 cent CPC, and one has a dollar CPC, but the ROAS is the same, I'm going to give preferential treatment in scale to the campaign with the lower CPC, even if the ROAS is the same or slightly less, because that traffic is going to yield future revenue in a way that's really important. Those kinds of thoughts around, what is the incremental value of the audience creation, is a really important consideration.
Stephanie:
Oh, I like that. How often are you checking in with those ... when you're starting to do that prospecting, in a way, early, how often are you checking back with them so you stay top of mind?
Taylor:
The window that I think about, so we have our general campaign set up, which is that we look at our time lag report, which in Google is basically the average window that a customer will make a purchase in. You can look at and see, like, what percentage of your customers make a purchase within 24 hours, within 48 hours? Usually, almost 80% of your are making a purchase within seven days. For the initial consideration, our primary remarketing funnels usually attempt to encapsulate the primary consideration phase, which is usually somewhere around seven to 10 days. But in terms of this strategy, what we're doing is we're building an audience that, ultimately, when it comes to Black Friday, Cyber Monday, the widest Facebook audience you can look at is 180 days.
Taylor:
The second you get within six months, which just happened for us a couple of weeks ago, we got within that six month window of this. Now, you've got an audience that you're going to speak to again at Black Friday. I don't know that we have an intentional strategy to speak to them again at a 45 day window or a 90 day window. We don't. But I think that one, that's a good idea. I think that it might be worthwhile to just sort of warm them up again, but as long as they're within that 180 day window, I have the capacity to speak to them at Black Friday, Cyber Monday.
Stephanie:
Got it. That makes sense. So, what kind of mistakes do you see companies making when it comes to these growth strategies?
Taylor:
Oh man, that's a broad question. One of the primary ones is what we call the single account ROAS problem, which is this idea that most people are running their ad accounts on the idea that every purchase is the same just based on the cost to acquire the customer. Let's say I have a target of a two to one ROAS, which basically means that I'm paying 50% of the purchase price in acquisition. Well, the reality is that not all customers are equal to you, and not all product sales net you the same amount of dollars in your pocket. One of the things that we work really hard to get really clear with our clients on is the value of customers by different cohorts, so by first product purchases an example. If you think about every skew that you have in your store, every skew has a different margin and has a different return rate and has a different shipping cost.
Taylor:
Each of these three variables mean that, even at a fixed ROAS, so if you applied a two to one ROAS across every skew that you have, the net dollars in your pocket is different for every skew. Really understanding which products net you the most dollars as a business owner is a critical data element that I do not see enough people consider, and they don't design their ad accounts to reflect the variable value of the product.
Stephanie:
That's a good one. I haven't heard anyone talk about that as a mistake yet, so that must mean a lot of companies are making it.
Taylor:
Yeah. It's because it's hard. The information is hard to access, and it's hard to get granular visibility too. It's a much simpler decision-making mechanism to go, "Well, my blended cogs are 30%, and so if I get a two to one I'm making 20% generally across my business." That's a much easier consideration to make than to try and actually break it down by individual skew and get really specific on the decisions.
Stephanie:
Yep. Are there any best practices when it comes to developing spreadsheets or dashboards or something that can give you easy access to that information that you've seen your brands or yourself develop?
Taylor:
Yeah. We've built a tool to do this, to calculate cohort specific LTV data, to ultimately give us a view that we care a lot about, which is your 60 day LTV by specific cohorts. The reason we look at that time window is because most early stage Ecommerce businesses can't really wait much longer than 60 days to really realize the value. They just don't have the cash position to be able to wait longer than that, nor do I think it's really wise to wait longer than that. We've built something internally to do it, so I wish I could say like, hey, just go copy this spreadsheet and set it up, but it is difficult information to access, but you can do it. You can build cohort models for your business, but beyond just the LTV, the easiest thing to do is to really deeply understand that you did economics by every skew that you have.
Taylor:
What I would do to start is I would export every product that you have, I would mark the MSRP, so the retail sales price. Then next to that, I would put the cost to you as a business. Then I would put the return rate of the product, and then I would put the shipping cost of the product, and then I would calculate the net value of every skew. Just being aware of that for your merchandise set, like for the entirety of your product catalog will give you the kind of information that you need to then think more specifically about your ad account.
Stephanie:
That's great. To shift a bit into, we were just talking about how to grow a company, then track metrics and all that. I know you also have just been recently talking about an anti-fragile Ecommerce playbook. I was hoping you could kind of detail what that means, how are you setting up the anti-fragile Ecommerce companies, and what does that playbook look like?
Taylor:
Yeah. This goes back to this idea that we are bad at predicting the future. When I think about how I want to build a business, I want to build a business that thrives when I'm wrong. I actually want to accept the fact that I am not going to be able to determine the future, and I want to set up the business to be able to survive in almost any environment. That's sort of the idea of anti-fragile, is not just that I'm resistant to negative, but actually the negatives can be in an environment in which I succeed. The way in which I think that you're afforded the opportunity to do that is by having a specific set of attributes related to your business that allow you to sort of thrive in variability. Some of those are ... now you're going to make me try and quote my exact tweet to see if I can remember all of them, but one of them is high margin, right?
Taylor:
This is seemingly obvious, but this idea, the more room for error that you have to still be profitable, the more that the variability on your CAC, as an example, still does it affect you, and it allows you to potentially win when others can't. So, high margin is one. Another is, and this is a really underrated one, is great payment terms with your manufacturing supplier. One of the biggest things that destroys cashflow for Ecommerce businesses is obligation to front the cash for inventory. One of the best skills I think an entrepreneur can have is relational development and negotiation skills with their supplier to develop trust, to get to net 30 terms on delivery, where you're actually realizing the revenue of your product before you have to pay for it. That allows your cash conversion cycle to speed up tremendously in a way that's super, super helpful. Another one [crosstalk 00:21:19].
Stephanie:
When I saw that, I'm like, that's huge. We have the same thing in media. People will start coming and be like, "Oh, we have net 60 or net 90 payment terms." You just can't take no for an answer sometimes, and just keep trying to build up the relationship and be like, "We really can't do that." Oftentimes, you'll be able to get down to net 30, just like you're mentioning here. So I thought that one was a really good point. Sorry, keep going.
Taylor:
Yeah, that's exactly right. You just got to think about your cash conversion cycle and how you're going to not be in a position where you have to sort or seek outside capitalization to fund when you're winning. That happens in Ecom because of the cost of inventory upfront, which makes it a complex cash management business. Another one, and again, these seem obvious, but I think we don't consider them enough is low OPEX as a percentage of your revenue. We have this principle, we call the four quarter accounting principle, which gives you sort of a directional guide to where you want your revenue to go. So, if you think about your top line revenues of business, we break it into four quarters. The idea is, if you want 25% profit, then your costs need to exist in these quadrants.
Taylor:
You need to have 25% CAC, so a four to one, what we would call marketing efficiency rating, so total revenue divided by total sales is 25%. 25% cost of delivery, which is basically the cost of the product from wherever you're manufacturing it all the way to the customer. Then 25% of OPEX, and that's your payroll, your rent and all of those things. If you look at your P&L and you look at it relative to each of those four quarters, you can figure out where your profit gets eaten up and where you need to go make improvements. So, the lower your OPEX is, so you can do this by not having a really expensive office by controlling your overhead in an employee count in smart ways. Really, just looking at how do I run this business as clean as necessary or as possible in order to give myself opportunity again, because there's going to be variability in my other places.
Taylor:
The shipping thing is a good example, where it's like, maybe my cost of delivery is normally 23%, but because of the shipping thing, maybe it's going to go to 27% of my revenue. If that destroys your profit, because your OPEX is too high, then it gives you a lack of options. That's a really important one to consider. Gosh, what else did I say in there?
Stephanie:
You also said diverse traffic mix, which I like.
Taylor:
Okay. Yeah, so this goes back to the point that we're talking about. Just like an investment portfolio, if you're over-indexed on any single channel, if that channel deteriorates in value, your business is in real trouble, but if you have a diverse traffic sourcing, and I think, so the question is, what's a diverse traffic sourcing? A good baseline metric is 50% paid, 50% organic. You're going to be able to survive volatility in any one of those channels, because you have a good amount of traffic from other sources. All of these things, make it so that when the inevitable problem strikes, your business is set up for it.
Taylor:
I think that we under consider how important it is to get into these positions of strong foundations of anti-fragility before we pursue further growth. Especially in this crazy environment where we're in now, where basically every forecast that I see every business make is wrong. The question is, what do you do? A lot of people want to try and think about like, well, how do I forecast better? I just go like, I think that's a fool's errand. I think attempting to predict the future, there are just too many inputs to do it well. So, instead, how do you build a business that when you're wrong, you still win?
Stephanie:
Yep. Yeah, I love that. I think it's such a bad mindset to think that like, you have to be perfect. I think that that's how companies do it. Even when I worked at other finance groups within companies, we were usually not right, which is why we did scenarios because you usually are wrong.
Taylor:
Well, that's exactly it. The quote that I always come back to is that, all models are wrong, some are useful. They're useful in their ability to understand where you're importantly wrong. When you have a detailed model, let's say I have a prediction that shows me what I'm expecting my traffic to be by every channel next month. Okay, so for direct organic search paid, search paid social, I have a prediction. Well, the reason that model is so important is not because it's going to be right, but because it allows me, as I'm actualizing the data, to understand where I am importantly wrong. As the data's coming in, I can start to see, Ooh, I'm missing my prediction in email by a lot, and it allows you to then think about strategies to go and solve that problem, where if you don't have that model, if you don't have that prediction, it's really hard to determine where the problem comes from.
Stephanie:
Yep, exactly. It's like the pandemic too, who would have predicted that? It's straight out of Missing, Taleb's book. That's a black swan event, you never would have predicted it, so why try? Just different scenarios, and a worst case scenario like now.
Taylor:
It seems a lot like I'm reading Antifragile as I'm thinking about the application of Ecommerce. It's like, well, how do you think about a business like that? What I see is I see frustration from our entrepreneur partners about their forecast being wrong, and they get really upset about it. I get it. It's really hard. You have to make decisions about this. So, it is an important exercise and you want to reduce the margin of error as much as possible going forward, but you have to begin to expect that. That's one of the things I think about being a more seasoned entrepreneur who have seen thousands and thousands of forecasts be wrong is I'm no longer surprised when they are. So, it just gives me a different frame of the problem.
Stephanie:
Yup. When people are trying to think of those black swan events or scenarios, how can someone go about building a scenario if they don't even really know how to anticipate it? They don't even know what to prepare for.
Taylor:
I like the idea of, rather than trying to predict the future, you should extrapolate the present. That's the Nassim Taleb idea, which is that, where are you now, and where do you believe you will be in the next month based on the present? If you extrapolate the present versus predict the future, then what it allows you to do is to think about, okay, my organic search is currently at 20,000 visits a month, and it has grown by 5% a month. If that continues, I'll be at 21,000 visitors next month. You put that into place, and then as you actualize it in real time, then you can understand what's happening. What you need to understand is that, the further out you go, the wider the margin of error becomes. Predicting tomorrow is a lot easier than predicting a week from now, which is a lot easier than predicting a year from now, because the number of inputs and variables just increase as you move out.
Taylor:
That idea of constantly re-forecasting and constantly actualizing your prediction and making adjustments, that's the skill, that's the exercise to continually get in the habit of doing and understanding where you were wrong. Then, doing your best to understand why, I think sorting out causality can often be sort of this thing that we chase and we make assumptions around. I think it's sometimes useful, but more importantly, it allows you to make adjustments in your next forecast, and then do it again and then do it again and then do it again. But again, no matter how many times you do it, you're always going to be wrong, and that wrongness is the thing that I think is really informative, and it allows you to ask the question, how do I make sure I'm okay when I'm wrong? That becomes the important thing to then go build.
Stephanie:
Yup. I love that. Yeah, it reminds me back in my Fannie Mae days, I used to do with a housing forecast, and we would literally be forecasting for like the next month, and we would have data almost halfway through that month and we would still be wrong. I think it boggled my mind how we'd be wrong, but even thinking of that, I'm like, there's just no way, once you get past a certain point, you just have to keep re forecasting, even if you're halfway through the month sometimes again.
Taylor:
This is such an important understanding about how we as humans process information. My favorite example is something I call the roulette run problem, where if you've ever been to Vegas, there is a reason that at the roulette table, they display all of the recent numbers for you. The reason is, is because what your brain does, when you see a bunch of reds in a row is you go, uh, well, the next one has to be black. And you build this relationship between past data and future data that is not real. We do this all the time with information as humans. We're just really bad at computating things in a statistically rigorous way about the future. This is also why humans are actually really bad media buyers, and why we try and train all of our internal media buyers to make as few of decisions as possible inside of the ad account.
Taylor:
Because if you think about what most people are doing inside of a Facebook ad account, is they're loading up a dashboard. They're looking at past data. So, they're looking at historical data and making inferences about the future without using a computer, without using a calculator, without so much as writing down chicken scratch. They're trying to make predictive decisions about how things like CTR and CPC and ROAS are going to relate to the future, and they're almost always wrong in those decisions. This is just like, it's really important to understand what the biases are that affect us as humans in our decision-making.
Stephanie:
That's great. Talk a little bit more about humans being bad media buyers, how are you all going about buying media? What are some best practices? Other than just saying like, "Okay, just rely on the platform, let it do its job." What kind of things are you guys trying out and doing and seeing success with right now?
Taylor:
What I'm going to push back on is that language that you use, I think diminishes the right idea, which is people love to say like, "Oh, well, yeah, just let the algorithm do it." They say that in a way that reflects that that's the simplistic decision. What I'll tell you is it's not. It actually takes incredible discipline to be thoughtful about allowing the computer to do what the computer does best and focus on what you do best. With our media buyers, their job, if you think about any machine learning tool, the key to a great machine learning tool is the inputs. Machine learning tool is just taking a set of inputs and understanding them to generate future outputs. Well, the key to being a great media buyer is you set a good structure of inputs. I'll give you an example.
Taylor:
Let's go back to this idea of different product values and different average order values by purchase types. If you were to export your last 30 days of orders and you were to build a scatter plot, where across every day, every dot was an order by AOV, you would have a variation of different order values. If you think about one of the most common mistakes I see in an ad account is you have a campaign that's bidding for lowest cost, which is the conversion objective, where you're basically saying to Facebook, give me the lowest CPA that you can inside of this ad set. Then in that ad set, what they will do is they will sell a bunch of different products with different prices. Let's imagine I have five different skews. I'm a jewelry brand, and they range in price from $50 to $500. Well, what product is Facebook going to favor if the structural setup is lowest cost and you give it those options?
Stephanie:
Yeah, the cheapest one.
Taylor:
So, you're building a structure where the computer output is going to be focused on the skew that likely doesn't generate you the best net outcome. That is a tactical media buying error that has to do with poor structural setup and understanding of the tool, that has nothing to do with the decision making of which ad you should allocate the budget to. That's the kind of thing we teach our people to think about over and over and over again is, am I setting up the right structure for the output that I want?
Stephanie:
That makes sense. You would instead maybe have like similar price products so they can all actually see the performance, instead of teaching the algorithm to, of course, always showcase the cheapest one because you don't have a budget?
Taylor:
That's right. Or I'm going to bid for highest value instead of lowest cost. Facebook has different conversion objectives I can set up relative to the thing that I want. The question is, and we play this game at our company every Friday morning called [inaudible 00:33:36], where I pull up an ad account and we go through campaigns and I make the media buyers tell me, what are you intending to accomplish with this campaign? What were you trying to do? Then let's discuss of whether the structural setup and inputs were right for that outcome. Did you design the system accurately to generate the thing that you want? Because Facebook's tool is incredibly good at getting you what you want, but over and over and over again, I see people design systems that will never, ever generate the outcome they want. So they're setting up games where the rules mean they will never win.
Stephanie:
Yup. That's really good lessons. Any other things that you've seen, like similar themes of ad buying, where you were like, I've seen quite a few people do it this way and it's wrong. Anything else that has come on your radar?
Taylor:
Yeah. The big other thing is just the relationship of budget to number of variables. One of the things, again, this all comes back to some basic statistical ideas, where if you think about ... have you ever seen a graph of how long it takes to normalize the data for flipping a coin? Like how many coin flips it takes before you basically get to 50% outcomes? Have you ever seen a graph that looks like that? What it is, is that like, when it's a two sided coin, the amount of flips that it takes to normalize the data, so in other words, the time at which it will reach the predicted outcome of 50%, it's somewhere, usually in the range, by the time you get to 100 flips, it's almost always going to be at 50%. Now, if you take a six sided die, okay, do you think it takes more or less rolls to get there?
Taylor:
It takes substantially more, because there's more possible outcomes, so the amount of time that it takes for the data to normalize is a lot more rolls than if there's only two possible outcomes.
Taylor:
So the same is true of the way that you build a campaign. The more end nodes in your structure, so think of an end node as an ad set or a campaign to an ad set to an ad. The number of variables in your campaign is going to determine the amount of budget that is required to get to statistical significance, to get to accurate outcomes. The other big mistake I see people make is they build these campaigns with all these end nodes, all of these ad sets, all of these ads and a very tiny budget. You might as well check back in three years and then you'll actually get a definitive result. What they do is they build campaigns like that, and then they make decisions on insufficient data. What that is, is it's basically looking at four flips of a coin and then saying, "Oh, it's 70, 30 heads. The truth here must be this coin yield 70% heads."
Taylor:
Instead, you have to build structures that allow you to get to accurate information quickly by having an appropriate amount of budget against the number of nodes in your test, if that makes.
Stephanie:
Yeah, that makes complete sense. Is there any ratio where you're like, for every 10 ads, you need $1,000, or is there any ranges like that?
Taylor:
Facebook gives you this information. They tell you that they want 50 conversions per ad set per week. That's what they need to get you out of the learning phase. There's a lot of people that are these Facebook truthers, that think like Facebook has all these ulterior motives to attempt to get you to spend money. I get it. They are rationally self-interested, but your success is actually in their interest. So, they will give you directional understanding of how to use their tool best. So, part of what they tell you is that they designed this thing called the learning phase, which is basically their way of declaring that the data that you're seeing is not trustworthy yet. When you are still learning, you should not act on this data because it's not actually predictive of the future.
Taylor:
But then when you get out of learning phase, now you're in an actual set of outcomes that are more predictive, they're more accurate, they're more deep, they're more true about the set of inputs that are there. So, the way to get out of that is this idea of ensuring that, based on your budget and based on your target CPA, you can get to 50 conversions per week per ad set. Because campaigns use a daily budget, if you take 50 and you divide it by seven, the formula that we give people is 7.14, which is just 50 divided by seven, so for your daily budget. 7.14 times your target CPA. Again, that's the payment that you want for the objective times the number of ad sets in the campaign, that needs to be your daily budget in order to get through optimization as fast as possible.
Stephanie:
Ooh, that's good. I'm writing down the formula now, so we can put it in our show notes.
Taylor:
Yup.
Stephanie:
Okay, cool. Awesome. That's really good tips around Facebook ads. I agree about the, like when you were mentioning the learning phase, we have our own ad network, and it's just the same thing. Our growth team's always like, "Hey, we need about $1,000 just to learn and then we'll let you know what the cost per click is." It's not just Facebook, it's other platforms as well.
Taylor:
That's right. People get frustrated by that because it's a media buyer, especially if you're a company that's charging on a percentage of ad spend, it's really hard for that to feel like anything, but a self serving piece of information. But the reality is, it just goes back to an understanding of how data happens. It's like, again, if you wanted me to tell you the results of flipping a coin, give me a hundred flips, not five, and it's the same thing. That's the understanding that we need to get to about how you get to statistical significance.
Stephanie:
Yep. So, are there any surprising campaigns that your team has initiated or certain kinds of ads that you were like, "That's not going to work", and they actually performed well?
Taylor:
Oh man, all the time. I'm so horrible at predicting what will work well, creatively in particular. Man, anything that I think is like a really interesting format right now.
Stephanie:
I feel like the formats right now are ... they have to be kind of different. There's a lot happening with the ad platforms because of brands pulling back and other brands dipping in on those ad platforms, but also just with the styles of ads that are going out. With the whole world, it just seems like things are different. So, I'm wondering how you guys are approaching that.
Taylor:
Yeah. Different is a good thing. The hardest thing is actually to avoid ruts. Because there's this horrible habit that we have in the media buying world. I'll lump us into this. We fall guilty to it too, which is the way that you generate ad creative is you go to Facebook ad library, you look up your favorite brand and you copy the styling of their ads, because you're making an assumption that they're working. But I'm a big believer in sort of the purple cow principle from Seth Godin, which is this idea that, the value of an ad deteriorates in repetition of its use. Every time that an ad goes out into the world and every time it's replicated, it becomes less valuable. That same thing happens with ad formats. We've seen it with influencer ads and UGC and the Mashable style, and these formats that have become really popular, eventually their impact is reduced as people encounter them.
Taylor:
I think that the key thing, and this is the biggest challenge inside of an organization like ours, is how do you produce a system that constantly generates novel ideas? That's what I would think a lot about. Again, I know this isn't the simple answer, where I can say to you, just use an ID story squared, whatever format, but I would be lying to you if I said that. Instead, I would really take space to challenge yourself to think like, one think a lot about the beginning of the ad. I know this is cliche, but it's just so true, is that video average watch times on Facebook are like four seconds for great ads. You just don't have as much time to say the thing that you're intending to say. It's sort of the David Ogilvy quote, "If you're selling a fire extinguisher, lead with the fire." That is just fundamentally true.
Taylor:
I would think about that as a core principle, but beyond that, you've got to break the feed. You've got to be novel, and you've got to figure out a way to differentiate yourself. People are scrolling a mile a day on their phone. If you plan to stop them and break them, then you've got to figure out a way to be compelling right off the bat, and a great metric for tracking this, so we have this principle that we sort of developed off of AIDA, which is a sort of legendary advertising hierarchy of effects model, and we've sort of applied modern metrics to it. So, if you think about the first one, the most important one before ... so with the hierarchy of effects model, they happen in sequence. The second one can't happen until the first one happens. I think this is really true of Facebook ads, which is you don't get a chance to communicate your message until you stop them and capture their attention.
Taylor:
A metric we focus on a ton is three second views divided by impressions. In other words, what percentage of your served ad impressions result in a three-second consumption? You want to see that number get close to a north of 40%. Otherwise, you are paying for a lot of people to scroll past your ad.
Stephanie:
Yep. I like that. I like having specific metrics set up for the AIDA format, which for anyone who's like, "What's AIDA?" Attention, interest, desire, action retailers.
Taylor:
That's right. That's exactly right. We assign a metric to each of those variables, so attention is this three-second views divided by impressions. Interest is video average watch time. Desire is outbound CTR. Then action is ultimately CPA or ROAS or whatever you use there. But the important thing again, with these models, is to think about them happening, they have to happen in sequence. What that does, what I love about using that as a feedback loop for our creatives is that the worst feedback that you can give to a designer or a creative is your ad's not working. That is so not helpful, because what do you do with feedback that says it's not working? What you can do is if, instead of thinking about the ad as a single unit, I think about it as component parts. If I say to them, "Hey, your three-second view to impression ratio is really low."
Taylor:
Well, now I can think about what's happening at the beginning of the ad. Or if I say, "Hey, everybody's dropping off at four seconds." Now, I can think about what's happening at that point in the ad. So, you can start to now deconstruct the actual ad into pieces that allows a creative to actually take it and iterate in ways that are productive.
Stephanie:
Yeah, I love that. It seems it could get a bit overwhelming if you have tons of ads running, like starting to just try and dissect, what's happening at the four second mark, or what's happening when it should be the D in AIDA? How are you thinking about, if the company has like a large amount of ads that they're testing?
Taylor:
This is a great question, because this is the number one marketer's dilemma, is that, what do I do next? There's a thousand million gazillion things to do. The answer is you sequence by volume of opportunities. I'm going to just start with the ads that are running in my campaign with the highest spend, and I'm going to iterate on those first because that's my area of highest potential impact. Then I'm going to sequence the rate at which I engage with my ad creative relative to their potential impact. That's a really important thing to think about is that, the sequence by which you decide to do things has opportunity cost to it. So, you have to make sure that you are going after the areas of highest impact relentlessly first.
Stephanie:
I love that. Yeah, really a good way to think about it. How are you thinking about maybe ... oftentimes, history repeats itself, how are you thinking about looking at historical ad styles or going back to direct mail, which a lot of people are doing right now since everyone's at home? How are you thinking about viewing history to maybe impact present day advertising methods or growth strategies for your brands?
Taylor:
Yeah. We have this course that we teach to all of our designers called advertising philosophy. The idea is to do that exact thing, which is to understand the fundamentals of advertising that are always true. So, we start with things like behavioral psychology. We read The Choice Factory by Richard Shotton, which talks about different human biases, to help them understand things that are just true of people, period. Then from there, we sort of begin to allocate that against the medium. We read a little bit on advertising and the history of advertising the change, the history of advertising, which are all just chockfull of amazing adding examples that are primarily prints from a legacy of magazine print ads, but they're so much in those print ads. If you think about how hard it was to actually create impact with a print ad, like someone had to open a magazine, they had to see the ad, then they'd to physically go somewhere to take action. It was way harder to be an advertiser there.
Taylor:
So, the copy had to be so strong and the visuals had to be compelling. There's so much to be learned from a lot of those principles that I think we underestimate the value of the art and history of advertising before we worry about applying it to the modern medium. So, we teach that to all of our people, because one, we want them to fall in love with advertising, because we think it's an incredible art form. A lot of times, for creatives, advertising is sort of seen as the thing that you do when you fail at being a real creative. We just don't believe that. We believe that it is like a true, true art form that reaches millions and millions of people, and if you can learn to really love it and to love the way in which you can impact human behavior with your communication, it can unlock like inspiration for you. That's a long winded way of answering, and it's not just as simple as direct mail, but you've probably realized by now my answers are rarely simple.
Stephanie:
No, I love them all. Every time I'm Like, ooh, that's a good quote. We should pull that one, because yeah, that's a really good point. Even thinking about when we're generating ads for Mission, it takes so much brain power to think about like, what's good copy, what kind of images should we use? What is someone going to remark about? It's a process. It's harder than even building out a podcast sometimes. So, I can [crosstalk 00:47:18].
Taylor:
Yeah, as a simple hack, because I think these things are cyclical. If you are really creatively stalled and you're looking for inspiration, I would really encourage you not to use Facebook ad library as a mechanism for copying. Go look at one of these books, they're full of ads, and literally copy an ad from 1960, and think about the language, the imagery, and literally replicate it in the modern day. It will be more impactful than copying somebody's ad from Facebook ad library. That is a much better source of really potentially impactful ad creative than is the stuff that you're going to see from basically every brand on the internet.
Stephanie:
Yeah. That's really great. Are there any brands that you're watching that are actually always head of someone, where you're like, these brands all have the same ads, but this particular one is always kind of ahead of the game?
Taylor:
Yeah. I put out the other day, like one of the things I've gotten shamelessly relentless about is when I see something amazing, I go try and figure out who did it and try and hire them. So, TRUFF, the hot sauce company, their ad creative is as good as anybody's I've seen in the last few months. I put out on Twitter the other day, like I was citing that as an example. I just said, whoever did this, if you reach out to me, I'll double your salary to come work for me right now.
Taylor:
I think what they've done is really, really fascinating, clever ways of taking a sort of historically boring product in hot sauce and making it super compelling. One of the things, a lot of creatives feel constrained by the product attributes, like our initial entry point in ad creative all the time is like the product features. We just have this phrase that we tell our creatives all the time, which is you live in an infinite creative universe. You can say and do anything and make it relevant to this product. One of my favorite examples of this is there's this legendary ad from Gillette razors. It's a picture of an egg in a frying pan, and the headline is, this is an ad about razorblades.
Taylor:
The copy just talks about how the nonstick material in the pan is the same thing that they use to build the razors so it doesn't grab your face when it goes by. It's just brilliant. But the idea is like, it's a picture of an egg in a frying pan. It didn't come with the asset library from the client when they sent it over. But if you open yourself up to the possibility of telling stories broader than just the library of photos you receive from the client, and you really embrace this idea of an infinite creative universe, you can do anything. I think that's when you get to the really interesting stuff.
Stephanie:
Oh, that's great. I love that. Yeah, one of the ads that a friend's company is running, it's for socks, but it's literally a piece of corn growing out of two different. Something like very random, not relevant and it's their best performing ad.
Taylor:
That is the thing. It's like random. Again, you've got to think about somebody who is scrolling endlessly on their phone, and what is going to stop them
Taylor:
It's just about understanding, and this is the thing. You've got to be an internet user. In the same way, like everyone thinks about platforms like Reddit is this really specific sub-culture where you'd have this specific language. I saw a hilarious ad for a Reddit out the other day that understood this really well. It was Fresh Box, or one of the meal delivery services. The ad was basically like, "Hey, Reddit, my boss asked me to run an ad on Reddit, so I went ahead and took care of it for you." It's basically this meme app that Reddit users use, which is a robot blowing up the brand. It was basically the satirical way of understanding the medium so clearly, that they mock themselves in a way that made them endeared and loved by the Reddit users. That sort of ability to understand the place and the environment in which people are receiving your content is a real skill.
Stephanie:
Yeah. No, that's a really good example. I know we only have a couple minutes left, so I did want to ask a higher level Ecommerce question because from the interview, I just know you're so excited about predicting the future and you just feel very confident about it.
Taylor:
Do it.
Stephanie:
I wanted to hear, what kind of trends or patterns or disruptions are you most excited about right now in Ecommerce, or do you see coming down the pike?
Taylor:
Let's see. One of the things that I like, I'm sort of betting on for the future, is the global Ecommerce market. I think about the ... when anytime I see a marketplace where there is this pent up demand, that the infrastructure doesn't yet support, but it's finding a way to happen even before the infrastructure exists, what that means is that, by the time the infrastructure catches up, you're going to have a massive moment of arbitrage. Think of it like a wave that builds up that suddenly then released by some sort of technological innovation, and that's where there's periods of arbitrage before everybody else shows up and the competition's there. I think about a market like India, where you have this massive, massive market that is coming online really, really fast, and you have this problem, which is a payments infrastructure.
Taylor:
Nobody there has credit cards. Almost everything is cash on delivery, and none of the systems yet support the infrastructure for that delivery and payments processing. But yet, there's massive engagement from the user base. The second that gets solved, it's going to be a huge opportunity. This is true in a ton of other countries, where you have ad inventory costs that are extremely low, you have demand that's really high and you just don't have the systems that need it yet. That's a thing I'm watching and following really closely, as we already have clients that are seeing 30, 40, in some cases, 50% of their spend in international markets, where there's tons of friction in fulfilling the product. The second that, that all goes away, we are on the precipice of a truly global marketplace in a way that we haven't even begun to process. It's going to be really, really cool.
Stephanie:
Ooh, that is a very good answer. What other parts, or what other places in the globe are you looking at right now? India of course, is a big one next million users, everyone's focused there, but what other smaller markets are you looking at right now that you see a big opportunity, or your brands [crosstalk 00:56:20]?
Taylor:
Places where like, so the United Arab Emirates is anytime you ... especially, if you have any sort of luxury product, there's massive opportunity there. There's highly efficient opportunity. It's pretty volume constrained. It's a small country. Super interesting. I think Southeast Asia is super, super interesting to me. Nigeria, even from a talent standpoint in the Ecommerce world, that's a giant country. I think sometimes, because we have these geographically warped maps because of our Western centric view, we don't realize how big some of these countries are. Those are a few, Nigeria, Southeast Asia and India from a hiring standpoint, from a potential market opportunity standpoint are places that we're following really closely.
Stephanie:
And is good spots to watch. All right, so we have a few minutes left. I want to hop into a quick lightning round brought to you by our friends at Salesforce Commerce Cloud. This is where I'm going to ask you a question and you have a minute or less to answer. Are you ready, Taylor?
Taylor:
Ready, fire.
Stephanie:
All right. What's next on your reading list?
Taylor:
What is next? I'm going to pull up audible right now. Do I have a countdown on my clock? Shoot. Where's my reading app? Audible. Someone just sent me a book. Oh, I know what it ... Here, let me take it. I'm failing at the time challenge, but [crosstalk 00:57:36].
Stephanie:
That's okay. Thankfully, we can edit this podcast and make it [crosstalk 00:57:39].
Taylor:
Yeah, a book called Caste: The Origins of Our Discontents, by Isabel Wilkerson. It's all about sort of racial history in the United States and some of the things that have led to our own version of a caste system. This is a big sort of initiative for me personally, in my own learning and development right now, is sort of redesigning my own sense of history, as well as we've got a bunch of big diversity inclusion initiatives inside of CTC right now. So, I'm trying to do the work of my own education, and that's a book that was just recommended to me.
Stephanie:
That sounds good. I will have to check that out as well. What's up next on your Netflix queue?
Taylor:
Man, Netflix is so dead right now. It's one of the biggest drawbacks of COVID era. We just finished Money Heist, which is awesome, or Heist, maybe it's just called, which is dub from a Spanish show. So good. But I'm watching a show on Amazon right now called Upload, which is about this idea that like in the future, they've invented a way that when you die, they upload your consciousness into this digital world and you can interact with the present world. It's sort of a comedy, but it's ... I like those sort of futurist dystopian content.
Stephanie:
That's interesting. If you were to create a podcast, what would it be about? It can't be Ecommerce, and who would your first guest be?
Taylor:
Right now it'd be about trading cards. I've become obsessed with baseball cards in the last few months. My guest would be God to the name of Evan Vandenberg, who's launching this company that I might potentially be an investor in called [CollectX 00:59:07], which is basically, think of it as Robinhood meets DraftKings, but it's basically the digitization and tokenization of physical cards into a market dynamic that I'm sort of obsessed with. That's a weird nerdy answer. I'm sorry.
Stephanie:
I know nothing about trading cards, but that sounds very intriguing. All right, and the last one, what favorite piece of tech or an Ecommerce tool are you trying out right now that is either making you more efficient or you're having a lot of success with?
Taylor:
It's one that we're building, which is our growth data tool, which is just all around cohort specific LTV data. I have this super fun position of being able to hire a rad developer and a rad product manager and just build something that I want.that is just so fun. To have ideas in your head and then for them to be able to manifest themselves into the world, it's magic. That's my real answer, but I'm an obsessive Evernote user. I believe a lot in creating an external hard-drive for your brain as a really, really powerful tool. I think we were already sort of bionic people more than we realize, and expanding your mental capacity by taking great notes, I think is a serious life hack.
Stephanie:
Yeah. I completely agree there. All right. Well, this has been an awesome interview, so many good insights and tips and things that people can actually implement, which I love interviews like that. Where can people find out more about Common Thread Collective and yourself?
Taylor:
So, commonthreadco.com is our website. Then, I would say follow me, Taylor Holiday on Twitter.
Stephanie:
You are a good Twitter follow. Yes. All right, thanks Taylor.
Taylor:
Awesome.
Without question, the last several months have accelerated ecommerce adoption and drastically changed consumer behavior. The entire sales lifecycle from finding a prospect to closing the deal has been turned upside down. Now two key obstacles lie in the path of ecommerce leaders…
The first is the more obvious, more discussed problem: How do you operationally and technically need to change to meet your customers' evolving needs?
The second key obstacle is not as often addressed, but is equally as important: How do you then communicate to your customers that even in these changing times, you are equipped and ready to meet their new needs?
The binding and laminating business doesn’t sound like it would be ripe with insights into answers to both of these questions, but Jeff McRitchie, the VP of eCommerce at Spiral, is here to prove that assumption wrong.
Jeff has nearly two decades of experience in the ecommerce and digital space. Just last year, his own company, MyBinding.com, was acquired by Spiral, where he now helps lead ecommerce operations.
On this episode of Up Next in Commerce, Jeff explains what it has been like merging his ecommerce business with a more traditional binding company. He shares some of the challenges he faced along the way, and what methods and strategies he’s leaned into to find success. Jeff also discusses tips for building out a winning SEO and content strategy, and how ecommerce is playing a larger role across the entire business, including in customer acquisition and content marketing.
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
---Transcript:
Stephanie:
Welcome to another episode of Up Next In Commerce. This is your host, Stephanie Postles. Today on the show, we have Jeff McRitchie, the VP of Ecommerce at Spiral Binding, My Binding and Binding 101. Jeff welcome.
Jeff:
Thank you.
Stephanie:
Thanks for coming on the show. I was excited when I was looking through Spiral's background. It looked like you guys started in 1932. Is that right?
Jeff:
Yeah. I mean, we've been around for a long time.
Stephanie:
Yeah. I think that'll make for a really fun conversation because I'm sure that the company and you have seen a lot of transformation over the years, so that'll be fun to dive into later.
Jeff:
For sure.
Stephanie:
Tell me a bit about Spiral. What is it? How do I think about what you guys do?
Jeff:
So Spiral is really a company and we've built ourselves around helping people to bind presentations and proposals. We do a little bit of laminating. We do a little bit of other things, but really we focus a lot on binding. We sell the equipment and the supplies for people to be able to bind presentations, proposals, books and training materials. Those are probably the primary things that come out of it.
Jeff:
We're a niche player in the office products market is one way to think about it. We're an interesting a hybrid of a company because we sell a little bit in B2B, a lot in B2B, a lot in B2C or B2B to C sort of space. Then we also have some really interesting national account sort of business as well. Kind of a little bit of an evolving company, we're a manufacturer and a distributor at the same time. We have lots of different faces which presents some really cool challenges from the standpoint of being in a digital transformation or Ecommerce role.
Stephanie:
Okay cool. So how long have you been at the company for?
Jeff:
My story is interesting, actually I'm co founder of a company called My Binding about 17 years ago. Last year we sold to Spiral. I've been with Spiral for just over a year now in this sort of digital transformation role but with My Binding, which was more of a pure play Ecommerce space. We grew and we were the largest sort of binding Ecommerce player in the market. Then all of a sudden we joined forces essentially with Spiral, which was the largest sort of B2B player in the market. Now we're one force together going after the binding and laminating market.
Stephanie:
Oh, interesting. What was that process like where you had your own company, you guys were selling online and then joining a company that maybe wasn't doing as much of that. What was that process like when it came to incorporating your company into an existing older company?
Jeff:
There's definitely some upsides. Suddenly you have increased purchasing power, you have more access to talent and capital. Those were amazing things, but the integration side of things is tough.
Jeff:
I mean, you're trying to merge systems and figure out how everything works together and learn the language of a new company. Some of that stuff is not as easy as it should be, as well as trying to figure out where exactly are they on the landscape of digital transformation and how do you navigate that when... We were pretty much an Ecommerce or digital first organization. That wasn't really their background. Now we're figuring out how do we be both? That's a pretty big challenge actually.
Stephanie:
Yeah. That sounds really difficult. What does the customer journey look like for Spiral or what did it look like compared to My Binding?
Jeff:
I guess the best way to think about it would be that in a B2B, B2C sort of Ecommerce experience, we were really building our business around a large number of transactions with a large number of customers, essentially small transactions to a large number of customers. On the more traditional B2B model, the traditional side of the Spiral business would have been around a small number of transactions to really big customers. Which is pretty typical when you look at this idea of traditional B2B and more like an Ecommerce B2B sort of experience. At least a B2B, to C sort of experience.
Jeff:
That was the really interesting thing is that we were dealing with customers from all over the country that in almost every industry that you can imagine, but most of them were rather small and we are filling specific needs for those customers. That was fine. On the spiral side you were looking and saying, hey, they had deep relationships. Relationships that went back decades, in many cases, with organizations where they were the supplier of choice. They had complex contracts and all those kinds of things. That was never really part of the Ecommerce world. Trying to figure out how do you merge those two together to get the best of both. It's not easy, but it's really fun actually.
Stephanie:
Yeah. I can imagine it takes a lot of training for their existing customers who are used to those contracts and used to things being done a certain way. How are you maybe going about training the customers who are used to doing things the old way to be like, Hey, we actually can do this online usually.
Jeff:
Slowly.
Stephanie:
Any lessons there that someone can take away if they're going through the same thing right now within their org?
Jeff:
You don't have to do it all at once. Our approach is really to allow customers to interact with us the way they want to interact with us by giving them better options. Really the priorities for this past year have been to try to integrate systems and then upgrade our footprint so that we can allow the company to put its best foot forward. Really starting with the E-comm side and getting everybody on the same platform and then tied into the same systems.
Jeff:
Now we're actually probably just a couple of months away from launching our brand new B2B E-com experience for the traditional spiral customers. Essentially we have been allowing them to continue to exist and deal with the company in the way that they used to while improving the experience and then bringing the platform up for the entire organization. One of the things about especially B2B commerce is that it gets really complicated as you tie in lots and lots of systems and a lot of interesting rules.
Jeff:
Customers want to deal with you in the way that they want to deal with you. What we've found is that we have to build specific experiences for our different customer types. That's the approach that we've been taking. I think that's a good approach from the standpoint of, you're not trying to force everybody into the same sort of experience because not everybody wants to deal with it in the same way. As a large organization that sort of deals with these sort of different challenges, we have to answer questions, like, do you display pricing on the front end of your website or is it a login only experience?
Jeff:
What pricing do you show people or what price pricing do people get and how do you control that and how do you manage that and how do you make sure that that experience is personalized for individuals? Then there's the age old question, which is really challenging in an organization that has multi channels and that is, how do you deal with the channel conflict? Whose customer is that? I guess it depends on who you would ask because everybody thinks that the customer is theirs. Yet ultimately the customer needs to deal with the organization in a way that the customer feels the most comfortable, not in the way that the organization feels most comfortable.
Stephanie:
Yeah. That makes sense. What kind of legacy or what things did the legacy customers get hung up on the most when you guys are making this transition and trying to show them that a new platform's coming? Is there similar themes of things that they're like, oh, I don't feel comfortable with that, or, I don't want to move because of this?
Jeff:
I think when it comes to customers, most customers want technology. I mean, they become comfortable. I think that they don't want to lose functionality. That's been probably one of the hardest things is that even if that functionality wasn't the best, they become comfortable with it and they don't really want to lose that. Yes they do want a best in class experience. One of the hard things that we all have to deal with in Ecommerce right now is that the bar has been raised.
Jeff:
There are people who want more and more features in terms of their online shopping experience. What you find is that you need to be able to roll these things out, but you need to make sure that it doesn't make things harder on those customers, especially long time corporate customers. They are really dependent on these things working smoothly and easily. That's actually one of the hardest challenges in this process has been, okay, well, we've done a lot of cool things for customers over the years. One off, you build a feature on the website just for that one customer.
Jeff:
Well, trying to then redo that and not lose a substantial amount of functionality for specific customers, especially large customers that you have these really deep relationships with, that's pretty tough.
Stephanie:
I was actually going to ask that next, when you mentioned that you were personalizing the experience for certain customers to make them feel more comfortable or hearing what they want and trying to incorporate that into the platform, how do you go about picking out what things you should maybe personalize or give to the customer without going down a worm hole of having a personal experience for every customer?
Jeff:
Ultimately, we're taking an approach of first saying, what's the best in class experience that we could build. What are the things that are going to be the best for all of the customers and then looking and saying, "Hey, can we in our roadmap put in the flexibility to accommodate for these many things that customers have asked for?"
Jeff:
How could we build this in such a way that we can add that on or this on? I'm not sure that we always nail it just from the standpoint of... It's pretty tough to keep everybody happy. But we're taking the approach of, hey, we can make it substantially better for everybody. It may not be perfect, but it should be a dramatic enough improvement that they'll recognize that we have their best interest in mind.
Stephanie:
It seems like some of those requests might also fit other customers as well or it might be something where they're like, oh, I actually wanted that and never thought to ask. It could be helpful when it comes to product development on your side, like technology development.
Jeff:
Yeah, totally. We had a really good team that we used to build out stuff and we're able to iterate fairly quickly. That's the good news because sometimes we miss something and so... But as long as you can respond fairly quickly to a customer's need, it gives you an opportunity to serve them better and to communicate. But the other really important part of this is really getting the account managers and your sales people involved in this process so you get some really good feedback because one of the challenges that we face at least is that sometimes as the E-com department and on the technology side, you don't always get raw feedback.
Jeff:
Maybe the stuff you're hearing is from the people who are yelling the loudest, not necessarily from the people who are trying to help you. You're not necessarily hearing about the features that are going to make the biggest difference for most number of users.
Stephanie:
That makes sense. With this whole re-platforming and new tech stack that you're going to be launching what pieces of tech are you most excited about showing to the customer or bringing online that maybe wasn't there before?
Jeff:
For us it's really about an enhanced user experience. We kind of been a little bit on the old school side on the traditional B2B piece of it. This gives us the ability to provide a really much better experience end to end in terms of transacting with us. Some of the things that we're aiming for, that are harder than I was thinking they would be, would be real time freight quoting. When you're a B2B company and you've got a distribution network across the country, and you're trying to figure out how much that pallet is going to cost to go to this customer. You think, hey that should be super easy. That's like in the Ecommerce world, until you start to realize, well, it's really important that you get that right. You have to first know where all that's going to ship from.
Jeff:
One of the biggest things is a really deep integration with our ERP so we can understand where the inventory resides and then how much it weighs and the sizes and all those kinds of things so that we can do that on the fly. Because right now we do an add back type thing. We'll tell you what the freight is later. Customers don't like that. Especially not in the Ecommerce world. Getting that upfront, same with sales tax calculation. Right now, a lot of that's done on the backend and people want to know upfront. That means building a system that has management for resale certificates and all of those pieces.
Jeff:
I need to understand where are you exempted, where you not exempted and what are you exempt from and all of those kinds of things so that I can quote you and tell you what the sales tax is going to be upfront before you place your order. That's another piece of it that we're excited about. Requisition list is another one where people will have their own custom price list in the system where they can quickly order. We're building a system where they can upload an Excel file with all of their items that they want so they can do quick ordering and quick reordering.
Jeff:
I guess those would be a few of the systems. Like a quote management system to allow people to request pricing on items and then for us to respond to them live and track that inside of our system is another one that we're building. Those are all areas where we're saying, hey, this could really enhance the user's journey and make it a lot easier for them to do business with us.
Stephanie:
That's great. Yeah that sounds like some great changes. Have you had any customers trying out the platform as beta testers and have you seen any difference when it comes to average order value or anything?
Jeff:
We're not quite there yet. We finished design and we're in the midst of development at the moment. I would say that that's going to be one of those steps prior to launch. Will be first to have sort of sales associates and account managers jump into the platform and test it for themselves and then to really get especially key customers in the system testing, and then also giving us feedback. What do they love? What did they not like and how can we make it better for them? That's on the roadmap before launch to be able to say, "Hey is this better for you?" It's funny because on a traditional B2C Ecommerce launch, you'd be focusing so much on the front end.
Jeff:
Like, the My Account pages are taking just as much time for this site because that's where our customers are living. They want to use the search, but they really want to use the my account pages. They know what they want, and they need to be able to quickly reorder it. They need to be able to see their orders. They need to be able to have the ability to upload those requisition lists. It's a little bit of a twist but getting them, especially into those my account pages so that they can spend some serious time understanding their accounts and telling us what they like or what they don't like is going to be really important for the launch process.
Stephanie:
Yeah. That's really interesting about focusing on my account page and how much time they're spending there. I'm sure that things like product suggestions or also bots might be very important on that page to help showcase items that maybe they wouldn't otherwise buy when they're just quickly uploading something or just reordering. Are you guys experimenting with some of the suggestion features?
Jeff:
Most definitely. Yeah. That's part of the vision is to try to figure out and say, okay, we have these deep relationships with customers and they buy specific sets of products. How can we expand to purchasing a product set? How do we get them and introduce them to complimentary products and show them the right pricing and the right place so that they can say, "Hey, I should totally add that on." That's something that I should consider. It's an interesting challenge for us because we have different personas or groups of people that we're dealing with.
Jeff:
On one hand we're dealing with dealers and they're really reselling product. You're trying to show them maybe categories of product, where do they need to expand because they're buying for specific purposes. Then you have end users and those end users you might want to show them a different size or a different color. We're experimenting with what the best algorithm is that we can use to show them the right products and then also in the right places too.
Stephanie:
That's great. What tests are you most excited about that you're pitching to everyone right now and some people maybe aren't sure about?
Jeff:
I'm actually most excited right now about the lead gen side of our business.
Stephanie:
Tell me more about that.
Jeff:
When you start to think about what the power of Ecommerce is for a B2B organization. Ecommerce can really become the engine that powers the acquisition efforts of a company. Especially because we can get in front of hundreds of thousands of customers a month, whereas the traditional B2B sales force might only touch hundreds of customers per month. Maybe thousands, but definitely not hundreds of thousands.
Jeff:
The idea of... What does it take for us to build a really cool robust system to not only bring these leads in but then to try to figure out how do I score these leads and then not only take them and turn them into an immediate sale, but to determine which ones of these really can be turned into those more traditional B2B accounts that we have these deep relationships with that are going to buy from us for years to come, many tens of thousands of dollars, right?
Jeff:
The really exciting part to me is looking at it and saying, okay we are on the Ecommerce side, on the B2B2C Ecommerce piece of it. We almost have too many leads. We get so much traffic that comes in. So then how do you figure out, take all those leads and build a really robust system where you can make sure that they're getting exactly what they need, and you're closing as many sales as you can, but then how do you figure out a way to pass those accounts up, the right accounts to the right people so that you can build them into a much larger long term sustainable program.
Jeff:
For us, that means building a really cool inbound sales team that makes sure that we take care of those leads and that we foster them and do all the things that we need to do, but then building an outbound sales team as well that's going to go in and then say, "Hey, let's take these leads and take them to the next level." Then also figuring out a system for passing accounts up and down inside of the organization. You really want to be able to pass a lead up or a customer up that has substantial potential to be either a national account or what we'll call an enterprise level account.
Jeff:
But you also want the reciprocity of getting those accounts back or the smaller accounts back from the team. I will say that no one wants to give up that account. That's a big challenge inside of an organization when you're trying to say, "Hey, I'll give you some, you give me some." The way usually ends up being is someone... Everyone wants to receive, no one wants to give. But the system only really works if you can give the best to the... But then also that you can receive quality back. For instance, handing back to the E-com team, only the accounts that don't do any business, isn't really a win.
Jeff:
You really want your enterprise salespeople focused on enterprise level accounts. We're having to sort of wrestle through what does that look like in terms of structure. I don't know that we really have it all figured out yet, but it's a cool idea.
Stephanie:
I'm guessing there's a way to automate that and create rules. So it, like you said, can go up or down depending on certain criteria from when they're coming in. How are you all thinking about automating that process? So it's maybe less of a salespeople having to give and take and whatnot, and more like, Oh, this is automatically routed to you based on these metrics.
Jeff:
That's exactly what we're doing. We're exploring machine learning and big data to try to figure out a really good way of scoring customers because using that scoring, you can figure out how to pass customers up. Then a set of rules as well that says if these customers aren't of a certain size or if they have this kind of profile, they really belong in this group. But it's an interesting challenge from trying to figure out where do you get all this data from, and then how do you process it? We're exploring different options right now in terms of what that might look like and how we can best approach that without spending a ton of money before we bet that it actually works.
Stephanie:
Yeah. That's really cool. So outside of the prospect giving that information, what kind of things are you looking into right now to find the information to help with that scoring process?
Jeff:
It's actually challenging. You have certain pieces of information that are given to you which you have usually a name and an address. Their email address usually has a domain associated with it, especially in B2B. So you can pull a lot of information from that and you can start to sort your domain, your customers by domain. But really we're looking and saying, okay, well we do know the purchase history. The idea then is, okay, if you were to sort all your customers out, you can sort them on a scale of, let's say a one, two, three. You can say my best customers spend the most money with me. My worst customers spend the least amount of money with me, but that really misses part of the point.
Jeff:
You almost need to add a second access to this, which is really about customer potential. When it comes to customer potential, we're looking at the idea of what would it take for us to add some big data to this? To understand the size of their company and the profile of the company that they come from, or the industry that they come from as well, because the industry can be really important to us. But then the other side of it is also looking at what they purchased. Like for instance, people who purchase specific equipment or supplies, they're going to have a much higher lifetime value with us because those are proprietary or have maybe a really good pull through rate.
Jeff:
For instance, it may not be that it's a proprietary supply, but when you buy that machine, you have to go through a lot of supplies to make it worthwhile. You look at the data and you say, okay, that customer has a huge amount of potential. Not because of the amount that they bought from us, but because of what they bought or who they are, the company that they work for or their position. We're looking at the possibility of maybe even extending that into some of the databases out there that help you understand whether people are in market and what their roles are as well.
Jeff:
Because when you're dealing with B2B, you're not really selling all the time to the company, you're selling to a person inside of the company and that person has a role. You have to figure out, okay, well what role do they play in this picture? That helps us to sort them into personas. If you're dealing with a really small number of accounts, you can figure this out, but we have to automate it because it's not really feasible to do that in a one off basis.
Stephanie:
Yeah, definitely seems like you're going to need a whole entire data or business operations team who can build those rules out for you and have dashboards. That seems like a big project, but well worth it. Earlier, you mentioned that you guys have more traffic than you know what to do with and lots of leads coming in. Of course my first question is how are you getting this traffic? How are you acquiring potential customers?
Jeff:
Sure. I mean... We're in a niche industry, right? So that's part of it. We've been around for a really long time. Because of that, at least... Spiral has been around 80 years, My Binding for almost 20 on the web. As you start to look at that, we created a massive amount of content. Thousands of videos and pages. We really have in a lot of ways, the best websites in our sort of space and industry. Because of that, people are finding us to solve problems. What you find is that we built out these websites and either through SEO or through paid search we're driving a ton of traffic to the websites because they convert and that makes a ton of sense.
Jeff:
We're essentially... We have all of this content and it's really designed around this idea of how do we solve these problems for customers? We can drive more and more of that content. The website deals with a certain number of those sort of leads and converts on its own. The challenge for us tends to be, what do you do with the people that are maybe a little higher in the funnel? You're now talking about making sure they have a really awesome call center that is going to be able to answer those questions. Live chat is really big. We've extended our live chat hours all the way to midnight which is unheard of in the B2B space.
Jeff:
I want somebody there to talk to somebody if they have questions about products. Especially really big products. We're experimenting with the idea of doing triggers for live chat. We did that and that was really successful for us. We turned on the trigger and said, with the idea of if I walk into a store, somebody says, "Hey, how can I help you?" We did that on the Ecommerce site and we had massive numbers of people that were engaging with us. But the surprise to us was that many of those people were actually much higher in the funnel than we were used to dealing with.
Jeff:
In other words, they were now engaging with us and they weren't ready to buy. They were in the research space and they had lots of questions. Which is really cool but it just changes the model a little bit and you all of a sudden have to figure out how do I step up for that? How do I make sure that I have the right person to answer those questions? That's part of it. Driving the leads really comes to how do you acquire traffic on scale? Really good high quality traffic for the site. Then the question is, well, what can you do with it? Driving the traffic is really exciting from a standpoint of it doesn't have to be done in one way but you have to be maybe a little bit creative to do it because you really are trying to get in front of people that have problems rather than...
Jeff:
At least in our space, you don't come to a binding website unless you have a problem that the binding website can solve. It's not exactly an impulse purchase. You're going to show up and you're not going to just browse around. I wonder what kind of binding machines they carry. You probably are on a mission to solve some sort of problem. Right. Whether that's like your bosses told you that you need to buy a binding machine or you need to upgrade the way that your reports or presentations are going to look, or you have a deadline of Friday and you need to get these reports out for the annual meeting.
Jeff:
These are all sort of really common sort of scenarios and so then the question is, will this product work for my specific needs? That's a question that our customers are constantly asking. Building to that has been a really great sort of acquisition model for us to build around the idea that every customer that comes to us comes to us with a problem that we can solve for them, and then figuring out how do you work backwards to that? What problems could we solve? Then as you start to get creative with that and build massive amounts of content, that content lives out there forever. That's been really a big part of our success, is really the longevity but also the content generation sort of machine that we've built over the years.
Stephanie:
How has your content... What is the style now today? Is it only educational? Is it humorous and how has it evolved over time?
Jeff:
We've tried a lot of things over the years. We've tried to be funny. I think we think we're funny sometimes. We've tried a bunch of different things. We've tried to be really educational. It was really hard to figure out the ROI of that. What we've really... If you were to look at our content, we do a lot of content that is really close to the bottom of the funnel, but that would be really helpful. We go with that sort of helpful thing as well as deep. So the idea of building out a really robust and large set of content over the years about products.
Jeff:
We spend a lot of time making sure that we have all of the details about the product, even to the point where our competitors come to our sites to look up products because they don't have as good of information as we do. That's one piece of the content side of things for us. We have a lot of how to videos. We did a bunch of experimenting around the videos. We found that the videos that people really cared about would basically answer a couple of quick questions. But mostly it was, will this product work for me? How does this thing work?
Jeff:
We made a whole series of those videos, almost five thousand of them that are really around the idea of how does this product work and a quick demonstration essentially. Usually around a minute long that takes the product out of the box, show someone how to use it. Those really work well for us because they show a customer generally what are they looking for. A lot of customers they want to see what it looks like or they have a machine already and they want to say, "Is that's the thing that works with my machine.? They don't understand our language. Those videos have worked really well for us as well.
Stephanie:
That's great. Are there any surprising pieces of content that you didn't think would work that did, or surprising sources of customer acquisition that you wouldn't have looked into before?
Jeff:
We've had a few blog articles that have found traction in the world and the web that I wasn't really anticipating. We've written a lot of content over the years. Most of the blog articles get a little bit of traffic. They're like evergreen content, little bit of traffic over a long period of time. But occasionally we'll end up with one like... Something about how to laminate without a laminator.
Stephanie:
That's a good one.
Jeff:
Amazingly, there's a lot of people that look up that and I was shocked. It consistently drives more traffic than almost any other blog article for us. Which is odd. I'm not sure it drives a ton of business because they don't want to buy a laminator, but if you think about it, there's a whole segment of people that have maybe problems that we don't traditionally associate with our business. That would be one thing and then the other piece would be the language piece.
Jeff:
It's always surprising when I discover that the language that we use internally for our business doesn't match the language of the customer. An example would be we talk about binding covers all the time because we're in the world of binding. A lot of people they just talk about card stock. In the paper world, the card stock doesn't even exist. It's not a thing. People will talk about it. It's cover weight paper. Index weight paper. Card stock is like this sort of crafting term. Yet it's sort of taken on a vocabulary of its own in the world.
Jeff:
When people search for binding covers, often they'll use that word. That's always surprising to me as well. There's a whole list of those things where people basically they choose to use their own words to describe things. Now you're trying to figure out how do I technically be accurate about this product but really use their language? Because if you don't use their language, then you're not going to show up in search for this stuff and they're not going to feel comfortable with it.
Stephanie:
That's a really good reminder, especially with generational shifts that the new consumer might be using completely different language than what you're used to. How are you exploring what that language might be? I mean, especially a company that has been around since the thirties, how are they figuring out, oh, this is what they call it now, this is what the kids are saying these days?
Jeff:
Probably the easiest thing for us is to look through our search results and especially the no results found once because often it's those things. When people are typing in stuff in the search bar and nothing's popping up. You look at that and you're like oh... A smart merchandiser, someone who understands your products really well, they start to make those connections and they're like, oh, wait a second. That's what they mean. Obviously a lot of that like spelling mistakes and things like that. You can fix those in your search engine but when you start to look at it, you start to see sometimes patterns. That's one of the easiest ones.
Jeff:
The other two that are really helpful for us would be Google autosuggest. Just start typing things in Google and then figure out what Google thinks that you should add to the end of it. All of a sudden you realize, okay, maybe people are searching for maybe a slightly different side of things than we thought they were. Then the other one would be Amazon. Amazon, their product terms are awful. Yet they sell so much. Why? Because they tie into language. They have usually products that have all these different words in the titles that you would never imagine.
Jeff:
As you start to look at products that are really successful on the marketplaces, you can start to realize, okay, well maybe they're onto something there. They've managed to call out even the most important attributes of that product in a very search centric sort of model or they have really been able to hone in on maybe key words that we weren't thinking of when we've been building this out. Especially because often you start with whatever... A point of reference would be the manufacturer's title. It becomes quite difficult sometimes to sort of detach from that, but Amazon detaches automatically because they let people come up with their own titles for stuff.
Jeff:
Usually it's the sort of ecosystem that will change the title to try to optimize. Sometimes when you find really successful products that you're realizing, Oh, maybe people do care about that.
Stephanie:
I love that. That's really good tips to remember about, finding those keywords and how to discover them because yeah, I think even longterm key words would probably be really good for your industry. I'm thinking, how would I Google something like that? I would probably be like how to create a hard cover book for my presentation or something really long winded like that. It's a really good reminder about the keywords importance.
Jeff:
Then obviously you have your paid search stuff too. You can look and see in your paid search accounts, you can say, okay, what keywords are actually driving? If it was a broad or a modified broad match keyword, you're going to start to dig in and you can say, oh, it actually matched on this keyword and it drove a sale. Again, driving back and saying, okay, what am I driving sales on? It tends to be a really good place to start discovery as well. The only thing, the problem with that is that you might be so far off that you're missing the boat completely. That's where it takes a really good merchandisers to sort of nail that stuff down.
Stephanie:
I also think it was interesting earlier when you were talking about how to laminate without a laminator and thinking about selling something through saying, oh yeah, you don't need to buy through us. Here's how you do it because I'm sure a lot of people, like you said, are searching for stuff like that or how to fax without a fax machine. I know I've searched that quite a bit, but making fun of it and you might actually be able to convert someone who's like, Oh, I actually just do need a laminator to do this, but having a humorous video around that.
Jeff:
Yeah. As well as maybe they decide that they want to buy some cold laminating pouches. The idea is, if you can be really helpful in the long term, going back to that idea of video. We've done a lot of videos over the years. We understand that many, many, many times people use our videos post-purchase not pre-purchase. People are going to the video to figure out how does this thing that I already bought work. Well, that doesn't really help us but it does help us in the long term.
Jeff:
As you look at it and say, it's not going to win us the sale today, but it will win us brand awareness. It does potentially when you do supply sales. Because we're a very supply driven sort of space. If you think about it, if you buy a binding machine, you got to buy some supplies for it. Longterm, we want to have an awareness and be in front of customers so they understand who we are when it comes time to buy the supplies that they need.
Stephanie:
Just like you said, it's really important to continue to stay in front of that customer so they come to you to buy supplies and remember you guys. How do you go about doing that and keeping a customer retained? Because it seems like it would be easier with these legacy customers who are maybe in these year or three year long contracts. Now when you're moving towards Ecommerce and they can hop around really quickly, it seems like you wouldn't be able to retain customers as easily. So how do you go about staying in front of them?
Jeff:
I mean, there's a lot to that, the question. To give you maybe a general overview of our thoughts is a big part of our business and something that's really important to us. Especially on the E-com side of things, it really starts with delivering a really awesome experience upfront. So you need to be able to help them find what they need and then deliver it to them in a really reasonable timeframe or meet their deadline. All that kind of stuff. To have the product in stock and all of those kinds of pieces. That's actually harder said than done when you deal with a really large niche category.
Jeff:
That's the beginning piece of it. Once you've given them that positive experience, or if they've had a negative experience, you use your customer service to basically earn a customer for life. That's actually the motto of our customer service group. Earn a customer for life. As you look at this idea, you say, okay, well, we now have a shot at their business longterm. Now the challenge for us is, okay, what's the best way to reach them? The easiest way is email. We have a ton of automation in our emails. We send emails based upon what you've purchased with replenishment. We send life cycle campaigns based upon... Welcome to the store anniversaries campaigns, and then also best customer campaigns, win back campaigns and reactivation campaigns.
Jeff:
We have all these automations that go out. They're really helpful. We also have sales that go out on a weekly basis that keep people engaged and keep things front of mind for them. You combine all of that on the email side, but then you recognize that that maybe only gets you half the customers. The question becomes... Because there's a bunch that are opted out in the B2B space, it's really hard on deliverability to get into the inbox. More and more people are using advanced filtering programs to prevent spam from getting through to their employees.
Jeff:
As you look at that, you say, okay, well, email only takes you so far. So then what do you do? The real question is, back to that conversation we had earlier about lead scoring, how do you determine your best customers or your best potential customers and make sure that you get somebody to call them? To send them a personal email which are easier to get into their inbox or to find another way of touching them. For us right now, the two other ways of touching them that we're sort of exploring, one would be SMS and then another would be direct mail. We're kind of in the process of exploring a test on SMS.
Jeff:
I'm not too sure how we feel about it, honestly. We have to figure out how our customers feel about it, just from the standpoint of as you look at customers giving their personal cell phones for business purchases and getting text messages. But you think about it, that's a great way to get in front of people and stay in front of them as long as you're going to be super, highly relevant. Then the other piece of it that we do a little bit of would be on that retargeting side of things. If you don't know who that customer is exactly, or don't have their ability to email them, you can at least sort of [inaudible] do it, make sure you're sending or placing ads more frequently into their feeds on different platforms through retargeting.
Stephanie:
That makes sense. It seems from, especially in SMS perspective, it seems like the only angle you can go about is being helpful. Like oh, you probably are running out of supplies, order now. I don't know, you can get a discount or something. It seems like there's not too many ways for B2B companies to use texting without the customer being like, "Oh, I don't want to be thinking about work right now." Unless it's a trigger for them to be like, "Oh, I need to reorder this or else we're not going to have it on the day." Is that true or are you seeing other avenues?
Jeff:
Well, the first step would be to be helpful with order cycle. For instance, think about what Amazon has done with allowing you to get a text when the item is delivered. Which is a big problem for a bunch of our customers, especially in pandemic, but even outside of that. It might be delivered to a central desk or to the shipping and receiving area of their company like an alert. Alerts are a pretty good option for us to sort of get our toe in the water a little bit and to stay active. Then yes, something that's personalized.
Jeff:
Then also, what we're struggling with is what is the best time of day to do this? Probably don't want to send it to them in the middle of their evening. They're disconnected from work, but you also need to make sure that... It's got to be time adjusted for the time that they're in and they also really needs to be followed in their workday probably. Those are some of the things that we're sort of figuring out and testing right now and saying how is this going? Then what's also the most appropriate way to collect where people don't sort of get freaked out. Because it's one of those things, do you want to get text messages from your binding company? I don't know. You got to ask it in an appropriate way.
Stephanie:
Yeah. That's a really good reminder. All right. We have a couple minutes left and I want to jump into a quick lightning round brought to you by Salesforce Commerce Cloud. This is where I'm going to ask you a question and you have a minute or less to answer. Jeff, are you ready?
Jeff:
Okay. I'm ready.
Stephanie:
I'm going to start with the hard one first for you because I feel like you're in a game right now. I got to keep it going. What one thing will have the biggest impact on Ecommerce in the next year?
Jeff:
Well, I think obviously it's COVID. It's pushing people online in completely new ways. It's shifting customer expectations around a whole bunch of different things. It's ruined the Amazon two day expectation, which I don't mind, but it's also shifted the way that people shop, where they're shopping, how they're shopping, and even their mentality. I don't know that we even really totally understand how it's affected everybody yet because everybody's still sort of in this scrambling mode. But ultimately I think as this shakes out, it's going to change the landscape of how we market, but it's also going to change the landscape of how our customers interact with us.
Stephanie:
I like that. What one piece of advice would you give a new Ecommerce entrepreneur?
Jeff:
I would probably say stick with solving the customer's problems. I know that tends to be a B2B thing, but it's not really a B2B thing. If you think about it, I need the right sweater for me. Really be customer centric. That becomes really cliche and that's why I go to the idea of solving a problem. You got to think about what sort of value proposition are you offering to this customer that's unique, that is going to allow them to accomplish something that they wanted to accomplish when they came to your site.
Jeff:
I think by focusing and being really focused on the customer problem, I think you can build out really awesome experiences, and then that deep understanding of your customer will take you really far.
Stephanie:
That's a good one. What is your favorite day in the office? I'm trying to imagine what a binding company feels like. What's your favorite day in the office feel like?
Jeff:
I mean, most of my days are pretty full of meetings. A day without meetings would be an awesome day in the office.
Stephanie:
That's a lot of people.
Jeff:
I think so. In the world of the binding company, a day in the office doesn't look all that much different than a day in a normal office. It might be a little bit like an episode of the office.
Stephanie:
That's what I had in my mind honestly.
Jeff:
Yeah. It's like paper company. There is a little bit of aspects of that, but I mean, we're just like any other company. We're a retailer, we're a distributor. We deal with customers all day long. I would say the other thing, the best day in the office is the day that you have customers that love you and that are just heaping praises, especially on the customer service people and your salespeople. When you have customers who are just singing your praises, those are great days.
Stephanie:
Yep. That's awesome. I'm glad you mentioned the office and I didn't have to. If you were to have a podcast, what would it be about and who would your first guest be?
Jeff:
That's a tough one. If I were to have a podcast. I am super passionate about entrepreneurship. I'd probably do an entrepreneurship sort of a podcast about starting a business, growing a business, and the creativity that goes around that. If I could get anybody on the show, I would probably pick an entrepreneur. Maybe I pick the person from lemonade stand or one of those organizations that's really making a big impact on starting up entrepreneurs with kids. That's something that I really love.
Stephanie:
Yep. I like that. Brings back the memories of my parents make me [inaudible] my neighbor's yard for 25 cents which is well below market.
Jeff:
I think you could make at least 50 cents for that now.
Stephanie:
I think so too. All right Jeff, this was very interesting, such a good conversation. So many good tid bits that people can actually use from this interview. Where can people find out more about you and Spiral?
Jeff:
Sure. You can definitely visit one of our websites. We've got SpiralBinding.com. We have MyBinding.com and Binding101.com. You can find me on LinkedIn as well. Shoot me a message and ask me to connect and I'd love to meet you.
Stephanie:
Awesome. Thanks so much for joining Jeff.
Jeff:
You're welcome. Thank you.
Amanda Hesser believes that food is at the center of a life well-lived, and it is that belief that led her to co-found Food52 in 2009.
Food52 is a community-centered blog and eCommerce store that reaches more than 24 million people a month. But no platform builds itself, and in the case of Food52, this massive community of users was brought together through a set of unique engagement tactics that Amanda has iterated on and refined over the decade-plus that the company has been around. It’s a strategy that any company would envy, and one that she shares with us today.
On this episode of Up Next in Commerce, Amanda explains how she and her team were able to use high- and low-touch ways to get users involved, and why that engagement created a sense of buy-in that made Food52 scalable. As Amanda explains, engaged users don’t just help with content generation, they also provide valuable insights into consumer trends and have helped inform Food52’s latest offering, an exclusive product line that is helping further boost its revenue into the tens of millions.
From tips on building a community, to dropshipping products, and launching a new product line, tune in to find out all of that and more.
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
---Transcript:
Stephanie:
Welcome back to another episode of Up Next in Commerce, this is your host, Stephanie Postles, co-founder of Mission.org. Today on the show, we have Amanda Hesser, the co-founder and CEO of Food52.
Stephanie:
Amanda, welcome!
Amanda:
Thank you so much for having me, hello.
Stephanie:
So, I was just looking through the Food52 website, and it's absolutely beautiful. I love everything about it, the theme, the concept, I mean, the design, really, really beautiful. Tell me a little bit about how you came upon starting it. What made you want to found that?
Amanda:
Sure. Well, my co-founder Merill Stubbs and I co-founded it together, and we did so because we were both journalists and editors and trained cooks, so we were professionals in the field, but we were professionals because it was a passion of ours. We love food, we love home, we love cooking and traveling and eating, and we just felt that a couple things were happening. One was just that food was really shifting from being this niche topic in our culture to something that was just much more ingrained in Americans' identities and lifestyles, frankly.
Amanda:
And there was this real sea change happening in the industry and that was really exciting to us, as people who care about food. But we also felt like as a result, what we were being served with as consumers, meaning the content that we had available to us, the products, the conversation, interaction, the community was lacking and really wasn't keeping up with the evolution of its place in our culture, and we felt like there was an opportunity to serve people better to create a very different kind of company than had existed before, one that was much more a 360-degree and also selfishly, we wanted to create this world and this hub for ourselves. You know? We felt a lot of great companies are born out of an unsatisfying consumer experience, and I think that definitely was a piece of what drove us to create Food52.
Stephanie:
That's awesome. So, how long has it been around?
Amanda:
So, we launched Food52 in September of 2009, so we are 11 years old, which is both I think on one hand, is an incredible accomplishment and is also... It is not a surprise to us that it has taken us sort of this amount of time to get where we are, because we understood going in that when you're building a brand, when you're really trying to create an emotional connection with your readers and your followers, that it takes time. It's not something you can do overnight. On the other hand, being a startup and being 11 years old, I think once you pass the three-year mark, you start entering dinosaur-hood.
Stephanie:
Yeah, everyone else that you started with is gone. You're like, "Oh, it's just me left."
Amanda:
Yeah, there is a survival feeling, which is nice. But also that it's an industry and world that is always looking for the next. So, if you've made it beyond three years, you're no longer the news. But it's actually I think in many ways, in terms of running the company, it's been so great to... Actually, I think once we hit kind of eight years, where we're really not only just more of an established company, but able to really broaden what we were covering as a media company, really ambitiously pursue our commerce business.
Amanda:
The business just became much more interesting, and it's a complex business, so it's not something that you can... We started focused on content because we understand the power of content to build that relationship. And also to really build brand identity and that was to us, the most important thing that we could do in the beginning. And then we methodically kind of added, layered on all the things that we do now. And I think that even if you were starting today, that is the way to do it, because you couldn't... A, you couldn't get funding to do all the things that we do now. But also, we wouldn't want to, because it's sort of... You really need to build that relationship and you can't just kind of [inaudible] press the consumer with like, books and a site and recipes and content across cooking and home, and a presence on all the social channels. There's a lot of stuff that we do that I think had to sort of slowly evolve.
Stephanie:
So, yeah. I want to kind of dive into the evolution of your brand, because I think I recently read that you guys reach 24 million people month, is that right?
Amanda:
Yes, mm-hmm (affirmative). Yeah.
Stephanie:
That's amazing. So, I want to kind of hear how did you all start out, and then where are you now?
Amanda:
Sure. So, as I mentioned earlier, we started by focusing on content, and we started very much in the kitchen. Because we felt that is the core of our premise, which is that we see food at the center of a well-lived life. And we serve people who believe in that. We felt like the kitchen and cooking was always going to be kind of our core strength, and so when we began, the vast majority of our content was focused on cooking. We did recipe contests, and we did that because it was a way to test a content model that we felt like was underused online. Which was there was lots of user-generated content, but it wasn't done in a way that really served other readers well and really celebrated the content creators. We wanted to become this platform for them, and what we provided was in some ways, you could look at it as production services, right? People could contribute their recipes, and then we would photograph, then we would test them, and then we would distribute them across a bigger platform, our platform.
Amanda:
And that was the way that we built community and we created lots of ways for people to get involved. So, it wasn't just for the people who were creating recipes, it was also for people who if you wanted to become a recipe tester, you could do that, or if you wanted to vote on the recipe contest. We created lots of different kind of high-touch and low-touch ways for people to have meaningful engagement and involvement in the curation of the content, and that was something that really hadn't been done well before, and we felt like it was a way to not only build community, but also create a scalable model and send the message that this is a community-driven company that cares a lot about high-quality content, and we can build this together. And we can start with recipes, and then we can build out from there.
Amanda:
And what we did do was through our recipe contests, we were able to identify really great home cooks who maybe they had a blog, maybe they didn't, but they didn't have a platform that was sizeable. And we were able to provide that for them, and we got them to then write articles for us, and some have done cookbooks for us and many of them have gone on to do their own cookbooks. And I think that building that sort of trust and that relationship in the early days with our community is what has allowed us to get to where we are now, which is a much bigger site, and we still have recipe contests, but fewer of them. But we have other ways for people to be really deeply involved in what we do. And so, for instance, I'll just give you kind of a smattering of examples.
Amanda:
We have a hotline and on our hotline, anyone can ask any cooking or home or food question, and it gets answered by the community and answers can get voted up or down in a kind of stack overflow fashion. And so that's a community resource. We do our own kind of set of social contests on Instagram. That's really how we built our Instagram community and following was through creating a hashtag called #F52Brands, where we named themes and then people would tag us with photographs relevant to that theme, and then we would repost our favorites. And so, people posted, tagged us, let their friends know, and that's how we built our following which is at 2.8 million. We have a product line called Five Two, and we have a drop ship shop where we sell hundreds of products, really thousands of SKUs at this point, and those are products that are produced by other vendors, that we drop ship through our site and our platform.
Amanda:
But we wanted to create our own line of products once we had gotten our sea legs in commerce. And so, when we went to do that, it made total sense for us to actually call on our community for their input on the products, and not just in a shallow way, but a really kind of deep and extensive way. We had the data on what people were shopping for, what was selling well on our site, what materials. But we really wanted to hear... and our first product, just to give you a specific example, our first product was a cutting board.
Amanda:
Now we already sold a lot of cutting boards, so we knew what materials sold, what price point sold, what sizes sold. But we really wanted to just go to our community and say, "What do you want?" In your ideal cutting board, what does it look like? What is it made of? What do you use it for? What features do you want? And we did a survey that was 11 questions, which goes against all rules of surveys, too long. And more than 10,000 people answered, and in great detail what they wanted. And so, we created a product that reflected their feedback, and that's how that has formed the DNA of that whole product line, is using the input of our community to create better cooking and home products than we could have otherwise come up with ourselves.
Stephanie:
That's amazing. Such a good evolution of the business. How are you encouraging your community to fill out those surveys or want to engage? I mean, I'm sure there's your power users who are like, "Anything Amanda does or puts out or the brand puts out, we're ready to help." But then for newer people, I'm sure there's a little bit more maybe convincing, so how do you strike that balance to get people to help decide on the product decisions or what's next?
Amanda:
Yeah. I mean, I think there's a couple of different ways that we do it. One is as we saw that there was great interest in having a say in the products we created, we decided to create what we call the Five Two Design Team, and it's essentially a communication channel for that group who wants to have all the latest news on what products we're thinking about, what surveys are coming up, what products are launching. They get a sneak peek. They help us test those products, we'll send them prototypes. And so, people could sign up for that. So, that's one way that people could kind of engage at whatever level they're interested in, but of course, that also attracts people who tend to want to be more engaged. The cutting board survey I think is maybe a bit of an outlier in that it's probably one of the more extensive surveys we've done.
Amanda:
What we tend to do is kind of lighter touch things on social. So, we'll go on Instagram and we'll ask three to five questions on an Instagram story. And you can vote right there on the story, so we give you the choices and just press a button and let us know, and then we do like to make sure that we give open-ended, sort of open field questions so that people who are extra passionate or who have detailed information they want to share, they have that opportunity. But they can do it in a medium that's right in front of them. For instance, if they're on Instagram already, we want them to be able to do it right there, not have to flick over to our site and fill something out.
Amanda:
And I think this is not just with our product line, I think this is with everything we do, is meet people where they are and serve them well where they are. And so, that's really the way we think about it, and we also try to frankly, just make it fun. So, it's not just these surveys to feel like we're giving a homework assignment. We want them to be presented in a fun way, and it should be entertaining, but it also should be substantive.
Stephanie:
Yep, I love that. So, you're getting a bunch of data from these surveys and from the community. Are there any tools or tech or are you using AI or ML or anything to kind of sort through all this data to help make decisions, whether it's for new products, or a new direction that the community wants or anything?
Amanda:
I would love to say yes. The answer is no. I mean, we have just found honestly that the best way to... We've created for some of the survey answers, our team will create pivot tables so they can kind of group things together. But frankly, the best ideas have come from just reading through people's answers. I think we've gotten better at structuring the questions we're asking, so that many of them can be answered through multiple choice and therefore, you have very straight up data. But the best product features, they come from those open field questions, and we want to make sure that there's space for that and that we are reading through them. And we also have a group, it's kind of VIP shoppers, called Club Sandwich.
Stephanie:
I like that name.
Amanda:
And we reach out to them and we ask them for feedback, and actually, I guess with Five Two, we do this too. And sometimes, we'll just send notes to the group and we'll say to the Five Two Design Team, "Hey, we'd love to hear your thoughts on X, Y, and Z, or if you have any product ideas, let us know." And we always say, "We read every email." And it's true. We just, we do. I mean, maybe there will be a point at which we can't do that, but we're a pretty sizable business, and I think that we created the community because we wanted people to feel like they could connect with each other.
Amanda:
Food is inherently social, and we wanted to create ways online that you could really feel connected to one another, but likewise, I think it's really important for our team to feel connected to our community and to what we're doing and their thoughts on what we're doing. I think when you create more of a wall, that's when you start having... That's when you can have real challenges in your comment section, and you can attract trolls. Our presence and engagement is I think just as important in terms of allowing people to feel like it's not just that they're connecting with each other, but that this hub through which they are connecting with other people has a sense of place and of people.
Stephanie:
Yep, yeah. That's great. I think a good reminder too about crafting survey responses in a thoughtful way, so then you can actually curate the data easily, but then also leaving the long-form answers.
Stephanie:
So, one thing I saw was a mention of the film Julie & Julia, and I wanted to hear about that and some opportunities that have come up while building Food52.
Amanda:
Sure. Well, that particular opportunity came up based on a story I wrote in the New York Times when I worked there. It was actually the sort of dawn of food blogs, and this blogger Julie wrote a very funny blog, which believe it or not, had no food photos because blogs didn't even have photos back then-
Stephanie:
That's great.
Amanda:
... about cooking every recipe and mastering the art of French cooking. And she had an amazing writing voice, very funny. So, I wrote this story about her and it got a lot of attention, and then eventually, Nora Ephron wrote the screenplay for Julie & Julia, where she kind of took Julie's blog and then also juxtaposed it against this memoir or... I guess, yeah. It was a memoir of Julia Childs' time in France. And then created the movie script out of that. So, yeah. So, I ended up playing the part of myself interviewing Julie in her Long Island City apartment, just like I did in real life. And then that sort of story coming out, and having a big impact on her career.
Stephanie:
That's so fun. That sounds like just a very fun and cool experience to have now.
Amanda:
Yeah, yeah. I always joke that I had the perfect Hollywood career. I auditioned, which I did actually have to audition for the part for myself.
Stephanie:
That's great.
Amanda:
And got the part, it was... Meryl Streep was in the movie. The movie was a success, and now I'm out. I don't ever have to try again. I was like, "I'm good."
Amanda:
But yeah, it was a fun dip into a very different world.
Stephanie:
That's really cool. So to shift over into your guys' product line, Five Two, I wanted to hear a little bit about when you knew it was the right time to launch your own products instead of sourcing them from other vendors.
Amanda:
We launched commerce in 2013, and we didn't launch Five Two until 2018. So, I would say that we took our time getting experience in the commerce space, and I say that but with a caveat, which is that commerce, and I would say especially... Well actually, retail and ecommerce have gone through such immense changes and shifts in the past decade that everyone's learning all the time, even if we've been in the business forever. When we started our drop ship business, there were so many companies who just didn't drop ship.
Amanda:
So there were great products out in the world that we couldn't sell because the companies were not willing to do a drop ship model. They wanted only to sell inventory, which we understand, but we were betting on the fact that the world would shift and the industry would shift, and our bet has paid off. But it did take time to really build up a strong assortment of products in our category to build relationships. I think that was sort of the big [inaudible] of learning for us, was that commerce is very much about relationships, and it's not just about people wanting to sell their products, but they want to sell them through outlets that they get along with, where you really are partnering with each other.
Amanda:
That takes time to evolve. So, I think the first couple of years was very much about relationship-building, really understanding logistics. We built our own commerce platform. We don't use Shopify. We didn't do Magento or any of those things. We built it from scratch because the nature of our commerce business is very different. It functions differently than the sort of larger platforms allow for.
Stephanie:
Yeah, there's a lot going on there. Drop shipping, your own product, blogs, community. A ton.
Amanda:
Yeah. Yeah. So, we had our hands full with things that we needed to both learn but also refine. We built this platform. It did what it was supposed to, but for the kind of commerce business we are today, it was simplistic, so we've had to over the years continue to develop the platform itself, improve our checkout, improve basically kind of every aspect of it too, kind of reflect the kind of business we are now.
Amanda:
Anyway, so the first couple of years we knew was going to be learning and then also, the other thing that we learned was what people trust us for and what do they look to us for, and what do they want to be buying from us? Once we felt like we had a real handle on that, then it was a matter of... I think everyone from probably day one wanted to create our own product line. But deciding when we're ready I think ultimately just took us saying, "We're going to do it this year," and that was 2018. You know? It was just pulling the trigger, because everyone's busy, right? In an organization like ours. And so, it's not that people don't want to take on something new and big like this, but they know that if we do, they're going to have to re-organize all their work streams and really devote new time to this.
Amanda:
And so, it was a matter of finally just kind of biting the bullet and saying, "We're doing it, and we're going to aim for a fall launch," and then working backwards from there therefore, to see how to make it happen. And I think similarly, our growth into retail will be a similar thing. Are you ever ready for retail? I don't know. It felt last year to us like a good time, and we'd started exploring it very seriously, and then COVID hit and so we just hit pause, but we're thinking about it again for next year. Obviously, post-COVID, knock on wood that it will be post-COVID, it may look quite different. But I think it's something that we are committed to pursuing and better understanding and figuring out what makes sense for us.
Stephanie:
Yep, that makes sense. So, you were just mentioning COVID and I want to hear a little bit about how has that shifted your business? Because a lot of people are home now. I'm sure maybe you have a lot more orders as well, because people are wanting to cook and trying new recipes, where maybe they didn't have time before. But what does that look like for you all now? What have you seen behind the scenes?
Amanda:
Yeah. It's been a tremendous year for us in terms of our audience growth and our revenue growth. Obviously not something that anyone would have wished to have spawned that growth, but it is what it is. I think what we've come away from this having learned was a couple of things. One is just it's been a real validation of what we do. I think we in our hearts have from the very beginning understood that food and home are such incredible and vital parts of one's life, and that they are worth investing time and thought into, and that's really what we've been pushing as a brand since day one. We were building this company knowing that there was kind of a growing understanding of that. I think COVID really just rapidly accelerated people's understanding, I think across our entire culture. Right?
Stephanie:
Mm-hmm (affirmative), yep.
Amanda:
Because I think suddenly people saw that having a place where you feel safe and comfortable and being able to feed yourself and your family and loved ones is just so important, and so it's been great to be a company where we feel like we can serve people in a positive fashion during a time that's really stressful, and that... and I think that we're able to see now what specifically people are interested in. We've been able to adapt with our product lines. For instance, there's a textile company that we've worked with for many years, and their main products, there was less demand for.
Amanda:
But they were able to make masks, and so we sold masks. We've sold tens of thousands of masks. And not just through them, but through some other vendors who also had the capabilities to make them. There are categories that have shot up that were previously doing fine, but now have become really significant. For instance, hand soap, hand sanitizer, things like that. And then obviously, our sort of traditional kitchenware and kitchen gear sales have really gone... have wildly increased because yes, more people are cooking and they're home. And they're realizing, "Oh, my saute pan isn't in such good shape, or I actually need a different size," and ideally, we're helping them out with that.
Amanda:
But then I also think just from a maybe more unexpected internal team benefit that we have seen is that we had some people who were working remote previously, but we had offices... We have offices on 26th Street in New York City, and that's where sort of the vast majority of our team worked. And when we had to shut down, we had to shut down our photo studios, our video studios, our test kitchen, we were really faced with a big challenge of how do we produce content without all of that support? Sometimes, not having everything really inspires creativity and I actually think that what we've learned is that we can do a ton with very little and also that people respond to it in a different way.
Amanda:
We're sort of known for our visual aesthetic, our photography, and kind of the sort of beauty of what we do. And that's great. I think we also pride ourselves with being accessible and relatable, and I think while we were achieving that, I think we've learned from COVID that we have so much more potential if we're actually shooting in real people's homes, not just in our pretty studio. But if we're showing kind of real life, it makes people feel much more at ease and also more open to the content and feel like they can be a part of that. And so, that's been really eye-opening and exciting, because I think for having... Our content team is 30 plus people. And having that many kind of creative minds together, I think has been really inspiring for all of us to just think differently about what we do and what we can do.
Stephanie:
Yeah, I've heard of quite a few brands saying the same thing of, "We maybe never would have tried this model before, because maybe we thought the way we were doing it was what everyone expected and wanted," and it's been in some ways a good shake-up to be able to see kind of, "Oh, this is actually not only just working, but it's also maybe something to keep for the long term."
Amanda:
Yeah. And in fact, it's a very common comment on our Instagram TV videos, is "Please don't go back to doing these videos in your office."
Stephanie:
Oh, wow. So are you guys going to stick with that? And/or are you going to do a mix going forward, once you can re-enter the office?
Amanda:
Yeah. We are. So, one piece of our office we have reopened is our photo studios, and primarily for things like our product shots in our shop. [inaudible] in a setting. We have not gone back to doing kind of our food videos and things like that.
Stephanie:
So I wanted to quickly talk through user acquisitions? So, I know you've talked quite a bit about Instagram, and I wanted to hear how you find new users, and what platforms are working for you or what strategies outside of the contests and Instagram stories, what else are you guys experimenting with and seeing success in?
Amanda:
Yeah. There's no silver bullet, and that's good. I remember the early days when everyone was just relying so heavily on Facebook to grow their traffic, and that was when social sites were really fine with referring back to sites. And I remember that we were uncomfortable with that then, and we didn't... It felt sort of too easy, right? That's one thing that I think people who have been in content for a while, it's never easy and that's okay, and that's what makes it interesting, right? Because you have to constantly be nimble and experiment and keep evolving.
Amanda:
And so, I think that's been really key, is not getting too wedded to any one thing that's working and seeing it as not just... that that's not a lack of efficiency, it's actually an opportunity to make sure that you're reaching people across lots of different channels. So, there are a couple of different ways we do it. One is sort of channel-specific, right? This year, we launched TikTok. We're still just early days there starting to experiment. We got into Reels, we really expanded our IGTV. We're starting to really invest more time and understanding where we should... how we can add value to Pinterest, right? And create an experience that people will be interested in. So, I think that constantly sort of making sure that you're experimenting, trying new things, and then adjusting across different channels. We just launched a podcast this week.
Stephanie:
Oh, nice. Congrats. [crosstalk] What's it called?
Amanda:
Oh, thank you. So, it's called The Genius Recipe Tapes. And it's based on Jamie's Recipes, which is our most popular column. And these are recipes that... It might be a recipe for something like meatloaf, but there's something about that meatloaf recipe that has a particular technique or an unexpected ingredient that really changes the way you cook meatloaf forever. So, it's these recipes that really are stand-outs, and a celebration of the people who have come up with them. And so-
Stephanie:
That's cool.
Amanda:
... Genius Recipe Tapes grew out of the videos that we do where Kristin, who writes Genius Recipes, she invites the creator of the recipe onto the video to talk about how they came up with it, and just talk about their life and cooking. And there was so much good material that we realized that we could create a podcast out of it. So, that's our first podcast. We have one called Burnt Toast, which is on hiatus right now. But this is the first in a push towards building a podcast network.
Amanda:
So kind of expanding across channels is one way, but the other is expanding across the landscape of contributors who we work with and just really broadening it, so that we are working with people in lots of different voices, lots of different perspectives, and also lots of different expertise, so that we can go deeper on topics like bread or spirits, but we also can bring people who just have a really sort of unique perspective on cooking or home and who will have their own followings, and who we can kind of fold into our world a bit and broaden our audience by reaching theirs, and vice versa, help them build their own following by having them be on our platform.
Stephanie:
Yeah. Yeah, I love that. So, I want to hear a little bit about your podcast strategy, of course, that's top of mind for us. I mean, we have a lot of brands coming to us, asking to help them build a podcast or think through that, and I'd love to hear your idea around what does success look like when you're thinking about building out these podcasts, and what should maybe other ecommerce leaders think about when they're thinking, "Oh, I want to build a podcast for my brand?" How are you guys approaching that?
Amanda:
Well, the way we approached it was we looked at the landscape of what kinds of podcasts were in our space. And obviously, we had some sense of that based on our existing podcast, and feeling like there were... Are there unexplored topics or voices that weren't kind of getting out there, or even just concepts? Previously, we had this one podcast, and we were kind of reliant on it to kind of do everything, so to speak, in our podcast footprint. And I think that what we realized is that in topics like cooking and home, there's a lot to cover, and there are a lot of specialized interests.
Amanda:
And we felt like if we could create a suite of shows and we could create some in-house, but we could also again act as the sort of platform for creators by partnering with them to create shows that they would like to do but maybe wouldn't have the full source of... Oh, sorry, to give the full resources to do themselves, then we could build on this idea of a suite of podcasts that are around related topics. And then do a lot of cross-promotion between them, and then ideally monetize them collectively, as opposed to trying to just build up one show.
Stephanie:
Mm-hmm (affirmative). Yeah, I love that. Cool, so we don't have much time left, and I want to hop into a lightning round which is where I ask you a question and you have a minute or less to answer.
Stephanie:
All right, so lightning round brought to you by our friends at Salesforce Commerce Cloud. I'm going to throw a question your way, be ready. I'm actually starting with three different ones this time that I haven't asked before, but I think it'll be interesting to hear your answers to this. So, these three questions are going to be called Lessons Learned or Hiccups, and it's the first thing that comes to your mind when I ask this question of something you learned or wouldn't do again, or would tell a new founder like, "Oh, make sure you avoid this when starting this." So the first lesson learned is around drop shipping. What's a good lesson there, or what's a hiccup you made early on where you're like, "Make sure you don't repeat this?"
Amanda:
We launched in August, and for November, we decided to sell frozen turkeys, heritage turkeys. So it was a fresh ingredient, that can spoil if not shipped properly in an efficient fashion. And we sold 80 turkeys that year, which we felt like was a pretty big amount given that we had just launched. And 79 of them got to the homes on time, happily, everyone had their Thanksgiving-
Stephanie:
That's good.
Amanda:
... ready to go. But you don't want to not get somebody's turkey to them for Thanksgiving. So that one person's turkey took five of us to track down and then replace and then send an apology gift basket. It took us two days. And so, the person got their turkey for Thanksgiving, but we came away knowing that we were not ready, sort of from a supply chain logistics perspective to be handling fresh foods. So, we stuck to our dry goods.
Stephanie:
Oh my gosh, that's a great story. I mean, the customer might not like this, but having a good social story about that of like, "Where in the world is Sharon's turkey?" And trying to figure out where it went.
Amanda:
Well, there's a UPS truck broken down on the side of the road in Florida, and I guess another truck came up and was like, all the packages were shipped over, but the turkey did not make it-
Stephanie:
Oh no!
Amanda:
... in the transfer. And so, somewhere in Florida was that turkey, and pretty close to its final destination, but it just never made it there. But anyway, we learned all sorts about sourcing turkeys, finding delivery companies in Florida, and it's always... Yes, it was a race and every little triumph of figuring out one piece of the logistics was fun. But it was not the most relaxing Thanksgiving for us.
Stephanie:
Oh my gosh. Well, that's a pretty good lesson when it comes to drop shipping. One, be careful if you're around holidays. I like that, because a customer might actually get upset, and then yeah, the perishable thing is tricky. That's a good one. All right, the next lesson learned is around creating a new product line. What would you advise people against trying or any hiccups you had early on with that?
Amanda:
Well, I think the hiccup we've had with new products that we've developed is frankly, just not building production delays into our timelines. And it's hard to estimate, right? But I think when you're new and trying to get a product line launched, those launch dates have such importance, and if you can't stick to them, or you... If you can't stick to them, yeah, it causes a lot of high blood pressure. So, yeah. I think that mapping out realistically and not... and making sure that you're building in as many buffers as possible. It is best. What one of the things that we did to kind of get around this was what we did was pre-sales. Sometimes if a product was not going to be able to be released on the date that we thought, we would do a pre-sale for it, being clear about when the actual delivery date was. But it allowed us to kind of soft launch a product and let our community know about it without having a long delay between product launches.
Stephanie:
Mm-hmm (affirmative). Yeah, that's a good answer. All right, easier questions up next. What is a favorite recipe you're trying out right now?
Amanda:
Hmm. Well, let me see here. What am I going to be trying in the near future? Oh. So, Joanne Chang who has Flor Bakery in Boston is known for her egg sandwich, and it's a baked... She bakes the eggs in a water bath, and they're just so light and fluffy, they're one of the most popular... It's a really popular recipe on our site. And I've eaten them, but I haven't made them. I'm going to just follow her recipe sometime this weekend. And I like the idea of not having to fry an egg last minute before making an egg sandwich. I like the idea of it sort of getting cooked in this very sort of slow, controlled environment so you can have a great breakfast sandwich without adding stress to your morning.
Stephanie:
Yeah, oh, that sounds interesting. I've never heard of baking an egg in a water bath before. I've heard of poached eggs, but never baking it. So, I will have to also find that recipe. We need to get the link to that so our listeners can try it out as well.
Amanda:
Great.
Stephanie:
All right, and the last question, slightly harder. What one thing will have the biggest impact on ecommerce in the next year?
Amanda:
I mean, I think it's what we're seeing now. COVID has just accelerated this industry shift, where larger, more traditional retail companies were being squeezed by ecommerce and the retail landscape was shifting. Obviously, we've seen a lot of bankruptcy since COVID hit. So, it kind of sped up the process a bit. And I think that ecommerce, most ecommerce companies have benefited from people being home more and people not wanting to go out to stores. I do think that mindset of ordering online, while obviously it was well underway before COVID, I think is going to be more firmly part of the way people shop than maybe they had previously. So, I do think ecommerce is poised to have a great benefit. And I think for companies like ours, the big challenge is, if they've had this influx of new customers is, "Okay, now how do you keep them and how do you keep serving them well beyond this extraordinary and unusual time?"
Stephanie:
Yep, yeah. That's a great answer. Well, Amanda, this has been such a fun interview. I'm a little bit hungry now after hearing about that baked egg. But where can people find out more about you and Food52?
Amanda:
Oh. Well, on Food52.com and on our social channels, which are @Food52 and @Home52. And we also have a bunch of cookbooks, I hope you will check us out.
Stephanie:
Cool, thanks so much for joining.
We’ve all been there. It’s late at night, you’re flipping through the channels and you stop on CNBC. Chances are there is an old episode of Shark Tank playing, and sitting in one of those leather chairs you might have seen Kevin Harrington, one of the original sharks.
Now think back many years ago, you’re still flipping through the channels, but this time you stop on an infomercial for a George Foreman Grill or a Tony Little Gazelle. Did you know you were actually seeing Kevin there, too? Maybe not physically, but Kevin’s fingerprints and dollars were very much present in those “as-seen-on-TV” specials.
Kevin was the pioneer of the television infomercial, and, therefore, the direct-to-consumer industry. And when the internet emerged, Kevin was one of the first to move his sales online. On this episode of Up Next in Commerce, we grabbed Kevin for a quick interview to discuss his latest book, Mentor To Millions, and asked him to take us through his transition from TV powerhouse to digital investor. Kevin explains some of the key areas he looks at when determining if a company is worth investing in, and he details some of the ways that eCommerce companies should be thinking about marketing and product strategy.
3 Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
---Transcript:
Stephaine:
Welcome back to Up Next in Commerce. This is your host, Stephanie Postles, and today I'm really excited. We have Kevin Harrington on the show, the OG original shark from Shark Tank and the CEO of Harrington Enterprises. Kevin, welcome.
Kevin:
Stephanie, thanks for having me. Looking forward to having some fun today.
Stephaine:
Oh, me too. Your background is so interesting. I feel like I can't even do it justice, going through how you started out in the world of e-commerce. So, I was hoping you could actually touch on that, of where did you start in Ecommerce? Because I see you listed as the original everything. The infomercial guy, the guy who created this stuff. So, I want you to put it in your words how you started out in this industry.
Kevin:
Okay. Yeah. So, I started... I was a young entrepreneur back in Cincinnati, Ohio, one of six kids, and I had started a... Getting, ordered cable television. And so, I remember I got a 30 channel package. This was, now, early eighties. And so, I'm going through my 30 channels, 24 hours of sports on ESPN and 24 hours of movies on HBO. I get to Channel 30 and there's nothing there. So, I call the cable company and I said, "Hey, look. I love this cable, all these channels, 29 of them. But I'm paying for 30. Nothing on channel, Discovery Channel."
Kevin:
And so, they said, "Oh, Discovery is our latest channel. It's brand new. They don't have a budget for 24 hours a day. They do an 18 hour a day schedule. Six hours is nothing." And so, that's when the light bulb went off. I'm thinking, "Wait." I said... I literally said to the person, "If I have something to put on that six hours, would you be interested?" "Hey, yeah. Come on down. Talk to us. We're definitely... Whatever you're thinking."
Kevin:
So, anyway, make a long story short, I started putting products on Discovery Channel back in the early eighties. I then tied up that six-hour block on the nationwide level at the parent, Discovery, which was in now tens of millions of homes. And so... And again, this is back in the early eighties and we were doing the Food Saver, the Jack LaLanne Juicer, the Tony Little Fitness, George Foreman, Billy Mays. We even started getting into mainstream celebrities like Paris Hilton and her lip plumpers and the Kardashians and their skin care and things like this. So, we got involved, and this was early on, the early eighties. Nobody else was doing this, so people call me the inventor of the modern day infomercial.
Kevin:
So, that's when it all started and we've, over the years, gone public with a few companies. Build them, sell them, build them, sell them. I like entrepreneurship and bringing in the right kind of team of people to help, but... So, as we were then selling products on TV, that was the beginning of my entry into the marketplace and I think as we started getting more sophisticated, things started happening down the road, where we started putting websites. Of course, in the early eighties, websites didn't exist, right? It wasn't until, I believe, around '94 that things started. I mean, Amazon started in '94. I was in business for a dozen years before Amazon ever started. So, selling products direct to the consumer.
Kevin:
And in the nineties, we started putting websites into our infomercials and wow. All of a sudden, we found a certain percentage of the people, they didn't want to call the operator. They wanted to go straight to that website, get all of the details, and now we found a whole new area business between websites and Amazon and digital and now when you look at Facebook, etc. etc., it's a whole new world.
Stephaine:
That's awesome. So, what does your role look like today? I read that you have launched more than 20 businesses that have grown to over 100 million in sales each, so I wanted to hear kind of what are you doing today and what kind of principles are you using that you've learned from the many years that you've been doing this?
Kevin:
So, that first company that I mentioned, we ended up being a public company in a little bit of a complicated transaction. But here we were, public on the New York Stock Exchange. The stock was sitting at a dollar a share and I started bringing the right kind of people on board and you give options and things to people. But make a long story short, a few years later, that stock went to $20, and so I was one of the co-founders and had millions of shares, so this was my first chance to be like... And take some chips off the table, as they say, right? So... Because I was building my business all those years, putting all my own personal cash back into building the business until we had a public company, then I could use other people's money. We had lines of credit and all kinds of amazing things. So, that was the first public company that I got involved with and we had great success with it. So, I thought to myself, look, yes. I can make money selling products, but I can also make money driving share prices in public companies.
Kevin:
So, since then, fast forward, I like to participate in public companies. I like to be on the board if that's important for me from their standpoint. Also, there's hardcore board of directors of public companies. There's also advisory boards. So, as I invest in companies and take board seats and things, I'm involved now in about north of 10 public companies in some significant fashion, meaning I own equity, shares, board position, advisory seats, whatever. I mean, for example, one of my companies I got involved with five years ago was a little company called CELSIUS and it's an energy drink that... I don't know. Have you ever heard of CELSIUS [crosstalk 00:06:14]?
Stephaine:
Yes, I've... Yes, I have.
Kevin:
Okay. So, I got involved at a start-up, CELSIUS. The stock was 22 cents a share and again, I got a nice package when I got involved with these guys. But the stock yesterday hit $19, okay? So, I mean, it's... So, when you think about... When you get in in the beginning and get a big block and that block goes to a big number, that is wealth creation. So, I can talk about national media. I can talk about another one As Seen On TV, another one [inaudible] Travel Biz. I'm involved in various of these pub-cos. Some of them have product, some of them... Most of them have some kind of relation to what I can bring to the table. But I will say this. Almost every single one of them needs the expertise of Ecom and selling and doing digital marketing to create, whether it's customer acquisition or investor acquisition or friendly participant in whatever it might be, the acquisition of names and value to the company.
Kevin:
So, generally, when I join the board of a public company or the advisory board of a public company, I'll be helping bring some of the things that I've been dealing with and learning about over the last 30-some years in the world of Ecom and internet and digital. So, it... I think my focus now, since I've had great success with helping small pub-cos grow and create value for their shareholders, that's something that's near and dear to me and I love participating in those kind of opportunities.
Stephaine:
That's awesome. So, how are you able to build buzz or advise your companies to build buzz in the way that you were when you were using traditional media streams like TV? How can you have that same experience online or through word of mouth and conversions online? How are you advising your companies to get that same kind of buzz that you had generated in your past life?
Kevin:
[inaudible] If we went through... If we take a look at CELSIUS, for example. Let's look at that industry. CELSIUS was a start-up five years ago going against Red Bull and Monster, two of the biggest companies out there that had tremendous shelf space already. So, they started down the path of getting shelf space and they were successful at getting some space here and there, but what we also created was a direct to the consumer side of the business where we started bringing on influencers, big ones like Flo Rida, Khloe Kardashian, etc. And then micro-influencers, fitness influencers. We have hundreds and hundreds and hundreds of fitness influencers, micro-influencers, out there on some arrangement that we've made with them to blast all of the information out about CELSIUS, why they love it, why they use it. And these are people... Many of them that approached us because they were users of our product.
Kevin:
So, now what's happened... So, for example, Flo Rida. He had 26 million followers. He created an amazing buzz to the point where one of his followers and friends was Khloe Kardashian. Well, she said, "Hey, Flo. I love this CELSIUS. Can you get me some cases of it?" So, we're shipping her cases, Flo cases, hundreds of fitness influencers, and now our Amazon business is just crushing it. So, I mean, this is... You can't just sit and wait for it to happen. You got to build the buzz.
Kevin:
And by the way, there's one thing that I did not say we did. The old days of as seen on TV... I used to spend, some years, as much as $100 million on television. ABC, CBS, NBC, FOX, Discovery, Lifetime, all the cable networks, hundreds and hundreds of broadcast stations around the country. But it's very, very expensive and the brand, a product like CELSIUS, in the world of as seen on TV would cost millions, if not tens of millions. So, we chose to go in the newer and much more direct way by utilizing micro-influencers and we've had a great run. The product is now in 165,000 stores, but it's also being supported by the social media influence marketplace.
Stephaine:
Yeah. I love that. Yeah, really great story. So, someone does not have connections or even maybe a budget big enough to give them even a micro-influencer. What would you suggest to a new DTC startup who's trying to get in front of people? What kind of digital channel are you advising your companies to try out or marketing methods or anything? How would you tell a new person starting out, this is the things that you should look into that are working right now?
Kevin:
Well, if they don't have the budget, I'd recommend that they go raise some money and get a budget, okay? So... Because if you are in business and you say, "Well, I don't have a budget for the Facebook or Instagram." I mean, this is where you have to test, these outlets, because... I mean, I had a product that somebody brought me two years ago. They had attempted to sell it in stores and on QVC and different places and they got shut down because nobody had ever heard about it. There was no branding. And so, we started running some very inexpensive $5 ads on Facebook and then Instagram and for $5,000 in ads, we brought in $25,000 in credit card orders. Amazing, right?
Stephaine:
Yeah. That's great.
Kevin:
Now, these folks that owned the company, we had a partnership now where we're starting to run this and so we were spending 100,000 a week, bringing in 400,000 a week in sales. Making money, paying for itself, unbelievable. So, don't tell me as an entrepreneur, "I don't have the budget." Because for five grand, you can test and you're going to find out. You may be... That... What happens... If you bring in 25,000 in sales off a $5,000 spend, that's self-liquidates, makes money and you're in a big profit position. So, you have to figure out a way to test the digital forces out there.
Kevin:
The other thing you can do... I know some groups that represent a lot of influencers and there are some people taking aggressive positions, where maybe you could talk them into taking a little equity position in your company in exchange for exposure from groups of influencers, so... Because these big master influencing organizations that have... I know companies, they have 800 influencers that they work with. Well, they pay them, but there's nothing that says they couldn't dribble down some stock or some equity to some of them also, and I think... I'm aware of some companies that are now starting to do equity-based influence marketing and so, I think you're going to see something like that taking storm in the near future.
Stephaine:
That's really interesting. So, when you're picking companies to either go on their board or help them, what kind of metrics are you looking at for these Ecommerce companies that lets you know whether they're going to be a winner or not? What kind of things are you looking for to pick who you're going to support?
Kevin:
Well, I like to see that they're spending money on media or influencers or some form of getting distribution. And so, if a company is... They say, "Okay. We've got $100,000 a month budget and $25,000 a week, and we're going to go spend it in an area." I like to see returns on that investment. I like to see at least a one-to-one back, meaning you spend 100,000, you're bringing back 100-plus, at least 100 in sales. But I really prefer to see more like 200 minimum, because now that is now where you're getting to a self-liquidating situation.
Kevin:
So, the most ideal client or investment for me is when I come into a company that is spending money and actually making money on the spend, but they don't have the money for the media, they don't have the money for the inventory, so they need capital. That is a perfect thing for me because once we plug the capital in, the sales are going to start blossoming and there actually will be self-liquidation so the media, it won't be expensed. It's sort of like an investment to the future profit. So, I think that's... In an ideal scenario, somebody that has a business that has a media spend that's paying for itself. That is, first and foremost, the number one thing that I look for.
Stephaine:
Well, makes sense. So, for more start-up companies and public companies, do you see them struggling with a lot of the same problems or is it just completely different? And if so, what do you see them hung up on right now, in this environment?
Kevin:
So, I mean, I think start-ups are different, generally, than public companies. Usually, a public company is working off... The reason they've gone public is because they've figured out a model that generally works and so they want to tell the public, "Hey, look. We've figured this out. We've got the customer acquisition cost figured out and we've got long-term lifetime value of our customers figured out and we just need money to go... And when we go public, we sell stock, we raise money to build the business." Right? Now, that's generally the kind of pub-cos that I like to get involved with. They're kind of over that start-up phase.
Kevin:
The challenge with start-ups is getting to that point of proof of concept, knowing that you've got something and/or having... And I... Being an old DR guy, back to the old days of selling Ginsu knives and Food Savers and Tony Little Gazelles and Jack LaLanne juicers, I'm an old school guy that likes to see customer acquisition models that work. So, I highly recommend... If a start-up is trying to raise capital, if they can show me an economic model for customer acquisition, I'm in. I mean, it's then a much easier deal because I can see the money is going in and it's going to build the business. I don't like to sink money in that's going to be used for salaries and start-up costs and software and all these things. I like to see money that gets invested into marketing programs that focus on increasing sales and getting new customers.
Kevin:
So, if a start-up... I mean, if you look at a lot of these modern day start-ups, the Caspers, the Romans, the... I mean, even... There's one. What's the one called? Oh. I'll think of it in just a second, but it's BarkBox, okay? Where people get a box for their dog every month, right?
Stephaine:
Yep.
Kevin:
Well, what they were doing was using customer videos. People would open the box every month with their dog and show all the excitement and the fun they were having, and these customer videos were being sent out to millions of people, acquiring new customers. So, they've built a $250 million business with their customers sending out things on Instagram because they were excited about the product. So, they had... They had proof of concept, they had a business model that worked and a customer acquisition model that worked.
Stephaine:
Very cool. So, what are some... I mean, I'm sure you've seen a lot of different models of customer acquisition. What are some of the most creative ones or timeless ones that continue to work?
Kevin:
Well, I mean, I think... Let's start with the one I just mentioned because when... This is... BarkBox is a company that, they didn't start on TV like the "as seen on TV." No. That would have cost them millions. They went... They reached out to their customers and so... There's another girl that started a beauty company and she was an intern at Vogue and she went out and started blogging and getting all kinds of information out. She wanted to start her own brand, direct to the consumer, and this is now a billion dollar brand and for some reason, the name of it is escaping me.
Kevin:
The bottom line is, how did she build a billion dollar company from zero, right? I mean, it was... It's literally amazing. But how she did it was micro-influencers. She recruited 1.7 million micro-influencers and this just took off and built her company into a billion dollar brand.
Stephaine:
Yep.
Kevin:
But the bottom line is I had nothing to do with this company. I just watched her and followed her from intern to billion dollar business, and that's exciting for me as an entrepreneur, to see young entrepreneurs doing this. I think the folks that started the businesses Rent The Runway and the clothing companies that, you would get a box every month, those are companies that focused on really tight acquisition costs for their clientele, etc., etc. But I just... I love hearing about these stories, when somebody starts from zero, is an intern at a magazine and a couple years later, running a billion dollar brand.
Stephaine:
Yep. Yeah. I love that. That's awesome. We will look her up and put it in the show notes.
Kevin:
Okay.
Stephaine:
So, one last question before we dive also into your book. What big trend or patterns do you see coming to Ecommerce right now? Any disruptions or things that you see impacting Ecommerce in the next year?
Kevin:
Well, the big old Amazon is up there, kind of waving its big wand over the whole industry in the product side of the business, okay? And so, I will tell you, what's happening is I'm seeing entrepreneurs start a single product business, get it on Amazon and then somebody comes along, wants to buy them. This is pretty cool because you don't have to have a $100 million business, a $50 million business or even 10 million. You could be doing two, three million dollars a year and someone might be willing to pay you eight or 10 million for that. So, I mean, there is an amazing trend right now. I know people, they're doing roll-ups, as they call them.
Stephaine:
Yep.
Kevin:
They're buying companies that... They'll buy them on a multiple of sales or earnings and then, as a big company, they've got an attractive blended situation that allows for their multiples to work for them and then packaging these companies and selling them off. So, I think the difference today versus, let's say, me when I was starting close to 40 years ago, back in the early eighties and I'm running Tony Little and Jack LaLanne. We only thought about just selling a lot of product, building these sales and maybe go public. But we weren't selling these brands. We never thought about, "Oh, let me go sell Tony Little's Gazelle product. Let me go sell the Jack LaLanne Juicer as a company." Right? But it's...
Kevin:
Now, this is what's happening. People that start a product business realize it is a business and it might be worth... If you got a business that's doing 30 million in sales, it could be worth two or three times sales. It might be worth $60 or $90 million. I mean, these are things that people that are entrepreneurs need to explore because the key thing is there are exit strategies for entrepreneurs today, unlike the old days where it was a lot tougher to find somebody to buy an old asset that you had.
Stephaine:
Yep. I love that. Very inspiring. All right, so you have a new book out, Mentor to Millions. I want to hear a little bit about that. What is the book about? Tell us all the details.
Kevin:
[crosstalk] Mentor to Millions, it's myself and my co-author, Mark Timm. Now... And actually, it's very interesting. The foreword is buy Tom Ziglar, Zig Ziglar's son, so...
Stephaine:
Oh, I love Zig Ziglar.
Kevin:
Oh, yeah. Me too. And Zig was a mentor to me and he was also a mentor to Mark Timm, and the family, after Zig passed away, introduced Mark and I and said, "You guys should be doing business because you're two good guys that my father mentored." And so, make a long story short, this is a book about mentoring. It's a book... I mean, we turned this manuscript in in January, long before there was any real buzz about COVID crisis and the pandemic. But once the pandemic hit, March, April, and our book... It's just coming out now. It actually launches in September, so right now it's only pre-order and I'll tell folks about that. But the bottom line is it's about how to get a mentor, how to find a mentor, how to utilize the mentor in your world, because I have used many mentors in many ways, and what they did for me is they helped me take my business growth exponential. And not just added on business, but geometrically exponential is what happened for me when I got mentored by the right folks.
Kevin:
So, Mark and I... It's... I'm the mentor in the book and he's the mentee and it's a story of our relationship and the magical transformation that occurs in the process. So, it's a powerful book about mentoring and how and why and where and all of that. But we're pretty excited because Hay House is the publisher, launches next month. We've got a lot of effort going into it and if anybody would be interested in hearing more about it, they can go to kevinmentor.com and there's an explanation of the book and all about the chapters and the follow-through from me mentoring Mark along the way of building his business. So, thanks for asking. I appreciate that, Stephanie.
Stephaine:
Yep. That's awesome. We will definitely be checking that out. We will link it up and Kevin, thanks so much for joining the show.
Kevin:
Hey, it was great to be here. Stay safe and healthy. Take care.
Stephaine:
Thanks, Kevin.
One of the most vexing questions brands are asking themselves today is how to get a solid ROI from influencer marketing. At Fancy.com, Greg Spillane thinks he has the answer.
When Greg came on as the CEO of Fancy in 2019, he was tasked with re-inventing and rebuilding the brand. Known as the “turnaround guy,” he had experience coming into distressed companies and pivoting them into viable businesses. Fancy was right up his alley. The company was known for lavish parties, and even handing out $1,000 gift cards to celebrities, models, and influencers. After Fancy blew through $100M in investment money, and with no profit in sight, Greg knew there was work to be done. With a new focus on profitability, and building on the impressive technology that Fancy created, Greg figured out a model that created a win-win opportunity for brands and influencers.
On this episode of Up Next in Commerce, Greg discusses how he approached his role when he was brought in to turn around this struggling brand. He details the influencer, channel and email strategies he’s implementing to turn engagement into transactions. Plus, he talks about how to build a sustainable company, the things to consider when building out a board or taking on investment money, and his thoughts on when building an app is beneficial or just a distraction. Enjoy!
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
---Transcript:
Stephanie:
Perfect. Welcome back to another episode of Up Next in Commerce. This is your host, Stephanie Postles, co-founder of Mission.org. Today we're chatting with Greg Spillane, CEO of Fancy.com. Greg, welcome.
Greg:
Thank you, Stephanie. I'm so excited to be here and speaking with you.
Stephanie:
I know. I'm really excited to have you on. I was going through Fancy.com before this, and I think I've found at least three things that I want to order after the show that I actually have not seen anywhere else. One was an air plant that was on top of an amethyst crystal. I haven't seen that. And the other one was like a chilling beer mug. It looked Awesome. So that's where my mind's at right now. Air plants and beer mugs.
Greg:
Well, perfect. I'll tell you what, I'll hook you up with a solid discount code and even something you can send out to your audience.
Stephanie:
Oh, I like it. This interview is already going great.
Greg:
Yes.
Stephanie:
So, you have such an interesting story. Fancy is a really good story. I was hoping actually, we can just start and dive right in about what is your role and how did you come to Fancy? And what is Fancy.com?
Greg:
Sure. Yeah. My background is I guess, little atypical. I mean, I came out of school really as an athlete. I attended undergrad on a football scholarship. So I was a little bit of a meathead type of guy earlier in my life. And was introduced to the internet and really computers really early on. I was one of those guys that had a computer when I was 10 years old, connecting with my 2,400 baud modem to BBST, doing all those types of things. So that's schools, technology is where I studied, I got out. I started my career as an engineer. I quickly realized coding all day is just not for me. And that's kind of where my entrepreneurial journey started. I actually founded an agency.
Greg:
We were doing customer development for people. A lot of digital transformation stuff really early and sort of the internet booms like early 2000s and built a couple of different products sort of just for happenstance. And I took them to market in a subscription-based model. Well, before SaaS was really even a term. And had some success and had an opportunity to sell that company. So that was great. I decided to go back to business school at that point. And then really spent the better part of the next eight years or so in kind of the management consulting world specific around technology, sort of like big Fortune 100 type of systems implementations, et cetera. And great cushy, all that stuff, like good pay. But I just, I didn't want to be like sort of a cog in a giant wheel.
Greg:
So a business school colleague of mine had just taken over this company based out of San Diego, was founded by a guy who had already had a billion dollar exit. It's kind of more of an incubator of sorts. Was like four or five companies that had come together and he was asked to run it. And he was looking for a guy who had sort of a tech marketing business development background. And brought me in and I left sort of the cushy corporate world to get back into the crazy world of entrepreneurship. Led that company through a pivot. We ended up eventually rebranding as Events.com. We spun off one of our divisions and sold it to private equity. And it was a nice little ride. And that gentleman ended up moving back into the private equity world and opened up a firm in a venture front and would invest in a number of different companies.
Greg:
And somehow I became like this turnaround guy that he would bring me in to these companies that had all this potential that they invested in, but for one reason or another was somewhat distressed. And that's ultimately how I got introduced to Fancy. He came in, they sit on the board of directors here, they invested in the company in late 2018 and there were some things that needed to be changed. Obviously, Fancy has been a company, been around for a really long time. So I was brought in, made the CEO in March of 2019. But a little bit more about Fancy, the company itself was founded in 2010, tremendous amount of early success. I think we're talking about people like Jack Dorsey was on the board of directors early on. Even today our board of directors is sort of a who's who of people.
Greg:
But our company had over 12 million users since our inception. Really found it as more of a social network, Pinterest of sorts. A place to really kind of find and share just really cool and interesting and unique products. And then there was a natural evolution into commerce. And we've had a lot of highs. And the company never had an issue with users or experience, it was really around profitability and finding a way to make this into a viable business model. So we did end up having a situation where there's a couple of insolvency moments which ultimately led to the transition. But I've come in and there's still such a great userbase and foundation in here. And we've sort of been pivoting the company and turning things back around. It's been a fun little ride so far. We're really excited about the future.
Stephanie:
That's great. So when thinking about coming in and turning around companies, either at Fancy.com or just holistically from like a higher level of what you've done in your past, what is the first maybe 90 days look like when you are looking at a company and figuring out how you want to change it and what's going wrong?
Greg:
Yeah. Good question. So having done this a handful of times now, I can tell you that I made a lot of mistakes the first couple of times doing it. And I think that it really prepared me for the role I took on at Fancy. I'll tell you what not to do. First, what not to do is go in and start making changes too quickly. To go in and sort of like point out every mistake that the company's ever made. One of the easiest things in the world to do is be a critic. And you can go into a company that's somewhat distressed or has had some issues, and you could just start just tearing things apart. Whose decision was this? Why are we doing this? This doesn't make sense. And even though you can quickly come up with the right direction and the right solution for what you need to do, you can lose your people.
Greg:
And ultimately, your people are the most important assets you have in many cases. So what you do need to do when you go into a company and you want to turn around, and I think it's something that I was able to do at Fancy even though there were a lot of tough decisions and tough changes, is get the buy-in from your team. A lot of times you do that by just listening and just acknowledging all the great things that they've done in the past. And truthfully, most of the issues that you're going to eventually have to address, they already know they exist and they know what they are. So let them tell you, and you'll start to kind of pull out the solutions. Then when you have to make those really difficult changes that impact people's lives and careers and whatever it may be, the people that you need and people that you keep are on board because they see the rationale and they understand it. And a lot of ways, they're the ones that have kind of helped you, guide you.
Greg:
So I guess just to summarize that, the one thing that I've learned over time and that I don't think I did really early on in my career is to just take super account of the people and the human aspect of what they're going through and being a new person coming into an established company and having to make change, but doing it in a way that keeps them engaged and let them believe in you and want to continue to be part of the company.
Stephanie:
Yeah. I love that. So when it comes to Fancy.com, it seemed like before you, it was a pretty fancy environment. Like maybe really nice parties and things like that. Did you have any struggles maybe when it came to convincing the employees like we can't keep doing that? Because many employees are probably like, "I'm used to this and I'm very used to going here and interacting with these people and having this kind of swag." I don't know if that's the case for Fancy.com, but did you encounter any of that pushback when you were kind of evolving the environment to focus on profitability?
Greg:
Yeah. I did. Funny story, at least I think it's funny. We had the storage unit in Manhattan. And I went into it one day and just a bunch of old fancy stuff, swag and different products, people incentives for revaluation. There are just box. And I open up this box and it's got these thick, like metal credit cards. They're the size of credit cards, but they're kind of like solid steel. And it's like, "Thank you for visiting Fancy. We value you. Here's a $1,000 gift credit to use at Fancy, coupon code." And there are like-
Stephanie:
Oh my gosh.
Greg:
... Hundreds of these things. I mean like a stack, like a box full of them, probably even had thousands of them.
Stephanie:
Oh my gosh.
Greg:
I'm like, "What is this?" I go, "We were just giving away, like handing out $1,000 gift cards?" And so I went back to the team uptown. And the founders apparently would go to these parties in New York City and they would have models and celebrities and hip hop artists and athletes and et cetera. And they would just walk around the party just kind of talking and they would just give these $1,000 gift cards away to people.
Stephanie:
Wow. That's super fancy.
Greg:
That is super fancy. Right. Right. That's how you go through $120 million in capital in a period of time.
Stephanie:
Is that what you encountered when you came in? It was like $120 million of capital was kind of spent maybe in not the best ways and you had to kind of get out of the hole?
Greg:
Well, yes and no. So the positive, and this is what really is I think exciting about the opportunity and one of the reasons why I decided to pretty much route my life and spend the last, however many months in New York. I'd been a Southern California guy, is, yes, that a lot of money went to waste. And there was a lot of money spent on parties and those types of things. But along the way, they built an amazing technology platform. So Fancy is all proprietary and really the underlying technology that's built upon... The mobile app that we have is really rock solid. I'm in technology. And I've been in technology throughout my life and our mobile app, we have, I think today like give or take like 2.7 million active installs of the Fancy app, iOS, Android.
Stephanie:
Wow.
Greg:
Fancy.com domain name, the site itself is generating however many hundreds of thousands of unique visitors a month just to sort of organic and SEO. Our dataset, we've had over 12 million Fancy accounts created. We've done several million transactions. We're working with however many merchants, some 800 merchants. We're a global company. Last year alone, we sold a product to 135 countries. So there was this asset pool that was built with that money that went out that as a startup you would just never be able to replicate. You just couldn't do those things if you were starting from scratch.
Greg:
But then because of some of the shortfalls of the company, and this is more from a business perspective, the current valuation and as we've raised last money, I mean, we're just closing out a small little bridge note right now and a $12 million valuation, which is insane. I mean, the intrinsic value of our assets far exceeds that number, but because of the situation that's where we're at. So I look at it as a huge opportunity and an amazing asset pool that we sit on. But short answer to your question is there was a lot of money spent on parties that like Tiësto was deejaying at. They had no business rationale really other than just getting the Fancy brand out.
Stephanie:
Oh my gosh. I mean, I kind of wish I was at that party, but I don't know if I want to be an investor in that company per se or the CEO at that time. So that sounds like a big turnaround project. Maybe to talk a little bit about Fancy, so there's a lot of products on there, a lot of really cool products, was there any business decisions around product selection or how to curate them or personalize things or around like sourcing new products that you're implementing right now to maybe make the user experience better and to not show thousands of products at once and more personalize it to the people when they're coming onto the website?
Greg:
Yeah. Really kind of all those things in some way or another. And it's still a work in progress. And we're implementing, actually we partnered with a great company, is actually a portfolio company of Raptor which is the investment firm behind Fancy right now called Luminoso.
Greg:
And they have a bunch of amazing AI technology, machine learning technology that's being implemented in everything from search to recommendation. Sort of a lot in the social aspects we have in our site how we're going to be able to better make recommendations and curate products more effectively. So like all of that stuff has been unchanged. We did a significant culling of the amount of products that we were on our site when I came on board. I think it was, actually like 400,000 products that were live.
Stephanie:
Wow.
Greg:
It just didn't really make sense. Like you can't be a curated marketplace or a highly curated marketplace with that many products available. We were much more open earlier on in regards to who we would let come sell on our site. And what that did is, there were some quality issues in regards to who that merchant was and whether they were fulfilling, and is the product really what they said that it was? So we've moved much more towards like a closed marketplace. We do have an internal brand development curation team who thoroughly vets all of the sellers on our site.
Greg:
And our philosophy, where we're moving towards as a company is this concept of the rise to the direct consumer brand. We just see so many amazing purpose-driven brands. And I think that's the key. Like Amazon has almost been a victim of their own success fulfilled by Amazon and Alibaba and all these different people who are just trying to source product and get in on Amazon and sort of like tweak with the algorithms. Getting like commoditized products that there's not really a brand behind it. A lot of these people, these entrepreneurs who are selling these products never even take possession of the product. They're not designing the products. They're just sourcing them and trying to sell them.
Greg:
And we're trying to be the anti-Amazon in that regard. So we want to work with the, sort of like the Allbirds of the world before they are the Allbirds. And get those products on. And we look at it as a huge win-win because we know consumers are attracted to those brands and purpose-driven brands. Brands that have a story. Brands that potentially have a charitable aspect or a self-sustainable aspect. And those are the type of products that they want to find. They want to cut through the clutter. I mean, there're sites out there that have this stuff. I mean, you go to Etsy, you're talking millions of products. And it's like, how do you find these products? How do you get through some of the other junk that's out there?
Greg:
And then on the brand side, customer acquisition is really difficult and platforms like Instagram and Google are really saturated. That's one of the main channels that people have now to reach out to their consumers. Everyone's talking about influencers and how they can leverage influence more effectively. But I don't think anybody's really cracked that code really well. So we have a huge audience and we spend a lot of time trying to build up the products, the brands that we feature. And we come up with a fair and equitable revenue split. And we reach out to the audience. People come to us to find these brands that have been curated and it doesn't cost anything to be on our platform for the brands. So they're guaranteed to make money when we sell products. And we're going to continue to build on that thesis.
Stephanie:
I love that. So maybe to zoom in a bit on the customer acquisition piece, you're talking about Facebook and Google, they're getting pretty saturated and pretty expensive. What channels are you guys finding success in right now to bring customers to these new brands and products?
Greg:
Yeah. It's a great question. So we're really lucky because we really, since I've been here, have not spent a ton of money on having to do sort of paid ads. I mean, we do a little bit here and there and we handle retargeting and that type of stuff, but we have a tremendous amount of organic traffic that just finds us. We're a well optimizer, very high search engine authority. So a lot of people come upon Fancy.com and naturally go there. We also have a mobile app that has a very different shopping experience. It feels much more like a social shopping experience where there's dynamic feed of products and people can like and share and then recommendations are made by what they like.
Greg:
So we do, do some advertising in regards to getting people to download our app. We found that we have a really high lifetime value for people who have downloaded our app. I think right now our average user opens the app like 5.4 times a month or something like that. So it's relatively sticky. We're working on conversions and optimize the conversion rates on that. Because of the social aspect, those are lower than some more traditional Ecommerce. But the area that we're really focused on and really growing is to continue to build upon our influencer model, our affiliate model and partnering with micro-influencers. The technology is on our site in which they help sort of guest curate.
Greg:
And this is going to be a big part of our upcoming release, guest curate, different selections of products whether it's for home decor, or whether it's fashion-based, whatever it is, with the idea of, we're creating a great experience for our userbase. But then we want to help sort of build their own personal brand with the idea that there's a quid pro quo. We pay them a percentage of sales and we can attribute when they've driven traffic to the site or anything that's been sold which provides an incentive for them to share and drive people to the Fancy platform and then vice versa. Obviously, we're providing them with an avenue to create more exposure for themselves. Because if it's not being hidden, we want people to know who this particular curator or influencer or thought leader in the space is.
Stephanie:
Cool. I love that. So it's a good segue into influencers because we've had a lot of people in our audience ask about that and wonder how to even... Like, "Is it successful working with influencers? How do you go about engaging with them?" So what does maybe the back-end look like for Fancy when it comes to building up this influencer network and what kind of success are you seeing? And how would you maybe advise a smaller brand to start this, if you think they should?
Greg:
Yeah. The influencer models can be tough. And it's definitely something we talk a lot about. We've been toying around, we've done a lot of user research and space. What I would say is the traditional influencer model of, "Hey, let me find a micro-influencer. Let me pay him X amount of money, depending on their size. And let me have them do a post talking about our product or driving people to our site." The experience that we've had ourselves and then with brands that we've worked with is, you're really not going to get an ROI there. It's doesn't necessarily pencil. At least that's what we've seen. I'm sure there's some people out there that have been able to figure that out.
Greg:
So we're looking at it a little bit differently. At least our approach to it is, we want to create more of a platform that influencers can leverage and become a little bit more native in what they're doing that helps them expand their own reach, expand the value to their userbase. And then ultimately monetize that userbase because that's really what the influencers, especially micro-influencers are looking to do. But it has to be done somewhat organically, at least from what I've seen. And if it's just a matter of paying an influencer, because you want them to use your product or post your product or tag you in something like that, I don't know. I have not personally seen that ROI. I think it takes a lot of time and patience. I've seen some companies, some of the brands that you've talked to that have tried it. They've kind of given up after a couple months of doing it because they just haven't seen the return that they've wanted.
Greg:
So I think that, that's kind of one component of it. I think it can be kind of difficult to go that route. From my experience, some of the influence could be a little bit difficult to work with but not all of them. So we kind of pick and choose. We do a lot of reach out through our own Instagram account. We have about 350,000 followers. So that helps and it gives us some legitimacy. We're usually able to engage and we got some great people who follow us on Instagram. And that's another big advantage as well. So that's typically where we open up discussions. And then we try as much as possible to look at it from a pure win-win perspective. And we want to be a technology company. So we want to be able to provide them with more of a platform that sort of ties into what they're already doing and allows them to effectively monetize their audience to try to do it as authentically as possible.
Stephanie:
Yep. So how are you building a platform? I'm trying to imagine what that would look like from the influencers' perspective. Like, is it just a platform based around Fancy products? Or is it kind of separate where it's a platform for their them to influence but other products can be there as well? Or how do I think about that?
Greg:
So the way the platform currently works right now is we can create a profile on Fancy for a particular influencer which they can curate their own lists, different groupings of different products, et cetera, that they like. So what we bring to the table is, a, we bring in the fulfillment infrastructure. We have the relationships with all the different brands. They've already been vetted. We handle all fulfillment. We handle all shipping. We handle all payment processing. We handle all fraud detection, returns, customer support, et cetera, et cetera. And then what we can do with them is we can give them the ability to go on Fancy, create a profile. It can be done honestly, and we have done it in more of a white-labeled capacity in the past, where it looks almost like their own personal website, their own storefront in which they're able to pick sort of unique and interesting products and kind of populate it.
Greg:
But in a lot of cases, it's done more of in like a traditional profile on our site. And then we have attribution on that. So it works in more of an affiliate model from, any traffic or any users they drag to our site we can track it and ultimately we can pay them per the performance of what they've done. And then, I think what makes us interesting versus like, let's say in Amazon who does some affiliate type of stuff is we do have a little bit more of an authentic kind of lifestyle brand through Fancy and a little bit more legitimacy with kind of being cool and sort of having new, initially unique stuff versus Amazon, which is great for commoditized products, but isn't necessarily where you want to buy your fashion from.
Greg:
So that lifestyle brand plus the uniqueness of our products, it's something that a lot of times their users and micro-influencer and influencer working with the type of imagery we use, et cetera, is typically more engaging and more in line with what they're trying to accomplish with their own profile anyways.
Stephanie:
Got it. Yeah. That's really interesting thinking. It's probably easier than for a brand to just work with you guys to then get access to that influencer network and hopefully be chosen to be on one of those lists or whatnot.
Greg:
Yeah. It's funny you say that. That's something that we have, as a company have done in the past and have done pretty successfully. When I came in, I really wanted to simplify our business model and I wanted to kind of bring out all these sort of different one-off type of deals, but we've had a lot of brands, like big brands. I mean, like global brands that have come to us and have paid us six figures to connect them with users on our site or influencers on our site in kind of joint marketing efforts. You mentioned T-Pain. And you saw that T-Pain-
Stephanie:
Yeah. I saw he was called the VP of, I think product testing, but VP had quotes around it.
Greg:
Yeah. So like, he did a big thing with us, Purple mattresses. You've probably heard of Purple. Purple community was however many, a couple of years ago, we did an entire... We sort of middled an entire campaign with T-Pain. And T-Pain did a bunch of different videos and interesting kind of things. It's created a bunch of content for Purple mattresses that of course was featured on Fancy, but then Purple was taking this content and they were repurposing it for their own purposes.
Greg:
So there are opportunities there. Like I said, it's a little bit of when you come into a company and you're running the turnarounds, you've got to kind of cut. You got to like really focus. So I'm really, I'm trying to focus on just creating a great user experience trading win-win with our merchants and the different brands that we're partnering with. And then do the best that we can in order to help that experience for our consumers be a better experience by bringing in influencers or people who can really create interesting collections of products that we think ultimately people like yourself, the consumers the world will find value in.
Stephanie:
Yeah, that's awesome. So when talking about building a company now, and we've been talking quite a bit about around, like the turnaround story and how to rebuild it, one thing I have not touched on that I think it would be great too is developing a board of directors. So a lot of brands right now, if they're thinking about raising money and of course, like the board of directors question always comes up of like, "Who do you want on your board?" And I was hoping you could kind of touch on your guys' board of directors and what's helpful? What's that? Like, how should someone think about having a board and putting that together?
Greg:
That's a great question. Obviously, you want a board of directors that's going to be supportive of you. You want a board of directors that's going to be helpful, right?
Stephanie:
Mm-hmm (affirmative).
Greg:
That has connections. That's going to be involved. I've had boards where it's like all they want is reporting, reporting, reporting, which you're going to provide anyways. I mean, you, of course are providing your reporting to your board. But it's like a really effective board isn't necessarily a babysitter of the money or whatever that's been invested. And just kind of like that. I mean, that's helpful. I guess it helps keep you accountable. But what you really want from a board is a group of people that are willing to get involved and make introductions and are actually taking an interest and listening to what you're doing and provide you with valuable advice and help you answer difficult questions.
Greg:
And a lot of times you don't get that with your board, especially if you get kind of a fund that comes in and maybe you get someone on the board. It's a board, so you can take over. And you're a part of 100 portfolio companies and they're not even really paying attention. They don't really know what you're doing. They don't know your industry, et cetera. I've been really lucky here at Fancy. We have a small board. It's only four of us, well, were five of us, including myself. The chairman of our board is Jim Pallotta. Jim Pallotta is the owner of Boston Celtics. Just actually recently sold A.S. Roma, which is the Rome Premier League soccer team. He's a billionaire. Extremely accomplished investor based out of Boston. Super well connected. And is just sharp as a tack.
Greg:
And he's involved just enough. Like the perfect amount. Like wants to make introductions, wants to makes his connections. Has just an amazing Rolodex and he is willing to open his Rolodex at anytime to make a connection for the company. And then we have François Pinault who's basically the chairman of Kering. He's married to Selma Hayek. You might know him. He's the guy who donated like $300 million to the Notre Dame when it burnt down, [inaudible 00:30:38]. And so they own Gucci and lots of gallery, like one of the largest luxury houses in the world. So once again, extremely well connected credibility across the board. When you're talking to brands, we're trying to bring on direct to consumer brands. And one of the largest shareholders of this company and board members say owns Gucci, that goes a long way.
Greg:
So I'm really lucky, very supportive. There are people who have brought more to the table than just money. Really an active interest in the company and making those things. As far as building your own board, look, a lot of times your board members are going to be your biggest investors and you go out and raise capital and unless you've got an amazing idea or you just really doing something special, as much as you want to say you can go out there and pick your investors, that's a lie. So someone's going to write a cheque and you're trying to raise capital, in many cases, you're going to take that capital. And along with that capital comes board seats. So you don't always have the control that you would like in that situation, but if you do have the ability to pick your board, I think you can pick your advisors a little bit more easily. But you want people who are going to be more than capital to the table. You want people who are going to get actively and involved and they're not afraid to open up the Rolodex and make connections.
Stephanie:
Yeah. I completely agree. It's something you see at least here in Silicon Valley. Sometimes people are excited maybe about really big brand name, investment firms or large amounts of money. And I've always asked the question of like, "Well, how can they actually help you? Like, can they spend time with you? Can they actually give you introductions? Are they willing to do that?" I think not for certain. At least I've heard certain investment firms, once you get to a certain level, they're not going to spend time with you unless they invest a very large amount of money and they have a lot of skin in the game. And outside of that, it might actually be better to work with someone who's in your industry, knows it, can introduce you to people. So, I completely agree. The same thing with building a board or thinking about that. You might not always have the options to do so, but if you do, choose someone who can actually help you and spend time with you.
Greg:
That's exactly right.
Stephanie:
So earlier we were talking about, you guys have an app and your desktop version, how did you go about thinking about building out an app? You said it had a different user experience and buying experience and a lot more of a social aspect there. Like how do you think a brand should think about like, "Should I have an app?" Because I think at one point, every brand probably considers building their own app along with their desktop version.
Greg:
Yeah. No, absolutely. You know what's funny? Or whatever. Six, seven, eight years ago when these were the app... It got super hot and everybody wanted to build an app. Things were different. And sort of like the technology, especially just around mobile responsive websites was different. And to get a really good mobile experience in a lot of cases it helped have a native mobile app. You were able to tap into so many functions or features that weren't necessarily available with mobile web. But what we see today and where we sit and the kind of conversations we have in our product meeting is, we have a great mobile responsive platform. The mobile experience on Fancy.com is really good in our opinion, or it's as good as you would need it to be, is as good as all the other products that are out there.
Greg:
So for us to replicate our mobile web experience on app, just to have a couple of different features that you get with native didn't necessarily make sense for us. So we did look at it differently. And with our mobile app, the way mobile is structured right now it's of truly much more of a discovery-based experience. It's the kind of experience that people open up and, "This is what our data shows and the testing that we've done." People open up our app because they're just interested to scroll through and will get really interested in cool and unique products. And we focus very heavily on using lifestyle imagery through that. And these are social aspects. People can like and they can build their lists, and they can share, and they can follow other people and they can get updates of what people who they follow or influencers that they're following have liked other products or other products that are on lists and those types of things.
Greg:
And that would be really difficult to replicate in like a true mobile lab experience. So when we look at it and we look at our product strategy, we ultimately look at web. So Fancy.com and then our mobile experience for that is a little bit more of a traditional commerce-based experience. You go to it, you have categories, you search and find the things you like, hopefully you transact. Well, we look at mobile as much more of, sort of a stickier, joyous engagement where you just want people to kind of open it up similar to how we open up Instagram 25 times a day. Nobody opens Instagram absolutely because you want to buy anything. You're just kind of opening it up because there's like cool images and there's things that you're going to discover. And it's going to bring kind of a little moment of joy in our lives.
Greg:
We're sitting there in the bank and... That's a lot of how the experience with the Fancy app has been created. Our thought is that people will discover things and they'll find things and they'll like things and personalization will happen through our mobile app and then many cases, they'll end up going to web to transact.
Stephanie:
Oh, can they currently transact on the app, or is it more of a discovery platform right now that transfers over to those [crosstalk 00:36:09]?
Greg:
They can transact on the app.
Stephanie:
Okay.
Greg:
A large part of our business still occurs mobile. But definitely the experience that we want to have is... I guess that would be my big takeaway to any company out there that was considering building a native mobile app if they're in the commerce world, is why? Like, what difference are you going to offer on mobile versus you're going to offer on web. Because the truth of the matter is people don't need to download another app. And if they can get everything that they need by just going to your domain name through your Google browser or whatever it is in their iPhone, then save the trouble.
Stephanie:
Yeah. I love that. So how are you thinking about balancing the social aspect on the app? You had mentioned conversions weren't as high as like traditional Ecommerce sites, which makes sense if people are kind of going on there just to see new things and maybe not always having an intent to buy. But how are you going about balancing that to keep people moving along and get them to check out, but also have fun and engage with other users?
Greg:
Yeah. The big thing with us right now, and big focus is around, number one, personalization. We're doing everything we can to continue to make the experience more personal. I think that, that's something that... There's been kind of an area where I don't think we've always done a great job on that is that, we've very much had a point of view that Fancy has taken in regards to kind of what we think is cool and what people who we want to think it's cool and that kind of gets pushed out. Where I want to have a little bit more, based on your interactions, based on what you've liked, what you've shown, that I can kind of avoid showing you stuff that isn't relevant to you.
Greg:
That's a big component of that from that perspective. It's a good question. We really, we're okay with conversions being lower with the app because we also have really high engagement and repeat users. So these are people who are just opening up the app quite frequent, maybe some people open up the app on a daily basis. And those people aren't going to buy something on a daily basis. And they're not necessarily going to Fancy because they want to buy something, but they ultimately do buy.
Greg:
So I think for us, the more the experience gets better, the more sticky it is, the more people want to open up the Fancy app and kind of just enter into that sort of social commerce world, the more people who are eventually going to transact, even though it isn't a straight kind of equation like on a return on ad spent, like you do with more of a traditional website. We have a particular product, somebody goes to that site because they're looking for that product. And then, thought they converted, but they didn't. They didn't convert. Now we're going to do retargeting. We're working at it as a little bit more of an engaged experience. So it's not a huge concern for us from that perspective.
Stephanie:
I'm guessing you would have to have a different set of metrics when it comes to, how's the app performing versus how is desktop performing? What kind of metrics are like your go to things to check in on the health of the app versus desktop?
Greg:
Yeah. No, that's a good question. So we track, obviously, just simple things like total sessions, users, new users, app downloads, uninstalls. My dashboard has all that information. Time on app, number of products they've clicked into. We do look at conversion rates across the board. How many users came in? How many times did they convert? Average order value. Standard stuff like that. But when we think about the app and the experience itself, we're really looking at things like, how many users did we have? But how many sessions did we have? So what's the average session per user, Because in our app experience, it is about having people come back and using the app for multiple times.
Greg:
And then when they do open up the app, how much time are they spending on a typical basis interacting with the app? What are they doing? So those are a lot of things that we look at. And then from a bigger picture, obviously, we're not spending a ton of money trying to attract you on app downloads, like outward spending, but we still have a tremendous amount of new app downloads that happen on a pretty regular basis. So we look very closely at how many new app downloads and what our uninstall rate is.
Stephanie:
Cool. Yeah. That's really good. Good to know. When it comes to personalization, are there any tools right now that you guys are really excited about? I know you mentioned one that was maybe within a portfolio company that you guys work with, but are there any tools that other brands should be looking into right now when it comes to personalization?
Greg:
Yeah. Right now we're spending some time on our ESP or our email service provider. And we're looking at a couple of different providers in that space. But that's something where there's some really cool providers out there that do some amazing stuff in regards to personalization around all messaging, not just email, but also push, because obviously for mobile apps. And that's something that we're probably going to adopt here and if not next quarter the quarter after that, and try to revamp the way we do our outbound.
Greg:
We have about a million people on our email list right now. We send out a ton of emails. I told you about, it's like 2.7 million active installs to the app where you push notifications. And then that number is from our push notifications. So when we actually do a push notification, It'll tell you how many we've delivered. So that is about 2.7. So we do a lot of outbound messaging and I think there's a huge opportunity for us to do more personalization with that messaging.
Stephanie:
That's great. Yeah, it'd be really cool to bring you back in a couple months after you've done the email stuff and talk about what you've seen with your app and your push notifications and kind of hear an update on all that.
Greg:
Yeah, absolutely.
Stephanie:
All right. So we can have about 10 minutes left. I feel like you're going to have some great answers for the lightning round, so I want to make sure that we have enough time for it. So the lightning round brought to you by Salesforce Commerce Cloud. This is where I'm going to ask you a question and you have one minute or less to answer each question. You ready to go Greg?
Greg:
All right, let's do this.
Stephanie:
All right. I'm going to start with the hardest one first because like I said, I think you'll have a good answer. What one thing will have the biggest impact on Ecommerce in the next year?
Greg:
Oh man. Look, COVID has been terrible but unbelievable for Ecommerce. And I think that the one thing that it's done is it just increase the adoption rate and made it gone through the roof. People like my parents who never bought anything from Amazon, never bought anything from Postmates or anything like that are now just doing it. And even as stores and retail locations of brick and mortar continue to open back up, I think the cat's out of the box. I think the adoption rates are going to continue to rise. I think they're just going to be many more direct consumer brands that are going to continue to come about.
Greg:
There's going to be new technology that innovative companies out of Silicon Valley are going to come up with that are going just make the experiences better, whether you're talking about augmented reality or different types of things. So I just think that the overall continued adoption of Ecommerce is just going to make the pie, the $7.2 trillion global retail market, the Ecommerce side of that is just going to continue to expand and grow. I don't think, there isn't any stopping site.
Stephanie:
Yeah. I completely agree. I love that answer. What's up next on your reading list?
Greg:
Oh, good question. I tend to go back and forth between like more auto, biographical and then just like fiction. I'm a big Stephen King guy. I typically read all his books. I just, whatever, kind of just, moving in, in time. But right now I'm reading Eric Larson's newest book on Churchill, Winston Churchill. And it's really focused on 1940, 1941, in England where the Germans were just bombarding England with bombers and the US hadn't entered the war yet. And Germany was just a powerhouse. I mean, it just looked like they were just trying to bomb them into submission and then Churchill would not submit. And we all know how that ended up turning out. But just so amazing to learn about that guy especially as kind of a CEO of a company where you're faced with, sometimes it just feels like overwhelming odds and you have to be honest with your team and they have to realize the gravity of the situation, but at the same time motivate them and give them the confidence that you can overcome is exactly what he did. And it's been a really good read.
Stephanie:
Oh, that's good. I will have to check that one out. If you were to have a podcast, what would the podcast be about and who would your first guest be?
Greg:
So I'm an ex-athlete. I talked to you a little bit about that. So I was actually football player in college. I'm kind of a jock. I still like to do a whole bunch of things. And I learned so much of what I do in a professional world from my athletic career, just dealing coaches and the meritocracy involved and just working hard and showing up on time and competing every day and all those types of things. So I think what I would like to do is, I'd love to have a business focused podcast that had athletes turned business people who are able to talk about their experiences, especially guys in the NFL, experiences [inaudible] of coaches like Bill Belichick, et cetera, and how those principles are translated into the professional world.
Greg:
I mean, I think someone like a Tom Brady would be a great first guest. He started up his own, [inaudible] TB12, and he's got kind of like a whole supplement line. I'd love to talk about how he's translated, sort of what he's done. Professionally he's the greatest quarterback ever. And how he's having success now and in a business capacity.
Stephanie:
That sounds like a really good podcast. I will find you a sponsor, Greg, and we will get that off the ground.
Greg:
Let's do it. Right?
Stephanie:
Yeah. I like that. That's good. All right. How do you stay on top of Ecommerce or industry trends? What kind of sources are you looking at or tools are you using or resources do you rely on to stay on top of things?
Greg:
A lot of reading. Yeah, obviously that's the answer anybody would have. Right? But I'm just, I have a number of, sort of hashtags or subject lines that I'm following in my Flipboard account. Every morning I open it up and flipping through and seeing what other people are doing. I also like to read about some of the bigger players in the space that are public. So even following companies like Overstock.com, Wayfair, Etsy, have had tremendous growth in the last several months. I mean, I think Overstock.com stock went from like $3 a share and marched to almost $100 a share most recently. So jumping into their quarterly reports and their 10-K's, as public companies they have to disclose everything. I love to read kind of what they're seeing, what they're doing, where they want to go with things. So that's always helpful pulling a lot of ideas and insights from some of the bigger competitors in the space.
Stephanie:
That's really good. We haven't had anyone talk about going through their quarterly reports yet. So I love that. That's something I enjoy doing as well, but I thought I was the only one.
Greg:
No. It's [crosstalk 00:48:32].
Stephanie:
Well, Greg, this has been such a good interview. Like I said, we need to bring you back for round two to hear how some of these experiments are going, but where can people find out more about you and Fancy?
Greg:
Yeah. Well, obviously Fancy.com is the site. You can go into your App Store, Android Store, we'd love for you to download it. You can reach out to me directly. I literally just love people just email me. I get them all the time. So greg@fancy.com. Super easy. One G. And then, like I said, we're raising a little bit of a round of equity right now. We're actually doing it partially through a equity crowdfunding site called Wefunder. So anybody that's says shouldn't learn anymore, wefunder.com/fancy, can see a video and see T-Pain and learn a little bit more about the opportunity. I think it's a pretty attractive investment considering where we're at and what our opportunity is, especially the valuation of our company today.
Stephanie:
Yep. I completely agree. We will link up that video because it was pretty great. All right, Greg. Well, thanks so much for coming on the show. It's been a pleasure.
Greg:
Thank you, Stephanie. Great being here.
What do underwear models, Frank Sinatra impersonators, and a partnership with Anheuser-Busch have to do with selling alcohol? For Saucey, it was about changing consumer behavior in an industry that hasn’t truly been disrupted since the 1930s.
Chris Vaughn is the founder and CEO of Saucey, an alcohol delivery service. Since launching in LA in 2014, Saucey has broken into 20 metro areas and has continued to grow. Getting off the ground wasn’t easy, though, and on this episode of Up Next in Commerce, Chris takes us through the trials and tribulations of bringing Saucey into the market — from regulatory issues to investor and customer skepticism. Plus he explains how they pushed through the hardships and used edgy creativity to break into a market that was set on shutting them out.
Key Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
---Transcript:
Stephanie:
Welcome to Up Next in Commerce. This is your host, Stephanie Postles. And today on the show we have Chris Vaughn, the CEO and Founder at Saucey. Chris, welcome.
Chris:
Thank you for having me.
Stephanie:
Yeah, I'm excited to have you. It might be 9:00 AM here, but I'm trying to get into the beverage mindset right now. Thinking about my 5:00 PM drink.
Chris:
Yeah. Nice, good. I like that.
Stephanie:
Yeah, I know. So Saucey, tell me a little bit about what it is and how you started it, the whole backstory. I want to know it all.
Chris:
Sure. So we started Saucey in late 2013. We really had this hypothesis that... I guess even before it was a hypothesis, we have this idea that you could have basically anything you wanted delivered, but for some reason you couldn't have alcohol delivered. In some major cities like New York, The Bodegas would run it over to you and whatnot, but for the most part in a city like LA, where we're based, that really wasn't an option. Found that to be really interesting, particularly given that the buying behavior around alcohol seems to be such an impulse driven buy. I know I'm going to have dinner tonight. I know I'm going to buy groceries at some point this week or next week, and delivery for those categories, mirror that behavior.
Chris:
Grocery delivery is more about saving me the time of shopping the whole store. Food delivery is this convenience driven thing. I know I'm going to have dinner, but it's kind of, "What do I feel like having?" And alcohol is this heavily impulse driven by where maybe I have dinner and it gets to be eight, nine o'clock at night, I'm watching a show or Netflix or whatever it may be. And I feel like having, some wine or I feel like having a cocktail, or beer, or whatever it is, or some friends are going to come over and they text me, "Hey, you want to get together?" And then and then you need to buy something. And so given that the buying behavior was so again, I think a non-planned purchase occasion we found that delivery would be the perfect fit for that type of purchase.
Chris:
So we started to look into the industry a little bit, and I think that the things that really opened my eyes was there clearly have been very, very little innovation in the alcohol industry really since [prohibition 00:02:32]. Most of the innovation had taken place on the brand side, creating new brands, new brand categories, but very little to do with how alcohol gets distributed or purchased. It was also fascinating to see that the brick and mortar landscape had effectively been built out to mirror that type of impulse driven buying. There's more liquor stores in the United States than grocery stores or gas stations. And that mirrors this behavior of, "Oh, I feel like having something." Run out to the corner and go get it.
Chris:
Then lastly, I think we clearly identified that there was a huge brand loyalty when it came to the products. I'm a Bulleit Bourbon drinker, I'm a Tito's vodka drinker. I'm a Coors Light drinker, whatever it may be, but almost no loyalty when it came to retail. Yeah, I'm on my way home. We'll stop here. I'm on my way to my friend's house I'll stop there. With the exception of some major holidays. Major holidays, go to Costco, stock-up or some of that type of buying. We found that delivery would be the ideal use case where we could not only capture more of a customer's purchases than any of the traditional brick and mortar players, but obviously service and provide a solution to this need of this impulse driven buying, or this last minute buying.
Chris:
We actually came up with the idea where... or how we came up about Saucey was I had floated it by a very close friend of mine at the time we were working at another company, and my girlfriend at the time, now wife with three kids we were camping up in Yosemite and we went up on this big hike, and I just couldn't get it out of my head. And I was talking through it with her and she was like, "I think you should do this." I came back and shared it with my close friend, and another close friend of this company called Text Plus where we were all working. Daniel Leeb, and Andrew Zeck. Andrew Zeck was one of their head mobile engineers, and ran their whole iOS team. Daniel Leeb was effectively leading their product of those teams.
Chris:
I said, "Listen, I think there's a big opportunity in alcohol delivery. And I think that the margins are there to support the business. It's a little brutal in food and some of these other categories, I think we can do it and alcohol, and here's what I think it could look like." Immediately we started working together. Nights and weekends spending a lot of time on the weekends and late into the night, trying to put this thing together. Dan did all these initial mocks of what it would look like. We didn't have the name Saucey at the time. We were trying to think of different names. Andrew was starting to program what the prototype would be, and we were working on doing all the specs.
Chris:
And then I was out trying to find who our first liquor store partner was going to be working with legal counsel and then subsequently talking to the ABC and some of the regulatory committees, or the regulatory bodies on, "We would like to do this. How do we do it, not only in compliance, but what are some of the issues you guys have in this industry, and how, as we're thinking about it, how can we maybe solve some of that stuff?" Like underage drinking, and be more proactive about ID verification, or there's cash under the table transactions, have everything go through credit cards. It was a fascinating time, we started working on that, I want to say October, November 2013, we really got our heads down and we launched in May 2014.
Chris:
Our first ever delivery. So remember Andrew dispatched it, Dan and I drove it. Was a bottle of Johnny Walker black label, to a guy named Vincent Rella who we actually ended up hiring, not that long after.
Stephanie:
Oh, that's great. Go Vincent.
Chris:
Yeah, it was interesting times.
Stephanie:
How did Vincent find you? First customer, did he actually find your app, or how did he even stumble upon you guys?
Chris:
I think Vinnie had loosely known Andrew. We all posted on Facebook, and we did all these things, and he saw the post and just said, "Oh, I'll try that." And then we ran the order to him and he goes, "Yeah, I know that guy." And then it was exciting. And of course those early days, we got one order, two orders in a day. And we did all the deliveries ourselves, taking turns on a schedule throughout the week, having to rotate who is going to be dispatching, who was going to be out delivering. An internal irony to the story was we wanted the service. We wanted to be able to order a bottle of wine, or a case of beer or something to your house, and so we built it. But what we actually ended up doing is just all of our time, seven days a week was out delivering to everybody else, and then we could never use it ourselves. So it was interesting.
Stephanie:
How it works. When you guys were doing that, any funny stories that you remember from when you were personally delivering, or doing the pickups and drop offs?
Chris:
Yeah, I mean, there was a lot of interesting stuff. I think-
Stephanie:
Here we go.
Chris:
... we did probably a thousand orders between us before we started really hiring any outside couriers. At the time alcohol delivery was also very new, which I think is interesting. When you think about delivery as a category, food delivery has been around for decades, grocery delivery has been around for decades in one form or another, used to be able to call it the corner grocery store or place a fax order, and have things brought to you from your local market. Alcohol delivery in most major metros started six or seven years ago with us and a few others. And so it was a very new behavior. I think all the customers in the early days, the first additional hurdle, everyone was just asking, "Is this legal?" Everybody. Investors, customers, et cetera.
Chris:
We had to do a lot of work, both in our email content, as well as in our investor materials to walk through conversations we had had with the regulatory bodies, what the law says, how we think about these different things. So those early were just like, "Is this legal? I don't know, I'll try it sounds cool."
Stephanie:
Like sneaking out behind their bush, like, "Okay, drop off the goods."
Chris:
Exactly. And we'd show up in 25, 30 minutes and they were blown away, but we definitely had a couple of customers open their door, just totally nude, and totally unfazed. And you had to do a double take, and then, "Can I see your ID?" They'd walk back, come back, still totally naked, hand you their ID, you'd scan it and then turn over their order. That definitely happened more than once.
Stephanie:
Odd.
Chris:
People with unusual animals or pets. There was one customer that had like a snake wrapped around her arm. I remember one of those delivered, and was trying to hand it to her, and the snake's on her arm. And we were like, "Wow, this is some interesting stuff." But also lots of just, fairly standard and normal deliveries for the most part, people just super excited to use the service, and check out what it was all about.
Stephanie:
Yeah. That's really fun. So what kind of challenges did you run into when you were starting this, and working with these agencies and whatnot?
Chris:
Yeah. Licensing and working with licensed retailers is a challenge. The regulatory environment of alcohol being different on the state by state basis. So you're effectively dealing with 50 countries in the US, as opposed to having the rules all be the same. You can't ship alcohol across state lines, spirits and other things. So there's just a lot of barriers and a lot of reasons as to why Ecommerce has not taken place historically in alcohol, while fashion, and consumer electronics, and even cars and all these other things have picked up. Big followings in the Ecommerce world, set up at East Coast warehouse, a West Coast distribution center, take online orders, ship them out to everybody, and then optimize more distribution centers, see a faster delivery times.
Chris:
In alcohol, there is a whole series of barriers. One, that you mentioned is regulatory. You have to work with a licensed retailer, or get a license yourself. You're going to get a license yourself, and you don't previously have one that can be a very long and arduous process as to proving you are who you say you are, there's something in alcohol called the three tier system, which means you can only effectively be a manufacturer, a brand like Anheuser-Busch, a distributor like Southern & Wine Spirits, or Southern Glazer's, or a retailer. And if you're one, you can't be the other. So alcohol flows through about three to your system. There's some exceptions in wine, obviously, but it divides up the industry in many ways.
Chris:
There's many reasons why, I think even in like the private equity world there's been roll-ups of laundromats, there's been roll-ups of car washes. There's been roll-ups of grocery chains. There's been roll-ups basically any category you can think of. When it comes to alcohol, it can get pretty difficult because when you're trying to roll-up a bunch of liquor stores or roll-up a bunch of these licensed entities, these different regulatory bodies want to know every single person that has even a fractional amount of ownership. So you could have a PE firm, or a venture firm, all of a sudden being in a situation where they're having to go back to their LPs to get identification cards for people to list them on licenses. And so it's just a very challenging environment as to how people have been able to operate in this space.
Chris:
I think also because of the shipping regulations you had a lot of categories that were it's not as simple as setting it up and shipping. And then take that a step further when you think about fundraising, or capital, a lot of endowment funds, pension funds have carve-outs for things, like don't touch anything to do with alcohol, tobacco, firearms, pornography. So there's entire institutions, or very large venture funds, or funds of funds that have invested in all these different VCs that in those early days just wouldn't touch alcohol as a category. So when you think about building a service in an Ecommerce space where you can't ship all over the place, that's a challenge. Everywhere you go you have to deal with licenses and/or different regulatory guidelines on a state by state basis. That's a challenge.
Chris:
When you're looking to raise capital, large sums of capital to go and attack this big problem. And there's a whole swarms of buckets of capital that literally can't touch the category. That's an uphill battle. And so most, I think the capital injections into the industry have usually been families that have come in, or you've seen someone's creating a brand. They usually do these friends and family rounds. But again, very little going into like a big marketplace, or very little venture or private equity money pouring into the space over the years. Some of the big challenges that we had was in all of those buckets. We launched in LA, but then dealing with even expanding into other cities, looking at the regulatory environment as you go into other markets, thinking about licenses and protecting our partners' licenses, and ensuring ID verification, the way that payments worked, worked properly.
Chris:
You just have to be very careful on the regulatory side and on the capital raising side, you have to be very resourceful in thinking about who your partners are going to be, and who you'd be able to raise capital from. I think some of that's changed now, particularly during COVID and the acceleration of a lot of things online, you're seeing all sorts of barriers, and regulatory guidelines be changed or altered in some ways to adapt to this new normal, and that includes capital as well. But back then, it was very much a little bit of a taboo service, and taboo marketplace that we had to raise money for.
Stephanie:
Yeah. I was just going to say, with all of those things you have to think about, and then you also have to think about building local marketplaces to find the drivers, and find the retailers, and the customers, how did you figure out which steps needed to come first without getting overwhelmed? Because that whole list that you just gave me, I'm like, "Oh, I would have given up, that's like very intense and I don't even know where to start." So how did you unravel that, and figure out, "Here's things that we want to focus on first?" Like, did you focus on the product, or the regulatory aspect, or did you like divide and conquer?
Chris:
We divided and conquered I think the way as founders, we've been extremely fortunate that we just work really well together. We still hang out together. We're still very close friends today. That's not always the case with people who have been working together for over six years this closely. But we couldn't find a better group of people to work with and just have inherent trust in each other as we're building this thing. A lot of my role in those early days was the regulatory, and compliance and working with the different regulatory bodies, legal councils and whatnot, and that really was gating factor one. You don't do that correctly, as we saw with other services, you could be shut down tomorrow, or your ops could be turned off, and then you could also have that stigma against your business. So you got turned off, you were a little blahzay about how you were thinking about the rules in a regulated environment. We had to be just above reproach when it came to that.
Chris:
Two, Dan, and Andrew were really focused on the product and engineering. And then when we put those things together, it was a definitely collective effort, but that also fell heavily on my plate as it related to capital raising. So Dan and Andrew in many ways we're running and setting up a lot of the operations and business product, the design, the roadmap, and I was out there bringing in the dollars, and making sure that we don't all get arrested. It was very good in the early days to be able to work that closely together. And obviously that's permeated throughout our, our journey over the years. I think yeah, we knew early on that it's a big opportunity in the space and that you'd have to be willing to take on a certain amount of brain damage if you were going to build something great here, and that's a bit of a moat.
Chris:
We've seen a lot of people dip their toe in alcohol, realize there's all these compliance things or whatnot, and just give up. We've I think over the years have developed a little bit of a specialty or become known as entrepreneurs as the guys that are willing to go through just crazy amounts of complexities and brain damage when other entrepreneurs maybe wouldn't take on those challenges, and love it or hate it, that's become our specialty to some degree.
Stephanie:
That's great. Tell me a little bit about some of your early marketing efforts. They looked pretty unique, and I was hoping you could touch on that and talk about how you acquired some of your early customers?
Chris:
Sure. The early days you had very small budgets. When we first launched, we were effectively bootstrapped and very shortly after launching had raised a small amount of money from an angel who was a terrific early believer in the company and maintained support throughout the years. But I mean, how do you make as much noise as possible with very small budgets? And we just had this approach of we're in the alcohol space. I think, our first thing we looked at was retail alcohol does marketing very poorly, or in a very boring way. If you look at how customers are adopting any type of brand or brand category or marketplace, usually there's a little bit of brand identity, or something you're trying to communicate to them.
Chris:
Retail alcohol's literally just, "Hey, we have Smirnoff, it's on sale. Come to me. Hey, I have SKYY vodka, it's on sale. Come to me." There's almost nothing... even if you look at the brand names and logos of most of the major alcohol retailers throughout the country, they're just like gimmicky whatever. We knew that we wanted to take more of the marketing style that takes place in the on-premise world — bars, restaurants, hospitality, leisure, et cetera — that I think translate some of these alcohol brands' vision to the customer very well, which is not, "Hey, come to our bar restaurant, hotel, whatever, because we have alcohol here." It's come here because it's a good time. And you'll be here with friends, and all these things that alcohol subtly sits in the background.
Chris:
We wanted to mere that type of approach over to the off premise world where it wasn't, "Hey, come here cause we have alcohol." Or, "Hey, we're alcohol delivery." Or, "Hey, get beer delivered." Or whatever maybe. It was trying to communicate fun and interesting messages, plans for people, different things they could do in their city. Wild and crazy activations that just got them excited, and just falling in love with the brand. And then subtly, by the way we deliver beer, wine, spirits, mixers, snacks, ice cream, all this type of stuff. So our activations really mirrored that philosophy of saying, "How are we going to deliver plans to people, or excitement to people?"
Chris:
One of our first big stunty activations, we partnered with a terrific company, LA company called MeUndies, which is the world's most comfortable underwear, and we just said, how do get a bunch of attention together, and do something that customers would love? And we came up with MeUndies underwear models, delivering sleepover packs that were pajamas and underwear, and a bottle of tequila, a bottle of wine or whatever it may be. It was male and female underwear pairs. Underwear models going out, and delivering. So anybody who ordered-
Stephanie:
Were they just in their underwear?
Chris:
They were just in their underwear, so you have anybody who ordered to have this female and male underwear model would come and show up at their house and deliver their sleepover pack. And we structured a great partnership together, rolled it out and we got just shy of a hundred million press impressions inside of a week, basically for free.
Chris:
We also did on Frank Sinatra's birthday in December, we partnered with the Sinatra family, Jack Daniels, and I believe it was Universal Music and anybody who ordered Jack Daniels, it would be delivered by a Sinatra impersonator. And they'd give you an LP and sing songs to you and do all this type of stuff. We did a handful of other really stunty activations. We took a page out of Uber's book. We delivered cuddly puppies, and donated proceeds to different animal charities and all sorts of stuff like that. Then we backed those types of campaigns with other things that we could afford at the time, which was we did a lot of door hanger campaigns. We did a lot of early stage for direct mail to 21 plus mailing lists.
Chris:
We did a lot of Facebook ads, Facebook native ads at the time. In the early days of any marketplace, you can acquire tons of customers on Facebook, relatively cheaply, and then your CAC start going up. So it's always a challenge to figure out as you saturate a channel, or saturate a market, how to change either how you're running the ads, or new ways to acquire customers or not be so dependent on one channel. But in the early days it was bracketed as deliver wild and crazy activations that get people talking about us. And then let's backfill that with a little bit more direct response media that maybe they heard about us from a friend because we did this crazy thing, and then they saw some Facebook, and then they saw us on their door. The combination of those things hitting people multiple times really drove a lot of that early adoption.
Stephanie:
Yeah. That's really, really fun. I love that story, is such a good idea and a good reminder to be creative in the early days and get the most bang for your buck. So what does your customer acquisition look like today, and how are you measuring that?
Chris:
It's a little different today running across a lot more channels, but I would say that a core tenent of our marketing has always been our referral program. We think that that's the best way that anybody's going to adopt a new service or product is hearing about it from a friend. And so we always push our referral program. It's always been our highest performing and fastest conversion customer acquisition channel that we do run ads across tons of different paid media channels. Obviously, the social, podcasts, radio, out-of-home, less so out of home right now for obvious reasons, and then we do a lot of partnerships with the big alcohol brands to drive awareness through some of their channels. We work with different influencers and then have started exploring some things like streaming, and whatnot.
Chris:
I think the most fascinating things that have happened on all these channels during COVID is obviously about 50% of somebody's alcohol purchases. It's usually fairly split between on premise and off premise. Bars, restaurants, stadiums, hotels, et cetera, over here. Grocery stores, alcohol delivery services, Ecommerce whatever over there, and half of those purchased venues effectively got turned off. So you had this influx of 50% of somebody's buying jump over to the other side, the off-premise buying behavior. And then you had people not wanting to go wait in lines and all this type of stuff. And so the search traffic went through the roof, time to first conversion shortened at rates that we had never seen before. We had higher intent, customers coming in, and just looking for alcohol delivery, "Is this even possible? Is it possible in my city?"
Chris:
We've been fortunate enough to have a great ops team that we've expanded dramatically, our footprint. We've launched dozens and dozens of new markets and cities over the past few months, been acquiring customers in all those new markets and cities. Partnering with terrific brands to help drive awareness and let people know that they can use the service. Then acquiring people at very different numbers than we've seen historically, an example would be when COVID really started to kick off, our Facebook customer acquisition costs dropped to about a 10th of what it's been for roughly six years. Time to first conversion, which share is usually around 14 days, someone downloads the app and they're waiting for that first use case.
Chris:
"Oh I feel like having that bottle of wine. Oh, I'm watching a show, I'll try ordering six pack of beer." Or whatever it is, dropped down to effectively a day. People were just searching for the service, found it, used it. And then second purchase happened before that 14 day mark as well. So you went from having time to first conversion be 14 to 20 days, and then it's all about getting to that second and third purchase. You had purchase one, purchase two, basically happening inside of that first purchase period of time. The customer acquisition costs on a lot of major channels dropped to a 10th of what they normally have been. Then we saw other people willing to spend a lot more media dollars. And then obviously when you think about marketing as well, so much of it is just how you cut through the noise.
Chris:
If you go back there's a lot of terrific documentaries on Netflix about history ad agencies and all this stuff, but there wasn't tons of marketing being thrown at people the way it is today, back in the fifties and sixties. And so a creative ad, like the Volkswagen think small, or something like that could just cut through everything and take over a nation. Today, it's very difficult. How do you come up with campaigns that cut through the noise that feel genuine that people respond well to? But when you had entire industries been negatively impacted by this pandemic and pull back, a lot of their marketing spend, a lot of that "marketing noise" had died down. And so if you were a service that was still operating the ability to just make sure the customers knew about you was in a heightened state than it had been in.
Chris:
So there's been a lot of changes over the past couple of months, both in terms of how we do marketing operations, and work with our customers. But yeah, we've obviously been very blessed by sheer dumb luck in this sense on being in a category that has been positively impacted as opposed to negatively impacted.
Stephanie:
Yeah. That's amazing. Very cool to hear about the time to first conversion and all that. How would you guide someone to create a marketing campaign that does stand out among the noise? Like even outside of a pandemic, and how to make sure it's authentic, but also unique. How do you guys even think about that when building your campaigns?
Chris:
Yeah, I mean, it sounds cliche. It's just put yourself in the customer's shoes. Be a customer for a day, go on to social media, take a drive around, look at the billboards, look at the signs. Look at the ads that are being served up to you. What's attractive? What do you like? What stands out? What feels cool? Having a barometer for just what I think really impacts somebody is important. And then translating that into your own campaigns is key. We've done most all of our stuff over the years in house. In terms of ad copy, and ad creative, and CRM, creative and copy, and all that type of stuff. But it's just putting yourself in the customer's shoes, what feels genuine, find brands that you really like what they're doing, and they feel honest and interesting and original, and they create interesting templates and guidelines.
Chris:
There is a creative agency called Gin Lane, which has since pivoted into creating their own products that built these templates for a whole bunch of companies, one being Hims & Hers, and a handful of other very well known brands today. But yeah, I mean, it's just what feels honest, what stands out, and do things that get people talking. It's fairly simple, but I think our barometer's just always been if you do what gets people talking, and is cool and genuine, then people will talk about it, and they will share with their friends. If you do something boring, or off-putting, who cares?
Stephanie:
Yeah. You'll be like everyone else. I love that. So with all the changes that have been happening, what updates did you have to make to your website, if any? Is there anything that you completely changed to try and... website or app either one, or like, this is a new user that's coming in, or now we have this new group that we need to focus on retaining who has never been here before. Any strategic updates or changes that you've made to your mobile or desktop presence that have really positively impacted like conversions and revenue and whatnot?
Chris:
Yeah. I mean, some of the initial stuff was very simple. It was just categories. So obviously coming into the app in those early days, people were looking for anything from wine, but also PPE equipment, and masks, and gloves, and hand sanitizer, and things like that. A lot of our stores and markets carried those things, toilet paper, paper towels, et cetera. Canned soup, frozen pizzas. So we've had that stuff for years, though a lot of people don't necessarily know it, but it was just making sure that that was very prominent in both our content marketing, as well as in the app and the website. So when people showed up they knew that that was available and they could use it. Then operationally, it was obviously it was getting out in front of a lot more people, so rapid expansion of our delivery footprint and neighborhood coverage throughout the country, so that more and more people could use us.
Chris:
Then obviously all the communication and work that went into little things operationally, like in certain States that require signature capture at the time of delivery, not just ID capture, but signature capture as well. Working with different people to get those signature capture requires lifted. So you could have more of a contactless delivery, it's not the same as delivering a sandwich where it can just be left at your door. You do have to see the person. You do have to visually identify them and scan their ID. But that can still happen in a contactless manner, where they just hold out their ID, you scan with the phone, and nobody's swapping goods or anything like that. So yeah, there's little things around COVID protection, primarily around contactless delivery, and ensuring a signature capture was waived in certain States.
Chris:
Showing more prominently categories of products that people were looking for, but particularly around stocking up or staying safe at home, or staying safe with PPE gear, putting up protocols to all of our retail partners on how they need to be picking and packing products and operating at retail. In some cases helping them source their own protective gear. Then yeah, on the site and in the communication email... I was recently speaking to somebody else about this, but we just had to basically torch all of our content marketing that was planned, where March was all March madness. We had tons of ad campaigns and things lined up for that going into different sports seasons, sports openers. All of that media and content pretty much could be very tone deaf if you just went as is.
Chris:
So all of our planned content marketing and even some of our campaigns and video shoots or photography, all those things, were basically just nixed it all and had to start from scratch on the marketing side. But the team there did a fantastic job.
Stephanie:
Yeah. It seems like there's so many things that were changing and you guys were able to act really quickly to pivot, and showcase the products that were already there and personalize it in a different way. Yeah, that's really awesome. What metrics are you looking at to measure success for your business?
Chris:
For us, alcohol's a little bit different than food. Food you eat every day, or dog walking was a big category. People that I remember early days, some of these venture guys, I don't think quite understood the category, not speaking about our investors, speaking about other people that we would pitch, and they ask things like, "Well, we saw this dog walking app and the retention is... they get used like nine times a month." Are people going to use your service nine times a month?" And it was like, well, I'd say, "Well, that dog is alive every day of the week, no? So if the dog is alive, it needs to be walked every day. Right? And if people are working then yeah, they need a service to walk the talk every day of the week that they're at work."
Stephanie:
Why are you comparing us?
Chris:
Yeah. Or even food you need to have food, and am I going to cook? Am I going to buy something at the store? Am I going to have it delivered? But when it came to alcohol, it's a little bit, I'd say roughly 15 to 20% of your customer base and in alcohol is really the people that drink a little bit more frequently, or several times a month. It's not as exaggerated as like sports betting or gambling where some instances we've seen platforms where 0.3% of the customer base is driving 70% of the revenue. And it's all about maintaining that 0.3%. In alcohol it's finding the people that enjoy the category, maybe have a wine in the evenings, or a couple of times a month or whatever it may be, and nailing that customer use case.
Chris:
Then we have other customer use cases where people just use for gifting, or people use us as their office for gifting all their employees, or having office happy hours, or having business orders. So it's really segmenting and cohorting all the different types of use cases, and customers that relate to this product. It's obviously a big space over a hundred... these are pre COVID numbers, but alcohol is roughly a little over $200 billion a year in sales, in the US. Roughly 55% off premise, 45% on premise. It's a big space, and it's all about finding obviously the people that use your category. I think as we think about just our marketing may change, or customer acquisition may change, or who the customer is, it's always just identifying those use cases. And some of those use cases have obviously changed right now. Where we're supporting more of that on-premise behavior. Zoom happy hours, people socially drink it with their friends, but from home. It's been interesting.
Stephanie:
Yeah. I really liked the idea of putting the users into cohorts based on why they're using the product. That's a really good point. The other big topic I wanted to talk about that could be probably a whole entire episode is all around partnerships. I want to hear what it's like partnering with these companies, like the industry that maybe hasn't really been online, the alcohol industry previously, what does that look like behind the scenes? How are you going about partnering with these companies right now?
Chris:
Yeah. Partnerships is a huge part of our business, both on the marketing side, as well as just how we operate as a company. We're a marketplace for the most part. We partner with existing retail locations where we'll partner with a store in a geographic area and then funnel all the volume and requests effectually to that store or a handful of stores in that area. So partnering with liquor stores and retail stores all throughout the country. And then we partner obviously with the Diageos, and Bacardis, and AB InBevs, and those guys of the world. When we first got started, the first ever brand partnership that we did was with Anheuser-Busch, and they actually reached out to us. It was this is this $200 billion market cap company. And I think they had just started their first digital team, which was less than half a dozen people up in a garage in Palo Alto. They called the beer garage.
Chris:
A guy by the name of Mike Raspatello reached out to me on LinkedIn and said, "Hey, I'm from Anheuser-Busch. We saw..." I think probably because of the MeUndie's campaign, "We saw what you guys are doing, and we want to have a conversation about how do we work together? We're trying to take on digital for the first time, and we're part of this beer garage." It get morphed into what later became ZX Ventures, which became like a venture team of theirs. And then is this big team now of hundreds of people over at Anheuser-Busch, back then it was mostly, I think Mike and a handful of people up in Palo Alto. He reached out, and he's like, "Yeah, we're talking to Instacart, we're talking to you guys, talking to one or two others." And we did a campaign where we promoted certain products in the category. [inaudible 00:39:47], and Stella Artois, and a handful of their portfolio products, and saw could you increase by featuring different brands? Could you increase their share of category?
Chris:
For them it was, "Our historical share of beer category is X at retail, in this new online world, how do we make sure that it is more than X?" And every brand has approached it that way. We are X percent of our categories in retail, how do we make sure in online we are more than X? We ran the campaign and did extremely well. Mike was absolutely instrumental in that, and terrific at Anheuser-Busch. He'd probably hate me for saying that, he's a hilarious guy who's in Chicago now and catch up with him. He's one of my favorite people, but yeah, we ran this campaign and they came back to us afterwards and they were like, "Man, you guys just worked so seamlessly with us. It went so smoothly it didn't go as smoothly with some other people. How big is your company? You guys got like four or 500 people?" And I think it was just Dan, Andrew and I at the time. I was like, yeah, totally. Totally we have 500 people.
Stephanie:
Huge backend helping us here.
Chris:
Exactly. I was hesitant to let them know, but I was like, "No, it's three of us right now, and a handful of couriers." And they were like, "What?" It was interesting in those early days, it was a little bit of fake it till you make it, in making us feel much bigger than we were in year one. That helped us get some of those very early partnerships. And then obviously as we started doing more and more creative stuff a lot of brands came knocking at our door. In many ways, outside of just promoting people in categories, or integrating them into our content, we did some big activations and made a lot of noise with different people. Like you saw with the Jack Daniels, and Sinatra impersonators and stuff like that.
Chris:
In many ways I think people started to treat us a little bit like a creative agency, they'd come to us to say, of course, we're going to do paid placement, but what else do crazy people come up with? We'd come up with all sorts of cool stuff for these brands. And in many ways we became like an outsourced agency that would help them with that stuff, or even help them with some of their Facebook spending. "Hey, we're currently with agency X running Facebook ads, they're telling me a customer acquisition cost of 137 bucks is fantastic. Is it fantastic?" We don't know, it sounds great to me. They have all these slides and whatnot, and we're like, "No, that's atrocious. That was absolutely terrible."
Stephanie:
Yeah. Oh man.
Chris:
"Let us help you figure this stuff out." So in the early days it was again, just being extremely helpful, but then sometimes that's not always scalable being very handholding and helpful with each brand. You can't translate that at our team size to every brand. And so it was coming up with a lot of templates and guidelines. Finding out what's effective. How do we translate what's effective to each brand? Today, our team on that front does a terrific job of still being able to come up with really creative and interesting campaigns with companies and execute on them. I think the biggest change that I've seen is in those early days, a lot of these... they're like institutions. These brands, or portfolio holdings are just huge, had very rigid brand guidelines.
Chris:
I remember working with a big very famous champagne brand, and effectively the model was they have a brand authenticity team that is just protecting everything related to that brand. And they spend months specking out what a campaign looks like for billboards, TV, all this stuff. And we were effectively just another channel to put that campaign into. And that just didn't work. We speak to our customers in a very unique way, and you take this billboard and then just put it in Saucey, and it looked very foreign. People recognize it as a foreign object, and don't respond well. And so the brands that earlier were able to say, "You guys know your customers better than we do. So we're going to give you relatively all the creative freedom to speak to them, with some approvals." Those were the people that performed the best, and those are the people that have continued to perform the best.
Chris:
I think the biggest change that I've seen is you've had a lot of these huge alcohol companies go from having zero person digital teams to having fully built out futures in digital teams. Then the biggest next step was those teams doing a fantastic job of working with senior leadership at those organizations to get them out of the more rigid guidelines around brand identity and being much more flexible in how they both think about campaigns, creative talking to people, et cetera. And that's been a huge shift for them.
Stephanie:
Yeah. I love that story, especially about Anheuser-Busch. And it's just a good story that highlights the importance of finding that first partner and really giving them, like you said, like a frictionless experience where they walk away like, "Wow, that was easy. I didn't really have to do anything. And the team just took care of it for me." Even if it semi kills you to begin with, like that doesn't have to be a for everything, but maybe first big fish, [inaudible] like, "Here's our partner." Is what can bring all the other partnerships your way. So yeah, such a great reminder. All right. I want to move into a lightning round, I know we don't have that much time left. So lightning round brought to you by our friends at Salesforce Commerce Cloud is where I will ask a question and you have a minute or less to answer. Chris, are you ready?
Chris:
I'm ready.
Stephanie:
All right. What is your drink of choice?
Chris:
I like Michter's Rye neat.
Stephanie:
On the rocks, or how do you make it?
Chris:
Just neat, Michter's Rye neat, is my favorite. Second favorite probably be Tito's Martini. After that probably jumping into beer or wine.
Stephanie:
All right. What's up next on your Netflix queue?
Chris:
I'm big into murder mysteries and prison documentaries and things like that. So probably something about international drug trade, or world's toughest prisons in Russia or something along those lines. Drives my wife absolutely crazy.
Stephanie:
Oh, man, that sounds very interesting. Also, our producer, Hilary said, "Neat means no ice, Steph." Got it. Thank you, Hilary. I apparently do not know alcohol, so that's on me. If you were to have a podcast, what would it be about, and who would your first guests be?
Chris:
I've thought about this a little bit. I think that I personally, when I was first starting working on businesses or trying to build a career, you see the end result of all these people, and you miss a lot of the details that got them to where they're at, or got them to how they think about the world and where they're at. Guy Raz, obviously, with How I Built This does a fantastic job of telling the idea of a company from start to finish. I'd love to even know the backstory before that of a lot of entrepreneurs. How did you get to the place where you wanted to jump off a cliff and start the company? You can have a little bit on the company, but really how did you shape what ultimately became this person that's willing to take risks, and do all these different things?
Chris:
I think to be totally honest, my first interview would probably be my co-founder, Dan Leeb. He has an unbelievably interesting story. I've that all sorts of twists and turns in life. He's one of the smartest people I've ever met. I would start a hundred businesses with that guy, and it would be an interesting one to listen to.
Stephanie:
Cool. That sounds good. I would definitely listen. And I love the story or founders stay together and stay friends because you always hear that not always being the case. So it's really fun hearing that. Yeah, you guys continue to be good friends to this day. That's awesome. The last one, what is your favorite piece of tech, or an app that's making you the most efficient right now with work?
Chris:
Just my phone. My phone, and these ear buds it's 90% of what's happening.
Stephanie:
All right.
Chris:
But yeah, I'm on the phone, most of the day, working with teams, video conferencing so these AirPods, or AirPod Pros with the noise canceling, that's a game changer. I got three little kids running around working from home, so we got a noisy household. So you got to be mobile and be able to communicate with everybody.
Stephanie:
Yup. I can relate with you there. And I almost forgot the hardest question that I need to ask you. What one thing will have the biggest impact on Ecommerce in the next year. How could I forget that one?
Chris:
I mean, outside of what's already happening with COVID, I think the biggest changes will be regulatory. We'll see what happens, but things like telehealth, or telemedicine, or even grocery, or even alcohol where you're seeing a lot of the legislation and regulations that have been sitting on the books for decades or 70, 80 years in many ways are all being revisited right now to adjust to this new normal. People have been trying to push for those legislative changes for years and years and years. And it's just been under the stack of papers, because, "Why is this so important?" Sort of, "Who cares, we'll get to it eventually." But you're seeing a lot of that accelerate right now. And I think a few big changes depending on what industry you're in, could really unlock an entirely new world for certain Ecommerce categories.
Chris:
So I think legislation driven by change of life, change of pandemic, I think will be very interesting to watch. And I think you'll see not only new categories come online, but the dramatic acceleration of some of the existing categories.
Stephanie:
Well, I love that. That's a great answer. I'm glad I remembered to ask that question. Well, Chris, this has been such a fun interview. Where can people learn more about you, and Saucey?
Chris:
You learn anything you need about Saucey at saucey.com. If you want to learn about me, I guess you'd listened to this podcast, go from there. I don't have a huge online presence, stay relatively private. But I think that, you want to learn more about Saucey, go saucey.com.
Stephanie:
Cool. Well, I like being exclusive source, so for all things, Chris Vaughn, you're welcome everyone. All right. Well, thanks so much for coming on the show. It's been great.
Chris:
Thank you so much. I appreciate it.
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Do your systems have rules that look at the customer location and choose the nearest warehouse to fulfill that order? Or are you relying on one fulfillment center and allowing days or weeks to pass before it arrives to your customer?
The real-world logistics behind each digital order can be a complex process… but if you could set up the proper systems, what if you could then compete with the new industry standard of two-day shipping?
Understanding this logistical side of Ecommerce is vital for any store owner or executive team looking to master this world.
Today, we’re exploring the logistics side of Ecommerce with an industry expert.
Casey Armstrong, is the Chief Marketing Officer at ShipBob working hard to ensure that Ecommerce shops are able to get products to their customers effectively and efficiently.
On this episode of Up Next in Commerce, Casey takes us behind the scenes of what makes for a good third-party logistics partner, or 3PL.
Plus he explains when companies might want to start thinking about finding a 3PL partner, and why Amazon, which is seen as the gold standard in fulfillment, might not actually be the best choice for your Ecommerce shop.
3 Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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---Transcript:
Stephanie:
Welcome back to Up Next In Commerce. This is your host, Stephanie Postles, co-founder of Mission.org. Today on the show, we have Casey Armstrong, the chief marketing officer at ShipBob. Casey, welcome.
Casey:
Hello. Thank you for having me.
Stephanie:
Yeah. Thanks for coming on the show. I am eager to have you on since we have not had anyone in your industry on yet. I think there's a lot to learn.
Casey:
Perfect.
Stephanie:
I want to hear before we dive into ShipBob, a little bit about your background and how you got into your current role of CMO.
Casey:
Yes. Thank you for the intro. As you mentioned, chief marketing officer over here at ShipBob. Where at ShipBob, we are an Ecommerce fulfillment solution essentially bringing that Amazon level two-day, three-day shipping experience to direct to consumer brands. We can get more into the specifics of ShipBob later. I'm not here just to pitch that, but we do that through our distributed fulfillment network. We've got 10 facilities around the world.
Casey:
Then before ShipBob, I actually was the VP of marketing over at BigCommerce, one of the leading Ecommerce platforms who also happen to go public in IPO last week. Another huge congrats to the BigCommerce team over there, that was a huge accomplishment. I'm just very proud of what they have accomplished. I know that they're just getting started. Then prior to that, I was the SVP at a company called Watchmaster. We were a luxury watch Ecommerce brand actually located over in Europe. Those were the last couple roles for me that brought me over to ShipBob.
Stephanie:
Tell me a little bit about ShipBob. What is it? How would you explain to someone who does not know even where to begin with that?
Casey:
Yeah. We ship off to really simplify it. Again, if I would really simplify it, we're a tech enabled 3PL which again means we store and ship your products. If you're a direct to consumer brand and you want to utilize ShipBob or let's say another 3PL, you would send us your inventory. We would store your inventory. Then, as orders come in, we ship it out on your behalf. We are not a carrier. We are not like FedEx or USPS. We partner with them.
Casey:
Every day they send multiple trucks to our facilities and pack that truck to the brim. Then, take those orders out to deliver to the end consumer. Yeah. I think that covers most of it.
Stephanie:
Yeah. That's good. You're kind of like the behind the scenes operation that can help fulfill products and orders for an Ecommerce shop?
Casey:
Exactly. We really are pushing the envelope to do a lot more than that. I mean, we are platform agnostic. We can connect on all the marketplaces. We don't really care how you are selling or where you are selling. We just ingest those orders. Then, we can ship the products to the end consumer. We're really enabling that entire e commerce experience regardless of how you are running or facilitating your business.
Stephanie:
How does ShipBob differentiate itself from other 3PLs?
Casey:
One of the ways, the most obvious ways is our fulfillment network. We have 10 facilities, eight in the US, one in Canada and one in Europe. Why that is important and why we're making a huge bet on the distributed fulfillment model is because then you're closer to the end consumer, which means that you can deliver your packages not only faster, but also much more cost effectively. That's a huge focus area of ours.
Casey:
Another very, let's say, obvious item too is the technology. I'll touch on two items there. One is we really are making our bet on controlling that entire stack. That goes from the merchant application, which should really be your go-to source for all inventory and order management. You don't have to use another tool. You get all of that within ShipBob. Another is the ShipBob fulfillment engine, which is really the logic of what and where and how to ship all products. That's what talks to our fulfillment centers. Then, it's our warehouse management system or WNS technology, which powers all the logic within the fulfillment centers.
Casey:
That's from how should we receive your inventory when you send it to us? Where should we store it? When the order comes in, which person in the fulfillment center should pick it? What box should they put it in? Which label should they print it out? When should they prioritize that within their day? All of that is ShipBob technology. The reason why we think that is so important is that's how we can create this unified fulfillment experience for our customers across all of our locations. That way, we can also be as cost effective and efficient with our time, so that we can then pass on those savings to our customers.
Casey:
Then, another item with the technology as well is that allows us to, again, not just optimize what happens there but share this data more transparently with our customers. For example, all of our customers get ... we're we actually going to turn this into a paid product, we decided because of how much value it drove to our customers, we just decided to open it up to our analytics dashboards. Customers can come in and just get some pretty robust data and analytics on how their business is performing from like an inventory and fulfillment perspective.
Casey:
They can even see things like with a click of a button, let's say they're storing all of their product in our southern California location. They actually see they're getting quite a few sales in the northeast. They can click one of our northeast locations and they can see, okay, this is the cost savings and the reduction in transit speed if I utilize two facilities. Sometimes, you're like, why wouldn't anybody use two or three or 10 facilities? You have to think through the business, which is it might cost incremental money to ship to multiple facilities or you might want to double up on inventory.
Casey:
There are pros and cons of both. That's just one of many examples of with a click of a button, you can really dive down in your business and see where there are some cost savings and time saving opportunities.
Stephanie:
That seems very good, very helpful. I will point though, would someone know like, okay, now is the time that I should maybe outsource my fulfillment. How big should they be? Or when will they know it's the right time to maybe hire or bring on a 3PL?
Casey:
Yeah. I think knowing the right time, I think that's the easier one to answer. I get this question all the time. Is it 100 orders a month? Is it 1000? What is it? Just like most answers to things in life is it depends. I think it's beneficial to pick and pack and ship products for maybe a little bit, maybe even just when you're getting started, because one you kind of learn the mechanics of it and what goes into it and just even things to optimize yourself.
Casey:
An example there is sometimes people want this extremely robust unboxing experience. They'll get these extremely customized boxes. Then they realize, oh, well it takes them 10 minutes to fold it all up together every time. That's not efficient for them and that won't be efficient for the 3PL. Also, I think it's actually just extremely important to understand who your customers are and so as these orders come in, and you can do this after you outsource it as well, but as orders come in, look them up.
Casey:
Is it Casey Armstrong? Okay, he lives where? Okay, he has children, he's into certain things. Who are these people? To really understand your customers. I'd say the time to outsource it is when you start getting close to a point where the fulfillment side of the business is eating into your time that can be better spent on sales and marketing and product development fulfillment is often a low leverage use of your time. There's a reason why people utilize companies like ShipBob.
Casey:
You should be spending your time on growing the business, again, sales and marketing and product development, probably not picking and packing boxes, which also takes a lot of time.
Stephanie:
Yeah, that makes sense. How would I think about you guys versus maybe like Amazon fulfillment? What is the difference there?
Casey:
Yes ...
Stephanie:
Would I pick you over Amazon? Or is it either or? Can I use both?
Casey:
You can use both. Sometimes, we're a replacement. Sometimes, you would utilize us instead and sometimes we're a compliment. With Amazon, it depends on what you're looking for. With us, we often work with Ecommerce brands. I definitely stress brands, people that care about owning that customer relationship and owning that data and having full control over what and how products are getting sent to their customers.
Casey:
With Amazon, which really sets the gold standard in logistics, no question, with them, it's really you ship stuff to their fulfillment centers, everything goes out in an Amazon box. You get extremely limited data if something goes wrong, or if they make changes. Like for example, they stopped shipping essentials or receiving essentials, early on in COVID. Most recently, they are limiting the amount of inventory you can store in their facilities. They're the end all be all. They make that decision and there's nothing you can do about it.
Casey:
You just have to conform your business to how they change. With us, you can include marketing inserts. You can include custom packaging. You get and own all of the data about your customers and about the fulfillment experience. If you want to pick up the phone and talk to somebody, you can. It's really weighing what is right for your business.
Stephanie:
Yeah, that makes sense. The one thing I've always kind of struggled with when thinking about 3PLs is the cost aspect. Because at one point, I don't remember what I was looking this up for but I was trying to find a good one here in California. They all use different metrics. I actually had to build a matrix in Google Sheets to be like, well, this person is quoting it based off of like, what are they called, partials or the big wooden blocks? Not blocks ...
Casey:
Pallets?
Stephanie:
Yeah, pallets. Hey, there you go. Yeah, they're quoting it based on pallets. Then, other people are talking about pieces. They all had different ways of talking about it. I felt like I didn't fully understand what cost to even consider when looking for different 3PLs. What do you advise if someone's going this route right now and thinking through it?
Casey:
Let's say, before even getting into the pricing equation is understanding what's important for you and that should hopefully allow you to whittle down your options because you probably are going to get handful of pricing agreements that are difficult to compare apples to apples. I mean, you could spend a little bit of time and get it to that point. Is connecting to certain technologies important? If so, you can probably cross a bunch of options off your list.
Casey:
Is having a location in a certain region or regions important? Do you want to split your inventory? Is certain things from a kidding or a packing or an unboxing experience important? If so, again, you can probably widdle some more off. With us, we really try to simplify it so you get billed off of receiving storage, and then what we call a total fulfillment cost. We try to simplify it some but again, even when you're looking at us versus others, you can't necessarily always get to this true apples to apples comparison but you can get pretty close.
Stephanie:
Yeah, that's a good point. If someone is doing a lot of other things like you mentioned like unboxing or having distributed fulfillment centers, that is probably even more important than just like how much will it cost to ship certain pieces. When thinking about the distributed fulfillment centers, how does the reduction, maybe like shipping days increase purchase size or cart abandonment? Have you seen any metrics around that where a quicker shipping time, I'm assuming helps with higher purchases, purchase volume?
Casey:
Yeah. We actually have a couple of case studies that are pretty interesting on our site today. I'll give two examples where one is with this one brand and they were utilizing our two-day express program. There, we split their inventory and we try to optimize everything or as much as possible to be shipped via ground, because we're going to pay ground versus air is night and day. That's why distributed fulfillment networks are important is because then you're getting access to a larger footprint of the US.
Casey:
Let's just say in this example, the continent of US for ground shipping because anybody can ship two day in air. That's easy. You can ship it from one facility, it's just going to be very expensive. Anyways, they were able to see slightly over 20% increase in their average order value by showcasing this two-day shipping experience. I think that's because they were really showing off that Amazon level experience. Amazon had a lot of data on just the additional spend, granted this isn't necessarily apples to apples but how much more the prime members spend versus a non-prime.
Casey:
Again, if somebody is using prime, they might have more ... maybe they're like in a higher income bracket or they put more emphasis on Ecommerce. We had another customer honestly that saw a 97% increase in average order value once they started showcasing this fast and free two-day shipping. I would not mark that as your baseline or your benchmark or target because doubling your average order value is pretty insane. It does go to show things that people, I think, think about a lot more now than they used to. That shipping and fulfillment experience both whether it be free for two days or free and two days can really move a lot of levers that will also help feed back into your ROI and your marketing.
Stephanie:
Yup. I think a lot of customers in the back their mind they know, if I don't get this in probably a week, I'm going to forget about it or I won't be as excited about it. I mean, that's at least how I am when I see maybe like seven to 14 days. I'm like, what am I going to be doing in 14 days? I don't even know if I want to wear that t-shirt in 14 days.
Casey:
Something that's really tough to calculate is how does that improve ... I mean, you can calculate like your net promoter score or NPS or your C-SAT or customer satisfaction score if you poll your customers. Maybe improvements in NPS improve word of mouth or improve customer retention as well. Something that I think about a lot is people always focus on email marketing or SMS or ads, but what is the number one place? Where do you get 100% open rate with your customers?
Casey:
That's on the products that you ship them. Everybody's going to open that box. From the speed and the experience and how they receive the package to maybe even the actual package to maybe what's inside the package is extremely important. Focusing on that because there's no better channel than word of mouth, but word of mouth is also the toughest to measure and also the toughest to grow.
Stephanie:
Yeah. I love that, especially the 100% open rate quote. How are you advising brands that you're working with when it comes to creating a delightful unboxing experience?
Casey:
It often depends on what they're selling.
Stephanie:
Yeah.
Casey:
I'd say it's more on not trying to do things overly complex. I think, back to the first website that I guess commissioned to be built. The poor developer who's actually the designer as well wanted to hang up the phone on me or delete my emails, because I just made what should have been so easy, so complicated, where I really just needed a homepage. Then, I needed a bunch of other let's call them child pages, but they could follow the same design template over and over again. Essentially, I just needed to build out two different design templates. Even if my website was going to be let's say, 50 pages.
Casey:
Where I came to him and I was like, I want the homepage to look like this. I want the blog to look like this. The about page to look like this. The service page to look like this. He's like, we haven't even got off the ground and you're asking for 50 things. The same thing with that packaging and unboxing experience, which is, let's say you're shipping in just standard brown boxes today or poly mailers today. How can you make just like an incremental step up? Maybe it's that brown box but it has your logo on it. Then, maybe make another incremental step forward from there.
Casey:
Because every time you add complexity, it's going to cost more money most likely to create these custom boxes. Also, your 3PL might charge you for kidding fees. There's a company that I'm a customer of, Lovevery, if you're familiar with them, I know you have little ones.
Stephanie:
Yeah, I've heard of them. Their unboxing experiences, it's beautiful. I know my wife and kids look forward to it every time it hits the door. You don't ...
Stephanie:
What does it look like? Tell me a little bit about it.
Casey:
From the box, and there's another company called KiwiCo that does the same. It's this beautiful box, you open it up, everything is laid out like in the order that you're going to use it from the instructions to the toys or the products you're going to use because they're more like educational toys. It's almost like this story or they're like hand holding you through this experience. Let's just put them at the far end of the spectrum of this amazing unboxing experience. You're going to maybe even pull out your phone and Instagram it or something.
Casey:
Maybe that's your future state goal. If right now, you're just throwing things in a brown box, don't try to do that overnight. Just try to make it like a little bit better and then just progress on that overtime.
Stephanie:
Yeah, that's a really good point, not just for boxing, but I think this advice in general, sometimes it's easy to want to go, let's do 1,000 things and then it's like you're frozen and you can't move forward. I'm sure you see a lot behind the scenes with a lot of new brands, probably approaching you and trying you guys out. What kind of trends are you seeing in the fulfillment world? Are there new things that have come up since the pandemic that maybe you weren't anticipating before that you guys are kind of pivoting to help out with that maybe you just didn't have customers asking for that prior to COVID?
Casey:
I don't know about trends of things that they're asking for that they weren't prior, I'd say, their sense of urgency is increased. We knew that we were going to roll out a few international locations, but the demand for those capabilities and the speed at which customers are trying to close themselves. For our business, it's actually rather welcoming, but it's been pretty fascinating to see that really accelerate over time.
Casey:
We rolled out our European and Canadian fulfillment centers this year and people just kind of been banging on the door to leverage those because Ecommerce demand everywhere has spiked. I'd say another that's been kind of interesting is while Amazon is still viewed very favorably, let's just say across the US, how people are evaluating Amazon as a 3PL, depending on their business, again, whether they put all their eggs in the Amazon basket versus like just viewing it as a compliment.
Casey:
I think this has really shed a huge light on the importance of owning your business and owning your distribution channels as much as possible and owning your customer data and owning that supply chain like the example that I gave earlier. Again, I have so much respect for Amazon. They push our industry forward, not just Ecommerce, but logistics as well, is when they can start limiting which products you can ship to them and when they can start limiting which products that you can store with them, which therefore dictates which items you can ship out, which is how you make money.
Casey:
That's a lot of power to give to a third party. They're doing it because they need to do what's best for them as a company. They need to do what's best for all of their third party sellers and aggregate. No matter how big you are, you're just one of those hundreds of thousands of businesses. Just making sure that you plan accordingly.
Stephanie:
Yeah, that makes sense. It seems like the shipping delays that happened with Amazon as well or when they started prioritizing essential stuff also gave a lot of DTC companies and people who aren't relying on Amazon a chance because all the people on Amazon are maybe used to that two-day shipping, that started turning to five and seven and two weeks, started looking elsewhere and started being open to other ideas other than just like Amazon is my source.
Stephanie:
I know myself included, I have actually been okay ordering from brands directly. Because I'm like, this brand is maybe four days, Amazon might be two to three, not that much of a difference. Whereas before this, I don't know, if I would have considered ordering directly from a brand if it was also on Amazon.
Casey:
You're spot on. That's what's going to be so interesting as COVID hopefully starts to dissipate and then hopefully it's in the rearview mirror, is the habits that we have formed over the last four to six months and which of those stick and people being comfortable with a slightly longer fulfillment time because they can buy directly from the brand or because whatever fear that they had has been reduced and so they'll trust these other websites more.
Casey:
Even I know when I was at BigCommerce like we had a quarter that was super focused on digital wallets. As that's evolved, digital wallets meaning like the PayPal buy button, the Amazon one click, I'm trying to think what else Visa and Apple Pay. Those also allow people to buy not just on desktop but also mobile so easily where you don't even need to go and get your wallet. It's just the ease of purchase is just so much easier now versus like on Amazon, they stored everything and it was very easy. Now, those digital wallets are also on a lot of these direct to consumer sites.
Stephanie:
Yeah. I think that's so important. It's like we have a Philz down the street and I used to always go in and order, use my credit card and whatnot. When they started doing only mobile ordering where you can only pick it up at their ... like outside, instantly, I'm all of a sudden ordering like two Philz a week. I'm out and I walk my dog I'm like, oh, I've got my phone I can order it. Payment is already set up. Something I never would have done before. Now, I'm like, why did I ever wait in line? What was wrong with me? Why didn't I get their app to begin with?
Casey:
Yeah. Great point. It's like this forcing mechanism for us to try these slightly more innovative products. Even somebody like myself has been in Ecommerce forever and buying stuff on Amazon, I'm sure you've ... since whenever you had a credit card, my wife and I, we never utilized like Whole Foods delivery or buying groceries on Amazon. Then, with this and with the little ones, we've just been very diligent on really living the quarantine life as fun as that is. We get multiple Whole Foods deliveries a week now.
Casey:
When before, we're like, I'm not sure about how the produce will be. What about getting meat? It's been great. I mean, the cons are usually you get about 85% of the things you put in your cart, because they don't have everything but they deliver right to you. There's just so many changes, just like your example, the coffee.
Stephanie:
Yeah, I'm starting to wonder too, if consumers will be ... I think there's going to be two sides of it, one where they're going to have very high expectations for things like they want to have trust in the brand. They want transparency. They want to see what's going on behind the scenes? Are they socially conscious? Then, I also think there's another side of the consumer where they're going to be okay with good enough. Like with your Whole Foods example, I was the same way like, I pick tomatoes out in a certain way or avocados and they just won't know how to pick out my avocado.
Stephanie:
Now I'm like, if four out of five of the avocados are good enough, I'm happy with it. I kind of see two ends of the spectrum of what this push consumers to be, which would be kind of hard to meet.
Casey:
I agree. I might be slightly biased and we're pushing ShipBob to deliver everything within, let's say, one to three days. Sometimes, a merchant can only store all their inventory in one location. Let's say, it's on the east coast and I know you're in California, as am I, and we order something, maybe it takes about four or five days to get to us. Am I willing to take that slightly longer delivery speed, because I know that I'm supporting entrepreneur that much more?
Casey:
I'll be curious to see how that changes just as we do are more conscious about supporting SMBs. We know that if we buy it directly from their website versus Amazon or elsewhere, that we put more money in their pocket. I'm very interested to see how that evolves over time.
Stephanie:
Yeah, no, that'll be really interesting. We're just talking about putting more money in the merchant's pocket. How do you advise or what best practices do you see when it comes to setting pricing? If I'm implementing a 3PL, should the retail price of something have like a 50% profit margin or 70? How do you advise someone to set their prices in a way that makes sense to make sure that their margins are good and not eaten up by 3PLs and returns and all that?
Casey:
I mean, every business will just be so different. I think what's important that you're getting at is, and something that not everybody fully carves off the time to understand off the top of their head, like all these numbers off the top of their head. What are their true costs of goods sold? How much does it cost for them to receive these products? As they scale over time is there opportunity to reduce those cogs so that they can improve their margins?
Casey:
You start with something like that. Then it's like today and then as they forecast in the future, what are their customer acquisition costs or CAC? Then, understanding that, because then that tells you how much money you still have left over for fulfillment. What are your true shipping and your total shipping and fulfillment costs? I think a lot of people focus just on reducing their customer acquisition costs without understanding all the levers that they can pull.
Casey:
Again, it's just knowing your metrics extremely well. Then from there, identifying which are the biggest numbers and how can you start pulling levers to reduce those or increase those over time?
Stephanie:
The other thing I'm thinking about when you're talking about opening up fulfillment centers in Europe, what does a brand need to consider when they are thinking about using a fulfillment center overseas, if they are in a California or New York? Is there anything special that they have to take into consideration before utilizing fulfillment center overseas?
Casey:
Yeah. We'll keep this relatively succinct because this can ...
Stephanie:
Be a whole episode?
Casey:
Exactly. I guess, are there any regulatory issues with me getting my products into a certain country? For example, I know certain cosmetics, it's actually more difficult to get into Canada and ship from there versus it is to get into Europe. It's understanding that. Then, number two, which where you'll spend most of your time is just that value added tax. What do you have to pay to get your products in? Then, how do you need to include that within your pricing?
Casey:
Every single country in Europe has their own batch structure. You can just spend a lot of time there. Or like what we're working on is allowing people just to think of that as in Europe is like one country. Then, we do a lot of the heavy lifting on the, let's say, peripheral or outside and so you really only need to think of that once versus that differently for every country.
Stephanie:
That's a good thing to consider. You guys are kind of taking care of that for them in a way so they don't have to do all the research on the different locales and what to charge and whatnot.
Casey:
Exactly. There are different types of that. With Watchmaster, for example, sometimes we would buy watches in the south in a country like Greece, where I think their VAT is like 22 or 23%. Then, we'd sell them in the north. Let's say Germany, where I believe the VAT is 18%. There alone, let's say in Greece it's 23% and in Germany's 18%, that's a 5% delta. Even if we sold the watch, for the same exact price, we have 5% margin just because of the delta in the VAT.
Casey:
I'm simplifying this greatly. Just as an example of like there's just so much complexity and that's just one product in two different countries.
Stephanie:
That makes sense. Then, do you guys, I mean, I'm sure things get caught up in customs, do you also help keep track of that? Or is that something that they need to get it to the warehouse or center in Europe, and then you guys help take care of it from there?
Casey:
If we're shipping things from the US internationally, that's one thing. There's duties you can pay in advance and then there's also unpaid. Then, from getting the stuff into the country and into our facility, we will help some there, but it's usually utilizing partners of ours. We're not a freight forwarding company.
Stephanie:
Yup. Cool. That makes sense. With everything you guys are doing behind the scenes, I wanted to touch a bit on the technology because it just seems like you have a lot going on. Like you said, you guys are tech enabled. What kind of technology are you using to make the fulfillment process seamless? Any AI you're implementing? Or new leading or cutting edge technologies that you're implementing to make that process work?
Casey:
Yeah. We do use a lot of machine learning. Our bet also is building a lot of this stuff ourselves. That's utilizing from connecting our solution and APIs to third party solutions, to then building all the logic and intelligence internally. Again, that's utilized a lot of machine learning. Then, that's driving the decision making. Really, I'd say the biggest bet with us on the technology is owning the entire stack from what our customers are using to how those orders are being sent to the fulfillment centers and the technology in the fulfillment centers.
Casey:
It's not using let's say like a third party warehouse management system.
Stephanie:
Got it. When you're talking about integrating seamlessly and partners, what kind of partners are important to have integrated with your 3PL? Who are you guys making sure that you're partnered with to make it a seamless experience?
Casey:
Yeah. Definitely, at the top, it's the Ecommerce platforms. Then, on the output side, it is the carriers. It's making sure that we're able to get the best pricing within the right timeframe across FedEx and UPS and USPS and DHL and some of the local carriers so that we can make sure that we're making the best cost efficient and time efficient decision on behalf of our customers.
Stephanie:
Cool. The one thing I always love is stories. I'd love to hear any mistakes that merchants have made where they come to you and you're like, we've been doing it this way for 10 years, or like, this is how we do things now and you're like, oh, that's bad. Any stories like that that other people could learn from like don't do this?
Casey:
One that sticks actually off the top of my head. This was something I thought about a lot when I decided to make the jump over to ShipBob was when I was at BigCommerce, we were doing this big film series and we were visiting a bunch of our merchants. I met this one merchant. This husband wife duo where ... and I love their story and they're doing really well. Certain businesses run their way for certain reason.
Casey:
I love their story because the wife, she started the business initially by herself. She ran it by herself for a couple years, where she signed up for the two-week trial. She literally hit the Launch button from a Starbucks. It's like the American Dream version for Ecommerce.
Stephanie:
All the pictures show that you're in a coffee shop and today is the day. I'm hitting go live website.
Casey:
Exactly and still free, you're on the trial. Fast forward however long it had been, like five years from when I'm sitting in their "office", which is essentially just a mini fulfillment center. The place was packed to the brim. Now, it was the husband and the wife and they were doing all things sales, all things marketing, all things website development. They were doing everything except for the storing the inventory, picking it, packing it, handling returns, putting the labels on the box, taping up the boxes.
Casey:
They had 18 employees so 90% of the workforce, including them, were doing fulfillment work. They were the only people focused on building the community and sales and marketing and product development. I knew at the time this is before honestly, they even knew about ShipBob, this is not right mix. When I left, they were actually going across the street to negotiate extending their warehousing space, so they can move across the street to store even more inventory.
Casey:
Now, you're adding all these fixed costs, such as your rent and also fixed costs with all your employees. While you can maybe get rid of the employees, if things go bad, you're most likely going to be stuck with the rents. Whereas if you utilize a third party logistics solution, you're often paying them on performance. The more you sell, the more you pay them. The less you sell, the less you pay them. It's more of this variable rate versus this fixed rate.
Casey:
I just was blown away because these people were going to do over 15 million that year. It was really just two people doing everything except for fulfillment.
Stephanie:
My gosh, I blame Shark Tank for that. You know all the ads they show where they're like, we started in our basement and here we are with our whole family packaging everything. If you show that ad enough, people would be like, that's how you do it.
Casey:
I'm not going to name names. We have customers and it's kind of unfortunate. We have customers that will throw up their Instagram stories every week of them picking and packing boxes and storing a bunch of stuff in their spare bedroom and all this stuff because they're selling the dream to their community. They get it to an extent. Then, all of their followers were trying to do things themselves. They're replicating these false mistakes when I'm like, what?
Stephanie:
Oh, gosh, yeah, that's really good, though. I mean, I think that's an important lesson all around is like there's a certain point when you can do that. Then, after that, you need to be focusing on the product. It can only get you so far when you're doing everything on your own.
Casey:
Mm-hmm (affirmative).
Stephanie:
What kind of disruptions do you see coming to the world of fulfillment?
Casey:
Some news that just broke the other day that I think will be interesting to watch is a lot of these older retail spaces. A big question is what's going to happen with these malls? I think a lot of that also comes down to ... and with these retailers. It comes down to I think it was signing property but it was these large mall operators and owners, what are they going to do with the space?
Casey:
Amazon unsurprisingly is right in the mix. Are they going to start leveraging these now vacant or near vacant malls, where they can be very close to ... because these malls are often in suburban areas, which are close to a lot of the end consumer. Can they start leveraging these mall facilities for their last mile operations? That'll be interesting. It's definitely something that we've looked at. We're definitely building our technology in a way that individual store owners could possibly even utilize it at some point, people could start injecting it in the malls.
Casey:
I think that's going to be pretty fascinating to watch. Then, another thing less on like the innovative side, just more of like the blocking and tackling stuff is like, with Q4 coming up, how big of upswing in sales are we going to see? Usually we see between let's say 30 to 50% uptick in sales volume. With unemployment and everything, not in the best space, are we still going to see that? If so, these brands that are trying to get ahead of the curve and store all their products, now, Amazon's already said that they're not going to allow unlimited inventory like they had in the past.
Casey:
We've come out and taken the opposite stance where we're not going to restrict because of COVID. How are a lot of these mom and pop 3PLs that really only have one facility are going to be able to do things and just how are a lot of people are going to be able to conform. That's just the kind of boring work of I just need to literally store my product somewhere and then ship it out. I think it'd be interesting to see how a lot of brands navigate that.
Stephanie:
Yeah, completely agree. That'll be a good area to watch. All right. We have a couple minutes left and we do something called a lightning round brought to you by Salesforce Commerce Cloud. This is where I will ask a question and you have a minute or less to answer. Casey, are you ready?
Casey:
I am ready.
Stephanie:
What's up next on your reading list?
Casey:
My reading list. Oh, man, I've been buying way too many books lately. I actually bought this book. Here, let me grab it, I actually have it next to me.
Stephanie:
Yeah.
Casey:
I've been trying to get a lot more into finance and so I actually I bought Titan by Chernow and then I bought Reminiscence Of A Stock Operator. The one I'm reading right now is called How Finance Works. It's by this Harvard PhD or Harvard professor that just really kind of uses some humor, but really gets you hands on and breaking down a lot of things from a finance perspective.
Casey:
I historically read a ton of fiction, but now I'm reading this and maybe that's why I'm falling asleep faster at night.
Stephanie:
I'll have to check that out. I mean, I love finance. I will be checking that out. What's up next on your Netflix queue?
Casey:
Oh man. Because I have little ones probably like Rescue Bots or something.
Stephanie:
Yup. I feel you there.
Casey:
Yeah. I think I've exhausted the rest of Netflix.
Stephanie:
That's all right. Kid stuff. I'm on the same page as you.
Casey:
There we go.
Stephanie:
If you were to have a podcast, what would it be about and who would your first guest be?
Casey:
Gosh. I've thought of this idea quite a bit. I mean, there's a bunch on the business side, but I think it'd be ... I just love sports. I'd say probably Shaq, Shaquille O'Neal. I want to understand what was the catalyst for him to get very business savvy for an example like he ... I don't think it was maybe like his rookie year, but very early on he never touched a paycheck because he was making so much money from endorsements.
Casey:
Basically, all of his NBA salary would go to his bank. From there, he's just invested in ... he owns like a ton of like Popeye's and a bunch of car washes. He just very diversified the assets that he owns and where he makes money. It's just fascinating to see how he was just so early in that. Then, you see people like James Harden and Steph Curry and others, and I think Kevin Durant recently did buying minor shares in MLS teams.
Casey:
I think that the athlete getting more business savvy is just a fascinating concept and would allow me to geek out about sports. I know that's not a lightning answer, but it's my long winded answer.
Stephanie:
All right. The last one is what app or piece of tech are you using right now that's making the most efficient in life or business?
Casey:
I'd say an app that I have a love hate relationship with like most people will be Twitter, because sometimes I'm like, is this just an absolute waste of my time? I don't necessarily tweet over too often, but using it as something I've actually been doing a lot more over email to is just cold email, cold outreach. The connections you can make with people to send direct messages. It's fascinating.
Casey:
Then, as you evolve those relationships over time like there's no way to even put an ROI on that. Just opening the doors in different business opportunities and partnerships and stuff, it's just been fascinating and it's free. It's insane. Anyways, I'd say for now it's Twitter.
Stephanie:
I need to try more of that. DMs make me nervous. I'm like, I don't know if I should do it. I should just go for it. Start DMing everyone.
Casey:
You should. I mean, worst case, they don't reply and that's where you were in the first place.
Stephanie:
Yeah, so true. All right, Casey, well, thanks so much for coming on the podcast. Where can people find out more about you and ShipBob?
Casey:
Yeah, shipbob.com. Come check us out. As I mentioned, I'm on Twitter CaseyA. Come hit us up over at ShipBob. Let us know how we can help.
Stephanie:
Awesome. Thanks so much.
Casey:
Thank you.
In the music industry, having talent is often not enough to succeed. You need to find a way to stand out and be unique. That’s true when it comes to marketing and ecommerce in the music industry as well.
Eamon Mulligan is the VP of Product & eCommerce at EMPIRE, and it’s his job to help lead a team toward ecommerce success. The way he does that is through creativity and partnerships that have proven to drive traffic in big ways. What kind of unique ideas have they tried, how do they manage to achieve a high ROI on SMS marketing, and what do memes have to do with all of this? Find out on this episode of Up Next in Commerce.
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
---Transcript:
Stephanie:
Welcome, everyone, to Up Next in Commerce. This is Stephanie Postles, your host, and today on the show, we have Eamon Mulligan, the VP of Product and eCommerce at EMPIRE. Eamon, welcome.
Eamon:
Thank you for having me.
Stephanie:
How's it going?
Eamon:
Good. Just hanging out at my home office and plugging away.
Stephanie:
Yeah?
Eamon:
Yeah.
Stephanie:
That is good. I've never had anyone on the show in this industry before, in the music industry, so I'm really excited to hear all about it. But first I want to start with you and your background. I saw you have a long history in the music industry, so I wanted to hear how you got involved in that.
Eamon:
Sure. I guess not to go back too far, but as a kid I always loved music and wanted to be in it somehow. I grew up originally in Napa, California, which is not necessarily a hotbed of the music industry. [crosstalk 00:01:04].
Stephanie:
Unless you get too much wine. I guess.
Eamon:
Yeah. I spent a lot of time traveling down to the Bay Area and watching local groups perform and eventually really attached and followed a local group called Living Legends and befriended them at the time webmaster, this is probably 1999, 2000 ish. And I didn't really know anything, what I was doing at the time, I was talking to the webmaster and asking, I read all these magazines and I see that mentioned in there, but there's never been a full on article, how does that happen? And then he went on to say, "That requires a publicist and BIOS and press kits." So then I started interviewing the guys and putting together BIOS and press kits, which I wish I still had today because I'm sure I would laugh at them.
Eamon:
And eventually, the Living Legends in 2005 asked me to go on tour with them to assist the tour manager. Previously I had been helping them with online stuff. I had started their MySpace page, their YouTube channel, was helping with an email newsletter. So that was where I cut my teeth a lot in the digital space. And then they had me go on tour. I was the assistant to the tour manager who was also doing merchandise. So I was helping set up the Merch booth, and she was teaching me how to sell stuff and keep tracking everything and all that stuff.
Eamon:
And then, with two shows left, she had left the tour ... the tour was ending right before Thanksgiving. And she left early, and they were like, "Okay, you're the tour manager now." And then I was like, "What?"
Stephanie:
Push you right into it.
Eamon:
Yeah, and they were like, "It's not that hard, it's not rocket science." And they just forced me into it
Eamon:
I had never gone to college, and so I eventually went back to school. And then so when I finally graduated from school, I initially was thinking, the music industry was fine, maybe I should try my hand at something else. And so I started taking interviews with a couple of ad agencies, advertising was interesting to me. I had taken a couple of the classes while I was in school.
Eamon:
Nothing really panned out. But at the same time, there was all these music opportunities that kept presenting themselves to me. I looked at that as like, "Okay, I think the universe is trying to tell me something here." And so we had put a release out with EMPIRE in 2011. And Ghazi, the CEO and founder, and I just built rapport, he's a Bay Area guy, grew up, born and raised in the Bay. So we just always kept in touch. And when I got out I shot him an email and said, "Hey, I'm looking for something to supplement my income, I'm still managing, but do you have anything going on?" So we went back and forth for a little bit and then he eventually brought me on to help with the physical distribution side of things and merchandise, which has been a long tale in building [crosstalk 00:07:09].
Stephanie:
Tell me a little bit about what EMPIRE is at a high level and what your role looks like there.
Eamon:
Yeah. So, EMPIRE is really like an all encompassing company. So it originally started as a digital distribution company. Ghazi the founder just completely bootstrapped, was never taken a dime of investments, refuses to sell anything, retain 100%, that kind of autonomy. And eventually the company grew into adding label services with a lot of the distribution that we did. And one of the things that set EMPIRE apart originally was for the distribution deals. He was doing non-exclusive distribution deals. And that was unheard of at the time. People would often catch when he was giving out non-exclusive distribution deals and be like pretty crazy, what are you doing?
Stephanie:
Yeah. Jump at that.
Eamon:
Yeah. His thought process was, I'm not in the business of holding people hostage. If anything, hold us accountable, because then we have to earn the business, and it keeps us honest. And so that's been one of the guiding principles of the company to this day. And so, eventually, we started adding more services and more departments. And it's grown into a full fledged record label at this point. And then we also have a publishing arm. So right now we have a distribution, record label, publishing and merchandise.
Stephanie:
That's awesome. Any artists that I would know?
Eamon:
Yeah, we work with Snoop Dogg. We just released Adam Lambert album earlier this year. We were instrumental in XXXTentacion career, unfortunately who's passed, Anderson Paak, we were a part of early. We've helped grow a lot of early artists and we're still doing that and also working with a lot of legendary artists as well.
Stephanie:
Very cool. Yeah, I do know a lot of those names. So that's very impressive. So tell me a little bit about your role at the company as the VP of product and eCommerce when it comes to thinking of record labels. I don't always think eCommerce and of course, when I started looking at you and I was like, oh, yeah, obviously they are. But tell me what your day to day looks like there?
Eamon:
Sure, I manage our physical distribution and our merchandise team. So on the physical side that looks like setting up and gathering assets for a physical release and setting it up with our physical distribution partners, and getting stuff the product made, so CD, vinyl, cassette, and then making sure that it is getting into all the right stores. We'll also do a lot of exclusive things with Urban Outfitters and Vinyl Me, Please and other retailers, Turntable Lab, et cetera.
Eamon:
And then on the merchant side that looks like managing ... we have a team of people that's, our account management and web admin and marketing and production. So we're talking with the artists that are signed to our label that we have merchandise rights with and building out merchandise items and coming up with creative ideas. Sometimes it comes all from us, sometimes it's collaborative effort, sometimes the artist has things ready to go. And then we're just helping manufacture a market. But that's ... it ranges from building out the creative, building out web stores, building out marketing assets, as well as back end automation marketing as well. And then ultimately reporting and paying out the artists.
Stephanie:
All right, cool. So when it comes to thinking about being a label, because I would think some artists might be like, "Oh I'll start up my own eCommerce platform and sell my own merchandise." What makes them want to work with you guys and have you do that for them?
Eamon:
Sure. A lot of ... we're living in a very independent-minded world in music, especially right now. And that's very different than what it used to be. So, we also have that spirit, but a big part of it is the production and the fulfillment process. A lot of people can build the website and put up a product image just that they made in Photoshop, but when it comes to fulfilling stuff and getting stuff out to customers on time, and then getting things made and knowing how to prep your files and all fun stuff. Those are the areas where they definitely lean on us.
Stephanie:
Got it. How does the creativity process when it comes to creating merchandise, and making sure that you're creating good merchandise, because I'm sure artists have a lot of ideas around like, here's the thousand things you can do. But I'm guessing that you guys have a lot of insights into like, we've been doing this for a lot of other artists, and we know what sells and doesn't sell. How do you guide them in that creative process?
Eamon:
Delicately.
Stephanie:
You have to be creative. You've got to be careful.
Eamon:
Yeah. It's definitely ... a lot of artists I feel ... I'll say this, that I think a lot of artists are very savvy. And they are watching what's going on, seeing what their peers are doing, and also other artists that they look up to. And they have a lot of great ideas and then some of those ideas maybe a little ahead of where they are in their career. For instance a lot of artists might want to do a cut and sew piece, which means cut and sew, and so it's like you know you're actually fabricating a garment from scratch. You're not buying a blank garment and then just silkscreen something on it.
Eamon:
Which is possible, but there's high minimums for it to make sense financially. So, sometimes an artist will come to us and say, "Hey, I want to do X, Y, and Z." And then we'll come back and say, "Okay, we can do it, but we have to make like 300 of them."
Eamon:
And they're like, "We can just make 50?" And I wish we could. There are places that can do it, but the unit cost is going to be really high. So unless you feel like you have a diehard fan base that will pay a premium price on something, it's hard to do. So a lot of times explaining the mechanics of things, helps artists understand it. One of the principles that the company deals transparency and education. We want to educate the artists, we don't want to hoard the knowledge. We want to let them know, "Hey, this is a really cool idea, but it's going to cost this much and we would have to sell it for even more for it to make sense financially."
Eamon:
And then, a lot of times when you have that conversation they'll say, "Oh, okay, I get it now, let's try to figure something else out." So yeah, that's like ... I think education is probably the biggest tool.
Stephanie:
Yeah, that makes sense. And how do you guys go about selling With the actual merchandise, is that all under EMPIRE's website or are you putting in other outlets as well?
Eamon:
So yeah, we have a couple of different ways but we have a general EMPIRE store and so anything that we feel might just be a one off project or might be something that is not going to require a full own store themselves, we'll build out on the EMPIRE store and then things that are larger, it's going to be a longer relationship, we'll build out their own store for them. Those are our two primary sales channels. And then we also have a partnership with another company called Merchbar where they aggregate the products from our back end to artists, Spotify and YouTube channels.
Eamon:
So when a consumer goes to listen to Spotify and they're on the page and they're scrolling through their profile, they'll see a couple of Merch offerings on the profile. And then similarly on YouTube, if you may have seen it, if you're watching a video, just below the video, there's a merchandise shelf and so there'll be products there. So those are our bigger things. And then we have doubled a little bit in the live event stuff, but obviously right now that's not taking place.
Stephanie:
So when it comes to the EMPIRE brand, as a fan, maybe I'm not always aware of the label that's behind the artist, so how do you guys think about getting the fans attention from a label perspective, if at all?
Eamon:
That's a good question. Early in the company's history, we were all about not forcing that, and playing the background as we've grown, and we've become more of a label and less of a distributor. We've definitely made that play a little bit more. So it's like little things from ... we're making a CD or a vinyl including our logo on it, and billboards or advertising, we'll have our logo on it, and sending our artists, EMPIRE sweatsuits so that they wear them and they'll take pictures on them. There's pictures of Diddy in our sweat suits.
Stephanie:
That's great.
Eamon:
Cool. Yeah.
Stephanie:
I need a sweatsuit.
Eamon:
Yeah, send me your address. I'll get you on. And then we also do a lot of events around larger industry events or around the Grammys, around BET weekend. We throw parties that are widely attended and hard to get into. But that definitely helps spread the name. I would say that, a lot of ... probably right now more of the industry knows about us than the actual consumer. But I think that that's shifting the more we grow and have higher caliber artists. A lot of consumers that are knowledgeable or super fans, excuse me are going to Spotify and looking at the label line and realizing like, "Oh, this is another EMPIRE artist." So, I'll talk to a lot of people who will say, "I didn't know you guys had this artist and that artist and this artist. I saw on Spotify that you guys were the label name."
Eamon:
So I think that also helps too. I know as a kid, as an avid music listener, I would read all the liner notes, which unfortunately don't exist as much anymore in the digital space. But they're working on correcting that a lot of the DSPs and Spotify and Apples of the world are starting to include a lot of that metadata now. But I think having that information available and then the fans that are in the know will find it.
Stephanie:
What is your most successful marketing channels or advertising channels for your artists? Because I heard a little bit about EMPIRE you guys do events and billboards and things like that but is it a completely different strategy for marketing your artists?
Eamon:
General marketing it's a whole suite of things from ... that all connect and play with each other. So it's like putting out content. Isn't like the first part, whether that's audio or a music video. And then making sure that that audio and music video get seen through ads, serving as the fans, letting them know that the album is out, letting Know that new video is out and then direct email marketing. Retargeting, on the merchandise side we use a lot of retargeting apps and services. Especially one that works really well for us is SMS retargeting, and then outdoor advertising billboards. We paste guerilla marketing and then we also have our radio team.
Eamon:
We have our own radio team and so they're working records at radio. Radio is still a very large discovery platform for people. So that definitely helps bring artists into the general knowledge and then in the digital space, doing things on with a bunch of the meme pages and running that kind of content on there.
Stephanie:
That's cool. So I want to dive into three of these. Maybe first I want to start with meme advertising. I haven't heard of anyone doing that yet on the show, and I want to hear about how you guys think about doing that and how are you converting people over to either the merchandise or the music or whatnot?
Eamon:
Yeah. It's really just more of an awareness, like top of the funnel. So it's making sure the content is out there on all these pages that a lot of people are following. So it's like that. And then TikTok has been also a big part of that. So if something catches on TikTok, that's a huge driver for streaming because then people will go and find the song. Who knows what will eventually end up happening with TikTok. But that's been something that's really been cool as well and seeing if something goes viral on TikTok. That's always not something ... we can't control if something goes viral, we can help with the kindling of it, you know what I mean? But ultimately, if it catches it catches, if it doesn't, it doesn't. But the TikTok thing if something goes viral, we've seen huge spikes in the streaming numbers.
Stephanie:
Do you see any similarities between your videos that are going viral versus the ones that are duds?
Eamon:
That's a good question. A lot of them are ... on TikTok it's something that a lot of ... if it's anything that people can recreate and take a part of, or take part in sorry in the trend, then that's something that we'll catch. So if it's either doing some dance or doing some little skit or something like that, then those really take off, usually. Those are the ones that we've seen go. And then ... but sometimes it doesn't happen either. And sometimes it happens on songs that we weren't even thinking about. And all of a sudden we'll see that some song is going viral that we didn't even know about.
Stephanie:
Yeah. I think that's a good reminder of why testing and doing more rather than less is so important, because we see that with some of our ads that we surface too. Some of the most random ads that we use would be the best performing ones, but the ones that we really thought hard about they don't even work a lot.
Stephanie:
So the other two areas that I'm interested in, you said SMS is working well for you. What kind of messages are you sending to fans in a way that's not annoying and actually helpful? Not intrusive.
Eamon:
Yeah, it's basically, we're not being intrusive. Well, hopefully we're not, but a part of it on the commerce side it's basically like an abandoned cart email. So it only works also if the customer inputs their number. So if they get all the way to the point where they're filling out the payment information and put their phone number in and maybe their dog ran off the leash or whatever happened, or they don't complete the purchase. There will be a text that gets sent to them automatically and remind them like, "Hey, you left this in your cart." And there'll be a direct link to their cart. And we've seen astronomical return on investment on that, where we'll spend very little money and get thousands of dollars back.
Stephanie:
That's great. I haven't ... because I do get those texts sometimes. But I don't always have the link that just brings me right to my cart. That seems like a very great way to make sure it's easy, because oftentimes, it'll maybe link back to what I was looking at. But then maybe I'm on a different ... I was on desktop before or maybe now I'm on mobile, and it's a very different experience and actually hard to even purchase or [crosstalk] again.
Eamon:
Navigating back to where ... yeah.
Stephanie:
Yeah, that's awesome.
Eamon:
And then also just like digital marketing, we have a digital street team per se. So we have a general EMPIRE phone number that people can text and they'll get added to the list and then we'll blast out things that we feel are relevant or big announcements. And then we have artists setup as well with that. So a lot of artists have a phone number, and they can actually send text themselves and actually respond to people themselves, if they want to, it depends on the level of engagement they want to be committed to. But it's a good way to ... and you can also geo target that.
Eamon:
So if we were in a world where touring was going on, you can still, "Okay, I'm going to be in, where Seattle next week so let me send a text message to everyone with the Seattle area code." And say, "Hey, my show is next week, the show box, here's the ticket link." So, like helps in that way and then any new releases, album, merchandise, videos, can also be communicated through those channels.
Stephanie:
That seems really smart from a lot of companies and brands going more at the local level right now. And engaging with your local community, but how are you encouraging people to actually text you and so that you can even have them on the list to begin with? Because that seems like the initial hiccups to even get people to want to text you in the first place.
Eamon:
The acquisition.
Stephanie:
Yeah.
Eamon:
A lot of it is hinged on the artist and then posting something that says, "Hey, give me a text, shoot me a text and I'll text you back or." There's always some call to action or [inaudible] that's like, I'll text you back or you'll get a sneak peek of new music or a certain percent off my merchandise store, something like that. So there's always some incentive to sign up for the fan.
Stephanie:
That's great. So with everything's happening with the pandemic, and events and concerts being canceled, what are you guys doing instead? Because it seems like eCommerce is probably something that you're leaning even more heavily into, so what have you changed or plan on changing going forward?
Eamon:
We've definitely seen an uptakd of inbound requests with people wanting to set up eCommerce with us. So just, one being able to provide that option to people where they might not have the infrastructure on their own to do it has been helpful. And then we're also looking at different ways to partner up with delivery services. So for one of the releases I'm working on doing something with DoorDash. And so it'll be a custom facing restaurants. And then there'll be a couple of Merch items that are available through that. And so if you order the food you can also order a piece of merchandise and it will come with your food order.
Stephanie:
Oh, interesting. Tell me a bit more about that partnership. How did that idea come about and how are you convincing restaurants to also show Merch which maybe could distract someone if they're like, "I'm just trying to order sushi." And then they're like, "Oh, now I'm going down a [inaudible] of [crosstalk] as well" What does that feel like?
Eamon:
Yeah. So the project I'm doing on is the whole theme of albums are restaurant themed. So it made sense. The idea initially ... we were talking about it right as the quarantine happened, and at that time, it was like, "Oh, maybe it'll be done in a month." And so we were thinking of doing an actual pop up restaurant, like a physical pop up and like a restaurant in LA. And then as time went by, and we realized this is not going to end in a month We started thinking of other ways we could effectively do the same thing but not do it in a physical space where we would be having people come and gather. So we have a partnership team and I believe we have a connection to DoorDash and a couple of other delivery services, Postmates and maybe Uber Eats.
Eamon:
And we just reached out to DoorDash and presented the idea and they were into it. So it's still in the final phases right now of being launched. But the DoorDash team is handling the restaurant end of things. So they're basically going to be partnering with restaurants and going to specific restaurants and asking if they can provide a specific menu or menu items. And then within the app, it'll be basically a virtual pop up. So it'll be in its own restaurant and people will be able to order from there. But it's really on the back end, like an actual restaurant.
Eamon:
And it was also a cool way for us to try to support some of that, because the restaurant sector just took such a hard hit with the pandemic. We were like, how can we do this and not and also help that sector of the economy?
Stephanie:
Yeah, I love the creativity behind that.
Eamon:
Yeah.
Stephanie:
Yeah that's really great. What are other creative campaigns or projects that you've done like that before that either they worked really and you're like, "Oh, that's surprising." There's just a funny or random idea that worked well, or maybe one that you set up and you're really betting on and then it just didn't do anything? Because a lot of the things you're mentioning now when it comes to your marketing and channels you're trying out, you're probably one of the more creative companies we've had on the show that's literally trying a bunch of different things and new things that I've never heard of. So I want to hear a little bit more about this.
Eamon:
Yeah, we're definitely not afraid to take a leap and try things. One of the cool things that we did last year, we put out Snoop Dogg's album, "I Wanna Thank Me" and this was one of those things where we did it. We thought it was awesome, and we didn't feel like it fully connected. But we basically ... our digital team had someone build an augmented reality filter on Snapchat of the album cover. And so If you scanned ... on the marking sticker for the album, we put the little Snapchat like QR code and said, "Scan this code in Snapchat to hear a special message from Snoop Dogg." So you open Snapchat, you scan it, and then you put the album cover in your viewfinder on the phone and then the album cover comes to life and it was Snoop Dogg. He had, I forget what award show was that he had given a speech saying ... when people accept the words [inaudible 00:39:33], I want to thank God, I want to thank my family, blah, blah.
Eamon:
And he got to, I want to thank me because without me, without my hard work ... it's like a very endearing speech. And that was fully animated and you could move it in different angles, and it was like 360. And that was really cool, but I don't feel like that really virally took off at least. But that was one of the things that was different and unique that we did. Right now we're actually doing a giveaway for one of our artists Young Dolph, he is giving away his Lamborghini and to enter you basically buy Merch product that's bundled with the album on pre order. So yeah, that's a-
Stephanie:
I want a Lambo.
Eamon:
Yeah. Store.youngdolph.com.
Stephanie:
Go do that.
Eamon:
Yeah. So that's something that we're doing right now that we've never done. That's we're testing out. The first couple of days were really big and now we're trying to figure out how to keep it going.
Stephanie:
Have you seen any hesitancy with consumers with ... you've got all the stuff that like, I'll give you Bitcoin if you do this, and you'll win a free car if you do this. And it seems like it's a good mix between spammers and scamming people and fraud and then actual real competitions going on or giveaways. How are you balancing that in a way that people trust like, "Oh, yeah this person is real, or they're actually going to give away their Lamborghini or whatnot."
Eamon:
Yeah, I think that probably there's probably still some skepticism on the fans end at some level at all times, but the artist has posted on his social media so that always helps. That's helped one drive traffic to the store to ... it shows that it's coming directly from the artist and not just this unknown entity. So that definitely helps. There's a bunch of legal language on the site that explains everything if you feel so inclined to read legalese, but it's all there [inaudible]
Stephanie:
I do not.
Eamon:
Yeah.
Stephanie:
Okay, got it. So I guess one last bigger question before we jump into a lightning round is what is your guidance on larger brands being creative, having creative partnerships, marketing campaigns, how would you tell another brand to come up with these creative ideas or to really get into a mode of experimentation?
Eamon:
I think there's a couple elements. One it's having ... I think a part of it comes top down. Our founder and CEO, Ghazi he's always been like, try it if it doesn't work, then move on, but try something. So he's always been encouraging of that. So I think if you have that culture in your DNA, as a company, then I think that helps. The other thing is, I think obviously hiring the right talent, and having the right minds and skill sets they can think of and structure and eventually execute these things. [inaudible] we have a lot of young creative minds on the team and then some people that are a little bit older, they can help execute things that maybe have a little bit more experience of seeing things through or just executing.
Eamon:
I think the end of the last one, I think would probably just be ... what do I want to use here? The right infrastructure. If the company is really big, there's probably a lot of bureaucracy and red tape. We are lucky because we are independently owned, we're a small company so we can be nimble. So we are able to move and react quickly. But I think having the courage, I guess to jump out and try something is probably one of the bigger things.
Stephanie:
Yeah, I completely agree. And execution, like you mentioned is so key. Earlier, you were like, "Oh, we just reached out to DoorDash and just ask them if they want to partner." I think a lot of people might have an idea like that and then not just think, let me just email them and see if they'll want to partner on this which is Just [inaudible 00:45:21].
Eamon:
Yeah, We are experts at not taking no for an answer. We are just like, keep trying and try to find different ways to get it done.
Stephanie:
Yeah, I will get to DoorDash. Just [inaudible] keep sending emails. That's good. Cool. I was thinking now we can move into the lightning round, if you're ready. It's a quick lightning round where I ask you a question and you have a minute or less to answer.
Eamon:
Sure.
Stephanie:
All right. What new up and coming artists are you all most excited about right now?
Eamon:
We're growing a lot in the African space. We recently opened an outlet in Nigeria. So there's a lot of good music coming out of there. Patoranking is one, Fireboy DML is another and then I also work with an artist to plug a little bit but with EMPIRE but Tobi Lou is another artist that I'm working with, that I'm really excited about.
Stephanie:
Cool. I'll have to check out all those artists. What app or piece of tech are you most enjoying right now?
Eamon:
I would say the standby Instagram, I guess. I probably spend the most time on that app just scrolling through and seeing what's going on.
Stephanie:
Yeah, I agree. I love Instagram. And then the last one if you were to create a Netflix or Hulu original or documentary, what would it be about?
Eamon:
Maybe about us, maybe about EMPIRE. I think that'll be interesting.
Stephanie:
There you go. If you don't celebrate yourself, no one else will you. I like that. Cool. Well, Eamon this has been such a fun interview. Where can people find out more about EMPIRE and you?
Eamon:
You can find out more about EMPIRE at our websites empi.re. No dot com, no dot net, just empi.re/empire. I think all social channels. So Instagram, Twitter, et cetera. And then for myself, Instagram/eamon E-A-M-O-N.
Stephanie:
Awesome. And thanks so much for coming on the show. It's been a blast.
Eamon:
Thank you for having me.
When you’re entering a new company or a new market, there are lessons to be learned from the past and opportunities to grab hold of to propel yourself and your company forward. Paul Lanham entered a new company and industry all at once when he became the Chief Information and E-Commerce Officer at Charlotte's Web, a CBD company.
On this episode of Up Next in Commerce, Paul details how he used his experience at companies such as Crocs, HCL and Brookstone to help guide him as he helped grow the Ecommerce business at Charlotte’s Web to the point where it now represents 65% of the business. Paul explains the methods he has used to generate qualified traffic, conversions and a high retention rate, and he discusses the technology he thinks is going to make a huge impact on Ecommerce in the future.
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
---Transcript:
Stephanie:
Welcome back to Up Next In Commerce. This is Stephanie Postles, co-founder of Mission.org and your host. Today we have Paul Lanham on the show, the Chief Information and Ecommerce Officer at Charlotte's Web. Paul, welcome.
Paul:
Hi, nice to be here.
Stephanie:
I'm glad to have you. Yeah, I'm really excited. I've used Charlotte's Web products before. So, when I saw that you were in our queue for interviews, I was like, "Oh, this is going to be a good interview."
Paul:
That's good to hear you have some perspective then.
Stephanie:
To start, I was looking through your background and was really impressed by some of the companies that you've worked at. I'd love for you to first before talking about Charlotte's Web, kind of go through a little bit about your history and then what brought you to Charlotte's Web.
Paul:
Sure. As you just noted, I have a pretty diverse background mostly in the retial and CBG and technology industries. What's really colored my career is that I've been given a lot of opportunities, some of which I hadn't had a lot of experience in including Ecommerce when I started in its infancy in the mid '90s when you had to build everything. You couldn't really go to the corner shop and buy an Ecommerce server.
Paul:
But I basically have touched on virtually every aspect of Ecommerce over the past 20 somewhat years. I've been a C level executive for about 25 years and worked for a diverse group of companies, a variety of sizes. Some startups.
Paul:
I started my own tech company and now it's Charlotte's Web, which I have to say is very much different in terms of its make up versus the companies I've worked for in the past.
Stephanie:
Yes. And just for people to know the difference, it would be great if you could name drop a bit. I know people hate name dropping, but I'd love to hear what were some of the companies, the largest ones you've worked at? I think you can compare it to Charlotte's Web.
Paul:
Sure. I worked for what was a startup, Crocs. I think people will recognize the infamous shoe company that is just located down the street from where I work.
Paul:
I've worked for Jones Apparel Group, which is a mega apparel conglomerate that own companies like Barneys New York, Jones New York, Apollo Jeans, et cetera, in the apparel industry.
Paul:
I started a tech company that eventually became a subsidiary of HCL Technologies, which is a global tech firm based in India.
Paul:
And Brookstone, which is the gadget shop, competing with Sharper Image. Again, near its infancy as well. So, a diverse group of experiences.
Stephanie:
Yeah, that's amazing. With some of these companies you've worked at previously, are there a lot of lessons that you were able to bring to Charlotte's Web or is it just such a different beast that you kind of had to just start over and had a completely new hat on?
Paul:
Well, basically if you've been a C level executive for a number of years you have some successes and you have some failures and hopefully you learn from the failures, and I've had them too.
Paul:
Implemented virtually every kind of system you can imagine. Been on the business side from an Ecommerce perspective and learned a lot of different things that I've been able to bring to Charlotte's Web.
Paul:
Back to the diversity of my career, one thing I can note, I probably have been in just about every function that you can imagine from finance, to marketing, to sales, to Ecommerce, et cetera, et cetera.
Paul:
So, I think that brings somewhat of a unique perspective to a company like Charlotte's Web, where I frankly I have a lot of empathy for my peers in other departments because I've done a lot of their jobs.
Stephanie:
Yeah, that is so important. I've worked at previous companies where someone doesn't understand I worked in finance back in the day and people do not understand the complexity or why there are certain procedures set up and you can definitely see tension between certain groups if they've never worked in that team before. So, that's key I think.
Paul:
Absolutely, and financial people can be fun. Most people don't know that.
Stephanie:
They can be. Just like me, I'm fun. You're fun Paul. I'd love to hear or I'd love for you to explain what is Charlotte's Web and maybe even starting with the story behind it, behind the name.
Paul:
Sure. Charlotte's Web is CBD company that was founded by the seven Stanley Brothers and that's a wonderful story in it of itself in that they grew up in the Cannabis industry.
Paul:
But the company's namesake, Charlotte Figi, who many people may remember from the Sanjay Gupta CNN Specials from years back and most recently illustrating how there was this trajectory of various peoples and things to help a little child basically survive.
Paul:
So, our namesake Charlotte really is like our guiding star or north star in the context of our mission, which is to help people through natural products that Charlotte's Web produces.
Paul:
So, it's a young industry, it's a young company where we are a market leader. Obviously we are commercial, but we're always grounded by our original mission and we still do help quite a few people to where our product is very essential like the Charlottes olive oil.
Stephanie:
Yeah. I was looking at the I am Charlotte video on your website and it definitely gave me goosebumps. When did you guys create that campaign?
Paul:
Well, it's basically been the past year. The point is with her passing it really shook us all to our core because frankly it was probably one of the core reasons that most of us joined the company. I was fortunate to be able to meet Charlotte and her mother Paige a couple of times.
Paul:
But many people in my company, and obviously the Stanley Brothers basically grew up in this company attached to Charlotte's story. The I am Charlotte campaign is currently just obviously a testimony and our take on how beloved she is and still is.
Stephanie:
Yeah, I love that. The CBD industry as you mentioned, it is kind of a new-ish industry. When you're in California it seems like it's been around forever, but when you go to other states or back to my hometown, people still kind of have they either don't know what it is or yeah, are just very unclear about what it is. You have different preconceived notions, you can say.
Stephanie:
So, how do you all think about kind of educating the public or new buyers who come to your site for the first time?
Paul:
Certainly. Two points, actually about 15% of households have had some experience with CBD in the United States. And still because it's such an emerging industry, word of mouth is still very important. Typically, people first get exposed to CBD by a relative or a friend or somebody mentioning it that it helped them.
Paul:
When they go to search for it, we basically are actually a leader at Charlotte's Web because we rank very high on the first page, in the first third with what is CBD. To that point, we spend a good deal of time on our site through blog entries and various educational videos that we put out to educate our customer on the difference, for example, between hemp and cannabis or what is the efficacy of CBD and various in-depth, I guess, videos to illustrate the depth of what they could know about CBD.
Paul:
So, it very much is still an educational process as you've mentioned to evangelize the use of CBD.
Stephanie:
Yeah. Yeah, I completely agree. How did you all become a market leader? I know you were not first, but you definitely were some of the early leaders or even starting up in this industry. But how did you go about making sure people had your name as the household name when it came to CBD?
Paul:
Sure. They were among the first and the brand story between the Stanley Brothers and Charlotte really resonated. It was made for this industry and the mission that the Stanley Brothers inoculated into the company and we still have in terms of evangelizing the product and natural products to the world to help people, I think resonate with people.
Paul:
When you talk about, for example, our end-to-end integration from seed to shelf, our quality, et cetera, all those things kind of are confluence in terms of being perceived as a quality brand and a premium brand to a consumer.
Paul:
There are a lot of smart business decisions along the way, frankly, in terms of becoming that market leader.
Stephanie:
What kind of smart business decisions? Now you've piqued my interest.
Paul:
Okay. For example, going really strong in Ecommerce initially in that the nature of the industry is that there's been a slower adoption in the major retailers because hemp frankly, from a federal perspective, wasn't quite legal until a couple of years ago based on the format.
Paul:
There are some reticence in terms of conservative retailers to carry the product. So, they were very smart in not necessarily going the mom-and-pop route even though we have a big natural store population on the retail side.
Paul:
But going very strong with Ecommerce and hiring the right people right off the bat a couple few years ago to basically push the commercial side of this. Ecommerce right now represents about 65% of our business as was in the first quarter. That's somewhat of a higher percentage than many of our competitors.
Stephanie:
What do you think is attributed to that higher percentage?
Paul:
Being first out of the gate. Being very professional about it. But the primary drivers, they're a couple, back to the brand story that really resonated, was beautifully presented on the site and for media.
Paul:
Secondarily, the quality that we bring to the table that we try to communicate to other consumers. From that seed to shelf continuum, we test the product 20 times, we track each individual bottle or tincture or the like back to a specific lot and seeds. We could document virtually anything anyone needs to know about that particular product.
Paul:
So, particularly in this industry where you have an influx of competitors, some of which frankly are not quite as sophisticated in the context of testing and the branding. You can really stand out by basically taking care of those issues.
Stephanie:
Yeah. Yeah, I completely agree. That is how I found you guys in the early days was because quality to me is the biggest factor when it comes to CBD.
Paul:
Absolutely.
Stephanie:
And it's also something that a lot of people worried about early on because you do hear horror stories and it felt good going to a company knowing yeah, they've already got everything figured out. They've got the dosing down to its seed. They've got it's non-GMO and yeah, I think that's so important with an industry like this.
Paul:
Absolutely.
Stephanie:
The one thing I was thinking about was consumer journeys. Everyone is coming to your website maybe at a different place like we were mentioning before. Some people are brand new or they've maybe never even heard of it, where education is key.
Stephanie:
Some people have heard about it. You've got the people who maybe are hiding their browsers when they're looking for it or the people like me it's like, "Yeah, this is an obvious thing that can help you."
Paul:
Sure, sure.
Stephanie:
How do you personalize either your Ecommerce experience or your marketing efforts to kind of go after all those people and meet them where they are?
Paul:
Well that's a good question because when I mentioned sophisticated we invested in tools that enable us to personalize that journey. So, for example, back to my comment on what is CBD.
Paul:
If somebody enters that as a search term and they have to click on our link, we will take them initially to the education materials and will kind of guide them through the process from the Ecommerce perspective of walking them through that journey and hopefully they purchase.
Paul:
We do that in the context of segmenting our email channel. We have a variety of channels and we handle each one differently. Our affiliate channel, for example, is very strong in terms of the partners we deal with like a Healthline.com, which yet again is another educational component in that we're very strong with them.
Paul:
So, depending on the channel, depending on the entry point of our consumer, we will treat them differently in the context of where we land them on the website, what we offer to them in the context of their journey through the website, and what promotional activity we engage with them.
Stephanie:
Got it. Yeah that make sense. When it comes to affiliate programs, how did you all think about setting that up and is that still a big part of your strategy or did you kind of pull back on that once you started becoming more of a household name?
Paul:
It's still and will be a very big part of our strategy in that penetration of CBD from a search to perspective is still relatively low compared to what I've experienced in the past so that we're still in an emerging phase where we need to use and leverage every channel we can.
Paul:
So, as strong as our Ecommerce business is, which happens to be frankly Ecommerce alone at Charlotte's Web is a market leader in revenue compared to every other CBD company, just alone. It kind of tells you the scale of our business.
Paul:
But what I'm getting at, the Healthline.com affiliate is very important to us in that it is the number one rated medical advice site, I believe, if I look at the statistics recently.
Paul:
Every entry point is different for every consumer and we need to leverage all those different entry points. We can't, for example, rely solely on organic search as an example, not that we would. But we basically go through every venue.
Stephanie:
Got it. What does it look like setting up a partnership like that? Because, I think that is really important kind of finding someone who has a good reputation that a lot of people trust. But what did that look like setting that partnership up and making it so both sides feel like it's a win-win?
Paul:
Well to your point, it's important to vet the partner because obviously you don't want to be presented on a site that doesn't quite meet your value set or your brand image. So, we're fairly choosy in terms of the affiliate partners that we work with.
Paul:
Obviously, in some cases it's a longer negotiation in that obviously we want to do it on advantageous terms in terms of the share basically. So, we don't cast a wide swath in the context of the affiliate partners we deal with. We're very selective.
Stephanie:
Got it. So, the one thing that I was wondering earlier when you were mentioning failures and you of course have a huge backlog of experience at other companies, what did your first 90 days look like coming in to Charlotte's Web and what big things did you change from the start based on maybe past failures or successes that you've had at prior companies?
Paul:
Well, like entries in the most companies it's a rush. My story, this is pre-COVID times obviously, I talked on the phone with a board member and my boss, the CEO, on a Friday. I flew over the weekend, got there on Monday. I took the job sight unseen after a phone call.
Stephanie:
Wow.
Paul:
I was so enamored of it. I've never done that before. And Danny has never hired anybody like that before, it just went so well. I showed up on Monday and I didn't leave for 90 days, much to the consonation of my significant other in Boston. So, we worked it out.
Paul:
But it was just a rush of understanding the industry in-depth, doing triage in the context it was still a start mentality, triage in the context of building a business intelligence stack, revamping the Ecommerce organization, planning the next iterations and improvements, setting up for the holiday season for example.
Paul:
When I joined, literally the week after I joined we kicked off a new platform upgrade that we only had a couple of months to do prior to holidays. So, it was a lot of long days.
Stephanie:
Was that something that you feel like you could step into because I'm sure you've done many re-platforming experiences before?
Paul:
Yeah. There is some muscle memory and back to my point, you always want to learn from your failures and not do them again or at least understand the context and admit them. Basically one of those issues is that one has to listen very carefully.
Paul:
I parachuted into a company that was going 1,000 miles an hour and one of the lessons I've learned in the past is honor the past because there was a great deal of work and a lot of great work done that I took the attitude of evolving and adding to as opposed to turning the part which many C level executives take that as their mandate.
Paul:
I've never really done that. It's one of the failures I've learned from in my past that basically sometimes evolution is better than tearing things apart.
Stephanie:
Yeah. Yeah, I love that and I think the quote too.
Paul:
Yes.
Stephanie:
So, I'm sure another thing that you kind of the change of thinking on would be how you track the success of a business or the Ecommerce site. What kind of metrics, did you maybe look at prior companies where you were like this is our set of metrics that always made sense versus what do you look at now at Charlotte's Web?
Paul:
Well, there are quite a few. You know the Ecommerce business, there are probably 20 things that you look on a daily basis. That's my routine in the morning, I get up and I look at basically all the metrics.
Paul:
But what's important here, more so than perhaps, it's always in the top three conversion for example, on unbalanced traffic. It's significant here because you're engagement with a new customer and maybe fleeting because of the nature of the industry, the curiosity about CBD, people not knowing about it.
Paul:
I actually had to look at that statistic or those statistics several times because they didn't believe them, they were so high. That's a testament to the people and the staff that were here in that whether it's educating the consumer, or the customer experience on the site, or customer care on the backend, we have a high percentage of sales that convert.
Paul:
So, that probably is a much more important stat that I've paid attention to in the past. It's always been in the top three or four.
Paul:
Retention of consumers. Again, in this sort of industry because of the fleeting interaction with your customers, we have a very strong subscription program that is very important to us, which are typically customers who deem the product to be essential to their wellbeing.
Paul:
So, we've put a good deal of emphasis on that as well as retaining customers, and again, without divulging the statistics, it's much higher than I've experienced in my past 20 plus years of experience in Ecommerce.
Stephanie:
What do you think is making it so high? How are you all retaining customers so well or encouraging people to subscribe?
Paul:
Well, it's high because I guess in a way our traffic is more qualified, then again I've experience in the past. When they come through the site and they've been educated, there's a slightly high degree of propensity to buy. So, that's a factor.
Paul:
Plus some of our tools really facilitate the conversion in that. Not that we're pushy but we don't let go in the context of okay, this isn't right for you, maybe this or how about this promotion or have you rethought this through the customer journey in the site?
Stephanie:
Yeah.
Paul:
Basically, there's a pre-decisive to buy basically once they get to our site.
Stephanie:
Is there any initiatives that you've implemented when it comes to, like you said, it's nice you don't let go and you make sure to make to keep reminding them or showing them new products or new ideas.
Stephanie:
Is there anything that you've implemented recently around those kind of initiatives that have increased conversions or increased subscription rates or anything, or anything that you've done where you're like that was a big flop, don't try that?
Paul:
Well yeah. Again, getting much more sophisticated, I don't think anybody else has implemented the suite of what I call campaign tools and analytical tools. Typically, people use the standard GA or Google tools and we've gone past that and utilizing tools that I've used in much bigger companies without naming the company.
Paul:
So, we can have a high degree of personalization in terms of how we treat our customers as they kind of navigate through our site. A much higher capability in terms of test and react and basically inoculating those scenarios and situations into our campaigns eventually down to the individual level.
Paul:
So, we're still learning some of those. We've implemented those over the past three or four months. The company is still, my staff is still learning some of the aspects of those tools.
Paul:
On top of that from an analytic standpoint, which is a little unusual in the industry, we dived in with both feet from an artificial intelligence perspective because I joke with my staff and they read too rapidly that my experience doesn't always mean anything. I think I know everything about my customer and I'm confounded constantly in terms of why I was wrong on that.
Paul:
It comes down to the data and what artificial intelligence does for example, is that it makes those deep correlations that none of us would have thought of, I would have never thought of with my 20 plus years of experience of how our customers actually interact with our site or what are they thinking in the context of their purchase strength.
Paul:
So, when you put all those things together from a capability perspective, I love it in terms of being data driven, in terms of understanding our consumer at a deeper and deeper level and being able to provide the best experience and the best service that we can on an ongoing basis.
Stephanie:
Got it. That makes sense. When you're implementing AI, first can I ask what platform are you using for that and what kind of surprises have you found when you implemented AI? What were the consumers doing that you would never have guessed before?
Paul:
Well it's a third party app. It's a bunch of data scientists who basically provide the service for us. They're conduit for the massive amount of data that we have. To your question of surprises or those correlations or what people have affinities for in terms of say, an add-on purchase that we would never think of, what prompts them to basically make that leap to make the purchase in the context of their journey through the site. Some of which are counterintuitive to some of our experience particularly for certain segment of our consumer base.
Paul:
It's just some of those interesting nuggets of information. The hard part of it is, there's so many correlations that we have to rank them and we basically test each correlation over a period of time to vet out the action.
Paul:
Our challenge at this point is basically getting into a much more test and react cycle on these correlations.
Stephanie:
That's really interesting.
Paul:
Yes.
Stephanie:
So, if you were to implement AI all over again or you had someone who does not have that on their site right now, what would you do maybe differently or if you were like we could go back and maybe I would change the way we did this or think about it differently when implementing it, what are some advice around that?
Paul:
Well what slowed us down was the notion of producing what I call hypothesis based on our prior knowledge. That tends to put you into silos of information and doesn't quite give you the breadth of correlations that AI can do for you.
Paul:
So again, it was all of my advice that hey, I think I really know this aspect of consumer behavior. I'm really interested in terms of their conversion activity when they do X, when they do Y.
Paul:
I wouldn't be so structured in those hypothesis going into it and probably a little more open minded in the context of looking at the correlations in a much different broader way.
Stephanie:
I love that. That's such a good reminder about the kind of biases you bring when looking at data or your consumers and why all that should be scraped from the beginning and just let the technology work for you?
Paul:
Absolutely, absolutely.
Stephanie:
In your industry I'm sure you probably get a lot of questions around this. But I'm thinking about all the regulations you have to deal with especially on a state level and when it comes to having Ecommerce be such a large part of your business, what does that look like behind the scenes when it comes to shipping or selling in certain states?
Paul:
Well, it's mostly an impediment from a retailer, particularly a major retailer perspective because to your point, there's a hodgepodge of regulation in the state. Even though hemp was 0.3%, THC less than 3% as federally allowed, depending on the nuisances of what is in California or Florida, et cetera, retailers may be averse to getting into ingestibles as opposed to topicals.
Paul:
So, back to our point, one of the reasons why we're industry leaders we've invested heavily in internal, external lobbyists that can guide different parties and factions, whether it be congress at the federal level or legislations at the state level or associations to evangelize the notion of CBD.
Paul:
One thing that people miss the point on, we welcome more defined regulation from the FDA because we feel that we're heads and shoulders above most of our competitors in the context of how we test, how safe our product is, how we document it and the like.
Paul:
So, it's an ongoing journey that hopefully more clarity will emerge at both the state and federal level whether it's with the FDA or with various state legislatures to make the retail sales of CBD more palatable. We do ship to all states in the Ecommerce perspective.
Stephanie:
Okay. Yeah, I like that idea around encouraging the FDA to look into it and implement regulations because you're like my product is so good, we should have the other products regulated and be held to a high standard as well because that is what can maybe hurt the industry as a whole, is having people making subpar products that aren't as high quality as Charlotte's Web.
Paul:
Yes. It's kind of adding to that, major business publications have basically stated and make the articles that CBD is here to stay. It's a multi-billion dollar business growing at a rapid rate and it's frankly grown so fast and it's a new industry that regulations haven't quite caught up with it.
Stephanie:
Yeah. I was reading a bit about demand surges especially during the pandemic right now. I think maybe it was your CEO who was mentioning like, oh we had a surge in demand for two weeks and then people kind of pulled back for a little bit.
Stephanie:
I was wondering how you guys are keeping up your inventory levels, how you manage that and then if you're changing anything going forward after seeing these surges of hopefully consumers that are going to stick around going forward?
Paul:
We've been really gratified and continuing to serve our customer because the majority of the customers consider our product to be essential for their wellbeing whether it's the type of tincture they use or the ointment or the like. So, it's been relatively stable for us.
Stephanie:
Okay.
Paul:
Now from an notary perspective, as a growing company our processes have become more sophisticated and over the past year we've implemented an NSLOP process or production planning process that I'm more familiar with in my CBG background to really dial into marrying strategic plans to budgets, to demand forecast and skew level and doing a relatively sophisticated job of planning product demand.
Paul:
Now the flip side of that, this industry is volatile in the context of demand in general because retailers, some are still adverse to taking the product, so it's hard to predict demand in that context.
Paul:
So, we place a little more emphasis on safety stock and agility in the context of the co-manufacturers we deal with and the like.
Stephanie:
Got it. What are some of the best practices you set up when it comes to setting up that forecasting process because I know you've had a lot, like you mentioned, a lot experience with that. What did you bring to Charlotte's Web that maybe they weren't doing before?
Paul:
Well, they had started it but I amplified from an Ecommerce perspective, a rigorous skew demand process that is three dimensional and that it adds up from top to bottom and extremely rigorous analytical process of continually revising those forecasts taking into account promotional cadence, taking into account day-to-day iterations of different campaigns.
Paul:
So, it's a fairly in-depth forecasting process in Ecommerce so that our accuracy is much higher. It's in the 90 percentile by skew in terms of our monthly demand, for example.
Paul:
One of the things I've learned in my past is that sometimes you have to take a leap of faith on a particular product because you don't know how high you can go. On the other hand, that's what safety stock is for.
Stephanie:
Got it. What does that look like when it comes to thinking of new products? How do you influence your decision behind that, like you were mentioning, behind the sales channels and the marketing channels that help you influence your ideas or thoughts behind it. What does that look like when it comes to new products?
Paul:
We do have outside data and with a caveat that it's such a rapidly growing industry that tends to change overtime. But I feel is obviously one of the standard firms we use in the context of a longer term view, in terms of product categories and growth and certain segments and the like and we use that as a baseline.
Paul:
Obviously we use our trend and my counterpart on the retail side and myself where basically experience marketers and sales people and that we have our own opinions in terms of how we correlate our thoughts on category growth versus what we're seeing in external data, for example, like Brightview.
Paul:
So, we listen very closely to our consumer in terms of what categories we're pushing.
Stephanie:
I was just going to say I'm sure you guys get a lot of customer feedback of what people want or what they're looking for.
Paul:
Yes we do.
Stephanie:
How do you grab all that and put it in a meaningful way because you probably know best. So, a lot of times consumers might ask for something and then not actually buy it or not really want it.
Paul:
This is true. They certainly vote with their dollars. But on the other hand, we have a pretty good customer care department that is in my peer bid where I've managed those sorts of departments in the past but this is in an interesting one, the group of individuals that the empathy, because of the nature of the product and the stories they hear and the people they try to help, the empathy they exhibit in terms of comments from customer is just outstanding.
Paul:
So, it's not only commercial, but to the extent that it's practical based on the information they have, they are advisors to the customers that call in and we have a high volume of calls that come in not necessarily about order standard things, but really what should I do? What about this product?
Paul:
The other aspect is we have a fairly rich library of customer reviews and the technology we use enables us to slice and dice some of the categories of the customer reviews and try to get to a gist of what's working versus not, whether it's from a product efficacy perspective or perhaps a defect of some sort.
Paul:
The dropper may not work exactly the way we wanted to and the like. So, we have multiple sources of information of customer contact.
Stephanie:
I think that's so key to be able to call in and actually talk to someone. That's the perfect way to develop trust is by having someone that you can actually get on a phone with and be like, "Okay, I don't know what to do now. Tell me exactly what I should be doing." Or same with reviews, being able to see someone who sounds like me reviewing the product just seems like a great way to develop trust all around.
Paul:
Absolutely. From a hiring perspective, I have lunch, a virtual lunch nowadays with every associate in my group at some point. Today I just, prior to this meeting, I had lunch with three of our associates just to kind of get a feeling of that.
Paul:
When it comes to our customer care associates, I've never met such a group of people that are truly empathetic to where they hear a story and they're crying on the phone with the consumer. They're doing everything. They have a wide latitude of actions they can take to help our customers more so than I'd had in the past in much larger companies.
Paul:
But they really have the right mindset, I think, as opposed to working in a call center.
Stephanie:
Yeah. That's so key and so important.
Paul:
Absolutely. Absolutely.
Stephanie:
So to shift a little bit into more of a marketing mindset, I wanted to hear a bit about how you guys are investing in different digital channels. What's working and what's not?
Paul:
Sure. Just the overview is that you may have seen our Trust The Earth campaign, which I loved, we started last fall that kind of instills what our brand messaging is. Basically, a lot of our marketing efforts go to that because again we're an emerging industry, we're maintaining our market lead, we want to convey a certain image, just a random stat based on our efforts here today.
Paul:
We have over 400 billion impressions from the various things we've done versus, I think our closest competitor from the stats that I've seen were about two billion and it dropped rapidly. So, marketing our digital efforts from a broad perspective are very effective and that shows in the context of where we are in organic search or educating the consumer, long ways to go.
Paul:
From a digital perspective obviously we're active in every social media component and we're very assertive in terms of educating our consumer through that channel, conveying our brand message.
Paul:
The industry is in a place right now, there are some restrictions in terms of how aggressive that you can market CBD on social media like on Facebook, for example, or Twitter. But that's not a real problem for me right now because for me we want to activate understanding and education and our brand story at this stage of our growth in the social media channels.
Paul:
So, a lot of our digital, aside from our paid media, which we're very good at I believe, a lot of our digital is focused on building our brand.
Stephanie:
How are you thinking about expanding into other markets? I think I saw that you were looking at going into a few other countries. How are you guys exploring that right now?
Paul:
Well, we're basically putting our markers out there. We have a staff of people who are very experienced internationally. I have a good deal of international experience as well from an Ecommerce perspective in retial.
Paul:
But one of the constraints still is the regulatory environment in that we won't sell in any country that obviously it's not allowed. There aren't too many countries that actually allow it. So, we're basically putting the building blocks in place if in case that would be our strategy to understand what the international market would mean to us.
Paul:
But it's still evolving because it's basically not allowed from a regulatory standpoint in quite a few countries.
Stephanie:
Got it. So now that we're kind of predicting our future a little bit, I'm wondering what kind of Ecommerce trends are you excited about or preparing for right now?
Paul:
Well, in general, like I have for a number of years it's the technology keeping up with my visions of personalization. In the perfect world I'm interacting real time with the individual consumer in the context of whether we're educating them or guiding their journey and the like and the technology is starting to catch up with that capability even at a company of our scale.
Paul:
So, that's the trend that has been there for a little while but the promise has been there, but the reality is starting to catch up. The other one I mentioned is using deep technology to a point within certain boundaries to understand our customers behavior and needs and wants and applying, point number one, the personalization with that.
Stephanie:
Yeah. That makes sense. Is there any new tech that you're experimenting with right now that you guys are loving?
Paul:
Well, I've experimented with in the past in terms of client side speed of devices. Every Ecommerce and you know all the tropes about how conversion is impacted by site speed and page loading and all those different things.
Paul:
But what I've been enamored of in the past couple of years is utilizing technology to tailor the experience on whatever the device our consumer has. You know there's somebody out there who's still on dial-up, if that still exists.
Stephanie:
You caught me Paul.
Paul:
With a new browser, right. It doesn't matter how efficient your site is or your servers are like, you have to tailor the experience, strip down the page load, the content, rejigger the Java script on the fly depending on that individual's device because as far as they're concerned, they may have a iPhone 5 that hasn't been updated in five years but they still like that experience.
Stephanie:
Yeah. I completely agree. That's really important because I think a lot of people assume that users are always on a newest and the latest and greatest. The one thing, yeah, I had, let's see, we're doing a study on I think Google maps users in India and the majority of them were on such outdated versions that they were never seeing updated streets or an update at all in maybe a year or two.
Stephanie:
I think it's just a good reminder that a lot of people are on older versions of things, not just in other countries but here too. Like you said, some people still use dial-up. Sowe have a quick lightning round coming up. But before that, I wanted to ask you one last question because I love your excitement towards the company and your energy behind it and I wanted to hear what is the best day in the office look like for you?
Paul:
The best day in the office, let me think about that for a moment.
Stephanie:
Yeah.
Paul:
As I mentioned before I'm usually willing to go every day. It's when I'm in the thick of it, I'm a great delegator I believe, and I think the people who work with and for me would say so.
Paul:
But I'm most happy when I'm in the thick of it, not being Mr. Executive and my people interacting with, like a peer to some degree, in terms of coming up with ideas, debating certain concepts, making things happens.
Paul:
It's still small enough company where many people I'll be a jack of all trades and that's where I've shined in my past of, okay, rolling the sleeves up and figuring it out and having to learn things.
Paul:
Many of my jobs have reflected that. So, that's when I'm happiest, when I'm learning something new. I think I've been told I'm really, really curious to a fault. I ask too many questions sometimes.
Stephanie:
I think that's a good thing.
Paul:
Yeah, I guess so. But that's what jazzes me, being in the thick of things, making things happen. Now having said that, as a C level executive you have certain programs and responsibilities to create a conducive environment for your people to work in to make them feel trusted, to stretch them to the extent of their capabilities giving them a vision.
Paul:
On the other hand, I've always been a believer of an executive being able to walk the talk having done something. Being able to do it, without actually doing it. That lends a certain amount of credibility in your interaction with your staff. So, I think that's very important. Back to your point, that's what makes me happy is just being in the thick of it.
Stephanie:
Yeah. Yeah, I completely agree. I like that idea and I heard a ratio or it was a metric that an executive used called the say do ratio, and it was how much do you do what you're going to say you do, and that's how he gained the trust with a new company he was joining, was he actually tracked it.
Paul:
Well in a small company I think my first interaction with an associate at CW is riding up the elevator that Monday, they had heard of me, and they asked my name and they heard that I was a tech guy. I was really the Ecommerce business guy and tech guy and they asked me about an email problem they were having.
Stephanie:
A personal or a company one?
Paul:
A company one, yeah.
Stephanie:
Okay.
Paul:
"I can't quite get this to do this." It was a sales executive or a sales manager that we had. She asked me a question not knowing exactly what I did so I spent a half hour tracking it down and getting back to her.
Paul:
Later when she learned, you're in charge of Ecommerce and tech and all that stuff. To me, in a small company like ours, you have to be personal, you have to be willing to help anybody with anything and follow up on it and get it done as opposed to always delegating and there's a balance obviously in terms of the work balance.
Paul:
But you have to show that direct interest in everybody's issue in what they're doing.
Stephanie:
Yeah, I love that. That is such a good mindset to be in, like you said. Especially coming from a larger company where employees might be like, "Oh this guy is going to just delegate everything," like showing them you're willing to get your hands dirty and help them with their needs and stuff. It's also crucial.
Paul:
Yes.
Stephanie:
All right. Next we have the lightning round brought to you by our friends at Salesforce Commerce Cloud. This is where I'm going to ask you a question and you have a minute or less to answer.
Paul:
Okay, lightning round it is.
Stephanie:
Are you ready?
Paul:
I'm ready.
Stephanie:
Roll up your sleeves, get ready. All right.
Paul:
They're already rolled up.
Stephanie:
First, I'll start with an easy one.
Paul:
Yes.
Stephanie:
What's up next on your Netflix or Hulu queue? What are you watching these days?
Paul:
On my Netflix queue let's see, geez I don't watch a lot of TV so you're going to stop me. I have 30 seconds left. Mostly about historical dramas. I've always wanted to watch The Crown, which everybody has watched. So, that's probably next on my queue.
Stephanie:
Cool. I haven't watched that yet. You'll have to let me know how it is.
Paul:
There you go.
Stephanie:
All right. What's up next on your travel destinations when you can travel again?
Paul:
Wow. When I can travel again? I'd like to go back to Tokyo. I've traveled so much in my career personally. One point I spent about 50% of my time overseas.
Stephanie:
Oh my gosh.
Paul:
But Tokyo because I was born in Tokyo.
Stephanie:
Cool.
Paul:
And an American descent. But when I traveled I was always able to get there and see my cousins three or four times a year. But it's been a while. That would be my first place to basically get back to my roots.
Stephanie:
That is a good one. I love Japan.
Paul:
Yeah.
Stephanie:
What app or piece of tech are you most enjoying right now?
Paul:
I'm most enjoying, this is an odd app, is a password saver. I won't say the name of it, but I've been searching for the perfect one because I'm all about convenience and security and all those things at the same time. So, it's an odd choice but I found the perfect passwords saver.
Stephanie:
Yeah. That is actually a very good piece of tech. We recently implemented that at the company not too long ago and I was like, "Wow, this saves a lot of time. Who knew?"
Paul:
Absolutely. Get rid of the sticky notes.
Stephanie:
Yeah. All right. If you were to create a podcast, what would it be about and who would your first guest be?
Paul:
My first guest I'm thinking big.
Stephanie:
Go for it.
Paul:
Because I'm thinking really, really big because I'm enamored of her career. I was actually at her first rally, Elizabeth Warren. It tells you a little bit about politics and no offense.
Stephanie:
That's okay.
Paul:
But I was still in Boston, I went to her first rally and I was just enamored, I've always been enamored of her and not withstanding what happens in the near future. I would just be fascinated to talk to her about her career and how she made that mid career shift and the [inaudible] plan.
Stephanie:
That's cool. So, it would be politics focused or more human centric on what's important when it comes to you?
Paul:
More human centric with a tinge of politics because I am interested in politics. Elizabeth Warren would be it.
Stephanie:
We could get her on the show. I would make that happen for you.
Paul:
You could make that happen?
Stephanie:
Yeah.
Paul:
That would be so cool.
Stephanie:
I could do it. Elizabeth call us. We're ready for you.
Paul:
Absolutely. I remember I've actually seen her a few times, in the crowd obviously. The last time was at a protest at the Boston Common and she was quite compelling in her speech.
Stephanie:
Well that's great. I will have to see if I can find that online.
Paul:
Yeah.
Stephanie:
The last hard one which you've kind of already answered this, but I'll throw it anyways at your way. What one thing will have the biggest impact on Ecommerce in the next year?
Paul:
I think the biggest impact is the turmoil going around the big guys whether it's Facebook, Google, to some degree Amazon. What is the regulatory landscape, what is the antitrust landscape, how will they evolve, how monolithic will it be?
Paul:
I think I actually think about that quite often in terms of how do we enact with them, do businesses, make the leap into Amazon as a third party do, how do the algorithms evolve from a group perspective. How does privacy work?
Paul:
That really weighs on me in the context of thinking through how do those outside forces that are so monolithic in the tech industry impact Ecommerce.
Stephanie:
Well that's a big juicy one. We'll have to have a whole nother episode just to talk about your thoughts on that.
Paul:
Right, right.
Stephanie:
Well Paul it's been such a pleasure having you on this show. Like I said, I use Charlotte's Web. I've been around it for a while and I really appreciate you coming on and taking the time. Where can people find out more about you and Charlotte's Web?
Paul:
Well obviously our website, Charlotte'sWeb.com and I have a pretty fulsome linked in profile that shows you how haphazard my career has been but it's been a fun ride.
Stephanie:
Yeah. That's where I found out all about you. Well thanks so much for coming on. We'll have to have you back for round two in the future. It's been great.
Paul:
Absolutely enjoyed it. Thank you very much.
How does a guy who used to sell fighter jets move on to build an Ecommerce company that sells single-blade razors? It’s an interesting question with an even more interesting answer, and on this episode of Up Next in Commerce, Patrick Coddou tells the tale, and gives some insights into the world of Ecommerce along the way.
Patrick is the founder and CEO of Supply, and even though the company has been in business since 2015, has seen 80% of its total profits have come in over just the last several months. So what’s Patrick’s secret? In today’s interview, Patrick dives into the nitty-gritty of what changed, including how he finally discovered exactly what profit margins he — and most companies — need to hit in order to achieve sustained success. Learn what that number is and more, on this episode.
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
---Transcript:
Stephanie:
Welcome to another episode of Up Next in Commerce. This is your host, Stephanie Postles and today on the show, we have the founder of Supply, Patrick Coddou. Patrick, welcome.
Patrick:
Thank you for having me.
Stephanie:
Yeah, we're excited to have you on. I was doing a little bit of LinkedIn stalking and your background... At first, when I stumbled on your LinkedIn, I'm like, "Is this the right guy?" I saw a background in selling fighter jets and I wanted to start there with you of kind of like a little bit of your background before you founded Supply.
Patrick:
Sure. So I spent my education as a mechanical engineering and before starting this company, I spent eight and a half years in the corporate world. I worked in the aerospace industry and in particular I worked on military aircraft. We make some fighter aircraft here in Fort Worth, Texas where I'm from.
Stephanie:
Very cool. And what does that look like behind the scenes of working on aircraft? I saw that you did, I think an $8 billion deal. So I want to hear a little bit more details around that.
Patrick:
Yes. I worked on it. It would be very, very arrogant of me to claim that I was responsible for that deal. Yeah. So in general, and I'm happy to go deeper if you want to, but in general, the US government works with foreign militaries to arm and equip them with certain pieces of equipment that we think that are necessary for them to have and to support interoperability between allies. So one of those aircraft was called the F-35. And I think the deal you're talking about was maybe the deal with South Korea we did probably five or six years ago where the US government sold, I don't remember how many, 60, 70 aircraft to South Korea.
Patrick:
So that was a really phenomenal experience getting to fly there and negotiate with our partners over in South Korea and spent a lot of time kind of immersing myself in their culture. Just a cool, cool thing to be a part of. So I learned a lot there, but at the same time was ready to get out when I left.
Stephanie:
Yeah. So let's hear a little bit about you're almost a decade at, I think Lockheed Martin and you're starting to get the entrepreneurial itch. So what was happening while you were there and what had you make the jump.
Patrick:
Yeah. So as outrageously cool as the subject matter was of what I worked on in my previous life, it was... As awesome as the subject was, it was as equally terrible to work in a corporate environment like that one for me personally. Not for everybody, but for me. And especially working with the US government. Just procedures and processes and just layers of bureaucracy. It just led to boredom and frankly anxiety and depression personally. Just wanting to be fulfilled in my work and not finding the ability to be so in what I was doing.
Patrick:
I tend to plan and think ahead a lot. When I visualize the future of my life there, it was like I could literally see myself sitting at the same desk like doing the same things that I had been doing for like the next 30 years of my life. For years, I wasn't raised as an entrepreneur. I don't really have that in my family. I didn't know the first thing about starting a business, but for years I was always thinking about kind of what is kind of my path out of this life and kind of into the next one.
Patrick:
I always had ideas and never really kind of jumped on them because I wasn't a risk taker, I was an engineer. Taking risk was the furthest thing from what I was used to. And I finally have this idea for a razor that I wanted to invent, and we can kind of get into that if we want to, but in general I've always kind of struggled with irritation and ingrown hairs with shaving since the first day I started shaving. I came across this old style of shaving, shaving with a single blade safety razor and just fell in love with it and decided I wanted to try to kind of make a modern version of this old razor that I found.
Patrick:
Then in addition to that just decided like this is kind of... It's kind of now or never to make the leap from this job to doing something on my own. So it was kind of a perfect storm of the idea came and the necessity came and the opportunity came at the same time and just decided to go for it.
Stephanie:
Yeah, that's awesome. I think a lot of people probably have those same feelings of getting stuck somewhere. I know I have in the past. There was a point in my previous life when I was working at Fannie Mae and I had the same kind of thing. I'm like, "Oh my gosh. Do I want to end up in a semi-government job or corporate job?" And even at Google, it's like, "Oh, things feel so great right now. Should I leave? I feel like I'll stay here for a long time because it's so comfy." So I think a lot of people have the same kind of feeling of now or never. I better jump before I get stuck here for the rest of my life.
Patrick:
And the further you go in those career paths like the harder it is to leave. What can an aerospace engineer that has worked as an aerospace engineer for 20 years do other than that after they've been there so long?
Stephanie:
Yeah. I had the same feeling. What year did you start Supply or did you start something before then or was Supply your first company?
Patrick:
Yes, Supply is my first kind of real company. Prior to starting Supply which we started in... The company started in January of 2015, but we launched publicly in August of 2015 with our first Kickstarter campaign. And prior to that, I started a website with one of my best buddies called razorpedia.com and that was like, I think, we started in 2012 or 2013. Long story short, it was a kind of razor review website that really was kind of a... Just kind of a stupid fun thing to do with a buddy on weekends where we wanted to kind of test razors and try to find the best razor on the market. Actually, the website ended up getting pretty popular and we ended up selling it later. But that's really where the razor kind of story began with shaving.
Stephanie:
Yeah. I mean, I read that the Razorpedia was like the number one google search result and it had like 1 million organic page views over 30 months. So it sounds like it was actually a pretty big deal.
Patrick:
Yeah, it was pretty successful. We were fortunate enough to like... We literally launched I think the same week that Harry's launched.
Stephanie:
Good timing.
Patrick:
Yeah. It was good timing and we wrote a blog like the same week about Harry's. We ended up like kind of being... If you searched razor reviews online or Harry's razor review, we were right at the top of the search results. So it was kind of dumb luck. So we started to kind of monetize it with ads. We didn't know what we were doing. We were making it up as we went. The best thing that came out of that was the realization that all these multi-blade razors that we tested were all... In my opinion, were all trash and just not good razors. It was that website that actually led me down the path to find this old style of shaving, which is this single blade style shave.
Stephanie:
It's really interesting how marketing can really train us like "Oh, the more blades the better, and this one has two. Oh, this one has three." You wouldn't even think like getting back to the roots of like you're talking about a single blade is maybe actually the best way of doing things.
Patrick:
Yeah. There's an old Onion article from like 2002 and I think the most blades in a razor was maybe three or four at that time, and the title of the article was Screw It, We're Doing Five Blades. So they actually foresaw the five blade razor. I think you can actually buy a seven blade razor today.
Stephanie:
Oh my gosh. So you have this idea of Supply. What did the early days look like? I mean you have this old-time razor where you're like, "Oh, this actually works really well." What was it like to actually start the company and find a way to create and manufacture this razor?
Patrick:
It was very challenging to say the least. So I had the good fortune of one of my friends. I wanted to just make the leap and just go cold turkey and go all in on the company and the idea from day one. I had the good fortune of having some friends in my life that I listened to that said, "Why don't you try to figure out how to make this product work before you just leave your paycheck behind?" That turned out to be really good advice because it took me about a year and a half if not two years to go from Kickstarter campaign, which was kind of the initial rough prototype to no kidding supply chain or product that I could actually sell at scale.
Patrick:
I have no background in consumer products at all, whatsoever. So a lot of that kind of two-ish years was just me making it up. I had no investors. I had no real network or people to rely on to help me figure out how to kind of make this product. So a lot of it was just kind of figuring it out as I went and making a lot of mistakes and fixing those mistakes when they happened.
Stephanie:
So how were you finding ways to... I mean, you get a really well-funded Kickstarter. What was the next steps after that? Did you go and start meeting with people who manufacture razors already and you're like, "Here's my new design idea?" Or since you're an engineer, were you actually like trying to make your own?
Patrick:
Yeah. No, I did not make my own. We've always done outsourced supply chain and production since day one. We're currently actually not working with any of our early manufacturing partners. We've got a really phenomenal network of manufacturers that we work with today. But in the early days, it was a lot of googling although that doesn't really get you too far when it comes to manufacturing.
Patrick:
And then just a lot of calling and cold outreach to anybody that I could get to pick up the phone. So I think I probably called somewhere around 50 or 60 different suppliers that I just found through Google or recommendation from somebody who would talk to me, but didn't want to do the work for me or something like that. I eventually settled on... And this is a very common practice in the consumer products space. I eventually settled on... I never really know what to call them, but kind of an outsourcing kind of middleman sort of company where they're a... This is what they do is they go find factories to make you your product.
Stephanie:
Oh, interesting.
Patrick:
Yeah, I found a guy local to me. I don't remember how I found him. I think he was on Upwork maybe and he managed the manufacturing of our first batch for me.
Stephanie:
Very cool. So what led you to change manufacturers? You said in the early days, you had one manufacturer two and then you don't use them now. What happened and what kind of lessons did you learn through switching manufacturers?
Patrick:
So we launched our campaign August of 2015. I promised delivery by March of 2015, and that was in my mind plenty... That was more than enough time. That was like I was being generous with that timeline. And the manufacturer knew that. They were on track with that. March came and went. No products. April came and went no products. May. And then June I finally... I'll never forget, he literally shows up on my doorstep with a big old dolly of... I think we had ordered maybe 2,000 razors or something like that and he drops him off inside my house. Then as he's walking out the door, he says, "Oh, by the way, there's a problem within."
Patrick:
I'm like, "Oh, now, you're going to tell me there's a problem." Anyways, it turned out there was an issue with the razor to where if it wasn't used properly, it actually wouldn't even really shave at all and you couldn't load a blade.
Stephanie:
Oh my gosh.
Patrick:
Yeah, just a little problem, which was just devastating because I had already spent all my money that I had raised, I think about $8,000 on that production batch. Essentially what we did over the next kind of two to three months is I set up a little shop in my garage to try to kind of adjust the razors to make them work and we did the best we could with that. We were very open with our backers and that's always like number one thing. I always tell young founders or operators is like when things go wrong trying to cover it up or not being honest about it with your customers is just going to make it worse.
Patrick:
You need to kind of be honest. We were telling our customers what's up like here's what happened, here's what we're trying to make right about it. Oh by the way, if you want to wait, we're going to start up a second batch with a new manufacturer, but it's just going to take some time.
Patrick:
Anyways, we ended up kind of salvaging some of that initial bash. We ended up having to scrap a lot of it, lost a lot of money on that first batch and then we started up a second production line and eventually made it right with our backers and delivered everything we promised, but it took... I think it was the following March before we finished delivering what we had promised. So it took a year longer than what we had told people it would take. The lesson for me is and has always been at the end of the day, all I have personally that's keeping my business alive is the relationships with the people that I work with.
Patrick:
Those relationships and that trust is everything. It's extremely difficult to, on the front end, determine if you can trust somebody. But I always highly leverage towards trust when I'm evaluating a new partner rather than capability, right? Because capability is just kind of table stakes for us to even have a conversation. Something is going to go wrong and what happens when it goes wrong is what makes all the difference.
Patrick:
So that first vendor, his true colors were showed when something went wrong. The vendors, I'm with now, things go wrong all the time, but what happens is they make it right. So that's kind of the biggest learning lesson for me and the biggest advice I can give people is going into business with people that you not only enjoy working with, but can trust to make things right when things go wrong because that's literally all you have. What's written on the contract doesn't even really matter when you're as small as me, right? Because I can't sue somebody. It's just... Anyway.
Stephanie:
Too much time, too much money to even try and do that to begin with.
Patrick:
Yeah, exactly. So it's all about relationships.
Stephanie:
Yeah, that's a really good point. So on your Twitter I think I saw that... I mean, you guys have been in business for a few years, but 80% of your lifetime profit has come in the last six months and I was wondering what's the catalyst behind that? Why are all the profits coming in now? Is it better marketing? What's behind the scenes to drive that profit now?
Patrick:
Two things, supply and demand. So on the supply side, I worked all last year. This is another kind of big learning point. I've gathered over the years. I worked all last year to significantly improve our gross margins or essentially how much our products cost to make versus what we sell them. The first four basically years of my company, I wasn't charging enough for my products and they were costing me too much to make. So 2019 was a big kind of cost cutting year for us.
Patrick:
Then in addition to that... So those cost cutting initiatives went into effect on November 1st. So that's the supply side and then the demand side is November 3rd we aired on Shark Tank. So that was the beginning of a big tidal wave of orders. So those two things coincided very nicely to bring us to a place to where we're significantly profitable in the way that we've never been before and that really changes a lot of things for us.
Stephanie:
That's awesome. So how did you go about figuring out what areas needed to have cost cut down? What does that process look like?
Patrick:
Yeah, for us, I mean it's less about... We've always had very low overhead. Started the business with my wife. We've barely ever paid ourselves much... We've had a very small team always. We worked out of our house for the first three years. So overhead has always been very low for us. I always, always, always urge young businesses and founders to keep overhead as low as possible. I think a lot of the reason you're seeing a lot of companies go out of business or have issues this year since COVID hit is they don't have the flexibility in their overhead to withstand volatility in the marketplace which is what's going on right now.
Patrick:
So that's always been low for us. It's always been a thing that I've held important. What it costs us to make our products versus what we charge for them, I had what I'd consider a friend/mentor get on a phone with me. He runs a very successful men's clothing business that's probably 10 times larger than mine. He shared with me, "If you're not charging at least 4X for your products what you make them for, you're never going to be able to scale in a meaningful way because customer acquisition costs are just too high to let you be able to scale with any less margin than that." And he's right.
Stephanie:
Did you take his advice exactly and do 4X of how much it costed you?
Patrick:
Yes, I did.
Stephanie:
Cool. And what was the price before for a razor and what did that jump to?
Patrick:
Without getting into the engineering side which is maybe a little boring, but we didn't really necessarily change the price of the razor. We have two versions. We have what we call an alloy version and a steel version. The steel version we increased the price probably about 20 to 30% and we introduced an alloy version which is a lot less expensive to manufacture and we actually kept and almost kind of lowered the price on that one because we were able to bring our production costs down so much.
Stephanie:
Got it. When you're lowering your production costs, I know you mentioned overhead is a big thing, but was there anything with your production costs or the materials that you also looked at decreasing the prices for?
Patrick:
No. I mean, we kind of kept the packaging the same. Another thing that you'll probably hear a lot of people, supply chain guys talk about is we're always trying to get like ahead of the curve when it comes to ordering because historically we've always had to rush shipments via air. Not all of our stuff, but a lot of our stuff is made overseas and air shipments cost anywhere from five to 10X more than ocean shipments. So that's always really painful when you got to spend 20 to 30 grand just to ship something versus two to three grand.
Patrick:
So getting better forecasting so that we can order far enough ahead of time to put something on the ocean instead of the air is another big thing we're doing. Otherwise, it's just like constant... I live in my profit and loss statement where I'm just counting every single penny that goes into my cost of goods sold whether it's the cost to ship to me, whether it's cost to ship to my customer, the fees I'm getting charged by my credit card companies, cost of my boxes.
Patrick:
I mean, it just requires relentless dedication to constantly being in the numbers to make sure that... It's just like... It's like entropy. All things tend towards chaos. Well, everything in your P&L tends towards higher costs if you don't stay on top of it because you're just going to spend more and more money.
Stephanie:
Yeah, I completely agree. I think a lot of founders oftentimes avoid looking at it because, one, it's kind of hard to read a P&L or a balance sheet or something like that if you haven't taken the time to figure out what all the line items mean. But then also like you said like a lot of things start adding up behind the scenes whether it's subscriptions or just stuff where you're like, "Whoa, I didn't realize my credit card fee is this." Maybe it's actually cheaper just to you know get a loan or do this and start thinking differently about how you're spending your money. Because a lot of those costs do add up especially in the early days.
Patrick:
They do, and software too.
Stephanie:
Oh, yeah. Software is a big one. And forecasting. I thought that's a really good point about forecasting in a way that you don't have to airship things. We actually haven't had someone on the show talk about air versus ocean, so I found that very interesting.
Patrick:
Yep.
Stephanie:
So the other thing I was wondering I would love to hear more about is your Shark Tank experience. We've had quite a few Shark Tankers on here and everyone's had a slightly different experience. I want to hear a little bit about what that looked like.
Patrick:
Awesome. I mean, it was a once-in-a-lifetime sort of deal. Never will forget it. We had a blast. I went on with my wife. We both pitched. We filmed in June of last year, so June of 2019 and then we aired in November of 2019. Just all the way through from the very... I applied three years in a row. It took me three years to get on the show and from the first day I applied the first time all the way through the last interaction I had with them after filming, it's just a really class act. Up and down, just phenomenal people.
Patrick:
I'm not talking necessarily about the sharks, although they're all great. You work with them for literally 30 minutes to an hour. You never see them again, but all the people behind the scenes are just a class act. Just the experience of standing in front of these people that you've watched for close to a decade, if not more than a decade on TV and actually talking to them and them talking back to you and saying your name. It's just like this very kind of out of body experience to where you kind of like in a sense like black out a little bit. Like don't even really remember what happened, at least personally. But we had an absolute blast. We ended up getting an offer from Robert and accepted his offer. We actually didn't end up closing that deal, but just had an absolute blast.
Stephanie:
Oh, and you said you didn't end up closing it?
Patrick:
No, we did not.
Stephanie:
I think that's also interesting to know that not all the deals close and there's things that maybe happen afterwards that could impact that on both sides.
Patrick:
Yeah. About half of them don't close.
Stephanie:
Yeah. So what was it like after you went on the show? I'm sure you had a large increase in demand? Did you guys have any website issues or inventory issues or what did that look like?
Patrick:
Yeah, a huge increase in demand. I think in November, we did you know 4X our previous monthly record. So big increase in demand. It really strained our customer service. It strained our supply... Not our supply chain, our warehouse a bit although we had just onboarded with Shopify Fulfillment Network. They were doing a phenomenal job of keeping up with things. It was more of what was straining was getting stuff in stock from our vendors on time.
Patrick:
So we had some orders that took us like three to four weeks to ship and that made some customers pretty upset since they were Christmas presents. We did get everybody everything they needed before Christmas which was like my one thing that I wasn't going to sacrifice on. We ended up getting it done. But between November 3rd and Christmas, it was pretty painful, in a good way. But the response was pretty phenomenal.
Stephanie:
Yeah, that's great. And are you seeing continued demand from that or did you start leveraging other maybe customer acquisition strategies or marketing tactics to kind of build on that demand?
Patrick:
Yeah, so it really put a ton of wind in our sales. It's really helped us kind of upgrade a lot of our business kind of to the next level. But in terms of like sustained demand, no, you're not getting a ton of like post Shark tank people streaming it and coming to your website. Although, I'm sure that happens. What it has done for us is it's given us kind of a social proof of being on this national platform.
Patrick:
So we've used a lot of footage and assets from the airing in our advertising. So if you go to our website, you'll probably get retargeted with some Shark Tank style ads. And just in general, it's given us the ability to taking us from this quiet kind of nobody brand to... I won't call us a household name, because we're certainly not, but a lot more people recognize us like, "Oh yeah, I've seen that before."
Patrick:
So it helps with everything. I mean, it helps with not only the company but your partners and your vendors are now even more excited to work with you. Press finds you that hasn't found you in the past. We'll be in The Wall Street Journal this weekend.
Stephanie:
Oh, cool.
Patrick:
We are in GQ's best single blade razor of 2020. These things just kind of slowly snowball. It's been a really phenomenal experience. We're very grateful for it.
Stephanie:
Yeah, that's great. It's such a good reminder of how PR can work if it's done the right way because there's all these PR companies who always say that they can help you, but it depends and that's just a good reminder that it can work well if you get the right outlet and getting featured in like Wall Street Journal or places like that. Very beneficial.
Stephanie:
So what kind of digital channels are you finding the most success in right now when you're going about... You're talking about retargeting and different marketing tactics. What kind of channels are you finding success in?
Patrick:
Sure. I mean, no surprise Facebook, Instagram and Google in that order for volume. We've always wanted to test these other channels like Snapchat and Tik-Tok and whatever and we probably will sooner or later. But there are some other things we want to spend some more time on building before then. We do a little bit of affiliate. We do a tiny bit of influencer, and that's really kind of I think what we're going to start turning our eye to for maybe the next phase of our growth. But yeah, those are really the big channels for us.
Stephanie:
Yeah, cool. So when you were building up supply and you mentioned Harry's earlier. The razor market feels like it's been pretty popular for people to start companies in. You've got Dollar Shave Club, you've got Harry's. How did you think about that competition and making sure that you stood out among the other brands that were launching?
Patrick:
Yeah. So our value proposition is very much kind of anti-Harry's and anti-Dollar Shave Club. Then our positioning and our pricing is similarly the complete opposite. So they're clearly competitors of ours, but I don't really consider them necessarily direct competitors. What I do consider them is people that I can steal my customers from. So it's a single blade. I haven't really talked much about the product. It's a single blade.
Stephanie:
Yeah, let's hear about that.
Patrick:
Yeah. It's a premium single blade razor and the value propositions are there's a few. Number one, it's not a cheap product. It's a $75 handle, but the value prop is you invest a lot up front, but then you save tons of money over time. So our blades are 75 cents a piece and they last somewhere between eight to 10 shaves. So after you buy the handle, you're spending... If you're shaving every day, you're spending maybe 24 bucks on blades a year. Then you've got this handle that lasts forever. We actually guarantee it for life.
Patrick:
So you never have to buy the handle again. But then aside from that, the value prop is a single blade gives you just as close of a shave as a multi-blade razor. But for roughly 30% of guys, they experience like myself a really severe razor burn and or bumps typically on the neck or in the sensitive parts of the face. And a lot of that is caused by multi-blade razors. We don't have to go that deep into it, but the way they're designed is works for some guys in terms of giving you a close shave, but for guys like me who have sensitive skin, it actually does the opposite. It makes things worse for you.
Patrick:
Anyways, so going back to Harry's and Dollar Shave Club. So a lot of guys, they just use these razors and they just think like this is the way everybody shaves and they just have to deal with this issue and just deal with the razor burn or just not shave. So what we're telling them is no, it's not the case. You can actually shave and enjoy it and not have your face be a train wreck after you shave.
Patrick:
So we're slowly helping guys kind of wake up from this myth that multi-blades are better and that's like the only way to shave. If it doesn't work for you, then too bad. Just keep shaving and tearing up your face.
Stephanie:
Yeah. How are you going about that education process because I was going to say that it does seem like there's quite a bit of education required for that and just for like... I mean, you mentioned shaving eight to 10 times. I'm like, "Oh, I think a lot of people probably shave with the same blade for long time." I'm thinking about myself, I'm like, "Oh, man. I'm pretty bad at that." So how do you go about getting people to change their behavior?
Patrick:
Yeah. Honestly, it's tough. I mean, I'll give you an example. We present in our ads like why multi-blade razors are bad for your skin and we literally present it the same... We present the same data that Gillette presents. It's on their website. Multi-blade razors are literally designed to lift... The first blade tugs the hair out of the skin and like the second and third blade kind of cuts it below the surface of the skin. That's literally how Gillette has designed them to work.
Patrick:
People accuse of us of lying and making that up. And it's like, "No, just google it." You'll see it straight out of the horse's mouth. So the point is like it takes a lot of education. When they don't even believe that you're just saying what your competitor says, clearly they they need a lot of education.
Patrick:
So we do it through video. For example, if you buy the razor, you get four emails from me, the first four days after you buy it and each one is a short 60-second training video. It's not like this outrageously complex course of learning how to shave with our razor. It's 60-second videos. But guys, we've learned are very prone to throw instructions out so they don't read anything that we include with the product.
Stephanie:
You think they fancy videos like you call them, "Hey, come look at this."
Patrick:
Exactly. It continues to be a challenge, but in general video seems to work the best in terms of teaching guys how to do. And actually, we're starting up our YouTube channel next week to kind of help that process as well.
Stephanie:
That's really interesting. Another thing I read. I don't even know why I know anything about razors because I did read an article about the marketing behind them, how a lot of the traditional companies show the razor getting like water all over it and sitting in the shower and that actually degrades the blades and then you have to change it more frequently and that was like their whole plan. Do you think that's true or am I just reading conspiracy theories behind razor blades?
Patrick:
Yeah, I don't know exactly what you've read, but I mean it is true that water, what it does, I mean, if it sits on a blade it causes it to rust which degrades the edge. I mean, we tell our customers don't leave your razor in the shower in a damp environment. We tell our customers not to do that because that's very... That's true.
Stephanie:
Yeah. I mean, all these things I think most people probably are doing right now, I'm thinking of myself and our producers typing in there that how long she goes from changing her blades. So I think there's a lot of education to do in the market in general. How are you guys also thinking about new products because these are designed for men, but I'm like women definitely have a lot of the same issues. Are you thinking about launching new products geared towards women as well or are you just strictly focused on men's products?
Patrick:
The short term, we're focused on men's products. We do have women as customers. My wife and my co-founder is a user of our product. So we're more than happy to have the ladies buy from us. But what's really, really difficult or at least I've found is to position our product as both a men's and women's product at the same time. I don't know the best. I'm sure there's a good way to do it, but I don't know what it is because shaving your face and shaving your legs are too... They seem similar, but they're very, very different things.
Patrick:
I'd love to do like maybe different landing pages or product pages because the value props are basically different, right? So I don't know, man. Maybe I could use some advice for how to sell... Maybe the problem is I just don't know yet how to sell razors to women.
Stephanie:
It sounds like my team. We've got ideas and we'll team up with your wife and we can all figure it out together.
Patrick:
Yeah, yeah exactly. It is on the to-do list. It's just something we haven't been able to get to yet.
Stephanie:
Very cool. So tell me a little bit about how you developed your website like the experience... I mean, when you're selling something that kind of needs to be tried out or you need to hold like the handle to see like wow, this is a good quality like piece of steel here, how do you convey that to the customers who are coming on and how did you develop your website experience.
Patrick:
Yeah. It's tough, it's really tough. I don't think we've arrived by any stretch, but certainly, certainly made a lot of progress. We have a very, very talented development company. We work with agency called Fuel Made. Good friends, just good people and they do amazing work. So they handle just from the front end and the back end design. They're handling most of that for me.
Patrick:
Prior to that when we were smaller, I think it's a complete, complete waste of money to spend any money on complex web design. There are so many free or very cheap templates out there that work so well. I would encourage people to not spend any money on development and take any money you have and invest it all in creative and start with just phenomenal photography.
Patrick:
Find a very, very talented photographer and spend your money there if you're going to spend your money anywhere. So I have a very good friend of mine who is that person and he takes all of our photographs. And so we over index on beautiful photography. We're now at a point to where we can afford kind of an expensive agency to develop our site and otherwise, we do just tons of AB testing. Every month, we're testing something new or we're launching a new feature. Sometimes it works, sometimes it fails miserably. Each month is just an opportunity to get better.
Stephanie:
What kind of tests have you seen work versus fail because I think a lot of people may be thinking about trying out some of the same kind of features or tests that you're thinking about. So is there anything that comes to mind where you're like this really worked well with conversions or increase cart value versus this one did not work at all and it seems like it would have.
Patrick:
Yeah. I probably have more this didn't work than this does work.
Stephanie:
Let's hear it. I like those stories just as much.
Patrick:
Well, man, I'm really sad about this one. We just did one where once you add the razor to the cart, there's a pop-up that immediately shows up that says, "Hey, do you want to upgrade this to our starter set which is our second best seller aside from our razor?" We tested different variations of that pop-up. We tested it against no pop-up and there was like no clear winner after, I think it was two weeks and a very significant amount of traffic. No clear winner.
Patrick:
So we decided not to go with that pop-up. I launched a membership/loyalty program in April. The way I designed it was outrageously complex and I put a lot of development work and dollars into it, let it run for eight weeks and then I canned it. That was painful to do because it was just too complex.
Stephanie:
What made it complex? Because I've actually heard similar themes from a few other people who've been on the show who said that they thought that a loyalty program would work for them, but it ended up not working like they thought. So what do you think made it too complex or would you have done it differently or are you just like, "We're not trying that again?"
Patrick:
Yeah. Two things on the front end and on the back end. So on the back end, the code, it was completely custom designed from a code using scripts on Shopify and it just got really complicated. But on the front end, it was kind of confusing to the customer. So the program was essentially like it was kind of like buy a razor and get a free lifetime of blades offer which sounds like a really compelling offer, but there's always kind of... There's got to be a caveat to that statement.
Patrick:
So it was like you could get a shipment every quarter of blades, just pay for shipping or you could buy our premium membership, which was like 20 bucks a year and then get the blade shipped to you once a quarter, which is a great deal, but offering them those two options was really confusing and then just the way we made them sign up for it was confusing.
Patrick:
In general, we're going to try to launch another program in the future, but it will be far less complicated. If you can't explain it in a sentence or less and have people get it immediately, then you've set yourself up for failure. And that's what we did. I've explained the program to people and they'd be like, "Okay, wait. But if I buy this, what happens?"
Stephanie:
I need my Google spreadsheet out like which way will I save an extra dollar?
Patrick:
Yeah. So anyways, things that have worked. We actually launched international currency on our website because we do a pretty big chunk of business overseas and that actually increases conversion rates quite a bit for us. I'm blanking right now. We've had other wins, but I'm blanking on it right now.
Stephanie:
That's all right. If you think of any more, we can circle back because I actually think it's very interesting diving into some of these tests like this because I'm sure other founders are thinking about similar tests.
Patrick:
For sure.
Stephanie:
Very cool. So a couple general Ecommerce questions. Now, that you've been in the world for a while and kind of doing a bunch of tests and you launched your company, what kind of trends or patterns do you see coming down the pipe right now especially with everything with the pandemic. Are there any changes that you see coming in the future around Ecommerce?
Patrick:
I guess this is probably cliché, but the only thing I know is that I have no idea what's coming next. I think there's a ton of opportunity in the future and a ton of volatility in the future for Ecommerce. I'm very, very grateful, number one to be in the industry I'm in to continue to operate and be healthy and growing. I have friends in the restaurant business that cannot say that.
Patrick:
So I'm very bullish and grateful for the industry I'm in. I'm not planning on changing anytime soon, but at the same time, I think consumer behavior is going to continue to be like challenging to kind of forecast. People say this all the time on Twitter, but I just don't get the fact that our stock market is so high and our GDP is so low and so many people are out of business.
Patrick:
To me, it's like, okay, when is this... Part of me is waiting for the other shoe to drop and when is this all going to come crashing down and the other part of me is like eCommerce is 30% of retail now and like that's not showing any sign of stopping anytime soon. So I don't know if that's a direct answer, but in general what I'm doing is I'm doubling down. I'm building processes and teams for growth.
Patrick:
So we actually just left our long time marketing agency that I had a great relationship and love and really enjoyed working with and it was really difficult to leave them. But the main reason I left is like I'm convinced the brands that are super nimble and able to react and adapt really quickly are going to be the ones that survive and thrive in this environment, in this volatile environment.
Patrick:
So whether Facebook CPMs are up or down or what's going on, I think we're just going to be really flexible and part of what I'm doing to be flexible is building more internal teams to move quickly rather than just being a bit slower.
Stephanie:
Yeah. That's such a great point and I think a lot of other companies are probably starting to think about that too especially around like being able to move quickly and not having costs that are recurring for like the next three years that you can't get out of or long-term contracts and even around like not relying on just a single manufacturer and being able to kind of like move around if needed. So definitely being more nimble will probably be how a lot of companies are thinking about this going forward.
Patrick:
Yeah, and it's tough because at the same time you also, I think... We started the call off kind of like this, it's like you have to keep overhead low at the same time. So you've got these competing priorities to be able to move fast and have an internal team, but then also not have a bloated internal team that you just can't respond. Your overhead can't respond quick enough to any kind of unforeseen events.
Stephanie:
Yep. Completely agree. So is there anything that you wish I would have asked you that I did not bring up?
Patrick:
Let me see. I don't think so. No, nothing I can think of.
Stephanie:
Man, I'm just the best. All right. Cool. Then we can move on to a quick lightning round, if that sounds good.
Patrick:
That works for me.
Stephanie:
All right. So the lightning round brought to you by SalesForce Commerce Cloud. This is where I will ask you a question and you have a minute or less to answer. Are you ready, Patrick?
Patrick:
I am ready.
Stephanie:
Cool. So if you were to start a podcast, what would it be about and who would your first guest be?
Patrick:
Okay. I know the answer to this one.
Stephanie:
You're prepared.
Patrick:
This is no offense to you at all.
Stephanie:
All right. I'll try not to be offended.
Patrick:
I would start not like a one-on-one podcast, but like a round table debate style podcast with roughly three to five people. I want vigorous like vitriolic... I don't know if that's a word, but debate. I want people that are so ingrained in their opinion that they're willing to fight other people to the death about what they have to say. The topics would be all Ecommerce or retail related.
Stephanie:
Okay.
Patrick:
So anyways.
Stephanie:
I feel like I see that happening on Twitter right now though.
Patrick:
Yes, it's Twitter and podcast form. That's exactly what it is.
Stephanie:
Yeah. I see all these people getting very angry about stuff with certain Ecommerce or someone calls something like D2C and they're like, "That's not data saved." I'm like oh my gosh.
Patrick:
That's exactly what I'm talking about.
Stephanie:
That's funny. We at Mission have done roundtables before, but they're usually with like three CMOs and then one of us hosting it. So it does not get that heated. So I'd be very interested to see how your podcast goes.
Patrick:
Yeah, it would be a requirement for yelling to happen.
Stephanie:
That sounds great. What's up next on your reading list?
Patrick:
Let's see. I just downloaded been a book by Ben Horowitz. I don't remember the name of it but it's about building culture.
Stephanie:
Oh, yeah. What is that new one?
Patrick:
I don't remember. But it's all related to this kind of transition I'm going through right now is what I call a transition from founder to CEO and focusing less on doing things myself and focusing more about delegating and building a team that can accomplish things without me involved. So a huge, huge, huge part of that is culture and I have no clue how to build good culture. So I want to learn from the best.
Stephanie:
What You Do Is Who You Are?
Patrick:
Yes, that's it. Is that new or is that old?
Stephanie:
Yeah. That one is his newer book. I was listening to it on Audible and I like it because it ties in history along with building a culture, but it's like here's what happened a long time ago and why these themes are still relevant. So I'd recommend that one as well.
Patrick:
So you liked it? That's good.
Stephanie:
Yeah. I thought it was great.
Patrick:
Okay, good.
Stephanie:
What's up next on your Netflix queue?
Patrick:
I don't really watch a whole lot of Netflix.
Stephanie:
No? Nothing? Everyone always starts by saying that and they're like, "Oh, wait. I just did this. I just watched this whole series."
Patrick:
It's funny. Me and Jennifer will turn on Netflix to watch something new and we always default to just watching The Office.
Stephanie:
That's a good one. That's a good go to, to Keep you smiling.
Patrick:
I will say we did just start. We dug up an old DVD set of Seinfeld and now we're watching Seinfeld right now.
Stephanie:
Oh, nice. Pulling out the DVDs. That's awesome.
Patrick:
Yeah, the DVD. Blu-Ray though, yeah.
Stephanie:
Yeah, got to be. What app do you enjoy most on your phone?
Patrick:
What app? I use twitter probably too much. It's a good thing and a bad thing. A lot of the good things that have happened to me over the past year have been through connections on Twitter, but it can also be a time suck.
Stephanie:
Yes, I agree. All right. And then the last one, what is a favorite piece of tech that you use or a trying out that's making you or your team more efficient right now?
Patrick:
More efficient. Well, we're trying out a productivity app called ClickUp? Have you ever heard of it?
Stephanie:
I think I have. Tell me a little bit more about it.
Patrick:
It's kind of like a monday.com or an Asana. So like project management, task management. I've never found one I like or that works. We've tried doing it in Notion before, although I love Notion. So we're trying that in ClickUp. I don't know. We'll see. I like it so far.
Stephanie:
Cool. Yeah, we'll have to check that out. We use Basecamp for almost everything, but I'm open to other things.
Patrick:
Go ahead.
Stephanie:
Oh, go ahead.
Patrick:
I was just going to say, I don't know that I'm a huge fan of Basecamp. I could never get it to work for some reason.
Stephanie:
Yeah. It is a little high when it comes to like starting up and teaching the team and everyone learning from it, but it gets better.
Patrick:
Yeah.
Stephanie:
All right. Well, this has been such a fun interview, Patrick. Thank you for coming on the show. Where can people find out more about you and Supply?
Patrick:
You can find me on Twitter where I spend most of my time. My handle sounds like canoe. Because my last name sounds like canoe, it's Patrick Coddou. So you can find me there and that's really where I spend all my time. And then our website is supply.co. You can see our company and all of our products there.
Stephanie:
Awesome. Thanks so much and have a great day.
Patrick:
Thank you.
Believe it or not, in the pre-internet days, a good deal of swimsuit purchasing was done via direct mail, not in store. So why, even in today’s digital-first age, are big brands still focusing on in-store experiences when it comes to selling swimsuits?
Lori Coulter saw an opportunity in this disconnect. Using data and a methodology she had already perfected in the made-to-order space, she co-founded St. Louis-based Summersalt, a direct-to-consumer women's lifestyle brand. And you could say Lori found the perfect wave to ride to success — in the very first summer of the company’s existence, the waitlist for its bathing suits surpassed 10,000 people.
On this episode of Up Next in Commerce, Lori explains what trends she was looking at in the market that compelled her to take the leap to start Summersalt, and which ultimately led to its massive success. Lori also shares her tips for inventory management and marketing advice for D2C brands. Plus she goes into detail about the challenges female founders face when fundraising, and how to turn those challenges into wins and buy-in from skeptical investors.
3 Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
---Transcript:
Stephanie:
Welcome to another episode of Up Next in Commerce, I'm your host, Stephanie Postles, co-founder of mission.org, and today on the show we have Lori Coulter, the co-founder and the CEO of Summersalt. Lori, welcome.
Lori:
Thank you. I'm really thrilled to be here.
Stephanie:
Yeah. I'm so excited to have you. I'd love to hear a bit about your background before we get into Summersalt which seems like a crazy story, awesome things that I want to dive into, but I want to hear a little bit about you before Summersalt. What was your background, work experience, all of that?
Lori:
So, what's interesting I think I'm probably... I don't know if I want to say a born entrepreneur, if I believe that or not, but even in college I would tell my friends that I just had a good idea, I would do it. I went straight through from undergrad to a business school at Washington University here in St. Louis. Again, had that entrepreneurial mindset from the beginning, and when I went to business school I wrote several business plans. Had an entrepreneurial focus, although that wasn't as in vogue at that time as it is now, and I left business school, I went to work for an economic consulting firm primarily understanding at a macro level, economics.
Lori:
We did a lot of selling to major banks, investment banks, but I always had an interest in fashion and apparel, and had turned down several jobs coming out of business school in the industry that I loved.
Lori:
At that point in time, I was focused on a concept around fashion and technology, and digital body scanning, so working at the intersection of technology and fashion at an early date. Did a ton of research and eventually launched a start up in partnership with Macy's in store as their vendor, doing digital body scanning in made to order apparel, initially swimwear and eventually, we were supplying other mid size brands, early eCommerce brands like ModCloth and some large scale resorts. So, that was my story pre-Summersalt. We really parlayed that intellectual property that's a foundation. We still use it at Summersalt to this day in regards to our fit, quick turnaround manufacturing, and prototyping.
Stephanie:
Very cool. How did you get big brands like Macy's to partner with you and your company early on like that? Those are some good names to get in front of.
Lori:
So, what's interesting about being a founder is ... Half of it is just sticking to it. And so, raising your hand, asking the question, asking for the meeting and just telling your story, it truly is a sales process and I managed to get in front of the right person at Macy's and got the deal done. So, I didn't know anyone in particular, it was just, "Hey, can I tell you my story?" And we're off to the races.
Stephanie:
That's great. So, you were mentioning IP earlier, and you were saying that right now you use some of that IP with Summersalt. What was a process like where you had one company you were partnering with, the Macy's of the world, and then now you're moving over to Summersalt which I'd love for you to detail a bit about what Summersalt is and how you brought that IP over.
Lori:
Yeah. So, we launched at Macy's over 10 years ago, and in June of 2016 I met my now co-founder, Reshma Chattaram Chamberlin, and she also is a serial entrepreneur and had owned an agency working with some of the larger direct-to-consumer brands on the east coast, particularly on the brand and digital marketing side. And I shared with her the intellectual property in regards to fit. We had scanned over 10,000 women and made a swimsuit for each of them so we really had optimized that process for the consumer and knew exactly what worked for a broad spectrum out of the US market.
Lori:
And then we had separately mastered quick turn around manufacturing and prototyping, which allows us to move at the speed of lightning that we're still moving at with Summersalt to this day. When I shared with her the IP I was sitting on, what I was seeing in the market with regards to consumer trends, and I didn't see a truth path to scale for brands that were pursuing that traditional wholesale model in apparel space, it has had headwinds for a long time and even more so now with COVID-19.
Lori:
But I shared my story with Reshma on what I was thinking she got really excited. We went away from that conversation. Ironically, that was a conversation at Chipotle. It wasn't intended to be any life defining moment, we were just two Midwestern founders sharing our ideas about eCommerce and the future of retail. But she really inspired me to look hard at that direct to consumer business model. So, I went away from that conversation we were at the initial business plan and strategy for what is now. I developed a collection, which I think separates the dreamers from the doers, the ability to actually manifest a concept and then go out and do it.
Lori:
And then, I went back to Reshma in December of 2016, a full six months later, to retain her agency. Ironically, she was in transition at that moment, wasn't taking on new clients. But serendipitously we ran into each other in New York, which is a bit ironic, because we're both based in St. Louis. Ran into each other in New York, at the Gramercy Park Hotel, Rose Bar. I'd been interviewing PR teams that week and had the deck and the line she left me and I literally cornered her on the spot, shared what I was working on, and her response was, I'm interested about what you consider a co-founder, and that's how we joined forces and the rest is really history.
Stephanie:
That's awesome. And how do you describe Summersalt today?
Lori:
Summersalt is a direct-to-consumer women's lifestyle brand, direct-to-consumer meaning we sell primarily on our own website and platforms and have an ongoing relationship with a consumer over time as opposed to working through a major retailer or another department store or something.
Stephanie:
Very cool. So, when my team was doing research on Summersalt, I saw some wild numbers that were a little bit hard to believe. I saw that, and you can be like, "Stephanie these aren't wrong numbers." But I saw that you had a waitlist for one of your bathing suits of over 10,000 people.
Lori:
That is absolutely a 100% true and what is really, really interesting about that is that was our first summer we had a waitlist that high.
Stephanie:
That's wild.
Lori:
Right. We had raised a very small Angel around to launch. We were everywhere that first summer from our Refinery29, to the Today Show, to Elle Magazine. I think Forbes covered us and it became clear. One, that we didn't have enough inventory that first summer, and two, when we saw that waitlist continue to build, we knew there was an incredible amount of pent up demand and I think it's twofold.
Lori:
One, the brand itself is resonating with the modern consumer and so much swimwear had been done and it's over sexualized, tired, outdated way and Summersalt's fresh and new and fun, and our whole mission is to inspire joy, the childlike joy we all felt at the beach as children and I think it's just so encouraging to see that message resonating with the consumer and then separately we translate that message in our products as well.
Lori:
And clearly the fits, the aesthetic, this idea that you can be fashionable and cheap but so comfortable, is important to the core of the brand. And then separately, I think that the macro dynamics in retail are in our favor. They have been from the start and even more now that we're facing COVID-19 as a nation.
Stephanie:
Yeah, I completely agree. So, what were some of the main drivers behind getting that consumer demand? I mean, I know you were mentioning PR and a couple well known outlets to probably spread the word but what would you say were the key drivers to getting in front of people and then also encouraging them to join a waitlist, because when I think about buying something, sometimes I'm very much like I want it right now. Like, if I need a bathing suit, it's because I need it probably for tomorrow. So, how did you get people to agree to get on the waitlist and wait until you have the inventory back and even get in front of them in the first place?
Lori:
So, when we were launching and even to this day ... Summersalt just celebrated our third anniversary on May 23. So, that gives you an idea of how far along we are in the cycle of business, and from the very beginning it was about a 360 degree approach. It wasn't about just one platform, as far as how we speak to our consumers, so that includes press, that includes email, that includes social media, working with influencers, working with other brand collaborations, it's about bubbling up to the top and speaking to our consumer in multiple ways at multiple times, but always when, where, and how she wants to be spoken to is how we talk it about it [inaudible 00:09:21].
Lori:
And obviously, the scale is quite a bit different now. But at the same time, those principles hold true. And I always tell brands, if you're focused on one platform, only one message without that brand storytelling. It's such a risk to the business model over time, and what's wonderful about Summersalt we truly are a brand that is digital first.
Stephanie:
Yeah, I completely agree about relying too heavily on one outlet. What metrics do you look into? I mean, it sounds like you're doing a lot whereas a lot of PVC companies we've had on here so far, they only have enough bandwidth to maybe focus on one or two platforms, and they're going deep instead of going wide. So, how do you start thinking about metrics that holistically look at all of your marketing efforts? Are there any certain things that you rely on?
Lori:
Yeah, I think a couple of things are important when you're a digital first brand. First and foremost is sessions on the site, and any activation we do, we want to see the consumer coming to the website, and then of course, conversion rate is very important, but it's really that traffic that you have to have on your storefront, that is important.
Lori:
And then separately, we look at organic search metrics and anytime we have a brand activation, whether that is something on social media or we did an out of home campaign in New York, as well as even direct mail. You want to see search lifting, and then eventually traffic to the site. And then, as you continue to see conversion lift as well, you can understand, you can measure the difference and understand, "Hey, this consumer is highly likely to purchase. She has high intent." So, we measure that as well.
Stephanie:
Got it. So, selling swimwear online seems difficult, at least when I think about making sure the measurements are right, and it looks good. How do you showcase the fact that your swimsuits are comfortable, and I know that they protect you from the sun, and they'll also fit right. How do you display that messaging to the consumer to where they know that this will be a good fit and I'm not worried about getting something that would be weird on me?
Lori:
Yeah. So, what's interesting about that is from the very beginning, again, it was about inspiring that sense of childlike joy. We always show the consumer a diverse set of women both from age, race, background, size perspective, and that's really core to who we are at Summersalt. And so again, I think she trusts us as the best friend she brings in the dressing room because of how open we are ... Still showing, I think aspirational and joyful women, but still some reality there that's quite different than the approach that traditional retailers and really particularly swimwear brands have taken in the past.
Stephanie:
Yep. I definitely got that feel when I was looking through your website. I'm like, "Uh, these people actually feel like me." Where oftentimes, especially on Instagram, and you're looking at swimwear companies, it's always the skinny models and very tall and you're like, "Okay, well that's not exactly me, and I'm not in off the coast of Italy or whatever they're doing it feels so detached from reality." And I liked how when I was browsing your website it's like you could see people from all walks of life and all different body types and it made you instantly feel a little bit more secure with browsing through the swimsuits knowing that there will be a good fit for you there.
Lori:
And I think the other thing that's interesting swimwear, pre-internet was purchased in great quantities via direct mail. So, it really is a category that's conducive to try at home or buy at home, and we knew that before launching Summersalt, and so many other brands of yesterday and particularly post-COVID-19 are not in the space, so it gave us a ton of whitespace to go after and scale very quickly.
Lori:
And also, from the very beginning, it was never just about swimwear. It was always about building those concentric circles out from swim that fill her wardrobe and closet with all things Summersalt and starting with things that are comfortable, cozy, and then meeting her where she is right now. But what's interesting is, we had already launched loungewear, pajamas and cozy comfy sweaters in Q4 of 2019, which has been wonderful for us.
Stephanie:
Yeah, that's definitely very good to have that now. I'd love to talk a little bit about how you go about designing your product, because I think I saw that you guys have about one and a half million measurements from people, and I'm wondering how you use those data points to create a new product, what does that process look like?
Lori:
So, what's interesting about the body scans is that we had developed a modular approach to allowing the consumer to mix and match the perfect building blocks of the swimsuit. So, whether that's changing the neckline, or the leg height, or the seat coverage, or the bra, or the lining, or the straps, or the back, it was a mix and match approach, which in reality is an unlimited license to continue to create on an ongoing basis. Systems still hold that basic fit, and so that's the approach we took 10 years ago and we've benefited from that at Summersalt, every new style that we're bringing out. It allows us to not have to move at a snail's pace, we can roll out new products at an exceptional speed and then have confidence that they're going to fit the consumer when we bring them to market.
Stephanie:
Yeah, that makes sense. Do you guys have a full on data science team who's working behind the scenes to make sense of the numbers and give suggestions and things like that?
Lori:
We do. And it's phenomenal, and just the level of detail because we're 100% sold ... Almost 100%, maybe not quite 100% sold on our own platforms. We have all levels of data by style, by skew, by size, any comments from the consumer, or any return rates, or return reasons? We can go and view that data and then make those incremental improvements that make such a difference over time. It's quite different than how most major brands work and certainly major retailers.
Stephanie:
Yep. Yeah, I completely agree. So, how are you organizing the data in a way that you can make quick decisions? Because it seems like with all those data points coming in, you would need some nice dashboard to be able to just look at each week to then be able to make adjustments like you are talking about. What's best practices on that?
Lori:
So, what's interesting is we have the query database that pulls in data from multiple different platforms. And so at least eight right now, I believe, and then we are able to take that and cross reference across platforms. So that for instance, from a return or reason perspective, we want to see the sales data on one platform, but we need the return data from another as well as the reviews from a third and we can cross reference and make sense of it all in a way that's clear on a particular dashboard and certainly ... Again, it's a type of situation where we have set dashboards that we work from, but then we're trying to answer maybe a new question, and we continue to build there on an ongoing basis as well.
Stephanie:
Yep, any adjustments that you've made to your site where you've seen increases in conversion or less returns or any big strategic plays you've made there that have helped with the consumer experience or a buying behavior?
Lori:
So, my co-founder is an amazing UX designer by training, and so we are constantly measuring conversion. The UX user experience is super important to us in Summersalt and we're making incremental improvements all the time on an ongoing basis. So, if you see us make a change, and it stays long term, it's probably because we've seen a lift in conversion or along the way.
Stephanie:
Yeah, that's great. So, you guys founded the company in Missouri, right?
Lori:
We're based in Missouri, St. Louis, Missouri.
Stephanie:
I'd love to hear a little bit about your experience, because I haven't talked to many people who founded a company there. So, I want to hear what your experience has been around building there. What advantages do you have for not being in high cost of living area like the SF Bay Area, like a lot of people are in New York, what is that experience like for you?
Lori:
So, what's interesting about building a startup and particularly a consumer tech startup in the Midwest, is that we have a unique view of the entire country that I think is a bit of a challenge for brands that are truly coastal, maybe they're an asset for New York. And if you think about the consumer brands of the last 50 years that have gotten to critical scale, and I'm talking the Nikes of the world, or even Spanx, a lot of times they're not coastal, or they're not in the major tech startup hubs. And we believe there's something to that, there's something about being the merry band of outsiders and I don't know if you've read the Nike bio, but they talk about that a lot there. It's their brand their way, we're doing it our way.
Lori:
Not that you don't borrow from the best practices of other startups, certainly. But at the same time, you're authentic to who you are as people, as founders, as well as authentic to the brand, and to the consumer. And that is working for us. And so we're grateful to be based in St. Louis, I do think fundraising outside of the coast can be very difficult, particularly at the earliest stages. And if you think about it, less than 3% of venture capital goes to women founders, less than 20% is what is outside the major hubs of New York, San Francisco, and Boston, so the odds were for us, and the earliest venture stages were tough, and we heard, No, many times, particularly at our seed round, but thankfully we persevered.
Stephanie:
Yep, yeah, I saw that you guys raised 26 and a half million or a little bit above that?
Lori:
Yes.
Stephanie:
Yeah, that's huge for this kind of company. I'm wondering what lessons did you learn going through each round, and how did you close that final, large round on the third time?
Lori:
So, I think, honestly, the large round was the easiest, and I think it has to do with the proven numbers. Whereas when you're at seed in series A you're still selling yourselves as founders, as well as the concept. And I mean, it's a bit of a stretch for two women founders, and starting with swimwear as a garment category. Now, we always intended to be that larger lifestyle brand, and we're certainly executing on that now. But it's still difficult at the early stages to convince people that, that's the one, that's where you're going and see that you can do it.
Lori:
And I'm grateful that we have amazing investors on our team, and that we were able to get it done. Lessons learned, I think one of the most interesting lessons we learned along the way is ... I can give credit to a researcher at Columbia, Dana Kanzi, and she somewhere in 2017/2018, published an article in Harvard Business Review. Around the questions investors ask female founders, and I don't know if you've seen any of this research, but 65% of the time, women founders are asked what she refers to as prevention questions and 35% of the time promotion questions, and the opposite is true for men. Male founders, men are asked 65% promotion, 35% from it prevention.
Lori:
And the strategy we took immediately upon seeing that research is to always answer a prevention question or a promotion question it doesn't matter, with a promotion answer and not to get into that cycle of mitigating risk, which is essentially what happens as a female founder, if you're asked a prevention question you answer in a small way, here's what we're doing to keep us from failing, here's what we're doing to be the biggest and best possible we in the company can be, and it makes a big difference in the outcomes with regards to fundraising. And I'm a big believer that all women founders, and probably as it's important for all women in general, to really learn how to advocate for themselves and to not answer questions in the risk prevention the smallest way possible.
Stephanie:
Yeah, that's great. I want to dive a little bit deeper into that, because it's interesting. What is another or a few examples of a prevention question, and how would you answer that? And then what's an example of a promotion question just to make sure I fully understand the two?
Lori:
Sure. Okay. I was speaking to an MBA classroom, probably 18 months ago, and I told the Summersalt story, told our growth trajectory, fundraising path, clearly, we were hitting the top 1% metrics from a growth perspective worldwide as it relates to venture capital backed consumer startups. So, having this big story, and the first or second question I fielded from the class was essentially a prevention question and the answer was, given your extraordinary growth, how are you going to manage the crazy amounts of inbound, negative customer comments in regards to ... Like essentially just assuming that given our growth, we were going to have a lot of complaints. There was no reason for that type of question.
Lori:
And I took that opportunity to say, "Hey, stop, let's talk about what just happened, and certainly you asked me a prevention question, would you like to reframe?" And he did, and I think I'm sure, hopefully, we'll never do it again. But that being said, just understanding that happens a lot to women founders. And ironically, it's not just by male investors, its female investors too. And so, just understanding our own biases to make sure that we're allowing founders to paint their opportunity in the biggest possible way is super important.
Lori:
Promotion questions would be telling you about your growth plan to get to as XYZ number next year, or where are you going to be in three years? What's the biggest market opportunity? What's your next step? What's your next product category after swimwear? What's the fifth product category? So, all of those things, how do you reach your consumer on an ongoing basis increase that lifetime value and repeat purchasing behavior? So, all those things are growth oriented. Risk oriented would be anything that was around minimizing the bottom as opposed to maximizing the top line of the revenue.
Stephanie:
Got it. Yeah, I love that. That's such a good reminder, whenever someone's phrasing something in like a fear based approach, or like you're already set up for failure type thing, you don't need to answer that. And I like that just stopped them and said, "How about you rephrase that to actually ask a meaningful question instead of trying to have me go down like a negative spiral and answer it in a way that's going to hurt me ultimately." So, that's great. So, did you pick any investors that were strategic in the D2C swimwear space? Or how did you go about finding a good fit of investors?
Lori:
Well, swimwear in particular, I think there are very few venture backed companies, and I believe that as a category, it's not something that particularly male investors can relate to. And so maybe had been underfunded for that reason. In the past also, there were a lot of old school legacy brands that are sold with many, many multiple middlemen in swimwear space. So, a lot of licensed product that's essentially sold through independent sales reps, and then eventually through major retailers and so there was just huge opportunity for disruption there and we knew that. We certainly have many investors that have D2C experience just not in the swimwear space.
Stephanie:
Got it. That reminds me of Sara Blakely story with Spanx, when she's pitching all those investors and they're like, "I don't see a need for Spanx." And then I think one of the investors wives tried it on and they're like, "This is amazing." But it's sad, because you can't convince some of these investors like, "Well, this is what women need." And same thing with swimwear. A lot of them are probably like, "Ah, a bathing suit is a bathing suit." They don't understand why that is not the case.
Lori:
Yeah, and I think, again, it's about the early stages it's tougher than now we certainly have the quantitative metrics to back up our success, as well as to paint the bigger picture from a growth perspective.
Stephanie:
And how do you keep track of your inventory? When I was thinking about your waitlist earlier, what have you learned to maybe help not have as big of a waitlist or work on the inventory maybe issues? So, we've heard a lot of that happening, especially for the companies that have come on the show so far, who've gone through Shark Tank, and they've had huge surges in demand, and then they're trying to figure out their supply chain. Is there any best practices that you guys have found we can copy?
Lori:
Yeah. So, a couple of things, we have a robust planning process that we're managing on a daily basis, but certainly on a weekly basis, making adjustments. We do a couple of things incredibly well. We certainly forecast for growth, which that's ... If you've never worked with a venture backed company, and you're a planner, it's completely different than planning 2% up year over year. Like we're talking significant growth rates.
Lori:
And so we have a top line plan that we're looking to target. We have an overall breakdown of apparel to swim by month, were buying to that. And then what's different about Summersalt Is we launch multiple limited editions on an ongoing basis, and those are planned to sell out in two to three weeks. And so, we really plan obsolescence and have a good idea of what our weekly sell throughs are going to be throughout the year.
Lori:
And so, I think that we're quite sophisticated actually in our approach to inventory, as well as planning for those limited editions while we still have core product always available as well, that urgency that comes from the limited editions is interesting. And then on the other side of things on the supply chain side, you just have multiple amazing partners across the world, and so as we started to see supply chain disruptions this spring around COVID-19, that diverse supply chain set that we have and their ability to move at our speed.
Lori:
And remember we have that legacy of quick turnaround in manufacturing allows us to scale quickly to shift manufacturing quickly to mean into product categories that are important to the consumer right now, for instance, loungewear, while she might not be wearing a resort dress, if that makes sense, and to be close to her knees at any given time, which is critical and has proven invaluable, particularly this year, as we're both scaling and dealing with the COVID-19 supply chain disruptions.
Stephanie:
If someone didn't have a background like you and they're like, "I'm really looking to get into apparel or something." What steps would you tell them to find the right partner, manufacturer, or factory? How would you go about it if you didn't have anything to start with?
Lori:
So, the Commerce Department, you can actually track down Asian factories, we can look at our numbers on all pain tags or garment labels in garments. So, if you want to start taking notice of who's manufacturing what product and where that's a good way to do it. And then, I think there are several ... If you're looking to start on a small scale, there are several mini-manufacturing organizations and particularly in LA, that have domestic manufacturing as well as in New York.
Stephanie:
Okay, that's cool. Yeah. I always wondered, how do people find all these great partners who work so well? I mean, you also hear some of the bad stories as well. But a lot of people who've come on the show so far have good partners and I haven't asked the question is like, how are you finding these people? It seems so hard for me to think about working with someone in other countries who maybe haven't met before, and just interesting to think about that process. Would you advise companies starting out to always have more than one factory partner or? Because I'm thinking right now we were just talking about with like, everything with COVID. A lot of people are having problems with their supply chain and their manufacturers. Do you think a lot of people should pivot now to always have more than one, so they're not over reliant on just one partner or how are you all thinking about that?
Lori:
We believe in diversification, for sure. And of course, because we have multiple product categories. We certainly by definition, have multiple factories by their areas of expertise, but we want to have redundancy for all categories as well. And I think COVID-19 has certainly brought to light why that's important. But it's important from a fair pricing perspective, it's important from a logistics perspective. And also, as you continue to scale and you're in growth mode, like we are at Summersalt, it increases your capacity that much more.
Stephanie:
Very cool. So, another thing I was curious about originally, I saw that you were selling swimwear under your name, which, to me you have a great name. It's very designery, and then you shifted over to sell under Summersalt. And I wanted to hear what that process was like and why you switched to not selling under your name anymore?
Lori:
So, I think a couple of things. First of all, we wanted Summersalt to be a true disruptor in the space and sit next to other direct-to-consumer brands that are disrupting the category. What better name than Summersalt, right? We were amazed that it was still available.
Stephanie:
That's a good name.
Lori:
Yeah. And this idea that we're turning the industry upside down, as well as evoking the sense of summer and salts, and all things joyful and fun. So, first and foremost, it really was about building a brand of the future. And also, I don't need to be the center face of the company at all times. In fact, I've enjoyed just my role as CEO. And I certainly love to design and I have a very trained eye but I think my skill set is around building the business in whole so I'm very comfortable just letting Summersalt stand on its own. It doesn't need to be my name, for instance.
Stephanie:
Got it. I think that's always a debate when founders are first starting a company it's like, "Do you want to build a brand around yourself and have your name be the company or pick a unique name?" So yeah, that's interesting to hear your thought process behind that. So, little higher level eCommerce question. What trends are you most excited about over the next year? What are you following? What are you preparing for?
Lori:
So I think, fortunately for us, but unfortunately for our country COVID-19 has brought a once in a lifetime adjustment to the retail industry. And some forecasts are that as much as 50% of physical stores, particularly mall based stores are likely to close over the next 18 months. And what we know is that that demand is not going away, those sales are probably going to move online and so they just tailwinds and eCommerce in general, for brands like Summersalt are phenomenal. And I think it's truly being in the right place at the right time, having the ability and the resources to scale at a time when the demand is climbing. I mean, we see almost unlimited potential there.
Stephanie:
Is there anything you're changing from things that you've seen over the past six months or so that maybe you weren't thinking about prior to this? It can be a business model, website anything.
Lori:
So, I think the biggest thing for us is that the opportunity for Summersalt is bigger and it's sooner than we anticipated. So, this idea of being the go to eCommerce brand for our generation of women and consumer for women like us, she has fewer and fewer choices both in store and then physically. And then also a lot of the brands that she's turned to over the years, are struggling tremendously due to the COVID-19 headwinds.
Lori:
And so just knowing that she is likely to go to brands that she already knows and trusts I think we all in this time have a sense that we have so much change, We don't want to try just completely new brands, but Summersalt particularly she already knows us, she loves us, she's familiar and is able to know and trust the product as well as the consumer experience. It's really in our favor.
Stephanie:
Yeah, I think trust is so important and key right now, especially in this environment. Are there ways you go about garnering that trust, whether it's like developing a community and help generate word of mouth among your current consumers? How do you think about building that up?
Lori:
So, we have an amazing community of customers, women on social media, as well as an awesome customer happiness team. I don't know if you saw but in the midst of COVID-19 we launched Joycast, which really was a text based platform for women could customers, not just women, customers could text us and we would send back a little clip, or joyful uplifting message, video, image, anything that made her life a bit happier.
Stephanie:
That is great.
Lori:
We have an amazing customer happiness team that's led by a group of women that are either in a counseling program or they have a master's degree in English. It's just really all are great communicators, and have super high empathy for the consumer. And it's a quite a different approach than any of our D2C counterparts are taking. And what's interesting is the consumer has responded to this group and to our approach for customer service.
Stephanie:
Yeah, that's really fun. Did you see anything come from that experiment that you didn't expect?
Lori:
We had a lot of people that responded, it was amazing. Hundreds, thousands of texts, which was fantastic and it allowed us to feel like we were supporting her through a very difficult time. And I think our customer happiness team loves doing their part to make the world a little bit happier. And it was a difficult time for everyone.
Stephanie:
Yeah, I completely agree. So, before we move on to the lightning round, is there anything that I missed that you were hoping I would ask?
Lori:
No, I think that you've done amazing. Yeah.
Stephanie:
Oh, thank you. Well, let's move right into the lightning round then, it's where I will ask you a question and you have a minute or less to answer. Are you ready, Lori?
Lori:
I am ready.
Stephanie:
All right. If you were to create a Netflix original or documentary, what would it be about?
Lori:
Oh, I think the Netflix original would be about my life as a mom of two boys and my life as a startup founder and how at times it seems like those are completely two different worlds. But somehow I managed to navigate them both hopefully well.
Stephanie:
I would watch that. I have a lot to learn. So, I'd be your first viewer.
Lori:
Or not so well.
Stephanie:
It's a balancing act for sure. What's up next on your reading list?
Lori:
What's next on my reading lIst? I think I just finished a couple of interesting books but the one next to my bed is Million Dollar Brand.
Stephanie:
Is that good? I have that on my list.
Lori:
I think it's great ... Oh, sorry. Billion Dollar Brand not a million dollar. Let's Let's do that one again. The one on my reading list, next to my bed right now. Let's do it again.
Stephanie:
Yep, what's up next on your reading list.
Lori:
The book that is on my nightstand right now, next to my bed is Billion Dollar Brand sent to me by one of our investors.
Stephanie:
And are you enjoying it? I have that one on my reading list as well. I haven't gotten to it yet, though.
Lori:
It's great, and what's interesting is, I personally know several of the founders that are referenced in the book, so it's great to hear their early origin stories and hopefully they'll write a subsequent chapter on Summersalt.
Stephanie:
They will. Very cool. Yeah, I definitely have to check that one out. What new piece of tech are you enjoying most right now, it could be an app, it could be something you're using at Summersalt, that you are just trying out. That was exciting around tech that you're using.
Lori:
Tech wise, we are always using the latest and the greatest, but I think in the COVID-19 environment, I've never been more grateful for Slack. We used it pre-COVID but now that we have 100% fully remote team, our team was already somewhat integrated with Slack but now it's part of our day in and day out every minute.
Stephanie:
Yeah, us too. I love Slack. What new product are you most excited about launching? Or are you working on behind the scenes that no one else knows about?
Lori:
We have a few things that are top secret, but-
Stephanie:
I want to know them.
Lori:
We had some amazing loungewear launches this spring and summer. And I'm super excited about continuing to build out loungewear as a category and particularly for Q4 gifting. I think the consumer is going to be blown away.
Stephanie:
Cool. I can't wait. I'm all about loungewear these days.
Lori:
We all are.
Stephanie:
All right. Yes. Last hard question. What one thing will have the biggest impact on eCommerce in the next year?
Lori:
Oh, it has to be the store closures and the continued consumer reluctance to actually even go and shop in store and so just understanding that the growth of the category. Clearly it's taken 10 years to get to this point as far as adoption of eCommerce and I think we're going to see another 10 years worth of growth in the category in the next 18 months.
Stephanie:
Yep. Great answer. Lori, it's been a blast. Where can people find out more about you and Summersalt?
Lori:
Please go to our website summersalt.com, spelled like summer the season and salt like the seasoning. And then of course, we're on LinkedIn as well.
Stephanie:
That's the best way to describe Summersalt. I like that. Well, thanks so much for coming on the show. It was really fun and we will have to have you back once you hit that billion dollar mark.
Lori:
Thank you so much. I really enjoyed it.
Stephanie:
Yeah, same. See you next time.
Lori:
Take care.
If you want to keep up with what’s going on in the eCommerce industry, the best thing to do is to go straight to the source and ask. But where can you find a group of eCommerce business owners openly talking about their pain points, sharing tips about how they grow their businesses, and combining their knowledge to solve problems together?
Does such a mecca exist?
Andrew Youderian is here to tell you that it does. Andrew is the founder of eCommerce Fuel, and on this episode of Up Next in Commerce, he discusses how he built a community of more than 1,000 seven-figure eCommerce business owners, plus he shares all of the insights he’s gathered along the way. From questions about Amazon, to a crash course in community-building, to the single metric he says should guide eCommerce businesses today… Andrew divulges some of the industry’s best-kept secrets and more in today’s interview.
Key Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
---Transcript:
Stephanie:
Welcome back to Up Next in Commerce, this is your host Stephanie Postles and today we're joined by Andrew Youderian, the founder of eCommerceFuel. Andrew, welcome.
Andrew:
Hey, thanks Stephanie. I appreciate you having me on.
Stephanie:
So, is a weird feeling a podcaster being interviewed by a podcaster? What are your thoughts right now?
Andrew:
I think it's great. You have to do all the work and I can just sit back and relax. Well, unless you send some really pointed questions my way, so maybe I shouldn't be relaxed, so we'll see.
Stephanie:
Oh, yeah. I don't know.
Andrew:
But, yeah-
Stephanie:
You might have to sit up straight and get ready, this might be intense.
Andrew:
This may be, I need to stop slouching here. But no, it's good. Good to be on, it's fun to be on the other side of the mic for a change.
Stephanie:
So, I want to dive into your company eCommerce Fuel. I looked at it and it seems awesome. It seems like you have gathered so many insights from this company that you've built all around eCommerce, but I want to hear in your words what is eCommerce Fuel?
Andrew:
At eCommerce Fuel we provide community content and capital to seven figure plus store owners, and so we do that through an online form which is really the heartbeat of our community. We've got over 1,000 vetted store owners, and the idea was really just get a lot of people together that are doing this day in and day out, that we're running seven... our average store owner is probably doing three or four million dollars a year with their business, so that's community aspect. We also do a big event every year for our community through content, like you said I'm a podcaster. I've been doing the eCommerce Fuel podcast for I think it's about seven years now, which is crazy.
Stephanie:
Wow.
Andrew:
And then we have a capital arm as well where we invest in promising eCommerce businesses. We have 20 investors that have a lot of similar experience or world class experts, everything from Facebook marketing to email marketing to product design and so we invest in companies that we think are interesting, so that's what we do at eCommerceFuel.
Stephanie:
That's such a cool model. So, for you podcast I think I saw you had over 300 episodes.
Andrew:
Yeah. I think, actually I think we're... yes, we do. I've been, like I said, been doing it since July 2013. Yeah, been going at it for awhile. It's been fun.
Stephanie:
Yeah, that was really cool to look at your backlog and the guests that you've had on. So, your business models' really interesting how you have a capital arm and community, I mean two things that I would say are very hot right now. Everyone is always thinking about of course being investors, I mean at least here in Silicon Valley that's everyone's dream it seems like. And then building up a community is something that we've heard a lot of guests mention on the show, like how to properly build a community. What was your idea behind starting this business and having those different arms of the business?
Andrew:
They came in stages, so in a nutshell, left the corporate world and got my teeth in eCommerce for starting in 2008 on a couple different eCommerce businesses and built those up. So, I had a sense of this space and nobody was talking about eCommerce unless it was like from a Home Depot or like a Lowe's, like a, you know, Fortune 500 style?
Stephanie:
Mm-hmm (affirmative).
Andrew:
And so I started writing about what it's like to grow an eCommerce business for a small team or a single founder and developed a little bit of a following on the blog, started podcasting, and then from there that kind of just naturally led to me meeting all these great people and I thought what if we got a bunch of people in a community together that had some kind of vetting thresholds and just made sure everyone had some level of experience? And that launched the community and built that up over time and then the capital arm is fairly recent, really recent in fact, it's about five or six months old. That just came as a natural extension of seeing all these interesting entrepreneurs that hopefully we'd built some trust and report with, or that people knew about us from the time running the business. And then also just a really great group of investors who also had not just money, but a lot of in the trenches experience and advice to lend, so it kind of came in stages.
Stephanie:
Yeah, that's really cool. To start with the community aspect, what are the vetting procedures that people have to go through? How do you know who to bring in to keep it a high quality community? Because I think that's biggest problem when you're getting in all these Facebook groups or communities, you're like, "Oh my gosh, just everyone's in here and I'm actually not learning anything." So, what does it look like to get into your community?
Andrew:
Yeah, you're right. I mean, if I could only do one thing well in a community it would be bring the right people into it. So, our guidelines are a little nuanced but you need to be operating a seven figure business. If you have a very proprietary product that you've made from scratch or that is a little harder to make sometimes we'll take people in kind of the mid to high six figure range. If you're selling just on Amazon usually we require a little bit more than that, so that's on the revenue threshold sides.
Andrew:
So, we keep it no major SaaS vendors, and then for service providers we're really careful. I'd probably say only 10% of our applicants that we accept are service providers and they need to be recommended by an existing member because you can... An amazing email marketing expert that knows the space, that is respectful of people and isn't going to come in at a hard pitch and is going to build relationships the right way through adding value, is a huge asset. But we want to make sure those are the type of people we have and not people who are just trying to sign somebody up on the first day, so.
Stephanie:
Yeah, that's really important. How many people are in your community now?
Andrew:
We have about 1,100 members in the community.
Stephanie:
Okay. How did you go about building that up? What is your method of bringing new people into the community? How do you get in front of people and even tell them about eCommerceFuel?
Andrew:
Community building's interesting. You've got this chicken and an egg problem, right?
Stephanie:
Mm-hmm (affirmative).
Andrew:
And the way that I did it was when I was blogging and podcasting early on about eCommerce, just over that probably 12 month period really focus on not trying to monetize the business or anything, just trying to build authority, get a little bit of a reputation, and connect with people. Over the course of a year, just naturally, organically, met about 100 to 150 really interesting people. And any time I did, I'd just put a little tag on them in gmail and say, "Community seed member."
Stephanie:
Oh.
Andrew:
So, a year in a had this list of 150 people and I reached out to them and said, "Here's what I'm doing. I'm starting a community, are you interested?" And then over the course of about 30 to 45 days I dripped in, I added, about four or five people a day. I'd bring them in, I'd introduce them, I'd introduce them to other people, I'd ask them questions, kickstart discussions, and so it gradually grew. I didn't just drop everyone in at once, and it took about like 45 days but we had a bit of a community at that point. And then from there I had over the last year built up some traffic to the website, was able to put up a page that said, "Hey, here's the community. You can join," and that gave us kind of... because you need both things, right?
Stephanie:
Mm-hmm (affirmative).
Andrew:
Like in community you have to have new people come in because you always have a drop off even in the most healthy. So, from it was able to kind of, with a lot of work, get to self sustaining within probably 18 to 24 months, so.
Stephanie:
Wow. Yeah, that's great. And it is a paid community?
Andrew:
It is, yes. It's a paid community, so it's... yeah, it is. It's $99 a month.
Stephanie:
That also helps... Okay, yeah. I'm sure that also helps with quality and bringing in people who are serious and really want to learn and contribute to get their monies worth.
Andrew:
Oh, it helps so much. I mean, for a couple reasons why. We have, just like you said, on the vetting side, yeah, it shows that people are actually serious about this. The other nice thing is it gives us the resources to do things like hire a real community manager. We have someone full time that their whole job is just to vet people to make sure that if people have questions that don't get answered they can move them to the right people. It let's us invest in technology, we've probably poured six figures plus into the custom tech for the community, so yeah, it makes it a lot easier.
Stephanie:
Yeah, that's really cool. When it comes to keeping the community engaged, because to me that's one of the biggest things to make sure people keep renewing their membership and they want to check in everyday and see what's new and see who's talking, how do you go about keeping them engaged? And maybe what have you seen works and what didn't work? Like any tests that you've done where you're like, "We've tried this and this failed," or, "We tried this and this really increased engagement a lot and helped keep it going?"
Andrew:
I think the best thing you can do, two things, the first thing is to actually have discussion and content that are highly relevant to what people are doing day in and day out. So, again, kind of going back, if you get the right people in the same room that's 80-90% of the battle. From that point, setting up custom notifications is really important. So, some of the custom tech that we've talked about, when people sign up we don't just blast them with every single discussion that pops up, that's crazy, right? They'd just drowned in a fire house because we have like 5,000 comments every months in there. But we do try to figure out like, hey, what are you an expert in and what are interested in learning about? And then when they join we tailor their notifications to try to create the highest level of a signal to noise ratio possible, and so that's another thing. The third thing is just maintaining a really respectful environment, like we have a pretty strict no jerks rule. I probably shouldn't say this, but I get a lot of pleasure out of throwing people who are just downright disrespectful and just, you know, kind of just generally unpleasant out of our community because they're horrible.
Stephanie:
Yeah, good. Boot them.
Andrew:
And also non-solicitation. We kind of have a one strike, one warning, and then if you do it again you're out. So, we don't put up with pitches, you know, if people are hard pitching stuff they're out. So, I think those are the big things that help with maintaining an active community where people keep coming back to.
Stephanie:
Yeah, those are such good points and it's not only applicable to your business but even thinking about any eCommerce business of how to build up... I mean, everyone talks about building these communities but how do you actually make it helpful and personalize it to people in a way that people want to engage on your social media post or they want to engage on your blog or tag themselves wherever they're in your clothing or with your mug or whatever. So, I think these lessons actually can apply across industries as well and not just upon building a community like you're doing.
Andrew:
Yeah. Community building, it's interesting, it's kind of like a brand. It is a brand. It's insanely hard to get up and running, like the amount of time and energy and love and relational just work that you need to put in, I don't say it in a bad way, but just building relationships takes a tremendous amount of work. It takes a ton of time, just like building a brand. But it's insanely defensible, I mean, if you're willing to put in that, you know, if you have a multi year approach. You can't steal people's friends, right?
Stephanie:
Yeah.
Andrew:
And that's what happens, whether you're building a community for your brand or kind of a micro niche community like this for eCommerceFuel, is people come in and they stay because they get value and they stick around for a couple months but then they come to an event, they connect with people via PM, and then build genuine friends. I don't know, you'd be hard pressed to tear me away from my good friends and it's really defensible in that department, so.
Stephanie:
Yeah, I agree. I love that. So, you probably get a lot of really good insights into the world of eCommerce and where things are headed just by some of the questions that some of the members in your community are asking each other, and I wanted to know what kind of top questions do you see occurring right now where it's like quite a few people are asking the same type of question or these same things keep popping up?
Andrew:
Yeah. Let's start with the 500 pound gorilla in the eCommerce space, and that's Amazon. Some of the questions I think people are asking on there is how do I... I'll just go through a handful of them and then maybe we can talk about ones that are most interesting to you. If I'm selling to wholesalers, should I let them sell on Amazon? How do I control my brand identity on Amazon? There's some interesting popping up right now about how... I don't know if you've noticed this, but Amazon Prime used to be for awhile it was free shipping, then it was two day, and it was one day, and now it's like-
Stephanie:
Yeah.
Andrew:
... three to five days if you're lucky depending on where you live.
Stephanie:
Yeah, I did notice that and I was like, "What's happening here? Usually I can get my stuff for my son in like a day and now it's taking a week."
Andrew:
Yeah. It's kind of crazy, and of course because of just with COVID eCommerce is blowing up, the capacity is limited on the delivery networks. But it's interesting because it kind of levels the playing field at this moment in time for independent brands because the shipping factor is not so much of an issue, and in fact a lot of people are probably are almost in... If somebody gives you something and takes it away it's worse than if they just had never given you anything to begin with, right?
Stephanie:
Yeah. Yeah, yeah I feel way more sad right now than I ever would have before this.
Andrew:
Exactly, right, because the expectation's there. So, that's creating an interesting opportunity. One of the things that Amazon just recently came out with I think in the last couple days was re-introducing... Way back, I don't know, two, three, four, I don't know how many years ago, multiple years ago, you used to able to ship your products from Amazon's warehouses to customers. You could use them as a 3PL fulfillment center without Amazon branded boxes. They changed that for many years and just this week I think they changed back to saying, "Oh, actually you can use our fulfillment services with your own proprietary boxes," or at least with unbranded boxes. And I think potentially... Who knows why they did it, it was kind of perplexing to a lot of people, but perhaps because they realize that they're losing on the shipping game and other merchants maybe are starting to migrate other places and if independent merchants are able to deliver the same shipping without Amazon maybe more then we'll move off. And one thing that we've done, we've done a State of the Merchant Report for the last three years, and our one for this year should be hopefully coming out fairly soon. But a trend that is really noticeable is the number of people that are going to Amazon is really... it's not reversing but it's plateauing very significantly.
Andrew:
And even just chatting with merchants and seeing a lot of case studies, people are taking a lot harder look at is it worth going on Amazon for how much channel risk you take on, how much loss of control of the consumer that you give up, you don't have addresses, all these things. They're just taking a lot harder look at is this good for my business long term?
Stephanie:
Yeah. So, do you think 2020 will show that a lot of people are pulling back from Amazon?
Andrew:
That is a good question. I think not a lot of people, but I do think when we released the report I made this prediction in the report too, so very likely could just fall on my face in the mud here, but I think the percentage of people who sell on Amazon, it was about 55% of all stores that we surveyed last time, I think that will decrease a small amount. I don't think we're going to see a precipitous drop but I think it goes from 55% to maybe 54 or f... I think we start to see that inflection point.
Stephanie:
Yeah, that's really interesting. The one thing I also read in your 2019 report was about the different marketing channels that people were using and I saw that Amazon ads had the highest ROI but not many people are using it, so I'm wondering what are your thoughts around that aspect of using it as a marketing tool?
Andrew:
Yeah. No, it's... Wow, good prep work. If you're on Amazon, Amazon ads you have to have a... people reported them being the most effective sales channel that they use. So, if you're on the platform they work really well, so definitely should be doing that if you're on the platform. I think it's just more of a... it's not a question so much of should we use Amazon ads if you're on the platform, you absolutely should. It's more of a question of do we want to be on Amazon in the first place? But, yeah, for people selling on Amazon they work really well.
Stephanie:
Yeah, okay. But then the other interesting thing I saw was that the average order value was way lower for... because if it's maybe a direct to consumer site or anywhere else people can maybe stack on additional things from your brand, where I think I saw on Amazon the average order value was much lower which makes me think you're not getting that, hey, you should maybe also try this from my brand and this from my brand as well and kind of increase the cart value.
Andrew:
I think that could definitely be part of it. I think a big part of it too is that if you have people on Prime there's no free shipping threshold, right? Have you ever ordered a... what's a good example here? Like a $3 koozie and it shows up and you're like, "How did they pay for the shipping for this? They lost money on this." Or even better, you order a $7 paperweight set that weight like 10 pounds and they ship it. There's no threshold so it's easy to impulse buy small stuff on Amazon.
Stephanie:
Yeah. Good point.
Andrew:
Whereas if you're buying from an independent merchant not always, but more often than not you're going to have some kind of free shipping threshold. So, either you're intentionally going to seek it out or you're buying multiple things so I think that probably also has a big part in why those order values are different.
Stephanie:
That's a good point. That's a good reason to look further into data and not just look really quickly like I did through the report. So, what other trends are you thinking are happening either right now, because a lot's been changing because of COVID and things are kind of just all over the place where some people are struggling, some people aren't. It seems like the market is changing quickly. What other trends or things happening do you see that people are surfacing in your community, or are you building into your next report coming out?
Andrew:
Yeah. So, eCommerce obviously no surprise here is just exploding, and we did a survey, this was in March when the world was falling apart and nobody knew what was happening and it was much more uncertainty than there even was now, and you saw early on in that you kind of saw a very big dip for the first probably week when COVID really started spiking and being taken seriously. And then you saw kind of half and half, half the businesses were doing okay or growing and half were failing, now I'd say you definitely have some businesses that are really struggling. If you're in the event space, if you sell items in the event space, any of the kind of in person things are having a hard time, but by large I'd say most of our stores are doing, you know, most of the industries are doing really well so that's fantastic. One thing that's tough, it's a downside, and anybody who's selling is probably going to be aware of is just the sales tax issue in the Unites States is just an absolute disaster, just on making-
Stephanie:
Tell me a bit about that because whether-
Andrew:
It's just a dumpster fire.
Stephanie:
I don't know if I... well, I actually probably have avoided anytime I see tax I'm like, "Oh, no thank you." So, I would love for you to dive in a bit and tell me why is the sales tax a disaster because [crosstalk 00:18:28].
Andrew:
Yeah, so I'll try to be somewhat brief because you could probably talk about this for quite awhile, up until two or three years ago pretty much the case was if you... The only places you had to collect sales tax for was if you had Nexus in a state. So, if you had... I run a business out of Montana and Arizona, so Montana doesn't collect sales tax and so traditionally we've only had to collect sales tax in Arizona. There's a big Supreme Court case that came across in 2017 or 18. It was Wayfair versus South Dakota and pretty much the shakeout from that was that the Supreme Court said that states can require sellers that are outside of their state, they have no physical presence in their state, if they sell to a customer within their state they can collect sales tax on them if they reach a certain threshold. If they sell either a certain dollar volume in that state or if they have a minimum number transactions for that state. And it could be as low as 200 transactions and $50-100,000. So, the problem that causes is that now you have companies who create this economic Nexus and now all of a sudden they have to be responsible for collecting and submitting sales tax not just to 50 states but to potentially sometimes all these different municipalities and cites, and just creates a disaster of a compliance thing.
Andrew:
So, you've got companies that have sprung up to try to deal with that, and one top of that, if you sell on Amazon, technically if you have inventory... Normally, you send your inventory into Amazon and they a lot of times will split it up in three or four warehouses so it can be delivered quickly. Well, technically now if you have those inventory in those four states you have Nexus in those states and you have to also collect sales tax. So, it's just on the Amazon front, on the independent front, it's just created... We don't have any central governance for this. What I think would be best is if the federal government kind of took it over and said, "Hey, we'll create a national sales and redistribute." But at the moment you either have to deal with an insane amount of complexity, especially as you get larger, or you have to run the risks of being out of compliance and facing huge fines. It's a really rough place to be.
Stephanie:
Wow. How are you seeing eCommerce companies tackle this? That is not something that I've even thought about honestly, and it kind of scares me to ever start an eCommerce store now.
Andrew:
Yeah. There's a lot of different ways. Sometimes there's places... I have a company called The Tax Valet that helps out, they do a really good job. Kind of a personal hands on approach to doing this. Some merchants will use SaaS software like Taxify or TaxJar to be able to do that kind of stuff, Avalara as well. And some people just roll the dice and say, "Hey, this is a nightmare I'm not going to try to deal with this," so there's a lot of different... it depends on your risk tolerance, it depends how big you are, but people are taking a lot of different approaches to it. But to do it right it's really unfortunate.
Stephanie:
You'll have to hire someone.
Andrew:
Yeah, hire someone or really go deep on the SaaS side of things and dive in.
Stephanie:
Yeah, that sounds messy. Well, earlier you were talking about the howling out of eCommerce and I wanted you to talk a bit about that because we're talking still about the trends and what it's going to look like in the future, and I thought you had an interesting take on that so I'd love for you to go over that if you could.
Andrew:
Sure. And again, of course totally could be wrong here, but when I look forward into the future I feel like Amazon's going to be hallowed out in the sense that, or excuse me, eCommerce is going to be hollowed out in the sense that you have... On one side, you have brands on Amazon that sell either one or two things, they're either well known national brands, like the... well, I don't think Nike sells on them anymore so that's a bad example, but the... Why am I blanking on big national brands here? Tide for example could sell on there or Rubbermaid or Adidas, brands people... household names. They sell on there because it's just they know that brand, they go find it, and they want to buy it. You have people who are selling really small things, like we're talking about koozies or you needs stapler, or maybe you need a little backyard pool for the fact that your cousins are coming over and you really don't care if it breaks in three weeks and so you buy that. But then for anything in the middle that's like kind of not a huge national brand but also something that you want to have that's quality, I think a lot of those companies are going to start... people are going to buy much more from the companies themself, direct to consumer.
Andrew:
Because they can merchandise them better, the shopping and check out experiences are getting easier. I think brands are increasingly not going to sell on Amazon because there's, in addition to all the things we talked about, you also have huge IP issues and people ripping you off. So, I think that's going to be the hallowing out of eCommerce when Amazon's going to be a big donut and in the middle a lot of people are going to be selling directly on their own sites just because it makes more sense for all the reasons I mentioned, so.
Stephanie:
Yeah, that's interesting. We've also talked a bit about the conscious consumer that's kind of rising out of all this and how people are starting to care about what is the source of this product, is it actually sustainable? Is it a quality product? And less about can I have more and more focused on quality and sustainability. Have you heard that trend as well in your community?
Andrew:
Yeah, I would say I think that's something that's been kind of gradually increasing over the last five to 10 years. I think more than anything how it ties into our conversation is that Amazon over the last couple of years, and they've been fighting it and they've done some, to their credit, they've done some things to combat it, but they still have a... If you buy something on Amazon most people are not going to think it's... there's a little bit of a thought that it's probably not high quality, a little bit of a stigma for buying stuff on Amazon especially if it's not a name brand. Part of that-
Stephanie:
Even the name brands people wonder if it's it... is this a legit name brand, I've seen that a lot in comment and reviews.
Andrew:
Oh, totally. Partially because of review manipulation, partially because of counterfeiting, and partially because there's just a lot of... I mean, there's everything on Amazon so how do you filter through it, right?
Stephanie:
Yeah.
Andrew:
So, yeah, I think that's part of going back to that [inaudible] about the hallowing out of eCommerce unless it's a brand you absolutely have faith in or it's something that you don't care about the quality. Would you rather buy one of those borderline things from Amazon and roll the dice with an unproven brand, roll the dice with one of those mid-tier brands being counterfeited? Or, especially if you can get it just as quickly either because Amazon is shipping stuff really slowly or because increasingly independent merchants can deliver it more quickly with some of these other options via straight from the horse or straight from the source rather. So, yeah, I think for me that's how the quality issue ties in I think to the larger discussion.
Stephanie:
Yeah, that makes sense. Do you think that is why the drop shipping model has kind of decreased? I saw on your report that that is not as big of a thing as it used it, and I just remember... maybe even like last year, over the last couple years that was a huge thing. Everyone just said, "Start a eCommerce company and just drop ship things and let other people take care of it for you." What are you seeing with the drop shipping trend?
Andrew:
Yeah. So, when we talk about drop shipping I think it's important to differentiate two different things that come into people's minds. One is drop shipping, you can build a great high quality business based around drop shipping. A couple of businesses I started were drop shipping based businesses, one of them's still, under a great new owner, is still doing well. Really at the end of the day it's less about the product quality and more about how it's delivered. So, like Home Depot for example, they drop ship a ton of their stuff, some of their even big name brands because they're can't afford to hold everything in stock and that can potentially work out reasonably well. I think where it got a really bad reputation with all AliExpress side of things and so where-
Stephanie:
Yes, that's the stuff I read.
Andrew:
Yeah, right. And that's a whole different ballgame, and for people who, you know, if you're not familiar with that the 30 second version is you go onto AliExpress which lets you pretty much ship pretty much ship products directly from the factory in China to consumers in the US very cheaply through some kind of loopholes in the postal service. You can set up a store really quickly but by and large the products are garbage. They're just crappy, so that I think is where... There was a big rise in that, people ran that for a while, tried to run with that, but the problems were you couldn't build a brand around it because the products were awful, and because it took weeks to get your product to your customer, and probably because most likely if you're launching one of those businesses you know nothing about the product, so.
Stephanie:
Yeah. Never seen it, you don't even know if it'll make it or not.
Andrew:
Yeah. But even on the other side I'd say, that all aside, even if you're selling really good quality products, Amazon in the last five years has completely solved distribution. When I started for awhile I sold trolley motors, I sold CB radios, and back in those days you really could get a business up and running purely by sourcing a relationship with a wholesaler, doing a decent amount of marketing, having reasonable customer service and you were in business. But like today if you know what you want to buy, you know the brand, and you want it at a fair price, at a reasonable quickly you're probably going to go to Amazon for something you discreetly know that you want. So, Amazon's solved, at least before COVID and probably still I'd say a large degree, they solved distribution. So, how do you add value? You got to add value through some other way, usually that's through a lot of education or a really curated product line if you're going to sell existing products and those can be harder to get right. So, I don't think drop shipping is completely dead but I think it's gotten significantly harder versus even just two or three years ago.
Stephanie:
Yeah, that makes sense. So, one question I always try to ask on here is about metrics and data, and with access to your community I want to know what kind of metrics do people talk about as their success metrics or what do you hear people debating about when it comes to metrics behind if a business is doing well or not?
Andrew:
Yeah, I think the one everyone loves to talk about is revenue, right? But I think that's probably a pretty horrible metric to use. It's easy, and we're totally guilty of it, that's one of our thresholds for even membership. So, guilty as charged, I'm going to slay myself along with everyone that I slay here. We use it because it's easy, we use it because it's socially acceptable. It's way easier to say, "I do three million in revenue versus I made $600,000 last year. It's also way easier to say, "I did three million revenue," than, "Oh, I only made $20,000 last year and that was I didn't pay myself anything," right?
Stephanie:
Yeah.
Andrew:
But metrics that I think are most important, one that... To be totally frank, in the community we don't talk a ton about... a lot of our conversations really don't revolve around what metrics should you track. Bottom line is a big one, of course. Conversion rate's a big one, average order size is a big one. Repeat purchase rate is a big one. And I'd say we don't have tons of conversations about them, but I think probably the most important ones to think about today are repeat purchase rates because advertising is doing nothing but getting more expensive. It's getting harder and harder to get in front of people without paying the big tech gatekeepers. So, the more likely a customer is to come back to you and needing that product the more likely you can actually build a viable long term business, that's a big one. I think profitability per visitor is a huge metric. It's harder to calculate but if I was going to run my business on one metric it would be profit per visitor to my website. And the reason I say that is because it encapsulates a lot of things, conversion rate, traffic, all these different things.
Andrew:
But it really makes you focus on pricing. If I would have to identify the one thing that I have done across multiple businesses in my life that has had the biggest impact and taken the least work, hands down it would be pricing. And so few people play with it. Some people can't, a lot of people can. And it's terrifying to change prices because we all fear that when you change the prices that your business is going to disappear, but that rarely happens especially if you do it in a really smart way. And what you should be maximizing is your profitability per visitor, at least for new customers at a minimum. So, yeah, those are some of my thoughts on metrics, and again we don't... total frank, we don't talk a ton about... those aren't the hot topics but I think those are some of the things to really think about.
Stephanie:
Yeah. So, now you've opened up, what are some of the hot topics? What are some of the heated debates that are going on behind the wall?
Andrew:
That's a good question. You know what, let me pull it up.
Stephanie:
Yeah, open it up. Let's see.
Andrew:
I'm going to pull it up here.
Stephanie:
Sounds good.
Andrew:
So, we have a cool little feature. Let's just surface all the top discussions from the last year. So, I can't... for confidentiality I got to be sensitive, but here's some of our top stories from the last let's say month. The story about how someone sold their brand, their business that they built over the years and just the emotional rollercoaster and what they learned, and how they were looking to hire multiple... How to use influencers on YouTube to build an eight figure business.
Stephanie:
Oh, that's a good one.
Stephanie:
Yeah, the influencer one is interesting to me because it kind of brings about the question of the social shopping experience and how the US is so based... right now, I mean, a lot of people are looking towards influencers. Whereas other markets, like China, are not really as much about that. It's more about the social shopping experience. What were your thoughts, or what was the debate when it came to the YouTube influencers and how they utilize that, and do you think that's a longterm trend?
Andrew:
Yeah. I think one of the big themes I've seen is that the really big influencers a lot of times are spendy and hard to track, but you could potentially get a better ROI if you focus on helping maybe working with smaller influencers either for less money or just for product. Because it's, I don't know, I don't know about you but when I'm on Instagram and I see someone using a product, and especially if they even mention it in any little way I'm immediately a little suspicious. I'm like, "Is this person really like this product or are they just getting it comped and they're having to fulfill their end of the agreement that they signed up for?"
Stephanie:
Yeah, especially the more popular they are, like as it goes up to the really popular famous people then I'm like, okay, do you actually use that whitening strip? How much are you getting paid for that?
Andrew:
Yeah, and so I don't think influencer market is going away. I mean, we've had famous people endorsing things for decades, maybe 100+ years, especially in the United States, but I do think, yeah, I just think you can also waste a lot of money on it if you're not doing it carefully.
Stephanie:
Yeah, I completely agree. So, on your podcast I'm thinking, this is like self serveant, so I'll go with it, but what are some of the best questions that you've asked your guests before where you continued to get the best answers or the best stories?
Andrew:
Oh, good question. One of my... A couple ones, I would say what's the biggest mistake, or what's... excuse me, what's the last thing you apologized for I think is an interesting one.
Stephanie:
That's a good one.
Andrew:
I think another one is what's your number? Like, what's your number to be happy, like if you had X in the bank and what's your number where you'd be happy without having anymore? It's interesting to get a sense. You get numbers from all over the place from a million to 100 million, sometimes bigger, so.
Stephanie:
Oh, gosh.
Andrew:
Yeah. A lot of the questions are very specific to the individual person and their story, but for two general ones I'd say I like those ones and get some really interesting ones those times.
Stephanie:
Yeah, that would be really interesting. A good kind of peak into who that person is or how they think too. I like that.
Andrew:
Yeah.
Stephanie:
So, I know we haven't gotten to talk about the capital arm of your business yet and I wanted to kind of go into what that was like starting it up and what kind of issues you were encountering when starting a capital arm? What does that look like and I want a little behind scenes for the new side of your business.
Andrew:
Sure. Well, thank you. I appreciate it. Yeah, and I'll say in total transparency, like I said, very early into this. We're only about four or five months into this, so still pretty new. But you asked, and specifically were you hoping to know kind of some of the hard parts about starting that?
Stephanie:
Yeah, like what was the... not the thought process, because that seems pretty obvious like you have this great community and you maybe see some of the challenges that are going on, but what was it like starting a investment arm and what kind of challenges have you run into so far in the first four months?
Andrew:
Yeah. So, what it was like, it was terrifying. And I think-
Stephanie:
Sounds like it.
Andrew:
Yeah, traditionally you kind of have these two approaches where either you go out and raise a bunch of money and then you get all these commitments and you close on it and then you have to go out and put this money to work. It's kind of your life for the next often 10 years, and it's a traditional fund route. The other route is what's called syndicate where you pretty much do deals on a deal by deal basis, which gives you a lot more flexibility but the problem is every time you get a deal you got to go pass the hat and call a million and half the people are out, you know, of those half a quarter of them decide at the last minute that... like the funding process is a nightmare on that side. So, putting it together I kind of did something of a hybrid of those two where we have a group of about 20 investors that are tentatively in. I know them, they trust me, I trust them, and there's kind of a... they signed an informal thing that says, "Hey, I'm in for the next three years for this amount of money." So, hopefully it gives us the flexibility of not have to go out and deploy money just to deploy money, but we can also can be a little flexible, and we can also have the commitment from some people to go forward.
Andrew:
So, that's totally on the technical fund side, probably super boring to most people. But in terms of some of the challenges, I think that the challenging thing is just the number of deals you have to look at to try to find a good deal. I mean, I looked at over 100 deals so far at some level of depth and it's just finding, A, just good companies, B, where it's a good fit for both parties, and C, where you can see it working out well for everyone. It's really hard to find good deals, especially as a minority partner that comes in to invest, especially on the eCommerce side because our approach and what we're trying to do is buy, invest, in the long run with companies to build profitable businesses, like we're not trying to flip them. And I think in tech investing you can get away with a lot of sloppiness because you're kind of swinging for the fences. So, if you have a bunch that don't work out it's a big deal, most of them don't work out.
Stephanie:
They don't.
Andrew:
But with eCommerce, our model... we're looking to do singles and doubles and it's just hard to find really good businesses that you feel are going to be around for three to five years. So, the hardest part for us has just been finding great businesses that we feel check all our boxes, so.
Stephanie:
Yeah, that makes sense. Is there a common theme behind what these businesses are needing capital for?
Andrew:
Yeah, I would say... So, financing for eCommerce businesses is tricky. There are some options out there, there's things like Shopify Capital, there's ClearBank, there's PayPal Capital, Amazon Lending, all these things, but they're expensive. They also take a... often times you don't pay them back on a fixed rate, you pay them back on a percentage of revenue which can be good and bad. So, inventory financing is a big one but I'd say the people that we talk to it was probably half and half. Half of them want money for inventory financing to grow the business and half of them just really would love to have someone who has spent $15 million on Facebook ads in their career to be able to help them and give them some high level guidance on what to do and some thoughts there, or someone who's done a lot of importing to be able to tap into that knowledge based in that network, so.
Stephanie:
Yeah, I agree. When were thinking about fundraising back in the day I was like, "I actually don't really care about people's money as much as are they going to help me?" Like, I really don't want the most famous investor because I highly doubt they will spend any time with me. I want the person who's ready to get their hands dirty and help me with the nitty gritty stuff that I'm looking for help with.
Andrew:
Oh, totally. Yeah, there has never been... There's so much money sloshing around right now, right? And so there's a lot of places that get money, which is good if you're raising money, but it's greed. I think the real value ad is the experience side and the money is just kind of a nice perk that comes along with it often.
Stephanie:
Yeah. Yeah, I completely agree. So, you've been looking at a lot of businesses and you have a lot of businesses in your community, what is one thing that you wish online sellers would either start or stop doing?
Andrew:
Start or stop doing...
Stephanie:
I like to throw out the hard balls.
Andrew:
Yeah, no this is good. I would say I wish people would start having more fun with the copy in their business. So, one thing I always... and I didn't, I can't claim-
Stephanie:
That's a good one.
Andrew:
I can't claim credit for this one, but I've always liked to try to make the copy and confirmation emails and things like that fun and interesting and a little bit different as opposed to like, "Thank you for your order. Your order is 49732. We appreciate your business." Such a great... Transactional receipts are one of the most opened emails across all emails, shipping ones absolutely, and if you're trying to build a brand there's no better point to be able to, you know, have some fun and be able to be different and differentiate yourself, right? So, I think that's a big one. You can extend that to the product packaging, your website, all that stuff. But I would say take a little more risks and have a little bit more fun. I would check out a site called mancrates.com, have you heard of them?
Stephanie:
No, tell me a bit about them.
Andrew:
They're so good. They're so good. They sell fun gifts for men, so for example, instead of ordering your dad a tie you can order him a 16 inch by 16 inch wooden crate of beef jerky and steak rub that he has to open with a crow bar when it shows up to his house, Like stuff like this that's different.
Stephanie:
Oh my gosh.
Andrew:
And the copy is freaking just hilarious. So, check them out if-
Stephanie:
Oh, that's good. I'll have to check that out.
Andrew:
Yeah, they're really good. It's just you're buying an experience for the recipient and people pay up for it, so.
Stephanie:
Yeah, now more than ever with people not going out as much, not going in stores and stuff, you do have to figure out how to differentiate yourself. And I think that's a good point that, I mean, right now I'm even thinking I bought something and I'm getting the actual logistics email of DHL or whatever will be shipped at this time, and it's all this other text that I don't care about, so it's like, "Okay, I actually don't care about this email that's coming through." And if they would've made it unique and fun and exciting... like I don't even know what this is that I bought, that's how bad it is. There's no branding or anything, it's just coming apparently.
Andrew:
Yeah, if they were like, "The DHL guy had a wreck but your package was so important that he grabbed it from the fiery box and he crawled with one arm bleeding out and he handed it to the last person he saw and said, 'Deliver this, please. Deliver it to Stephanie,' and then he died."
Stephanie:
Oh my gosh.
Andrew:
That might be intense and maybe it doesn't work for all brands, but it sure as heck gets your attention and you're like, "Whoa, this is interesting."
Stephanie:
You need to write for our brand. I'm going to bring you on our team, Andrew, just for your copy. I need that. Oh man, that's good. All right. So, I want to do a higher level eCommerce question because I just think you're, one, you're willing to take a risk and you're willing to predict the future which I like. I appreciate that. So, I want to hear either what disruption is coming to eCommerce that's not already here, because a lot of people have said, "Oh, COVID's the biggest disruption." That answer's already been taken, so either the biggest disruption or you can tell me what the future of online commerce looks like in five years.
Andrew:
Biggest disruption coming, I'll try to tackle both of them. Biggest disruption is I think that... man, it's just coming from the guy. You talk about be willing to predict the future, I made a bet with somebody when Amazon was $200 a share that Alibaba was gonna out pace it. And now that Amazon is $3,000 a share, it was a humbling experience and it cost me a very experience steak dinner. That being said, here's my prediction...
Stephanie:
That's all right. I want your prediction still.
Andrew:
I would say the biggest disrupter, oh man... I'm going to throw a couple things out there, I think text is going to be a big one, SMS. But that's not like a big disrupter as much as just a new marketing channel that us marketers can leverage for awhile until we completely destroy texting for everybody which will probably take three or four years.
Stephanie:
That's a good one though. What are thinking around using that as new marketing channel?
Andrew:
Oh, I just think, I mean, if you look at the... I think email is just getting harder and harder unless you really want to hear somebody's email. So, I just signed up for the service HEY, are you familiar with that from Basecamp?
Stephanie:
I've heard about it and I seen a bunch of drama on Twitter about it, so.
Andrew:
Yeah. There has been... probably between them and the App store and all that kind of stuff?
Stephanie:
Yes, yes.
Andrew:
Yeah. So, one of the reasons I signed up for them is because they have this thing where you can screen your emails now, and the first time you get an email from a new sender you can say, "Hey, I want this person to pop in my inbox, or no, Johnny, from Michigan I don't care about your boat covers. Don't ever talk to me again. It's unsolicited." So, that kind of thing, I think email is going to be... there's going to be more and more tools and services that let you curate your email and really slice down who gets to hear from you and so email is going to get harder and harder. But if you look a just text message delivery versus email it's an order of magnitude higher engagement, readability, click through, et cetera, and I think that marketers are already, I mean, they're already starting to do that. People that I know that are on the leading edge have five, I haven't six figures, but definitely seen some good mid tier five figure SMS lists and they just do really well. So, the problem is you got to be really careful because when people text me about things that I'm not interested in... like texting for me is very personal. I text my wife, my family, my good friends.
Andrew:
I don't text with Bobby's Boat Shop in Michigan, and if he sends me a promotion via text I'm going to be pissed off. So, you got to be really careful about how you use that but I think that will be a big marketing channel going for, so. Not really sure if that's really a disrupter and it's already kind of here in some regards but I'll throw that one out there.
Stephanie:
Yeah, I like that. I think that's a good one though to think about how to be careful when you start using these new channels, because completely agree. I've had I think someone just texted me this morning who's like, "I'm the education blah, blah, blah person of your district." I'm like, "What are you texting me right now? Don't."
Andrew:
Oh, totally. You can really... and I think there's some pretty stiff penalties for not being careful about that in terms of if you just spam people via text, which is good. But yeah, nothing's worse than getting a text from someone you really don't want to hear about, so.
Stephanie:
Yeah, I agree. All right. So, next we have a lightning round, if you're ready, Andrew. It's where I'm going to ask you a question and you have a minute or less to answer.
Andrew:
Perfect. For each question?
Stephanie:
Yeah.
Andrew:
Awesome. Is there like a booing sound if I go over so I stop talking?
Stephanie:
No, it'll just be me, "Boo! Boo!" in the background.
Andrew:
Do it, do it.
Stephanie:
All right. What's up next on your Netflix queue?
Andrew:
I don't really... Oh, actually I do have... what is it? They're in Arizona, there's a place called Biosphere 2 where they locked all these people into this kind of self contained environment as a training mission to go to Mars, and they isolated them from earth atmospherically for two years, and surprise surprise it was a huge trauma fest. Can't remember the name of the movie but that's what I'm watching next on Netflix.
Stephanie:
Oh my gosh, that sounds insane.
Andrew:
Spaceship Earth is the name of the documentary.
Stephanie:
Spaceship Earth, okay. I will have to check that out. Very interested in that, and I also pontificate about Mars sometimes on our other show Mission Daily, so it's perfect for me.
Andrew:
Oh, perfect. Watch it tonight.
Stephanie:
All right. Where are you going next for your travel destination when you can travel?
Andrew:
Probably down Tucson, Arizona where... I'm up in Montana right now, but probably Tucson, Arizona which is where we live, so.
Stephanie:
Cool.
Andrew:
That's kind of a cop out. I need a better one.
Stephanie:
Wait, you live in Montana and you live in Tucson?
Andrew:
We're up here, we spend some time in the summertime up in Montana just to see family, friends, like that.
Stephanie:
Oh, cool.
Andrew:
Yeah, so we're heading back there soon. Don't have any plans at the moment but the next big trip I would like to take would be to Mongolia.
Stephanie:
Oh, that would be very interesting. Do you have an Instagram? I'll have to follow along when you go there.
Andrew:
@capalisthippie, so.
Stephanie:
Okay, I'll follow you. If you were to create a Netflix original, what would it be about?
Andrew:
Oh, this is easy. It would be... I'm fascinated with the question of where is the balance between running a business and being ambitious and chasing entrepreneurial success and having a great life and traveling and seeing your family and nurturing other side of yourself, and I feel like so few people get that right. So, my documentary would be pick 12 entrepreneurs from varying levels of that spectrum, live with them and follow them for two months each and try to come to some conclusions about if you were going to try to design your life to be able to maximize both of those, where's the line?
Stephanie:
Yeah. That's a really good one. I need help with that right now.
Andrew:
I think a lot of us do.
Stephanie:
Yeah. What podcast guest are you trying to get on that you just can't get, like they're just not responding and you really want them?
Andrew:
Oh, that's a good one. I think awhile we were trying to get Tim Ferriss on the show, which is super cliché. It didn't work out.
Stephanie:
Ouch.
Andrew:
Yeah, I know. I'm still upset about that, Tim.
What is the favorite piece of tech that makes you more efficient?
Andrew:
Good question. I would say text expander is a big one so you can do saved replies and bump those out. Yeah, I'd say that's probably one of my favorite. Asana is another great one. I love Asana for we manage all our SOP's and long term projects there, so I'd say those two.
Stephanie:
Yeah, completely agree. I like them. All right, the last one, what new eCommerce tool are you hearing about that a lot of people in your community or outside of it are having success with right now?
Andrew:
I would say there's a tool called Bonjoro, and it's not necessarily just for eCommerce, but it allows you to send custom welcome videos to people really easily. If you think about sending a video to a customer it's probably not the filming that's the hard part, it's probably like the okay, I have to film it and then I have to send it, and then I have to edit and export, and it just lets you cue up these emails, send videos to people for kind of nicer customer service touch. So, yeah we use that for onboarding for a lot of our members and I've heard people have good luck with that, so.
Stephanie:
That's cool. Well, Andrew, this has been such a fun interview. Where can people learn more about you and eCommerceFuel?
Andrew:
Yeah, if you like podcasts, which at the end of listening to me talk for 45 minutes you prob are-
Stephanie:
Do you want more?
Andrew:
... a glutton for punishment, yeah. I would love to have you as a podcast listener on the eCommerceFuel podcast, so you can get that anywhere you get podcasts, iTunes or elsewhere. But yeah the big home is just eCommerceFuel.com, so you can learn about the community there if you're a store owner and want to get plugged in or if you have an interesting business that are looking for either money or probably more importantly some expertise from a group of really experienced eCommerce investors. Yeah, I would love to have a discussion with you. So, eCommerceFuel.com is the best place for all that stuff.
Stephanie:
Well, it's been a blast, Andrew. Thanks so much and we will see you next time.
Andrew:
Yeah, this has been fun. Thanks for having me on.
In today’s digital age, even the most traditional enterprises are moving processes online. Unfortunately, though, the shift to online is not as simple as turning on a faucet.
Wolseley Canada is a leading wholesale distributor of plumbing, HVAC/R, and waterworks products and earns more than $1 billion in revenue each year. Today, the company has one of the industry-leading B2B eCommerce sites, but getting to that point in their digital transformation hasn’t been easy. Gail Kaufman, the Vice-President of Marketing & eBusiness at Wolseley Canada, dropped by Up Next in Commerce to walk us through how she has helped lead that movement online, and the speed bumps they encountered along the way.
Gail touched on everything from building the initial backend infrastructure to the replatforming experience that happened as they learned more about their customers and what they needed from an online experience. But what did they need? And how did those needs affect the training of internal employees and the shift toward implementing A.I.? Everything is connected, and you’ll find out how.
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
---Transcript:
Stephanie:
Welcome to Up Next In Commerce. This is your host Stephanie Postles, co-founder of Mission.org. And today, I have Gail Kaufman on the show, the vice president of marketing and eBusiness at Wolseley Canada. Gail, welcome.
Gail:
Hi, Stephanie. Thank you so much. Glad to be here.
Stephanie:
Yeah, I'm really excited to have you. It feels like you're so far away, where are you calling in from?
Gail:
I am calling you from Burlington, Ontario, which is just about a half an hour Southwest of Toronto.
Stephanie:
I think you're our first guest on the show it's calling in from that area, what's the weather like?
Gail:
Perfect, it's beautiful out. We had a little rain last night. It's cooled down a little bit, but we've definitely been experiencing some very what I would call South Florida weather recently.
Stephanie:
Rain, something I miss here in California. My two-year-old always asks like, "When will it rain?" And he always brings out his umbrella and I'm like, "I don't know. Don't ask me." So Wolseley, I saw that you've worked there for over 14 years and I was really intrigued and I really wanted to kind of hear about what that journey's been like. What is Wolseley to start and then tell me a bit about your role and how it's transformed over the years?
Gail:
Well, Wolseley Canada is a leading wholesale distributor of plumbing, HVAC/R, and waterworks products. We have about 200 or so locations coast to coast, 2,500 employees. And we are part of Ferguson PLC, which is the world's largest trade distributor, plumbing and heating products. So very large organization in North America, and we are listed on the London stock exchange and on the FTSE 100 Index. So that's a little bit of overview of the company. Yeah, very large company. So yes, I have been with Wolseley for a number of years. And the role has really evolved since then. I started as director of marketing. And since that time, I've taken on a variety of different responsibilities under, still within marketing obviously, but the scope has then flowed and expanded over the years.
Gail:
In 2009 was when I got involved with the Ecommerce piece at Wolseley. The platform previously sat in business development and then it was moved over to marketing. And at that time, we had had a very long standing relationship with a digital agency who really pretty much drove the development and the day-to-day management. And so when we really started to get serious about eBusiness, it really made sense to transition that over into marketing where we could really sort of wrap it into our value proposition for our customers and give it the right focus. And so obviously that was a really great opportunity for me too. So that was really where my engagement with eBusiness started.
Stephanie:
Very cool. And was this something that you were starting to get interested in before they were making that switch or was it kind of like you were thrown into it like, "Here you go, you're going to take this whole business and it's coming into marketing, it's all yours"?
Gail:
I would say it was interesting because the world had started to change. Certainly in our channel, Ecommerce was not prevalent. But certainly sitting in marketing, it was like we need to do something here. So when I was given the opportunity to take that, it was good. It was a nice development for me, and I felt like we could really do something important with it. It was a direction that we needed to move in, and I thought I was in a good position to do something with it.
Stephanie:
Yeah, that's great. So just to make sure I fully understand, how were customers buying from you all before 2009 and then what did it look like afterwards? Because I haven't bought a HVAC unit recently, so I'm trying to think about how that worked for you guys.
Gail:
So in a very traditional fashion, our customers would interact with us through an outside sales rep or in a branch, pretty much that was it. I would say before 2009, we did have a presence online, but it wasn't fully transactional. So there was a website, someone could place an order. But in fact, they weren't really placing an order because it wasn't fully transactional on the backend. So 2009 is when we really got serious about having a fully integrated platform. So before then, it was really coming into a branch, calling a sales rep. And that's still very much how many wholesalers continue to operate.
Stephanie:
Yeah, I was going to say for this industry, I can imagine the people who are in this business getting used to doing things the way they always have like I always buy from this one company, I go into the store and they place a big order for me. How much education was involved when you start introducing online ordering? What did it take behind the scenes to change that consumer behavior to say like, "Hey, we have a platform now, go here instead"?
Gail:
Well, that's a great question and certainly one that comes up a lot. I can tell you it's been a journey. But invariably when this comes up, talking about engagement of our customers, I always have to say, first and foremost, this is really about engaging our own associates. It's making sure that they really understand the value proposition, that they are comfortable, that they are proactive in talking about Wolseley Express, really understanding how it impacts the customer from a convenience and efficiency standpoint. That is a very large piece of work unto itself. We recently did a survey with our customers and they indicated that the number one reason they tried the platform was because their salesperson recommended it. So that's a very influential relationship.
Gail:
So it's really important not just for our outside sales reps, but also for our branch associates. They have really strong relationships with our customers, so it's really about how do we start making Ecommerce and promoting Wolseley Express, just part of what we do? We're really great about talking about products, we're really comfortable with talking about pricing and competitive pricing. But it's like, how do we start to expand the conversation around value in other ways?
Stephanie:
That makes sense. What was the process like trying to retrain your employees who have maybe been used to something a certain way to then start being like, "Hey, make sure you also mentioned this, and this is the way we do business now"? What was that training process like?
Gail:
It's an ongoing training process, and it's really about giving them a level of comfort with the platform. They certainly don't need to be experts, but they really need to understand the why. So we have to look at different types of customers, there's different features that may resonate with some customers over other customers. There's training, there's coaching on how to have conversations. I think we have a pretty good approach to it actually because it's very holistic. So we're providing you the training, we're providing you the why, we've got a number of different tools that we provide. And we also really dig into our data and help them really understand the different types of customers who we would consider high potential customers, why we consider them high potential customers. And ultimately, it's about, A, identifying the customers and helping them have those conversations. So that's working down through our sales management network and our branch network. So it's a very multifaceted process, it's very hands-on.
Gail:
The other thing I didn't mention is we've talked about sort of the onsite experience and sort of why Wolseley Express is so helpful to a customer from a convenience standpoint and efficiency standpoint. But there's also, which I should mention is the whole training around the fulfillment piece. So if they have a great experience onsite, that's good. But if something falls down and the fulfillment part of the program where I didn't get the material or I didn't get the material when I was expecting to get it, that's a whole other area that we've spent a lot of time with our operations people to really make sure that we're closing the loop on that. So that's another piece.
Stephanie:
Yeah, makes sense. What parts of fulfillment did you invest in heavily that you saw the largest improvements from?
Gail:
It's really about system training, when a web order comes in, this is what it looks like. This is where you look on a sales order to make sure that every step of the way that people were picking up the orders because when an order prints out, it's sort of in with all the other orders. That's the way it works. So we need to make sure that we prioritize these, that someone's looking for them. Because we're not keying in the orders, we want to make sure that they don't get lost along the way. So the fulfillment is not much different other than the order comes in the same way. But in the early days, it was kind of strange because all these orders print out, so the people that are responsible for the customer they'll pick off their own orders.
Stephanie:
Like someone goes fist, thanks you very much.
Gail:
Because they're talking to that person either on the phone, maybe talking to them across, so there's this human interaction that's happening. But when you all of a sudden get this order that shows up, it's like these orders were being sort of just left. Well, that's not mine. Well, yeah, it is yours, it's everybody's. That's sort of the foundational stuff that we had to address at that level to make sure that all of these orders were getting processed with excellence.
Stephanie:
So when I think about wholesalers and industrial wholesalers, I don't really think about typical companies investing a lot in the user experience and making sure ... I mean, you were mentioning like convenience and having a good user experience on the site. Do you think there's an opportunity for disruption in this field, and how are you guys going about that to make sure that your customers are getting the best experience on the site that's also maybe translating to a higher AOV each time?
Gail:
Well, I think it's about knowing your customers. And so what we've been doing I would say over the past three to four years, we have invested a significant time and effort into our customer experience program. So that gives us a real time pulse on our customers. We use Net Promoter score, that's a very common way for companies to measure customer experience. So we are always constantly looking at NPS, reporting on it. We have a wealth of insights that we derive from that. And then we take all of that feedback, of course some of it's relating to online, some of it's not. But it's really about taking that feedback, closing the loop on it, and then really being aware of sort of those overarching themes that are emerging and then how do we address some of those through operational improvements?
Stephanie:
Did you see any similar themes that people were giving you feedback on that maybe you weren't expecting or it was kind of like an aha moment where you were like, "Oh, 20% of our customers just said the same feedback, we need to implement this instantly"? Any surprises there when doing this?
Gail:
I would say not a lot of surprises. But one thing that comes up from time to time, which shouldn't come up from time to time is pricing. We may get customers that will say, "Well, I checked out Wolseley Express, and I can always get a better deal when I go to your branch." That should never happen. And the reason that should never happen is because Wolseley Express, it's fed from the same system. So the price is the price, is the price. So that is an opportunity for us to go back and identify where we be having people doing overrides where they shouldn't be. So that's definitely a coaching opportunity that does come up sometime. And that is a great example of when you're really paying attention to that customer feedback and doing something with it. And so you can really address those issues because if someone's always thinking, well, I'm not going to use it anymore because the pricing is always wrong or it's always higher, that should never happen.
Stephanie:
Yeah, because it kind of creates a waiting game where the customer's like, well, I see a discount maybe in the app or in the branch or something like that, I might as well wait until that better price when really there shouldn't be any discrepancy to begin with. So it kind of creates a different mindset.
Gail:
And it erodes trust. And I think that's a key tenant of shopping online. And certainly in the early days when we were talking about how do you get your customers to engage with it? When they engage with it, you better deliver. So your pricing has gotta be right. They have to have the confidence that when I look online and I see that my branch has 100 copper tees. And if I place an order for 50, they actually have them. They actually have them, someone's actually going to pick up the order and they're going to actually send it to me. In the early days when shopping online wasn't that prevalent, there was a lot of, I would say, trepidation.
Gail:
So it was kind of easy for customers to talk themselves out of it and just think, "Yeah, I don't know. It sounds interesting, but I think I'll just call my guy. That way I know I'll get what I need." Trust and reliability is still really important, but I think through all of the efforts and through really focusing on not only the online experience but the fulfillment piece, it's not really an issue anymore.
Stephanie:
So what was that replatforming experience like? What drove you to want to replatform in the first place, and what was it like?
Gail:
There were some core enhancements we want made to address speed. A lot of it was relating to the architecture of the site, so there were some things that we needed to do to improve speed. A responsive design was certainly one of those things. So it was a real large project. And at this point as well, we took the development in-house at that time too. So we have a great working relationship with our IT group here. So how my group operates is we are working with the customers, we've got the infield sort of feedback loop working really well. We really drive the training and the education and the activation efforts. And all of the insights that we get, we have regular engagement with our IT team.
Gail:
We have a massive development list as everybody who has a site does. We're just working through it taking into consideration the priorities of the business, what's happening with our customers and then working with our IT partners to bring this stuff to life. So that was another major piece of this replatforming, allowed us to bring all of this stuff in-house, which ultimately gives us much more flexibility to manage what's happening. And of course, we go out and we grab all of the cloud based solutions that enable it to do what we need it to do. So how we did this, I don't know, I think it was like 18 months start to finish, which was a pretty good clip for a project of this size.
Gail:
And then of course came the reeducation process, again, starting internally. So we did a coast to coast road show, and I think we had about eight different markets where we went into and really tried to do some pretty in depth workshops with our own teams to really give them insight into what the changes were, most importantly, why we were doing them and what this meant for our customers, which was all good news. So that's when we went responsive and that's when we eliminated the app.
Stephanie:
Okay, very cool. So earlier we were talking about replatforming and all that, is there anything that you changed where you were like, this had the biggest driver of results or conversions or something? Any technologies you implemented or that you built in-house or anything during the replatforming process that you can attribute to having the most impact on the business?
Gail:
Oh gosh. When we replatformed, we actually changed up the whole user experience. We really spent a lot of time, we engaged some experts in that field to really help us make sure that it became much easier to navigate. When customers hit a site, they don't want to have to try to figure it out. They want it to be easy to navigate, they want it to be intuitive. So I would say how we organize the information, one of the things we did, we created my Wolseley page. So when you come in to the site, my Wolseley page is all there. And it's really well organized, it shows all your quotes, all of your previous orders. There's a little piece there on credit. All of your lists, all your draft orders, everything, it's all in one spot. And I would say that was a major step forward in terms of ease of use for our customers. I would call that out as one major thing.
Stephanie:
Yeah, that makes sense. I've heard, especially when it comes to the B2B side of Ecommerce, having it so that a customer can log in and just hit reorder or if they put in one piece of pipe. Hey, look at me I sound like I know what I'm talking about. And then it says, you should also order this as well, like add this to your cart too because you definitely need this if you're going to be using this pipe. Just thinking of ways to not only increase the order value but also just help the customer so they don't have a delivery come and then be like, "Oh no, now I don't have the key piece and I have to wait another week for a couple screws to come in," or whatever it may be. So I think that's a really important point about making it easy to use.
Gail:
Absolutely. You just prompted something. So when you're talking about customers also bought or did you remember, that's a really important part of it. So we have formed a partnership with the University of Toronto who are real leaders in the artificial intelligence space. And so we actually have been working with them for a couple of years and just recently have implemented AI on Wolseley Express. And that is really helping us with the recommendation engine.
Stephanie:
That's interesting partnering with a university. Tell me a little bit more about that. Did you give them a bunch of your data where they kind of ran it through the models and trained the models for you guys? What was that partnership like?
Gail:
Well, the partnership is on ongoing. And yes, so we thought who better to engage with than people that are really, really involved in AI to the extent that they are? So we didn't exactly know what we were going to do with it, but we do know there's a lot of different applications for AI. So it was like, "Gosh, how would this apply to our business?" So this was a real obvious one. We have massive amounts of data, so we did share our data with them. And where we landed on the project that we used as a landing off spot was we really want to improve the recommendation engine that we have. So that was a project that was chosen. Like I said, we just unleashed that just recently, a couple of weeks ago. And so we're working on other opportunities with them as well, there's other places that AI can be really helpful to us.
Stephanie:
Yeah, it sounds like such a fun project to not only partner with someone like that who is probably cutting edge and wants to try a bunch of experiments, but then also maybe starting to see some of the early results coming in where you're like, "I never knew that just showing people these two items instead of this one could result in a 50% increase in order size
Not many people trade in both a successful finance career and the chance to get a Harvard diploma for the opportunity to launch a business. But that’s what Sarah Paiji Yoo did. And when she found success and sold her first company, she knew that she could never satisfy that entrepreneurial itch by doing anything but building another company. Sarah went on to co-found a start-up studio and helped launch a number of other companies, including M.Gemi and Rockets of Awesome, but she craved more. Ultimately, she wanted to dig into something that served a deeper purpose.
Today, Sarah is a co-founder of Blueland, a consumer products company on a mission to eliminate single-use plastic packaging. The way Sarah and her team are accomplishing that mission has started with creating a new way to develop and use cleaning products and has included a stop along the way in the Shark Tank, where Mr. Wonderful himself, Kevin O’Leary, bought into the company.
On this episode of Up Next in Commerce, Sarah sheds light on common mistakes that young entrepreneurs make when they are starting out, as well as shares the secrets for avoiding those mistakes. Plus, she explains what the holy grail metric is for judging the health of your company.
3 Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
---Transcript:
Stephanie:
Hey, everyone. This is Stephanie Postles, your host of Up Next in Commerce. Today we have Sarah Paiji Yoo on the show, the co-founder and CEO at Blueland. Sarah, how are you?
Sarah:
I'm great, how are you, Stephanie?
Stephanie:
Doing well. And you're calling in from New York, right?
Sarah:
Yeah. Good, old New York City.
Stephanie:
Yeah, how's New York life right now?
Sarah:
New York life, it certainly feels ... It's funny, because I feel like in the beginning, we definitely were the hotspot of coronavirus. But now it feels like one of the safer places to be, given the high immunity. So, it's good. I think it's a little unfortunate that summer now, it's my favorite season in New York, so, it's unfortunate that we're still, for the most part, having to stay at home. But I think we got in our groove and it has definitely given at least my family the opportunity to force ourselves to find other ways to explore nature right outside New York City.
Stephanie:
So, I'd love to dive a bit into your background before we get into Blueland. Because I read some interesting things about you about having some Ecommerce companies in the past and dropping out of Harvard MBA program and I'd love to hear a bit about your journey of how you got to where you are today.
Sarah:
Yeah, absolutely. So, I guess if I were to start way back, I started my career actually pretty traditionally in finance and consulting. Certainly early in my career I actually had no aspirations to be an entrepreneur. I always consider myself relatively risk-averve so it is interesting to see how life unfolds. But yeah, I started my career very traditionally after those stints in consulting and finance, which I actually wouldn't trade for the world. I really appreciate the experiences and the skillsets that I picked up and the frameworks it gave me to really think about the world and business.
Sarah:
But after those stints I decided to go back to Harvard for business school, to really, most of all to be able to have the time to step back and reflect on what it was that I wanted to do next. Because I think my early experiences, if anything, taught me that I wasn't a lifer in terms of professional services, I really wanted to be more in the driver's seat and wanted to be at a company versus advising the company. And so, yeah, I made the decision to go to business school. And when I got to business school it was a really interesting time because there had been, right before I came, a series of female founders that had started very impressive companies, GuildCrew, Birchbox, Rent the Runway, LearnVest, Katrina who started Stitch Fix with just one year ahead of me in business school.
Sarah:
And that was extremely inspiring for me just to see a set of women who were young and had a very similar background or set of experience as myself and see them so quote, unquote, early in their career, setting out to build their own business. And I decided that given business school ... You can make what you want of business school but it doesn't have to be particularly rigorous. And so, I had more time on my hands than I did previously what I was working in, so I decided to really use that time and try to start a business while I was in business school. And a few months in I ended up starting work on my first startup, which was Snapette, which was a mobile shopping app that helps consumers find products and stores around them.
Sarah:
I was really excited about everything that I was seeing around smartphones and the mobile space. And this was still pretty early on. So, this was almost 10 years ago, pre Instagram days, if you can imagine a world before Instagram.
Stephanie:
Tough world to start in.
Sarah:
Yeah. Yeah, exactly. But yeah, that's the first business I decided to start while in school. I ended up raising a round of venture capital that summer between my first and what was supposed to be my second year of business school. And so made ... it was actually a very easy decision, to drop out of Harvard and continue to just work on Snapette. And I ended up scaling that business for the next about three and a half years to a small team, about 20 people. And then we ended up selling that business to one of the world's largest stock search engines at the time, called PriceGrabber. Again, almost four years in. And-
Stephanie:
That's amazing. What was the process like, selling the company? Did you actively go about selling your company or were you approached? Or how did that look? I heard a good quote the other day that companies don't just get acquired, you actually need to actively go and sell your company if you want it to be sold sometimes.
Sarah:
It's interesting because I've also heard the opposite.
Stephanie:
Oh, interesting.
Sarah:
Which I can related to both [inaudible 00:05:48]. I was actually worried with the phrase, but we were lucky in terms of we received an inbound.
Stephanie:
Oh, nice.
Sarah:
That tipped us off to, "Oh, this might actually be a good time to sell. And the context of that period was, I started Snapette at a time when Mary Meeker and a lot of these industry experts were saying, "Oh, mobile's going to be the future. People are going to spend more time on their phones than on their desktop," and that seemed inconceivable, the early days as she was saying that. And when we sold, that's when we were seeing about 30% of site traffic, to many of the major sites coming from mobile instead of desktop. So, it still hadn't flipped yet.
Sarah:
But it definitely felt like it was coming. And so, yeah, we had an inbound from a traditional, online, non-mobile player. And that kick started me to reach out to a few more folks in the space that had a similar profile, because if we were going to engage in these conversations I thought, "Let's run a robust process," because obviously competition can always help drive a better outcome. And so that's what I did. And ended up not really engaging a bank or anything. That's where my former finance experience definitely did come in handy because I did have experience buying and selling companies and so I understood ad a high level what that process looked like. And so, yeah, we were able to quarter back that process in-house and get a few offers and ultimately find an acquirer for our business.
Stephanie:
That's amazing. So, at that point you got the itch to start another company? You're like, "This is great. I'm going for round two."
Sarah:
Yeah. Yeah, yeah. Exactly, exactly. So, initially we had ... Not initially. We had a one year lockup with the parent company. And so our whole team moved over. And it was interesting, I think initially I was extremely excited about the prospect of being part of a much larger organization, that had much higher revenues and much larger budget. And I didn't expect how quickly ... I feel like day one, post-acquisition all of a sudden, the speed at which we were running, everything came to a halt. And all of a sudden my calendar was full of just meetings with lots of people back to back.
Sarah:
And I think it was hard. I think it was hard going from also this small, mobile startup where Apple would make an announcement about the newest feature and then I would get together with my team and our engineers and really think about like, "Oh, how can we integrate this? How can really use this to push our product forward?" And in a larger organization, completely understandably you have much longer product roadmaps, you need to justify why a change that you want to make is going to add more value to the company than some much larger initiatives that maybe underway.
Sarah:
And we were dealing with 18 month, plus product roadmaps, which to me at the time felt like, "Oh my god, if I have to wait 18 months to start working on some of these things, I'm going to be dead." So, it was an interesting contrast for me. And so, I certainly, definitely developed that itch to go back out and start something again. And I think also as a first time founder with Snapette, I had made so many mistakes along the way. And I was just dying to do it again but be better the next time around.
Stephanie:
So, then where did you go after that [crosstalk 00:09:35]?
Sarah:
Yeah, so after that, it's interesting, because I think ... my career, my life had been so linear til pre Snapette. But I think that startup journey really showed me both the joys and the benefits of just being being open to what life may bring and that really just reaffirming the Steve Jobs quote, "If you can't connect the dots forward, only looking back." And so, at that point I knew I wanted to get back into early stage company building. I wasn't proactively looking for my next business or the next idea, but I ended up reconnecting with a former acquaintance in the Ecomm space, Ben Fischman, who had also sold his startup, Rue La La, which was one of the first flash sale sites here in the U.S.
Sarah:
And he had sold his company right around the same time I sold Snapette. And he was exploring the idea of raising a fund and to start a series of new businesses. So, it wouldn't be a venture capital fund, but it would be more like a startup studio. And the thesis that we both share was that, at this point it was 2013, we believed that it was still very early innings in terms of direct-to-consumer. So, at that point Warby Parker was our, in way, that preeminent example of direct-to-consumer. But it was our belief that we would continue to see whole categories move direct-to-consumer, and many of which we've seen now come into fruition. I remember at that point thinking about, "Oh, we're going to see everything from shoes to socks to tampons to vitamins, etc. Everything is going to develop a new brand and find more efficient ways to directly reach and communicate with consumers."
Sarah:
And so, yeah, he was like, "You should come do this with me." And at that point, again, I didn't have a specific idea in mind. I knew that I wanted to be back in the company building stage. I loved the tech and direct-to-consumer space. And so, yeah, I jumped onboard with him and was a founding member and partner of that team. And so, that startup studio was called LAUNCH, or is called LAUNCH, it's still around today. And the goal was to then launch one new business per year, which is what we ended up doing. So, over the next four years we launched M.Gemi in our first year, Rockets of Awesome. M.Gemi is a direct-to-consumer footwear business. And then we launches Rockets of Awesome the second year, which is a direct-to-consumer subscription kids apparel business. And then we launched Follain, which is a clean beauty retailer. And in the last year that I was with LAUNCH, LAUNCH Trade, which is a direct-to-consumer coffee marketplace.
Stephanie:
Very cool. How did those individual companies do?
Sarah:
The individual companies have all been doing great. They're still around today, very proud of how far they've come. But it was definitely a crazy time. Certainly in a period where we've seen over funding and collapses, you know many important DTC businesses I think very proud to say that all those businesses are in great shape and still around today.
Stephanie:
Yeah, that sounds really fun. Chaotic and crazy but fun. Were there any universal truths that you learned? Even though the companies sound very different that you were launching there, was there anything that you found a best practice and then you could apply it to future businesses?
Sarah:
Yeah, I think the biggest takeaway, probably from launching multiple businesses is just the importance of focus and the importance especially of focus on product market that in early days I think it's very easy, especially when you are venture backed, either with access to capital or with this immense pressure to grow quickly, to grow into the valuations that you may have raised that it can be easy to fall into the trap to shift a lot of your focus to marketing and growing. But ultimately the best marketing is an amazing product or service that drives strong retention, strong word of mouth.
Sarah:
And any marketing spend that you deploy is going to be so much more efficient and effective if you don't have a leaky bucket. And I think that's one that is certainly harder, especially in this world where we celebrate large fundings and also companies growing very quickly. And I just think there's so much value, especially early days of almost staying smaller so that especially the founders can really focus entirely on product-market fit and making all the tweaks necessary to really optimize the product, service or offering.
Stephanie:
Yeah, I completely agree about that. How did you all go about finding or knowing when you had product-market fit? Were you like, "This is the one, let's move forward."?
Sarah:
Yeah, yeah, yeah. I think it's hard to draw that line in the sand, for sure. I think an important metric or area of metrics to look at certainly are around retention and repeat. Because ultimately there is a lot of focus, especially in D2C, on acquisition. And whether it's customer acquisition cost or cost per acquired customer, ultimately, that doesn't give you the full picture. That just tells you that you were able to have a clever ad and maybe you have attracted someone to make that first purchase. But it's certainly a lot cheaper to have your customer purchase again and repeat with you than having to go out into the market and pay for a brand new customer. And so, we've always been extremely focused on the retention metrics as a leading indicator to help the business.
Stephanie:
Yeah. yeah, that's great. So, then, at what point were you at LAUNCH where you were, once again, "It's time for me to move on, do my own thing again."?
Sarah:
Yeah. Yeah. So, I had a crazy journey and it was an amazing ride. I learned a ton about launching new business, having to do that back to back. But I think after my fourth year, after the fourth business, I developed a deep seated desire to do something that was a little more personally meaningful. I think for so many years simply the challenge and excitement of bringing a new brand or product to market that had never existed before was enough for me and it was incredibly energizing. And I still love that aspect of it. But at that point I was looking to build something beyond selling more shoes or beauty products.
Sarah:
And I think that also was heavily influenced by my becoming a new mom around that time. So, it's not coincidence that the number of years I've been working on Blueland is about the same number of years as my son's age.
Stephanie:
Yeah, it's funny how all of a sudden, same with me, you get interested in what's organic and what's actually natural and-
Sarah:
Hard to miss it.
Stephanie:
Yeah, it's something I never paid attention to that much until having kids.
Sarah:
Yeah, no, exactly, exactly, exactly. And I think you also start questioning how you're spending your time. You have very limited time, and thinking once you have children and a family it highlights more clearly for you the trade offs between work and rest of life. And I think, I was very open to how I would feel on the other side of motherhood. I was very open to maybe I wasn't going to want to work at all. Maybe I was going to be so obsessed with my child that I was going to want to spend every waking moment with him, which would also have been a fine outcome. But interestingly, after having my son, for me, I realized that I still really did love working. I loved my work a lot but I think I just needed to find more meaning in it if it was going to take up so many hours of my day and taking away from my child.
Stephanie:
Cool. So, then, what was the first step when it came to ... what really led you to creating Blueland? Was there an aha moment, was there something ... Tell me a little bit about what Blueland is maybe first and then how you came up with the idea.
Sarah:
Yeah. So, Blueland is a consumer products company, we are on a mission to eliminate single use plastic packaging. And we are starting with cleaning products. And so, the first set of products that we launched, when we launched about a year ago were a set of cleaning sprays and hand soap. And what was really unique about our products was that instead of selling you a bottle of liquid, these products are traditionally about 90% water, we've shrunk these products down to these tablets that are about the size of a quarter so that instead of buying a new plastic bottle every time, instead of paying for all this water which you already have at home, you can use one of our beautiful, reusable bottles and simply fill them up with warm water, drop in one of our tablets and it starts to bubble on its own, there's no shaking or stirring or weird chemistry required. And at the end of a few minutes, you have a full bottle of hand soap or cleaning spray.
Stephanie:
Yeah, that's cool.
Sarah:
And our cleaning sprays include a multi-surface cleaner, glass and mirror and a bathroom cleaner.
Stephanie:
Yeah, it remind me of a Alka-Seltzer, where you drop it in and then all of a sudden you have this big big bottle of cleaning solution.
Sarah:
Exactly, exactly, exactly. And we stared there because we found that it was very intuitive for people even though it was something that had never been done before, it was brand new to market, it was something that people could see and quickly understand like, "Oh, that makes sense. That water and the tablet can make a bottle cleaner." And so, yeah, those are the products we started with. Happy to say last month we released our newest category which is the dish category. So, we launched a dish soap and dishwasher tablets. And in a similar vein, these products were created as part of a reusable, refillable system. So, upfront we sell you a permanent, forever container that you can refill with our refills that come packaged in paper based compostable packaging instead of plastic.
Sarah:
And so, our dish soap is actually a powder. But it's used very similarly to liquid, to the extent that you just sprinkle it directly onto your sponge, you add water and then you get a nice, rich foam. And yeah, our dishwasher tablets are naked, to the extent that they don't come individually wrapped in that plastic film that you'll find, with most all dishwasher packs.
Stephanie:
I've never really thought about, "Where does that film go? Does it just go down the drain?
Sarah:
Yeah. So, it's unfortunate because it-
Stephanie:
That's sad.
Sarah:
Yeah, it is sad. It is sad. Because I think the assumption for a lot of people, understandably, is that because it dissolves, that it just goes away. But unfortunately, because it is a synthetic petroleum based plastic film, the plastic molecules do still remain and enter our water systems and majority of it is then ultimately released into the oceans, rivers and anything else.
Stephanie:
So, when building this company, I read that you had reached out to over 50 manufacturers who all turned you down. And I wanted to hear-
Sarah:
Oh my goodness.
Stephanie:
I wanted to hear that story a bit, because I think most people maybe after 10 woudlve been like, "Well, it's not possible." Or, "We can't find how to contain these tablets." Or, "No one knows how to do it." Tell me a bit about what was that process like when starting to build the products out and trying to find people to partner with to make them?
Sarah:
Yeah, yeah, yeah. So, I think a big piece of being a entrepreneur, it's not rocket science, it's just being tenacious and having grit and not taking no for an answer and not assuming that because it's never been done, that means that it can't be done. And so, yeah, I think when we initially came up with this idea for Blueland, it was a crazy idea. And we had a lot of questions from people like, "Well, if it's so easy, why hasn't it been done?" And we're like, "Well, somebody has to be the first."
Sarah:
And so, yeah, initially, the natural place to start was to reach out to manufacturers, because typically, whether it's in the food space or the cleaning space or in the beauty space, a lot of these spaces are fashion. A company usually works with a contract manufacturer to actually make their products. And so, first choice was finding someone with the existing infrastructure that could just make this for us. Not surprising, in retrospect, hindsight's always 20/20, that no one could do this for us. We were reaching out to cleaning products manufacturers who were creating these products as liquids, and they were pretty much telling us how, "We don't know how to deal with solids, like we don't even have tableting machinery. And in fact, many of the ingredients that we buy for our liquid products actually come in liquid form. And so not even sure how we would then transform that into a dry product."
Stephanie:
But did you have an ingredient list? Were you like, "This is what I want in it?" Because that [crosstalk] seems hard to me of like, how would I make a multi-surface cleaner?
Sarah:
Exactly, exactly. So, in the beginning it's just this huge chicken or egg problem. So, we reached out to many manufacturers. And at that point it became also just less so in terms of ... we didn't necessarily think we were going to find an end-all, be-all solution with one of these calls but our hope was that we were going to get enough smart people in the space, who had been in the space for decades to talk to us in each of these conversations, we were going to glean a little bit more information. And if they couldn't do it, they would potentially know someone else who could. Whether it was a scientist ... because a lot of these contract manufacturers also work with contractor chemists, et cetera, they might know of an ingredient that they heard of that would be able to help us do this and so it really was just our form of Googling around, when Google could only get us so far on these niche topics that no one had a reason to read up about online.
Sarah:
But yeah, I think it became apparent through these conversations that someone was going to be able do just do this for us and everyone was recommending that we would need to come to them with a formula. And at that point felt like we hit another wall because my co-founder and I, we didn't have any chemists in our direct network. We had no idea where to even begin. We were both business people. And so, we, after asking our network, not really finding any leads to any reputable chemists, certainly no chemists with a cleaning products background, we just turned to LinkedIn.
Stephanie:
Ooh.
Sarah:
That was just a natural place to turn to, to be able to search for experts based on their experiences and at that point ended up going down another, very long rabbit hole of collecting ... We still have that spreadsheet today of hundreds of names of chemists that we found on LinkedIn and wrote up what their background was and ranked them and then just started reaching out to them, just [inaudible] reaching out to them on LinkedIn and just trying to get as many people as we could on the phone with us, like we were doing with the manufacturers.
Stephanie:
Did you get a good response rate from people or was it slow?
Sarah:
It was definitely slow. In LinkedIn there's all these limitations of if you're not connected, they may not readily see your message, also turns out a lot of chemists aren't actively checking their LinkedIn or messages. We also were just two random people that were messaging about this crazy idea that most recipients on the other side probably had like, "I don't know how to do what they want to do," or, "This idea seems crazy," or, "Why are they soliciting me for a job? Why would I leave my big company, well paid job to go do this?"
Sarah:
So yeah, I think suffice to say response rate wasn't great. But to some extent, it also was a numbers game, which is why we did reach out to so many people. And we were able to get a good number of people also just to get on the phone with us. And there definitely were a set of folks that we're so thankful to that were inspired by our mission and the audacity of at least the vision, and were willing to chat to see if they could be helpful. And that is ultimately also how we found our incredible head of R&D, Syed, it was through LinkedIn.
Sarah:
He was formerly at method, which is one of the world's largest non-toxic cleaning products companies. And prior to that, he had the perfect background because prior to cleaning products he was actually working in nutritional supplements. So, vitamins. So, he also had that hard, tabled-like form factor experience.
Stephanie:
That's amazing. So, how many tablets are you selling today? And how much plastic is it removing from the environment if someone chooses that versus a normal alternative?
Sarah:
Yeah, yeah, absolutely. For us today, I forget the latest numbers. But we've sold tablets in the millions-
Stephanie:
Wow.
Sarah:
... at this point, which is exciting because that means that our impact has also certainly been in the millions of plastic bottles eliminated. I think people are always surprised to hear that five billion plastic cleaning bottles are discarded each year, because there is so much focus on the water bottles and the coffee cups and the straws. Rightly so, because those numbers are even larger. But people are always surprised to hear how much of ian impact you can do by also just swapping out your cleaning products to a reusable solution.
Stephanie:
Yeah, yeah. That's amazing. Nice work. So, I'm guessing there has to be some kind of convincing and education factor that had to go on because a lot of customers at first, they all worry about maybe the anti-microbial factor and everyone's probably ... at least when I think about it I'm like, "Just throw some Lysol on it or bleach or something, that'll clean up anything." How do you go about convincing people that your product has the same benefits and even though it's natural, it'll still work? What does that education piece look like?
Sarah:
Yeah. So, that education piece is obviously so important and has become even more important during this period of time and COVID where people are very focused at keeping germs, bacterias and viruses at bay. We received, especially in March and April, that was the number one question that we were getting, especially around hand soap, actually. Where people were asking if our hand soap was antibacterial, whether our hand soap would kill COVID. And there we were very direct with the answer that ultimately, no, our hand soap is not antibacterial, it's not disinfecting, we cannot make the claim that it kills COVID. But it was an educational moment for us because at that point we could start the conversation with consumers that also are rooted in many studies that suggest that antibacterial soaps might actually be doing more harm than good, as well as if you look at the FDA, they've made official statements that say, "Regular, non-antibacterial soap is effective for the removal of bacteria and viruses," and that hand washing with plain, non-antibacterial soap is a great way to prevent the contraction and spread of illnesses.
Sarah:
And so, I think most people that hear that get it, and it will even link them to the FDA site on proper hand washing techniques and just to just reassure people this, "By no means are we looking to mislead or brainwash," but that it's just more the education of, you know, many times I think there's this perception you need a certain set of ingredients to get a certain job done. But-
Stephanie:
It's part of the marketing behind that too, for people who do have the antimicrobial stuff in it, they're pushing it so hard, "You need this," when I've read the same research about you actually don't really need that and you can still have very clean hands afterwards.
Sarah:
Yeah, yeah. Exactly, exactly, exactly. And so, it's been nice. It's been a nice period where we can also provide that education, because we are staunch supporters of non-toxic formulations. And so, any opportunity that we have to speak more to the efficacy of non-toxic products as well is always, we think, a good thing, not just for us but for the broader industry and for people on the planet.
Stephanie:
Yeah. So, how do you get people to find you? I'm thinking, if I'm going to the grocery store, that's maybe where I'll pick up a cleaning product when I run out or something. Are you in retail or were you planning on going into retail before COVID or are you staying strictly B to C? Or how are you thinking about that? Because it seems like it'd be hard to bring people over to buying online when maybe they've never thought to do that unless it's through maybe Amazon Prime or something, I don't know.
Sarah:
Yeah, yeah. No, it's definitely one of the larger areas of friction that we recognize. To the extent that it's interesting when you think about it from a direct-to-consumer perspective or context because I definitely went into this eyes wide open, as to this is a category that's going to be harder to convince people to go to a separate, online destination to buy the products. Because in my past, I've been in shoes, I've been in apparel, I've been in beauty, and for all of those, especially something like shoes or swimwear, I would argue it's easier to convince someone for a one-off special purchase, like glasses, to go to a separate destination.
Sarah:
But to your point, with the cleaning products, this is a product that even early surveys have found that over 80% of people would prefer to just purchase these either in brick and mortar stores or just as part of the shopping that they're doing regularly anyways, whether it's weekly or biweekly grocery shopping, whether it's all on Amazon or at their local Target or Walmart. And I think that because of that, retail will definitely have to be an important part of our future. At the moment we are still a most all direct-to-consumer business. We have a handful of retailers that we sell through but still pretty minimal like we're with Goop or with West Elm, we're with Nordstrom. But I think-
Stephanie:
Those are some pretty good names.
Sarah:
Yeah. Those are definitely great names, but those are more I think we still view brand enhancing names and not necessarily the place where people are going to every week to traditionally buy these products. But I think it all comes back to focus and we also always knew that direct-to-consumer was going to be an important component of launching the brand. I think there's so many benefits, especially from a brand building and story telling perspective and explaining the mission and as a new brand to market just explaining who we are. And it's certainly an efficient enough channel to be able to get to early adopters and a set of consumers. But we do believe that if we are going to truly maximize our environmental impact and reach as many households as we can, then absolutely, we do need to, at one point, go into retail, physical retail and traditional retail.
Stephanie:
Cool, so, how do you get in front of the early adopters that you just mentioned? What kind of digital channels are you exploring? How are you doing your marketing? How are you finding customers and bringing them back?
Sarah:
Yeah, yeah, definitely. Instagram has been an invaluable channel for us, especially on the organic side. I think we've had great success there. So, we've been live for probably just about a year now, we have over 170,000 followers on Instagram, all of it organic. We haven't really done any paid influence or promotion or anything. And I think it's really helped that because our mission is so integrated into our product offering, we are a mission driven company but that could mean different things for different companies. And for some companies that means it's a donation that they're making or a philanthropy in addition to whatever their core product or service is. And for us, our mission is just 100% integrated into the products that we sell. And that's given us the ability to, on social speak across a range of topics and speak more broadly about climate change and plastic pollution and tips on how we can each do our part.
Sarah:
And it's been so exciting to see how much that's resonated with the community on instagram and how quickly we've grown and it certainly is one of our largest channels. So, it's exciting to see that organic is something that that can work for a direct-to-consumer brand.
Stephanie:
Yeah, especially if you have that. Sustainability is a hot topic right now and like you said, if you're able to lean into those groups and people and tags and stuff, that opens up a whole new market where maybe other DTC companies who are just trying to sell their product and create brand new content, very different. So, it seems like that'd be a very helpful way to get new customers and access to an audience that maybe you wouldn't get access to otherwise if you weren't building a sustainable product.
Sarah:
Definitely, definitely, definitely. And it's also been a really great amplifier for word of mouth. I think we're fortunate that we have a product that people feel more inclined to share. So, everyday we get hundreds of people story-ing our products and their unboxings. And I think that's being driven by two things. One is just the mission I think that gives people a real reason or additional reason to want to share our product with their friends, because also saving the planet is something that we have to do together and they understand that the more they can raise awareness for things that help this planet, to their friends and community, the better place we'll all be in. But also, our products are very visual and experiential. The process of making the solutions, dropping the tablet, showing the tablets dissolved.
Sarah:
I was very worried, before we launched Blueland that that would be one of the largest hurdles to our success because undoubtedly it is more work for a consumer than just going out and picking up a bottle of solution. But I think it's hugely benefited us, especially in a world with video, Instagram stories, et cetera.
Stephanie:
So, when you're thinking of the health of Blueland, as you're building it, what kind of metrics are you looking at? Specifically maybe around your website and how to know if you're really doing well?
Sarah:
Yeah, it's definitely starting to get a lot more complicated now that we have so many more products. I think early days it was a lot simpler ... I would say early days it was a lot more straightforward given ... I think over 90% of our new customers were coming in through the same kit. They were all purchasing our four piece kit. And because it that initial basket was pretty uniform, it was much easier to track those cohorts over time and understand both acquisition behavior and success as well as retention behavior and success. I think now, as we look at our business, there's a lot more granularity. We've layered in more fragrances, we have at this point I think six different kit permutations that you could opt into.
Sarah:
There isn't a clear kit that all new customers opt into. We also have many people that are adding refill packs now to their kits and their first purchase, which changes the way we have to think about repeat curves and retention because a customer, if they're loading up a dozen multi-surface cleaning tablets in their first purchase, that's actually a great thing for business. It drives higher AOP, it's certainly also better for the environment because we're only shipping that package to them once and they may not need another package from us for a year, at least on the multi-surface cleaner side. But as you can imagine, we then need to look at our data in a much more nuanced way and cut in so many more different ways to really understand what is happening. But yeah, largely we are very focused on customer acquisition cost, the conversion on our site at every part of the funnel and then repeat basket size based on original basket size and channel.
Stephanie:
Yeah, that makes sense. So, is there any best practices when all of a sudden you have a lot more data to work with and you're trying to actually see trends and parse out the noise. Is there anything that ... I'm assuming with your finance background, you're probably already very good at data. I also have a finance background and how long I had to be in sheets and looking at numbers all day was crazy. But, you do learn how to actually parse through large data sets. Like, what are some best practices that you say worked when it came to expanding your product catalog and actually trying to find trends and things to pay attention to?
Sarah:
Yeah, absolutely. I think the main thing is making sure that you're being thoughtful about the tests that you set up and setting them up in a way where the data will be valuable and also just taking into account what you're in or how much volume you're getting and so not trying to test too much all at one time. Because I think, and I bring up testing because sometimes it's hard to look at just the organic data that you're getting and make a determination as to what the value drivers are. So, for example, a question that we're trying to solve at the moment is that, are there better kits for people to start on? Do we have a preference as to, is the customer going to be more likely to stay with this? Is the customer more valuable if they buy into kit one very kit four?
Sarah:
And it's hard to look at the data that you have without setting up a clean test because there maybe other factors that have driven certain consumers to a kit one versus a kit four, that would then make their retention characteristics different. So, to do a very clean test, you would want ideally place randomize and drop off a set of consumers to either kit one or kit four and then see if those two cohorts perform differently over time.
Sarah:
But it's just making sure that we're being really thoughtful with the test, making sure that there's not other confounding variables that we're introducing, like for example making sure we're using the same ad creative to drop people off on kit one versus kit four, taking into account, again, how much traffic we expect to drive, how quickly that test will wrap up. Because certainly you could think, "Well, we're going to do this test for kit one through seven and do seven kits that we're landing on." But it may also just take forever to get any type of answer of statistical significance if we're dividing up our volume in that way.
Sarah:
Yeah, so things like that. But certainly something that we're thinking a lot about and is certainly far from straightforward.
Stephanie:
Yeah, tough problems to solve but I'm sure very informative and helpful for the future. So, I know we don't have too much longer but I did want to ask, we've been on a Shark Tank kick lately, we've been a couple of companies who've been on Shark Tank before you as well, and I wanted to hear-
Sarah:
Awesome.
Stephanie:
... very high level, doesn't have to be a really long story, but how the experience was for you and how you dealt with the increase demand and your inventory and everything that came after being on the show?
Sarah:
Yeah, yeah, yeah. What a wild experience. It's always actually been facetious, half serious dream of mine to go on shark tank. So, it was really exciting. I think we over prepared every step of the way, which was right in terms of I don't say that negatively. But everything from leading up into the pitch, to making sure that we were ready from a site perspective. Our team still says today that we've never been so prepared for anything outside of Shark Tank.
Stephanie:
That's amazing.
Sarah:
So, it's something that we always point to, even with our new product launches or other things that we're trying to do. Because especially in startup world, you're rushing, it's never ... And we always point to, "Look how well Shark Tank went, because we spent the time, we were organized, we put the time in and it definitely pays off."
Stephanie:
What kind of things did you prepare? If you were to look back and say, "These two things were the best things that we did to prepare? Or what were some of the levers there that you were working on?
Sarah:
Yeah, yeah, definitely. So, I think before filming on that side, it really was all hands on deck, full team for that week leading up to our Shark Tank filming we pretty much focused on Shark Tank. Especially Syed, our head of R&D and myself were going to go into the tank. But even the rest of the team, we were required probably at least twice a day, for about an hour and a half each, so about three hours a day, whole team would be on just grilling us every which way, with the hardest questions they could throw, with the most inappropriate questions they could throw at us.
Stephanie:
That's fun.
Sarah:
It's fun. And it was, in the beginning it definitely was incredibly embarrassing because it was so hard. You're just like ... But after that, it really did prepare us for anything that could come our way in the tank. So, that was great. Including lots of, they just threw lots of mental math at us, which if anything, I don't know if they got us better at mental math that it got me better controlling my facial expression when I didn't know something.
Stephanie:
Yeah, or just delaying the response so long they forget what they asked, maybe?
Sarah:
Exactly, exactly, exactly. So, that was very valuable. And then from a site perspective, we really did everything we could possibly do to make sure that the site didn't come down. We spoke with a lot of other companies who had aired on Shark Tank to get their tips for what to do, and that was really helpful. Like the guys at Plated had a landing page ready. Because their site did go down. And so, they were very thankful that they did have a landing page ready to capture email addresses. And they were able to capture a ton of email addresses that way and then email the people when they were back up and running. So, we did that. Someone, another company had a really great idea to swap out all the videos or gifs we had running through the site. So, anything that was heavy that takes up a lot of speed or memory and just pairing back to replace all the videos on our site with images. Again, just to lighten up the site as much as we can.
Stephanie:
Cool. Yeah, that definitely seems like some good due diligence. And you guys ended up getting a deal, right?
Sarah:
Yeah. We ended up getting a deal with Kevin O'Leary, who has been fantastic and really supportive and shockingly accessible.
Stephanie:
I was going to ask that, do you actually get time with him and is he actually helpful?
Sarah:
Yeah, yeah. We get a lot of-
Stephanie:
Give me all the gossip.
Sarah:
Yeah. We get a lot. Early days, I was like, "Is this too much time? I have other things to do." But we probably speak by phone or text once every two weeks or so. And definitely-
Stephanie:
Wow.
Sarah:
Yeah, yeah, and [crosstalk 00:52:50]-
Stephanie:
That's way more than I actually thought.
Sarah:
Yeah. Yeah, in early stage I feel like I was talking to him multiple times a week, especially right coming off of Shark Tank when we had a lot of opportunities and he brought us onto QVC the week after Shark Tank aired.
Stephanie:
Oh, nice.
Sarah:
We've done multiple press interviews on TV together. It's been great. It's been really great.
Stephanie:
That's really cool. Yeah, thanks for sharing that story. So, now we're running out of time. Is there anything you wanted to cover before we jump into a quick lightning round?
Sarah:
No. I think we covered a lot of ground.
Stephanie:
All right. Cool, well, let's jump into the lightning round brought to you by Salesforce Commerce Cloud, this is where I will ask you a question and you have a minute or less to answer with whatever comes to mind.
Sarah:
Okay, great.
Stephanie:
Are you ready, Sarah?
Sarah:
Yes, let's do it.
Stephanie:
All right. I'm going to start with the hardest question first because you've been in the industry for a while and I feel like you'll have a good answer to this, what one thing will the ... Oh, let me rephrase that. What one thing will have the biggest impact on Ecommerce in the next year?
Sarah:
Ooh, in the next year. Oh, that one's harder. In the next year ... I would say packaging. It's a non-traditional answer. But I do feel like we're seeing the tides are shifting. I've just started to receive my first set of Amazon packages that for once are coming in paper based envelopes instead of plastic based envelopes. And I think that's going to send a great signal to the industry of, "We need to be a lot more thoughtful about with all this Ecommerce comes an incredible amount of packaging waste and consumers are becoming so much more knowledgeable and mindful about the waste that they're creating." And I think we'll start demanding this stuff of companies.
Stephanie:
Love that answer. What's up next on your reading list?
Sarah:
What's up next on my reading list? So, I've been incredibly inspired by the Black Lives movement, Black Lives Matter movement. And so, I have picked up a ton of books in that process. And my next one actually, by my bed right now is White Rage.
Stephanie:
Nice. And have you started it yet?
Sarah:
I have not started it yet.
Stephanie:
Cool, we'll have to circle back and let me know what you think of it.
Sarah:
Yes.
Stephanie:
If you were to build another company, which I feel like you will probably be doing in your lifetime, what would that next company be?
Sarah:
Oh, geez. That's so hard, that's so hard. that's so hard because I love the company I'm building at the moment. I always tell my co-founder that I don't think I'd want to sell this business because I don't know what I would work on next. It's just an incredible mix of product development, science and really doing things that I believe will make a huge difference in the world, as well as just educating people in areas outside of our products, which has been incredibly gratifying, just being able to talk about ... Email's probably a couple times a month and certainly social posts multiple times a week where we're just talking about things that have nothing to do with our products but just ways that you could cut out single use plastic from your day to day life. I do think that if I do move on past Blueland, it certainly is going to be something around the space as well in terms of where-
Stephanie:
Sustainability.
Sarah:
Sustainability, exactly, sustainability and climate change.
Stephanie:
Cool. It would seem sad to throw away all the knowledge. I've heard that quite often where a lot of times founders will just get eager to move onto the next thing and they don't always properly value all the knowledge they built up either from their current company they're at or what industry they're in. And so, yeah, that seems great.
Sarah:
Totally.
Stephanie:
What's up next on your Netflix queue?
Sarah:
So, next up on our Netflix queue is season two of The Politician. I know I'm a few weeks late, but I've actually heard that ... my husband and I loved season one and we heard season two there's actually a lot of focus on plastic pollution and there's actually a character who's really leading the charge on eliminating plastic from her and other day to day lifestyles, so, it'll be interesting to see their spin on that.
Stephanie:
Yeah. No, that sounds cool. Yeah, there's also a series, I don't know if you've heard of it, it's with Zac Efron, which at first I was like, "No, how is he going to do a series on big problems and sustainability and things like that?" It's actually quite interesting. They ...
Sarah:
Oh.
Stephanie:
I'm trying to think what it's called. Maybe producer, Hilary can look that up for me and put it in our notes here. But yeah, he went through, first he visited Iceland and was showing there all of the renewable energy that they generate for Iceland. And then episode two was talking about water and it went into France's water system and how they purify it in a much better way than a lot of places in the U.S. do it, so, another one to just put on your radar. But I don't know the name of it, I just know Zac Efron's hosting it.
Sarah:
No, that's great. I haven't seen him in anything since High School Musical so I'm actually-
Stephanie:
I know.
Sarah:
... excited to see him all grown up.
Stephanie:
I know, when I saw him on there I was a little bit confused. I was like, "Wait, what?" And then I was like, "Okay, yeah. You're doing a good job. This is cool." Oh, let's see, Hillary put it in there. Down to Earth with Zac Efron. Pretty good one, very interesting.
Sarah:
Great. Great, great, great. I'm going to add that to my queue.
Stephanie:
All right. And then the last one that I've recently started asking, what is the number one tool or app or technology that you use day to day that's most helpful to you or that you either learn the most from or that you loved the most?
Sarah:
Yeah. It's got to be Instagram. I wish I had a more creative answer but ...
Stephanie:
No, I love Instagram.
Sarah:
... I learn so much from others and from incredible resources and I think most recently I think the Black Lives Matter movement has been an eyeopening one for me in so many ways and I think in so many ways that we're trying to even as a company make sure that we are sustaining that moment, but really have been grateful for that platform as a source of education.
Stephanie:
Yeah, yeah, completely agree. All right, Sarah, well, it's been so much fun talking to you about this. Where can people find out more about you and Blueland?
Sarah:
Yeah, so, people can check out our products and learn more about our products at blueland.com. You can also follow us along @blueland. And I also post lifestyle tips frequently to my personal account, @spaiji. That's S-P-A-I-J-I.
Stephanie:
Awesome. Well, thanks so much for coming on the show and we will definitely be following along in your journey.
Sarah:
Amazing. Thank you so much for having me.
If you’re looking for insights into the trends of the eCommerce industry, look no further than Adam Rose, the Chief Talent Officer, of eCommerce Placement. Adam has had a long career as a recruiter, including the last decade at eCommerce Placement, the company he founded to focus on the industry he believed was the future. That bet has paid off, and as the eCommerce industry has grown and changed, Adam has been in the middle of it all. What are the skills eCommerce based businesses are looking for? Where are eCommerce leaders focusing their attention and investing in growth? How is consumer behavior leading the shifts we’re seeing in the industry and how can those working in the industry be successful using analysis of that behavior? Which industries and companies are emerging as big-time players in the eCommerce landscape? Adam has the answers to all of those questions, and he shared them with us on this episode of Up Next in Commerce.
3 Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
---Transcript:
Stephanie:
Hey everyone. Welcome back to Up Next in Commerce. This is your host, Stephanie Postals. And today I have Adam Rose on the show. How's it going?
Adam:
It's going great. Thank you. Really happy to be here.
Stephanie:
Yeah, I'm really excited to have you here too. Tell me how did you first get involved in the world of e-commerce? What led you to create this company?
Adam:
Yeah. So eCommerce Placement, we are a leading e-commerce recruitment firm and what we do is we work with online retailers, e-commerce technology companies, really anyone that touches upon e-commerce. And we're recruiting across the full spectrum of e-commerce functional areas. So that's leadership roles, strategy and management, digital marketing across the whole channels, site merchandising, operations, analytics, logistics and fulfillment, creative technology, the entire gamut. And we've been doing this for 10 years and e-commerce as you know has been growing year after year. So we're just very fortunate to be in this space and one that's really interesting.
Adam:
Yeah. So, well I've actually been in recruitment my entire career. It is all I know and all I can do. But I went to school and I have a bachelor's degree from Rutgers in psychology and realized I didn't really want to be a psychologist, but I minored in labor and employment relations, which is essentially HR. And that got me into thinking about recruitment or HR as a career. And I ended up getting my masters in HR manager at Rutgers as well. And when I got out of school, I started in more of a generalist HR role at a financial services company doing benefits and compensation and recruitment. And the recruitment piece is what I really liked and decided that's what I wanted to stick with. So I was doing recruitment for several different financial services companies and then a little bit of pharmaceutical as well. And it wasn't until I landed a corporate recruiting position at Borderfree that I got into e-commerce. And Borderfree was a startup e-commerce software as a service company.
Adam:
And what they did was they allowed US-based online retailers to sell their products overseas to international customers seamlessly. Just like if they were here within the US, yes. And we had about 50 employees at the time when I joined and I grew that company to about 350 before it was sold to Pitney Bowes, much larger organization. Yes, but it was there that I saw that e-commerce was a really hot industry, that folks were still figuring it out. It was a really cool industry if you're an entrepreneur, if you like startup environments, which I did, very different from financial services and pharmaceutical. And I saw that there was a huge need for e-commerce specific recruiting agencies out there. We were working with some of the larger recruitment firms that were just very generalists. They didn't focus in e-commerce, but they were trying to help us regardless.
Adam:
And I saw that they just didn't have a good understanding of what we did, the types of candidates that we needed, where they'd be coming from, what they'll be doing. And after a while I said to myself that I could do that. I see what these agency recruiters are doing on their end and honestly it seems better than what I'm doing on the corporate side because they're not having to deal with a lot of the paperwork that I have to do, a lot of the internal struggles that I have. And they were doing the best part of recruiting, in my opinion, which is just proactively going out there and sourcing top talent. And that's what got me into recruiting in the first place and got me excited about it. I think it's one of the most strategic parts of business is bringing in the right talent, without that talent that your business may not be so successful. So that's really what got me thinking about making the switch and 10 years later I'm really glad that I did.
Adam:
And what we're really good at right now is just the fact that over the past 10 years, we've built this huge e-commerce talent network. We have our proprietary database of candidates, we utilize LinkedIn where we have a huge network and following there. And that's a differentiator that a lot of other recruitment firms don't have. And we're also building very longterm relationships with prospective candidates, following them throughout their career. Just being there for them, regardless of whether or not we have opportunities for them in providing advice around their resume, around their career goals and that playing the longterm game is, in this business, I think very important.
Stephanie:
Cool. Yeah, that's exciting. So how do you vet talent? Because it seems like, at least when I was at Google Day's interview questions were kind of hard to rely on because people would get through and you'd be like, "How did you get here? You definitely don't belong here." So what are some good tips that you could give to other e-commerce brands who are looking to hire? What kind of interview questions or tactics or strategies do you do to vet candidates to make sure that they're the right fit for the company and actually have the knowledge that's needed?
Adam:
Yeah. So the first thing is that the company itself really has to have a good idea of what their needs are. And that's our job too, is working with them initially to make sure that we're all on the same page. And a lot of times our clients don't even have job descriptions created. And then we have to work with them directly to create that job description and make sure that everything's buttoned up so that when we are going out there and trying to identify the right candidate and speaking with them, we have really good sense of what they're looking for. And I'm talking to them about what their day to day job looks like, the responsibilities, where these people should be coming from and what their soft skills are needed for these positions, everything. And then we go out there and we take a look and do some research to what similar companies, what are some of the competitors out there that maybe we should be tapping into?
Adam:
Job titles may differ between organizations too. So we'll make a list of all the different job titles that could potentially match this position. And then we'll do an extensive search on that end. And then once we get them on the phone, it's really just conversational. We don't do very hard hitting questions. Our goal is just to make sure that A, the candidate is interested, that this would be something that they could potentially see themselves doing in the future and that they also have the right skillset for it. And that comes out during a conversation when you're just asking them, tell me a bit about your experience. Walk through your background with me. Do you have experience on this side of the business? And if not, is that something that you think you could tackle in your next role? So it's really just getting to know the person.
Adam:
And then what we do is we send a summary of their experience, their resume, their compensation expectations over to the client and they decide from there whether or not they think this person might be the right fit and they'll get them on the phone and usually to do an initial phone interview and go from there. But what we aim to do is really focus on quality over quantity. There are a lot of recruitment firms out there that kind of give us a bad rap by sending over 100 candidates for a position and-
Stephanie:
These people I Googled and they're looking for work on LinkedIn.
Adam:
Exactly, exactly. And hoping that one of them sticks and they're just throwing them at the wall. But we don't do that. We send over three, four, maybe five candidates and these are all people that we feel you would at least benefit from by getting on a call with them. And our resume to hire ratio is insanely high. Our interview to hire ratio's insanely high and we're really proud of that.
Stephanie:
That's awesome. So are there any skills that these e-commerce company companies specifically are looking for that are hard to kind of find right now? Like there was a shortage and people who knew... engineers always refer to engineers out here, is there a skill where all the companies want this right now and if you had the skill you would get scooped up but I can't find it.
Adam:
You're totally right about engineering. Any technology position is incredibly valuable right now for e-commerce organizations. And that's everything from engineering to product management, which is a really interesting field for a lot of people to get into that really makes this business strategy and technology that I try to steer people into because they're always needed.
Stephanie:
And that's not actually a career path that you're told about in the early days. I know I heard about product management, I'm like, "What does that actually mean?" And then, well you kind of should be a little bit technical and you should also have a strategic hat on when you're thinking, I'm like, "I've never heard of this when I came out of college. Why not?"
Adam:
That's right, that's right. These are roles that people really just fall into. And that's across all of e-commerce. There are very few colleges out there that offer any type of program in e-commerce. So when you get a degree in marketing, you may not be thinking about e-commerce marketing. It's a very vast field and that's just an example. So these are positions of the future that I try to steer new grads into or those that are looking to make a career change because this is an incredible field. But getting back to your question, our hottest positions right now are anything related to Amazon. Companies are really doubling down on their Amazon business, whether it be a marketing or sales, channel management, Amazon is huge. It's the elephant in the room, right? So-
Stephanie:
It seems obvious, but when I hear that I'm like, "Oh, I wouldn't think about hiring for a role specifically focused on Amazon," but it makes.
Adam:
Yeah, Amazon, other marketplaces, retailer.com channels. If you're a brand or manufacturer of products that are sold on Overstock, Wayfair, Zulily, you need to manage your online sales strategy and execution on those sites. So there are roles that are specifically focused on doing that as opposed to their direct to consumer channel off their own website. It's a very vast and complex e-commerce industry.
Stephanie:
Yeah. No, that's really interesting. How would someone develop skills for an Amazon specific role? It seems like you would have to maybe be a seller on Amazon and to know all the ins and outs. You would actually have to have been there, done that to be able to help another company?
Adam:
Yeah. So, yes. And part of what we get tasked to do is go out there and find individuals that have very relevant skill sets that can come in day one and hit the ground running. And that's what we're good at. But when I advise people on how to get that experience, you have to start small. You have to take on additional responsibilities. If you're in a direct to consumer role right now and you're specialist, start taking on more general generalist responsibilities, start dipping your feet into Amazon and just start asking questions and learn because this is the future and this is how you grow in your e-commerce career. E-commerce is really cross-functional. You need to work across all different departments. Across marketing and merchandising and promotions and fulfillment in no matter what role you're in. And you're going to have to deal with e-commerce metrics and web analytics in almost every role that you're in.
Adam:
So that's another question I get for individuals that are looking to get into e-commerce and they don't know how to do it and they don't know how to differentiate themselves. Maybe they've been working on the retail side, the retail brick and mortar side, and they're seeing everything that's going on now and they're like, "Oh, Adam, I really want to get into e-commerce. How do I differentiate myself? What do I do to get my foot in the door?" And one of the things I always recommend is get certified in Google Analytics. It's free. Google, they allow you to do this on their site. They have a program. And that's something that is incredibly important for you to know. Almost every company uses Google Analytics in some way even if they do have a more sophisticated web analytics software and it's free and you can put it on your resume and it's great to talk about during interviews. So things like that and I think are really important.
Stephanie:
Got it. Well, how do you see the industry changing? Seems like e-commerce, of course, is changing really quickly and when I think about having... I mean, I love Google, I work there. But I think having Google Analytics as a certification, what's next? Because I know at least on our side, when it comes to marketing campaigns and things like that, Google Analytics isn't somewhere that we utilize anyways even if we're not e-commerce. But I'm thinking about what's coming next after that? What are the next platforms or tools or technologies or focus areas maybe that would come after that that someone could dive deep into along with Google Analytics because they are a force used by everyone in the industry too.
Adam:
Yeah, no, it's a good question. And there are new platforms coming out all the time. There are platforms that are getting acquired left and right. There are tons of different marketing technologies out there, whether they're related to paid search or email marketing. What I find is that companies, for the most part, don't really care what you have experienced in as long as you have some sort of experience in these technologies because you can pick it up. It doesn't take a genius to figure these out, but it does take someone that has a digital mindset or somebody that really could tackle the complexities of these different programs.
Adam:
But if you've mastered one, it's really not that hard to master others. So yes, there are new platforms and new technologies coming out all the time and you really should do your best to update your skillset. But from my perspective, companies, in terms of what they're requiring, you don't need to have experience across all of these different tools. Which is good because how are you going to get your hands on Adobe Analytics if your company is not using it? It's very difficult, right? So I think it's important to demonstrate your ability to learn these new programs first and foremost.
Stephanie:
Yeah, completely agree. That's what we look for when... whenever I'm going through the hiring process here, I look for more of like, do you have the ability to learn something and you have experience showing that you've tried new things and learn new things. You don't have to know exactly how to use Adobe Audition, but could you pick it up because you've tried it? A different tool or something.
Adam:
Yes. Yeah, it's a bit of a balance and sometimes a bit of a fight when we're working with our clients and they want skill sets that are so specific and experience that is very specific to what they're doing currently. Where it's like, "Hey, do you really need that or can this person learn that?" And then they start thinking about it and we come to a bit of a compromise there.
Stephanie:
Yep. Cool. So I'm sure with all the companies that come to you for hiring right now, you might be seeing a different trend. Whether maybe it's online grocery picking up and people asking you for help there. What industries do you see growing the fastest right now with everything going on?
Adam:
Yeah. You're totally right and online grocery is huge right now and these are industries that were just novel, they were new. Online alcohol delivery, very new and that has been accelerated during these current times. And you look at pet food, you look at children's toys, you look at home improvement, furniture. These are areas that are doing very well. Consumer health and beauty. We're working with clients that are in these spaces right now that they're e-commerce volume is where they wanted it to be a year from now, but they haven't hired accordingly because who knew? And they're scrambling and that's very common right now. But they know that things are going to continue to spike even after everything's back to normal and digital transformation is going to be accelerated more so than ever before.
Adam:
There's going to be increasingly heavy investments in e-commerce and omni-channel. So we're still in a really good spot. Everything is still really new. E-commerce as a whole is surprisingly a very small percentage of overall revenue for a lot of retailers and every point that jumps up is a lot for these companies and we're going to continue to see that. So think about online furniture where consumer behavior has just completely changed where in the past people wouldn't do it. They wanted to go to a store and sit on a couch or try out a bed and now you don't need to do that. People are way more comfortable shopping online for these types of products without ever seeing it, without ever feeling it in person. And we're going to see that across many industries at this point.
Stephanie:
Yeah, I agree. Do you think things will stay the same post pandemic because some things I'm thinking like furniture anyways, I would still want to try out and sit, whereas beds, I'm pretty used to buying a mattress and being able to send it back. But furniture, a lot of companies, anyways, you can't just send it. Are there certain industries that you think will kind of go through a dip period again after everything calms down and then maybe ramp back up or you just think everything's going to stay elevated at where it's at now?
Adam:
Well, some of the elevation right now is severely elevated just because of everything that's going on so we'll see a dip for sure. But overall across the board I do think e-commerce activity is going to remain... the volume is just going to be extremely high. And to your point with wanting to shop for a couch but still sit on it, yes. But companies are getting way better at returns, making that an easy process and deliveries. Consumers are demanding faster and faster and they're expecting faster and faster deliveries and companies are really working on that. And there are a lot of vendors out there that are 3PLs and similar to that are supporting them in getting those items up to these customers as fast as possible. And you're going to see an increase in online volume just due to the fact that it's becoming much easier. The barriers are breaking down.
Stephanie:
Yeah, I agree. I just wanted to order something off Amazon, and I saw now that you don't have to bring a box back, you just bring it back to the UPS store and will ship it out with no box. And I'm like, "Oh, this is awesome." Because that is actually what has held me up from returning things is not being able to find a box and being lazy. But I can definitely see a lot of industry's changing and making that return process a lot more seamless. So then I will feel comfortable buying furniture or other things like that.
Adam:
That's right.
Stephanie:
Yeah. Very cool. So do you see any technological patterns or trends coming down the pipe that you're excited about because of this? Because I'm sure the underlying tech will have to change for a lot of these companies who, like you said, they weren't expecting this this year. They're maybe expecting a year, even five years down the line.
Adam:
Yeah, I'm a bit of a technology nerd, especially consumer technology, just personally. And what had really excited me prior to the pandemic was everything that was going on in regard to augmented reality and virtual reality and e-commerce. That was another field that was kind of teetering. We didn't know if it was going to be successful. We didn't know if that was going to be adopted. But now with people not going into stores as much, it makes a lot of sense. If you want to see what your beauty product looks like on you without even going into a store and you are able to do that just by holding your phone up. That is amazing. You can see your different hair colors, you can, going back to furniture, you can place that furniture in your room using your phone without even going into a store to see it. So there's a lot of really neat things that they can do on that AR, VR side that can make customers a lot more comfortable shopping online than ever before.
Stephanie:
Yeah, no, no. That's a really exciting space right now. Have you seen companies embracing that now? Companies who were not embracing it before actually starting to think about embracing it now? Because it still feels like a field that feels a little bit hard to break into right now, because it's like, "What tech do I need? How do I get started?"
Adam:
It is very, very new. And I think that most companies that are thinking about it are mostly in just the very early development stage where they're talking about it. They're putting in into some strategic plans, but still need to work out the kinks. There are very few companies that do it right, right now, but I it's I think an interesting field to watch.
Stephanie:
I'm still trying to think about too how the difference between how a company can use AR versus VR. Because VR feels easier to me because you're in that world and things don't have to be perfect. AR still has to be perfect. So I'm trying to think about, at least when we were trying to get things to work on Google maps in an AR version and it was really hard. I mean, it was snowing in Zurich and then the whole time the app would go down and some will change a piece of a building and put a sign on it and then the localization would be wrong and then it'd go down again. So I'm trying to think about which one would come first or maybe at the same time.
Adam:
So it's certainly not perfect and the technology is getting better every year. VR is very expensive. You need to have a complete headset and there are not a lot of freestanding headsets either. So it needs to be connected to a computer as far as I'm aware. AR is a lot easier. You can utilize your smartphone and the technology is a little bit more limiting, but it does allow you to do a lot more with it. So I think companies are probably better off investing in augmented reality to start seeing how that grows because consumer adoption of virtual reality headsets, it's just not there yet. But everybody has a smartphone.
Stephanie:
Yeah, I agree. And I think I just saw maybe Magic Leap, I mean, other than having to lay off a bunch of people, they're shifting to enterprises now and they're not focusing on consumers. They're also wondering if there's going to be a hiccup there with the companies who were producing the big headsets that were more expensive if they're going to be there after all of this.
Adam:
Yeah. For consumers, I'm not really sure. But other industries, for the medical field, I can imagine Magic Leap being huge, right? So there's a lot of potential there and we'll see how it grows on the consumer side.
Stephanie:
Got it. Are there any industries in e-commerce that you're most excited about right now other than the ones that are popping up now. But before all this started, are there industries that you were focused in on?
Adam:
So it's interesting. When we first started, our business was very much comprised of fashion apparel companies, consumer electronics companies. It wasn't until the past two, three years that CPG companies started investing very heavily in e-commerce. They were a little bit late to the game and they realized it. They started figuring out e-commerce and we're talking food and beverage companies, we're talking consumer health companies. And it's very exciting times for them where they're figuring out direct to consumer, they're figuring out marketplace, they're figuring out retailer.com and did they have very large complex businesses.
Adam:
A lot of these are very omni-channel too where they have stores and they're incorporating their mobile application into their omni-channel strategy. So we're working with a ton of these and I think that the opportunity there is really interesting as they really focus more on the customer journey as well. That they can the customer... if you're going into a store, you don't really have the ability to customize an experience for that customer as they walk into a store and look at your product on the physical shelf but on a digital shelf you can do that. So there's a lot of opportunity there for emerging CPG companies to provide a really interesting customer journey to their experience that they otherwise couldn't.
Adam:
And that is beneficial if your product is a subscription based, right? How do you maintain loyalty in a subscription environment? How do you differentiate yourself from a lot of other CPG brands out there? Maybe even ones that compete on price. So these companies are really trying to figure it out and hiring very large e-commerce teams to do so. So for us it's been a lot of fun working with them and for candidates, it's if you want to work in a very entrepreneurial startup like environment, but still for a very large company that has a ton of resources to make it successful, CPG is the way to go.
Stephanie:
That's the most fun when you have resources to actually try something [inaudible 00:29:03].
Adam:
Yeah, yeah. A little less risky, but still you get the benefits of that startup environment.
Stephanie:
Yeah, no, that's fine. Are there any companies that you either hear your clients looking to as leaders to watch or that you advise them like, Hey, you should check out maybe this company because they're a leader with this, this and this. Is there anyone that we should look to either mimic or follow?
Adam:
Everybody wants to be the next cool startup in e-commerce. And everyone's like, we want to be the next Casper. We want to be the next-
Stephanie:
Dollar Shave Club.
Adam:
Dollar Shave Club or Harry's or whatever it might be. But this is where you have to level set with early stage startups and entrepreneurs. They think many times that they're going to be able to acquire top talent just because their idea is so cool. And that's often not the case and they're oftentimes looking to pay them more heavy on the equity side than base compensation. And they think that because of their idea's so cool that people are going to see the potential on this and that's going to be okay for them. The truth is that's not the case. That if you're an early stage startup or an entrepreneur, you have to pay market rates. You just do. That's the only way to be competitive. If you want top talent in the marketplace, you're going to have to do that on top of providing equity. So we have to level set sometimes and make sure that they understand that and it's a challenge, but you're talking about their baby when you do that but that's just what we see in the marketplace.
Stephanie:
Yeah. Very cool. Have you seen salaries grow over the past 10 years when it comes to what people are willing to pay e-commerce talent?
Adam:
Yeah. Yeah. E-commerce it pays well, it does because this is a huge revenue area for companies. They have a lot at stake here and these are roles that are highly specialized and there's not a huge talent market out there. If you want to remain competitive, you have to pay highly competitive rates. So companies know this, they get it, they understand it. We work with companies that are based outside of major cities, but for their e-commerce talent, they really want to pay city rates, city market rates just to remain competitive and for not just acquisition but for retention too. They don't want them jumping to another company. And this is going to be a significant factor going forward too with all these companies investing heavily in e-commerce and e-commerce teams growing and every company looking to hire e-commerce talent, how do you remain competitive?
Adam:
And that is, first and foremost in my opinion, compensation. And then companies are going to have to start thinking about remote or flexible work arrangements because this is what everybody wants. People reach out to me daily asking me if we have remote opportunities. This was before everything happened. And now I think that this is going to be front and center in people's minds and on their wishlist going forward and companies are either going to need to adjust to this or be okay with losing out on top talent.
Stephanie:
Yeah. And I think this might've been a good forcing function to get those companies to a place where they feel more comfortable as long as they see good results. A lot of people have been working from home now, I could see some companies seeing bad results and some seeing good ones so it all depends.
Adam:
I'd hate for them just to base it on this time right now because it is such an unprecedented time that people are... their kids are home. It is very difficult to get things done and have to figure out how to work remotely maybe when they haven't in the past. And it's just a very unique environment right now. Test it when everyone's back at work and things are a bit back to normal. That I think would be the true test.
Stephanie:
Yeah. Have you seen any of your clients adapting quickly to try and create good work from home type opportunities where maybe they're like, "Okay, I'm going to shift that job req to be remote now instead?" Or are they a little bit slower with that?
Adam:
Yeah. So certainly a lot of our clients have said, "This is the final straw. These roles are going to be remote. Don't worry about having people work in house for this or onsite." But what's happening now is that everything is remote where candidates are being interviewed over the phone and over Zoom. They're being hired over Zoom. They are getting onboarded over Zoom. They're going through orientation over Zoom. So everything is virtual and it's a learning curve for everybody. It's a learning curve for these companies. It's a learning curve for candidates. I've had candidates that had to do presentations, interview presentations over Zoom, and that's very unique and different and-
Stephanie:
Awkward.
Adam:
Very awkward. There are a lot of new challenges there.
Stephanie:
It's like, "Are you laughing over there? Oh, it's just frozen. Okay. Oh, awkward."
Adam:
Yes, yes, exactly. Exactly. So we're all figuring this out at the same time. And I think that in a more normal environment that companies will see that this is the future, you can't stop it.
Stephanie:
All right, so towards the end of the interview here we do this thing called a lightning round sponsored by Salesforce Commerce Cloud. It's where you can quickly answer whatever comes to mind and you have one minute and you have about five questions here.
Adam:
Okay.
Stephanie:
Are you ready Adam?
Adam:
I am ready.
Stephanie:
Okay, I'll start with the easier ones first and then we'll have a harder one last. All right. Since we were talking with you and our producer Hillary, that it's lunchtime for you guys. What's up next for lunch?
Adam:
Oh. So I am a big granola fan and I will eat granola for every meal of the day. And that's what I will probably hit up for lunch.
Stephanie:
Yum. I haven't heard your stomach rumbling yet so amazing. What's up next on your Netflix or Hulu queue?
Adam:
Interesting. I have had Ozark on there the new season for a long time. I just have not had the opportunity to watch it. But that is a really interesting show and I've been looking forward to it.
Stephanie:
Awesome. I see our producer, Hillary is in my dock right now in all caps saying, "I love granola too." That's good.
Adam:
I'm glad.
Stephanie:
That is a fan favorite. What's up next in your travel destinations? When you are allowed to travel?
Adam:
Oh man. I can't wait to get out of the house, first and foremost. But assuming we can get out this summer, Maine has been our favorite destination for summer trips. We go to Portland, Maine. Love it there. The restaurants are fantastic. It's on the water, there tons of parks to go to. We bring our kids, our dogs and the whole family goes and just they have a great time. So I'm hoping to still get there at some point.
Stephanie:
Awesome. Yeah, it sounds really pretty. What's up next on your reading list or podcast list other than this podcast or [inaudible 00:37:46]?
Adam:
So my favorite podcast probably have to be How I built This with Guy Raz. So I listened to that pretty religiously and I love hearing the stories of these entrepreneurs and how they get started and what they did to scale and the challenges that they did face. And one of my favorite questions that Guy likes to ask is how much of your success can be attributed to luck? And surprisingly, almost everybody says a lot. And I find that just a really interesting. And, again, we talked about being in the right place at the right time and I think that's really interesting. Of course, you make your own luck by getting yourself out there and working hard but the luck is certainly is a big factor.
Stephanie:
Oh yeah, completely agree. A lot of the reason we're here is because of luck for sure. And timing and being like, "Oh, glad that happened when it did, because if not, we might not be at this company right now."
Adam:
That's right, that's right.
Stephanie:
So completely agree. All right. The harder question. In your opinion, what's up next for e-commerce pros?
Adam:
For individuals in e-commerce?
Stephanie:
Yeah.
Adam:
What's up next? I think that we're going to be seeing a lot of activity, a lot of companies doubling down on e-commerce like I mentioned. And what they're going to be looking for are people that can understand the entire e-commerce ecosystem and that may be everything from retail, brick and mortar to omni-channel to direct e-commerce. Companies are going to look for people that can integrate their strategies and everything is becoming more integrated. There may not be different channels anymore. They're all blending together. So for people that understand the business, that is going to be critical for these companies, and that's where you should be really focusing on your skillset. If you're a specialist right now, start learning outside of your box and start thinking about the business and how it operates and how everything ties together, because that's what's going to be most important.
Stephanie:
Love it. Great answer. All right. Thanks so much for coming on the show, Adam. This is fun.
Adam:
Is great. It's a pleasure. Thank you so much.
In this digitally-native world, it might be surprising to learn that an old-school marketing tool is actually one of the most effective customer acquisition and retention tools.
On this episode of Up Next in Commerce, Renee Lopes Halvorsen, the VP of Marketing & Ecommerce at Marine Layer, joined us to dive deep into the merits of catalog marketing. Renee cut her teeth in the marketing, eCommerce and omnichannel world at the Gap and Athleta. Now she is guiding the team at Marine Layer using a data-driven and blended approach to marketing that has led to profitable customer acquisition, high lifetime customer value and retention, and a fully engaged customer base that is coming to stores with more buying intent than ever. How is she doing it? Find out on this episode.
3 Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
---Transcript:
Stephanie:
Welcome everybody to Up Next in Commerce, the number one show for all things eCommerce. This is your host, Stephanie Postles. And today, we're chatting with Renee Lopes Halvorsen, the VP of Marketing and Ecommerce at Marine Layer. Renee, welcome to the show.
Renee:
Hey, Stephanie, how's it going?
Stephanie:
It's going well. Yeah, excited to have you on.
Renee:
Yeah. I'm excited to be here too. This is my first podcast, but I'm an avid podcast consumer. So, I'm excited about this.
Stephanie:
Oh, we are very eager to have your first. So, I saw that you have a very interesting background of working at some good name brands, and I was hoping we could start there where you tell me a little bit about some of the previous work that you've done, and what brought you to Marine Layer?
Renee:
So, I've been at Marine Layer now for about five years. But about before that, I spent eight years at Gap Inc. I graduated college and like a lot of my peers, thought it would be a good idea to get into investment banking. But then about a year and a half of that, I was like, "What am I doing with my life? This is exhausting, and I'm not particularly interested."
Renee:
I think I was working on a petrochemical deal at one point. So, I wanted to join a company I was excited about and I found Gap. They were hiring in San Francisco. And Gap is amazing because I think they give you a lot of opportunity at the entry level to move around in the organization. So, I feel like I really got a rad retail background experience in all things.
Renee:
I started in real estate finance, and then I was able to join a corporate strategy team, where we were really looking at international expansion opportunities for Gap Inc and acquisition opportunities. And then, after about a year and a half of that, Gap Inc had just acquired Athleta brand. And I was a female athlete in college, always a huge advocate of women in sports.
Renee:
So, really wanted to join their team in whatever capacity I could get my way into the organization. And they were hiring in marketing strategy, which was ended up being perfect for me. Because I think I have a real passion for business analytics. But then, I also love just consumer trends, and consumer behavior, and just how those things roll up on a macro level.
Renee:
So, I joined the marketing strategy team. It was initially brought in to really look at a lot of the ways that Athleta was spending their marketing spend, and inform if they were overspending. I think Gap was particularly concerned about how much I thought it was spending on their catalog. So, they wanted more of an objective strategy team to look at that investment, and prove out that it was really driving incremental demand.
Renee:
And it ended up just being like the most incredible experience. I spent close to five years there, and started looking at the efficiency of catalogs to drive incremental demand. It ended up being when digital marketing was really taking off as an acquisition channel, and retention channel. So, spent a lot of time also weigh out what's a stronger growth tool catalog, or digital marketing.
Renee:
I was there and they're opening up a lot of their stores. So, I was thinking a lot about omni channel, customer health. So, love that job. And I think after spending a little while, it's like, "Gosh, I want to take all this newfound knowledge, and apply it to somewhere that's in a younger growth stage." And ended up meeting the CEO of Marine Layer, we hit off.
Renee:
He told me that he really wanted to start a catalog, and I was like, "Gosh, I think I'm probably one of the youngest people in our industry that knows a lot about catalog."
Stephanie:
Yeah. I haven't actually heard that term in any of the interviews referencing at catalog.
Renee:
Oh, yeah, it's funny. It's like an offline way to really do customer look alike modeling. I think people think of it as super old school. But when I look at what's happening, like on Facebook, or within digital marketing generally, it's the same things that the catalog industry has been doing for 30 years.
Stephanie:
How interesting.
Renee:
Yeah. It's just like using customer LTV assumptions to inform how much you're willing to spend to acquire a buyer. That's the core principle that I think has been a part of catalog investing for 30 years. And I think now, that's a huge part, that's the biggest part of a digital marketing acquisition too.
Stephanie:
Okay, cool. So, what learnings did you take from Gap, especially around the catalog versus digital marketing, and bring to Marine Layer?
Renee:
I think my biggest takeaway was actually the importance of not being promotional. And the importance of being really focused on long-term customer health.
Renee:
It was like a stark contrast for me, I think working in the Gap, Banana Republic world, and then shifting over to the Athleta world where they had super, super high percentage of their transactions happening at full price. But I just think getting into a discount space, it's a super slippery slope.
Renee:
And I think it was so exciting to watch within the Athleta environment that you might have to spend a little bit more on marketing, spend more on brand, but what you end up driving is really high rates of retention. I think it makes your business a lot more predictable, and healthy in the long term. So, it's super high level, it's focusing on long term brand health versus finding those cheap thrills with little promotions here or there.
Stephanie:
Yeah. When you joined Marine Layer, did you have to shift your thinking because I'm thinking the people who are at Gap or the consumers of Gap are maybe different than Athleta versus Marine Layer? Have you seen different buying profiles, and ways to connect with that audience, and get people to buy full price?
Renee:
So, Athleta and Marine Layer actually were more similar, but definitely Athleta and the other brands, I think are super different. The AOVs are pretty similar for Athleta and Marine Layer. I think the other category tends to be a really big driver of retention. So, it's known in our industry that if you are a bottoms-focused purveyor that you generally have a higher retention rate.
Renee:
I think that's what it benefits from being a bottoms-focused activewear brand. So, the retention rate is a little higher than what I was expecting coming into Marine Layer.
Stephanie:
How did you shift, yeah, when the consumer is may be different. Marine Layer and Athleta, you're saying are similar. Versus Gap, maybe they are used to sales and things like that. How do you shift your strategies and your learnings that you took from those two brands to Marine Layer?
Renee:
Yeah, okay. Absolutely. So, I think it's really around how you focus on measurement of your marketing channels. I think when you're focusing on discounting, it's pretty easy to focus on what was the comp over last week, or how many units have been moved through? But I think when you're focusing on long-term premium brands, you're really focusing on was it incremental?
Renee:
Could I have gotten more in the long term if I'd done it differently? What was the impact to customer LTV? What's the quality of customer that I'm bringing into my brand? I guess a big difference is that for Marine Layer, we won't do a lot of promotions in the acquisition stage. Because it's been proven for us that if you bring in a customer, or a lower price point item, or a lower overall transaction, or just a bigger discount.
Renee:
Those buyers won't repeat buy from you. So, basically, you've wasted that unit in selling to them on their first transaction on a buyer that's not going to be a big part of our brand a year from now. So, it definitely changes the marketing channels that you're looking at, and also changes the way that you measure them.
Stephanie:
That's a really good point about not showcasing maybe, like here's our discount $3 item, and then wondering like, "Oh, hey, why didn't they come back and repeat buyer, or where'd they go?" That's a really good point.
Renee:
Yeah. And even more recently, we've been having a lot of internal conversations on whether or not we should be selling our cloth face coverings in digital acquisition tools. So, you're probably seeing there had been a lot of brands out there that are including them in the way that they're trying to bring in customers to their brand. Our face coverings as a company are very reasonably priced.
Renee:
We're doing them more as a service than a real growth driver for our business. So, I think if we put them on our paid social channels, and use them to acquire buyers, I'm sure it would get a lot of acquisitions. But I just don't know how healthy those acquisitions are a year from now. I don't know if they're going to be buying from us in 2021 and 2022.
Stephanie:
Yeah. That long term vision. So, well, maybe before I keep having you dive deeper and deeper, it'd be good to have you tell people who don't know what is Marine Layer and what is your role? What is your day-to-day at Marine Layer?
Renee:
Yeah, absolutely. I get so excited talking about marketing. It's easy to forget the high-level stuff.
Stephanie:
Oh, me too. I was great after 1,000 more questions in the week. I'm like, "Oh, wait, we probably should talk about the brand first so everyone knows what you do."
Renee:
Totally. So, I'm the VP of Marketing and Ecommerce for Marine Layer. I joined the company five years ago as our Director of Ecommerce because Marine Layer was actually, it's a DTC emerging DTC brand, but grew at store base faster than it grew its Ecommerce business. When I joined in 2015, we had 10 stores. Now, we have 45.
Renee:
And really, our online channel was considered something to help with replenishment for people that were acquired in store, and then they wanted to buy it again online. So, I think that's where my role started. Over time, we just started building out these new marketing channels to drive online growth separate from the retail channel.
Renee:
So, my responsibility started to include more and more marketing functions. And then, more recently, I've started also leading our creative and brand teams, which I really, really loved doing because I think there's so much value in finding good tension between big brand ideas, and then long-term health of brand, and near-term sales goals.
Renee:
I guess zooming out again, Marine Layer is a casual clothing apparel brand. We are based in San Francisco. Our company was founded in 2010 because our CEO, his girlfriend threw out his favorite shirt, and he set out to recreate that incredibly soft, broken in shirt. And he did that. So, it was really founded on the best ever men's t shirts. Our shirts are just absolutely absurdly soft when you touch them. They make a wreath-
Stephanie:
Yes. I can vouch for that.
Renee:
That's awesome. And then, he started expanding the assortment for men's beyond t-shirts. And then, I want to say a few years later than that, he started expanding into women's shirts. It's definitely more of a tops focused business than bottoms. Although now, we have some really strong business in women's bottoms in particular.
Renee:
But now, it's a full assortment of California casual. We really focus on making everything comfortable, soft. We want it to be your favorite. We talked about the importance of it being like a top of the stack t-shirt, the go-to item that you go for. You're looking for it when it's coming out of the dryer because you want to wear it even though you have other ones in your closet.
Renee:
So, there's a lot of intention, and love, and care that goes into every single item of clothing that we make, whether it's a dress, or a t-shirt, or outerwear. It's really just around creating timeless, emotional, comfortable pieces.
Stephanie:
That's great. So, how do you convey that messaging on your website about how soft the fabric is? What techniques do you use? Especially, since you just got into helping tell the brand story, and the product stories, and all that. What are you finding works when it comes to talking about something that ultimately, it'd be nice to touch before you buy it? But if you can't do that, how are you conveying that message?
Renee:
So, lots of little ways. I'd also just definitely say that this is something we're always working on improving as the technology changes a little bit online. I think for us, it's communicating that our stuff is special, and that it has a fun, emotional connection to your stuff. It's not just any old t-shirt. We want you to feel like our brand is maybe an old friend of yours, or it's a comfortable place to be.
Renee:
So, it's in every single tiny touch point. The models that we use, how we style them, the copy that we write for our shirts, it's not going to be just like a bunch of bullet points with the fiber makeup of the shirt. It's going to be describing what you could put in the pocket, or where we used to wear this shirt, or what it was inspired by. Our model notes I think will be like so and so is a size medium, and 5'10", but he also plays in a band on the weekends. It's really. I think-
Stephanie:
That's right.
Renee:
And bringing the product to life in a way that feels unexpected, but then at the same time, just familiar and fun.
Stephanie:
I love that.
Renee:
Yeah. I think we'd like to play with more ways to test video on our site to really convey softness. And then, the other thing I would just say is that I think our store experience is a really big part of our brand experience. And I do think it's what makes our site so successful. Our best customers, this is true everywhere, but are the customers that shop online, and in store.
Renee:
And I think it's because those customers have the benefit of touching our stuff, interacting with like, are extremely friendly, and mellow store associates, and they understand what's special about it, even without the context of the site. And yeah, and then I'd also just add that it's another reason why I love catalog marketing.
Renee:
Because it just gives us more space to express the fun of our brand, and show off our lifestyle beyond just what you see in a flatter online experience. We love just shooting and fun inspirational locations. Our copy, I think is so funny and on point. I always love when I read the first draft of catalogs coming through that they can just make me smile. So, yeah, it's a multitouch approach to really bring that softness to life, even if you're not in store.
Stephanie:
That's great. Yeah. I definitely am in the same camp that if copy makes me smile.
Renee:
Yeah. Shopping should be fun. I think that's a big part of what guides our store experience and our site experience. We don't want to over iterate on it. We don't need to be the most innovative provider out there. We just want it to be fun, and make you smile where we can, just bring a little bit more joy into your life. Not in a cheesy way, but just an honest, approachable, fun way.
Stephanie:
Yep. Yeah. I think Trader Joe's does a really good job too with the pamphlets they send out.
Renee:
Totally.
Stephanie:
And I've either read them, but they have really good copy in them. And you also learn something, and you're smiling throughout it, and you're like, "Oh, I want to buy that bag of plantain chips also."
Renee:
Yeah. And I think it makes a lasting impression. When you're thinking about where you're going to go shopping, you're like, "Gosh, I guess I'll go to Trader Joe's." We think really intentionally about our promotions that way too. We don't want to do a sale and have it just be a sale. The lead story can't just be 70% off, although we would never go that deep, or even 20% off.
Renee:
There has to be a story behind it. Is it a funny story about a dad joke if it's a father's day story, or is it like, "Oh my gosh, my favorite promotions we ever did was when there was a blackout in San Francisco." Probably like, I think we all woke up that day, and nobody had any power. And we all came into the office, terrible shower situations, looking terrible.
Renee:
And we're like, "Let's just do a blackout sale, a sale until the lights come back on." And I think there's a shared experience that you have with your customer. And it makes your content just more memorable and honestly, I think people are more likely to participate with a smile on their face.
Stephanie:
Yeah, yeah, I completely agree. So, we mentioned catalogs earlier, but I want to dive a little bit deeper, because like I said, you're the first one who's come on the show who's really mentioned it, and talked about this. And I'd love to hear about how you think about brands, should they or should they not have a catalog? How do you measure performance, and how do you think about that as one of your acquisition or marketing channels?
Renee:
Yeah. Great, I love talking about catalog, so we can do this all day. I think it's a real great way to drive the story of a brand lifestyle. So, I feel like that lets you know right off the bat. It's not just a product, if we're just talking about a couple of skews that we're building on top of, then I think it's hard to pull together a catalog.
Renee:
But if you have an assortment of over 100 items, and there's a lifestyle component that you're trying to celebrate, then I feel like there might be good space for you to test into a catalog. I think it can also seem super intimidating from a cost standpoint, but there's ways to pull together photoshoots in a super scrappy way.
Renee:
Gosh, I think the first catalog Marine Layer I ever sent out, we use models that were good friends of the brand, and we shot locally, I think in the woods outside of Calistoga. So, it doesn't-
Stephanie:
Great.
Renee:
Yeah. When I was at Athleta, the budgets that we had for catalog content were much, much bigger than the type of stuff that we do for Marine Layer. Although, we have definitely professionalized our setup a little bit more. So, I don't think the creative cost needs to be super big. It's more about making sure that you have the breadth of assortment to support a catalog.
Renee:
And I think in order to send something meaty out there that's really going to drive results, you want to send out at least a 44-page catalog. So, that's where I'm getting to, like you probably want about 100 different styles that you want to market in there. So, yeah, we started mailing catalogs in 2015. And our books are about 44 pages.
Renee:
And now, our assortment has grown, and so as our catalog page counts, and also our catalog meal frequency, and I think what's really powerful about them is, again, just making that lasting impression on a customer about who you are, and what you stand for, and the breadth of assortment that you make. I think people really knew Marine Layer as a t-shirt brand and the catalog, especially for online buyers.
Renee:
And even now, people that maybe buy their first product off of Instagram or something like that, and it's just one item. It just shows them how much more we do, and what we're excited about. I think-
Stephanie:
That's great.
Renee:
They're also very easy to overlook, as I'm sure once people start sniffing around at the cost per piece, and the CPAs associated with catalogs, they're not cheap. But what I found at Athleta, and definitely at Marine Layer is that people that you bring into the brand on catalog tend to be a lot more productive in the long run. So, they're much, much healthier buyers than somebody that we may be acquire through an Instagram ad.
Stephanie:
Very cool. So, what is the average CPA to expect if someone were to start a catalog, and how do you track that incrementality, and ROI on that?
Renee:
It's going to vary for so many different reasons, but gosh, I feel like anywhere between a $70 CPA to $100 CPA would make a lot of sense. I feel like people are always so fascinated by how you do catalog tracking. I always get questions like do you just track all the orders that come in through the phone?
Stephanie:
Oh, my gosh, I wasn't going to ask that. I'm interested in tracking, but I wasn't like, "Are you talking to people on the phone?"
Renee:
No, no, no. No one is calling in to place orders. A couple of people do per season, but it's not like you're getting tons and tons of people calling in to place orders. It's more about like you're in the catalog match back process. So, you will know who you mailed your catalog to. And then, you can use third party providers to help you understand with all of the orders that were placed in the last two to four weeks when the catalog got in home.
Renee:
How many of them matched back to somebody who received a catalog? And then, I think beyond that, once you start mailing a little bit, people can start to ask, well did these people place an order because they received a catalog, or because I launched this new collection? And then, I think you can start to holdout testing to see for the folks that mailed a catalog versus didn't mail a catalog, how powerful was the catalog for driving new demand?
Renee:
So, all those things are things that you can do to measure performance. But in my experience, I think and in talking to other industry professionals, usually the first time you mail a catalog, you feel it. Your business was operating at a certain level for the last four weeks, and then all of a sudden, it's operating a different level for the next couple of weeks. So, that's good.
Stephanie:
Are you mailing catalogs to only current customers, or are you also doing people who've never bought before?
Renee:
So, we do a mix, and we do to new customers, and to existing buyers. As an existing buyer, I think it's a really good retention tool. And it was exciting, we've been measuring CLV for a while now. It's like you see the CLV of our brand for the average customers brought into our company. And then, when that catalog started getting mailed in June 2015, it just moves up, and then it starts at a new baseline.
Renee:
So, I definitely feel like it shifts our retention of our buyers. And then, we also do it for customer acquisition. So, we work with data co-ops, where we can rent names. So, we never actually take possession of those names. I don't know who I'm mailing, but I just know that I'm mailing customers that look like my customers.
Stephanie:
Very cool. Yeah, that's great. When it comes to performance, if a lot of people come in, and they have their digital marketing hat on, and you're talking about catalogs, how should someone level set expectations for here's the type of performance and ROI you can expect with catalogs versus digital marketing? How do you level set that?
Renee:
Yeah. I think we look at the CPA-LTV ratio. So, over a three-month time period, or a six-month time period, or a year. So, even though your CPAs are going to be higher for your catalog and for your digital acquisition business, I would expect that your LTVs will be a lot higher too. So, for us, the ratio ends up working out the same, or in a lot of years, sometimes even the ratio is a little higher for catalog.
Stephanie:
Got it.
Renee:
The complexity of catalog too that I just want to throw out there is definitely less nimble, which is, I think, frustrating for a lot of new age DTC folks. You have to send your catalog, create it about a month in advance, and you can't always control exactly when it gets in home. If there's a tornado, then the post office is going to mail it to certain post offices across the country.
Renee:
And so, I think what can be frustrating is that you can try to get it right in the catalog creative, and then when the catalog gets in home, maybe you're sold out of a certain item, or you didn't get something, you have to presell something because it's not actually available when you thought it was going to be available.
Renee:
All those little things that are hard, like those bigger moving pieces, they can really impact catalog performance. And I think with digital marketing, you can be just like super nimble. If the item is not in stock, you just don't market that item. Pros and cons to both.
Stephanie:
Yeah. That makes sense. So, in our research, I saw that customer lifetime value is your number one metric. And I was wondering, are you willing to acquire customers at a lost? And if so, how much are you willing to take on?
Renee:
So, we don't acquire customers at a loss. We focus on being profitable upon acquisition, or I'm sorry, being profitable upon acquisition, or zero to positive dollars coming in on the first transaction. That's changed over the last couple of years. I think in some years, we've let it get up to about a zero to six-month profitability time window.
Renee:
So, we expect to be back in black, six months after customers are acquired, I'm not an advocate for one year to two-year time periods. I just think there's too much risk involved. I have a pretty good idea what's going to happen in the next six months, and customers can be pretty predictable. But to focus on those longer time horizons, I don't know.
Renee:
That's just never really been my appetite for risk, or my company's appetite for risk. But I really feel like that decision is just a super specific decision made for every company based on where they are in their growth stage, and what access to capital they have. I think it's changed For Marine Layer.
Renee:
And I think it's fun for me now that we're focusing on being profitable on acquisition or better because I can take those dollars that we're getting at the first acquisition, and I can invest them in new tools, or I can invest them in improving our brand. And so, it feels like a healthier ecosystem for us to operate in.
Stephanie:
Yep. Yeah. I completely agree. It seems like a better approach, especially with everything that's going on right now.
Renee:
Oh, my gosh, I know.
Stephanie:
It's hard to predict going to happen next month, which makes me want to ask the question, how are you guys moving forward in this COVID environment? You were mentioning retail locations before, what's changing, and what are some things that you're doing differently going forward?
Renee:
Yeah, gosh. It's so funny because recently as a leadership team, we were looking back at our goals for the beginning of the year, and asked to rethink those, given that everything's changed. And the one that stood out to me that makes me laugh now is I had some goals around doing bigger campaign marketing planning. We're a really scrappy organization.
Renee:
And sometimes in January of this year, I thought we were almost too good at whipping things into shape last minute, and reworking copy, or reworking direction of campaign really close to the finish line, to the point where it inhibited our ability to tell bigger stories across more marketing channels. But now, I'm like, "Oh, my goodness, it's an awesome value and strength to have to be really, really nimble."
Renee:
Our big change for us during COVID is that we're really reviewing all of our emails, really close to when they get sent. We're not trying to create content on a Monday and send it on a Thursday. We might create a first draft or something on a Monday, but we'll keep reviewing it and make sure that the voice, and tone, and products that we're featuring all mix in up until a few hours before final send time.
Renee:
So, we're definitely just reviewing content, and we're also talking to our customers more frequently. I think in March, when everything was changing so quickly, and also our business was seeing a lot more softness, as I think COVID was becoming a huge, huge, huge reality. And the change was we were experiencing it personally, and our customers were experiencing it.
Renee:
There were moments when it just felt like you were paralyzed into not wanting to do anything, not wanting to send an email because you weren't sure what to say, or not wanting to post on social because you didn't know what to say.
Stephanie:
Yeah. I saw so many articles about that too, like how should your brand discuss COVID, and it's tricky because you can get in trouble for anything these days, and it feels hard to take a risk on any messaging, or yeah, move forward at all.
Renee:
Oh, totally. And I feel like I even had conversations with my CEO about pulling entire catalog mailings, and just like these very, very huge changes that weren't just about the next couple of weeks, but longer-term stuff too. And what I think worked for my company is to just not stop, to keep moving in the dark room. There's that metaphor when the lights go off, and you just stop.
Renee:
And we just didn't do that. We forced ourselves to write the really hard email copy. And I think we used to have like me and my copywriter, and my CEO review copy. And instead, we invited the larger group to really help us think through what felt right. And that really helped. We started emailing more frequently.
Renee:
So, rather than sending emails two to three times a week, we started emailing four to five times a week. Just because it felt like rather than sending these huge, big, long stories, we could just tell these smaller-point-in-time stories, and just keep our finger on the pulse more often. And that seemed to really work for our customer.
Renee:
And then, I also think we just force ourselves to try new ideas that we've never tried before, and make them work. We ended up shooting a catalog entirely in studio because we couldn't get outside. And it actually is one of my favorite catalogs we've ever created. So, it got-
Stephanie:
Oh, that's great.
Renee:
... May of this year. And I feel like it just forced our creative team to just think differently about everything we were doing. And it was really raw and vulnerable. But it's really awesome, and you see that it yields great content. And then, I'm also really proud for my company to speak up around Black Lives Matter. I think, as a company, we've definitely made it known that we're more of a progressive organization.
Renee:
But I think never made such a bold statement around an issue that we are passionate about. And I honestly think that going through March, and just learning how to be honest, and real with each other, and connecting with our customers in the way that we did, it really made us feel more empowered that we should be making bold statements across our platform about things that we believe in.
Renee:
Especially, when it has to do with human rights. And so, it really helped us guide how we responded to the Black Lives Matter movement in organic, social, and email, and just what we've been doing as a brand.
Stephanie:
Yeah. That's great. I like the idea of leaning into it not being scared to publish things. And just that we agree with that method of doing thing. So, are there any brands that you watched? Oh, go ahead.
Renee:
Oh, as I said, the other thing that I think we do now that we weren't doing beforehand is, well, one, we use Slack all the time, which I love Slack. It's funny to me that we are late to the game on that one. But the other thing I was going to say is that we actually have team meetings every single morning, and I feel like we over invite.
Renee:
When you're in the office, I feel like we have a tendency to try to limit meeting attendance because sometimes meetings just explode. And then, you feel like they are becoming unproductive. And I feel like we've been taking the opposite approach during COVID. We have a 30-minute meeting with my entire team. And that includes customer service, to eCommerce channel managers, to somebody on our brand creative team, and our copywriter.
Renee:
And it just helps to just connect really quickly in the beginning of the day, and make sure that everybody has the same information starting point for what's happening. I'm sure that there's a lot of people that don't need to be there, but I think it's replicating that like water cooler environment, or that you're walking, and making eye contact with somebody, or catching somebody in the bathroom. That's made a big difference too.
Stephanie:
Do you think that you all will continue doing larger meetings like that? Because I agree, having people onboard so you're not having to retell things, or having one person tell another person, tell another person, and the message is completely off. Do you think you're going to continue doing things like that even after when we can return to offices?
Renee:
I hope so. I'm going to force them to have a meeting every morning when we get in. I think there is something really nice. I think we've actually come together. We support each other more. I also think like role clarity has solidified itself in a really strong way. And I think there's not land grabbing around projects.
Renee:
Everyone is just super clear around who's doing what, and there is no like, "Oh, I wish I was working on that, or I wish I could contribute to that." It feels like there's more support across team members to get projects done.
Stephanie:
Yeah, very cool. So, earlier, we were talking about acquiring customers, and you mentioned that you had a scrappy marketing team, or your marketing efforts are scrappy. And I wanted to dive into that a bit about how you're acquiring your customers, and what channels you're finding the most success in, and what that looks like behind the scenes?
Renee:
Sure. So, like team structure, or more just channels that we're using or both?
Stephanie:
Yeah. I'd say channels, or marketing campaigns that are doing well, or how you think about setting that up to drive conversions, and new customers, and all that.
Renee:
Yeah. The last couple of months have been a weird time for everything. But I actually think for us, it's actually meant not really focusing on new channels. I'm starting to do that a little bit more now. Poke my head up, and think about what I want to test, and do in 2021. But for us, it's really been just focusing on things that we're already good at, and just being really, really thoughtful about brand creative.
Renee:
So, the channels that have been most successful are paid social, Facebook, and Instagram, and catalog continues to be really successful for us. Usually, retail is an awesome channel for us to introduce ourselves to a lot of people. But our stores were closed for three months. So, obviously, that had a big impact on our business. But yeah, so those channels have been working for us.
Renee:
And then, we have a pretty scrappy team. We do all of our own in-house creative, which again, I think has been really helpful, and iterative, and making sure that we feel all of our content is on brand. Yeah.
Stephanie:
All right, cool. For the retail stores closing, are all of them opening back up, or is it making you rethink your retail strategy at all, or what's your plans going forward with that?
Renee:
Yeah. I think, gosh, it changes every couple of days. I want to say 90% of our stores are opened. I think some of the stores in New York might still be closed, and I'm not sure when this air, so that might be different then. But for the most part, our stores are back open. We've been seeing that buyers are coming in, and even though our traffic is down, that buyers are coming in with a lot of intent.
Renee:
And we're seeing much higher basket sizes, and much higher conversion. So, overall, I think positively encouraged by what we're seeing in our retail channel around customer engagement through the pandemic. But I think what's been really exciting, and maybe that's the wrong word. I feel like nothing is really exciting. But when stores closed, I was nervous about how much we would lose the engagement from those buyers.
Renee:
Buyers that tend to participate in your retail channel, they do that for a reason. They're people that really like to touch the stuff before they buy it. And so, I wasn't really sure what to expect from those buyers in shifting their purchases to online, and how much, I call it retail migration, we would see. But for the most part, it's been a lot higher than what I was expecting.
Renee:
So, I feel good that our higher contact strategy that we've had in the web channel, or the web marketing tools has helped us engage with all of our buyers, even if they're traditionally retail buyers.
Stephanie:
Got it. Did you have different marketing strategies to keep those retail buyers engaged, and reaching out to them more, maybe not through email offerings, but direct mail or something like that?
Renee:
Not really. We talked about it a few times. But then I feel like, it's hard to create so many different creative iterations. I think we just came from like, "Hey, it's one customer out there. So, who are we talking to? We're talking to all these people." And I think what we've been talking about hasn't really been channel specific. It's more like Zeitgeist specific to everything that's happening in the world. So, I think that's worked for us.
Stephanie:
Cool. So, the one thing I was reading a bit about was something called the Re-Spun program. I was hoping you could talk a little bit about that because I was trying to think about how that model works, and the operating cost behind it, and all of that, and I was hoping you could touch on that a bit?
Renee:
Sure, I would love to. Re-Spun is a program that Marine Layer launched in November 2018, where we actually recycle old customer t-shirts into new tees and sweatshirts. And what's cool about it is that we take any old shirt that our customers had, does not need to be a Marine Layer shirt. We give customers $5 per shirt of Marine Layer credit.
Renee:
And then, we'd take their old shirts, we'd break them down to pulpy fiber, and re-spin them into upcycled cotton. And we also blend that upcycled cotton with a little bit of recycled poly, and then use that new thread to make new shirts, and new sweatshirts that are still absurdly soft Marine Layer caliber product. But it's actually being made from 100% either upcycled or recycled materials.
Renee:
It's a cool program because I think it does a lot of things. One, it defers shirts from landfills. So, we've actually collected, this number is probably a little old Knox. It's from January of this year, but over 170,000 shirts from our customers.
Stephanie:
Oh, wow.
Renee:
I think it's fun that we get to reward them, and give them Marine Layer credit. But I also think it really solves a problem for a lot of people out there. If you go back to why Marine Layer was founded, it was because our CEO did not want to get rid of his old favorite shirt. He wanted to keep wearing it, and he loved it so much. And I think there really is an emotional attachment to your clothing.
Renee:
That's what we try to do in every single piece that we create. And when you have an emotional attachment to something, it feels very sad to throw it away, or give it to Goodwill, and not really know what's happening to it. So, I think when we introduced this program, we were honestly blown away by the interest in donating old shirts.
Renee:
And we've actually had a lot of fun even going through them because we processed them at our headquarters. But some of them are old sorority fun run shirts, but some of them are like, there's really incredible stories behind the shirt.
Renee:
We've even reached out to some customers and shared that on our Instagram. We also did a contest just sharing the funniest shirt that we've received through this program. So, it's a nice way to connect with our customers, and understand more about what their stories are behind their clothes. And then-
Stephanie:
That's really fun.
Renee:
Yeah. And then, lastly, because I know this is an ecommerce-driven podcast. In some ways, we think about Re-Spun like our loyalty program. So, it's our way of rewarding customers for sharing our values, and creating clothing in a more responsible way.
Renee:
I think overall, just the response to the program, that's been just so awesome.
Renee:
We're just trying to expand it in a much bigger way. So, I'm looking for ways to include recycled materials, not just in this small assortment of Re-Spun tees, and sweatshirts, but how do we include recycled materials in everything that we're making. So, it's been fun to focus on this value of making clothing more sustainably, and using more recycled materials, and applying it to our whole brand.
Stephanie:
Yeah. That's amazing. So, to take a little step back into the world of eCommerce a bit more, and building actual websites, and all that stuff. What tools do you love using right now, or are you testing out, and you see them really working well with either not just customer acquisition, but conversions, or website performance? Anything in the nitty gritty that you're like, "This is really working well for us?"
Renee:
I feel like it's nothing.
Stephanie:
Feel free to go into the weeds.
Renee:
Yeah, I know. I'm trying to think. I feel like it's nothing particularly new. Well, if we've been having more fun with email flows lately, and looking at the frequency at which we're sending those, because it does seem that there's just an overall appetite to hear from Marine Layer more often. So, we were not sending our abandoned cart emails until two days after.
Renee:
But now I think we've moved that up to a few hours later, trying to monitor and see what happens there. I think because we are sending emails more frequently too, looking for more ways to segment our email file so that we can tell, again, more specific messages to certain audiences. And yeah, I think it's not really been not a lot of new in the last couple of months, it's mostly been focused on looking what we're doing, and seeing what we can make better.
Stephanie:
Yeah. What content are you sending if you're sending emails more frequently? I'm guessing it can't just be more product emails, or just the abandoned cart ones. I'm sure you're sending some content that's keeping the subscriber happy and engaged. How do you think about that when you're sending more emails?
Renee:
Yeah. Some of it is just as simple as segmenting by product gender. So, focusing on sending men's focused emails to people that tend to buy men's product, and women's focus emails to women's product buyers. But then, I also think a lot of branded messages. I think one thing that I love that Marine Layer does, that I didn't see happening as much out there is sometimes, we just send emails with no performance expectations against them.
Renee:
We send a really fun email, fun might be the funny adjective for it, but in March, where we just profiled what our employees were wearing while they were working from home, and-
Stephanie:
That's fun.
Renee:
Yeah. It wasn't even product that we are currently selling. We tried to focus on Marine Layer products, but our employees tend to have stuff from two or three years ago. So, we more just wanted to tell a story of being comfortable, and trying to find ease, and optimism wherever you are. Yeah. We also send that email usually around Father's Day or Mother's Day where we just like, "Oh, I love the Mother's Day on this year actually." We all sent in images of Facetiming with our moms.
Stephanie:
Oh, that's cute.
Renee:
And just talked about like, "We miss you, mom, we love you." And then, I think the Father's Day when we did this year was just around taking vintage images of all of our super cool dad styles, and sharing them on our email, and through our Instagram. So, yeah, I think we've had more creative license, just send emails that are just fun, and emotional, and make us feel happy rather than feeling like they're performance driven.
Stephanie:
Yeah, I love that. That's really fun, and I will be signing up just to see those emails [inaudible 00:47:30].
Stephanie:
All right, cool. So, the lightning round is where I'll ask a question, and you have a minute or less to answer, tan-tan-tan.
Renee:
Yes, I'm ready.
Stephanie:
So, this one I'm asking for our producer [Hilary] because she put it on the list. We heard you're a Bachelor fan. So, who's favorite bachelor or bachelorette?
Renee:
Oh, my God, that's so funny. I love Kaitlyn Bristowe. I just love Kaitlyn Bristowe.
Stephanie:
She is the best.
Renee:
Yeah. I feel like she ushered in a new era of Bachelor viewers, and I love The Bachelor. But then I also really love this funny podcast called Here To Make Friends. And it's like a feminist take on The Bachelor, and they rank episodes of things where feminist fails, and it's fun. I used to have a lot of roommates, and we would all watch it together. And then I got married, and I didn't have anyone else that would watch the show with me. So, now, I got to resort to podcasts.
Stephanie:
I love that. Well, then that's a good transition to what's your favorite podcast that you're listening to?
Renee:
Ooh, that's a really hard question. So, top of my head, I would say Radiolab and Fresh Air. Those are easy answers. But Fresh Air in particular, I love Terry Gross. I just think she asks such thoughtful questions. And I'm always surprised by the content that comes out of her interviews. And some of my favorite ones are with unexpected guests. If anyone hasn't listened to the Jay-Z interview with Terry Gross, go and find it. I think it's from 2013. It's so funny. It's so good.
Stephanie:
Oh, that sounds good. I have to check that one out.
Renee:
Yeah.
Stephanie:
What is your favorite learning tool or resource that you leverage along the way when it comes to running either marketing, or eCommerce, or something like that, where you're like, I constantly think about this book, or this article, or this person? Who do you look to, or what do you look to?
Renee:
Definitely my time Athleta. I would say it's more just the incredible coaches that I had at Athleta, and leaders that I had there that were just incredibly passionate about customer analytics, and customer health as a driver of long-term business health. I could list off folks, but Scott Key was our CEO. He's incredible.
Renee:
Mike O'Reilly was our leadership for marketing and eCommerce. And Irene Wong, my boss at the time, just a really, really powerful, thoughtful team that cared so much about the success of Athleta, and wanted to just try looking at a new way. They still inspire me all the time.
Stephanie:
That's amazing. What's up next on your Netflix queue?
Renee:
Ooh, this is embarrassing, but I'm going to say it anyways. How adorable is Baby-Sitters Club? Is anybody else watching that?
Stephanie:
I have not watched that yet, but I will have to check it out. I'm down to watch that. Not embarrassing at all.
Renee:
Okay, good. I have a three-year-old little girl, and I watched Baby-Sitters Club, and it just gave me a little spark of optimism that maybe the world is going to be okay if there's more 13-year-olds in the world that act like the Baby-Sitters Club. So, I'll throw that out there, and then also, Expecting Amy. We're two episodes in, and that's pretty good.
Stephanie:
Yep. Yeah. That's funny, too. What app do you have in your phone that you enjoy the most?
Renee:
This is going to be boring, but probably Google Analytics and Instagram.
Stephanie:
That's all right. Hey, those are not boring. I love Google Analytics and Instagram. Of course, is great.
Renee:
Yeah. I have to hand it to Google Analytics. Their app is very functional. I like that you can do different comparison periods real time stuff, it's helpful.
Stephanie:
Yeah. No, I completely agree. And then, the last one, if you were to create a Netflix original, what would it be about?
Renee:
Fun question. I have thought about this.
Stephanie:
Oh, wow. Okay.
Renee:
Well, I guess I feel I would like for there to be more stories about female professionals, and especially about female professionals that are comfortable being feminine and vulnerable, like Brene Brown take on what it's like to be in a workforce now. And I feel like there're podcasts that I think have done that really well that inspire me a lot.
Renee:
But I'd like to see that story told more. And I'm sick of stories about working mothers that are balancing their work life and their home. That's too complicated and too much to unpack there. But there is a lot to tell about just this new era of vulnerable women in the workforce. And I think a lot of them are moms, and I am very inspired by that.
Stephanie:
Yeah. I would definitely watch that. Renee, it's been such a fun interview. I loved how deep we get into a lot of things. And we will definitely have to have you back for round two. Where can people find out more about you and Marine Layer?
Renee:
marinelayer.com. So, that's a pretty straightforward one, and then definitely come and visit our stores. And for me, I don't know, send me a DM on Instagram. I'm @renielo, or you can send me an email at renee@marinelayer.com.
Stephanie:
Cool. It's been a blast. Yeah. Thanks for coming on the show.
Renee:
Okay. Thanks. It was great talking to you, too.
There are a lot of twists and turns in Joe Demin’s journey to founding Yellow Leaf Hammocks. It opens with a childhood refugee turned successful real estate developer, then twists into a story of entrepreneurship and an appearance on Shark Tank, and then turns again when a request for $400,000 became a $1 million investment. Through it all, though, Joe was guided by a singular idea to build a business that could actually have a measurable, sustainable positive impact on people.
On this episode of Up Next in Commerce, Joe guides us through his quest to make Yellow Leaf a success. Tucked within this incredible story are some critical bits of knowledge about running a successful eCommerce shop, including the challenges of selling on Amazon and the ways to optimize your Amazon strategy, plus some of the pitfalls to watch out for if you decide to pursue a path into retail.
3 Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
---Transcript:
Stephanie:
Hey everyone, and welcome back to Up Next in Commerce. This is Stephanie Postles from mission.org. And today we have Joe Demin on the show, the founder and chief relaxation officer of Yellow Leaf Hammocks. Joe, how's it going?
Joe:
Going really well
Stephanie:
So, your title, I don't think I've ever had anyone on the show with a title of chief relaxation officer. I was very excited when I saw that.
Joe:
Yeah, we're laid back, so we can't take our titles too seriously.
Stephanie:
Yeah, completely agree.
Joe:
It's a fun job.
Stephanie:
So, when I was looking over a little bit about you, you have a very interesting background and I was hoping you could start from the beginning actually, which I don't ask from a lot of my guests. But I mean, I want you to go way back, like age five.
Joe:
Yeah, wow.
Stephanie:
Tell me a little bit about your journey to where you're at now.
Joe:
Yeah. I mean, I appreciate the question and definitely I think a lot of what I'm doing now is sprouted from my background. So, I came to the U.S when I was five as a Jewish refugee from the former Soviet Union and had, I guess, natural hustle built in just from my experience growing up in a kind of a rougher part of Boston and just worked my way up through into college. And was, I would say, on a track to do something entrepreneurial.
Joe:
And early on in college, I fell in love with real estate development for various reasons. We can probably have a whole separate podcast on that, but ended up getting a really amazing job, like a dream job and where I got to lead a lot of high profile development projects. And through that experience, that was my first foray into fusing positive impact with making money in business.
Joe:
And this is around the time where green building was just starting to become a more of a mainstream topic. And as one of the younger people at the firm, I spearheaded efforts to reposition the firm as a leader in green building and sustainable development. And part of that philosophy that I had early on was this realization that we can actually increase profitability by building things that were better, more sustainable, that had a better health impact, creating healthier communities and so forth.
Joe:
It was definitely driven by wanting to do good but also realizing that you can do good and have a profitable enterprise. And as 2006 came around, the recession started and real estate was really the first. I graduated in 2006 and so I lasted a couple of years through the recession and ended up taking a job, more of an institutional finance position, but focusing on affordable housing. And a similar philosophy there where if you roll up your sleeves, you can actually take on a part of the sector that wasn't necessarily as sexy, but also had real impact on people, and again, keeping on profitability.
Joe:
And around this whole time of being in real estate, I was starting to get exposed to other entrepreneurs more in the consumer product space who were some of the early pioneers in sustainable agriculture and fashion, those types of areas and they were doing it in ways that were really impactful.
Joe:
And so, I caught that bug and had no idea what I was going to do next, but real estate was not the place to be at the time. And I was basically planning to go to business school. And right before going and applying for business school, I saved up all my vacation days and ended up going to visit a good friend in Thailand who was living abroad with four of my other close friends from growing up.
Joe:
And it was on that trip where the idea for Yellow Leaf came to be, but it all transpired on that trip, but driven by this experience that I had and exposure that I had to other social entrepreneurs.
Stephanie:
Okay, cool. So what happened in Thailand where you were like, "Uh-huh, I need to start Yellow Leaf." What did that look like? How did you find the hammock? What was the story behind that?
Joe:
So, I was originally on a remote island and reading a local guide book trying to figure out what to do with my day. We're sitting on the beach one morning and in this book, there was a story, it was a basically said, there's a little shop on the other end of the island in the old part of the island.
Joe:
And in the shop, there's a map that they give out for free that's a locals' only knowledge type of thing where it'll tell you the secret waterfall and the secret beach. And I was like, "Okay, I got to go check this out." So, I hopped on my motorbike, zipped through to the other end of the island and ended up getting to the shop and it was closed. So I was pretty exhausted by the time I got there. I sat down, someone came and opened the shop and I asked for the map.
Joe:
And then I also noticed that there was just a plethora of hammocks that were beautiful. And I immediately jumped in. I had loved hammocks before this never thinking that I would be in the hammock business. But I jumped in and was immediately struck by how soft the yarn was, the intricate weave. And I started asking questions about this hammock thinking that I would buy some and bring them home.
Joe:
And I was told the story of the Mlabri tribe and an aid worker who was working with this tribe and how literally through hammock weaving they had gone from being on the brink of extinction as a culture and they were trapped in indentured servitude. And through hammock weaving, they were able to provide enough income in their community where they were able to self-sustain themselves and build a path out of poverty or were on track to do that.
Joe:
The impact that they were creating for themselves that was driven by themselves and not an outside aid organization was really interesting to me. I had been familiar with the Toms Shoes model, the handout approach to creating impact. And so, this struck me as something really different. And I learned that these hammocks were not sold really anywhere else outside of a few places in Thailand.
Joe:
And so, a week later, that story of this community and what they were doing and the hammocks really stuck with me and I contacted the shop and I asked if I can go visit. And they connected me with the village. And long story short, I convinced the cab driver to drive me 600 miles to the village.
Stephanie:
Gosh.
Joe:
And I went there and I got to meet the women making the hammocks and spent a whole day in the community. And I learned that people would hike as far away as the Laotian border to this village because they heard how much money they could earn, how well they could be treated. And they were being turned away because there just weren't enough sales.
Joe:
And immediately I was like, "Well, this is a great product." Naively I was like, "Oh, I can sell some hammocks. We can provide work in this community. And I came home with a backpack stuffed full of hammocks and all this energy and excitement, threw them down on the bed when I got home and with my now wife was who was my girlfriend at the time we were living together. And told her about my experience and it all just snowballed from there. And I basically decided not to go to business school and start doing this on the side and diving into it and slowly getting to where we are today.
Stephanie:
Okay, cool. Yeah, that's such an amazing story. Where are you guys today? How many hammocks are you selling?
Joe:
Oh, God. Well, we have over 200 trained weavers. We started with about eight women when we first decided to do this full time. So, we've grown quite a bit in terms of annual units. I mean, tens of thousands that we've sold. And we're actually growing a ton right now. But yeah, it's definitely a very sustainable business. We're past the ideation stage and more into growth right now, so.
Stephanie:
For sure. Yeah. And I love that idea of giving jobs and actually, like you said, developing a market, a bigger market and providing an opportunity instead of just giving things to someone. Because I do think that's a much more sustainable path and one that I'm always very interested in. How has it changed though from when just a few women making these hammocks? What does it look like now with all these weavers? Are you ingrained in the training process? How do you keep up product quality? It seems like there's so many questions when you're working with a village in Thailand.
Joe:
Oh my God. Yeah. I don't even know where to start. There's a lot that we've learned and I think we've built a really, hopefully, a model that others can replicate for the artisan sector. But basically, when we started, we were, well, one of the first things we did was update the designs and we learned early on that...
Joe:
I guess to just step back even a little bit. When I first came back from Thailand, my co-founder Rachel's idea was that we needed to test the market and see if other people thought these hammocks were as great as I thought and that I wasn't just crazy. And that proved to be a really valuable process that we went through where we started selling hammocks at local markets and different fairs around New England, where we were at the time. And we didn't share the impact story. We just tried to sell the product and we led with product first.
Joe:
And through that experience, we gained a lot of feedback around design and being really design-focused. And so, one of the first things we did as we were starting to really grow was update a lot of the aesthetic to be more on trend with color and pattern and things like that. Upgraded materials so they were really built for the outdoor use and using performance materials.
Joe:
And so, as we were introducing these things, our weavers were really receptive to that. And we really engaged them in the process. But some of the things we've done as we've continued to grow and looking at how do we create more impact? Layering in like we built a financial literacy program, we have this amazing partnership with kiva.org where we're able to provide zero interest flexible loans to our weavers.
Joe:
And thinking about how do we provide additional support or bring in partners that can provide additional support in the communities to make it truly sustainable because the first step is giving somebody an opportunity to earn a great living wage and helping people evolve to the middle class. But then it's taking that next step. And so, we've done some work around that and really focusing on quality control from the beginning as well has been super important for us.
Stephanie:
That's amazing. So, how do you manage inventory levels? I saw you were on Shark Tank, which I'd love to hear the story behind that, but it also made me be like, "Oh my gosh, when you're on Shark Tank, I'm sure you got a million orders." How did these weavers keep up? So maybe first, if I can hear a bit about the Shark Tank story and what that is like, and then move on to how you manage inventory from that surplus of sales I'm sure you have.
Joe:
Yeah. Yeah, Shark Tank was quite the experience for us. I think we have an ideal product to showcase on Shark Tank, especially during today's times where people are spending more time at home. But for us going on Shark Tank was really, it's catapulted us truly. First off, we've had our first infusion of capital. I guess I can give away what happened.
Joe:
We received a million dollar investment from one of the guest sharks, Daniel Lubetzky, who's the founder of KIND Snacks. So, he's a very mission-driven investor who has a similar track record as us in terms of rolling up his sleeves and taking 10 years to build what he's built. And so, he's been through the trenches, but our experience in Shark Tank was, I mean, since Shark Tank, we've definitely seen a huge uptick in sales and we've been able to put some systems in place to really shift our business towards more of a direct-to-consumer model.
Joe:
And it's only been a month and a half since we were on the show. So, we're still living through a lot of the chaos that comes after you're on the show.
Stephanie:
Mm-hmm (affirmative). So what kind of unexpected chaos came? Because I'm sure you're like, "Oh, we're for sure going to get more sales," but what things happened or what surprising things happened after you were on the show or maybe during the show?
Joe:
Well, we honestly had no idea what to expect. We talked to some other entrepreneurs that have been on the show and have learned that it's different for everyone. It depends on what's going on in the world at the time that your episode airs. I talked to one person who was on the show during a massive snow storm and people were at home watching and he had a product that really fit the times. And so he did really well.
Joe:
And I talked to other people who were like, "Oh, it was okay." So, we just had no idea. And then going into this also, we're going through such a crazy time where we just didn't know if people are, how bad people are impacted economically. And so, we didn't know how to prepare inventory-wise, we didn't want to overinvest in inventory. That's been something we've really tried to hone in on and not hold inventory too long, have some of those kind of basic business principles baked in.
Joe:
But we've seen sales have far exceeded our expectations and it's broke a lot of the systems that we've had and created a lot of inefficiency now as we're trying to catch up. And going back to your question around the supply chain, on the one hand it's been a challenge, but we've also been able to catch up pretty quickly. And I think having a vertically integrated supply chain like we do and really great relationships with our weavers is what's allowed us to not lose out on, we're not leaving too many sales on the table and trying to take advantage of everything that's going on, keeping our foot on the gas.
Joe:
But it's been just the uptick in order volume within a short amount of time and sustained order volume has been something that's new to us. And so, it's been a fun challenge to work on.
Stephanie:
Yeah, that's amazing. Congratulations. Getting a million dollars from Shark Tank is awesome. And you went in only asking for 400,000, right?
Joe:
400,000, yeah.
Stephanie:
That's crazy.
Joe:
Yeah, they have a great clip at the end where Kevin O'Leary goes, "It's never happened before in Shark Tank where someone comes in for 400,000 and comes out with a million." And honestly, we had no intention of raising a million dollars on Shark Tank. I think, yeah, we're still like, "Did that just happen?"
Stephanie:
Did it hit your bank account pretty instantly or was there a whole process behind it?
Joe:
There was definitely a whole process. You go through due diligence after, it's more of a handshake agreement on the show. And so, we ended up closing and then went to work afterwards just preparing to be on the show, making sure that everything was in place for us to have a successful airing.
Joe:
And this was before COVID existed, so we did not anticipate what the world would look like when the episode actually aired. But it's great to see some money in our account for the first time and actually be able to think a little more strategically, so-
Stephanie:
That's always a good feeling.
Joe:
... definitely a different business today than, yeah. Yeah.
Stephanie:
So, what was the first thing that you invested in after that cash hit? Did you have a plan for it or what did that look like?
Joe:
So, we knew we needed to build our marketing engine. Prior to getting investment, we were very bootstrapped, we would reinvest all our profit and we were always getting pulled in a lot of different directions. And for once we can actually focus in on updating our website and really making sure we're telling our story and being a little more deliberate in the communications through our website. And so that was several months of a project and also focusing more on product development. We've got this new product called the hammock throne, which is a new category of its own.
Stephanie:
I need the throne because I consider myself a queen, so I like that.
Joe:
So, putting money towards that and making sure that we're positioned for this next phase of growth with product development and a really good Ecommerce experience was the first two things. And we're continuing to reinvest into those areas right now.
Stephanie:
Very cool. Do you ever test with the messaging on your website? And if so, what kind of testing do you do and what do you see works best to tell the story?
Joe:
Yeah, we've done some light testing. And the one thing we've tested the most, I would say, is how we message the product and the impact. And it's always odd to us if we ever lead with impact and the artisan story, it doesn't resonate as well as telling the product story. And so, we continue to test and we continue to iterate how we're communicating that because obviously impact is super important to us. It's baked into our business model, it's why we started, but the product is what makes it sustainable.
Joe:
And so, we're trying to really weave that into the storytelling more, but that's one thing we've, every time we test it, product story always wins. But we're starting to really get that striking a chord with more about how we tell the impact and how the impact story really contributes to making the product superior and what the benefit is to our customers.
Stephanie:
Yeah, that makes sense. I did go on your about page and I was watching more of the story of the weavers and I couldn't stop watching. It was like one of those addicting memes or videos where you're watching someone knit something and I'm like, "Oh, I can't look away." That's a really good video.
Joe:
Thank you. Yeah, and that's how we're now figuring out how to really tell that impact story of showing how it's made, showing the people that are making it. Every hammock is also signed on the label by the woman who made it.
Stephanie:
Oh, cool.
Joe:
And so, we really want to connect customers to, there are real people that are so enthusiastic about every single sale that we get. It's awesome. And we want to connect our customers with our weavers. And so, that video is something that it took us a while to get. Again, just not having raised money up until recently, everything came naturally and organically and over time, but those are things that we've tested out and seen how once we're able to show how it's made, that's one of our advantages. A lot of products are just made in I guess more of a boring way. I'm not sure, but just not in the same environment. And so, there's this beautiful craftsmanship that we want to showcase.
Stephanie:
Yep. Yeah, I probably would not watch how my office chair was made, but yeah, that I could not look away from.
Joe:
I did just get back from an office chair factory as we were figuring out the hammock [inaudible] that's was... I do think...
Stephanie:
What were you doing there?
Joe:
We were sourcing components for the hammock [inaudible] because we're getting into furniture. And I think that just showing how things are made should be done more. I think it creates more transparency and connects people to where things are coming from, which is important for sustainability and just awareness around that's important stuff. I would challenge that and say, even the way office chairs are made, at least maybe I'm just a geek around manufacturing and production, but I think there's some, I don't know, I saw some cool things that I thought other people would be interested in.
Stephanie:
Well, if you take a good video, I will be open to watching it and-
Joe:
Absolutely.
Stephanie:
... seeing if it's as enticing as watching someone weave a hammock together.
Joe:
Yeah.
Stephanie:
So, when it comes to new products, you just mentioned that you guys are looking into getting into new products. But one thing I saw on your site was that you could actually build a custom hammock and it made me just think about, how did you decide that you would allow consumers to build a custom hammock and how does that get to the weavers? Because it seems like it would be easier just to have like, "Here's our three products, and this is what the weavers know how to do, and this is all you can order." What was that thought process like allowing a customer to create their own?
Joe:
Yeah. We had a lot of debate around whether or not we wanted to pursue that because it does add extra work for us. We figured out what would be the premium cost. I think it's a $50 premium to make a custom hammock. The process has evolved over time and we're getting more towards a tech-oriented solution in this next iteration. But there's a design guide that we share out with customers.
Joe:
Right now it's pretty manual. You order the custom hammock, we then email you a design guide, a PDF that you fill out. So you can't actually see the hammock, but we have a lot of examples in that design guide and you can see the different colors. And it's worked really well, but what inspired us to do that was more around just realizing we have the ability.
Joe:
We have a very design-oriented customer, or at least one segment of our customers are very, in that interior design world. We also were previously, we did a lot of collaborations with companies like Anthropologie — we made all the hammocks for Tommy Bahama and other brands and realizing that they wanted something unique to them and limited edition collections and things like that and that we have the ability to do that. We realized maybe individual customers also have that preference and to make something that really fits their space as they're designing that area in their home or backyard.
Joe:
And so, we tested it out and we got a pretty good response and realized it was something we can do. And it's allowed us to differentiate as well, but also just another way to add value to people. And I think there's this broader trend around customization and less mass market products and things that really represent your personality and your style and things like that. So, we really lean towards that and wanted to empower our customers to be able to do that.
Stephanie:
Yeah. That's awesome. So, are you guys in retail or are you only doing direct-to-consumer?
Joe:
When we first started the business, we basically were trying to get any sale we can get. There's that bootstrap approach, just hit profitability as quickly as possible. We weren't really deliberate about where our sales were coming from, didn't have the resources for one strategy or the other. And as we grew and started reinvesting and we became a little more strategic and we focused on, our business was at, a year ago, it was probably 50/50 between retail partnerships and Ecommerce.
Joe:
And we've obviously started shifting heavily towards direct-to-consumer with stores being shut down, but other reasons as well, I think we were going in that direction anyway of being more direct-to-consumer. And the other thing that we're focusing on, thinking about more longterm is, I don't think we're going to not sell into retail. We're just going to be more strategic around who we work with and making sure that our story is really told well, the product showcased well, it's definitely a hard product to merchandise. And it's an easier story to tell on the internet with video like you mentioned and being able to really focus more on storytelling, which is a big part of our brand.
Stephanie:
Yeah. That makes sense. What kind of issues did you run into when you were going into retail, outside of COVID and everything, but what problems did you encounter?
Joe:
Well, taking up space on store shelves, packaging, we didn't really have retail ready packaging. And so, going through a couple of iterations of different displays, things like that, it took so much time to develop. Also, payment terms aren't flexible with most retailers, things like that. We pay our weavers immediately upon completion of the hammocks and some in advance.
Joe:
And so, just the whole retail business model wasn't really friendly for our art model. And we constantly were up against having to negotiate for better terms, having to figure out how to display the product in a store. And it's always just been so much easier to do it online.
Stephanie:
Yep. So, earlier you mentioned that when you started getting more orders, a bunch of things broke. What kind of things started breaking first and how did you go about fixing them? Or are there any best practices where you're like, "Well, when you have this happen, we saw this work, then this didn't?"
Joe:
So, I would say on the supply chain side, a lot of the efficiency that we had created just broke in the sense of... So, when we first were working with eight women, we were able to really go to someone's house and collect hammocks. And it was very manual and individual. As we grew to 200 weavers, we created a little bit more of a schedule around when we would drop off yarn, created a central location and standardized some of the things around collecting hammocks and payments.
Joe:
And after the Shark Tank appearance, our sales, we far exceeded what we expected to sell. And so, we ended up going on back order and still working through a lot of that right now as we speak and ended up having to go door to door again, completely lost all the efficiencies that we had, just trying to get the hammocks to the customers as quickly as possible.
Joe:
We started drop shipping directly from the communities where they're made in Thailand direct to customers homes. And so, a lot of the efficiencies just broke down and those things are compounded as you continue to stand back order. And so, that's one thing. The other is that when we relaunched our website in the beginning right before we went on Shark Tank, we had all these plans to continue innovating testing and a lot of those plans just fell by the wayside because we were putting out so many fires around being on back order, trying to get more yarn.
Joe:
There are so many challenges right now with global logistics. So, getting hit from a lot of angles.
Stephanie:
Yep. Do you see the industry evolving around logistics in the future? Because it seems like so many brands were maybe dependent on one location or these couple of factories or something. And if they're down for the count, you're in a pinch, how do you see things evolving in that part of the business going forward?
Joe:
Yeah, that's a really interesting thought to try to predict what will happen. But I definitely think a lot of brands are reliant on just one manufacturer and there's reasons to maybe figure out other backup solutions. I think we'll definitely start seeing that it's definitely wise to not just be fully dependent on one supplier. But it's going to be really tricky because in the U.S we're just not set up to manufacture a lot of things that people buy here. And so, it's not like it's going to be a sudden shift to bring manufacturing back.
Joe:
And globalization, personally, I feel like has had a positive impact on prices of products for people and accessibility to different things, but we're retracting a little bit, so I don't know. I'm definitely closely watching it and thinking about how do we look at different yarn suppliers and raw materials and maybe have more options just in case.
Joe:
But I think we're also inclined to not create a problem and just stick with the status quo. I think a lot of businesses are that way, so it's a little bit of a balance of putting some resources towards planning for worst case and also keeping your foot on the gas and keeping up with what's actually working now, but things will certainly be changing in the coming year.
Stephanie:
Yeah. Completely agree. So, with everything going on and all the chaos that you just mentioned, have you been able to focus on your content and marketing strategy? And if so, what does that look like for you all?
Joe:
Yeah, we've been definitely trying to scale up our content strategy. It's a little too early for us to report anything significant, but one of our, an area that I think we've done it really well in is having a lot of user-generated content. And if you look at our website, most of the photos on there are actually taken by our customers and this might have been a benefit of being bootstrapped and that we didn't have the resources to do a lot of these full-on photo shoots that bigger brands have been able to do.
Joe:
And that's allowed us to have real people in our products and to be able to show that to our customers, creating that relate-ability. And we're definitely wanting to continue that, and we're hiring now, trying to build out the content arm of Yellow Leaf more and focusing more around what a hammock represents in your life and relaxation and really shifting our mission a little bit more towards making relaxation a daily ritual in your life. And so, focusing our content strategy more towards that.
Joe:
And so, being a little bit more deliberate around our photography too and really showing the product in different places and how to use it. It's a little bit of a technical product in terms of how do you set it up? Where do you place it? And so, going forward, we're really focusing on being able to create content that showcases and answers a lot of those questions.
Stephanie:
Yeah. Yeah. That's definitely a good move. I also saw on the reviews, people were able to select where they place their hammock, and I thought that was so important because then you can be like, "Oh, she's like me and she put it in her backyard," or they put it in their kid's room. And it just helped you visualize, "Okay, it must not be that hard if a bunch of people are able to do it."
Joe:
Yeah, exactly. And that's where the user-generated photos that we have come into play. We also included a 12 page hammocking 101 guide book with every purchase.
Stephanie:
That's good.
Joe:
So, it has a lot of resources on how to hang it, where to hang it. Everybody sets it up a little bit differently. And so, as we look ahead, developing products that allow you to really be able to hang a hammock anywhere, there's more of our focus going forward. I think we've done really well with perfecting the woven hammock and now making sure that we can increase the amount of hammocks we can sell and the way people can use hammocks and making it a more integral part of our culture in the U.S. And so, that's the biggest focus for us in this next phase with solving that how to hang problem.
Stephanie:
So, when it comes to, you were mentioning UGC earlier, how do you encourage your customers to post those images?
Joe:
Well, I think for us, we're fortunate in that it's the type of product that people like to brag about. So, we definitely see a lot of people who are excited to use it. And so they're like, "Hey, take a photo of me," and they share it. And we try to really monitor social channels. I wouldn't say we have a massive audience compared to others yet. It's growing right now, but we try to really connect with people individually and have them share those photos with us directly so we can reuse them and just engaging with people one-on-one has helped.
Joe:
And then, more people see others sharing and they share. And so, it just builds on itself. Obviously, we send out the post-purchase review requests and anytime we communicate with customers we're always like, "Oh, we'd love to see your photos." And it makes our day to see that. And I think they're excited to share. And so, we try to keep that momentum going post-purchase.
Stephanie:
That's great. So, for a product that's pretty durable, probably going to last many years, what's your idea around increasing the lifetime value of a customer? How do you bring them back? How are you trying to get them to buy more than one product? What does that strategy look like?
Joe:
Yeah. With hammocks, it's obviously you would think a onetime purchase, and we were really surprised with our findings once we started really looking at the numbers behind our sales. And for us, it's about just under 20% repurchase rate within first year of purchase. And so, we were just shocked that for a hammock that we were seeing that.
Joe:
And what we learned was that this was such a great gift for people. And we started communicating that more once we discovered that so many people were gifting hammocks to a new, if someone, a friend buys a new home, get them a hammock. That's a great wedding gift. It's unique, it's different. And so, we've started really showcasing a lot of that gift giving more. And so, that's helped with the repeat sale.
Joe:
But that aside, we're also looking at how do we add more products? How do we build out, there's that space in your backyard that compliments the hammock? So, you buy a hammock, but there's other things. What else are you buying to create that space? And thinking about building more of a robust home and backyard brand centered around the idea of creating that relaxation space. And so, what can we do to add more value there? That's the product philosophy is more around hammock-inspired products, I guess.
Stephanie:
So, earlier you were talking about creating different messaging around relaxation or gift giving and things like that. What kind of marketing channels are you seeing success with?
Joe:
I would say right now, definitely the basics of being on Facebook and Instagram, especially for a very visual product like ours is great. We see a lot of success there and we've really tried to focus in on those. In the earlier days when we were starting to really focus more on digital marketing, we cast a little bit of a wider net. We found Google to be really expensive, really competitive and narrowed it down to, let's really figure out Facebook and Instagram before we start branching out elsewhere.
Joe:
And so, that's what our key focus right now. And we're also seeing with a lot of bigger brands moving off of Facebook right now with things happening politically, we're seeing prices come down a little bit. So, it's a smaller brand, it's honestly benefiting us. And so, we're trying to take advantage of that to be totally transparent.
Stephanie:
Oh, yeah. We've had a lot of brands, smaller brands say that as well, so you're not the only one.
Joe:
Okay. Yeah, and it's great. I mean, I think things are always shifting. The more people jump on a particular marketing channel, the cost increase, so you have to be really nimble. And for us, this is also new. We're also focusing more on Amazon these days. And so, I would say that's another really, it's been a great sales channel for us too.
Stephanie:
What was that process or what does it look like selling on Amazon versus B2C? What kind of things do you encounter while selling through their platform?
Joe:
Definitely very different. You lose a lot of control. Amazon's broken up between seller central and vendor central. And seller central you warehouse the product on your own either in your warehouse or put it in Amazon's warehouse so that you can offer prime shipping if you do that. But you have more control on that end. And on vendor central, they purchase direct from you and on the inventory and therefore their algorithm prices your product.
Joe:
And so, if you have a minimum asking price map pricing like we do, we never really discount our products. And so, you're constantly having to monitor and make sure that the product is represented the way you want it, which is really challenging. But at the same time, so many people are shopping on Amazon.
Joe:
And I think when we were first starting to shift more towards direct to consumer, we had a little bit of pride around thinking, "Oh, we're just going to be on our own website and some select retail channels." And really again, I don't think that's wise, I think you want to be where your customers are, particularly for your category. And for hammocks, we had an opportunity to really stand out on Amazon because it's such a commoditized category.
Joe:
And so, we definitely, yeah, we made this decision and it's worked out well for us, but there's definitely challenges around being in control of how your product is showcased and there's less customization and so forth, but a lot of people [crosstalk 00:43:39].
Stephanie:
How do you stand out on Amazon?
Joe:
You can pay a little bit of money to be able to create your page. I think it's called A+ pages. And really you're still working with their templated sections, but really focusing in on like, what are the core things you want to showcase? And you have to stick within those walls. But trying to make that section mirror our website as much as possible and just having good customer service on Amazon as well is important.
Joe:
You do lose a lot of that control when you're selling on Amazon, especially if you have such a, you're trying to build a brand and not just another kind of a trinket type product. But again, if people are especially already aware of your brand, like for us, we saw after Shark Tank, people would go to our website, but also people would check Amazon just because Amazon has such a strong reputation for quick delivery, easy returns. And so, why compete against Amazon when you could be on there and increase your sales to reach more customers?
Stephanie:
Yup. That makes sense. So, how do you build, I mean, we've had a lot of our, we do a survey for some of our listeners and many people ask about selling on Amazon. So, what kind of optimizations do you do to your page, or are you experimenting with where you're like, "This is working really well or make sure you pay attention to this part." What kind of things are you looking at when it comes to creating a different page that gets found and it's enticing and still tells your product story and the background and all that?
Joe:
I would say we're still learning a lot, but one thing that's worked for us was to move all of our products under a single page so you can click through the different views all in one page. And for a while, we thought that would be a bad thing to do because if you're searching for a particular product and you only see one design, you might not click on it. We found that to not be true.
Joe:
Once you click on, you actually land on the product page, you can click through the different designs. And so, keeping people all on one page. And I guess you can apply this to your website as well. And Amazon obviously tests these things and we started just following whatever their best practices are. And it also allows you to have all the reviews for all of the products on all in that one page versus broken out across 30 plus views.
Joe:
So yeah, I mean, generally we're just trying to follow their best practices and take their advice on how to set your page up and just stick to the basics and good photography obviously is a given too, so that's been important.
Stephanie:
Yeah. A previous guest also mentioned that, let the algorithm do its job, or like you said, let Amazon tell you best practices, because he was just saying that a lot of people will try and just do something different because they think they know more and instead it's like stick with what works and what the brand is telling you what works and see how that goes first. So, yeah.
Joe:
Yeah. Yeah.
Stephanie:
That's good. So, earlier you were mentioning your website, is there any new tools or technologies that you're playing around with right now that you're seeing help conversions or maybe before you were seeing cart abandonment and now you're not, or you were dropping off traffic from the homepage and now you're not anymore? Anything that you've had success with on your website?
Joe:
For us having the live chat functionality is really great. And rather than having something that pops up and is in your face right away, just having a subtle message in a corner that you can click on and you can ask questions and if we're on, you can chat with somebody right away. Oftentimes it's been turned off lately just because we still have a pretty small team.
Joe:
But you can, instead of going to a contact us page, having that there, we learned that for our customers, that was really important. A lot of people have questions before purchasing. And so, making that readily available without a way that's super intrusive to their site browse-ability. And then having a popup with really good messaging around. What's the value to you to sign up to our newsletter and not just trying to throw another discount in your face, because again, for us we're not able to really discount heavily.
Joe:
And so, those two things have been probably the greatest for us. But we're continuing to develop our site more and add a little more functionality and features. And so, but yeah, we're just, again, sticking to what works and following... We oftentimes look at maybe what other brands are doing and get inspiration from them.
Joe:
If you're small like us, what we've learned is that there's no point in reinventing the wheel. And bigger companies like Amazon and other Ecommerce companies that have huge markets that are testing things constantly, you can really learn a lot by looking at what they're doing. And so, yeah, we're testing on our own, but also taking cue from others.
Stephanie:
Well, that's a good question then. What kind of other brands are you looking at? What Ecommerce companies do you keep an eye on?
Joe:
Definitely some of the big marketplaces like Amazon and Wayfair, very different from our website and they're more of a marketplace but just what their experience is like for customers is great. Actually, another company that we look at our category specifically, The Inside, who I think was on your podcast. They do an amazing job. We were looking at a lot of furniture and direct-to-consumer brands who are also selling products that require a lot of thought before purchase and how they're communicating some of the questions that people have when they're shopping for their home like Parachute Home, Floyd, or another furniture company.
Joe:
And also I would say some of the early pioneers and direct-to-consumer brands like Warby Parker, Away travel, who's done a really great job. And so, yeah, looking at the companies that have been able to raise a ton of money, grow super fast, build those departments out, what are they doing and how can we tailor some of those best practices towards our own business has helped.
Stephanie:
Cool. Yeah, I love that. So, before I move into a quick lightning round, is there anything that I missed that you were like, "Man, I really wish we had talked about this?"
Joe:
I mean, no, I think we covered so much.
Stephanie:
We did. All encompassing. Well, cool. Then we can move right into lightning round brought to you by Salesforce Commerce Cloud. So, this is where I ask you a question and you have one minute or less to answer. Are you ready to go?
Joe:
Ooh, great. Let's do it.
Stephanie:
All right. What's up next on your reading list?
Joe:
Ooh. I am really looking forward to reading something that is non-fiction. Honestly, I've had my head down for so long that I have not had a chance to actually kick back in one of our own hammocks. And maybe I have to do a little staycation. So, I'm looking for a book that can take me away from all the work stress and everything else. I can't say I have one right now. But I would encourage people to... I'm sure a lot of your listeners are always looking for ways to improve, innovate like I am. And I think I've always found value in trying to step away from that. And so, I would say I don't have a book on my list, but I would recommend A Gentleman in Moscow, which totally takes you to a whole different world.
Stephanie:
I like it.
Joe:
And that requires all sorts of great creativity when you do that.
Stephanie:
Yep, completely agree. What is your number one recommended spot when you go to Thailand that you would tell other people, "You have to go here?"
Joe:
I would say if you're going to Southern Thailand and doing more of the beach thing, take the extra step to go further from, a lot of people go to Phuket, which is great, but get on a boat, travel a couple hours further. And there's hundreds of islands to choose from. Honestly, pick any one of those. I would say Ko Lanta is great. It has a little bit of everything, but just, yeah. Go a little bit further, a little bit further away from the people and allow yourself to have that experience of truly being remote.
Stephanie:
Yeah. That's awesome. What is the favorite piece of tech that makes you more efficient?
Joe:
I would say, I mean, I love my MacBook Pro.
Stephanie:
Same.
Joe:
Yeah, thing is great, I take it everywhere. But everyone's got a computer these days. I would say, I don't know. Lately it's been just my computer because I've been staring at it for so long lately.
Stephanie:
Makes sense. Yeah. As is all of us. If you were to have a podcast, what would it be about and who would your first guest be?
Joe:
It would be around relaxation and how to live a more values-oriented life. And my first guest would probably be, I would say, Wim Hof, maybe.
Stephanie:
Ooh, that's a good one.
Joe:
Yeah.
Stephanie:
I was just watching a series about Iceland. It reminded me of him doing his cold plunges and yeah, he's great.
Joe:
Yeah. He's figured some things up.
Stephanie:
All right. Well, this was a great lightning round. Where can people find out more about you and Yellow Leaf Hammocks?
Joe:
So, our website would be the first place we recommend yellowleafhammocks.com and also our Instagram which is Yellow Leaf Hammocks. So yeah, looking forward to, yeah, seeing where things take us after this, but thank you so much for having me on. It's always a pleasure to share our story and hopefully add value to others.
Stephanie:
Yep. Yeah, it was awesome. Thanks so much for coming on Joe, and we will have to bring you back after all the Shark Tank craziness dies down and see how you're doing in six months to a year. So, that'd be fun.
Joe:
Yeah, that would be amazing, Stephanie.
Stephanie:
All right. Thanks Joe, have a great day.
Joe:
You too, bye.
If you really stop to think about your clothing and the prices you pay for it, you might find that you’re left with a few questions. For example, how can a t-shirt cost less than your morning cup of coffee? Surely the materials and labor involved in designing, making, and shipping a t-shirt are more costly than a few coffee beans and some milk.
That low-cost t-shirt is the result of the fast-fashion business model which has swept through the fashion industry. The result is that we may have more access to cheap clothes, but the quality is poor and the environmental and humanitarian cost could potentially be catastrophic. Zana Nanic is the Founder and CEO of Reclaim, a slow-fashion Ecommerce brand, and she is on a mission to change the way people buy clothes.
On this episode of Up Next in Commerce, Zana explains how she started Reclaim after becoming fed up with the business casual, fast-fashion norms of Silicon Valley. Plus, she dives into what you have to learn from your customers during the initial launch of your business, and why she believes that an omnichannel approach is the best way to find success in the future.
3 Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
---Transcript:
Stephanie:
Hey, everyone, and welcome back to up next in commerce. This is your host Stephanie Postles and today, we have... Let me get the name right. Today, we have Zana Nanic on the show, the CEO and founder of Reclaim. Zana, welcome to the show.
Zana:
Thank you so much for having me.
Stephanie:
Yeah, I'm really excited. I'd love to hear a little bit about Reclaim.
Zana:
My story is not the typical story of she liked fashion and therefore she's super creative and wanted to do fashion. I am originally Croatian and I moved to Italy because Croatia was in the middle of a civil war. I grew up in Italy as a refugee and my parents, I remember, they were trying to get a job and they couldn't get any job because they didn't speak fluent Italian. Somehow, it was the early '90s them and fashion was the thing to do in Italy. Somehow, they started working in the fashion industry, very, very small and they were lucky enough to have a pretty successful run with it.
Zana:
But to me growing up, fashion was this amazing tool for empowerment. It was something that you could wear and forget a little bit of your identity. I had this very heavy label I was carrying with me, I'm a refugee, a foreigner, an immigrant, and as a child, sometime, it was pretty heavy. But when you had the right outfit and you look really nice, people just assume different things and admired you and were inspired by you.
Zana:
Fashion became a little bit my armor and then going into my adult life, it really became a tool I would leverage and use to present myself in a certain way. Giving you an example, when I was at Uber, I was one of the youngest people there and I was already managing. Having the appropriate dress code that made me look a little bit older than my age was essential for my confidence. Very much today as well.
Zana:
Reclaim really is this testament to how do I help women connect to themselves more and just open up opportunities so they don't have to worry about their outfit, but worry about much bigger and much more important things in their life.
Zana:
Reclaim is a fashion brand we started eight months ago and we focus on a very limited collection, all the wardrobe staples that every woman needs. But what we try to do is combine Italian craftsmanship and artisans. I'm Italian and my family is in Italian manufacturing. I literally grew up and made in Italy fashion. We tried to combine that aspect of fashion where beautiful aesthetic and a beautiful detail with love for practicality and function.
Zana:
I currently live in San Francisco, very Silicon Valley. Everybody's superefficient, super go getter. We try to incorporate those to [inaudible] and the clothes, and we have a very limited collection of things that are practical, functional but also extremely beautiful.
Stephanie:
Very cool. I was reading a little bit about your story of how you were in pencil skirts and heels and then you came to Silicon Valley and everyone was wearing hoodies and jeans and you're like, "I want something a little better."
Zana:
Yeah, that was a bit of a shocker because I grew up in Italy, where fashion is part of your identity, such a country that has a sensibility for beauty and art and culture, and fashion is a form of art. I was coming from a very corporate world. I wear pencil skirt, high heels, very formal wear was the day today.
Zana:
And then my first job at Silicon Valley was working for Google. I remember showing up there and everybody was wearing jeans and sneakers and T-shirts. I adapted to that lifestyle in the work outfit. But I also felt super underdressed. I'm like, "Ah, last time I wore this outfit, I was 15 and in high school." Is there anything a little bit more elevated? I feel like an adult and a woman with a career but still appropriate for business casual, and this is a little bit where Reclaim came from was how can we define a business casual aesthetic that is elevated but still very approachable and affordable
Stephanie:
Yeah, I love that. It's funny. I also worked at Google and if you would even get what would be considered maybe dressed up, they'd be like, "Oh, where are you going today? Do you have a date afterwards?" You're like, "No, I just want to wear a dress today. I just want to wear something cute."
Zana:
100%. It will be, "Are you interviewing for a different job?"
Stephanie:
Yes, I would get that too. You're working at Google, what did your career look like before Reclaim at Google or some of the other corporations? Were you in eCommerce or was that a big shift for you?
Zana:
It was a little bit of a shift. I mentioned before my family's in fashion so they have boutiques on the Italian coast stuff but very old school. They barely have a website and they do a lot of manufacturing and older clientele hasn't been the same for 30 years. I grew up in commerce but not eCommerce, a different generation.
Zana:
When I graduated college, I didn't think about fashion as a career option to be honest. I was like, "I want to do something that is different." Everybody I knew was in fashion. I was like, "I want to do something completely different and break the path with what my family is doing." I ended up in consulting. I ended up in management consulting and I didn't work for some fashion clients, but mostly I did a lot of projects and hardcore heavy industry, and after that I worked at Uber.
Zana:
I was managing Uber Eats in Italy which is different than fashion but is related to commerce and how to get conversion and how to get people to purchase your products. Some of the themes were similar and then the Google role was a mix of the two. It's a little bit of strategy and a little bit of execution and was focused on growing this smart home business.
Zana:
I would say that the career path I took was not a fashion career path and then this shift happened in business school. When I went to business school, I realized actually I do want to embrace my roots and there is a lot I know and I can offer and I spotted this niche in the market and this gap that was really needed. Honestly, it was my pain point. I was like, "I really don't know where to shop and I want to wear beautiful clothes but I also don't ever want to go dry clean them." That was the perfect solution.
Stephanie:
Yeah, that's super important. I remember one time I had dresses to dry clean only I'm like, "I'm going to throw that dress away. I'm not going to do that. I don't do dry clean."
Zana:
I also have a lot of beautiful cashmere sweaters and I wear them once per season because they end up in my pile of stuff I need to bring to dry cleaning and it takes me months to go.
Stephanie:
When you're shifting into creating Reclaim, did you tap into your family say, "Hey, here's what I'm doing," and start brainstorming with them since they are the experts but not in eCommerce but maybe in the industry when it comes to high end retail?
Zana:
100%. They were my first consultants, advisors, investors. They heard it all. My family business was a little bit like the sounding board for Reclaim and I spend a lot of time with the people in my family business and my family contacts. Like our pattern maker, for example, that we use in Reclaim she's a person that I met through my family. She's based in Florence. She's super, super talented and I designed with her most of the clothes that you see in the Reclaim collection because I would bring in the creative perspective and the vision, but then the nitty gritty manufacturing specs, somebody who's an expert has to do them. A lot of the concepts come from my family background.
Stephanie:
That network that seems a great way to start a company when you have different connections that you can tap into like that and different lessons that you can bring with you. That's awesome. What did the early days of Reclaim look like? Tell me a little bit about starting it up and building the website presence and how you were thinking about attracting your first few customers.
Zana:
The early days... We launched last summer. That was our first collection launch. I'd say the early day was a little bit like still discovery. I want to say that that lasted for the first few months. From launch to beginning of January was a discovery moment. You come in and you've done a lot... At least, when I launched the website, I talked with more than 2000 women at that point. I thought I know it all. I've talked to them. I understood what they want.
Zana:
I have a crystal clear picture what is needed, but then, when you have a website is when you start learning for real because one thing is the people that you have face to face what are they telling you and another thing is, "Oh, how are people interacting on my website? What products are they looking at? What are they purchasing? Which ones are asking questions? Which product are getting returned?"
Zana:
I would say the real learning starts when you are putting something in front of people's faces and you're asking them, "Put your credit card information and buy." That's when you're learning. Do you have product market fit? Or is there something you need to change?
Zana:
The early days were very, very busy. A lot of documentation and a lot of learning. We really cared about nailing it. Our first 300 to 400 customers, I would personally give them a call and just ask them, "How come you purchased? What convinced you? What did you like?" And just spend a lot of time learning and writing all that knowledge down and taking that feedback in. At the end of the day, we'd be like, "What did we learn today?" And just the bad thing and improving what you're doing.
Zana:
I wouldn't say that commerce is you have an idea, you put it out there and build it and they'll come. It doesn't really work like that. It's literally like take a lot of pride into changing things every day and iterating as fast as possible.
Stephanie:
I love that. You had a good point of a lot of people sometimes think build it and they'll come. But oftentimes, that's not the case even if you have an epic product or website or whatever it may be. How did you find your first couple of customers? How did they find your website? How did you get in front of people? Did you do some marketing?
Zana:
Marketing is a great way to attract people. Our first customers came from the Stanford network. I went to Stanford Business School. The first purchaser were people within my network. People that graduated from Stanford, Stanford alumni, or people that were affiliated with the university because we market it in the university network. And then following that, we had a lot of word of mouth. People who were wearing our products will tell their friends. We had a lot of referral. Our first batch of people that started using the product were referral, learned about us through referral, and then paid marketing.
Zana:
We did paid marketing on Instagram and Facebook. That is a channel that you use to raise awareness about your brand and your product. Our second wave was through paid marketing.
Stephanie:
Very cool. How often are you all launching products or new lines?
Zana:
We are a slow fashion company. Let's say, Zara. Zara would launch 20 collections a year, something that is not like fast fashion but still a high fashion. They would launch 14 collections a year which is a huge number. We're a slow fashion company so what we do we launch very, very few products, but we spent an enormous amount of time making sure that those products are amazing and they're done with the best material and the construction and fit are very well done.
Zana:
In total so far, we have launched one collection last summer and then we're coming up with our second one this coming August and it's a fall and winter collection and we're having just four products, four basic products, but they're done so much better than what's out in the market.
Stephanie:
Very cool. When you say four basic products, am I thinking like a T-shirt, a black dress like that kind of product?
Zana:
Yeah, I can tell you more. We're going to have white button down and the special thing about this white button down is that the front layer is actually made out of two different layers of fabric. You can 100% be sure that your white button down is not going to be see through which is a common problem every woman faces. And then material is the tencel material which is only produced in Germany, is highly sustainable, and it's one of the most ethically conscious materials.
Zana:
Another thing we're launching is two-piece jumpsuit and it's also made in tencel, so super nice fabric. We made it two-piece because, I don't know if that happens to you but it always happens to me, when you're wearing a jumpsuit and you're feeling amazing and then you go to the bathroom and you have this humbling moment where you're completely naked in your office bathroom. We're like, "No, it has to be practical." We made it look like it's only one piece but it's actually two pieces.
Stephanie:
That's awesome. I think every woman who's either tried on a jumpsuit or worn one you're like, "Oh, this is kind of awkward."
Zana:
Yeah, you look great and then the first moment where you actually have to live your life, you're like, "Oh, this is going to be difficult."
Zana:
And then the third product we're launching are... Those were our bestsellers in our first collection so we made some tweaks to them, but it's a pair of pants. They're made out of a super stretchy fabric but basically you're wearing a pair of black pants that look very nice and professional, but they're absurdly comfortable because the fabric is a 4-way stretch. You're feeling like you're wearing yoga pants but you look like you're wearing a really nice pair of black jeans.
Stephanie:
That's good. I need that.
Zana:
Our customers love them. We've got the most responses on those because they're such a good cheat. You're super comfortable but not inappropriate.
Zana:
And then the fourth product we're producing is going to be a camel coat. This one, the fabric is amazing. It's 30% cashmere and the rest is merino wool. It's super nice and soft. You literally want to sleep with the fabric, just the fabric price is $250 worth of fabric. It's super expensive but going direct to consumer, we will be able to price this product at a 350. It's one of the most affordable best quality materials that you'll be able to find.
Stephanie:
That's great. How are you conveying this quality and value to consumers or new customers when they're coming on your website? It's hard if you can't feel the fabric or try something on or know the backstory behind it that it's coming from Germany or Italy. How are you conveying that message on your website?
Zana:
That's a great question. Honestly, that is one of the hardest things to do because in a store, it's very easy. Somebody walks in, you touch it, you try it on, you talk with a store associate and you understand the message. In e commerce, you have roughly 10 seconds to make an impression. That's how much time people spend on one page before they decide. "Will I shop here?" Or they'll just bounce and go somewhere else.
Zana:
I think here is one of the areas where we did the most learning. Initially, we would have a lot of marketing language to be honest. The highlight or have some bullet points. Now, our learning is actually, no, like the women are coming on our website they really want to learn. We do exactly how I described them to you. We have lengthy copy, we go into the details, we give people the story. You don't have to read it.
Zana:
But if you're interested, there are pages into story of the material, what is the German fabric that is making this material. We provide all of that information out there and then we do big visual. Visuals and images is what converse the best and what people are resonating the most. We combine the text and the rich information with images, beautiful lifestyle images that people can see a zoomed in image of the fabric and reviews.
Zana:
We have also a lot of product reviews where every single customer that purchased with us we've reached back and asked them if they want to review the product if they loved it and oftentimes they do, which is great.
Stephanie:
That's awesome. How are you encouraging those reviews when a customer buys?
Zana:
We have an entire review post purchase encouragement system. The first attempt is always just to ask and usually... We have an email where I just introduce myself and tell them the story of our brand and how valuable their reviews are and that's where most of the people do their reviews. And then our second or third interaction is we provide them with a discount to a future purchase in exchange for a review.
Stephanie:
That's cool. Is there any split testing you do there that you've seen that worked better? I know we were speaking, I think, a couple weeks ago to the founder of Hous and she was talking about how she puts an image of her and her husband on a pamphlet every time they send a box or a thank you or something like that and that helps convert. Have you seen any best practices around that?
Zana:
The reason why we use my personal email for the reviews and I introduced myself is because people do like the personal touch. I'm sure that the founder of Hous was putting an image of her and her husband... People form a connection. My customers have the feeling that they know me and they're purchasing from an actual person. That is a real bond.
Zana:
I had one customer who bought a pair of pants from us and then she wore those pants on her family photo shoot with her newborn baby. She emailed me afterwards and she was like, "Oh, I want you to have the photos of our family photo shoot because I wore your pants and I look so great and the photos are beautiful." And I was just shocked. I was like, "This is so nice. This is amazing."
Zana:
I don't think I've ever emailed a brand to share like, "Oh, I wore this for an important moment of my life." I felt so attached. I remembered that made my day. The fact that something that I came up with and I designed and produced and spent time thinking up on, it's something that made her photo shoot more special and she felt prettier and more confident was very meaningful to me.
Stephanie:
That's really cool. That is a good customer to have. Hopefully, you can keep her long term.
Zana:
We have the craziest customer. We had one customer who purchased our perfect pants, the pants that are super comfy but they look professional. She purchased one pair. She loved them so much that she purchased 12 of the same size, the same... I remember seeing this order and I was like, "There must be a mistake."
Zana:
We email her because we thought there was a mistake or a glitch in the system and she was like, "No, I really love your pants. I want to have one for everyday of the week and I always want to have one ready because those are the pants I wore the most, so I just purchased 12." And I was just like, "I love you. You're amazing. Where do I find more customers like you?"
Stephanie:
Yeah, really. If you know, you know. That's great. Are you trying to also cross sell to a customer? I'm guessing when someone comes on your website and there's not a huge product catalog, it's probably beneficial to be able to say, "You're looking at this sweater. You should try this pair of pants with it too." How are you thinking about showing other products and are you personalizing at all?
Zana:
Yeah. The collection that we're launching is only four pieces and you're meant to have them all and they work as a capsule. All the colors are in the same color palette and they're all made to be mixed and matched. The idea is that you do purchase the entire catalog, and we're very mindful.
Zana:
The collection that we're coming up now is very much in line with the one we had before just a different cuts and different styles, but all the ones we are going to do in the future we're going to keep the same color palette and consistent materials so that people that decide to be Reclaim customers will have a trusted brand where they can have the entire wardrobe being a Reclaim wardrobe and it will always work for them because we're not going to have crazy fashion forward pieces that you buy once and they don't go with anything that you own. All the colors that we pick are very much neutral, creams, beige, black, and white. But it's a palette made to be mixed and matched and to do cross selling.
Stephanie:
Got it. Do you see people normally do buy multiple products at once? Or is there a little bit of convincing afterwards? If someone's like, "Oh, I'm just going to buy the button up and pants," are you then saying, "You forgot the sweater. You forgot the jumpsuit."
Zana:
Both. On average, people buy two products. That's our website average. But oftentimes people who bought and liked the products come back to the website and either buy more or just like fill their carts to try new products. Both things are true. Average first order is at least two items and then we have a lot of returning customers.
Stephanie:
Cool. Is there analytics that you're checking out to either see did they add something to their cart and removed it or were they hovering over something for a long time? Or is there any metrics that you look at behind the scenes to target those customers?
Zana:
100%. We have an abandoned cart flow. We call them flow. When we see somebody put something in their cart and then they ended up not checking out, basically an email follows them and ad follows them for a few days just to remind them that they still have this product in their cart and if they want to purchase it, then people who do purchase get an introduction to every product of the collection. They will receive emails to learn about the different products. If somebody, for example, bought the camel coat and then the following weekend then email about the pants. They can go back and purchase the pants.
Zana:
But there are some Holy Grail metrics that we look at as a startup. For us, returning customer is super important, even more than customer acquisition, even more than value of the basket size. Returning customer is what we really care about because that's the metric that shows how do people like you and how do people trust you and how well do they like your product.
Stephanie:
How do you reengage a customer if you have your... I think you mentioned slow fashion is the industry that you're in. How do you reengage someone when you might not have another product launch for six months or a year?
Zana:
You don't. That is a little bit the tradeoff. You can either have customers who are going to buy lots of pieces with you and you're going to have a high lifetime value of that customer, but they might not like you that much. They might consider you as us. "I bought it because it was cheap and it was on sale and I keep it in my wardrobe." But then the first Marie Kondo moment you have and you go through your wardrobe that is the first item that doesn't give you joy.
Zana:
Our model is very different. Our model is we're going to do fewer much better pieces and a customer will wait for our collection to come because they know it's going to be superior quality and it's going to be a piece that they will buy and keep for years.
Stephanie:
That's a good idea. Is there any education that you give your customers around why they should move away from the idea of the fast fashion industry or how to think about that? Any education behind the scenes that you're also doing?
Zana:
We are vocal about it in our Instagram but we're also considering starting a blog just to educate about what is this little fashion movement. But I would say that in 2020, a lot of the people that we interact with are extremely conscious consumers especially the younger generation. They know if a product is sustainable. They care if a product has an impact on the environment.
Zana:
I would say that it's the age of information. If somebody wants to know how ethical a company is and how much they honored your commitment, it's very easy to learn that. I don't know. I remember 15 years ago when fashion companies were like, "Oh, everybody's telling us we're not green." And they all started doing marketing campaigns in the middle of the forest. Get away with that. Literally, it's a practice called greenwashing.
Stephanie:
I had never heard about that but I do remember seeing images of people in new outfits and whatnot marketing them while they were sitting on a tree branch or standing in a field.
Zana:
Yeah, literally. That is called greenwashing where you basically show some images that could make your customers think that you're greener or more ethical than you actually are. I despise that. I don't want to be that kind of company ever.
Zana:
For us, it's very important just the customer that we have care and we do too. I'm okay if somebody who is not our ideal customer doesn't want to shop with us. I'm okay with that. If our price point is too high or if being sustainable is too expensive, I'm happy to have a smaller market but be company that is worth having in this world, than compromising on my morals and having great profitability.
Stephanie:
Yeah, that makes sense. It seems like your consumers would be interested in the community aspect of... You have a great personal story. You have a good story behind your company, a fun process, probably if they wanted to see behind the scenes of who's making what and how you're thinking about your designs and coming up with ideas and balancing all that out. How do you think about building a community around your brand?
Zana:
Our social media is our most powerful channel to share. We always post stories of behind the scenes and what's happening and what are we going through. That is the channel where the community is starting to mobilize. But in general, we do a lot of in person events. Not now because COVID changed that. But before COVID we would do brunch and browse, shop and sit. We would do events like this or and we target professional women in San Francisco because this is where we're based. We were very active on Facebook groups for professional women.
Zana:
We would have events where women can just come together and talk about their challenges and how they're advancing their career and simultaneously try on new great clothes. That is something that we help foster a lot.
Stephanie:
That's fun. I want to do one of the brunch and browses. That sounds awesome. Were you doing popup shops? Or how were people were they browsing? Online while in person or how do you think about the in person experience and retail locations?
Zana:
We have a partnership with a company like... We have multiple partnerships with companies that only have stores. We were in a Re:store in downtown San Francisco. They had our products on for six months. Now, they're close but they're reopening soon. And then we're opening our location in L.A. and one in New York with [inaudible 00:28:27]. We have partnerships with companies that basically bring URL brands and products in real life events.
Stephanie:
That's cool. How do you think about creating those partnerships and finding the right person, the right store? How would if someone was brand new go about finding a partnership like that?
Zana:
You have to make sure that is the right path you want to go on. I say that because retail distribution at this moment is not something that we could afford because we are a direct to consumer brand. We use premium materials and we make sure that our materials are done in an ethical and sustainable way. Our product cost is pretty high. We still keep prices as affordable as we can. Therefore, we don't have enough margin to pay a store or retailer and have a big distribution. Therefore, the partnership that we use we see them more as an opportunity to have a marketing presence in L.A. or New York.
Zana:
If somebody wants to touch our products and learn more about them, they can actually go and have a physical retail presence but it's more an exercise and a way to discover products rather than a sales channel for us. Our direct to consumer website is our number one channel for sure. It's the place that we use because that is the only way we can pass on as much price saving to the customer as we can.
Stephanie:
Yep. That makes sense. How have you seen conversions when it comes to people seeing something in person and then buying it online? Were you tracking that? Have you seen success in that model?
Zana:
What we noticed is that people who discover us in person are very loyal. The people who have had the chance to try on pieces and have had the chance to touch all the materials, they are the ones who end up buying. Most of the products have the highest basket size and they're the ones coming back just because they had the opportunity to discover everything and literally touch it with their own hands rather than seeing it on a website. There was definitely a benefit to that.
Zana:
But as I said, we are thinking about a model where in the future you can have a store where you discovered a product and touch and feel it but the growth will still come from eCommerce rather than opening stores across America. That's not something that we're thinking about at all.
Stephanie:
Got it. Maybe having like guide shops style where people can go in and look at it and then still go online and order to keep your margins down where you guys have now or close to it, I guess, not where they're at. Exactly. Very cool. To shift into more general eCommerce questions, what kind of trends are you most excited about over the next year or two around e commerce? Because a lot of things are shaking up right now, so I'm sure there's a lot on your mind.
Zana:
Yeah. Oh my God. eCommerce has been exploding. COVID definitely helped the eCommerce grow, but we're seeing multiple trends. One trend was definitely... Apparel did suffer a little bit.
Zana:
When COVID started in March, we saw an impact on our sales because everybody was scared. Most people are working from home. Our pieces are investment pieces to make you look great when you go to work or when you're out and about. It's not at leisure. And suddenly, the world is shopping for pajamas. We saw there was an impact to our sales. But the trend is quickly changing. Already in April, we saw a bump in sales and we think it's stimulus check giving an impetus to, "Let's buy nice beautiful clothes." We're seeing different trends.
Zana:
In terms of things I'm excited about, I'm very excited about sustainability. I'm very excited about slow fashion, the fact that consumers really care and want to purchase companies that our ethical.
Zana:
I'm most excited that customers are seeing that fast fashion and buying on sale and buying seasonal pieces is not something that they want to keep on doing. It's something that it's okay for your early 20s when you're broke and you want to be on trend, but the moment you're in your 30s or 40s, you want to have a more of a... They call it like a French lady aesthetic. Few pieces, very well done, super high quality, but not always make you look very chic rather than a bunch of things that do not make sense together.
Stephanie:
There's this one company that always targets me on Instagram and they drop new products, I think, it's every week and it got to a point where it's like, "Is this even quality? How can you drop new product lines every single week?" I started looking into it and you're like, "The reviews are pretty bad." "Oh, it's not..." Like you said there's no good ethical practices that are happening behind the scenes, but they're just very good at marketing.
Zana:
Ask yourself. If you see a T-shirt that is being priced six, $7, think about it. If the cost of Starbucks coffee is four or $5 and making your coffee is much easier than making a T-shirt that requires fabric, people sewing it, machines, transportation, it just makes you think. Somewhere in the supply chain, they must be taking some shortcuts.
Stephanie:
Yeah, I completely agree. It definitely is a good time too around apparel for a lot of people to rethink, like you said, what they're wearing, what's important because right now everyone's been in workout clothes and now even myself, it's like, "What do I really want to invest in going forward?" Because up until now, I've only had to worry about my top half and just have a nice looking shirt on maybe.
Stephanie:
But once it starts going back to work and going out into the world, I do think there will be a big shift in the consumers mind around, "What do I actually want to wear going forward and not just, like you said, for a season or a few weeks and then be done with it and clog up your closet space?"
Zana:
Exactly. That's definitely a trend that we want to participate in where if you already have a limited disposable income because the world is an uncertain place right now rather than spending it on things that are not going to last or that are questionable, spend a little bit more on fewer things which ends up being the same amount of money at the end of the day. But you're 100% happier with the premium pieces.
Stephanie:
All right. Let's move on to the lightning round brought to you by Salesforce Commerce Cloud. It's where I send a question your way and you have one minute or less to answer. Are you ready?
Zana:
Yeah.
Stephanie:
What's up next on your reading list?
Zana:
The Wheel of Time. It's a fantasy book.
Stephanie:
I haven't heard of it. I have to check it out. What's up next on your Netflix or Hulu queue?
Zana:
Oh my God, don't judge me for this but I think it's going to be The Bold Type or Selling Sunset. Don't hate me for this. I watch everything that was watchable on Netflix. Now I'm starting to trash watching.
Stephanie:
I actually can't judge you. It's funny because I was just watching Selling Sunset last night. I'm like, "This is so embarrassing but I'm going to keep watching it because it's really funny and I ran out of things to watch." No judgment coming from my side.
Stephanie:
Next on your travel destinations when you're able to travel again?
Zana:
I want to go to Italy. I know it's cheating but because I'm international in America, the recent visa immigration policies have been really difficult. I haven't seen my family in a year now and the moment this is all over, I'm going to Italy. I'm going to vacation for a month and I'm going to make all my friends jealous on Instagram. I don't care but I deserve it.
Stephanie:
I think I'm just going to come with you. You don't even have to worry about me. I'll just get behind the scenes. I'll be like, "Hey, mom and dad, where's my pasta?"
Zana:
We can go to Italy and watch Selling Sunset. I think we have a plan.
Stephanie:
Yeah, there we go. It'll be a perfect girls' trip.
Stephanie:
What's up next on your shopping list?
Zana:
I actually want to buy a nice desk. I'm eyeing this beautiful wood desk on AllModern. I think that's going to be my next purchase.
Stephanie:
Oh, that sounds great. If you were able to pick anyone to go to brunch with, other than me because that'd be a blast, who would you pick? It can be a celebrity or whoever you want.
Zana:
Oprah. I'll definitely go to brunch with Oprah or AOC, one of the two. I have a big girl crush on both of them so I should decide which one.
Stephanie:
You can bring them both. That sounds fun. And the last harder one, what one thing do you think will have the biggest impact on eCommerce in the next year?
Zana:
Next year?
Stephanie:
In the next year, yep.
Zana:
This one is a hard one. I don't know if under one minute it's answerable, but I think different forms of creative so Tik Tok is exploding. How to leverage different platforms like Tik Tok or just different forms of creating than the usual that we've been accustomed to see.
Stephanie:
Cool, great answer. It's been super fun having you on here. Where can people find out more about you and Reclaim?
Zana:
They can always shop and this is reclaim.com and follow us on our Instagram @thisisreclaim.
Stephanie:
Awesome. Thanks so much for coming on the show. It was really fun and we'll have to have you back in the future.
Zana:
Awesome. Thank you so much for having me.
The shift toward online grocery shopping has been happening for years, but the events of 2020 have accelerated the process beyond what anyone could have predicted. But will it continue in the post-COVID-19 world? Nick Green, believes so. Nick is the co-founder and CEO of Thrive Market, an online health food market that has been at the forefront of the online grocery trend from the beginning. Since Thrive first launched in 2015, the company has steadily grown to more than 900,000 members and hundreds of millions in sales, and they did it in an untraditional way. On this episode of Up Next in Commerce, Nick explains how receiving “nos” from more than 50 VCs nearly crushed the company before they found a unique new investment strategy. Plus he explains why Costco has been one of the most influential companies to learn from in terms of structuring the membership experience and how to hack the supply chain so that you can provide a truly curated and personalized experience for your customers. He also divulges what the No. 1 metric you need to look at is if you hope to build success for both your own private label as well as all the partner brands you work with.
3 Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
---Transcript:
Stephanie:
Welcome, everyone, to Up Next in Commerce. This is your host, Stephanie Postles, co-founder of mission.org. On the show today, we have the co-founder and CEO of Thrive Market, Nick Green. Nick, welcome to the show.
Nick:
Thanks for having me.
Stephanie:
I'm so excited to have you on here, because I've been a member of Thrive Market for a long time, but I didn't always understand how it operated. So yeah, I'm excited to dive into Thrive Market and your background a bit. And yeah, would love to hear what brought you to starting Thrive Market.
Nick:
Well, first I'm excited to be talking to you today as a Thrive Market member and customer, and as someone who I think exemplifies our typical members with a growing family and entrepreneur, and with a lot going on and wanting to be healthy for you and your family. So, that is our mission, it's to help people get healthy, stay healthy and to make that lifestyle accessible to anybody. And it's been a crazy ride over the last five years and we're really just getting started.
Stephanie:
Yeah. Yeah. I love it. For anyone who hasn't checked it out, I highly recommend, especially for the niche things where you're like, "I really, I'm looking for this kind of essential oil." And it's also good prices too. So, what did you do before Thrive Market? How did you come about founding that and getting into the world of Ecommerce and developing a marketplace of all things? Probably, one of the hardest things to start.
Nick:
Yeah. So, I'm a serial entrepreneur, and actually a serial social entrepreneur. So, Thrive is a mission based business as I alluded to before. And really both the companies that I've started, the first one was an education company, and then Thrive obviously focused on healthy living, really came from my experiences growing up in the Midwest. I grew up in Minnesota. I had a mom who was laser focused on two things, which was education for her kids and health for her family.
Stephanie:
That's a good mom.
Nick:
And I mean, the basics, right? The foundational pillars. And I saw how hard she worked for both, right? Figuring out the right public school. We actually open and enrolled to go to a Spanish immersion school, when I was in elementary school. So, really making deliberate decisions there, when we wouldn't have been able to afford to go to a private school.
Nick:
And then around health, in a place at a time when there weren't a ton of options to find organic food, certainly to find organic, healthy food at an affordable price, my mom did all of that legwork, all of that research. And mind you, this is back in the nineties, pre-internet.
Stephanie:
Yeah, that's hard.
Nick:
Pre widespread internet. It was tough. She was reading books and doing her own research. So, I didn't think about it, this at the time when I started my first company, Ivy Insiders. But it was really her focus and education that caused me to see the opportunity to basically help other kids like me who had gone to public school, weren't from the East or West coast. And didn't necessarily see the college admission process back when they were in ninth and 10th grade. And I saw the SAT for the first time when I took it, and got to Harvard as an undergrad. And found out there were lots of my peers who had basically been prepping for not only the SAT, but college admissions in general, since they were early in high school.
Nick:
So, in my first business was actually, is called Ivy Insiders, and we were hiring Ivy League undergrads to go back to their home towns all over the country to help other kids get ready for college, get inspired around college, and then help with those all important standardized tests. And so, that business grew very fast. It was a summer business where we'd send these undergrads home during the summer. And we had, ultimately about 900 of them, so 900 branches around the country. And then that would seed an online business during the school year where these folks would continue to tutor and work with their students. So, I started that as an undergrad. I was 18 years old. Ran it for seven years, so three years after school. I think I described it, I basically didn't leave a seven block radius of Harvard Square for seven years.
Stephanie:
Gosh. I know logistics behind that, sounds insane.
Nick:
It was insane. But it was my first foray into mission-driven entrepreneurship, where I related personally to that problem so acutely, and the impact that we were able to have on students, to just give them, to motivate them, to inspire them. And then of course, to give them tools and strategies to get over the hump. If you're, again, a kid who grew up on the East or West coast in a major metro area, going to a good private school with parents, who had all gone to college to, you probably, this stuff it's taken for granted.
Nick:
But I think for a lot of people all over the country, understanding how the game works for college admissions is a total mystery. And so, that business was really fun. It was really powerful and inspiring for me to realize how personally meaningful it was. It set pretty early for me the template of entrepreneurship, not just as a way to build a business or make money or something like that, but also to do something I cared about.
Nick:
And then, the only thing more fundamental than education really is health. And like I said, that went back for me to my childhood as well. So, I sold Ivy Insiders in 2011, came out to LA to work on an earn-out. I spent a year and a half doing that and had a great experience as the acquiring company revolution prep. I got to see an education business that was at greater scale, but also very entrepreneurial and also interestingly mission-driven themselves. So, that was really cool.
Nick:
And then, I was actually the startup accelerator as an entrepreneur resident on the investment committee doing a bunch of angel investing myself, and thinking through what my next thing was going to be, when I met my co founder. And he, Gunnar, actually pitched me initially on investing in a concept he was calling Shop Drive, which was going to be Groupon for healthy food. And the business model was very different than where we ultimately landed, but the vision and the mission was exactly the same.
Nick:
And he actually grew up, couldn't have been more different than my upbringing, but he grew up on a communal farm, basically a hippie commune in Ohio, California. But also with a mom who really was focused on healthy living, and actually a community that was very focused on healthy living. So, they were doing group buying of organic wholesale groceries back in the seventies, the eighties, the early nineties. And he always had this idea, and he was a serial entrepreneur too, but he'd always had this idea in the back of his head, "How can we bring the commune to the masses?" And so, he pitched me on this idea to do groupon buying for organic food. By the end of the meeting, I was pitching him on doing something together. And the rest is history. That mission, which I remember crystal clear him saying, "We're going to make healthy living easy and affordable for everyone," in that meeting. That is still, that is the line that's in our office. It's what we talk to every new hire about. And it's the mission that inspires us as the business.
Stephanie:
That's amazing. I also think, I just want to hear his story of growing up, like he did on a commune.
Nick:
He's got a way more interesting story than I do. I grew up in middle American suburbia. He was doing... Just totally, totally different experience. And really, really cool to see the way that they were able to solve problems like health, food access in a creative and communal way. And it's been the template for so much of what we've done at Thrive, not just in terms of the business model and the mission, but the way we've thought about community, and the way we've thought about our membership is more than just utility. A lot of the values and the ethos actually comes straight from that upbringing that he had.
Stephanie:
Yeah, that's really cool. So, how did you start Thrive? You guys landed on the business idea? What were the first steps with, even thinking through like, "Okay, how are we going to buy things in bulk or get partners," or what were the early days like?
Nick:
Yeah. So, I mean, like I said, it started with the end in mind and how do we solve this problem of making healthy living easy and affordable for everybody? So, we knew that was the mission. Initially, we saw the primary barrier, which I think I would still say is a primary barrier to buying organic and natural products, basically being price. Typical markup is 25% to 50%. And for 95% of American families that just literally prices them out of the market. So, Whole Foods was our touchstone in terms of what they had done with quality and with trust, and with sustainability and sourcing. But yet, half of Americans don't live within driving distance of a whole foods. And as I said, 95% can't afford the price premiums. So, we really wanted to solve both the geography question, which inherently we did, because we were going to be online, shipping anywhere in the country, but more importantly, we wanted to solve that price problem.
Nick:
So, the early days of the business were really around how can we figure out some way to get organic products to people at, or below the price of conventional equivalents. And intuitively when you think about, it is crazy that highly processed food, that is a combination of more ingredients, more complexity in the supply chain et cetera, costs less. And it's easier to get then simple organic products that should be, in theory, easier to create. And it all comes down to scale. And it all comes down to what those supply chains look like.
Nick:
So, what we did basically was first say, how can we cut out as many steps in the supply chain as possible? So, work directly with brands, sometimes work directly with manufacturers or even with producers. And then initially we said, we will take the commune model and pool everyone as a group to get a wholesale account with these brands. And then that'll enable us to basically, by cutting out the distributor, get to below the price of conventional equivalents.
Nick:
Now, the challenge with that model was nobody wants to wait two or three weeks while your wholesale order comes on every single item of grocery that you buy. So, and we should've thought about that immediately. It took us a few iterations of actually doing these group buying events to see that it wasn't really a longterm sustainable way for people to buy their groceries. So, we were basically back at the drawing board a few months into the business and looking at other models and looking at Costco.
Nick:
And Costco is the wholesale buying club. They also cut out steps in their supply chain, go direct as much as possible. But then the key thing is they make their money from membership, which allows them to also pass along really significant savings to members on the product sales. So, that's where we landed. We were fortunate that both of us had started and sold businesses before. So, we were able to sell fund the business during that initial iteration process.
Nick:
The interesting thing is we landed on that business model, knew it could work. We of course, had utter conviction in our thesis around people in middle America, middle-class people, working class people wanting to get healthy. And we were like, "Okay, we're off to the races." And then, we actually ended up having a hell of a time raising funds when we actually went out to pitch VCs.
Nick:
And so, we in our pitch just fell flat, and we were actually rejected by over 150 different VCs.
Stephanie:
Oh, my gosh.
Nick:
We continued to sell from the business. And I'll tell you, there were points in that period where, Gunnar and I were like, "We can do this for a while, but we don't have millions of dollars to pour into this business." And there was existential risk. So, that was a pretty dark, dark time, especially given that we still had total conviction in what the business could be.
Nick:
We ended up stumbling our way into a fundraising strategy by partnering with the influencers who we're already going to work with to promote the business. And we actually brought them on as investors. And in $25 to $50,000 chunks, we brought in this coalition of the willing, people that were thought leaders in health and wellness, who understood the mission, who saw the opportunity and bet on us. In many cases who had never made an investment in a private company before, bet on us pre-launch. And we raised about $8.5 million that way and got off to the races.
Stephanie:
I was very interested when I saw some of your celebrity investors. And you can tell me if any of these names are wrong. I saw Demi Moore, John legend, Tony Robbins. How did you get in front of these people to make them even consider investing?
Nick:
Yeah, that's a great question. I wish I could say, I just pulled them up on speed dial.
Stephanie:
DM action.
Nick:
Or take some credit for some master strategy. Honestly, it was a snowball effect. And we started out with influencers who were people, most people haven't ever heard of, but have major audiences online, and major credibility and authenticity because of their thought leadership. And so, these were on channels like Instagram and YouTube, bloggers who were connected to other influencers, who were in turn connected to other influencers. And it spiraled up and out until all of a sudden we were actually talking to celebrities. So, it was really amazing, again, to see the power of the mission, where once we got in front of people that understood what we were trying to do, who cared about it as more than just an investment that was going to drive financial return, and who were committed to the mission themselves. It was like just a night and day difference, right? There wasn't like the skepticism we saw with the VCs, instead it was, "How can I get involved? How can I help? Who else can I tell about this?"
Stephanie:
All of them.
Nick:
And it foreshadowed too what we ended up finding with our members, right? Where when people find out that they can get healthy organic food at, or below the price of conventional equivalents, that they have a platform that is purpose built for making that process easy, they want to share it. And that's been a huge, I guess, has been the part of our success on the membership side. And it was, essentially, our accidental fundraising strategy.
Stephanie:
I love that. So, earlier you were mentioning Costco and it reminded me, I was just reading a really good newsletter thread about Costco and how they convince brands to essentially cannibalize themselves. So, for instance, if they are selling Starbucks, they will also sell coffee right next to Starbucks, and it'll actually be Starbucks, maybe making it. And when they partner with these brands like that, to create their own Kirkland signature line, it's oftentimes the same company, like a Starbucks or something who's making that product. And then, Costco will also ask them to make the product 1% better.
Stephanie:
Is there anything that, like you said earlier, you were looking at Costco when it came to building up the strategy, at least on the membership side, is there anything else around their business model like that, where you are watching what they do and learning from them and then maybe, going to your brands and saying, "Okay, make a Thrive Market version as well. You can still sell your name brand on here, but also make one for us too."
Nick:
Yeah. I mean, that's a really, really good question. And honestly, I could spend the rest of this conversation just talking about Costco.
Stephanie:
Yeah. I'll put the link up of this thread. It was really good and also very interesting like, "Oh, I should choose Kirkland brand more often because it's the same exact product and everything. And oftentimes a little bit better."
Nick:
Yeah. I mean, any entrepreneur who is interested in retail, Ecommerce, membership models, customer centric business models, employee centric business models, values, they are the touchstone. Costco truly is an incredible, incredible business with a very powerful business model, the core of which is membership. But there's so many other dimensions to it. And so we, again, stumbled into understanding and studying Costco because of membership, but we've actually used them as a touchstone in a bunch of different ways. And the private label program is definitely one of them. And we call it private label turned on its head, because when people typically think of private label, they think of the compare to product that's going to be from a slightly crappier manufacturer with worst packaging, a little bit lower quality, but a slightly lower price tag. And Costco really changed that. I think the other retailer that's really changed that is Trader Joe's.
Nick:
So, we look at both of them as those examples of real innovators on private label, where their brand is actually trusted as much, if not more than the third party brands that are in the site or that are in the store. And to your point, they oftentimes actually work with their third party brands as the partners to develop these products to uplevel quality, to do customized case packs and sizing and packaging for their stores. And they get a bunch of efficiencies for the business that way. And then they're also able to really be responsive to the specific needs that they're, in the case of Costco, that their membership base has or in Trader Joe's, their shoppers.
Nick:
And so, yes, that's exactly the model that we take on our Thrive Market brand. That has been the fastest growing portion of our catalog. It's the best reviewed set of products on the site. It's the highest reordered set of products on the site. And we've now started to really blur the line between being even a retailer, we're a retailer still obviously, but also being a brand because a third of our sales are coming off of, basically the 10% of our catalog, that is our own brand. And that's because our members have invested in membership. They trust the Thrive Market platform. We do just act right and pursue our values and raise quality standards, so that trust continues to build.
Nick:
And then to your point earlier, we work with the third party brands in many cases or whatever co-packer, co-manufacturer we're working with, to be really, really responsive to what our members need in this product and how do we go above and beyond what their expectations would ever be. And because we're a retailer, we have so much more data than a typical brand would have in terms of number of feedback, in terms of purchase patterns, in terms of what products are selling in that category? What are the gaps in that category? What are the dietary trends? And so, we basically are batting a thousand on our private label products.
Nick:
And then, I think you're alluding to this too, because we're working with our brands, instead of it being an us versus them, where our private labels undermining the brands, we actually see the brand sales in many cases go up when we launch our Thrive Market branded product. And in many cases, it also allows us to curate the catalog further. So, we'll cut out some of the products that maybe weren't doing as well. And for those that are remaining, even if we're not using them as a co-manufacturers, they'll actually see their sales go up. So that's, it's been a core part of our strategy.
Nick:
The other part that we really followed Costco's lead on, which I just mentioned, is curation. You think about the Amazon model of the everything store. They're trying to always expand the skews to have as much choice as possible. If you go on Amazon and you search for almond butter, you'll literally find 40,000 results. How are you going to go through them?
Stephanie:
Yeah. Spend two hours going through reviews like, "Which one is the best almond?"
Nick:
Exactly. Trying to figure out what's right. And so, we've taken the opposite approach, which is exactly the same as Costco, right? Where they say, "We're going to have 5,000 products and it's going to make our backend operations really efficient. It's going to allow us to really focus on our purchasing power with a select number of high quality brands or vendors. And it's going to allow us to build trust with our members that they don't have to sort out which of these 40,000 options is best, rather we've done the work for you."
Nick:
And I think in healthy living that is especially important because the trends are changing so fast, people are intimidated. Oftentimes they don't know where to start. And to be able to come on to Thrive, after you just found out that you have a gluten sensitivity, or you have a child with a nut allergy, and click one filter and the entire catalog personalizes to you. The number of the feedback that we get from members is like, "This is, it's a dream, you're saving me hours and hours of time that I would have spent reading labels and doing my own research and having to do all this hard work that you guys had done for me."
Stephanie:
Yeah. I love that. I was just thinking two days ago, I probably spent an hour going through blog posts, because I have twins and the feeding schedule is getting a little bit crazy. So, I'm like, "Oh, maybe I should supplement a little bit of formula." And I went through probably 10 blogs trying to figure out a healthy formula for them. And it seems like there actually are none in the US, and all the good ones are in Europe and Switzerland and yeah, overseas. How do you think about finding some of those brands? Because it does often it seems like the US does not have as high of standards when it comes to FDA approvals and what's actually good. And I appreciate that you guys can step in and say, "Here's what's good. Here's what's not." But how do you find those products on your own?
Nick:
We've really taken it upon ourselves to first say, what are the right standards to have? So, for example, on GMO, we've simply taken the stance that we will not bring on any food products that have genetically modified ingredients. And it's not because we have some inherent opposition to genetic modification, that's a whole different debate, but it's the fact that 95% of GMO, genetic modification in the US is to basically make crops resistant to glyphosate, which is a carcinogenic chemical. So, we start by saying, "All right, let's put a line in the sand on our quality standards, things that are non negotiable, like non-GMO. Then we do the same kind of research that you're doing. But we have teams of experts who are dedicated to it. We're looking at each category and saying, "All right, what are the specific standards that we have to look to in this category for baby formula? What are the things that matter? What are the ingredients that it shouldn't have? What are the things that it should have? What are the best practices from a sourcing and supply chain?"
Stephanie:
I can be your expert now.
Nick:
Seriously, and you've spent the time, you're probably more of an expert than 99.9% of the population. And our goal is for that other 99.9%, "All right. Let's have the options on there that are really good, if people don't have the bandwidth or the experience or background to do the research themselves." So, it's been really, really interesting to see that trust where people can outsource the research to us. And the standards really do end up being different in each vertical or each category or subcategory, or a product type. Some of them are really, really hard like baby formula, because you're balancing, how can we make it affordable? How can you get, find something that's going to be shelf stable? How can you find something that's going to be scalable? So, have a supply chain that can actually scale. And then, of course I still hit the quality standards.
Nick:
But we've been pretty successful at it so far in a lot of different categories. And then we also allow people to, within each of those categories, as I said, we have 150 different metadata categories that we tag every product on. They can actually search by the things that matter most to them. So, if they have a specific allergy or they're specifically focused on fair trade, or they're specifically want to support women owned businesses or whatever it might be, you literally click a filter and then, basically empowers the user or the member to shop by their values.
Stephanie:
Got it. That's great. I think the idea of curation is only going to get more important as more products come online, more D to C companies are launching, you need that trusted source to be able to say, "We've already looked into it for you, and you don't need to spend five hours on a blog looking into that." So, that's amazing.
Stephanie:
Earlier you mentioned you have a lot of data, of course, that you're collecting all the time. Do you ever share that data with your brands? And if so, how do you go about that to keep the privacy aspect, but then also give your brands something to work with to maybe improve their own products where you're like, "Every time you sell this one kind of espresso bean, you always get a three-star review, versus this other one, you get a five star." Maybe you should look into that.
Nick:
Yeah. That's a really, really great question. And it's one that we're super, super focused on. I mean, we basically, our approach is be totally transparent with the brands on all of their data and then find ways to anonymize data, to give them insights more broadly on what's happening across the platform. I think one challenge that a lot of Ecommerce platforms have, but especially a marketplace like ours, is you can end up drowning in data. And so, it's how do you not just provide those data to the brands, but couple it with insights and make it distilled and digestible.
Nick:
So, one of the areas that we really focus is marketing and the kind of marketing dollars that brands put into promoting their products on site. If you think about that in a brick and mortar environment, it's a black box. You don't know whether that promo actually worked. You can do different lift tests and sometimes there's going to be some feedback provided, but it's much more art than science. And I think, that capacity makes it really hard to lean into the spend. We have a lot of brands that over allocate marketing dollars towards Thrive because they can see exactly what that impact is. And we have the ability to track that digitally. And then we share it with pretty, a high degree of specificity and controlling for incrementality what's actually happening, so that they can know their ROI, down to the dollar. And that kind of visibility is really powerful.
Nick:
Now, what you were asking about in terms of insights on what products are working, we're doing that all the time. And that's our category managers because they don't have 60,000 non-perishable skews, having an order of magnitude fewer skews, an order of magnitude fewer brands that we have to serve, means we can spend more attention with them. Which again, means we can not only provide the data, but we can help them interpret that data, analyze that data and then draw real insights from it.
Nick:
And I think that's part of the reason that the brands work with us. When I look at why we've become the go to launch platform for the most innovative new brands, why the leaders in the natural products industry are launching new products on Thrive first and giving us exclusives. Part of it is they align with the mission. They like what we're doing. And they know that we have almost a million members who are all really passionate about the lifestyle. But I think part of it is that we can do things on our platform that you just can't do in a brick and mortar environment. And some of that comes down to storytelling and just the way we position and present the brand. But a lot of it, back to your point, it comes down to being able to read them data and insights, and real transparency and visibility where they feel like they can control their destiny.
Stephanie:
Yeah. That's great. So, for the marketing campaigns, I didn't even think about you guys setting up your own marketing channel, what kind of metrics and insights are you giving these brands that they aren't getting elsewhere? And maybe, what should they be looking to get from other platforms? I mean, I'm sure they can't go on demand like, "I want to see this metric because Thrive Market gives it to us." But what are you showing that they normally can't get elsewhere, that's giving them that peace of mind and transparency?
Nick:
Yeah. I mean, the biggest thing is incrementality, right? At any given time, there's going to be so many different factors that can affect what's happening with the sales of a brand or a product. And those factors can be things like seasonality. They can be things like growth in our membership base. They can be things like COVID-19. And so, when you have all these different layers of volatility and a brand's sales on site, it's hard to know whether that promotion that you did actually had an impact. And this is the same issue that they have if they are selling in Whole Foods or any other retailer, it's like, I can run a promo. I can look at the lift pre-imposed promo in the overall brand sales. But there's all these other factors that happen. How do I actually adjust for those?
Nick:
And so, incrementality, as when we think about acquisition marketing for new members, incrementality is everything, right? And when these brands are spending incremental dollars, they want to think about incrementality too. So, that's the number one metric. And the way that we're able to do it is by having good attribution. So, when we send out an email, we can see every person that clicked on that email. We can know whether that click then drove to the purchase. And we can say definitively, right? Not just that this person purchased after the promo was sent, that this person purchased after clicking on that exact promo. So, that's one example. And then what we're able to do is then tease out and actually tell them, this is your return on ad spend in a way that is actually credible, versus attributing everything that happened during that period to the promo.
Stephanie:
Got it. And how do you control for more like environmental factors or larger things, like you mentioned COVID, how would you control for that when it comes to showing incrementality?
Nick:
I mean, part of it is you can, if you're looking at the overall sales lift, you can adjust, you can look at sales lift above and beyond what was happening in the category. And that's one easy way to do it. But more than that for us, we actually look at the power of an actual, the email that drove the promotion or click throughs on the banner or the ads themselves. If a person walks into a grocery store and sees an end cap, you don't have any way to know whether they actually saw that in end cap and influenced their purchase. If someone comes and clicks on the banner on our site or clicks through on an email that we sent on a promotion, we have that tracked, they've got a pixel and we will know and be able to attribute that.
Nick:
And look, you can say maybe that still is an incremental, they would've purchased anyway, but it gets you a lot closer to true incrementality. So, that allows you to not have to focus on just adjusting out all those other factors, which the truth is, we can't know for certain, right? We have an idea of what kind of lift we've seen from COVID-19. But even to think about that one, there's so many other factors at play.
Nick:
There's all the things we're doing internally to drive the business up. There's seasonal fluctuations that happen. So, we have to, some of it ends up being a judgment call, but the more we can provide the specific data and the... It's almost like a worst case analysis. We know these people that actually clicked are incremental, and if the ROI come back out on that basis alone, then everything else is gravy. And it just, it gives them a level of certainty to lean into the spend. And it gives us the power to really speak with conviction, to say, "Hey, these promotions really work for you." And we don't have to feel like we're just selling them on something. We can feel like, "Hey, we're partnering with you to drive massive value for your business in a way that no other retail platform really can."
Stephanie:
Got it. Yeah. Very cool. So, when it comes to building out your website, I'm sure you guys have had a ton of iterations over the past couple of years. What have you seen works when, I mean, because you're a membership site, when you're scrolling through, you can still see things which is nice. So, it's not like a complete, behind the curtain is the only way that you can see what will be actually have. But then after maybe right now, at least you click on it and then it'll say, "Okay, maybe you should think about a membership." And how did you think about building your website to get people to sign up for a membership, but also giving them enough products and things to see behind the scenes so they know it's actually worth it?
Nick:
Yeah, that's a really good question. And it's a balancing act. And to your point, it's been super iterative. We've tested all different variations of that initial first user onboarding experience. And we've done everything from an open site to a hard red wall to where we're at right now. We actually have an onboarding, we call it guided shopping quiz. So, you don't actually, most people that hit into site are not actually landing into the full unbridled Ecommerce experience, where they can browse through all the skews. Instead, they come into an experience where they get a landing page that shares the value proposition and features of Thrive. They then click through and actually go through a quiz that takes five minutes to do, that gives us the information to give them a curated, personalized set of recommendations to start.
Nick:
And I think the general thing that we found is, if you drop people right into an open marketplace it can be overwhelming, especially because Thrive is a different kind of shopping experience. And for many of the folks coming in they're new on this health journey. They may have just decided they want to pursue a keto diet, but they've never been on this site that allows them to search by, to filter by keto, or they don't know which categories of snacks are more likely to have keto products in them. So, giving a more guided experience where we get some data, again, do something that would be physically impossible in a grocery store. Well, you couldn't go in a grocery store and have the whole thing suddenly reorganize to put your stuff at the front.
Stephanie:
All vegan.
Nick:
Exactly. But that's effectively what we're able to do. And it's a five minute quiz, drives into a full data science model and uses millions of data points on purchase behavior in the past from people that had similar answers on the quiz to give, basically help you build your box yourself. So, from an Ecommerce as best practice standpoint, we've historically found that more open is good if people have high intent and they know exactly what they're purchasing. More open is detrimental to conversion in a world where people can be easily overwhelmed or there's real complexity, or they're new to the experience, or they need to get some education. So, we have really biased towards a funnel that is more educational and guided in nature.
Nick:
The cool thing about the quiz that not only actually gives us data, but it also in the questions that we ask and the things that we share in the categories that we move through, it shares with the would be member more about what Thrive does. And so, they get educated in the process too.
Nick:
So, and actually, if this really answered your question, but I'd say our funnel has tended towards being more closed and more guided, but always in a way that is giving value to the member in exchange for value that they return. So, one of the things we don't want to do is be that place that like says, "We're a walled garden and we're not going to tell you anything about what we are and just sign up and trust us." Because you will get some people that will do that, especially if you give them a strong incentive, but those won't end up being high quality members.
Nick:
So, we also think a lot about, what's the funnel that's going to not just drive that initial conversion to membership, but is going to create numbers who are going to be longterm engaged because that's what we're building and we want to have a business for the longterm. We're not just looking at clipping one year of membership fees.
Stephanie:
Yeah. That's so important. So, how did you think about building the quiz? Because I'm thinking, I could see quite a few people, I mean, I think you mentioned it was maybe around five minutes, I could see quite a few people maybe with lower intent dropping off. How did you think about building it in a way that would encourage people to finish it and what kind of conversions do you see when it comes to, or completions do you see around that quiz?
Nick:
Yeah. I mean the first thing I'll say there is your intuition is exactly what mine, and I think most people's would be on that kind of quiz where it's like, you just don't believe that people would actually go through the whole thing, especially as it gets longer. I remember I read a case study at one point on, I think it was match.com or one of these dating sites that has an onboarding survey or questionnaire that takes, it's like 80 questions or something, right? To find your perfect soulmate.
Stephanie:
Gosh. I'd give up. I'm single forever.
Nick:
Yeah. But and you would think that that's the way it is, but actually like 97% of people finish it. And I think part of it is people have to have an incentive, if there has to be a pot of gold at the end of the rainbow kind of thing. And so, obviously someone who's looking for the love of their life has a very strong incentive. Someone that comes to Thrive sees a lot of things they like on the landing page, really wants to get healthy, has a real incentive to finish it. We see about 85% completion once someone starts the quiz. And it's 18 questions. So, it's not a super short quiz. It goes by pretty quickly, but it's a lot of clicking, some real thinking, a little bit of cognitive load.
Nick:
And to be honest, we were totally surprised. We thought the drop off would be significantly higher. And what we found is it actually, to my point earlier, it builds more trust and credibility. There's a little bit of a sunk cost phenomenon where people are, they've invested now in getting through. And so, then they are really determined to actually get some value, see their results, like et cetera.
Nick:
But there's also this factor of they're getting educated about the platform as they move through the questions that we ask implicitly, tell them something about Thrive, what we're asking. Like, what are the causes that you care about? What are the values you want to live? What are the diets that you want to search by? As they go through those answers, they can see, "Wow. Thrive allows me to shop by diet. Wow. Thrive empowers me to shop my values. Wow. Thrive has beauty products too." So, we find it to be killing a lot of... Wrong analogy, but it kills a lot of birds with a single stone.
Nick:
And we found that our intuition on many dimensions of the quiz was totally wrong. So, it really has been just an iterative process of trying different things, prompting the membership at different points in the quiz, prompting the registration at different points in the quiz. And just like standard growth hacking 101 to iterate our way to something that converts.
Nick:
But then always, like for us, one of the big things we talk a lot about internally is always having our human hat on. So, if you're testing and iterating, it's very easy to look at the numbers, but not be thinking about the path that human beings are going through the experience. And we find that the greatest antidote to doing something that will be short term conversion driving, but longterm detrimental to the business is to put ourselves in the seat of the member and say, "Okay, is this actually a good experience? Will this feel good? Will I feel good, if I was going through this experience?" Because it is easy to test your way into something that will somehow squeeze more conversion out of the funnel, but you're squeezing out the wrong people. You're squeezing in, maybe the wrong people too, and you're leaving a bad taste in new users mouth that affects their longterm interaction with the brand.
Stephanie:
Yeah. Yeah. I completely agree. So, I think you have a 30 day trial, how did you think about having a free trial period? And then what does that pretension look like and how do you go about improving that number?
Nick:
Yeah. So, it's interesting that you mentioned the 30 day trial. For the first five years of the business, we did have a 30 day trial.
Stephanie:
That's what I did.
Nick:
And a hundred people came through the 30 day trial. Over the last nine months, and this coupled with moving towards this quiz, this guided shopping model, we actually ended up testing into removing the trial, having people sign up directly for membership. And we found that once they had gotten to see more of the catalog, see the values of Thrive and go through that quiz there was actually a willingness to sign up directly for membership. So, we now have an option to go through a trial for people that want to, but like 90% plus of our members are actually coming through what we call our direct to member funnel.
Nick:
We still do 30 day risk-free on that. So, you sign up for your membership, but for whatever reason, you don't use the membership, you don't like it. You have a bad experience, whatever. Well, people can get their $60 back. But our typical member takes back their membership fee in two purchases in terms of savings. So, it's about $30 average savings per order. And so, we find really high conversion. And we found that on the trial as well. We would have historically in our legacy funnels, 60% to 75% trial to paid conversion, which is unheard of for trials, which should have been an indication to us, we may not need the trial. And now we see similar actually higher. It looks like 75% of the people that will start the membership, three out of four of them we'll stick with it and have that great experience. And basically everybody that places an order we'll stick with it. So, the only people that are dropping out are, they signed up for the membership, they took the risk free. And then for whatever reason, they didn't actually place an order at all.
Stephanie:
Yeah. Yeah. It's another not to gush all over Costco, but another thing that reminds me of Costco a bit was the guarantee savings. So, I think it's not the normal Costco membership, but I think the business one that I have says, if you don't make a certain amount of savings or something, then you'll get your membership fee back. I can't remember what exactly it is. I just said, "Oh, that sounds like a good deal or a good deal." Don't you guys have something like that as well, where if you don't make your savings back, we'll give you the membership fee back or something along those lines?
Nick:
Yeah. So, we have two promises that we make to our members. The first we call it our low price promise, which is that if you find a product that we sell on Thrive, anywhere else at a lower price we will beat it. So, that just gives you that assurance that you don't have to be price shopping because we're doing all the price comparisons ourselves and making sure that we're always lower on every individual product. And if you happen to find one it's not, well, we'll go ahead and beat it on that price. So, that's one.
Nick:
And then the second, which I think, you're pointing to is our savings guarantee, which just says, if at the end of the year, you haven't made back your membership fee in savings, if you renew, we will actually give you whatever that gap was in store credit. So, if you only got $20 of savings during the year, that means that we'll give you, that's a $40 gap to your $60 membership fee. We'll actually give you $40 of shopping credit when you renew as a second year member.
Nick:
And we think that guarantee is really important, not because very many people take it, they actually don't. Because again, you only need two purchases to make back the membership fee. Almost everybody does. But the reason that we do it is for trust and for confidence, to put our money where our mouth is and say, "Hey, we're not looking to build a business that extracts value from you. We want to build a business that is non zero sum, that delivers value to members. And that the reason that you're renewing is because you've got real value from Thrive Market." And it's the reason why we have best-in-class renewal rates and every year, every cohort is renewing at an even higher rate. And I think it has helped drive our conversion too, because people can trust that, "Hey, it's risk free for the first 30 days. And even if I go through the whole year, if I don't make that money in my savings, I'll be able to make up the difference."
Stephanie:
Yeah. Yeah. There's so many ways that make it easy to want to stay with you guys.
Stephanie:
So, with everything that's happening with COVID-19 going on and a lot of changes in the world of Ecommerce, where do you see online grocery going in the future?
Nick:
That is a big question. And obviously, it is the question that we're thinking about so much right now. I think the first thing that's really important to understand about what's happening with COVID, and I would say specifically as it relates to online grocery, is that COVID has not created a departure from the trend. It's really just accelerated a trend that was already happening. If you look at the actual compounding growth rates of shifting to online grocery, it's like insane, right? It's double digit growth every single year. But it's early on in that growth period compounding. What has basically happened with COVID is you've packed five years into four or five months, and you've gone from 10% of people purchasing groceries online to 40% of people doing some of their grocery shopping online and many doing all of it.
Nick:
So, I think the billion dollar question as it were is, how much of that will remain and how much will go back? And I think that, if we had had two weeks of lockdowns, I think a lot of people might have done an order online, and then they're going to go back. But when you have several months, you now have a window, I think for people to bake a new habit. And the reality is that online experience, if it's good, people will have no reason to go back.
Nick:
One of the challenges is these retailers are dealing with out of stock. So, how do you do substitutes? I think there will be some fallout just because that first experience may not be ideal.
Nick:
But if you look at our categories, we focus on nonperishable products, which are easy to ship. We have a less than one 10th or 1% error rate on the picks that come through. So, you're always going to get exactly what you want. We now have a huge frozen selection of meat and seafood. We have a wine selection. We now have frozen meals. All these categories that you can get, that aren't the complicated, like fresh products that might not be ripe or whatever like that. People have a great experience. And when they have a great experience, they feel good about what they've done because they're shipping with carbon neutral shipping and everything comes in one box. So, you're not piling up a bunch of plastic to throw out like you do with an Amazon order. Then you retain those people.
Nick:
And so, we found with our cohorts during COVID is that they're actually engaging at a higher level, they're retaining at a higher level. And we expect them to basically behave at or above what previous cohorts have. And then we've also been seeing that our existing members that were using Thrive as one of four or five solutions to buy their other groceries, now they're using Thrive as one of one or two, which is driving up engagement there. And I think that those patterns given how long the quarantine period has been, or the stay at home period has been, are going to be longstanding.
Nick:
I also think that the shift of grocery online is only one of the trends. Everyone is focused right now on all the things that are moving online, all the things that are moving remote. Work is moving from the office to remote. Grocery shopping and other shopping is moving from a brick and mortar to remote.
Nick:
But I think there's another trend which is really relevant to us, that's actually maybe even more profound and that is, what I would describe as basically people becoming more conscious consumers. And I feel like the moment that COVID hit, everybody at some level became a conscious consumer. Everybody is focused on their safety. Everybody is focused on staying healthy. And everyone is thinking about trust and where do their products come from, "And is this product safe? And is this product going to keep me and my family healthy?" And so, that actually is the trend that makes me most excited because that's people wanting to get empowered about staying healthy, not just doing this purchase online, but buying more from retailers that they really trust, like Thrive Market.
Nick:
And then I think one of the really interesting side trends of this rise of the conscious consumer during COVID, has been people also thinking about not just their own health, but more broadly the health of our country and the health of our planet. And really seeing this incredible moment of people opening up their hearts and wanting to be part of the solution. We always have done donate at checkout, where we let our members donate a portion of their savings if they choose to the shopping budgets, for our gift members. And when COVID-19 started, when the pandemic started, we actually flipped the switch, so that all of that would go to our COVID-19 relief fund, basically providing grocery stipends for families directly affected. And we saw our donated checkouts go up 9X. So, just the generosity of our membership base. I mean, one that it's inspiring. It actually inspired me to, I decided to donate my entire salary for the remainder of the year to the relief fund.
Nick:
But it's also just so indicative of the way people, at this moment where I think people are at home, they're isolated, they in some ways feel helpless. They're looking at political polarization, all this stuff happening across the country. And they're saying, "What can I do to not only keep my family safe and healthy, but also help make this situation better, more broadly." And so, I'm really hopeful that that's something that will also continue. And that it will be extended beyond just helping those people affected by COVID to bigger topics, more longterm, like climate change and environmental stewardship. So, that's the trend we're betting on even more than online grocery, it's the rise of the conscious consumer.
Stephanie:
Yeah. Yeah. I love that. Everyone just had time to sit back and read on the internet and watch some Netflix series and things like that. And I think that it actually gave people a chance to dive into things that maybe they just didn't have a chance to do before all of this, where they could actually, like I did go into a thread about formula and watching Netflix series all about water and-
Nick:
Yeah, it's like getting educated and then also having that time to reflect, right? And say, "How do I want to show up in this? And how can I vote with my dollars?" And I think it's really, to me it's very heartening that when people have that moment, they come out saying, "I want to make a difference. I want to be on the side of change."
Stephanie:
Yeah. Yeah. I completely agree. I wanted to ask how you set up your backend infrastructure to keep your brands happy? How did you make it easy for them to, you to place orders from them or them to see sales, or how does it look behind the scenes? Because we focus a lot on the consumer piece. And that was the one part I was thinking was like, what are your backend systems look like for all your brands?
Nick:
And the approach that we took, which I think was pretty differentiated with our membership base was just to be hyper transparent on what was going on, what were the challenges we were having in our supply chain? Why was it taking longer to fulfill orders? And how were we scaling up our fulfillment capacity while still keeping our fulfillment workers safe and ensuring that the products arrived to our members safely? And so, that was a whole exercise for us and community building radical transparency. I got out there and did an Instagram TV. I'm not even an Instagram user, but managed to get up there and spend 15 minutes talking directly to our members about the different challenges that we were having and giving them a window in.
Nick:
And the same kind of communication was necessary, basically with each of our stakeholders. So, internally with our employees, it was a huge exercise. And how do you, during a time when everyone is work from home and isolated and scared, how do you keep people together? How do you create community? How do you be transparent with what you know, and also what you don't know in terms of where things are headed?
Nick:
And then with our brands, the exact same thing. We have good systems for brands to self serve on what's happening with their sales, with their performance of different skews. We also do a lot of just custom reporting, like I said, with every promotion that goes out. But the biggest benefit that we have, the biggest strength we have there is not so much the light bells and whistles on the backend reporting, as much as it is the fact that we have fewer brands, we can actually give them personal attention. And so, our category managers were basically on the phone all day during COVID and even pre-COVID they're on the phone all day talking to our brands, finding out how we can be helping them, giving them feedback and giving them insight.
Nick:
And so, I think we have, because of the curated model had the opportunity to, despite getting some significant scale, maintain that closeness of interaction and that personalization, and just like we're doing for our members, doing it with the brands. And I'll tell you that was especially important during COVID, because you can have a great backend reporting infrastructure and self service platform, but brands are trying to figure out what the heck is going on, that's not going to get you answers.
Stephanie:
They better be able to reach you.
Nick:
They better be able to reach you and they better reel up the conversation. And look, our brands had challenges too. They were struggling to scale their supply chains. We had major out of stock issues. We're still dealing with that. Honestly, there's been an elevated sustained demand. And the ability to have a relationship with each brand where they're keeping us apprised to being transparent with what's going on for them, and we're doing the same to them, I mean, it just, it removes that friction and that barrier, that I think can often happen when you've got brands and retailers that don't talk.
Stephanie:
Is there anything that you learned from all of this that you're, or maybe best practices that you saw happen with one brand that you're sharing with another to prevent out of stock issues or being able to help forecast demand better? Because I'm sure this won't be the first time this happens. What kind of best practices are you maybe sharing amongst your brands, if at all?
Nick:
That's a really good question. I think every brand has a unique situation right now. Each category is unique. There are some categories that have been affected 5% or 10% in either direction. And you've got others that have been affected 5000%. So, I don't know that there's universals. Probably, the only universal is that, if things are... There is no universal, essentially, right? That things are unpredictable, volatility can happen. And we have to build our business and they have to build their businesses in a way to be resilient and ideally be anti-fragile, is the term I like to use. It's being able to actually lean into a really challenging moment and step up and be a better version oof what you normally do.
Nick:
And so, for us as a business that was on the mission dimension of like, "Hey, for us and being anti-fragile, is we already, we do a great job building a community. We do a great job with communication. We do a great job living by our values. Now, we're going to do that. And we're just going to triple down on it to make sure that is our source of strength during this trying time."
Nick:
For our brands, the challenge that they have is, they're dependent on their own supply chains. They have limited manufacturing capability. And, again, if you have a 5% or even 50% spike in demand that might be able to be handled. But if you're a brand that creates hand sanitizer or can beans or flour or you do diced tomatoes, that have a year long lead time from the harvest, there just isn't much you can do. So, we have tried to work hand in hand with our brands for sure. We tried to be patient with them for sure. And then it's been a good exercise for us to think about redundancy in our supply chain and making sure that we have partners that can scale and are going to be resilient. We're still obviously hitting our quality standards.
Stephanie:
Yeah. That's a great answer. I'm pretty sure I could talk to you all day long, set a thousand questions, but I also want to respect your time. So, is there anything we missed before we jump into a quick lightning round?
Nick:
No, this is great. I feel like you asked a lot of good questions and gave me a chance to pontificate at length. So, thank you.
Stephanie:
I love pontification. Okay, great. So, the lightning round is brought to you by Salesforce Commerce Cloud. It's where I'm going to ask you one question and you have a minute or less to answer.
Nick:
Okay.
Stephanie:
Are you ready?
Nick:
I'm ready.
Stephanie:
All right. I thought of a hard question for you. If you were to create a Netflix Original, what would it be about?
Nick:
It would be about regenerative agriculture.
Stephanie:
Mm-hmm (affirmative). Tell me more.
Nick:
That is to me, that is the future of food. And it is the way that food can be part of the solution on climate change. And just so that for your listenership to understand, organic farming procreates a less of a carbon footprint than traditional farming, but it's not necessarily actually regenerating and sequestering carbon and having a net negative impact. And bringing up for those people that don't know, basically carbon emissions is what creates global warming or the primary thing that creates global warming. Regenerative agriculture is agricultural systems and models that actually sequester carbon, regenerate top soil, and in doing so have a positive impact. And there are negative, depending on how you want to talk about it, impact on climate change.
Nick:
And I think we are past the point, at this point where we just need to slow it down. We actually need to reverse it. And food as you know, is a massive, massive culprit, our food system. And I think people don't realize how innovative, how scalable and how impactful regenerative ag could be if we were willing to accelerate it. And there's so much cool stuff happening. I think if we could do a Netflix series that shows more and more conscious viewers in this case, be conscious consumers. What's possible, you'd have a groundswell of interest and support for regenerative ag.
Stephanie:
Oh, that's good. If anyone from Netflix is out there, hit up, Nick. Sounds like a [crosstalk 01:01:24].
Nick:
That's my pitch. That's my pitch.
Stephanie:
Yeah. There you go. What kind of music do you listen to, to get in the zone?
Nick:
Oh gosh. I'm actually an ear plugs and noise canceling headphones kind of guy when I'm working, utter, utter silence. And I like to walk a lot. My form of meditation is going out for a walk. I know I sound like I'm like 80 years old.
Stephanie:
Me too.
Nick:
It's for me, it's like super, super therapeutic. And then I will listen to music. And it depends so much on my mood. It can be everything from house electronic, if I wanted to really let off steam and move fast, to classical, to sometimes I just go silent too. So, I'm classic ADD where, if there's any distraction around, it's kryptonite to my work. So, I've got a big thing of earplugs sitting right next to me right now. And I go through about 10 pairs of disposable earplugs every day.
Stephanie:
That's great. What health fact do you drop on people that surprises them?
Nick:
That's where I could have spent the whole hour talking about. I think there are some... This isn't an answer to the question, but there are so many health facts that surprised people because so much of what we historically thought of as healthy has been total misinformation. And I think more and more people now understand that fat's not bad. Fat doesn't make you fat. That's an obvious one. But I think the one that I'm actually most interested right now, is the fact that what is healthy for humans is really also tends to be what's healthy for the planet and vice versa.
Nick:
And I've mentioned this earlier, but I think people are connecting that more and more, that if you look at products and food products, especially that are produced sustainably, those products will tend to be simple. They will tend to have low numbers of ingredients. They will tend not to have chemicals. And those same things tend to make them healthy for our people.
Nick:
And there's a lot of different debate and diets about, "What's the right macros. Should you be keto? Should you be vegan?" But if you generally just stick with, if this product was produced in a way that was healthy for our planet, you will probably get to a place that is also healthy for you as a human.
Stephanie:
I like that motto. It makes it a lot easier. What tool or technology are you most excited about either trying out or that you're currently trying out right now and it can be at Thrive or it can be personally?
Nick:
That's a good one, tool or technology. Honestly, I'm a minimalist, so I'm actually always trying to reduce, clear out and take away technology. I don't use any social media. I had a brief flirtatious relationship with Twitter early in the pandemic and got sucked in, literally I've never used. I don't use Twitter. I don't use Facebook. I don't use Instagram. And-
Stephanie:
I'm going to tag you, Nick. Oh, it makes me so sad.
Nick:
I know, but the truth is, I would be a total addict on all those platforms, I'm now convinced. So, I actually, I try to reduce tools and technology to the maximum. I think, if you're trying to do something, what matters in your life and your ability to achieve those things will basically be a function of how much of the things that don't matter, you can eliminate.
Stephanie:
I like that. That's a great answer. All right. The last hard one, what one thing will have the biggest impact on Ecommerce in the next year?
Nick:
Oh, I mean, I think that's obvious, it's what's happening with the pandemic and COVID. And as I said, I think there's like, it's the thing that people miss is that this is not a departure. It's not some orthogonal trend. It really is the acceleration of all these mega secular trends that were already happening. And I think what's fascinating about it is you are concentrating already rapid trends, like the shift of grocery online, or the shift to conscious consumer attitudes. And you're concentrating years of evolution into a few months. And I think the ramifications of that, what the new normal looks like, what the different vectors are beyond just online grocery and conscious consumers, I think it's going to weigh out last the virus itself. And in particular with Ecommerce, we're getting to see the future now. We are going to see 2030 in 2021.
Stephanie:
That's great. That's a good quote too. Well, Nick, thank you so much for joining the show. It's been such a fun conversation, so many good insights. Where can people find out more, not about you apparently on social media, where can people find out more about Thrive Market?
Nick:
Yeah, you can find more about me anywhere, but Thrive Market is thrivemarket.com. Again, first month is risk-free, if you want to sign up for a membership. If you're in financial straits or you're a teacher, a veteran, a student, a low income family, you can actually get a free membership, just apply through our gifts program. If you have anyone else that's affected by COVID directly, they can also get free membership and a grocery stipend. And yeah, check us out, we're also, obviously, on all the social media platforms.
Stephanie:
Cool. Thanks so much, Nick.
What is the right percent profit margin you should target for your products? How do you get the most out of your Facebook ad buys? How much should you really pay attention to conversion rate? These are just a few of the questions that every small business and Ecommerce shop wants the answers to. On this episode of Up Next in Commerce, we picked the brain of Andrew Faris, the CEO of 4x400, a company that has helped grow numerous Ecommerce companies from less than 500,000 into the tens of millions. Today, Andrew spills some of his advertising secrets, including how to make Facebook your core driver for customer acquisition. Here’s a mini spoiler: human bias is leading you astray, but there is a simple way to correct course. Find out that, and more, on this episode!
Main Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
---Transcript:
Stephanie:
Hey everyone. This is Stephanie Postles, co-founder of Mission.org and your host of Up Next in Commerce. Today on the show, we have the CEO of 4x400, Andrew Faris. Andrew, thanks for taking the time.
Andrew:
Stephanie, I am very glad to be able to do this. I have never been accused of not liking to talk about Ecommerce in particular, but just in general. So this is fun.
Stephanie:
Well, you're my perfect guest then. I was creeping as one does on your LinkedIn. I saw an interesting thing that you have a background in religion and theology. I was wondering how you transitioned into the world of business from that background.
Andrew:
Yeah. I can always tell when somebody has looked at my LinkedIn or not because that's maybe the only place where that's found anymore.
Stephanie:
You're welcome.
Andrew:
Yeah, yeah. No, I went to school for biblical studies, and then got a master's degree in New Testament. So that was my whole pathway, was to go into that and actually was a pastor for a while. Did that, and then about ... gosh, how long ago? Five and a half years ago stepped out of that not because anything in my faith changed per se, but just because I was just rethinking a bunch of stuff in my life and reworking a bunch of stuff in my life. So it's just total life change in all kinds of crazy ways. I didn't have a clue what I was going to do actually.
Andrew:
That educational pathway doesn't have a direct connection to almost anything that's not work in a church or academic setting or something like that in theology. So, I really loved that education a lot, but I was figuring it out. So I called a friend of mine named Taylor Holiday, who ... and I was talking to him about if there's any available work in his world of work. Just basically as an in between thing while I figured it out. I just thought I'll just go do something for a couple months to figure out what I want to do. He said, sure, and brought me to a company called QALO, Q-A-L-O. If you've seen the silicon wedding rings that are for-
Stephanie:
Oh, yeah.
Andrew:
.. on the internet a lot, QALO was the first big company of those. QALO went zero to 20 million in a year and a half and was not funded. So, I was bootstrapped. I went there and it was just growing super, super fast. Also, being not funded and being a bunch of people like that, it just meant that they just were, in those worlds probably some of your listeners probably know this story a little bit, which is like, you just find people who can do stuff in that setting. I literally started in the warehouse. At one point, I sat down with Taylor, who's now one of my partners. Taylor was running marketing for QALO at the time. His brother was one of the founders. Taylor said, "Hey, you've got a mind for numbers," which he knew because we were in a Fantasy Baseball League together and knew that I was a big baseball stat nerd.
Andrew:
May not be interesting to many of your listeners I'm sure, but I have a lot to say about the interplay of thinking about sports through statistical lens and thinking about Ecommerce. Anyway, so that was the origin. We had been in this fantasy baseball for a while, "I know you have a mind for numbers, why don't you learn Facebook ads and Google ads and learn digital marketing?" I said, sure, but still I was not really sure what I wanted to do in the longer term. But I was like, "All right, that sounds fun." So, did that and loved it.
Andrew:
I mean, I was so totally unaware of what was happening, but I still remember the first conversation I had with Taylor in a bank where he told me what I'd be doing. He's explaining to me how Facebook ads, Google ads worked and said, "Is it okay? Well, here's the deal. You get customers into the funnel with your ads and then you drive ..." and I stopped him in the middle of that sentence and said, "What's the funnel?" That was where my digital marketing knowledge was at. From there, that ended up being the pathway to the digital marketing and Ecommerce career growth. So I was at QALO for a while, went to CTC, the agency that owns our company, owns the majority of it and became the head of strategy there. And then now I run 4x400.
Andrew:
Yeah, it was a crazy set of circumstances with Taylor. We actually went to junior high together, but had not reconnected because of that. We reconnected outside of that. So, just weird circumstances.
Stephanie:
That's interesting.
Andrew:
This gets into my life philosophy a little bit. I'm a believer in divine providence and think there was some of that happening around.
Stephanie:
For sure. Yeah, that's awesome. Always good to be in business with someone who's willing to bet on you because you have that beginner's mindset and it's probably why you're doing so well. But I'd love for you to detail a little bit about the structure of CTC and 4x400 in the holding company structure because we haven't had anyone on the show quite like this. So, any details around what 4x400 is and how it's connected to CTC would be great.
Andrew:
Yeah, sure. Common Thread Collective, it grew out of ... Taylor was building the agency alongside the growth of QALO. Started really focusing on Facebook ads. CTC does a lot more in that now, but CTC is now a full service digital sales agency. We said digital sales sell digital marketing because what we're doing is selling things on the internet, it's consumer goods, really focusing on Ecommerce entrepreneurs. The mission of CTC is to help entrepreneurs achieve their dreams. So that's really what we're about. We're specifically really good taking people in somewhere in the journey from zero to 30 million.
Andrew:
I was a strategist there and then became the head of strategy there. CTC continues to grow and do well. Taylor Holiday, as I mentioned is the managing partner of CTC.
Andrew:
In the midst of that, we also were like ... I mean, we came from this background of starting QALO. Taylor also was early on with another one of our partners named Josh Rodarmel who founded Power Balance. If you don't know Power Balance, Power Balance was the really popular silicon bracelets that were worn by athletes for a long time, still are worn by some.
Andrew:
That company was another super crazy fast growth company. I think they were zero to 50 in a year and a half. Yeah, I think that was the number. But anyway, I did on the brand side selling consumer goods in those worlds. We're like, why don't we launch our own brands as well? So, that's how 4x400 started. Eventually I went over to that side of the business. We started with building our own brand from scratch. It totally saw giant failure called [inaudible] company, just a huge waste of money. It doesn't exist anymore. It was sports themed baby goods and it just ... there are a lot of reasons that didn't work
Stephanie:
Wait, sports themed baby goods, so-
Andrew:
Yeah, yeah.
Stephanie:
... like onesies.
Andrew:
Yeah. Like onesies that look like football uniforms. They're adorable. I don't know why nobody bought them.
Stephanie:
Okay, that's super cute. I'll buy one from you.
Andrew:
Yeah. I think that you'd have to go find a flea market in Northern California somewhere. I had to go get it every day.
Stephanie:
I will find one, I actually need to for my twin. So, it'll be a long journey, but I'm going to do it.
Andrew:
Okay. You're in Northern California, right?
Stephanie:
Yeah.
Andrew:
Yeah, I think that's who we sold to, so [inaudible] don't worry. We did that, and then realized actually most of our skill at this point ... most last couple years that we have really been spent after we'd gotten out of the brand side so much growing brands, not so much building brands. So we thought, why don't we just do that? Now our model is, at 4x400, we work with entrepreneurs who are in early stages and feel a little stalled out. We provide them with a team around them that can help them grow it. 4x400 mission is also to help entrepreneurs achieve their dreams. We just do it in a different way than CTC.
Andrew:
CTC does that the traditional client relationship 4x400, takes the majority share of the brand. And then our goal is to make it so that by bringing us on as a partner and all of the expertise and resources we have around finance operations, marketing, growth customer service, even just really thinking through the whole system of what it means to be a great Ecommerce brand, we can help brands grow. We just closed actually our fifth brand that is currently in our portfolio. We're hoping to close another one soon. Who knows by the time it comes out, if that will happen? We're trying to work with brands who are doing less than half a million in revenue and saying like "We can try to grow you from there." CTC is the majority owner 4x400. 4x400 is the majority owner of these brands. So there's this giant web of relationships there.
Stephanie:
Yeah, okay. That helps me understand the landscape a bit more. How do you think about acquiring brands, how do you find brands that are willing to say, "Okay, we'll give you a majority share and come under your company"?
Andrew:
Yeah. Well, there's a few ways. CTC is a magnet for some of them. Sometimes brands will come to CTC and CTC will say, we're not the right partner for you. You're not a place where you can afford us. One piece of advice I have for a lot of it was like, if you are paying an agency not very much money you should really think about whether the agency is good because agency economics just require, for you to get great service, they typically require a pretty good investment. Just think about it. Agencies exist by marking up people's time. So, an agency works well if they are able to attract and train great talent by nature of access to large amounts of information.
Andrew:
The value of an agency is that they are spending millions and millions of dollars of other people's money on stuff. So, it's information arbitrage in that respect. You can come to an agency and get that information applied to your brand in a way that maybe an in house resource can't always do because they just are not going to have the visibility to as much of what's going on. For that to work, then you have to mark up that time of high quality, talented people who are probably not cheap. And then also for something like Facebook ads, Google ads, and then oftentimes there's a creative element of that and a writing element of that, and a strap gentleman have that, so that means you got to pay designers and other people like that too. And then there's web dev parts of it. You start to put that all together and if it's too cheap, then you have to be going like, wait a minute, what am I actually getting here?
Andrew:
Some brands in the early days, will come to ... they'll be stalled out or come to CTC for resources. CTC will say to them, actually you can't really afford this. What we actually think is a better solution for you is to talk about a deeper investment where we can really surround you with more stuff. What we find is a lot of entrepreneurs love product building and customer communication in certain ways. They love their customer, they love their product idea people, but they don't necessarily have all of the skills around everything else it takes to grow a brand. In fact, they don't want to do those things.
Andrew:
Most entrepreneurs don't start brands because they love finance, they don't. They don't even necessarily love tactical marketing. A lot of times what we can say to them is, "Let us take all that stuff that you hate doing anyway from you, you feel overwhelmed and stalled all the time anyway. You come with us, we'll pay you a consistent salary," which is also a big help to some people who are going like, I just don't even know if I can perform this anymore. We'll help you grow. Some entrepreneurs want to stay on, some don't, some just wants to take it. So it really depends on each entrepreneur, but that's basically a lot of how we think about it.
Andrew:
And then for us, we evaluate the brand by saying like, "Does it have basic product market fit and basic fundamentals to where we think as we bring in all of our tactical expertise and all of our specific expertise in various disciplines that we can then apply that to the brand and grow it?" A brand who comes to us who hasn't really invested much in paid media, but has done 100 to $300,000 in revenue, we look at that and say, "That's ..." Actually, we have a really high amount of respect for that. It's really hard to do that, it's hard to do $100,000 without being good at Facebook ads. It's not easy. So we look at that and say like, "Good job. We don't think you're a failure. If you come to us and want our help, we think we get it." We look at that and say, "That's very impressive. Let us surround you now with resources that we can scale this to 10, $20 million in revenue."
Stephanie:
Very cool. How are your brands performing now?
Andrew:
Yeah, good. They're doing good.
Andrew:
I think COVID really helped Ecommerce brands massively. Two things happen at the same time. One of them is that large corporations who have diversity of sales channels, but were spending lots of money on advertising, pulled their advertising budgets the way the heck back. Of course, lots of other companies couldn't produce products. So they couldn't sell products in retail settings, so they pulled a lot of the budget back. They couldn't produce products because of supply chain problems. And then at the same time ... So that meant that in large auction based advertising work universes like Facebook ads and Google ads, ads got suddenly way cheaper really fast.
Andrew:
The way that works is that because those are built on an auction, if a lot of people leave the auction everybody's prices get cheaper. We've looked at this data across CTC accounts. There was a giant plummeting of advertising CPMs in those worlds. And then at the same time in the last couple months, conversion rate on websites went up because the only place to capture demand was online. You couldn't go buy stuff in the store. So if you're selling things on the internet, that's where people are buying things from. And then of course, the stimulus checks it. As people have noted, that actually ended up being one of the largest increases in revenue to the average American family in history. So, all of a sudden, people have money to spend. Whether or not they should have spent it on consumer goods is a different question, I don't really know. But they had money to spend.
Andrew:
The less places for that demand to be captured mostly on Ecommerce stores. And then also, it got a lot cheaper to reach those people with ads. You put that all together and Ecommerce did really, really, really well for a couple months. So that really helped us. There's no question about it. We're still feeling some of the positive effects of that. It feels weird to be a winner in COVID, but there's no question that Ecommerce brands were .. To varying degrees depending on the category you're in, for sure.
Andrew:
We have three brands that are in the established stage and not in the start it up stage.
Stephanie:
What account is established, is it a revenue metric or-
Andrew:
Yeah, a good question. I'd say a million dollars during 12 months, or a million dollar run rate. We would look at and say, "Okay, we're growing at the pace that we want." I can just give you some numbers. We're projected this year to go to have one of our brains go to 8 million, that brand did 100,000 in 2017. Last year, we really took it over halfway through the year. I think we ended at 750 for the year. So, that's definitely our fastest growing brand right now.
Stephanie:
That's [crosstalk 00:16:47].
Andrew:
Another one-
Stephanie:
... some good growth right there.
Andrew:
Yeah. We feel good about that. That's profitable too, which is definitely in our model. We took on a little bit of funding early, but not a ton of funding. We function more like a bootstrapped company. And then another one went from ... just a little over two years ago, we acquired it. It was basically doing no revenue, it'll do 3 million this year. Yeah, that's a different story. And then another one went from 250 to a million to just under two, this year, we'll do four to four and a half probably. So those ones are all we feel established growing at the pace we want, we feel really good about.
Stephanie:
Yeah. That's some impressive number. How do you grow these brands? What are some of your tactics and strategies that you rely on those, what do you see success with? How can someone else learn from what y'all are doing to grow their Ecommerce companies?
Andrew:
Yeah. Facebook ads is the core driver of customer acquisition for us. I mean, selling consumer goods direct to consumer online, Facebook ads is still the most powerful tool in the world for reaching people. I'm hearing chatter about other things, YouTube, Snap, even Tik Tok, Google ads, product's changing. I just think still at this point, at scale, depending on what you mean by scale, people define that word differently. But for us, that's the core, top of the funnel way that we get traffic to our website.
Andrew:
I mean, you think about what Facebook ads is, it's not buying ads so much as buying traffic. I guess it's both really. But we look at that and say, "If we can make the traffic worth more than we're paying for it, worth enough more that we're paying for it to cover the cost of goods and things like that," I should say, "Then we can win." That's how we drive top of funnel traffic for us. And then after that, we try to do everything that we think great brands should do, which is like create a beautiful website that treats their customers great, has generous returns and shipping policies as much as we can afford to do it basically, which varies from brand to brand, depending on a number of factors. Do a great job with your retention email and other automated flow stuff. Constantly testing conversion rate optimization on our site in various ways. There's just a whole bunch of that kind of stuff that we're doing on the backend of that.
Andrew:
We are also certainly looking to invest in other top of the funnel type metrics, our traffic drivers as well. I would think of Google search as mid funnel and Google shopping as mid funnel. So, we're definitely investing there as well. I think we'll keep doing other stuff. That won't work forever. There's going to be a cap to how much Facebook ads does the driver work and we fully intend to add to our customer acquisition approach when we can. But our goal has been to grow profitably and we think that's one of the best ways to do it right now.
Andrew:
The other thing is it's not just one of the best ways to do it, it's just that we also have deep expertise in it. So, I'm just a believer that do the thing you do well as much as you can. I think it works for leadership and working with teams. Just as much as we can set up our team members to be doing the things that they love doing and they're good at. As long as the things that people love doing and are good at create value for the company, then you should pay them to do it. So that's the way we look at it too.
Andrew:
Just coming from the agency side, I personally have managed, I don't know, 25 ad accounts, that's probably more than that. Seen a lot more of that when I was the head of strategy and working with other strategists. I don't mean that to brag. It means that now I have some intellectual capital built up on what works. So, that's what we use from there.
Stephanie:
Cool. To drill in a little bit deeper then for the Facebook ads because I think a lot of companies probably have looked at Facebook ads, maybe they're using it. I haven't heard of anyone growing liked you guys are growing your brands consistently. So what tactics are you using specifically, or what do you see works well?
Andrew:
Yeah, there's a lot I can say about that. I think this is going to sound so fishy, but if you're getting serious about that, there's a couple of things ... The thing I would actually tell you to do, if you don't know where to start and you're getting serious about it, is to go visit your admission.co. I don't know, maybe I can give you a link to this, Stephanie, at some-
Stephanie:
Yeah, we can link it up.
Andrew:
Cool, yeah. So that is CTC's education program. It's not a course, it's different than every other education thing I know of in this world. It's actually a moderated community with access to ... Taylor, the CEO of CTC is in there doing webinars like our team members, our brand managers and people like that. Also, might jump in there and do webinars exclusively for that community. What we're doing is teaching all of the things that are ... what we believe are really the best practices for Facebook ads from the perspective of creative, from the perspective of targeting, bidding, all that kind of stuff. Bringing people through all of those things and then giving them continued support with access to the actual CTC teams who are doing that same thing that I was describing, which is spending millions of dollars of other people's money, so you can have access to that knowledge set. I think it's 500 bucks a month right now.
Andrew:
I even say sometimes there's even executive level people who will take their whole team through it. It's not like you're going to be in it for forever. The point is that you can do that and get access to what we believe works best. We're always evaluating that. There are certainly other things to do there, but that'll give you what we ... We try to be really honest and transparent where we can about what we're seeing. So that will give you mental ways to think about that problem.
Andrew:
I think one of the things that can go wrong is you could listen to me talk about this, and maybe you're an entrepreneur and you hear my numbers and you go like, I'm going to go do that. You just blow money because you make simple mistakes that somebody could help you not make, if you've just got some support. There is no way to learn besides doing it really. You're going to make mistakes, it's okay. In my view, creative needs to be really product focused in the sense that it's on Facebook ads and Instagram ads. You are driving high quality traffic by giving people a clear sense of what your product is right away. Clear wins over everything else first as a baseline.
Andrew:
Clear doesn't make you give you the best out in the world. They're clear plus some other things do that, but clear establishes a baseline of what you can expect and at least drives what I consider high quality traffic to your side. People who are interested in you because of your product. So that's probably the first basic principle I would say is focus on being clear in your creative before you focus on being clever or funny, or any of those kinds of things. You can drive a lot of very cheap traffic to your website with Clickbait tactics, but they won't buy anything. Ultimately, it won't matter how cheap the traffic is if they don't buy anything. So that's the kind of thing I would say.
Andrew:
And then the other big thing I'm a huge believer in is trust the algorithm. There was a world where people talk about Facebook ads as the value of micro-targeting that was one of the phrases people would talk about. This idea that you'd go find exactly your customer really specifically target them without everybody else. I think there was a time when that was part of how you did it. Those times are gone. What I would say is what you want to do is give Facebook as much information as possible and let Facebook's algorithm predict the future for you because humans are terrible at predicting the future. Algorithms are pretty good at it. So, algorithms do a really good job of looking at the data set of who's responding to your advertising. And then going and saying, here's some more people like that to put you out in front of. So, we believe in really broad targeting.
Andrew:
Let Facebook have as much freedom as you can to go and find the next person to put you out in front of. Over time, not even over that much time, Facebook's amazing in this regard much quicker than Google is at this. Facebook will find who those people are. So that's the broad principles I would say is trust the algorithm, be clear with your creative. There you go. There's just so much more I could say about the Stephanie, but I'm going to stop there. So I don't take up the entire rest of the podcast.
Stephanie:
Okay, cool. Yeah, we will definitely link that up. I think it's a really important point too to segment a piece of your ad budget for testing. I know we do that internally as I'll tell. Our team members are like, "Hey, you have this much money. If you spend it and you just learn from it, that's okay. Versus this amount let's actually protected and make sure we drive results with it." So I think it's good to go into a mindset being okay with using a portion of ads for an R&D type testing project. So, you feel like you can learn from it, but not blow your entire budget on it.
Andrew:
Okay, no question. Constantly testing is super crucial. What I'd say about that is, when I want to test on Facebook ads, the place I want to test most is take big swings with your tests. The common thing you hear people say with testing, you'll hear people like, I've seen so many articles trumpeting like, oh, we changed our CTC button color or we changed it from [inaudible] now and it was a 15% lift.
Andrew:
First of all, I just don't believe those studies anymore. Secondly, the reason you're writing about it is because it's exceptional. It doesn't happen all the time. I just think that's a waste of people's time. But most people need to do, if they're looking to go from not successful to successful, the larger the difference in outcome you want, the bigger the change you need to make. You can't just change the background color of your ad and expect that it give you wildly different results. That's once you have results you like and now you're just dialing in and trying to grab an extra 2% of value here and there. I just rarely see that thing work.
Andrew:
What I would say is much better to think to test is something like, what's the offer that you're giving people? What's the product you're starting with and leading with? That can create wildly different results. We just ran something for our jewelry company that we ... 31 Bits, which is our other most recent acquisition, our fourth brand. We started with a batch of ads focusing on one set of products were necklaces and bracelets and things like that. We were getting a dollar of 50 clicks, low click through rates, et cetera, and very poor conversion rate.
Andrew:
We changed the product set, same exact brand, similar styles of photography, but just different products to a whole different category of product and saw triple or more the performance suddenly CTC went way down. Click through rate, went way up, conversion went way up. The reason why is really obvious, it's jewelry, some people like some bracelets better than others. If you just use the same stuff all the time, people are going to respond to it the same way over time. There's no magic to that. That's how people shop for something that you wear. It's about what it looks like. So, by changing the products that we led with that made a huge difference. So that's what I'd say is for Ecommerce consumer good people, that's the kind of test you want to be running.
Andrew:
Give it a whole different products out, a whole different offer, a whole different way of framing the offer, don't just change little bits of the creative and copy if you want to change your outcome in a big way.
Stephanie:
Yeah. I love that. People I talk to sometimes are focused on those micro adjustments that you're talking about or just the minimal incremental pieces that they could change, whether it's button colors or all that. That's a good point too. Yeah. Focus on the higher level things. But how did you decide on what new products to show?
Andrew:
In that case, part of it was what new products ... there's a change in our product development, that's going to make it so, or in our manufacturing that was going to make it to that, we're phasing out some products anyway. We always start by looking at most products over various periods of time. This is a simple way to start. I mean, there's not a lot of science to it in that respect. I think we're just looking around-
Stephanie:
Just seeing what it's doing well in the market.
Andrew:
Yeah. And what's done well on our side. Honestly, part of it is for a place to start your testing just like make a hypothesis and test it. I mean, it's not-
Stephanie:
Yeah. What timeframe are you looking at? When you do the test, are you looking at 30 days? Let's see how it does and try something new, or is it like after a couple of days you'll know and try something different?
Andrew:
Yeah. I'd say budget is probably a bigger factor than time. So if you're spending thousands of dollars a day, it doesn't take very long good answers. If you're spending a couple $100 a day, it takes a little longer. It also changes relative to your average order value. What you need is a statistically significant number of responses and really a statistically significant number of conversions. You can think of conversions as micro conversions as well. For example, a click on an ad is a conversion in a sense. Clicks as a percentage of impressions is a conversion. Because it's pretty cheap to run Facebook ads, you can actually figure out a reliable statistically significant performance in a click through rate pretty fast without having to see how those clicks convert.
Andrew:
In that case, it took us, I mean, I think we're got 100 bucks, when we knew that this new round of ads was way, way better performing because the gap and click through rate was so significant between the two. That's another core principle here. The larger the gap and the outcome, or the larger the disparity in the outcome, the more likely it is that it's a reliable result, if that makes sense. In that case, I think we spent between the two products, that's a total of 1,500 bucks. The whole goal of that was to test those while we went and ordered new products to try and start scaling a little bit for a larger test in the future. I didn't really care what the actual result was. The goal is a bigger goal to win bigger over time.
Stephanie:
Yeah, that makes sense. When talking about growing, I saw that you guys live by a central Ecommerce growth formula. I was hoping you could go into that a bit.
Andrew:
Yeah. This is changing a little bit in some ways. I'll give you the baseline version of it, which is visitors tasks conversion rate times average order value. This is actually really simple. Every business in the world only actually has three factors that make up the value that you get from a purchase, or that make up your revenue actually. The first factor is how many people come to your business. This could be people walk into your store, it doesn't have to be a website. But just never people who show up. And then you multiply that by the conversion rate. So, what percentage of those people buy something from you? And then you multiply that by how much they spend.
Andrew:
When you look at that, that will equal your revenue. If you just say, how many people get there, how many of those people buy and how much they spend when they do? That's the entirety that makes up the revenue. That's incredibly simple and intuitive in a lot of ways. But what I find is that in the fog of war, people lose sight of that very simple concept. So, they start making tests and changes without a really clear idea of which one or multiple of those variables they're actually trying to affect. Of course, those all relate to each other. For example, your average order value goes up, your conversion rate goes down, that's a general rule of thumb, it's true across everything. It's intuitive when you think about it.
Andrew:
A smaller percentage of people are going to buy a $1,000 item than a $10 item. As you drive more traffic, it's highly likely that you're driving lower and lower quality traffic. Everybody exists along in the world, exists along a continuum of people likely to buy your product and unlikely to buy your product from your mother, who's the most likely person in the world to buy your product to-
Stephanie:
That is number one.
Andrew:
Yes. To a subsistence farmer who doesn't have the internet is the least likely person. The farther you go from your mom to the subsistence farmer, the more expensive it is to acquire that customer. So as traffic grows, then your conversion rate is likely to go down. That's just another helpful concept, I think. These are rules of thumb to heuristics they're not always true, but that's a basic way of thinking about it. We think about those three levers in what we do and really try to understand when we test something at any point in our funnel, whether it's on the website or ad level or whatever, which one of those am I actually trying to affect? Where's the problem in my business?
Andrew:
I've talked with friends of mine who own CrossFit gyms, and I've said to them like ... I'm thinking of a friend in particular whose gym was struggling. I was trying to help him think this way, which of these is the problem for you? Are not enough people showing up to your gym? Or when they show up, do they not buy a membership? Or do they buy a cheap membership or you give them a month free and then they don't spend any money after that? Which one of these is the problem? That probably gets towards LTV as well, or CLV, Customer lifetime Value as something to think about in the midst of all this as well. This is where you can make it a little more complicated, but that basic principle is true. Across the gym, just like on my consumer goods websites, it's the same problem. You just have to figure out which one of those things has the highest upside at the lowest cost to fix next. That's where you should put your energy.
Stephanie:
Yeah, I love that. Have you ever pitched a brand to be taken over by a 4x400 that you believed in where everyone else on your team didn't believe in it?
Andrew:
Oh yeah. This is where it helps to be coldly rational. Gosh, I don't mean rational like smart, I'm always right. I just mean my approach is unemotional to a lot of this stuff. To the probably emotional dysfunction in other ways in my life or something like that, I'm not saying you should emulate this necessarily. But that's why there's therap, so it's fine. So, sorry? I know there's some noise there. A lot of times, if we're tweeting about a new brand acquisition. People will say privately like, "I do believe in this," or "I don't believe in this." I just started think that's like ... I think without having the view that I have in the acquisition process, I just don't even know what somebody is judging that on. People just go by their general sense of what they believe about if it's a good brand or not.
Andrew:
First of all, other people are not like you. Your subjective sense of that may not reflect at all what I brought population to potential customers is. Secondly, to me, you can validate this pretty clearly by looking at simple product market fit, things like margin is a huge question, which makes businesses work and it makes other businesses fail, is one of the problems of opening day. We made a huge mistake by just giving ourselves away too little margin on the products.
Stephanie:
What's the little margin, what do you consider small?
Andrew:
Yeah. Well, I think if you're going to try and grow a brand with ... I'll just tell you, we target 70 points plus of margin for brands that we are trying to grow with our method of growth. And then that's really important. If you have other growth mechanisms that might not matter as much. But for us, we want 70 points plus landed margin. We can deal with a little less than that, but if you're going to try and grow a brand with Facebook ads, you're going to need to be able to exist at a two to one return on your money on ads probably. It's hard to really beat that number, if not withstanding something like coronavirus throwing those small. So we target that. That becomes a big question for us, if we think we can do that.
Andrew:
Sometimes actually it's part of the first thing we have to fix for a brand is, we see supply chain processes that are in our view broken and we would say like, "We love everything about this brand. It's convergent on site, is great relative to its average order value, relative to its traffic sources." We dig into all that stuff, and say, "But your margin is not good enough, but we think we can solve that. W can help with getting your shipping cost down by repackaging it differently, or thinking about what products to focus on or not, or changing your manufacturer or something like that." We don't want to ever do that at the expense of giving people a good product. We haven't compromised on that at this point, which I'm happy about. But yeah, those are all the things that we can look at as potentially something to fix. But in our view, 70 points plus, makes the game a lot easier for sure.
Stephanie:
Got it. I like that point too about, what would someone know when they're doubting a brand? Because that is definitely a human flaw thinking about ... even when I'm thinking about those rubber bracelets from a while back, for me to say, "Oh, that's dumb," I don't need to be balanced or anything, or I need help with that. It's funny because it's like, well, apparently a lot of other people did because look how many people bought it. Yeah, I think that's also a good lesson for anyone starting something up. If they hear someone say like, "Oh, that's dumb, you shouldn't do that." Probably good to take a step back and be like, well, that's just one person's opinion and not let it deter you from trying at least.
Andrew:
Yes, especially relative to the set of metrics I have in front of me, which are going to tell me something a little bit different. This is one of the things that's so great about data is that I'm just wrong, Stephanie, about so many things in life, I just know I am. So having some source outside of my own brain that I can look at. When my own eyes are lying to me, humans are just biased machines. We're just machines of bad thinking about stuff. So, finding ways to be aware of my priors going into something and my bias going into something, check those against some sorts of truths that exist outside myself. Of course, people can lie with data and data can be poorly collected. There's all kinds of ways that can go wrong too. But in light of all those things, I just think that it becomes really helpful to do that, to go and have a source like that to go check in. So that's what we do in our process.
Andrew:
There's various levels of excitement about brands even internally. But there's no question that ... We sincerely believe it can work based on the data set in front of us and a few other old principals. So that's what we do.
Stephanie:
That's cool. We're mentioning data, stick with the data when it comes to it and don't just listen to unfounded opinions. What kind of metrics do you look at that you think a lot of other brands aren't utilizing enough? There's obvious ones like conversions and click-through rates and all that kind of stuff and revenue obviously, but is there anything that you look at that you think enough people aren't paying attention to?
Andrew:
There's no magic here. After we acquired 31 Bits, this jewelry company ... really super cool brand. This brand was started by women who were anthropology majors in college and wanted to provide good quality jobs to people who could not access them by nature of where they lived in the world. So they started in Uganda after a trip there and had these women making these really cool beads. This started in 2009. These women were out to change the world with this brand. It's just totally authentic, beautiful brand story around all of this stuff. When we acquired that, I on my podcast, it's called-
Stephanie:
What is your podcast?
Andrew:
Yeah, yeah. I feel so lame doing this right now, but-
Stephanie:
Oh, sorry, Andrew.
Andrew:
I know. There's a tangent there. But anyway, if somebody really wants to hear how I think about this question, I spent about 45 minutes with Taylor, the head of our agency, talking about exactly why we acquired 31 Bits. We did an episode about that. I'll find it and send it to you for the show notes as well. And then we interviewed the ladies from the brand for the next episode after that, so people could kinda hear why they chose us as well. We tried to be really honest about why we think it'll work and why we think it could fail. I would say the metrics related to that, that I care about, it's not just conversion rate it's conversion rate relative to average order value and relative to traffic sources. That's a huge one for us.
Andrew:
Conversion rate itself is actually so context specific that it's not that helpful of a metric. I mean, think about the conversion rate of a direct click. Somebody comes to the website, types in 31bits.com, presses enter. Let's take a 45 year old female on a desktop computer direct versus a 25 year old male on their cellphone through a display ad on the internet, saying conversion rates to describe what both of those people are doing and getting a baseline is not going to be helpful at all because the baseline for those two different customers of what you'd expect, they're so different. I mean, just the device issue you're twice as likely to convert on desktop than you are as mobile before you talk about any of the rest of the demographic's software or anything like that.
Andrew:
We try to really give some specificity of the context of something like conversion rate. Even one thing you'll see there is like, sometimes the brand's conversion rate will look low, but it's actually not low. The reason it looks low is because they're getting a ton of blog traffic via organic search SEO essentially. That blog traffic is technically on their URL, but it's not at all related to their product and it's not people looking for their product. Therefore, that blog traffic will have an incredibly low conversion rate and will therefore negatively influenced the total conversion rate. If you bucket that blog traffic out, it turns out the conversion and the brand is fine and their website works great and you just didn't realize that. I don't know if that example made sense. But there's-
Stephanie:
It does make sense.
Andrew:
... there's just all of these kinds of contexts, things like that, that I think are really crucial to look at all the way around. We look at some other stuff like we've looked at entire funnel on our site, so we'll look at not just the conversion rate thing. If somebody doesn't buy something on your website, there's a question of why did they not buy? Because they made it to your website, so what happened next? Did they never add anything to cart or did they add to cart and then drop off once they got to checkout or did they never even make it to checkout or what? We look at each of those things and try to understand what's going on.
Andrew:
If somebody adds to cart and makes them check out and then drops off, why? The answer to that question is probably because you're shipping cost is too much a lot of times, or it's going to get shipped slowly, or they're not confident in return policy or whatever. So we'll look at some of that stuff too. We have a value of 4x400, which is understanding before you act and paired with that is hard problems require deep focus, or require deep work. The basic concept is like, before I go and throw out a million solutions, I want to really understand as clear of terms as possible exactly what's wrong.
Andrew:
When I hear somebody say my Facebook ads are broken, the thing I want to say is, "What do you mean? What's happening? What broken-
Stephanie:
What are you doing?
Andrew:
Right, yeah. "Is the conversion rate broken? Are the clicks too expensive? Where is the problem? Are you not getting a high enough AOV? When you say it's broken, what do you mean?" To try to help people answer that question because then it can guide where to think about the next problem.
Stephanie:
Cool. I love that. Yeah, that was a really good example.
Stephanie:
Are there any things, technology or otherwise tools that you're using right now that are maybe new that you're excited about?
Andrew:
Well, I'll tell you what I think that is, it's not the answer you're looking for, but I think it's the answer that I get.
Stephanie:
Go for it.
Andrew:
My answer is no I don't. We will get there to where we'll need to do that, but I just think this is a massive distraction for a lot of people. I think people love to go chase the next new thing. They'll even say things like, "well, my customer is on Tik Tok." I don't really know what that means. Yes-
Stephanie:
I don't really know who's on Tik Tok right now.
Andrew:
I'm 36. First all, I'm 36, I'm too old and I don't get Tik Tok. I've never had Facebook on my phone, so I'm just the worst social media marketer ever in that respect. I do not understand what's happening in the world. I just don't always know what that kind of thing means. I think your customers probably also want Instagram because there's a lot of people on Instagram. So I could be wrong about that, I guess. I'd be so happy for somebody to correct me if that's the case and reach out and tell me, "You're not looking at this right." Anyway, I just think it becomes a huge distraction for people to go and try and find another new thing to go do instead of to get really good in one or two areas.
Andrew:
We will expand channels over time. I think we're really trying to build out more search and shopping as a next step for us, that is not a new channel at all. It's actually the oldest digital marketing channel, search in particular,. I'm playing around with some ideas from SEO, but really I'm just trying to make my customer more valuable at this point. So, just trying to really get better via email, post-purchase, via my unboxing experience, trying to think about how unboxing and product experience creates retention in word of mouth. I'm trying to dig deeper and get better at the things I'm already doing rather than adding a whole lot, I think.
Stephanie:
With everything happening in the world right now, it does seem like there, like you mentioned early on the show, there're a lot of changes happening, especially around Ecommerce. I know you're talking about focusing on what's working and all that, but is there anything you're preparing for over the next three to five years that you're anticipating around Ecommerce trends?
Andrew:
Yeah, all right. This is my coronavirus beat right non. This is a really fun question and is a great podcast fodder. I do not fault you for asking it and I don't want you to hear my answer to this as condescending. But there's no possible way in the world that I could predict the future that far out. Here's what I believe about predicting the future. The more complex the system you're project predicting with the more inputs that there are there, over the longer the timeline, the harder it is to project. So, I might be able to give you some sense of what's happening next week, but then also last week, all these companies started saying they're going to pull their Facebook ad spend.
Stephanie:
Yeah. I didn't why I mention that, but I'm like well, that seems like it's a good opportunity then, like you're mentioning to get on Facebook.
Andrew:
Yeah, yeah.
Stephanie:
I think Zuckerberg even said they'll be back or something like that, which is just funny.
Andrew:
First of all, who could have predicted over that timeline, that kind of thing would happen? Before you even talk about Zuckerberg, who ... There's just so many elements. The system of macroeconomics in the U.S., before you even talk to the world, is so big with so many inputs and so complex that I just don't believe in anybody's ability to really predict that. So what I think is that it's not helpful generally to do that. I'll say three to five years, the one thing I feel broadly, fairly comfortable with though, I think even this has, there's some basic questions is that Ecommerce, as an industry, Ecommerce is a share of U.S. retail spending, will continue to grow.
Andrew:
I mean, I just have no possible way of predicting that. So I feel like it's a good place to be if you're in Ecom, I think you should be investing in Ecom broadly. I just don't think otherwise it's very possible to do that. I mean, just look at what we were all saying about coronavirus two months ago and the models that we were all looking at about what this thing could be. It's been devastating. I don't want to underplay that, but it has not been in the U.S. the millions of deaths at this point, at least. Who knows that people were predicting? I just look at that and go like, that's because predicting that many things for something with that much unknown is really, really hard.
Andrew:
My take on this is to go read Nate Silver's book, The Signal and the Noise and to hone your skills thinking about what kinds of things you can and can't project, and even how to think about projecting things. And then to go from there, which means the way you win is not by predicting the future, but by honing your fundamentals and carving really good thought processes. This is what I really believe in the most. To think about this all like poker, which is that good poker players don't win by winning a hand, they win by playing lots of hands really well and by making the right move over and over. Understanding the game that there are going to be times when they're going to be in a big spot with a lot of money in the pot and the card will come up and go the wrong way. But if they play enough big pots and enough money in it, the law of large numbers says that they'll win over time. I think that's the way to think about it.
Andrew:
Get really good at understanding something like visitors and conversion rate times average order value and asking the right questions about that. Get really good at following your profit margins everywhere you can . Get as much clarity about them as you possibly can that way you know where your money is going and where you're making money and where you're not. If you can do those things over a long period of time and just get good at finding good people to work with and get good at those sorts of things, you will win. So ultimately, I bought into the partnership at CTC with my own money, I'm not rich.
Andrew:
The reason I put my money into that is because I believe in the humans that are the partner group there, and I believe that those people overall given enough chances will win. That's the way I think you should think about your brand and your business is find partners and find brands and businesses that you believe will play the right hand the most times and are people of high character. That is part of the right hand of what you're play, you're going to have a relationship with these people. Every part of your business, if you can do those things, then I think over the aggregate, you're going to win.
Stephanie:
That's great. That actually took a very nice spin because at first I'm like, okay, no one's going to disagree with you that Ecommerce is going to grow. But I like the spin that you just took on it about what you should focus on instead. So, good answer.
Andrew:
Thanks. Yeah, I know. It's a compound answer in some ways, but it's really what I believe is true about the world. It's so sexy to say, okay, over the next month, this is going to happen and this is going to happen. Next time somebody on the show gives you that answer, bring them back on in six months and ask them what happened and-
Stephanie:
I was just going to say that. I think the world is still missing a little bit of the accountability piece because I see people still on Twitter, even the people who are talking about the end of the world, no one's following up with these people, how come this guy has had a billboard out around California for a long time saying the end of the world was going to happen, I guess, a few weeks ago, and it didn't? What now, are we going to follow up with him and be like, "Hey, what happened?"
Andrew:
Yeah, that's a very California story. I like that.
Stephanie:
All right. We're going to shift now into something called the lightning round brought to you by our friends at Salesforce Commerce Cloud. This is where I'm going to ask you a quick question and you have a minute or less to answer. Are you ready, Andrew?
Andrew:
I am. But this is the ultimate challenge for me.
Stephanie:
This will be the hardest part of the interview.
Andrew:
Yeah, it probably are. All right, I'll do my best.
Stephanie:
I actually feel like you're going to have some great answers, that's why I've been excited to get to this. All right. If you were to have a podcast, who would your first guest be and what would the show be about? Other than the podcast that you're running now, you can't say that one.
Andrew:
Okay. I think it would be about exploring. Does it my guess have to be a live or can I pick anybody?
Stephanie:
No.
Andrew:
Okay. I think it would be about exploring big ideas about the world like theology, philosophy kind of stuff, but for the every man or woman. So, it would try not to be too much in the clouds, my guess would be C. S. Lewis, not because he's the most interesting thinker in the history of the world, although he's a really interesting thinker, but because he says things in really interesting ways. So, I think he would be a fascinating guy to just sit and talk with. When I think of a historical person I'd want to talk with most, would be that. Either that or a baseball ball guest.
Stephanie:
All right. Well, that's cool. That's a good answer. What's up next on your reading list?
Andrew:
Books I'm in the middle of or after?
Stephanie:
I'd say, you can do both, middle of and ones that you're looking back on like, that was a good book.
Andrew:
Okay. The Color of Law is the book I'm in the middle of right now. Richard Rothstein going through the history of government and forced racism in the U.S. incredibly helpful book for me so far. I'm three quarters away through. Highly recommended to try and get your head on straight about what's going on with race in the U.S. just pure history. It's really good. And then I am reading a Christian book called Money, Possessions and Eternity about how to use your money for compassion and care for people instead of for yourself. So, that's what I'm in the middle of right now. And a baseball book called Ball Four, which is a famous book.
Stephanie:
That's cool. If you were to pick a country to focus on to maybe buy a new brand from, what country would you look into?
Andrew:
A country?
Stephanie:
Yeah. If you were to bet big, I'm going to go for something in India, that's top of mind right now because I just read the whole thing between India and China and turning off Tik Tok in India. So, it's very interesting to me thinking about, if you were to bet on brands from a certain country or are you looking to go international, where would you go?
Andrew:
I think the answer is India. I think that's probably the right answer. The cost of reaching people in India is very cheap and India's economy seems to be growing very fast. But I'm just bullish on global economy in general. So, I think you could probably broadly pick out. In the last 50 years, massive amounts of extreme poverty have been alleviated in the world thanks to globalization and technology and all kinds of things like that. The world is a much better place than people make it sound. That's another book record recommendation, Factfulness by Hans Rosling. Go read that book-
Stephanie:
Factfulness.
Andrew:
... it will help you look at the world totally different. Factfulness. Forget my other book my other book and finish reading that one.
Stephanie:
I'll link of that one. Yeah, no, I think that's where I would bet too because I think I just read that, it's a billion and a half people there only a third of them, I think have cell phones right now. They're coming online at a very quick rate. So, I think-
Andrew:
Yeah. I mean, it's incredible how much better life has gotten in the world for so many people. There's very hard life in the world for a lot of people, so to not to underplay that. But it's just crazy and it's going to keep happening.
Stephanie:
Yeah, I agree. What's up next in your travel destinations?
Andrew:
Anywhere-
Stephanie:
When you can travel. I think, just outside my neighborhood.
Andrew:
Yeah. I like Austin, Minnesota where my family is, hopefully in a couple of weeks, but we'll see. As far as other places, I love Boston. Would like to go with my wife there. I have a seven month old though, so the actual answer to this question is probably nowhere for a while.
Stephanie:
Yeah. That's my life too. I have four month old twin boys and a two year old. Someone asked me like, "Oh, where are you going to go on vacation?" I'm like, "Nowhere outside of 10 miles away." It's a mess to get into the car that would be-
Andrew:
Four-year-old twin boys?
Stephanie:
Yeah, yeah.
Andrew:
I think it's awesome. Congratulations. That's beautiful.
Stephanie:
Thanks. Yeah, it's a wild ride. All right, the last one ... Yeah, you know. What's up next on your Netflix queue?
Andrew:
I just watch the same shows over and over again with my wife.
Stephanie:
Does she get to choose?
Andrew:
She does most times, yeah.
Stephanie:
So you guys are watching Selling Sunset and things like that?
Andrew:
No. We watched Parks and Rec, 30 Rock and The Good Place-
Stephanie:
Okay, those are very ones.
Andrew:
... over and over and over again. That's probably all we watch. I don't know. The decision fatigue I have on this particular issues, we just created a Slack channel that worked for media recommendations because I just don't know even what to do anymore about where to look next. So, I wish I had a better answer than that. It would-
Stephanie:
Let us know if you find something from your Slack channel.
Andrew:
Yeah. It's probably another episode of The Good place. My team is really hot on Yellowstone right now, so there you go.
Stephanie:
Okay. I don't know what that is, that just shows I am not with it either. So I'll have to check that out.
Andrew:
Kevin Costner intense ranching family season three.
Stephanie:
Okay. I'll have to dive into that one. All right, that was a good lightning round. Is there anything that you were hoping to cover, are there any last words of advice before we hop off?
Andrew:
I think just that in situations like this, I always just want to say that when somebody asks you for answers on a podcast, it's super easy to make it sound easy in some ways. But it's really hard actually to do these things and to grow business and to work in a team and all these things. So, I think the parting word for me is always just to say, it's not actually as easy as it maybe. I hope I didn't make it sound like that. It's just challenging at times. So, keep at it and surround herself with good people. Yeah, I think that's it. I think I just properly took all the wind out of the point that I was making by monitoring it at the end there. Maybe out of [inaudible 01:02:52]. That's the big piece for me, is just you can do it, it is harder than it sounds a lot of times.
Stephanie:
Yeah, I like it. Well, Andrew, thanks so much for coming on the show. It was a lot of fun and ... Yeah, thanks for taking the time.
Andrew:
Thanks, Stephanie, for having me. It's super fun.
As Randy Goldberg says, ‘no one dreams of going into the sock business.’ But if there is one sock company you can name off the top of your head, it’s probably the one Randy built with co-founder Dave Heath. Bombas Socks has grown from a small Ecommerce company with a mission into a $100-million dollar enterprise, and the success they’ve had all boils down to remembering the fundamentals.
On this episode of Up Next in Commerce, Randy takes us through his journey to Bombas. He details why founders need to avoid ‘shiny object syndrome’ and focus their sights on the basics if they want to succeed. Plus, he talks about Bombas’ culture of transparency and how to decide between leading with the company mission or the merits of the product when trying to attract customers.
Key Takeaways:For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
---Transcript:
Stephanie:
Hey, everyone. Welcome back to Up Next In Commerce. This is your host, Stephanie Postles, co-founder of mission.org. Today, I'm really excited to have Randy Goldberg on the show, the co-founder and Chief Brand Officer at Bombas. Randy, welcome.
Randy:
Thank you for having me. Happy to be here.
Stephanie:
Really excited to have you. Thanks for taking the time. I'd love to dive into your background a little bit before we get into Bombas, a little bit about what brought you into the world of Ecommerce and starting Bombas.
Randy:
Yeah, I guess, we have a sock company, an Ecommerce sock company. I say this a lot, but I don't think anybody ever really grows up dreaming of being in the sock business. It was kind of a winding path for me to arrive at Bombas and to think about this company. My background is in branding, so I was a copywriter and a strategist, and I worked for digital agencies and I worked for a lot of brands through the years. Writing brand books, trying to find out where they had gone astray, brands that were sort of struggling a little bit. I think through that work, I gained a perspective on what I thought a good company looked like, talked like, acted like. At some point, I moved from the agency side to the media side and I was working at a digital media company, and that's where I met Dave Heath, my co-founder in Bombas, and we sort of cooked up the idea when we were working together way back then in 2011.
Stephanie:
Cool. Why did you guys think, I want to start a sock company? Did you both want to start this or did one have to pitch to the other?
Randy:
Yeah. Well, I don't think we thought of it as a pitch. We were friends and we were both very entrepreneurial in our outlook. Our families were entrepreneurs. We just, I think, had that same point of view on the world, and we liked the idea of maybe starting a business one day. We weren't actively writing things on a whiteboard and crossing off a list, but we would just talk about things and the business landscape at the time. It wasn't, we need to get this done this year, we were just having a regular day, and Dave was on Facebook, and he saw a campaign that the Salvation Army had been doing with Hanes.
Randy:
The Salvation Army, they had a quote in there that said socks are the most requested clothing item in homeless shelters. We were having lunch, and Dave said, "I saw this quote, did you have any idea about socks and homeless shelters?" And I said, "No, and I don't even understand why." We started to call around to some shelters in New York, and we were talking to people and we just realized that there was a real problem here. If you're living on the streets, a fresh pair of socks, foot hygiene means a lot. You might be walking more and have less frequent opportunities to wash your clothing. And then, shelters don't accept used socks for donations. So they were always having a shortage and it was always a big need and people would have to buy new socks and then donate them.
Randy:
People just tended to donate the things that they had worn or gently used. We really just wanted to help solve the problem. So, we started thinking about that, we started buying socks and donating them. Then, I guess just the way our minds work, we started to think there's probably an opportunity here. We looked at the success that Toms had been having and saw their one-for-one business model, and Warby Parker had just launched at the time and they had a charitably inclined business. We thought, maybe this business model really works for this product. It really maps well to it. Just because this is a product that people really aren't allowed to donate on their own.
Randy:
Then we started to think about socks and we just got obsessed with socks. We were like, socks just haven't changed in 50 years. Athletic socks look the same. They're cardboard, they're white or they're black. Even if you're somebody who cares tremendously about the things that you wear, where they come from, what you're putting on your body, the last thing you get to generally is socks. We thought there was an opportunity to make something really great, to really improve on a product that people take for granted, and that are afterthought in the consumer market, to help solve a problem that's an afterthought sort of for shelters and organization.
Randy:
Just like, if we can make something really great, we'll sell a lot, and if we sell a lot, we can donate a lot, and if we donate a lot, we can help solve a problem in the community where we work and live. It's easy to look back and say that, but at the time, it just took a while for us to wrap our head around this and think about it as a business idea.
Stephanie:
Very cool. I will say that I'm definitely someone who had socks as an afterthought, but I will say when I tried on Bombas, I was like, this is a whole different level of socks. I didn't realize I cared about them at all. I would normally just get black ones and just be like, whatever, as long as they're short, I don't care. Then I tried them on, I'm like, oh, these are game changing. They're amazing.
Randy:
Thank you. I think that's what we're going for. We want to change the way people think about socks, and make it hard for you to go back once you put on a pair of Bombas.
Stephanie:
Oh yeah. You can't. In the early days, when you were starting out, how did you think through the economics of developing the one to one program?
Randy:
The early days for us, that meant making sure that we could, from the start, bake into the unit economics, the donation pair, so that no matter what anyone said along the path, if we were raising money, if we were building the business, that there's nothing anybody could do because we were ironclad around the donation model. We built it into the covenant of the business. We've codified it. It's just something no one could ever really take away, but just focusing on it from the beginning and making sure that we could afford to do it, as a for profit enterprise, was a big early step. We've grown and we've gotten smarter about it and we've built a big network of giving inside of the company. It's all gotten bigger and better, but it really started with that idea.
Randy:
I think that's the right question. Did you think about it from the beginning? Yes, or else we wouldn't have been able to do it and maybe somewhere along the road, we would have compromised, but it's been a big part of how we've talked about the business and the brand and a big part of the success of the company, and having a great product on the side for the consumer allows us to afford the development costs of the donation product, which is an important thing to make sure we're making a product for people who are experiencing homelessness or living on the street. All of these things have been really thought out from the start.
Stephanie:
It's amazing. I think I saw that you reached profitability by year three. What does your revenue look like now, annually?
Randy:
Well, we don't typically share exact revenues like numbers, but it's a multiple hundred million dollar a year company at this point and profitable.
Stephanie:
Very cool. Yeah, I think that's what I saw, but I wanted it to come from you instead of me saying what I think that I read.
Randy:
Yeah. You read correctly. Yeah, so profitability, I think you're seeing a lot of direct to consumer companies and Ecommerce companies now really starting to think about profitability in this moment. The way that people are raising money and what companies who are handing out money have been looking for, it's forcing a lot of companies who've raised a lot of money and had profitability as a down the road kind of goal, shift how they're operating and shift how they're thinking. I see that, and I've talked to founders who were dealing with this and it seems really painful. I think for us, it was a goal from the beginning. We wanted to have a really solid conservative financial outlook, get to profitability quickly, build a business for the long-term, for the long haul.
Randy:
We want our grandkids to be wearing Bombas. That's one of our core values. I think that plays into the way that we built the business from the unit economics and financial side of things as well, and the way that we approach marketing, which obviously as you know, as a direct to consumer company, is the hot topic, of course.
Stephanie:
Yep. Were there any issues that you ran into along the way? Because scaling to over a hundred million revenue is probably pretty tough. Is there any lessons you learned along the way or things that you're like, ooh, we did this great, or we maybe should have done this a bit different?
Randy:
I think the number one lesson is about focus. Know what you do really well, know why your company exists, why your product deserves to exist in the world, and then focus on doing that well, focus on telling the same story over and over and over again. Whenever we've been able to really focus on that product on the donation, on the sort of foundational elements of the business, that's when we've done the best, and that's when the company has grown really well. When we've gotten distracted by, hey, let's try this pop-up retail idea, or let's advertise in this new place that is unproven, but seems good for this one specific reason, and it's taken our focus away from the things that we do best, that's where we've had the most trouble. I think that's been the big theme for us in the early years, is just focus has really led to growth, and it's where we've had the most success as a company.
Stephanie:
Very cool. When thinking about the first conversion or a brand new customer, do you think the social good aspect of the business sells the product initially? Because it's pretty hard to convey how good the socks are on the website.
Randy:
Yeah, it is. It's hard until you, I guess, you try them on, and we just want to get as many socks on feet as possible. But yeah, there has been a constant debate at Bombas since day one about what comes first and the way we talk about the company. The quality of the product comfort or the mission, our commitment to give back to the community. Some people come for the product and stay for the mission, and some people will come for the mission and stay for the product. I don't think we've solved that debate. We poll our customers and we're surveying people and we're thinking about this a lot, but I think the thing that works the most in marketing for prospects, people who haven't heard about our company, is talking about comfort, is talking about the quality of the product.
Randy:
The mission definitely helps complete a sale, helps with the follow on sales, and our customers, people who've already made purchases, expect us to close the loop, report back on how we're doing with the donations that we promise we would do on their behalf. That storytelling element helps us with both sides of it. It's just about where we show up with the mission and where we show up with the product marketing, at what time in the life cycle. It's an ongoing debate and we stay nimble around it, but those are still the two elements, and they have been since the beginning that show up the most in our communication.
Stephanie:
Cool. The other thing I saw that you all had was the happiness guarantee, which I was like, how do they remain profitable? Because one of the things I think I saw in there was, if your kid outgrows a sock in a year, which I have three kids, so I'm like, that could happen quick, or if your dog chews up a sock, which our dog, [Tossy 00:11:14], does that every day, how do you make sure that people aren't abusing those rules? How did you come up with that happiness guarantee?
Randy:
I think for us, we think about the great companies that we all like to work with, or shop at, or interact with. A common theme is that they have great customer service and they stand by their products. We wanted to make that a hallmark of Bombas. In the early days, Dave would take all of the calls that would come in to our phone number on his cell phone. So we would be out talking about the business or in a bar, back when there were bars. He would get a phone call and go outside, and an hour later, he'd come back and he'd just talk to a customer. I think that idea of just making sure that we're taking care of the people who are spending money with us, that led to the idea of the happiness guarantee.
Randy:
We have our internal customer service team, they're called the customer happiness team, and we've also, just sort of connecting it back to the business, to get back to your question, people who interact with our customer service team have two times the lifetime value of customers who don't. We're trying to turn issues that people have into positive experiences, and that turns people into bigger longterm customers, because then they trust us, they trust that we take care of them. Sure, there are people who try and abuse the policy, but that's far outweighed by the number of people who are just trying to solve a problem, or get to the bottom of something and want things to be right and don't want to have to jump through a lot of hoops to get there.
Randy:
For us, the good of having that really strong internal team to deal with our customers and to respond to problems, and yes, to make sure that if your kid outgrows the sock that's expensive or that ... We'll be there to grow along with you. All those things are ... we just want peace of mind as people go through the process and think about, should I be making this purchase right now?
Stephanie:
That's great. How do you train your customer happiness team? Because I feel like it takes a certain kind of person to be peppy and to, like you said, have a higher lifetime value with the people who interact with that team. What kind of training process do they go through?
Randy:
It's pretty rigorous. I think Dave passed on the mentality of our customer happiness team to the person who originally ran the program, and he's still running that team. I think, like almost everything at Bombas, when we have something that we want to do and we feel like we've reached the limit of how we can handle it ourselves, we try and bring in people who are way smarter than we are and have the right skillset, and really focused on hiring great people. It also helps that, people who come to work at Bombas, tend to want to give back to the community and are inclined to support and work for a company that cares about that as well. Then, we in turn, care tremendously about our company and the company culture, and all of those things lead us to find, I think, the people who are right for the roles and write for the company and speak to those core values, and that's how it works with the happiness team.
Randy:
They're trained, not only on what to say in the situations that come up most often, but how to deal with Bombas customers, how to put the extra spin on it. It's about, I guess, just that level of care. Our whole team really appreciates that customer service team, and we make sure that they know how appreciated and important they are as the first line of defense for our customers internally as a team. I think giving them the support and love that they need as the team that has to deal with a lot, and has to clean up mistakes when they happen and make sure that everybody's happy, and then understanding how we want them to communicate with the world as a brand. The way that we talk in an ad versus a video, versus on the phone with the customer, versus internally, none of that should really be different, right? We're trying to be really consistent as a brand.
Stephanie:
How do you create that consistency? Because I can see as a company grows, and I've seen this happen before, where you start developing silos and the teams are kind of off doing their own thing, maybe trying their own marketing campaigns, and it starts getting a little bit chaotic. How have you kept a consistent culture and feel at Bombas?
Randy:
Yeah. We're not immune to some of the issues that you just brought up. But just recognizing it, being honest about it, trying to get ahead of those things, and focusing on that core messaging and communicating well internally. We're also at the stage where we're really thinking about planning and processes as a company as we've grown to 150 employees and being remote, how we interact and how we work cross departmentally. Those types of things are at the front of mind right now. We're hearing it from our team, we listen to ideas, we bring in people to help us. I think we're laser focused on making sure that some of those breakdowns and that siloed work doesn't get the best of us. We have seen that and we're working on it.
Randy:
I think any company that starts off operating like that, when you have five or 10 people, that would be overbearing, and I don't think the type of people who end up coming to a company that small would appreciate that, but as you grow, you have to adjust and you have to get ahead of it so that people keep that same feeling of freedom in terms of thought, in terms of how they can innovate in their work and get things done, and expectations around their jobs, all that stuff becomes really important to be more documented, to have tighter processes so that people feel freer to do the things that they love to do. That's what we're trying to work on, but it's not an easy thing.
Stephanie:
Yeah. It's definitely a tough juggle. If someone were to join and they're employee number five, and then all of a sudden, there's 150 employees, it's like, okay, well, I used to be able to do everything at the company, and now you want me to shrink my role. A tough thing to work through with employees.
Randy:
Yeah. It's a challenge. You want to retain the people who made Bombas, Bombas, but you also want to make sure that people are growing in the right way, and there are opportunities, and the new people who come in at certain levels understand what they're supposed to do and what everybody else is supposed to do. You just start to get into these things that maybe you thought you would never have to deal with if you started a company, but as it grows, this is what it looks like.
Stephanie:
Yup. Were there any resources that you leveraged along the way when you were growing quickly, when you were like, I need to learn this or I need to figure this out, or companies that you were watching to learn from?
Randy:
Yeah. I think that's been our mindset since the beginning. Just from our early advisory board, just to fill in the gaps, to hires that we've made, the things that we tend to lean on are people. Dave and I are like, we don't know the first thing about performance marketing, when we started this business. We need to bring in somebody who's an expert in that, or at least, have somebody on our advisory board who can help answer questions for us as we grow that until we have that right person, or to help us find the right person. That's been a big part of how we've grown this business, is leaning on our network to reach out to people, to ask questions, to make good hires, and then watching other D2C companies and having a good dialogue with the other D2C companies who have grown to our size and larger. That's been really helpful as well.
Randy:
Then you also think about companies like Toms. They've been really helpful to us, in terms of watching out for certain mistakes that they've made along the way with their donation aspects of their business. They've been really open with us about those things and helping us avoid them. We try and do the same with other companies who reach out and want advice from us as well.
Stephanie:
Very cool. How did you think about building out the website? What kind of things did you want to have on there to make sure that you kept with the brand story, but also, sold enough to be able to be profitable to keep the model working?
Randy:
It's a great question. The idea of what a website looks like when it's your only store is so important. You want to have that right blend of storytelling, but you want people to be able to breeze through the checkout process the right way. That's been a journey for us. I don't think it's anywhere near where we want it to be, but I would think that you would ask any direct to consumer company and they have a lot they want to do, and their technology roadmap is pretty long, and that's part of it. You're always building, you're always tweaking, you're always improving. You're looking at the data and you're making changes to just make it better.
Randy:
In the beginning, at some point we have to replatform. But just the processes along the way to get us from where we started to where we are now, to where we're heading, it takes a lot of care and attention. Like I said, when it's your only store, I think it's your job and your duty to make sure that it works and operates really well.
Stephanie:
Yeah, I completely agree. How did you know it was time to replatform and what was that experience like?
Randy:
I knew it was time when we just had so many issues with managing traffic or the backend or uploading content. It was wrong. We launched the business and the website in 2013. Since 2013, there've been a lot of changes in technology and the way that Ecommerce works and looks. If you went back to a site from 2013, as a 2020 consumer, you wouldn't last a minute. You'd be out.
Stephanie:
You'd bounce right away.
Randy:
You'd bounce. There was a lot more tolerance then, but less people using Ecommerce because the experience just wasn't great. I think, if you go back even further, and I think about this a lot, if you were starting a direct to consumer company in 2009 and you didn't have a lot of money that you would raise, building the website itself would have been prohibitively expensive for most brands, for most companies. But if you managed to get it up, the marketing was basically free. There was no algorithm that was holding your content back. If you had a Facebook page, whatever you posted, everyone who followed you with anyone who shared it, and anyone who got added to your page, not some of these early companies, resources to build a site were able to build huge businesses.
Randy:
But then, as it shifted, now, if you want to launch a direct to consumer company, the technology is basically free, getting that website up, but the marketing is prohibitively expensive. It's totally flipped. We just happened to launch, I think, in a sweet spot where the technology had gotten more affordable and the marketing was still affordable, but it was not free like it had been in 2009, and it wasn't very hard or challenging environment like it is now. We sort of had time to figure out both pieces, and we had runway to figure out the marketing and we could afford the technology. Then that got a lot better, and just have to stay on top of and ahead of all those things.
Stephanie:
That makes sense. To focus on the website piece first, and then we can jump into the marketing aspect, so the website, was there any like big fundamental changes that you made where you're like, this made the biggest difference when it came to sales and conversions and even getting traffic in the first place? Anything that you remember that you change where you're like this had the biggest improvement for us or a couple of things?
Randy:
Site speed, I think is the number one thing. As a person who comes from the creative side of the business, a copywriter or strategist, there's nothing that I could do from my previous job or as a brand person that would make the improvement of one second of site speed in terms of how something loads or how it acts. Just sort of getting over some of the sort of shiny objects into saying, oh, if we change the copy here, or what if we put this video here, or had this type of look on our site? If you make your site faster, it will convert better. Things like that, just understanding the fundamental way things move and what people want from you, layering the other stuff on top then becomes just sauce and becomes fun. Then you can start to have incremental changes and things that work. But I think, just looking at site speed, if you want one good thing, that's where I would start, as dry as that might be.
Stephanie:
Yeah. No, that's a great one. Was there anything affecting the site speed that you were surprised by?
Randy:
I think the way that you manage and load images, obviously has a big effect on that. Your product architecture and understanding
Randy:
I think some of these things you don't realize when you're starting out, but the way things are organized, hosted, served, there's sort of best in class ways of doing that now. But if you want to have your variants of your products perform a certain way, or if you want to create bundles in a different way than most companies do it, then all of a sudden, you're creating ... you could be creating extra things that are weighing your site down, even though you think ... it helps you organize the things that you want to sell the way that you see them in your mind. It doesn't always benefit you because maybe you're slowing things down. If people are bouncing before they're even seeing it, then what's the point? Again, this isn't my area of expertise, but these are the things that you learn along the road when you're doing everything in a business when there's five people.
Stephanie:
Yeah, I think that backend infrastructure piece is hard to focus on in the beginning because you're so excited about the product and the marketing, and like you said, getting good copywriting and telling your friends that you don't really think about how to set up, maybe the data and the backend piece to actually create a good performing website.
Randy:
Totally. Listen, like I said, my background was in branding. I was a copywriter. I think we built this business around the brand because it's, in many ways, a commodity that you turn into a brand. You do that by being really consistent and having good storytelling and build a moat through brand. But none of that exists if you don't get the infrastructure piece right, and you can't get to that. I talked to founders who were starting companies, and they're so focused on hiring the right creative agency or branding agency, they'll put together the right logo, and it's just not the right place to start in my mind, even though I love that work and I love thinking about that for companies and thinking about how you communicate to the world and understanding why your product exists, but without that fundamental infrastructure piece, no one's going to care about that other piece. It's just maybe a little bit of a sad truth for creative side of business people.
Stephanie:
That's okay. Got to hear it sometimes.
Randy:
That's right.
Stephanie:
One thing I saw that you guys were doing was that you were investing in a data science team and embedding more data elements into the customer journey. Can you tell me a little bit more about that and how you knew it was the right time to bring on a team like that?
Randy:
How will you know it's the right time is that when you start to ask questions that you can't answer, and nobody internally can answer it. That's the truth, and when one person ...
Randy:
You also know when you're having a debate about something in the business and somebody is able to pull out data or a statistic related to what you're talking about, and the conversation ends because it's hard to argue with the data. When you see that and you've thought about it the other way, and you're not trying ... You can't convince data, right? I know [crosstalk] manipulated.
Stephanie:
There's no argument there.
Randy:
That's right. Then you sort of think, this is really valuable, and rather than trying to think about something from the perspective of, I think it should work this way, you want something to show you how it should work, and you want to be able to interpret data the right way and be able to use it to your advantage to build out a strategy, rather than just making assumptions and going off of somebody who has the most experience or who has the most seniority. I think companies get in trouble when they just rely on the loudest voice in the room or somebody who's the most persuasive at arguing rather than bring data as a voice into the room for decision making.
Randy:
I think it started to creep in when we would understand a little bit what we don't know, and then have debates that were a little bit out of our depth and we didn't have the right people. We didn't really have that skill in the beginning. We knew that it would be a big part of this business, even back in 2013. We just knew that it wasn't the first thing we were going to invest in. It just sort of came naturally to the time. We were always excited about the idea of what a data science team could bring to the table for a sock company. There was a point where you almost can't operate without it anymore.
Stephanie:
Yeah. That's awesome. What does it look like now having that team, and what kind of metrics are you guys paying most attention to?
Randy:
A lot of the metrics are the same. You'll see a lot of Ecommerce companies paying attention to, but what the team looks like, and what's interesting is, now that we have the team in place, getting other teams to work with that team the right way is the key, and getting our directors and decision makers accustom to partnering with the data team, to help surface solutions to problems and present them and work, it goes back to some of the work that we're doing, trying to figure out the processes and cross departmental work and to avoid some of the siloed behavior that you brought up earlier. A big part of that is the data team and how they can help support. There's support teams within an organization, there's execution teams, and that's very much a support team, and they love answering questions for teams, and some teams use the data and analytics team more than others.
Randy:
We just try and be really loud about it at our all hands meetings and present back case studies so that people understand how they could better use that team. It's a process and something that was getting better all the time, but you just sort of have to make it central to how you operate as a company. That doesn't happen overnight. It's a big change. We've been working on that for the last six months to a year in a major way. I think it's really paying off for us.
Stephanie:
Very cool. Yeah, I definitely have seen business intelligence teams in the past struggle with being able to create a partnership with the product team or the engineers. I like the idea of showing a case study. So instead of pushing it on a team member, it's like, well, here's what another team did. Look how great this turned out, and encourage them to want to partner with that team even more.
Randy:
Yeah. You're making decisions, how many times a year should we ... We're not a promotional company. But if you wanted to ask a question, like how often should we do a sale? There's logical times of the year when you think that should happen, and the merchandising team might have a different perspective than the marketing team, and using the data team to think about the effect on customers or prospects. There's so much information that could help steer a decision like that, that is major to the business. Those are the types of things where you start to see a lot of power in the team like that.
Stephanie:
Yeah. We're talking about data. I want to also shift into the aspect of transparency. I read that you and your co-founder both had subpar experiences with transparency at previous companies you were at. I wanted to hear, how do you think about being ... Well, first tell me the story. I want to know all the nitty gritty details, and also how did that influence your culture now?
Randy:
Sure. I don't know, the cliff notes is that was a major influence on our culture now, but we had the experience together. Like I mentioned, we worked together at a previous company, and at that company, the person who ran the company brought amazing people together, and there was a great team, and the work was fulfilling and we learned a lot, but it was really hard to have conversations around career growth or compensation, or how well is the company doing? Or data. One person tended to hold on to decisions for so long that it was counterproductive and it was demotivating for people. You felt nervous to even ask a question, and nobody understood their stock options. You would ask questions about it and you'd get them response months later.
Randy:
That sort of fogginess around the things that people really care about when they're going to work at a smaller company, it was really hard for us. We knew no matter what company we started together, building a culture of transparency, where people really understood the why behind the business, the core values, the financial performance, what their ownership meant, and a culture of being able to ask questions, that was hallmark from the beginning. We just wanted to create the company that we would have loved to have worked at and centering our employees in the business, and thinking about them just as much as we do our bottom line. Our theory was that it would make the bottom line better. People would be more inclined to give something beyond their capacity or to continue to learn or to grow if they felt safe and supported at the company.
Stephanie:
Cool. Yeah, that definitely is a good way to build a company from the ground up, and maybe not fun to have that experience, but hey, you learn from the best people you work for and the worst people you work for.
Randy:
Absolutely. I wouldn't trade that experience because that's what led to the culture that we've built at Bombas. I think, if you talk to our employees and the way they think about it, we're maybe more proud of that than anything else that we built in this company. Did I give you enough nitty gritty details? Is that good enough?
Stephanie:
Yeah, I was hoping for a little more drama, but I'll take it. That was good.
Randy:
There was plenty of drama. We can talk about that offline. Yeah.
Stephanie:
That sounds good. Earlier, I mentioned, I also wanted to hit on your marketing a little bit. What kind of channels do you focus on? What are you seeing success in right now in any new channels that you're excited about?
Randy:
Yeah, for us, listen, we're a direct to consumer company that started in 2013. Can you guess what our number one marketing channel is?
Stephanie:
Facebook?
Randy:
Bingo. Right. Okay. I think we still see a lot of success there, and while it might've been a way larger percentage of our marketing mix in the early days, and we've diversified away from that a fair amount, it's still an important driver for us. In the beginning, in the early days, we would create a video that we didn't even intend to be an ad, just a thank you to our customers, and then eventually it gets turned into an ad on Facebook that's seen a hundred million times. Leaning into the trends and trying to see around the corner at Facebook. now working closely with that team. has really helped grow our business.
Randy:
One of the things that we have had since the beginning is ROI positive or breakeven on first purchase. We're not over our skis on Facebook spend, while lot of companies are to just to try and build up their customer base. For us, it was important to really be disciplined. We knew that if we were going to grow our budget and grow our company, and we were a really marketing led company, we'd have to diversify away. So, Hello Podcasts, radio, direct mail, TV. Those are all big parts of the business now, and they're all growing probably at a faster rate as a percentage at least of the business than our online ads on Facebook. But search has grown for us tremendously in the last year and a half as our brand has grown and recognition has grown.
Randy:
Some of that comes from broader marketing, like on TV, and then people are searching Bombas by name, and we can lean into search advertising and that works better. Some of these things are just about timing. Yeah, we still have a tremendous success sort of trialing things out online. We've never used a creative agency. Everything is internal at Bombas, so all of our creative direction and the marketing team and the partnership between the creative team and the brand teams and the marketing team operates as an internal agency. We like places where we can test things, test creative, test lines, test different cuts of videos, see what works, preview it, and then build it out into bigger campaigns that could work across all those different places that we talked about earlier that I mentioned.
Randy:
I don't know, that's sort of more of an overview than what's working now. But if I think about the last few months, when everyone's at home with COVID, people who were still able to afford to be buying things right now online are looking for comfort, and socks have done well in this moment. On the other side of things, we talk a lot about our efforts in the community and how we've adopted and been able to help out in this moment above and beyond how we normally do. That's also something that people want to hear about. For us, it's the combination of the product and the storytelling and the marketing mix, and making sure that we're nimble enough in all three of those places to make adjustments as we build and grow.
Stephanie:
That's awesome. Do you find that you have a community also, because it seems like with your story and your brand, you would have this community of people who want to lift you up and talk about you and spread the word organically without you really having to push too hard?
Randy:
Yeah, absolutely. Community is a big word at Bombas. Something that has been since the beginning. I think about the community of giving partners that we have. In the beginning, when we wanted to donate the socks, you buy a pair and we donate a pair on your behalf. We didn't know how to do that. We started with one giving partner that would accept socks from us, and we learned a lot from them. Then we built a specific sock that we donate, that's more tailored to the needs of the homeless community. Since then, now we have 3,500 giving partners across all 50 States. These are the people who are working really hard on the front lines helping out that community and doing what they can to serve their communities, and our job is to support them.
Randy:
That is a big community. We get a lot of feedback from them. Then you have our customers who really care tremendously about the product and the donation aspect of it, and they're telling our story on their behalf. You mentioned earlier about one of the keys, I think for us is consistency. The more you're telling the same story in different nuanced ways, the easier you make it for other people to tell your story on your behalf, and that word of mouth marketing, or letting people explain to somebody else when they're having dinner that, hey, they just got these socks and they're really excited about them.
Randy:
They donate for every pair they sell, and they also just happen to change the way they feel about putting on a pair of socks in the morning, and they feel more supported and comfortable in their daily life. That's a pretty amazing thing that you can get somebody talking about socks at dinner. I think all of this stuff is related, making sure the messaging is tight, keeping that internal, having a marketing team that's nimble and always trying new to new and different areas, and then having that product that's really high quality to support all of that, to give you the confidence to go out and sell something.
Stephanie:
That's great. How do you keep things organized? Because I'm thinking about, you have all these community organizations that you're mentioning to do the one to one program, then you've got your own product that you need to focus on. How do you make sure that you're spending the right amount of time with each area?
Randy:
You don't want to be playing whack-a-mole, I guess. You want to be seeing ahead of things a little bit. There's a certain element of making sure ... You start to see when some friction comes into a certain side of the business and you need to spend a little bit more effort getting your go-to-market process ironed out, or on the technology side, if we don't install an ERP process in the next X amount of time, we could see a lot of trouble. I think that starts with a leadership team that communicates really effectively, often open, and is really humble, and then syncing up on our company roadmap, and making sure that when something does seem like it needs a little bit more attention, that people spend their time on it.
Randy:
That's the idea. I guess some of that is also thinking about, and talking to companies that are a year or two ahead of us, and have been through some of these sort of growing pains at the same times, and looking for the pitfalls that they went through and trying to get ahead of it rather than to have to be reactionary.
Stephanie:
The D2C community, it seems like they're very helpful with each other, and you just mentioned, looking to someone who's maybe two to three years ahead of you, how have you utilized that community and leaned into it to get advice or build friendships or mentorship?
Randy:
Yeah, it's a great community. For us, we're a pretty open group. We talked about transparency and communication as pillars of Bombas from the beginning. We want to help out other companies who are coming up behind us, and then we've looked to other direct to consumer companies, and other, generally, just good companies to try and help us out. You ask the question and you find that people are generally willing to say like, yeah, this is how we did this, or connect with this person on our team. They know that at some point they'll have a question for you. We've always been just asking questions outside of the organization. It's the same approach with hiring. We want to bring in people who are smarter than we are.
Randy:
We want to ask the questions to the companies who are ahead of us. You don't get the answer if you don't ask the question. It's just an important thing, and I'm not sure why this group of companies especially is more open or collaborative, seeming than other groups that you've been in, but maybe it's this generation of founders and the way that we grew up and the interest in community, and the expectation from customers that our company just can't look the way it used to look or act the way it used to act, and it has to have more of a purpose. Maybe that just drives us all to be a little bit more open and a little bit more flexible and a little bit less guarded about some of the things that we're doing.
Stephanie:
Yeah, I agree. It also just seems like there's so many opportunities. It's not like you're going to be talking to someone who's doing exactly what you're doing. There's just so many opportunities and so many things to start and try that I'm sure that also helps with people wanting to share and show how they did things.
Randy:
Yeah. I don't really feel competitive with anyone in that space. In some ways, those companies, you could see them as more of our competition than another sock company, because we're competing for the attention of people online. It doesn't matter what you're selling. If somebody else is taking away time that somebody might spend thinking about Bombas, then I guess that's competition, but approaching it, from a lens of collaboration and like, if they can help us know we can help somebody else, it's just the way we've done it. I'm not sure it's right, or it does feel like it's helped us. It is nice to feel like there is a community around this. I like to think about these companies, I like the community of the businesses.
Randy:
I'd rather be lumped in with these companies, as a community of people that can help each other with the business side of things, than on the brand side of things. I'm wary of being one of the direct to consumer brands out there, because I don't feel like that set of companies always looks the best or the type of press that is out there is always positive. For me, it's just about the people running it and the people at these companies, and making sure that people in our teams are connecting to people who've done something that they maybe don't know how to do perfectly.
Stephanie:
All right. Before we jump into a few higher level Ecommerce themes, I wanted to hear what is the best day in the office look like for you?
Randy:
Oh, the office.
Stephanie:
How do you walk home when you're like snapped in and you're like, that was a good day.
Randy:
Remind me of what an office is.
Stephanie:
Okay. What's the best day from your bedroom look like?
Randy:
Well, okay. It is interesting to think about at home versus at the office. The office is a big part of who we were as a company and getting everybody together and that spirit of community that comes into it, and being able to sit down with someone face to face. We do miss that. Although the teams are really productive and risen to the challenge of working remotely. The best day feels like when something goes well beyond what you expected and teams are celebrating each other and recognizing each other. Also, when we have a speaker from one of our giving partners to give us perspective on what's happening in our work life and why maybe it's not the most important thing in our life and in our world.
Randy:
When all of those things are kind of clicking together, I think people remember why they work at this company, what's truly important, how they can impact it, and then the collaboration and the spirit that comes along with it. Those are the best days for me, when you're reminded of what's important and how that impacts the company.
Stephanie:
I think it's good to document those days too. I really like, there's a coffee shop, Philz, right up the street, and they have all these pictures of their employees and just having fun and team meetings they have. It's on the way when you're headed to the bathroom, but it's really fun. I would think as an employee, but also as a customer to see and remember like what it felt like that day and how excited this person looks when they're receiving this award. Because it seems like it could be easy to forget when something's moving so quick.
Randy:
Totally. I love that idea. I also think about the times when we all got to volunteer together. Now we tend to volunteer in smaller groups which is obviously still great. We have sign up sheets for all of our volunteer opportunities and you have to pounce on them to get the spots that you want. I think that speaks a lot about the culture of the company, but some of the photos you look back on from those moments, or those days when the team feels really connected, those are really exciting days.
Stephanie:
Yep. All right. A higher level Ecommerce question. What do you think the future of online shopping looks like, like in 2025?
Randy:
Ah, like when we're all driving around in flying cars, what does Ecommerce look like?
Stephanie:
Yup. I'm on Mars. Where are you?
Randy:
I might be on Mars too. Do you want to have a rival colony? I'm down or maybe we have a collaborative colony.
Stephanie:
Okay. Oh, I'm down. Maybe, we'll see.
Randy:
We'll see. Okay. All right. We'll see. We'll figure it out then.
Stephanie:
It depends if you accept my LinkedIn request, I guess, then I'll know. I'll be like, is it any cooler now?
Randy:
Wait, that's how we judge if you're cool, is if you accept our LinkedIn request?
Stephanie:
I just made it up, but we'll see. I might have higher criteria afterwards.
Randy:
Okay. All right. We'll put a pin in that. I don't know what the future of Ecommerce looks like, I got to tell you, I know the percentage of people who get comfortable shopping online, that's only going to go up. I know that companies are going to invent new ways to make it easier for people to buy their product, to review their product, to look at it. I think ease is the name of the game. In a world that's going to be more and more competitive, the way to stand out is going to change. All I know is it's not going to look like it looks right now, and having the attitude that, even if you're doing something right, that the way to succeed in a few years, it's going to be a different version of right, then you'll be okay.
Stephanie:
Yep. I love that. All right. Before I move into the lightning round, anything that you wanted to share that we missed, where you're like, I really wish you asked this, Stephanie, and you just didn't?
Randy:
No, like I said, I'm here for you guys. You want to talk about Mars and infrastructure, then great. Whatever you want to talk about.
Stephanie:
Mars and the moon, that'll be the next podcast. Anyone who wants to sponsor it, hit us up. I don't know what we're going to talk about, but we're going to need help to figure it out. All right. Lightning round brought to you by Salesforce Commerce Cloud. This is where I ask you a question and you have a minute or less to answer, Randy. Are you ready?
Randy:
I'm ready.
Stephanie:
All right. What's up next on your reading list?
Randy:
Can we just start that over? Sorry.
Stephanie:
Yep. What's next on your reading list?
Randy:
Up next on my reading list is the Mike Nichols book. I'm not sure what it's called, but I'm excited to read it.
Stephanie:
What's it about?
Randy:
Its about the director, Mike Nichols, and his life.
Stephanie:
Cool. We'll have our producer, Hillary, will find the link to that and everyone can go explore it there.
Randy:
I don't tend to read business books. I know that they could be helpful, but I'm more interested in people, humanity, fiction, novels.
Stephanie:
Yep. Cool. Any podcasts you listen to?
Randy:
Yeah. There's a great podcast I listened to about words called The Allusionist, Allusionist with an A. Love that podcast. I have a whole list, but let's just do one.
Stephanie:
Yeah. We'll check that out. Any hobbies that you're really getting into these days?
Randy:
Hobbies that I'm really getting into. I really like this sport called paddle tennis. It's not pickleball, it's not ping pong. It's called paddle tennis. If you look it up, it's like a fast version of tennis. You play with a paddle and a tennis ball, but you poke a hole in it. There's like a really small, but passionate community around the sport. It's really fun.
Stephanie:
Do you play on a tennis court?
Randy:
You play on a small tennis court. It's basically the service boxes and two-ish foot baseline, and a net. You serve under hand, and you can't serve [inaudible 00:52:55], and you poke a hole on the tennis ball so it doesn't fly everywhere, but it still bounces. It acts and feels like tennis, but like a faster version. It's really cool. You can play in New York. There's courts in New York in StuyTown and Peter Cooper Village, and there's courts in Venice Beach in California. Those are kind of the two centers in the US. It's not a very big popular sport.
Stephanie:
We will have to bring it up to Palo Alto. I will be the one do that. That would be my initiative over the next year.
Randy:
Do it.
Stephanie:
All right. If you were to have a podcast, what would it be about, and who would your first guest be?
Randy:
Oh man. If I was going to have a podcast, wow, I don't know. Do we need another podcast? Do we need a podcast from me?
Stephanie:
Yes, we do.
Randy:
Maybe it would just be rants. Just do like a short rant every week. I don't know.
Stephanie:
I like that. Hey, that seem to do well sometimes.
Stephanie:
That's okay. All right, this one's slightly harder so you might have to think. What one thing will have the biggest impact on Ecommerce in the next year?
Randy:
I think the thing that will have the biggest impact on Ecommerce in the next year is the timing on reopening the economy and stores and retail. If people can't go to stores or don't feel comfortable going to stores, they're going to, inevitably, accelerate their comfort level with shopping online. We already see that happening. I think it's just going to push that trend line even further forward. I'm for one, excited about it. I think the biggest, biggest test for this will be this Q4 and the holiday season, and to see what percentage of shoppers are shopping on Ecommerce and what they're demanding of Ecommerce retailers that they weren't a year ago when the percentages were smaller.
Stephanie:
Yeah, I completely agree. Great answer. Randy, it's been a blast having you on the show. Where can people find out about you and Bombas?
Randy:
You can find out about Bombas at bombas.com, and everywhere else you would expect, B-O-M-B-A-S. That's it. Thank you for listening and thanks for having me.
Stephanie:
Yeah. Thanks so much. It's been fun. See you next time.
Randy:
All right. See you next time.
Auctions are dead. At least, that’s what the press seems to think about auction platforms. But Tophatter is experiencing something different. The platform that started as an auction platform for homemade goods is now expanding to include a variety of products and is looking more like a third-party marketplace. Sree Menon is the COO of Tophatter, a discovery and auction platform that is gamifying the Ecommerce experience. On this episode of Up Next in Commerce, Sree explains the way Tophatter has differentiated itself through gamification, fast, real-time auctions, and a customer engagement experience that users have embraced. She also provides insight any founder or CEO would need to know about the fundamentals of setting up an online marketplace — or any start-up for that matter — and she discusses the importance of unit economics and A/B testing.
3 Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
---Transcript:
Stephanie:
Hey everyone, and welcome back to Up Next in Commerce. This is your host, Stephanie Postles from mission.org. Today we're joined by the COO at Tophatter, Sree Menon. Sree, welcome to the show.
Sree:
Oh hi, Stephanie. Thank you so much for having me. I'm excited to be on the show.
Stephanie:
We are very excited to have you here. So I was looking at your background a bit, and it's very interesting. I would love it if we could start there, maybe telling us how you got into your role you are in now, and yeah, how you got there.
Sree:
Yeah. It's a very long, long career. I started in the online world, which I think is more relevant in this podcast at Dell. I used to lead the commercial online sales for Americas, Latin America, and North America. I was there for several years, perhaps nine years overall at Dell, six years in online, and then I moved to eBay, was the general manager for the motors group. It was an amazing journey. But I did know that I wanted to go and work at a smaller startup using the skills that I have, and that's what brought me to Tophatter. We are a discovery based shopping marketplace, and it's been an amazing journey, and I'm happy to talk more about that in this podcast.
Stephanie:
Cool. Yeah. I'm sure the shift from Dell and eBay was pretty immense from going to a smaller company. What was that like, and what kind of learnings did you take with you from Dell and eBay?
Sree:
So it's a great question. So the things that you take for granted at a big company are generally that, look, you're not worried about the fact that the startup may fail. There isn't that. There's a tremendous sense of security because you're working in a big company. There's of course a lot more pressure in terms of being able to communicate a lot about what you're doing, working with many, many different teams cross-functionally, and also, the time to market or the time to execute an idea is very long. It takes a lot of cycles. So when you go to a startup, it's absolutely the other way around. I hardly have any scheduled meetings every week kind of thing. It's mostly just, you need to solve a problem, and so you're meaning to kind of solve it or brainstorming on something.
Sree:
So the pace of innovation, the pace of executing is so much faster when you're in a small company. But of course, that kind of freedom also comes with a lot of responsibility, with a lot of pressure to meet numbers, to be able to understand the intricacies of the entire business and not just to function, and it's thrilling and exciting.
Stephanie:
Yep. Yeah. That's awesome. So for Tophatter, it kind of reminds me a little of eBay. But I would like to know, how is it different? Because eBay's auction business seems like it's kind of declining, but Tophatter seems like it's thriving. So how would someone think about what Tophatter is and how is it different?
Sree:
That's right. So eBay's auction, the way I think about it is, yes, as compared to the overall business, in terms of just eBay or how e-commerce has evolved as an industry, auction is probably a smaller portion. The way eBay was designed originally, let's go back to the historical context, it was largely a C2C business, right? Auctions work well in a C2C background or in any background or in any context where there isn't a fixed price or value of an item. It is what the buyer is willing to give you. So for instance, I have a Louis Vuitton which is five years old. I price it a lot in my mind. I think it's very precious to me. But that value may not be the same. It may not be perceived the same by a buyer. That's where an auction really fits in really well.
Sree:
Now, that's one use case. So from that perspective, I think eBay's still doing well in terms of that format when it comes to C2C, when it comes to very high word items, high value items like cars and stuff like that, used cars, again, things that don't have an MSRP. Now, in our context, the auction model helps because it's more of a gamification element versus here's the value of that item in terms of the emotion that I have of it. Because we largely know we're not a C2C platform at all. We are a B2C platform. But they are discovery shopping items. So it would be for instance, if you're working on Embarcadero road, which is here in San Francisco, and you had a nice lunch, and now you're just kind of browsing on the streets, looking at the vendors, and you see a bracelet which is made of shells, and you want to pay the pricing at $20.
Sree:
Maybe it's a little too expensive which you're already feeling happy, and you're ready to pay for that. Or you find something for $5. It's basically some just overall discovery and emotional connection with that item. Those kinds of products, and that kind of platform works very well with an auction format.
Stephanie:
Very cool. So give me a little more details on how you gamified the process. I saw it's a 92nd auction, which I had never heard of, and I thought it was very fun and definitely would convince buyers to buy quickly. But in what ways did you gamify the platform, and has it been successful with short auctions?
Sree:
No. I do believe so. I think even the auction, we call that as a gamification technique per se. So think about what a game does for us. It makes us competitive. We compete. So just competing on an item is gamification in itself. Because you shorten it, it's basically shorten the timeframe, the adrenal that you boost to get of competing is much more extreme. So I think the core of that platform uses that gamification technology, and then now we've added on things like badges. We've added on things like, you can collect if you shopped in certain categories, you collect a badge. You could collect it and then cash it in as chips to get some credits. So there's a bunch of other techniques we've added on, and we're continuing to do that, right? I think that's what makes our platform unique and different. We're literally trying to take an offline shopping, browsing, hunting experience and putting it online and having fun in it. So whether you call it games or just an absolute fun experience, that's what we do.
Stephanie:
Yeah. I could definitely see that being a big team because there are many 90-second auctions. That sounds fun. I'm going to have to try that out. Is there certain incentives that you've seen be more successful, whether, like you said, it's badges or certain things showing up on the user's profiles? What things have you seen work well, and which ones were kind of duds?
Sree:
No. This is the badges have been really useful for us last year that we launched it. We also launched a few other things. We tried to kind of add a community angle to it. But those experiments didn't do very well. You could poke, or you could give some... Even the gamification element, having a name there, that was very helpful to us. So I think what has been working well is having pictures. At one point, we even had pictures of individuals that they will upload, adding profiles of themselves. These are all things that were very successful, apart from the badges that I said. We continue to iterate. We experiment a bunch every quarter, every month, every week, and we try to see what works.
Sree:
But the big wins for us last year was badges, the names, and the profiles per se. We didn't think that people would want to add profiles and talk about themselves, but you'd be surprised they do. This is where I think the convergence of a little bit of the community and gamification and shopping is all occurring, and everyone's discovering their own comfort level in terms of that convergence.
Stephanie:
Yeah. Very cool. Is there any metrics that you look at when it comes to adding these different features, or you said you're running tons of experiments all the time. What are your go-to metrics to be able to tell you if something is successful or not?
Sree:
That's right. So if we look at the typical funnel metrics, we try to look at the engagement metrics, which are, are people bidding. More bids that we have, then obviously, it means that people are engaged, and it also drives up the ASP of the item, which is very helpful from the sell site. So that's definitely what we look at and eventually conversion. So if you're bidding, that is conversion.
Stephanie:
So I could also see it being interesting with... You're essentially getting, like you said, multiple conversions just by someone bidding on it to where I'm guessing you could retarget those people, and you have consumers earlier than a lot of other brands might experience. Is that what you've seen, and how do you go about reengaging those people?
Sree:
It's a great question. So I mean, what you're seeing is basically, even people are engaging on an item. Only one person is winning it. Let's say there were 10 bidders. There's nine of them who were interested in that item. Maybe they were not interested in that item beyond a certain price point, but they were. So what we do is if you bid on an item, we do consider that as a saved or aligned item. So we save it as an aligned item in the backend.
Sree:
So we use various notification methodologies for when that item comes back. So let's say I bid on the... I'm looking at the platform right now, on a CBD cream, pain relief item.
Stephanie:
Very popular these days.
Sree:
Very popular. No. I didn't mean it because it's gone up, like somebody is out to get me, and I don't want to pay $15 for this. So I kind of stop at 14. So now, the system will automatically capture that. If you look at the platform, there's a little heart-shaped on lot, which basically is our version of we like it. So the next time the CBD cream is coming up for auction, I will receive a notification that says it's coming up for auction. Come back to the platform. So we drive up a bunch of engagement with those kind of notifications.
Stephanie:
Yeah. That's very cool. What kind of investments have you done into personalization?
Sree:
Right. That's a very interesting question, actually. Stephanie, for us, the traditional definition of personalization is to be able to give you that item at the price that you want. That doesn't really work well in our auction platform. So for us, there's a broader meaning of personalization. For us, it's about personalizing to a group of people with similar tastes and similar needs and shopping behaviors versus tailoring it to an individual. So I would suggest that we use terms like targeting. So there are males if there are electronic items, shaving items. We know they generally appeal to men. So our feed optimizes knowing that this is a male. Their feed will optimize depending on the fact that are they male or female.
Stephanie:
Very cool. So the other thing that I was thinking about is it seems like it could be a little bit difficult to bring a seller to a platform and say, "Hey, you have there's 90 seconds for your product to get sold. I was curious how you convince sellers to come to the platform. One interesting thing I saw was your guys' blog, which seems to focus a lot on education that isn't really about Tophatter per se, but it's things like how to optimize your e-commerce warehouse strategy or how to sell more products. It seems like it's just an educational tool that could be possibly convert sellers to come on the platform. What does that process look like to get them to list their first product?
Sree:
That's great. You have multiple questions, and they're all very interesting. So [crosstalk 00:15:02]-
Stephanie:
I seem to be that.
Sree:
They are interesting. Your brain works very fast. I can tell. So I think the first question is, how can they? What happens in 90 seconds? I think you're trying to say, can they realize the price in 90 seconds? Well, that is the interesting part is you would find that there are certain items on our platform that can go up $100 in 19 seconds or a little bit more than 90 seconds. I'll talk about that in a little bit. But some popular items, we keep them on block longer because we know that there's a lot of excitement. So if I'm listing, for example, an iPhone, which is a refurb iPhone, but still not very old, you will see that will generate a ton of interest.
Sree:
What does that mean? So what does that show to the seller is that if you have an item that a lot of people will like and converge, you will be able to realize the price and probably more than what you wanted in a short period of time. So to sellers who understand the audience and understand what would appeal to the audience do really well on the platform. So that's the number one question on price realization. The second point I think you're making about educating and teaching them a lot on what can sell and how to optimize the platform, what your warehousing strategy should be. Well, because we are a discovery based platform, it's like people get bored quickly, right? Because suddenly, everybody likes this CBD cream. We've got a ton of inventory there on. We've got a ton of buyers.
Sree:
But after that point, it's like that song that has been at the top of your charts, and you've heard it so much. You're bored of it now. So then that very quickly goes out of fashion, and that makes it harder for a traditional seller to do warehousing strategies and what have you. Then they're like, "I had a great product, was selling really well. I was making a lot of money, and now I'm not. Now, what do we do?" So sellers have to be really smart about how they test. So they kind of have a marquee product that they know that they make most money in velocity. It keeps selling that, knowing that this is going to not be the case in a few weeks or a few months, but then continue to test on the others in parallel in anticipation of creating leads and nurturing more products that can fill in the gap when this one runs its time.
Stephanie:
Got it. Yeah. That seems like it's a lot of moving pieces to make sure that you're putting the right product out with their right amount of inventory level. Are these sellers also selling on their own websites traditionally? Or are they pretty focused on you guys and maybe Amazon?
Sree:
Yeah. So are we the primary platform, or do they sell on other platforms and their own-
Stephanie:
Yeah, or their own. Yeah.
Sree:
Or their own. Yeah. So some of them, we do find a mix of all of that. So if you think about the pyramid structure almost as the very top of the big players who sell on every platform, did themselves have their own big e-commerce companies, sorry, websites, and they're selling on those platforms themselves. They don't do a lot of GTV. Those are the ones that have found a marquee product and probably have a ton of inventory on the platform, and they kind of probably also want to do testing and channel optimization in their own companies. So we probably are one of them. So they don't do a lot of GTV. But they are good players. They provide great experience, and they're also happy to use our platform also probably because it gives them a ton of velocity as compared to the other platforms. So those are the very top.
Sree:
Then you have the ones in the center who are actually small, medium businesses. They are mostly for whom Tophatter is the primary channel. So what they do is they will do a ton of testing on the platform, figure out what's working, like I said, find successes. They'll build their entire business around it. Then if it doesn't sell after a point in time and they're stuck with inventory, then they liquidate it on other platforms. So the other way around. So different use case in this case.
Sree:
Then the bottom of the ones are just people who come in and go. It could be even a buyer like you and me who think, "Oh yeah, I have a purse in my closet. Let me try and sell it." So you'll have a bunch of people who come in and go.
Stephanie:
Gotcha. So as a COO, you probably have a very good bird's eye view, like you said, into the entire company. What advice would you give to someone if they were talking about starting a marketplace, which is probably one of the hardest, I would think, e-commerce businesses to start. What kind of things would you advise them to do or not do?
Sree:
Oh, that's a great, great question. So hard, so hard. You're exactly right. It's very hard. I think the first thing is you have to kind of figure out is your customer acquisition and your unit economics. You have to get a sense of, am I able to bring in the customer with the certain level of advertising costs? Again, do I have a platform that they are engaged enough that the unit economics will work out. I think that's the primary question. Sometimes the indications are that they will, and over time, they don't. Right? And that's where it all changes.
Sree:
So after having built the initial base for that, then the idea is to be able to understand the startup or whoever's starting the company has to constantly look at, how do I drive that engagement? How do I drive with LTV? What are the changes they could make? And really experiment a lot. Experiment a lot. Be open to walking away from... Be open to learning from the results of those experiments and being brave enough to not feeling so personal about those experiments and the business model that you have to hold onto it. Right? So you should know when a particular thing is not going to work or has hit a ceiling, and then you continue to innovate and continue to iterate and experiment.
Stephanie:
Yep. That makes sense. Are there any metrics, maybe financial ones or not financial that you look at to understand if you guys are growing the way that you want? How do you think about success when it comes to the growth of the business and the platform?
Sree:
Oh, absolutely. So those are the three big metrics for any company, no matter what, is always the three, right? The big ones. GTV in our case, right? Are you growing your top line. Then you want to look at, what's your margin or revenue in other cases? What's your margin? Is it healthy enough? How much liquidity do you have? Basically, that's the healthy part. How much of operating income do you have? You may have negative operating income because you're a startup. But the idea is you want to know whether your unit economics are going to be scalable.
Sree:
There has to be a story. So let's say your unit economics are not working on right now. That is because of X, Y, Z reasons. You are investing in logistics or investing in international growth. You're investing in something. But there has to be an IP that you'll build up that will allow you to be able to monetize this in the long term where unit economics will work out. There has to be that formula, and there has to be that clarity. There has to be proof points when you're building the business that that story or that narrative that you build is going to come true.
Stephanie:
Yup. Is that something that you all have been able to keep track of from the start? Because I could see a lot of startups maybe getting pretty far in and being like, "Oh, oh, I probably should've started measuring this." But you don't really think about that when you're starting a company. You're just trying to be scrappy and get it out. Is that something that you've paid attention to since the beginning or at least since you've been at the company?
Sree:
Well, actually, a lot of it right from the beginning. So even I've been here only for three years, but the founding team, they were very, very diligent about unit economics. So I think the fact that we have been staying standing for eight years now and as big as we are is a Testament to the fact that the founding team was so focused on unit economics. So we know our formula. We know really well what for our formula, how sensitive that is, and what are the factors that causes it to be sensitive. So we've got guard rails around that. We might make investments in my opinion, bold moves. But we also know based on the guard rail that we have established is when that is shaky and when we need to pull back.
Stephanie:
Are you A/B testing or running multiple tests on kind of what user interface works best or what users enjoy the most? I'm guessing you could have a bunch of different interfaces and see how they more eagerly interact with the platform.
Sree:
Well, totally. So A/B testing is just what we do, right? That's all we do. Even in operations, we kind of try to do A/B testing. But even retail sellers, why do you do A/B testing? Have a listing with these words? Have a picture with these words?
Stephanie:
Oh, that's great.
Sree:
Right? So that is such a core part of our DNA is A/B testing, being able to have population groups, hold out groups. Actually, that is so much in our DNA that even in terms of our OKRs, we actually call it games. Our OKRs are called games now. We want to know whether what we're doing even in an operational sense makes a difference to the company. So we have a holdout group that does not receive any of the things that the operational team is doing, and then we try to compare the effectiveness of the population, the holdout. So we've really taken this whole A/B testing to a whole new level.
Stephanie:
How do you get your employees to engage in that way and thinking that way of like, everything's going to be tested and measured? How did you get them to put that hat on?
Sree:
No, it's very interesting. It is a little bit of a struggle initially for us because in a marketplace environment, it's like an economy, right? There's so many things that are happening is really hard to measure the impact of one activity. So you bring in a big seller and you say, "Wow, this seller's GTV has grown by X%." Well, that's probably because he has replaced the GTV off another person. Right? So how do we know that this is incremental to the platform?
Sree:
Right. It's a very hard question to ask, and even at eBay, we used to struggle with it. But of course, eBay was at scale. So there are established ways of measuring things. So in our context, to answer your question more specifically in terms of employee engagement, what we showed was we actually did want to experiment with the marketing team, where it was about giving credits to our buyers and seeing how they engage, so lifecycle marketing activity. That was very easy to do. You just have a group that you don't send credits and see how they perform and give another group credits. It was very clear the impact of the team and how they were managing the spends in driving engagement very clear.
Sree:
So we use that as an example of how we could leverage that. But the key is how you set up the measurements, what kind of tactics you're measuring. You can't measure every single thing. You also want to measure things that are important. Also, you want to make sure that you have a business strategy and the measurement follows that versus the other way around that you define a measurement system and then say, "Okay. Now, let's only do things that we can measure."
Sree:
So there is a fine balance there. So just to kind of summarize then how we did this was we said, "Okay, what's the business strategy? What are the things we should do? Now, having said that, which activities are most amenable to A/B testing into measurements? Let's go ahead and play games around that." So on a daily basis, you will have SQL reports that are set up that speaks out based on those games how you've done. That actually really helped the teams understand and refine the tactics and levers. Once you found a tactic that worked or a lever that worked, then the teams could go and scale it into a big process, which is the dashboard and what have you. But if you didn't know what those tactics say, you're not sure, and you want to test it, this was a very good way for even the teams to understand and measure and refine.
Stephanie:
Yeah. That seems like a really fun way to engage employees and get them excited about data. Because I could see a lot of people being like, "Ah, I don't feel like looking at these metrics. I don't really know what they mean, and I don't know how to take an action from it." But putting it into a game format just your platform seems like the perfect culture fit as well.
Sree:
That's right. That's right. You have to understand also that as an organization, who's comfortable with data, and who's not, and find ways to support it. So all of these games are set up by our team in growth, the analytics team who basically worked very closely with all of the other teams, whether they are product and engineers or operations. They understand what the teams are trying to do, and then they suggest the measurement system. So it's a collaborative effort. So that gives the people who are not very comfortable with data to know that they are supported, and it's simple interpretation of the data. They don't have to define a whole lot of other things which could be perceived as pressure driving.
Stephanie:
Yeah. That's so important, having that team mentality, because I think in the past, engineers were kind of left out of coming up with the metrics or KPIs or helping influence product decisions, and I'm seeing this movement now where everyone's starting to work together and develop those KPIs and metrics to think about, and they're not kind of leaving the engineers out and just saying, "Hey, we'll come up with everything, and we'll let you know how to make it for us, or we'll give you all the specs." It seems like there's a unifying process happening right now when it comes to the different teams.
Sree:
Absolutely. I'm a big believer that we should have the collective intelligence of everybody. Just because you're writing code or you're making a sales call doesn't mean that you may not be able to contribute to the bigger picture. In fact, because you're in the trenches, you probably have a different perspective on that problem, and it's important to be able to harness all of that energy and all of that input to then step back and see what it's offering us.
Stephanie:
Yeah. Completely agree. Are there any marketing channels that you all are experimenting with? Because the world's moving so quick, and there's all these new platforms popping up. Is there anything that you're trying out right now or somewhere that you're finding success that maybe others aren't looking?
Sree:
I think it's just the usual TikTok and Instagram and Snapchat, what do you call, other channels besides the big two Facebook and Google. What has been interesting for us, we are largely a site for older people and women, majority. But TikTok is for young people. They're literally Gen Z or so. We're seeing some success there. I don't know how much that can scale to see it. But that's why it's so important to continue to experiment. You'd have some surprises. So TikTok is definitely a surprise for us.
Stephanie:
Yeah. We've actually had quite a few guests on the show mention TikTok. So what kind of ads are you putting on there? If a brand right now is thinking about utilizing TikTok, what are some ways that you're utilizing that platform right now? How are you engaging the younger generation on there, which I heard is actually aging a bit. So how are you using it?
Sree:
It's a short video format with the product and just making... I think we all know that video is very engaging and lot more content on video. It's just our ability to scale, I think, is the key here. We have so many products. We have so many items to be able to continuously find the right level of engagement in terms of... If it's a video, it has to have a product. It has to be able to do all of that messaging because we are not leaving it to the consumer to be able to browse and find that information on their own. So that's the only challenge in terms of the scaling, but yeah, generally, it's just very short. We work with partners who create all those creators for us.
Stephanie:
Got it. I'm wondering if you have to definitely probably have different messaging on that platform, where I wonder if it can't be... You can't have the brand up in front maybe. It has to be more like, "Here's the fun behind it and go find out what's behind this," I'm thinking, to market to that. There's different users maybe on an Instagram or Facebook where it can be more obvious. Is that how you guys have kind of approached that?
Sree:
That's right. That's right. Also, what is it that people are engaging with? So for example, on Facebook, it's value. Those are the things we use a lot because we feel like those are the campaigns that do well for us, right? Where we see deals and fun and value. Whereas I think more from a TikTok kind of a customer, it's more the experience, the gamification element and probably a lot more products that are skewing different to that audience. So that's the kind of experimentation we can doing and testing and coming up with the best optimization for that channel.
Stephanie:
Yeah. That's very cool. We'll definitely have to check that out. I was reading a very pretty funny article about how some of the younger generation is using TikTok, and they're... I don't know if you've heard about this. They're putting faces on different storefronts. So whether it's Nordstrom or Target, they're putting eyeballs and a mouth on it, and then they're creating personas for these brands. So then you're dating each other and having drama. They're like, Target and Home Depot are having a tiff today or whatever. They're breaking up. I was reading this whole article about how TikTok is being used for that, and I'm like, "Oh my gosh, is this really a platform?" Everyone on the show keeps talking about like, "TikTok's the way to go." And I read this silly article about the drama between brands that these kids are making up. I mean, it was pretty funny. I wanted to go check it out, but it made me question it a little bit.
Sree:
It is definitely engaging. Oh my, I have a 12, 13-year-old son. That's all he does all day long. It's so hard. We have to literally snatch his phone and hide it. TikTok is very addictive.
Stephanie:
Oh, man. Yeah, I believe it. But I'm sure there's a lot you could learn from him too of, "Hey, what do you think would be a fun ad? What would you like to see on here?"
Sree:
You're right. I do film them sometimes when he and his friends are bidding on Tophatter. It's interesting to see how they engage, what they do. It's fascinating, kids these days.
Stephanie:
Yeah. Hey, that seems like a good way to kind of learn and test product and test marketing if you have a 12-year-old. Now you know, everyone. That's what you can use for your product testing. So you've been in the e-commerce industry for a while. What's one thing that you wish online sellers would start or stop doing?
Sree:
Would start or stop doing. It's fairly mature now. So let me think about that.
Stephanie:
It could be D2C sellers, who they're all starting up on their own, where you're like, "You probably should do this, or shouldn't do that. Or I've seen success around this, or this is really annoying when people do this."
Sree:
No. I mean, as a consumer, I think the more connection that I have to the seller and being able to... So I'll give you my first experience to explain. When I was a consumer at eBay long before I joined eBay, I had a situation where I hadn't got the item that I wanted. So the seller simply just shipped me another item as a replacement, asked me to refund, send everything back and just kind of begged that I don't give him a bad review. So I mean, keeping that aside, but the whole idea of the way that seller actually engaged with me and took care of me made me feel very trusted as a consumer. So I think that is the big challenge for e-commerce, as all players, whether they are a retailer e-commerce arm of a retailer or you are a pure marketplace like us.
Sree:
I think the challenge is the element of trust. Because the end of it, I can't touch the item. I don't know who you are. I haven't seen you. I haven't gone in your store. That's I think the critical aspect. I don't know, Stephanie, if you realize this, that even though we think e-commerce is a very mature market from an online perspective, the penetration rate for certain categories is still fairly small. Books and CDs are probably 55% of online sales, penetration. But apparel and beauty, for instance, apparel is less than 30%. I don't know what happens after COVID-19. So I don't know the numbers, but the expectation for 2020 or apparel was 29% and beauty 11.
Sree:
So I mean, this is another angle to what I said. But it's also the emotional element of when I'm wearing this outfit, how do I look? Does it fit me? Am I getting the community feedback off? Yeah. It's great if I go shopping with my friends. They'll be, "Yeah. That looks very cute." How do they replicate that part? Or if it's beauty, how does it look it with my skin color. Those are some challenges that I think we still need to address.
Stephanie:
Yeah. I completely agree, especially the trust piece. I mean, on Instagram, every single day, there's probably five new apparel companies advertising to me. You go to their website, and you're like, "Did you just start yesterday?" It seems like there needs to be some kind of mechanism to show.
Sree:
That's right.
Stephanie:
I know there are people that are trying to show this is a trustworthy website, and they've been around for five years. But it definitely seems hard from a consumer perspective if things are moving more online and people do start getting more comfortable shopping online, if you get burned once, it's going to be pretty hard to want to try out a new company. I think that'd be something that'd be difficult but necessary to figure out.
Sree:
Yeah. To add to that, Stephanie, is also like... I don't know. What is the agency? If you're buying something, like you said, I click a lot of the ads on Facebook, and I have a similar reaction, and being also on the other side of a partner of Facebook, it's very interesting to me to see both sides of the aisle is, how does Facebook become an arbitrator here, right? How do they make sure that the buyer is taken care of and folks like us, Tophatter as a company who are sellers or advertising in the platform how to hold us accountable and managing our internal metrics of how we considered customer satisfaction and marrying that with Facebook's definition?
Sree:
So it's a very interesting challenge because you're talking about distribution across so many... There was a time when you knew eBay, right? It's organic search. So you didn't have to go through an intermediary like Facebook. Now we've added that on. Facebook has become one of the biggest ad pair. So when you add that on, what is their responsibility in all of this?
Stephanie:
Have you seen these platforms-
Sree:
I don't have the answers.
Stephanie:
... shifting? Have you see these platforms since you've been on them kind of shifting their viewpoint on responsibility and of upping their standards when it comes to new brands joining? It seems like it's starting to get better when it comes to that.
Sree:
No. It's a very good question. Actually, they have. But I don't think that they are very mature in terms of how to think about it. So let me explain this a little bit. So let me use eBay as examples. So when eBay went through that question of how responsible are we, how can we make sure that the seller's performance matched that customer's expectation? I think if you had like 25 years of experience building that out, seller performance management system. Facebook is fairly immature there, right? I think they're still very early in the process. They've just figured that out. People are asking them questions, not only on the news content. They're being held accountable, but they're also being held accountable for the advertisers on the platform from a commerce perspective.
Sree:
So they're not mature. They're figuring it out. They have some rudimentary measures. But I think the gap for me as a consumer of Facebook's advertising... not consumer, sorry, as somebody who advertises on Facebook, for me, the biggest challenge is that I cannot connect the dots as to what I think my customers need and how Facebook thinks my customers need. I may have great customer satisfaction on my platform, but Facebook may not think that I do and vice versa. So I think they have some maturity maturing to do.
Stephanie:
Yeah. It definitely seems like it's a tough pole between these platforms. Do you want more revenue, or do you want to cut down on your revenue to also have better brands come on and not let just anyone come on the platform and potentially hurt the end user?
Sree:
Exactly. That's the kind of challenge we have at eBay too, right, and we have [inaudible] right? All marketplaces have the exact same thing. Because anybody who has, generally speaking, sensationalism, whether it is news content or products, also, the bad sellers do things in such a way that they might get more volume, and they may be even willing to pay for it because they don't have the overhead costs. So that is the same challenge that we have as marketplaces. But then what you do is you create a performance management system where you reward good behaviors, and you improve the baseline for the entire platform. You move the goalpost for the entire platform consistently, continuously. That of course took 25 years for eBay to get there, and still, I think you need to continue to refine it. So I think it's a question of time before Facebook figures it out.
Stephanie:
Yeah. Well, hopefully, with everything going on with COVID, it's been speeding everything else up. So hopefully it'll kind encourage speed around that area and it doesn't take 25 years to develop, hopefully.
Sree:
I agree.
Stephanie:
So we mentioned COVID. That brings me to the question of, what do you think the future of online commerce looks like, especially after the pandemic's over?
Sree:
Great, great question. I think that the last I saw, there was like 120% increase in online shopping in Q1, I think. You're in the US, something crazy like that. That of course won't be as crazy. The growth rate will probably come down. But then some of the shift is significant, and they'll stay there. So we all know that grocery shopping penetration went up. It's probably going to not be as high. But people who have never done grocery shopping online will be like, "This is kind of cool. I need to stick with it." So there will be some shift that stays permanent.
Sree:
I think the more interesting thing for me is what I'm seeing with retailers. The retailers who do not have an online presence at all are kind of coming to terms with the fact that they can't ignore it. All of the industry is designed around physical location. The processes are designed around physical location. Their marketing is designed around that. Pricing strategy, procurement strategy, returns, everything. So that's why they have been very resistant in terms of... Generally speaking, there are some who do better than the others. Generally speaking, they're a little more old school when it comes to e-commerce. Can you believe that Ross does not have an online-
Stephanie:
Oh, yeah. I know. [crosstalk 00:45:37]-
Sree:
Or Marshalls. I love Marshalls. I'm like, it's too hard. I want to shop, and I can't shop because they don't have a website.
Stephanie:
I actually just brought this up in another interview about TJ Maxx. There was a whole article that they will not be going online. I mean, they have a very minimal e-commerce experience right now. But I think they put their foot in the sand, and they were like, "No. We're not doing it." Right.
Sree:
We won't do. That's fascinating. That's fascinating. So maybe they can get away with it because they are only a discount retailer, right? They have major investments, and maybe they've realized that this is the niche, and they don't want to divert the resources somewhere else. That's okay. But now, the other retailers that were on the brink of bankruptcy have been kind of pushed to facing it at the moment. I think, what, 25 retailers probably have already filed for bankruptcy thus far. I hear that in the next five years, there'd be a hundred thousand stores that may be closing now. Well, what that means is there will be a tremendous amount of retail consolidation, and we'll have to take it seriously. People will have to redo the processes.
Sree:
Some good example I think I've heard is Zara. Zara is very serious about this, and they're like, "We will close art stores, and we will have a few channel strategy. We are going to use COVID-19 as a way to accelerate that, that we were going there anyway. Let's do that." I think that's the right way to go.
Stephanie:
Yeah, that's great. I wonder what will happen with all the stores. It seems like there could also be an opportunity for different retail models to pop up, like pop-up stores and [crosstalk] shops.
Sree:
[crosstalk 00:47:13].
Sree:
It seems like that-
Stephanie:
Absolutely. I think that stores will never go out of fashion. But how you use stores, initially it was stores as a central point of a strategy. Instead, it will be a strategic lever. I mean, there's a reason why Amazon bought Whole Foods. The fact that there are retail locations is a strategic lever for Amazon. Best Buy turned around. They used the stores as a very strategic lever, same thing with Walmart. So people will always want to socialize. People will want to hang out. So the stores could be an experience. It could be a place where you pick up things quickly. It could be a place where actually, there are things that you don't want to try on. You can't figure it out. You go there. Maybe it's a place where you drink wine and hang out and-
Sree:
Cool.
Stephanie:
... do other things.
Sree:
That kind of store.
Stephanie:
That kind of [inaudible 00:48:11]. Stores could be an experience. It doesn't have to be a transactional place where you just buy and sell things.
Sree:
Yeah. I completely agree. Or even the stores are known for having the newest items, where some people who care about that, they can go into the store then-
Stephanie:
To the store.
Sree:
... for the people like me who maybe are like, "Yeah. It's been out a few months, I don't mind. I can just shop online." So yeah. I completely agree about the experiential aspect of it. So before we move into the lightning round, is there anything around the e-commerce industry that you wanted to highlight or talk about that I just missed?
Stephanie:
No. I think I didn't want to talk about the retail, which we covered. So thank you for asking me that question.
Sree:
Oh, yeah. Yeah, that was great. All right. Cool. We can move on to the lightning round, brought to you by our friends at Salesforce Commerce Cloud. This is where I'm going to ask you a question tree, and in a minute or less, you can give me a wonderful answer. Are you ready?
Stephanie:
No pressure. No, I'm not ready. Let's go for it.
Sree:
No pressure. Just take a deep breath. It'll be fun. All right. So what app are you enjoying most on your phone?
Stephanie:
Should I admit it is TikTok.
Sree:
Yes, you can admit that. I actually have just started getting into TikTok. So there's no judgment coming from my end. Are you doing dancing videos or what are you doing?
Stephanie:
No. I don't know. I just watch. It's hilarious.
Sree:
You're slashing from the sidelines. Yeah, that's me too. I'm like, "I'm not creative enough to make something per se, but I'll watch everyone else." What is the newest e-commerce tool that you're trying out right now?
Stephanie:
Newest e-commerce tool. [inaudible 00:49:45].
Sree:
So any kind of tool that you're working on for the platform right now at Tophatter?
Stephanie:
Yeah. So Got it. So React Native. I'll pick that.
Sree:
Okay. If you were to have a podcast, what would it be about, and who would your first guest be?
Stephanie:
I think it would be about managing stress and how to live a balanced life, a happy life. I would love to get Dalai Lama.
Sree:
Ooh, that's a good one. We'll have to email him. I'm sure he'll say yes.
Stephanie:
All right. What's up next on your reading list.
Sree:
On my reading list. I have a history book that I just ordered, and I have Ben Franklin's biography that somebody had written that is on my reading list now. I've done a lot of business readings, so I need a break now.
Stephanie:
Yeah. Cool. Yeah, it's always good to get a break and read something fun. All right. The last one, what one thing will have the biggest impact on e-commerce in the next year?
Sree:
I think the retail consolidation to me is the most interesting phenomenon that I'm seeing. So that forces a lot more innovation in the industry. I really think that the omnichannel strategies are going to be the new thing, taken at a different level. It already is a thing. But then taking it to a different level, that's what I foresee, and I'm very excited to see in the next few years.
Stephanie:
Yeah. Completely agree. Well, Sree, it's been such a blast having you on the show. Where can people find out more about Tophatter and yourself?
Sree:
Well, you can find out about me going to LinkedIn. Go ahead and download Tophatter on your app. Or if you are more comfortable in desktop, go to tophatter.com. You'll find us all there.
Stephanie:
Awesome. Well, thanks so much for coming on Up Next in Commerce. We'll have to have you back. This was a blast.
Sree:
Awesome. Thank you, Stephanie. Had a great time myself. Have a great day. Stay safe out there.
Everyone is excited about A.I. and the idea of using technology to improve business. But that excitement has also led to confusion. There are many definitions and applications of A.I., and few have been able to truly optimize their A.I. strategy. That’s where Ashwin Mittal comes in. Ashwin is the CEO of Course5, a transformative intelligence company helping companies improve their businesses using technology like A.I. and machine learning. On this episode of Up Next in Commerce, Ashwin explains where and how people have gone wrong with A.I. in the past, and the steps an Ecommerce company needs to take in order to be able to get the most out of A.I. It all starts with understanding and controlling your data, and includes retraining your employees to rely less on their guts, and more on the analysis A.I. provides. He reveals how to do exactly that on this podcast.
3 Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
---Transcript:
Stephanie:
Hey everyone, and welcome back to Up Next in Commerce. This is your host Stephanie Postles, and today we're joined by Ashwin Mittal, the CEO of Course5 Intelligence. Ashwin, thanks for coming on the show.
Ashwin:
Thanks for having me, Stephanie. It's a pleasure to be here.
Stephanie:
Yeah, I'm really excited to have you on today because throughout a lot of our previous interviews that we've had so far, everyone has mentioned AI in some form or fashion, and when I saw that you were coming on the show and we were going to have a deep dive conversation into AI, I was very excited.
Ashwin:
It's a deep subject to talk about, so yeah, it should be fun, hopefully.
Stephanie:
It will be. So, what brought you into the world of AI? What got you excited about that and building a company around AI and analytics and all that?
Ashwin:
So, we've always been in the business of delivering insights for sales and marketing to customers from data and information. But about five or six years back, I realized that we're in this perhaps future technology wave of transformation because of the onset of artificial intelligence technology, and from a big picture perspective, if you look back the last 30 years, 40 years, we've perhaps seen two or three waves of substantial change value creation through technology. We've seen the PC wave, and we've seen the internet wave. You can say, okay, maybe there's a separate mobile internet and social media wave, but it's part of that. Both of these have completely changed our personal and professional lives, and one was built on the other. Because we had PCs, so the internet was [inaudible 00:02:03].
Ashwin:
So, my belief is that with AI it's going to be pretty much the same. It will take 15-20 years to play out, but its impact is going to be as deep and profound as the internet. And it's going to be built on top of the fact that we all have computers, that we're all connected, all devices are connected, and for us being in the data business of driving insights from data, we're really in the eye of the storm. Because the root of AI comes from data science. So, on the one hand while this presents a challenge to our business, and possibilities of us getting disrupted, but at the same time, it presents even larger opportunities.
Ashwin:
So, at that time, I decided that we needed to really double down on the AI wave, and started to completely reorient the business and the company towards riding this wave. So, that's really how [inaudible 00:03:12].
Stephanie:
That's great. So, how would you explain Course5 Intelligence? What do you all do? What kind of clients do you help? What problems do they come to you with?
Ashwin:
So, we help our clients make the best decisions from data and information for sales marketing customer-related problems. And within that, one of our largest focus areas is digital and Ecommerce. We typically work with large corporates, Fortune 500, Fortune 1,000 companies, and in some cases, we might be working with the Ecommerce group, their digital group, with the CMO's office, sometimes with IT or some combination of all of these.
Stephanie:
Very cool, and you guys have over 1,000 people that you employ, right?
Ashwin:
Yes, we have 1,200 people.
Stephanie:
Wow, that's crazy. When did you all start, and how long did it take to get to that 1,000-person mark, and what was the change like within your company? That's a lot of people to manage.
Ashwin:
Sure, sure. Yes. So, we've been in business for, what? 16, 17 years, and we've also changed and evolved along the way. The way you run a company that is 50 people doesn't really work when you're running a company that's 200 people, and you need to run a company differently when it's 500 people, and certainly when it's 1,000. So, we've also had to learn, change, evolve along the way. How we run the company, what kind of talent we bring in. How we set the organization structure, and today we're pretty much a global business. We're present in seven, eight different countries, have customers all over the world, so we're sort of a micro multinational on our own.
Stephanie:
That's great. Is there any struggles that you face when it comes to working with your teams around the world that you had to learn along the way?
Ashwin:
Sure. Yes, yes. No, absolutely. Absolutely. So, there's one challenge, which is a more difficult challenge, which is culture. There's a second challenge, which is also important, but perhaps not that difficult, which is regulation. Culture is a really tough one. It's not as tough today as it used to be maybe seven, eight years back. Today because of just the globalization and easy access to information everywhere, people are a lot more aware of different cultures, different people, and a lot more sensitive and things like that.
Ashwin:
But in our early years when we were globalizing ourselves, we had to learn about different approaches, different cultures. We had to be very open minded, and I think we managed okay. We're still learning, it's important to be sensitive. Culture is an important issue. In terms of regulation, that's somewhat easier. You just have to follow certain processes, protocols and make sure that they're completely compliant in every job that you're offering. And especially in a business like ours where you're dealing with data and information, and there's a lot of regulation around that, around data privacy and sensitivity around that and things like that. So, we need to just ensure that we are compliant in every geography that we operate.
Stephanie:
That makes sense. So, everyone talks about AI. Like I mentioned, a lot of people mentioned in our previous interviews, and oftentimes I think people if they're using AI or they're referring to something like it's AI and it's actually not. So, how would you describe AI? And specifically, how does AI help Ecommerce, or could it help Ecommerce if people aren't already looking into it?
Ashwin:
So, first point you made is spot on, right? What is AI?
Stephanie:
Yeah.
Ashwin:
So, this really means different things to different people, and honestly, there is no one perfect watertight definition. So, AI is essentially an umbrella term that covers a bunch of different technologies, which are all meant to convey computers getting intelligence, which is not typically expected from computers, and which is more human-like. Which is the common sense definition, which we would all accept. But then what falls in that bucket, and what doesn't fall in that bucket is different for different people, and I'll give you a simple example. Take a very old technology, something like OCR, optical character recognition. Nobody would call that AI today, but when it first came out, maybe some people thought it was actually computers becoming intelligent, and it was kind of AI.
Ashwin:
So, the definition is also keeping on evolving as our expectations from technology keep changing. But I would say that amongst the different technologies that encompass AI, the core one, the most important one, at least to me, is what you call learning or machine learning. And machine learning is essentially the ability of computers to learn, and that is really a game-changing technology. And then that supports all the other technologies that are typically and the umbrella term of AI. Where a computer can run a certain process or program and get better at it every time it runs, which is what humans are good at doing.
Ashwin:
So, that for me is one of the most important technologies. And sorry, you had a second question you asked about AI and Ecommerce?
Stephanie:
Yes. Yeah, how it impacts Ecommerce right now. Do you think people are using AI efficiently or what do you think the future could look like if they do start implementing this in a better way?
Ashwin:
So, it's already here. It is being used extensively, more by some companies, less so by some. Companies like Amazon are, of course, using it in a very, very mature and sophisticated manner. But various types of companies are using it, many of our clients are using it, and its footprint is increasing. It's used in automating various tasks, in virtualization, in campaigns, even at the back end in supply chain, inventory management. We all know that chat bots are used for customer support in A.I. In Ecommerce. Physical robots are used in warehouses, which also could have AI technology. If it helps, I can give you a couple of examples-
Stephanie:
Yeah, I think exactly. That'd be great.
Ashwin:
... of a couple of our platforms-
Stephanie:
Yes, please.
Ashwin:
... which truly you would consider as AI. So, we have this one platform called Compete. Now what Compete does is it enables our customers, our clients to gather competitive intelligence in the market, and respond in quick time. So, it has technologies and a bunch of bots that go out and search all competitive websites of a brand to collect and synthesize all the information on what the competitors are doing in terms of the five Ps. So, you traditionally have four Ps, product, placement, promotion and price, and we have a fifth, people reviews.
Ashwin:
And so, this keeps collecting this information in rapid time, and on different product SKUs and different combinations, how competitors are doing, what they're placing, how they're pricing. And then this is updated in a dashboard along with analytics to help the Ecommerce players monitor competitive moves and respond quickly so they can optimize their revenue, their profits. This platform's also used extensively during these major selling seasons, like Black Friday, Cyber Monday, and brands expect to make substantial sales in a very short period of time.
Ashwin:
So, they have to be very responsive to what the competitors are doing and what's happening in the market. So, this is one example, one platform that we have. Another one, which we call Adomate, this is really taking it to the next level where we're using AI to optimize creativity?
Stephanie:
What?
Ashwin:
Creativity, exactly. So, AI is not getting creative, just to be clear, and I'll explain to you how it works.
Stephanie:
It's not going to take over the world, do all the artwork in the future, write all the books.
Ashwin:
No, no, no. Well, there's some of that talk going on, but I think that you'll always want to read the book written by the author, you'll always want to know about the author. You'll want to see the artwork, which you want to know the painter's story. While those things might happen, but I don't think that's going to... Robots can play sports, right? But you want to watch humans play a football match. You don't want to watch robots play, they might play better than the humans. So, it's the same thing with art.
Ashwin:
But in terms of this platform called Adomate, so what we're doing is we're actually optimizing the process of content creation for either campaigns or advertising. So, when companies typically do campaigns online for Ecommerce, they will create, let's say, 100 different creatives, 100 different images, and put them into a system. And then the system will do live optimization depending on who's responding to what. Change which creative is being shown to whom. But you might have missed something fundamental, right? You don't know why something is working, why something is not working. Maybe you missed something in those creatives. Maybe there's some combination of both that you didn't know about.
Ashwin:
So, what our AI system does is using computer vision it actually reads every creative. So, it actually looks at the creative and then distills it into structured data. Who are the protagonists in the creative or what's their ethnicity? What's their emotion? What the background colors? Is the brand shown? Is the logo shown? Where is it shown? If it's a video, then it will break it into frames and read each frame. And so, you've got now structured data against each creative, and then you have the data of how people responded to that. Who clicked, who bought which segment, and you can combine all of that and actually then get prescriptive.
Ashwin:
So, depending on what kind of campaign you want to run, what segment you want to target, you can actually advise, "Okay, use a dog in this or use a Latino woman or bring the brand in or use red color instead of purple or whatever."
Stephanie:
Wow, that's interesting. Are a lot of companies using that today where they're actually personalizing the image for the product based on who comes in using AI behind the scenes to come up with that in real time?
Ashwin:
So, this is an early stage platform. It doesn't change the image in real time, though that's also possible. And my AI head tells me that we should be doing that next. But it doesn't change the image right now, what it does is it prescribes. So, for the next campaign, when you want to create something, then you would enter into the system what you're trying to achieve and the system might advise you what to do. Or if you have a creative you can submit it to the system and it will give you a score of how successful it's likely to be.
Ashwin:
But even that is an early stage platform. This is one of our exciting newer products, and we have maybe three or four customers using it right now, but it's certainly something that we're betting on.
Stephanie:
Got it. So, when these customers come to you, one thing I think about is when you have a problem. Back in my old days at prior companies, the teams I worked with who were focused on machine learning always told you like, "Well, you can apply machine learning to a lot of things, you just have to know the problem and if it's worth solving with AI and machine learning." How would a company know if the problem that they're maybe encountering is something that could be tackled with AI? Or how do they start thinking about that, especially if they're a smaller company, maybe a B2C company right now, and they are feeling certain pinches in areas, but they're not really sure how to handle that? How do you tell someone to start thinking about this or how do you have a conversation with someone so they can get this on their radar?
Ashwin:
Sure, sure. No, great question. So, it has to go step by step. That's what we always tell them, and first, honestly, a data foundation needs to be in place before you should even be thinking and talking AI. In terms of technology, what data you're collecting, how your metadata is defined, what data sources you're using, what are the connections between all of those, and are you able to establish a single source of truth. You can't put the cart before the horse. You need to make sure you're collecting the right data and it's reliable data.
Ashwin:
Then the other, I would say, even more important piece than that is organization culture. So, technology is all available, and getting your people aligned to data and technology to drive their actions and decisions is very good. If you're not able to achieve that, then all else will fail. So, we tell people that even before you think about advanced analytics or you think about AI, first get your teams into the culture of making decisions through data. We've all made decisions through gut, and gut is nothing but some kind of big data swirling in our heads. How do we move from there to letting data take us 80% of the way, and then still the top 20% can come through our gut? Because there are things we know that we may not have put that data into that system. We may not have been able to capture everything which is in our heads.
Ashwin:
So, we need to first get that culture in place, otherwise the entire analytics and the agenda won't [inaudible 00:18:12]. Once we have that in place then we can start driving different types of analytics programs and business outcome led programs for higher sales, higher profits for customer. Getting better customer experience, and it's not necessary that every problem, as you said, needs AI. Depending on the size of the company, the complexity of the problem, sometimes you might just be able to use a prepackaged solution. And there are prepackaged solutions out there, which maybe can solve your problem instead of developing something custom.
Ashwin:
But yes, if your problem is complex, your data size is large, then yes, you can have substantial rewards by deploying an AI solution, which we've seen with many of our [inaudible] customers.
Stephanie:
Cool. Yeah, great answer. So, when it comes to the companies that are coming to you, there has to be a core theme that many companies are struggling with, where you keep hearing the same recurring problems or the same thing that they want help with. What is that theme or problem if you could kind of group it together, and what did it look like after they implemented some of your analytics and AI got assistance from you guys? Kind of like a case study if you have one.
Ashwin:
Sure, sure. So, yeah, it depends on the company and what stage of the data and analytics maturity they're at, and what their business objectives are. So, sometimes we're asked to help with foundational data issues of assessing data quality of living data infrastructure. We sometimes work with our customers to create access to data and to create across sources, and just provide them with reports they can consume to run their business.
Ashwin:
So, in these cases we might start with a discussion of their business, and what data and metrics they need to make decisions and on what frequency. Sometimes we might get asked to choose or implement a specific data technology. And then for customers who achieve data maturity around data and metrics, then we get asked to drive business outcomes, which in the Ecommerce world it could be conversion rate optimization, it could be upsell, cross-sell, customer churn reduction, personalization.
Ashwin:
Essentially for many clients, we work with them through this life cycle, and this typically takes years. We first build their data foundation, we provide them with key metrics and intelligence to run the business, and then start driving sophisticated analytics programs, and then start leveraging AI in a more sophisticated way. So, it's really a journey, and it keeps evolving. So, it's not something that you come in, you do and you finish.
Stephanie:
Mm-hmm (affirmative), makes sense. So, what are some of the metrics that you provide them. You said you provide metrics around the business. Is there a core set of metrics that you think are really important for every company to look at or how do you think about that?
Ashwin:
Sure. So, again, it depends on the way they view the business and their needs, and typically, this will start with a conversation between us and them of how they run their business, what are key metrics they want to look at? Maybe we might have a point of view what metrics they should look at. But on the tactical side, we might help people optimize metrics or measure metrics like basic things like nuclear revenue, margin, campaign incrementality, lift. So, lift is the extent to which a campaign drove sales over and above the regular run rate of the business.
Ashwin:
These high-level metrics could be broken down to... Within these metrics you might have some metrics like average order value, units per transaction and others like that. Conversion rate typically tends to be a metric of focus, and then these could be compared to past periods, could be segmented by channel, by device, by geo, by transaction
Stephanie:
When it comes to the metrics, have they ever led a company the wrong way where you saw someone look at a certain metric or data point and they were making decisions off that where it was actually giving them bad information? Or you had to advise them like, "You guys shouldn't be looking at this because this isn't helpful. Maybe you should be looking at this instead."
Ashwin:
No, absolutely. So, that happens all the time, and honestly, data if it's garbage in, it's garbage out. It's actually a great question because so often we've seen companies and very large sophisticated companies where different business units, geographies and departments have built their own data systems and their own infrastructure. And then in that process they've gone about defining their own data and their own way. They define a certain metric. Every metric needs to be defined what that metric essentially means, how it's calculated.
Ashwin:
And then if you have different geos, different views defining metrics in different ways and then when you put it all together and you're trying to look at it, it makes no sense. So, we've often seen that happen. It's very important for companies to really have a very clear data foundation and a data strategy, and to have a metadata layer, right? Define the data beforehand. And often sometimes we have to come in and just do that. Sometimes we'll end up just doing their house cleaning with our customers.
Stephanie:
So, if you were to start an Ecommerce company today, would you tell them getting the data aspect right from the start is a priority? Should they make sure they have their data dictionary, and they're talking about how they're actually putting their metrics and collecting the right data? How should someone think about this if they're brand new, and set themselves up for success?
Ashwin:
Absolutely. Absolutely spot on. So, what we call it is a data strategy. So, they need to have a clear data strategy in place as in what data they need to collect, how they're going to define that data, what technology they'll use to collect that data, and what business outcomes they'll drive from that data. How they'll use that data to drive certain business outcomes. And of course, that will evolve because business is dynamic, the business changes, the market changes, and what you track, how you think about things, it has already changed a lot in last few, and it will continue to change further.
Ashwin:
But it's very important to have a data strategy, and it's important to keep reviewing it and enhancing it as you go.
Stephanie:
Are there any data points that you recommend people to collect that maybe they're not already, because I'm sure a lot of platforms that especially newer brands are on probably collect some level of data, but I don't know if it's the right kind of data or what they really need to help them with that longer term data strategy. Are there any key data points where you're like, "Make sure you get this, this and this from the start to really be able to help build towards the future"?
Ashwin:
I mean, it's all these ones that I've mentioned like conversion rate. Obviously, traffic and obviously conversion rate. Different points of failure where drop-off has taken place. Campaign effectiveness, campaign effectiveness by segment. All of these definitely would recommend that people collect. One thing we've discovered is even in today's day and age, one of the biggest failure points which we've talked about for a long time in Ecommerce, but it still holds true even today, is just the checkout process. So, just the customer is willing to give the brand his or her money, but somewhere something doesn't work, something doesn't render, some option doesn't come up and there's drop-off.
Ashwin:
So, definitely collect data around the entire journey and where the drop-off and all of that happens if it does. We found that it's remarkable that even today that seems to be an area of [inaudible 00:27:17].
Stephanie:
Gotcha. So, with all this data that you get access to when you're helping them build their data strategies and all that kind of stuff, is there any surprises that you've seen when going through some of the customers data and helping them organize it and build systems around it. Anything that you saw that you weren't expecting?
Ashwin:
Yeah, so actually we covered a couple of those challenges that we've seen, but the two main sort of surprises that we've seen are the two that we just covered. One is, just like we said, the checkout process. The page takes too long to load or it doesn't render on a particular device or particular browser. And then just the entire confusion around the data asset that the company has and how it's being measured, the metadata, and also there are opportunities for data sharing with partners and with vendors. These are really under leveraged, and if it's done in a thoughtful way it can yield real dividends.
Ashwin:
So, to give you an example, we have this major CPG customer, and we were helping them with their Ecommerce business and with their Ecommerce analytics. And then they said, "For our Ecommerce business we actually have a different supply chain because we have to compete with the needs of Ecommerce customers, which is very different. We need to have quicker deliver times and whatnot." So, they asked us to help them with their supply chain analytics. So, we started doing that, and then we realized these guys were buying their raw material product from farms, from various farms. And the farms actually have a wealth of data that can be combined by our customer across various farms to give them back valuable inputs to improve their efficiency, and also to improve product quality.
Ashwin:
Perhaps there wasn't enough advantage being taken of this opportunity, so I think there are opportunities that businesses just don't realize that they're sitting on, which they're able to leverage.
Stephanie:
Yeah, that's a really good example. We had a similar example when talking to Grubhub where they would share their data back with the restaurants to help them improve. Like hey, this person.... You'd get maybe a bad review whenever someone orders the nachos versus... Or they order at 5:00 PM, like what kind of chef do you have at 5:00 PM versus 9:00 PM when you get better reviews. Again, it's a really interesting point about how companies can partner with each other to share data to help each other.
Stephanie:
Do you think there's any hesitancy around that, because I could also see companies viewing even the farmer as maybe a potential competitor? If they were, I guess, worried about that, or worried about sharing data that could somehow come back and bite them later. Have you seen that hesitancy because I do see this as the way of the future, but I just don't know if I've seen enough people doing it yet?
Ashwin:
Sure. No, you're right. You're absolutely right, and that hesitancy is there, and it's fair concern that there could be competitive issues. So, for example, so many brands sell direct and sell to marketplaces. What information does the marketplace share with the brand, and what information does the brand share with the marketplace? There is a symbiotic benefit because when the brand has its own property that provides a certain richness of information about the product. And while they may still be doing a larger share of their revenue in the marketplace. But these kinds of concerns are there, competitive concerns are there.
Ashwin:
Then there are also concerns about data privacy because data privacy is a big issue and it can be done ensuring compliance, but one has to be careful of how one shares the data. What data is shared? Is it masked? Is it personally identifiable or not? And then the other issue is what we spoke about earlier is that they may be defining data in different ways. So, different entities that are defining their data in different ways, again, if it's shared, it may not lead to the right analysis because it may actually provide different perspective than what it's meant to provide if it's defined in different ways with [inaudible 00:34:10].
Stephanie:
That makes sense. Is there any way that you think it would be best to set up a data sharing program that would also make sure that the company doesn't lose focus? Because like you said, it could be a pretty big process to make sure that you're putting the right data points in there, masking it, actually giving your supplier or whoever it might be insights. Then I could also see that turning into 50% of your day job. So, how do you advise a company to think about that if they are thinking about sharing data with a partner so that they also don't lose focus on their own product?
Ashwin:
Sure, sure. So, and some retailers are doing it today already. Amazon does it, Amazon has Amazon Marketing Services where it shares a fair amount of data with its brand partners. It has certain definitions and certain ways in which it makes it available, which is pretty standard. So, then it's up to the branch to take advantage of it and use it in the way that it makes sense for them. And then they might have the other marketplaces that may be sharing this data in a different way.
Ashwin:
So, that's where we really come in is that we know how the different formats work and the different definitions work, and we bring it together in, let's say a dashboard that makes sense for a brand to consume and process different sources.
Stephanie:
Yeah, that makes sense. So, we keep talking about data definitions and how companies, oftentimes different teams will have different definitions for the data. I have personally experienced this in some of my old roles. And oftentimes, it's because maybe a team is very entrepreneurial where they're trying to start their own project and they're trying to create their own dashboards, and you just all of a sudden have funny different organizations using a different metric for, like you said, the conversions. Have you seen any best practices for large companies to be able to create a global spot for people to go and look into that dictionary to find what this data metric, if it already exists, what it means? Have you ever seen anything like that, that actually works well?
Ashwin:
Yeah, I think it's great question, and honestly there's no real silver bullet. Different companies are using different approaches and strategies, and the entire data and analytics journey is really evolving across companies. Different companies have different organization structures to [inaudible 00:36:45]. One thing that works, which has worked for some companies is having a chief data officer. Somebody who's really part of the CEO's office and who's empowered to drive that agenda throughout the entire business.
Ashwin:
But for certain other types of companies it doesn't work because they're so fairly diversified, they have different business units that have different needs, and they want that dynamism. So, in those cases there is a compromise where every business then goes ahead and sets up its own system and approach and uses that. So, then you typically have, on the one hand you have, let's say the core operation systems like your accounting and things, which work as a single source of truth. And then every business uses what we would call then multiple versions of the truth, which sit on top of a single source of truth and then they create their own logic and versions on top.
Ashwin:
So, we've seen both approaches, and both have their pros and cons. I don't think there's a definite answer.
Stephanie:
So, when it comes to having some versions of the truth in dashboards, I always get hesitant about dashboards because people can interpret them however they want. One person might be like, "Things look great." And the other one might be like... They might expand the time horizon and be like, "Things look horrible." It just depends on who's looking at it and what they want to see or what they think they see. So, how do you... You said that you are providing data a lot of times for these brands to make decisions, business decisions off of the data. How do you, or if you do this at all, guide them on maybe like, "Here's how you should think about this decision"? Or how do you make sure that dashboards are being read correctly?
Stephanie:
And this is not just for your company, but I'm thinking a lot of companies have dashboards that could potentially be advising people the wrong way. Well, not even advising. Providing data and people are reading it the wrong way.
Ashwin:
Sure, sure. No, absolutely. So, there, again, there's one very important is the people aspect and training aspect is very important. How to use that information, what it means, what it doesn't mean. As you said, you can look at something and interpret it in five different ways, and one person can say it's great and one person can say it's terrible. So, that training is very important, and along with that what we do is that we will set a baseline for expected performance for most key metrics. And then we have certain tools where we can actually append insights into those dashboards.
Ashwin:
So, we have this platform called Discovery, where along with dashboards, the system actually generates contextual insights. So, along with a number, it will explain what that number means, and why that number has moved from one point in time to another. So, then that helps people contextualize that information, and as they see that... And they can actually double click on that, so this allows people to interact with that information as well in a natural way. You can actually chat and receive information back on chat, or you can ask a question and the system will... A basic question, it doesn't do very, very deep questions, but basic or an analytical question and the system will understand your question and the calculation can come back and answer. So, things like this-
Stephanie:
That sounds helpful.
Ashwin:
Exactly, and then just on a very basic level, as we work with the business and we understand what they consider as good, not good, average, certain metrics, we can do things like color coding, highlighting into dashboards. Basic things like that can also help to just contextualize.
Stephanie:
Very cool. So, a couple times we've mentioned needing to train employees to have that data mindset and to actually know how to think about data and organize it. Is there any training tools that you recommend or courses or things that you've seen companies have success with by having employees go through them?
Ashwin:
Yeah, courses there are lots, and there are enough courses and there are lots of great trainers out there. But what is very important is you need to have a couple of internal evangelists within the company. There's this new term actually in the industry actually, which has become very popular, citizen data scientists. You have data scientists, which is like the kind of people they have. Technically people who can go deep in the data and who can drive the statistics modeling and all that. But citizen data scientists are essentially the translators. They're the guys who sit in between the executives who are making the decisions and the data scientists at our end.
Ashwin:
In some cases, the citizen data scientist may even sit in our organization, but mostly they sit in the client's organization. These people play a very important role of driving that awareness and culture within the company. It's highly recommended that every company either converts some of their existing resources into that or otherwise they hire some people [inaudible 00:42:20].
Stephanie:
I like that chief data scientists, and I have heard that quite a bit. I think it'd be interesting to have a course depending on if you're in Ecommerce, it'd be nice if there was a certain path that employees could go down to then be well versed and know how to operate within their industry. Because it does seem like there's just so many courses, I don't even know where to begin sometimes with them. And oftentimes you don't know what you need to learn either. Seems like there needs to start being some tracks that you can go down.
Ashwin:
That's true. That's true, and because of AI technology and because of all this transformation, there are lots of new opportunities also, new roles that people can take up. And I do believe that going forward we should all plan to spend some percent of our time learning.
Stephanie:
Yeah, so when it comes to skills, do you see people headed in a direction where everyone's becoming a polymath where they're a jack of all trades with many things, or do you see people really focusing in on a specific skill like, "I am an expert in AI for retail, that's my lane that I swim in"? How do you see the future shaping up for skills?
Ashwin:
Sure. So, I think that there is always an increasing need of course right now for specialists. But there will also always be a need for good generalists because you need specialists who can be deep in a certain function or technology, especially disciplines like AI, but at the same time we need generalists who can make sense of all these different pieces and put them together. So, I think that both career tracks... Therefore, you should just be clear which one of the two you want to be. Trying to be both then you're setting yourself up for failure.
Stephanie:
So, for everyone listening you're good either way. Whatever one you are, you just have to choose. So, to zoom out a little bit into the general Ecommerce industry, what trends or patterns are you most excited about for digital commerce?
Ashwin:
So, well, now we are in the midst of a human crisis, right? So, a humanitarian crisis with the COVID pandemic, and of course, we are all very mindful of the human tragedy, the hardship, the economic hardship it's put on people all over the world. It is exciting that this crisis has presented to really accelerate digital transformation and the use of digital channels. So, we have seen companies that have had digital transformation plans that have been one year, two years, three years long. And then, now they're talking, "Okay, we're going to accelerate and do this in two weeks, in three weeks." And it's actually becoming possible.
Ashwin:
So, what was thought to be impossible is actually becoming possible. We're seeing that if people really want to get these things done, they can. So, that adoption is exciting. It has potential to be... Digital has a potential to be much more personalized, more predictive than brick and mortar commerce. So, it offers a better experience for the customer, and it is good in other ways. It is good for social good as well because you can argue that it will reduce to some extent the impact of climate change. Less traffic, less congestion, less travel. And people get more family time for exercise or hobbies or what have you. So, digital commerce brings with it a lot of benefits as well, which I'm quite excited about.
Stephanie:
Yeah. Yeah, completely agree. It definitely seems like a lot of things have set up very quickly, and it's interesting watching the companies, there's a couple that I've been following, who just aren't moving to Ecommerce. How do you view companies like that who are taking a strong stance not to go online?
Ashwin:
It's interesting. While I do think that the industry at large is moving towards Ecommerce, and not just digital commerce, but digital everything, right? Digital entertainment, digital customer experience or digital communication. Most brands will need to do that to be successful. But sometimes there is always a market for those few contra players, right? Because there may be some consumers who may just want... Not want that new approach and new technology and who make the stand. They might have a spice boutique customer base who works with them. It won't last forever, but maybe it might help them for maybe the next seven, eight years, I don't know.
Stephanie:
Okay, so when it comes to everything that's been happening with the pandemic, how do you lead in times of change at your company or personally?
Ashwin:
So, a leader that has inspired me from his book was Satya Nadella at Microsoft. In his book, one quote that really stood out for me was he wrote that the C in CEO stands for culture. And he also talked about the importance of empathy in leadership. And so, I have taken it upon myself to foster the organization culture that we want to have. The culture that ties us together, and that is really helping us in these times. That culture that we fostered, which is bringing us all together.
Ashwin:
Along with that empathy, understanding of the challenges people are going through. It's not just being work from home, but anxiety about the disease, anxiety about the economic future, and along with that regular communication, transparency in communications. These are some of my key priorities, which are driving some of my actions in this crisis.
Stephanie:
That's great. Are there any challenges that you face when it comes to working remotely?
Ashwin:
So, it's actually been quite a surprise that when the pandemic hit and when we have to transition to work from home across all our different geographies, and 1,200 people moving to work from home, and I'm really surprised at how effective it's been. The work that we do is iterative, it requires collaboration and things like that, and it's working fine. And it seems like thankfully this happened at a time where all these technologies had evolved like Microsoft Teams and Zoom and others where it's still become very much possible. So, now I wonder why we used to be in offices all the time-
Stephanie:
Mm-hmm (affirmative
Ashwin:
Exactly. And so, it's not just us. It's the whole industry just thinking these things. We still need offices for bonding for having certain hard conversations, for inducting new employees, for fostering our organization culture, but we don't need them all the time. We can have 60, 70, 80% work from home. I don't know what the right balance is, we'll discover. But more than-
Stephanie:
Are you changing that at your company? When you can go back, are you only having a certain portion of your employees go back? Or how are you thinking about that?
Ashwin:
So, we've not taken a clear decision yet, but it will be definitely at least 50% work from home, maybe more. Could be 60, 70%. And we'll just have to experiment and find the right answer. We also want to see how things change when the pandemic isn't there and then how that changes people's orientation. But at least 50% work from home, and maybe much more is very much doable. And it will give hopefully people a good balance of engagement in office, and at the same time better quality of life because of [inaudible] and things like that.
Stephanie:
Yeah. Yeah, completely agree.
Ashwin:
But in terms of the pandemic, while work is not suffering, but the bigger issue is the emotional challenge. As I said earlier, people are not meeting their colleagues, not meeting their friends, so they have anxiety. Here we've tried to do a lot of things. We've tried to engage people through various activities like talent [inaudible] or talent contests and things like that. Yeah, so I'm amazed at the kind of talent we have in the company. People are singing and drawing and cooking.
Ashwin:
We've had different types of training. I rolled out a new skill learning challenge, where I challenged every employee to learn a new skill to enhance their career over the next 60 days. I said that I'll-
Stephanie:
How are you tracking that?
Ashwin:
So, it's not mandated. It's just a challenge, which is free for everyone to sign up for or not. But at the end of 60 days, if you have done it, you can report, and there'll be a prize for person or people who have enhanced their career prospects the most, and prizes for leaders who have helped their team members enhance their career prospects. Just to set an example, I said I'll learn how to program and write code in Python.
Stephanie:
Oh, man.
Ashwin:
It's been fun. I'm doing it with my daughter and it's been fun. And we also are providing some resources for things like mental health counseling and things like that if people are feeling anxiety and depression.
Stephanie:
That's great. Really good examples of things that other companies could take and implement on their own too. Especially the talent thing, that's really fun.
Ashwin:
Yeah.
Stephanie:
All right, you probably get this question a lot, but I have to end the interview. So, I'm sure a lot of people have asked you this or want to know this. Do you think that AI will replace jobs or will it just augment jobs and maybe some will not be around anymore, but it will also create new opportunities? What's your take on that?
Ashwin:
Sure, that's a great question, and that's a question that so many books have been written on it, and there's so much discussion in the industry. I'll just give you my point of view, and there are some people who think quite differently as well. But AI, what AI does is AI doesn't really automate jobs, it automates tasks. When you think of a job, any person's job is made up of a bunch of different tasks. Typically, what we've seen is the AI systems will automate some of those tasks, so that person is not becoming redundant, but some of their tasks are freed up.
Ashwin:
And so, then that gives the opportunity to use that individual to then do other things. To drive more personalized experiences, to take the businesses to the next level and things like that. But then that requires that right orientation in that individual, and then requires training. The company to provide that training to those people, or for the people to also take interest and train themselves through resources available. So, like I said, I think that now everybody in this new environment will have to consistently be training and upgrading their skills.
Ashwin:
But do I think that AI is going to come and replace other jobs? No, I don't think so. I think it will free us up from certain tasks and will enable us to widen the scope of [inaudible 00:57:19].
Stephanie:
Well, that is a good positive way to end the interview. Before we move into the lightning round, are you ready Ashwin?
Stephanie:
So, the lightning round is where I ask a question, and you have one minute or less to answer. And we will start with some easier ones. Once you can travel again, what's up next in your travel destinations?
Ashwin:
Oh, wow. Okay, well, I'd love to go to the Maldives.
Stephanie:
Great.
Ashwin:
Yeah, I'd like to go and do some scuba diving.
Stephanie:
Sounds amazing. What's up next on your Netflix or Hulu or wherever you watch TV shows? What are you watching?
Ashwin:
So, I'm currently watching Money Heist on Netflix. I don't know if you've watched Money Heist-
Stephanie:
I haven't.
Ashwin:
... know Money Heist on Netflix.
Stephanie:
No.
Ashwin:
That Spanish adapted English show, pretty cool. And I also like the historical genre, so I'm watching some shows like Last Kingdom and Vikings.
Stephanie:
Mm-hmm (affirmative), sounds good. I'll have to check those out. What's up next on your reading list, other than Python 101 manuals?
Ashwin:
So, that is taking up some of my reading time right now, and I'm trying to be disciplined about not wasting time consuming just unlimited amounts of coronavirus news and doing more productive things. So, right now I'm reading The Alliance by Reid Hoffman, and I'm also reading Why Should Anyone Be Led by You? Robert Goffee.
Stephanie:
Oh, I will have to check out that second one, I've heard of the first one. All right, the last harder question, what one thing will have the biggest impact on Ecommerce in the next year?
Ashwin:
Well, what's already had the biggest impact is the COVID crisis, but in the next one to two to three years, I think it's going to be AI.
Stephanie:
Well, that's a perfect way to sum up the interview. Ashwin, thank you so much for coming on the show. It's been a blast, and we'd love to talk again soon.
Ashwin:
Thank you so much Stephanie, it's been a pleasure. I look forward to talk to you soon.
You may only know Kellogg’s as the company that makes your favorite cereal. But there is so much more to the company than just delicious treats. Robert Birse is the Head of Global B2B Ecommerce at Kellogg’s, and he has been leading the charge to position Kellogg’s as one of the leaders in creating scalable B2B Ecommerce strategies. On this episode of Up Next in Commerce, Robert explains all the ways that Kellogg’s is upending traditional Ecommerce strategies in order to help customers find greater success. Using technology like A.I. and machine learning, and by developing a platform that all of their customers and partners can use, Kellogg’s has been pushing the ball forward on bringing small and large businesses into the world of Ecommerce and helping them get the most out of their Ecommerce strategies.
3 Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
---Stephanie:
Welcome to Up Next in Commerce. This is Stephanie Postles, your host from Mission.org. Today I'm very excited, we have Robert Birse on the show, the head of Global B2B & B2B2C E-commerce at Kellogg. Rob, how's it going?
Robert:
It's going great. Thank you very much, from captivity.
Stephanie:
Yes, yes. How is life in captivity?
Robert:
Well, I'm thinking about calling Amnesty International, see if they can get me out of here.
Stephanie:
Well, we were just talking about what life looks like right now, just us eating lots of Cheese-Its on our bed at home, calling into Zoom calls, or maybe that's just me. Maybe that's not you.
Robert:
No, I think that's a typical picture across the world right now.
Stephanie:
Yeah, which is okay. Temporarily, it's okay. So, I saw you have a very long history in E-commerce. I think I saw dating back to even early 2000s, right?
Robert:
I'm afraid it was in the '90s.
Stephanie:
Oh nice, okay perfect. Well, I would love to hear a bit about your background and what led you into E-commerce.
Robert:
Sure. Well, I was working for a catalog distributor, so not a distributor of catalog. We use the catalog as our medium to communicate with our customers who were predominantly engineers in factories across Europe. The business that I was responsible for at the time was a small specialist distributor, and we were struggling a little bit to find our position as E-commerce was starting to take more of a role in the consumer engagement or the customer engagement in our case. So we were on the tube and this was the late '90s, and we took a digital transformation, even though digital still wasn't really a bonafide strategy because it was only emerging. The first task we undertook was to create a digital asset library from all the bromides and things that we'd cumulated to support the catalog production.
Robert:
So we partnered with a startup in London, a bunch of basically college graduates who were trying to create the first digital content management system. And that was more than 20 years ago. So we did that and we started to work to create a digital presence online, starting with static content and then moving into transactional capabilities. It helped transform that little business into something that had a much greater future. So that was my first introduction to digital and then never looked back since to be honest.
Stephanie:
Oh, that's great. What kind of transformations has your career seen since the starting point in the '90s to now? And what does your role look like now at Kellogg?
Robert:
Yeah, I mean, I've used digital disruption and innovation in all the roles I've had since that position in the UK to varying degrees of impact. When I joined Allied, and I moved to Texas, we transformed that business collectively from a couple of hundred million to 600 million in a very short period of time. Just really ensuring that we unified the sales channels with the digital channel. In the early '90s, or early 2000s was very popular to Ring-fence E-com as a separate channel, and I felt that was wrong. So when we moved to the US I tried to ensure that the unification happens, so it was the best one to punch we could possibly give our customers, we're always on capability with the human interaction. I have used that principle throughout my career to build success.
Robert:
Ultimately all the way to Kelloggs where now, I'm using technology to create value for our customers, changing the paradigm that was always traditional in sales engagement of how do I get my customers to buy more? Now the principle behind our E-commerce strategy from a B2B perspective, is how do we enable our customers to sell more? And then we will be the recipients of the downstream benefit in due course, and that's a big change in the approach.
Stephanie:
So what did your first, maybe like 90 days look like? When you came to Kellogg's and you saw the lay of the land, what were some of the initial things that you were like, we have to do this, or have to shift this? What did you do?
Robert:
Well, the train was leaving the station when I joined Kellogg and I decided to embark on a pilot, a B2B pilot, in Brazil of all markets, one of the hardest B2B markets in the world. So it was an interesting challenge to ramp up very quickly. Now, thankfully that we're using Salesforce Commerce Cloud as the technology platform, which I was very familiar with. So that was okay, but getting familiar with our business model in Brazil, which was a direct store delivery model was a different beast for me. And then obviously with Portuguese language challenges, it was an interesting 90 days, but it was certainly a massive. You know the saying, jump in the deep end and [inaudible] and that's where I found myself.
Stephanie:
Thankfully you're still swimming today, which we all are glad about. So what does your day to day look like now? And how would I think about B2B when it comes to Kellogg's? Because from a consumer perspective, I don't really think about what goes on behind the scenes. I just go to my local whole foods. I find my cereals and my RXbars, and I don't think about how it gets there or how maybe it gets to a smaller Mom-and-pop stops. So how do I think about Kellogg's B2B experience and B2B2C experience?
Robert:
Well, I hope the consumer will start to see how B2B is impacting the shopper experience, not directly but indirectly. So as part of our mission, we're trying to use technology B2B platforms to create a conduit where we can influence, educate, and inform and enable our retail, especially our independent small retailers. Not a frequency store or space in particular, to be better store owners and to create a better in store experience. As well as use some of the modern engagement tactics, such as social media engagement to bring more food traffic to their store from within their community. Therefore, strengthen their business and providing a jumping off point for them to become more successful in the future.
Robert:
So the consumer should recognize that when they go to the store, the store has always got the product they're expecting to find in the store, and if that product is displayed in a fashion that's compelling and it's positioned next to other products, they well, that would be the perfect combination. Then B2B commerce, modern B2B commerce is starting to have an impact on the buying experience. So that's what goes on behind the scenes, and that's what our vision is built around.
Stephanie:
Yeah. That is something I never think about, is this product positioned next to another one to make a better, maybe make me buy more. How do you figure out what products should be next to each other? And how do you work with the store owners to ensure that they abide by those rules? To make sure that, maybe not rules, but it'll also help them sell more as well. So how do you work with the store owners to creating a partnership?
Robert:
Well, in the past, it was always through traditional sales engagement. The Lucas success has always been a principle behind how we've engaged our retailers in using planograms and driving compliance around these planograms and the science behind them has been well understood, and the discipline has been in place for a long time. However, the cost of serving and maintain that relationship at a cadence that we need to continue has become ever more challenging. So digital is helping to change that paradigm and allowing us to go back to the long tail and really start to help our smaller retailers to really become stronger and more effective in their day to day life. So we see things like AI driving the intelligence around product recommendations for a store type, for instance.
Robert:
So if you are an independent store owner and you are in a rural environment where you are a 1,000 square feet and two the cash registers, that we would like to be able to cluster you with other retailers just like you, do the analysis and determine what you must stock, what you could stock and what you shouldn't stock. And then ensure that we're talking to the owner operator on a cadence that would allow us to then do more of that and offer and recommend as consumers trends change. So we're always ahead of demand, not buying demand in the long tail.
Stephanie:
How do you stay ahead of demand? What kind of tools and technologies are you using to ensure that you're able to quickly react to consumer buying behaviors or inventory levels for the store owner? How do you stay ahead of those things?
Robert:
Well, you're giving me way too much credit to say that we're actually ahead of those things, we're aiming to be ahead of these things. So let's make sure that's completely clear and we're being transparent, there's a lot of work to do here. So what we see is the ability to take all that historic purchasing information, and then combine it with social listening to see what consumers are talking about, then plugging in triggers like weather and other influences on buying patterns and then continue to feed machine learning and AI logic to build a picture that is constantly dynamic and changing so that we can then say to the customer, the retailer, "Hey, this product is starting to decline its popularity so we're recommending you start to reduce the inventory you carry. And by the way, this product is gaining popularity and we're going to drive a marketing campaign in your market to promote it. So now it'll become a hot commodity, please accept this recommendation and capitalize on that demand and it will happen in the coming weeks." That's what we're aiming for.
Stephanie:
Do you see the partners being ready to accept that and wanting to stock the products that you're recommending? Are they trusting your guidance or has it been an uphill battle when it comes to those recommendations?
Robert:
Well, first of all, the primary segment we're focused on is that high frequency store, independent retailer, a C-store, a convenience store that kind of customer segment, and they've been incredibly underserved for many years now. So any insight that we've given them so far, and the questions we've asked them about would it just be of interest, they've all unanimously said, this is what we've been asking for years, please help me grow my business. So I think the appetite is definitely there.
Stephanie:
Yeah, that's amazing. How do you set up platforms and systems for these different businesses? Because I could see each one needing something a little bit different. So how do you scale that model to provide the data to each company in a different way, or each, like you said, store in a different way?
Robert:
Right. It has to be done without human intervention to start with, we cannot be responsible for building an army to support such endeavor. So at Kellogg we're really focused on a single global platform, one ecosystem of applications that will scale globally across markets and channels and the customer segments within these channels, with a lower cost of ownership as we scale it out. So that's the first guiding principle. The second end is, if a machine can do it, we probably shouldn't do it. So everything is going to be machine driven. And then by rewarding the owner operators to complete their profiles, that allows us to capture information like, is your store rural, suburban, or urban, gives us another great data point to then create more effective costuming.
Robert:
And then in these clusters, the analytics can be very powerful and the machine can then start to communicate through marketing automation on a cadence that we could never possibly imagine before, and then touch them with relevant content that is absolutely pertinent to their business. So I would make a recommendation to you and your store that you're missing these two products, you should this and if you do stock these, we predict that you will make X number of dollars incrementally every year thereafter. And that's very powerful for comparison.
Stephanie:
Yeah, no, that's great. Are there any pitfalls or learnings when going about this partnership model and helping the retail stores that you saw along the way that you would find maybe other companies or brands will need to do this, where you're like, "Hey, we ran into this problem along the way, or this was a big hiccup that other people could probably avoid if you listen to this podcast." Any advice around that?
Robert:
Well, I think it's going to be the same answer that everybody gives, and that's really focused on education, change management. You're asking people to change their habits. So in emerging markets like Brazil, for us high growth markets, there's a full service that the reps provide to date. And so the store owners are accustomed to doing a particular style of business with us, we're asking them to change that and be more responsive from a digital perspective. Now corporate, for all the bad and sadness that's come with corporate, it has been the catalyst for changing the perspective of many retailers to how they should interact with their brands. So that's been that the silver lining of corporate is it's elevated the position of why B2B could be a very important tool in their growth strategy going forward. And that's changed the perspective of consumers considerably.
Stephanie:
Yeah, that's a good silver lining. So I saw that you also created a mobile app to reach some of the smaller retail clients. Can you tell me a bit about what problem you were facing and why you thought mobile was the best way to solve that problem?
Robert:
Well, that's a really easy one is the business tool of choice for small business owners. The internet and the mobile device and companies like Kellogg's are now developing solutions, online solutions that years ago would have been financially out of reach. Now they have all these tools that they can run their business, and that's why mobile is so important to us.
Stephanie:
Got it. Do you ever feel like you're encumbered by trying to meet your partner obligations or that the experiences maybe can't be what you want them to be because of certain obligations you have with partners?
Robert:
No, I feel more enabled to be honest, because it's a difficult market. The times are always challenging. So anything that might add value to a relationship, I think it goes a long way to creating a winning business scenario. So don't feel there's any barriers, maybe some adoption challenges that those would have been there regardless. So I feel that there's such a large opportunity to use Ecommerce to change our engagement model, that there're enough partners that have put their hand up and will put their hand up to say, "Yeah, I would love to be part of that because I can see that could create competitive advantage for me and alone I can't do it but in partnership with you, I feel that you could guide us and help us aspire to our own digital endeavors going forward."
Stephanie:
Yeah, completely agree. How do these retail partners keep track of all their other brands? So I'm thinking, if Kellogg's has their website that you would log into and you would look at the recommendations and get your orders and your inventory and all that kind of stuff. How would a retailer keep track of everything else they have in their store too? Is there like a single source that they can rely on or how do they think about that?
Robert:
So that's a great question, and it's greatly misunderstood. There is no real lifespan for a single application to serve a single brand in a retail environment. Who in their right mind would manage 50 different applications from different brands? So for two different models, I foresee. So in a mature, disciplined distribution based market, such as North America where most of our distribution wholesale partners have a web presence to date with E-commerce capabilities, we will be looking to integrate into that, to improve the experience in that environment. So think about a store within a store concept, and that would be where I would see brands like Kellogg's and others prospering and allowing the retailer to buy across a broad selection of products available from the distributor, but also to technically punch out to reach my Kellogg experience, where they can see their performance plus with their peer group to get the recommendations that we're offering, being informed about trends and product demand and so forth.
Robert:
And then if they're inclined to confer upon a recommendation we've given them that product order will go back into the distributor environment to be processed in a normal fashion, thereby allowing them to continue to go about buying other products for the store. Now in markets where distribution isn't as well evolved from a digital perspective, then marketplaces become the answer to ensuring that a retailer can go to a marketplace designed for their customer segment, with brands that represent at least 40% of their shelf. So that there's enough for them to do in one execution to not create administration, but to reduce administration in the procurement of product.
Stephanie:
I got it, that makes sense. How do you think about working with different platforms? You just mentioned marketplaces and I saw when you go on Kellogg's website, you direct people to go on platforms like Amazon and then also CVS and Target. How do you balance working with bigger stores and retail partners, and then also platforms like Amazon within your Kellogg strategy for E-commerce?
Robert:
Well, there's a lot of room for improvement on both ends, so in the end you're referring to where the large platforms are in play, there's a ton of up side to improve content, to improved recommendations, to really get deeper integration, that we can take all that learning and insight and present it as a more refined offer list dynamic. Obviously the price part architecture element of ensuring that what we're presenting is something that's scalable and profitable for us, as well is a key factor in these relationships at both ends, of course. I would say that they're not mutually exclusive in the sense that, we can operate in two spectrums here. So in the large platform, but also taking that technology and applying it to enable the long tail to prosper.
Robert:
Monetizing the long tail is actually, a very worthy prize worth unlocking for every CPG company in the world. And I think that's where the glue on your food is to be honest, we do a great job in most cases with our Walmart's, and our Target's and our Amazon's. We don't do a tremendous job today with a smaller, high-frequency stores as an example.
Stephanie:
Yeah. That long tail does seem really important. How would you advise other CPG brands to engage with those? Like you said, the long tail?
Robert:
Do you know, I think partnerships are key. The synergistic product from more than one brand that you could curate into a collective offer, there is a lot of power in that. So strengthen in numbers has always been the case. So I think we could really team up better in the industry to make a more powerful proposition to our retailers, that creates greater value, greater economies of scale, and it's easier to adopt. And I think that's what's missing today because everybody is a little nervous about working together, trade secrets and what if the competition find out. But honestly in my entire career, I've always had a hard time just getting our innovation execution done, nevermind, stealing somebody else's in time. So in reality, it will never happen, but there's an insecurity, that's common to human nature, I guess.
Stephanie:
Yeah, I see the same thing in startup world where people don't want to share their ideas and you're like, "Trust me, I've got my own stuff to work on, I'm not trying to steal your idea and build a whole nother startup on top of the stuff that I'm working on. Don't worry."
Robert:
So true.
Stephanie:
Have you seen any successes when it comes to those partnerships that you would advise others to think about it this way, when it comes to letting people lower down their guards and allowing them to see this could have benefit for everyone, any successful case studies there?
Robert:
No, nothing is mature as a case study yet. We're still very much in the embryonic stage of developing this strategy. You can see it though in play from time to time when we do joint ventures with other brands targeting the consumer, to be honest. We did last year, we did a very exciting campaign with cheeses and house wine, that was the box wine company.
Stephanie:
Oh, tell me more about that?
Robert:
Well, this one is very interesting and very simple, it was a box wine. The box had to be extended to contain cheeses. Cheese and wine, as you know, is a perfect combination. I personally was just eager to get my hands on a box and, yeah, that morning it went live at nine o'clock and we sold everything in about 40 seconds, I believe. So none of us got any, so the power-
Stephanie:
You're still on the wait list.
Robert:
It's never coming back, I don't think.
Stephanie:
Oh, no.
Robert:
We have to recover from the demand. Yeah, cheeses doesn't need much help [inaudible] as I said, we can't make enough to meet consumer demand. That's a great example of when you can join forces and just make the proposition more compelling. So I see that playing out in the B2B space as well, as I said before, together we're stronger.
Stephanie:
Yeah. How do you think about what partnerships are advantageous to have? It seems like it'd be hard, and I could see a lot of brands maybe partnering randomly, and you're like, "Ah, that's not really even helpful to the consumer." So how would you think about striking up new partnerships in a way that's mutually beneficial to both brands and is good for a longer term strategy?
Robert:
Well, it depends what your ambition is, of course. So there'll be different solutions for different approaches. I mean, obviously, we wouldn't partner with a Benjamin Moore Paint brand, there's no correlation. So within the food industry taking snacks as an example, the beverage industry is the perfect partner, beer, wine, alcohol, Cheez-It and Pringles, it's a perfect combination. So the same as for cereal, milk and yogurt, it's a perfect combination. So there's definitely groupings of product where you can see which brands aspire to the same vision, it would be critically important as well. So just because the product has synergy doesn't mean that the strategy is there, you can't force a round peg into a square hole.
Robert:
So my first checkbox criteria would be, is the digital ambition the same? Do both companies, or do three or four companies aspire to own breakfast across all hospitality in the world? Well, if we do, then we've got a common objective. Now, how do we go about it together is the next step.
Stephanie:
That's great. It seems like the larger brands too, might have to give a little bit more, or provide a little bit more help to the smaller brands, if they're picking someone like ... If you were partnering with a smaller wine company or something, it seems like you might have to be ready to do maybe the 80% of the heavy lifting, because maybe they don't have the resources or the budget. Is that kind of how you're seeing things play out when you pick partners, that sometimes Kellogg's has to do the heavier lifting to create a partnership?
Robert:
Yeah. Even with partners with some of the bigger brands we're actually willing to do the heavy lifting. We made a decision with our leadership to own our destiny in this space. So it's from top to bottom, and I do see that small startups in an incubator fashion, we would be a great big brother to get products launched. And we have our own startup business within Kellogg's where we're giving grants to products like Leaf Jerky and so forth, which is a different plant-based product that challenges the status quo of what we felt like Jerky was in the past. So yeah, I could see that there could be a market verticals that we would go after, there might be health club awaited before we joined the Kohler, we were talking about RXbars and examples.
Robert:
So predominantly through health clubs and so forth, why not probiotic yogurts? Why not non-alcohol based beer? So why not the combination? All plays well to the health industry, so there might be some small companies in there that are pioneering excellent alternatives that we would be, I think, more than delighted to partner with them.
Stephanie:
Yeah. No, that's great. So Kellogg's is over, they've been around for over a 100 years, right? Since 1906, is that correct?
Robert:
Yeah, it's correct.
Stephanie:
Okay. Oh, good memory, Stephanie. So with a company that's been around for that long, how do you think about making sure that the company continues to innovate? Like you said, you have a startup within Kellogg's, what do you see within that startup? What kind of products do you see coming out of that? And would you advise a lot of other large companies to also put on their startup hat to compete with these B2C companies that are all popping up everywhere?
Robert:
Well, change has become the new norm. I mean, taking COVID aside, people want to taste new things, that is my impression, anyway. I think, there's an appetite for new and more challenging flavors and so forth. So in the food industry, I can see that the innovation around our product offers is actually critical for success. But the innovation doesn't stop there though, we have to be more innovative in how we present these products, how we ensure these products create value other than just in flavor, but in health and wellbeing as well. So Kellogg has always been a very health driven business right from its inception, that continues to be an underpinning philosophy of our company. I see a great deal of passion in our business and investment for innovation. It's not just digital, it's all down to food, not innovation kitchens and the chefs we have, they're inspired to really go find new products.
Robert:
We do a great job of creating an incubator within our business by constantly searching for ideas within our employee base around what we could do with Kellogg products. So I think you look inwards and outwards there's no stone not worth turning over to find out an idea about a new product.
Stephanie:
Yeah, that makes sense. When you mentioned marketing earlier, it seems like you would have to market to two different audiences. You have to market to your retail partners and then also to the consumers, how do you go about, maybe within your platform where you're selling to retailers, do you market differently than how you do to consumers? Or how do you think about that?
Robert:
Well, so now you bring up an interesting subject in the sense that direct to consumer, which could in sense be side by side be B2B, does provide you with an awesome channel to test the appeal of new product, and affordable cost if you engineered it appropriately so that you've got something you can stand up and tear it down quite quickly without major investment. So I don't know if you would really want to continually be knocking on the door of your retailers with new products without having some good market data behind it, to say that this will sell. And so testing that product in market that becomes a critical part of the evolution of the go to market strategy. So I see traffic consumer testing being interesting proposition for companies like Kellogg's going forward.
Stephanie:
Got it. So you test the product with a market first, and then you go to your partners and say, "Hey, a lot of people like this, you should also put this in your store?"
Robert:
Absolutely, because that's where we get the scale, and then we can then turn on all of our abilities to cross sale and use some of the capabilities we talked to earlier about in the B2B platform, ensuring that our retailers know how to create success with new product. There's another interesting aspect of that too, so if you'd go back to the conversation around the long tail of retail, these companies, these business owners don't have sophisticated inventory management tool. So one of the biggest challenges we're solving for is ensuring that new products, our products we've recommended for that retail when they're placed that they stay. Because we see a lot of occasions where a new product is being placed or our product from the portfolio that they should be adopting, has been taken.
Robert:
And then a week later has been sold and never replaced because somebody in the evening has just redistributed product on the shelf to complete the look and that position be lost. And so making sure that these products are reordered and reordered again, until they become habitual, their presence is habitual on the shelf is a massive opportunity so it's not about just new product and innovation, it's also about ensuring the stickiness of product they are placing on a shelf.
Stephanie:
What ways do you engage with your partners to make sure that they, like you say, keep reordering, have you seen any best practices to stay top of mind with these people even if they do excellent and lose a spot in the shelf. They're like, "Oh, hey, this product actually belongs there." How do you go about building those patterns?
Robert:
Well, there's also technology becoming available from scanning to just constant recognition. So there are solutions coming, they're not particularly affordable today for the segment we've been addressing, which is the high frequency stores segment. So the challenge has been resolved by manpower up until now, and of course, that's not very affordable. It's interesting when you go to markets like India, if you don't show up something else will steal your space.
Stephanie:
[inaudible 00:32:09].
Robert:
I know, so there's a whole bunch of, I must run ... Making sure that you hold onto the shelf space that you've worked so hard to attain. So we're looking at tools like, asking our retailers to take shelfies using the robot cameras and uploading-
Stephanie:
Shelfie? Tell me more about a shelfie.
Robert:
So a shelfie is just, the shelf equivalent of your selfie, in the sense that, we're to set challenges for our retailers and say, "Listen, take a shelf of your cereal display." And then we'll match that image to the planet ground that the AI has in its memory, and then give them a score, and that score will then be translated into points, Kellogg points that they can use for purchasing everything from a discount to cleaning services, say for instance, in the future. So one thing happens in this process, is we ask them to do a challenge, before the actually did their pictures there is a pretty good chance they're going to address any gaps on their shelf. So we see it being a little self serving and helping us get a better position in the store, but also then just educating the retail around best practice and reinforcing that practice. So the look of success is getting closer and closer in the package stores within their reach. So that's just one example, I guess.
Stephanie:
Yeah, no, that's awesome. That's a really fun example. Have you seen the rewards program that you have actually really incentivize these retailers to, like you said, take these shelfies and engage with your brand more?
Robert:
No, again, you gave far too much justice. I talk with authority, but we're still very much in the theory and the testing, the technology is still catching up, but we see rewards and we have a rewards engine built into our platform to date. We haven't really turned it on to its full force yet, but it will be a cornerstone of our strategy. We're looking at gamification rewards and recognition as being a key driver of behavior going forward, and creating the path to best practice. So it will be a constant in our engagement strategy, so at eight o'clock, nine o'clock at night, we'll be connecting with an owner operator of a store through WhatsApp or email or text to say, listen, we have a challenge for you, and this challenge is worth a 1,000 Kellogg points. If you go and take that shelfie or if you can tell us, answer this question about the new product you recently stocked, did it sell out, did customers come back and repurchase? Did you get any feedback in any shape or fashion about the flavor? What did they think, and reward them for that first party data insight.
Robert:
Now, all of a sudden you've got this incredible ability to harvest information that could be invaluable to your R and D teams. At the same time, you've got the opportunity to influence best practice and take the customer on a journey, the customer being the retail owner operator on a journey to become better at their craft, which is super exciting to us.
Stephanie:
No, that's really awesome. It seems like there'd be room to build a community among these store owners, to all do the challenges together and to talk about best practices. Have you all explored that?
Robert:
We're exploring it. We're definitely exploring it. So it came from, when we looked at one of our customer's segments being a K through 12 schools starting here in North America, there's a lot of schools that are rural. They're isolated, they don't have large school communities to support them, and there's so many challenges that they face from allergies and health and nutrition, taking food and making education subject matter. All of these things we're looking into to say, okay, so our community together would be again stronger. So connect schools that are similar together and then connect schools that are not similar and let them use our product as a teaching aid. So we aspire, this is long away from happening.
Robert:
So please don't take this as something that's been executed today, but we can see that sometime in the future, we'll create a syllabus around corn and our cornflakes and how it changes the flavor of patterns in Japan compared to Idaho, and then to schools when their kids are having their breakfast, they can share the differences in the sweetness and so forth because the [inaudible 00:36:46], the climate is different so that the plant takes on a different flavor. So that's a subject that you could turn into a syllabus and education and bring kids together. Yeah, it is a very exciting proposition for us and different from anything we've ever done before.
Stephanie:
Yeah, that's awesome. And I did not know that flavors around the world would be different. So you definitely taught me something brand new here.
Robert:
Yeah. We've done a few things at Kellogg's in the office in Chicago where they've taken five or six or seven different sources of cornflakes and put them all in independent bowls unmarked, and then tasted them and people were convinced that sugar had been applied and so forth. And it actually hadn't, it was just that the different produce, produce different flavors and it was quite an epiphany for many of the folks tasting them.
Stephanie:
Yeah, no, that's really interesting. So when it comes to your B2B platform, what are some of the best capabilities that you're using today that maybe you weren't using a year or two ago?
Robert:
Again, cornerstone of what I'm trying to do with the B2B platform is create efficiency, and so to create efficiency, the first thing I'm trying to tackle is preventing any waste of time as it pertains to identifying a product. So we are integrating scan into the mobile device, using the mobile device camera, quickly scan that barcode it will take you straight to the product in our platform. So no need to key in, no need to type in the barcode or any keywords that are associated, just quick scan within less than a second you're on the product detail page, and you got a path to purchase with one click. You've got a path to understand your performance versus your peer group with one click. And you've got a path to understand how to sell more by accessing the tools that give you the toolkits that will help you do that. So that's, that's one aspect.
Robert:
The second aspect is to create value around ensuring that big data is conferred into some form of exportable logic that says that, hey, you are not creating the optimal product assortment. Companies, businesses, stores, like you sell these products successfully, and you're missing revenue as a result of not taking them. So here's a recommendation for these products. Here's the stocking quantity that we believe you should take. And here's a revenue projection based on MSRP from the class that you belong to that. That to me is transformational in so many ways.
Stephanie:
So are you using AI behind the scenes to create a lot of these recommendations? And do you think a lot of brands are also doing this or is there a lot of room for them to adopt to this technology?
Robert:
Yeah. AI is the key to success. So we've talked about AI for several years now, and it has really not delivered what it says in the box as of yet, but I am a 100% confident we're getting closer and closer all the time. Anybody that's been getting with AI knows that a lot of teaching into the logic that supports the output, but we're definitely getting closer to being able to use it at scale. What I see in the next year to 24 months will be the ability to then turn on that dynamic, self-sustaining logic that continues to morph as it reads more data and continue to present very tailored recommendations to all of our retailers worldwide, simultaneously because the computing power, obviously, continues to scale at an exponential rate. So it doesn't do necessarily what it needs to do today, but the path is now clear, and I think it's just around the corner, to be honest.
Stephanie:
Yeah, no, I completely agree. Are you all training your own models for AI? Are you relying on a platform to help you with that? How would you recommend another brand or a larger or smaller brands to start adopting this technology or start experimenting with it?
Robert:
Well, there's a lot of data scientists that they're all better actor than I am for sure.
Stephanie:
Sure?
Robert:
Yeah, I'm absolutely positive. So we've been looking outward to smaller businesses, as well as some of our larger partners to use their experience. Because clearly they see the opportunity too, so I would continue to just make sure that you're using a blend of traditional partnerships and innovative new businesses that come up with some left-field idea about how to resolve one of the challenges. Constantly looking for new ideas from the marketplace, from the periphery where there's new startups starting and looking for an agent, they might have a great concept that we can use. I often equate it to something you might see in a Paris fashion show where coming in the the runway is a presentation that could be quite outrageous, but some form of it we'll get to the high street that will be very popular with the consumer. So a really wild idea can really translate and be boiled down to something that can be a game changer in reality. So never assume that it has to be something that's already in place, but to be open to suggestion and I try and work on a daily basis to be that way.
Stephanie:
Yeah. I think that's a really good lesson too, to look at tangental markets and industries that could also help influence not only new products, but also E-commerce strategies and just like keeping tabs on what other people are doing, especially startups who are moving quickly and experimenting quickly. How do you keep tabs on companies like that stay up to date with what other people are trying?
Robert:
Well in prior lives, working for brands that were less recognized, it was on me to continue to search and find, and encourage my team to continue to look for these innovations. Working for a brand like Kellogg's, there's a lot of people come calling. So I'm obviously in a fortunate position to be exposed to a lot of these ideas on a day by day basis from various entrepreneurs. I feel that Kellogg's could prosper from taking on the idea so that role has changed. So I'm very fortunate in that regard to be exposed to great ideas across the industry and not just from within the food and beverage industry as an example but from sending an upturn to, you name it aerospace, there's a lot of innovation going on.
Stephanie:
What is definition of success for E-commerce? What kind of metrics do you look at? What do you think is successful?
Robert:
Yes. Okay, so none of the traditional metrics are really going to be of any interest. So for me, the success has moved upstream. So when I think about what does success look like from a digital perspective in B2B, it's very much around ensuring that the retailer is selling more products more effectively and more efficiently, and putting more money in their pocket. So if I can look back and say that all the retailers that we supply our products are prospering as a result of our E-commerce engagement, because we're delivering not just the fundamentals of E-commerce, which is about auto management and everything else that comes with it. That's just table stakes, whatever else comes with it, where we create the value through AI recommendations, access to toolkits, marketing campaigns, guidance on how to create the perfect store. If that's translating into more dollars at the point of sale, then that's what success looks like to B2B commerce going forward, in my opinion.
Stephanie:
Yeah. It seems like that partnership and education is really important in B2B, have you guys seen success with doing that?
Robert:
Well, again, I wish I had something much more tangible to give you in terms of the successful metrics. This is still ground zero, we're still very much in day one of our B2B engagement. I think you will find that modern B2B is still in day one globally across both industries. So there's still a lot of learning, a lot of testing, a lot of refinement to do, but the appetite is there. When I talk to other brands, they feel the same way about how we can harness technology to create value. The retailers I've talked to they are hungry, and so is our distributor and wholesaler partners too, to participate in this new era of one-on-one engagement at a scale that's affordable and on a cadence that has never been achievable before. Just that combination of menu items is really driving the hunger to get to that point quicker.
Robert:
I wish I had to go quicker, we're definitely trying to get there quicker, but it just takes time to build. And so ask me again in six or 12 months, and I'll be in a far stronger position to give you a better answer.
Stephanie:
Oh, you've just invited yourself around two. So with things changing so quickly, are there any new or emerging digital channels that you all are focused on or trying out?
Robert:
Again, comes back to just watching and keeping an eye on how things are changing, an example would be, for instance, say WhatsApp for instance. So WhatsApp starts life as a messaging tool, becomes incredibly popular worldwide, supplanting email, phone, texting everything. Now WhatsApp is developing your online ordering capability that will potentially change the trajectory of B2B commerce. So we're watching it very, very carefully, but there's a caveat, there's so much low hanging fruit in just doing what we already know, we can do better in B2B commerce. The WhatsApp example would be a very shiny object while we still need to continue to look to shop opportunities, we need to temper our enthusiasm to be distracted, it can be a distraction. We know that there's enough revenue potential just executing our primary mission without chasing rabbits down holes.
Robert:
I don't want to be the anti-innovator, but there's got to be a balance. So I use three words to caution myself, stop, better and clever. Stop doing things that create no value. Identify what you do well, but do it better. And say Friday afternoon is for the clever things. So Friday afternoons are dedicated to it, but don't let it become all consuming and that's how I approach this.
Stephanie:
That's great. That's a really good lesson, Friday afternoons with a beer maybe then you're even more creative, right?
Robert:
Why not? Yeah, certainly, my wine consumption during COVID is gone up tremendously.
Stephanie:
I think everyone else. So are there any B2B commerce trends that you're excited about that are coming down over the next couple, well, maybe even in the next year?
Robert:
Well, I just think the fact that the chatter around B2B has climbed exponentially in the last three or four months, is exciting. I'm super excited about what machine learning can do for scale in just enabling us to do the value added services that we've aspire to do, but couldn't execute because of the cost. So these two elements that B2B is becoming a cornerstone of business strategy, and it's not seeming to be as a poor cousin of B2C, B2B can be sexy. We're taking all of the goodness from the user experience and applying it, but then with this logic, that's data driven it's hard to turn down when we recommend products to a particular owner operator that I've got a revenue projection associated with them, that's a hard proposition. Plus we're giving them an award for accepting the recommendation. If that recommendation comes and was close to our prediction, then I think conversion could be a 100% going forward.
Robert:
Now in digital, we usually have 2% conversion and an action was great, a 100% conversion, wow, that's perfect execution. What does that do to the industry? Truly transformational.
Stephanie:
Yeah, I completely agree. So when it comes to implementing technology and stuff, because I think, like you said, a lot of people and a lot of platforms are focusing on B2B now, it is a new player to look at where B2C was maybe the sexier area before. How would you advise other companies to think about onboarding new tech technologies and tools in a way that sets them up for longterm success?
Robert:
Well, first of all, think scrappy. You can't innovate with the mindset of perfection. Large companies, I think suffer more than small companies, of course, there's a procedure and there's an ROI calculation, and there's a certain set of expectations. Especially when you're dealing with technology that can't quite deliver on the initial promise, but you have a fairly competent perspective on it, we'll get there. So you have to be a little ashamed of what you take into market, because quite frankly, in my experience, you see the flaws, whereas the target audience does not. They see something different, something value added, they know it's a work in progress, and they can see it resolves a pain point. It removes all of the inadequacies of what you didn't do as a result of getting to market quicker and testing a reaction. So that would be my recommendation. Feel a little ashamed, to be a little ashamed about what you go to market with initially.
Stephanie:
So is there anything that we didn't cover that you want to cover before we move on to the lightning round?
Robert:
Oh, no, I didn't know there was going to be a lightning round.
Stephanie:
Yes. There's a lightening round.
Robert:
That's a little scary.
Stephanie:
Yeah, anything high level, E-commerce trends, the industry that you're like, "Man, I really wish Stephanie asked this question and she just didn't."
Robert:
No, I don't think so. I think we've covered off the fact that, I think the biggest thing that's missing in the industry is that more collaboration. I think collaboration is going to be a game changer in terms of driving success. So that's what I'm seeking to build through networking and working with other brands to try and find some common ground we can explore in. So if anybody is interested, please reach out to me and I'll be happy to partner.
Stephanie:
Yeah. I completely agree. That's great. All right. So the lightning round brought to you by Salesforce Commerce Cloud is where I ask a question and you have one minute or less to answer. Are you ready, Rob?
Robert:
No. Okay, I am.
Stephanie:
All right. You're ready. What's up next in your cereal bowl?
Robert:
Oh my God. No, Scott's, it should be porridge, but it isn't. I like porridge, I'm a diehard Frosties guy. I don't know, there's not a bad time in a day to consume Frosties, so that's what's always in my cereal bowl.
Stephanie:
I agree. It's a delicious choice. What's up next on your Netflix queue?
Robert:
Netflix, I just finished watching Altered Carbon and it was a book that I'd read, three books I'd read many, many years ago. And it was actually a really good rendition of the novel. So I thought it's Sci-fi is very forward looking, it's probably what you'd expect me to watch, but I thought I enjoyed that series.
Stephanie:
Yeah, that sounds great. What's up next on your podcast list or audible?
Robert:
Yeah, so podcast, during COVID, I mean, I listen to a lot of podcasts, especially at nighttime and I've started to rediscover Vinyl. So I've become a bit of a pseudo audio file or want to be, at least I fought the big stuff, but I'm working my way into. So I started to listen to Vinyl's audio file podcasts, which have been fantastically interesting, but suddenly they're talking about technology I can't afford or justify. My wife keeps a very close eye on me, so sorry-
Stephanie:
Oh, man, so rude of her.
Robert:
I know terrible, isn't? But logical, she saves me from myself.
Stephanie:
That's good. Yeah, that's really fun. Well, if you were to have a guest on a podcast of your own, so if you were to have The Robert's podcast and you want to bring on your first guest, who would you bring and why?
Robert:
Oh, that's easy. That's easy. I am a big soccer fan from the UK. And one of my idols is Alex Ferguson. I would love him to be my first case on a podcast. He has such great insight into leadership, management, the stories he has. He would be, there's an entire encyclopedia of subjects we could discuss, and he's an idol of mine.
Stephanie:
That'd be a fun one. I would listen to your podcast. All right. The last hard question. What one thing will have the biggest impact on E-commerce in the next year?
Robert:
One thing, I think, changing the culture within companies to really embrace innovation, not to necessarily wipe the investment and make a net positive operating gain in the short term but to be more risk orientated. I see a lot of challenges around investment strategies and payback periods and so forth, and it really does slow down our ability to go to market. So if we can get to a point where there's an acceptable investment tolerance, and that will obviously vary by company size and profitability, then I'd like to see more about an entrepreneurial approach to taking that startup fund internally, and going to market with it, improving success or a failure. In Kellogg's we've done a tremendous job recently of celebrating failures.
Robert:
We've even have an award, for the peace of the award for failure. So it's a transformation that's underway, but we still have to get more comfortable with capital investment that can be used to experiment rather than the business case that supports it longterm, which will come, that will come when we determine what the metrics are or what the levers that work that can be expanded upon and so forth. So that's what I'm looking for.
Stephanie:
I love it. You are a lightning round expert, so nice job. Well, it's been a blast having you on the show, where can people learn more about you and Kellogg's?
Robert:
Well, they can see my profile on LinkedIn, obviously, I'm not a big social media user today. So reach out to me through LinkedIn and I'll be happy to engage.
Stephanie:
Awesome. Thanks for coming on the show, Rob, it's been a blast and we will have to bring you back since we have an invitation now for round two, we'll have to bring you back in the future.
Robert:
That was a mistake, wasn't it?
Stephanie:
No mistake, we'll have even more fun then.
Robert:
I look forward to it. Thank you very much for having me on. It's a great pleasure.
Stephanie:
Thanks.
You may not know exactly what Soft-Tex is, but chances are you’ve seen or even own a Soft-Tex product. That’s because Soft-Tex is a B2B2C company that provides products to retailers like Walmart, Amazon, Bed Bath & Beyond, Macy’s, and many more. The company specializes in sleep products, like pillows, mattress toppers, mattresses, mattress pads, or anything else you might need in your bedroom to help you get a good night’s sleep. But Soft-Tex doesn’t only ship to their retail partners. In recent years the company has upped its Ecommerce and drop-shipping capabilities in an effort to get even more in the lives of consumers. On this episode of Up Next in Commerce, Taylor Jones, the Vice President of Marketing for Soft-Tex explains how the company is creating a collaborative partnership with retailers while also exploring and consulting in the world of Ecommerce. He explains the ways in which Soft-Tex goes about ensuring successful product launches — including the exact number of reviews he thinks is the sweet spot — why SEO and product-usage videos are the ultimate keys to success, and the need for an Amazon strategy and what that looks like.
3 Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
---Transcript:
Stephanie:
Hey everyone. And welcome back to your number one show on all things eCommerce, I'm your host, Stephanie Postles. And today we have Taylor Jones on the show, the VP of marketing and eCommerce at Soft-Tex International. Taylor. Welcome.
Taylor:
Hey Stephanie, thanks so much for having me.
Stephanie:
I'm excited to have you here. I'm feeling a little bit sleepy now, thinking about all the nice products you guys have, that are centered around sleep. I'd love for you to dive a bit into what is Soft-Tex International and how did you come to the company?
Taylor:
We'd love to hook you up first off.
Stephanie:
Yes, please.
Taylor:
So at Soft-Tex, we're really serious about sleep and home comfort products. I think for a long time, the company has been a leader in memory foam and cooling technologies and just everything to help you get a better night's sleep and live a comfortable and better life. I came to the company about three years ago. I have deep digital experience, worked for a company called Red Ventures here in Charlotte. Maybe you've heard of them. Then for another company in the call center space, Arise Virtual Solutions, and from some mutual connections found this role at Soft-Tex and started, really owning the eCommerce business for them. And it's blossomed into a larger marketing role, including e-commerce still.
Stephanie:
That's great. So how do I think about Soft-Tex? Because maybe a normal consumer, maybe hasn't heard of them. So how do I think about, how big the company is, who their partners are, how you guys sell? Tell me a bit about that.
Taylor:
Soft-Tex is really a B2B, to C company, and Soft-Tex is the entity that would be known to our retail partners. So think about Macy's, Bed Bath & Beyond, J.C. Penney, Walmart, Amazon, the whole gamut of retail, we supply with bedding, pillows, toppers, mattresses, mattress pads, protection, anything that is in the bedroom that you'd sleep on, it would probably make it.
Taylor:
We have a direct to consumer presence that we work with, bedpillows.com. We also have a robust, drop ship capability. So it's not just, we sell in bulk to a retailer. We do that absolutely, but we do, as a core capability, have drop ship to over 50 partners.
Stephanie:
Wow. So it seems like there's an interesting mix where, you're trying to market for yourself, you're doing direct to consumer, you have your retail partners. How do you think about managing these relationships and also not cannibalizing yourself at the same time?
Taylor:
Right. So I would say, our partnership with bedpillows.com, is emerging. It's a delicate balance for folks in our position, because we supply, our retail partners, we absolutely don't want to compete with them. Ultimately those relationships are very important to us and we build custom products. It's a very collaborative process with our brick and mortar retail partners and the branding that that goes into all of our different channels. Soft-Tex we have about five or six national or licensed brands that we supply product under or, or we'll develop product under a private label, to mitigate some of the brand conflicts or sales channel conflicts that may arise with selling our products.
Stephanie:
Very cool. And are you helping your partners when it comes to digitally marketing, the mattresses, pillows, are you helping improve their eCommerce strategy? Because I could see you having a lot of insights into different brands and their strategies and what they're doing to maybe share that knowledge and help each other out.
Taylor:
Absolutely. So the role we play on with the eCommerce team is a consultative role in that aspect, in that, we're able to see over the wall, we supply our products to the 50 different partners that I mentioned. So we can see some really interesting things that, maybe somebody over here is doing, in merchandising, assortment, with features, attributes, something cool on the product description page. And we can make that suggestion to someone else who maybe has not done that yet.
Stephanie:
That's great. So what are some learnings or key things that you see happening on these eCommerce sites where your like, here's some good best practices that anyone could implement or I see this working really well right now, or maybe it wasn't working six months ago. What lessons are you seeing through all these brands that you work with?
Taylor:
I think the concept of reviews syndication and review seeding is very important. Obviously, authenticity is critical and you don't want to see fake reviews, but when you have a new product, accelerating the process through which consumers can experience the product and write a review and leave a review, such that it exists is social proof, for other customers who see that product, is so important to getting a product off on the good foot. We've seen, in the home comfort space, 10 to 15 reviews, seems to be a sweet spot for a new product introduction to really help accelerate its growth.
Stephanie:
Completely agree on there. How do you encourage reviews?
Taylor:
There are review seeding partners out there, those companies that you can do seeding programs with, Bazaarvoice is a big one in our space. They have a really interesting service where you can collect reviews if you have a direct to consumer presence and syndicate those reviews. And they also have a network of folks that exists to, you can nominate your products and folks order it to sample your product. And those reviews can get syndicated out to retailers that, on the flip side are members of the Bazaarvoice syndication network. So we've seen retailers who participate in that, really scale up quickly on our products.
Stephanie:
Very cool. So they're not really having to do as much of the heavy lifting because essentially a consumer would review a product and that review can be used multiple times. Is that how to think about it?
Taylor:
Through a seeded review, say we did 10 reviews, those same 10 reviews would appear on Macy's, on J.C. Penney, on Kohl's, all at the same time, versus, if someone visited Macy's and bought the product and reviewed it, obviously that review would be owned by Macy's, and it will show there. So, as much as we can do to help reviews go as many places as possible, that's been very helpful.
Stephanie:
That makes sense. So when it comes to, I'm thinking about mattresses and buying mattresses, for a while, everyone wanted to lay on them and sit on them and see how they feel. And now with the market evolving, especially with the pandemic and everyone being a little bit more comfortable with ordering online, what shifts have you seen? Do you see consumer expectations increasing, consumer demands increasing on the sellers? What are you seeing happening behind the scenes right now?
Taylor:
For our products, from basic bedding, so everything non-mattress and the mattress, it's been through the roof. I think, folks want a fresh and clean sleeping environment, especially cleanliness is top of mind. With COVID in fact, Soft-Tex, my company announced a deeper partnership with Thomson Research Associates. They make an anti-microbial technology called Ultra-Fresh, the market is hot right now for all bedding products. And I think, from the customer experience point that you're hitting at, do you need to touch and feel the product in order to feel confident in purchasing it? Certainly bedding is a very tactile and personal experience and the same pillow or mattress that's great for me may not, may not work for you. Right.
Taylor:
I think we've seen folks through warranties and trial periods that the industry has, particularly on the mattresses, pretty much a hundred nights sleep trial guarantee, in some form or the other is a standard now. But from a pillow or top or other product standpoint, maybe there's not that trial period, but being as descriptive as possible, the images, the copy, using enhanced content and the importance of video is so important. Batched attributes, iconography, to really recreate that story and experience, doing everything you can without the consumer touching the product, and that way, I joke with folks at my company that I have the hardest job, right. I have to convince people to buy something that's highly personal and tactile, that they have never touched prior to receiving it.
Stephanie:
That's pretty tough. What best practices have you seen around creating videos? Because that's something that a lot of companies are leaning into right now, but especially for, a mattress or something, what are you seeing work when it comes to videos for the products?
Taylor:
I think the concept of video can take a number of forms. YouTube is the second largest search engine. So, you can do a ton of explainer videos or keyword optimized videos, to try and drum up search traffic to your products. But you can also leverage video, in particular the 30-second to a minute product video, to help drive conversion. And I think, that's been a huge thing that we've seen. The addition of video to product pages has scaled our conversion rate by an incremental 10 or 20%. It's hard to fathom, because typically most retailers merchandise video is the last piece in an image carousel, right? People don't like to read, they want to be told, and be surprised and delighted.
Taylor:
And so, leveraging that video format in a short, condensing it to 30 seconds, has been really big for us. And I think, stylistically, it's very on brand for us, the videos that we've done. As I mentioned at the top of the podcast, Soft-Tex is a very innovative company with emphasizing technology, cooling, I mentioned antimicrobial. So our videos come off as very techie, with graphics, lower thirds that pop up. So I think, making sure your videos are on brand and authentic to your brand voice, clearly and concisely conveying the product value proposition. In our space, it's really, how are we different than everybody else selling a mattress or a pillow? There's thousands of options.
Stephanie:
Yep. Are you making the videos for your brand partners, or are they all are using the same one, or are you customizing them where you're like Bed Bath & Beyond, this video works better versus Macy's they have a different clientele and we're going to make a different video for them or are they making their own?
Taylor:
Absolutely great question, Stephanie. For private label products, or we have some national brands that we offer exclusively to certain retailers, obviously those are customized, and we work with retail partners like Bed Bath & Beyond, and Macy's, on art direction, model considerations, we work with them on developing a storyboard and get it approved by them before we film it.
Stephanie:
Got it. That makes sense. So the one thing I was thinking about when we were mentioning direct to consumer, how you guys were going about that route right now. I was thinking about a very large mattress brand who I think recently IPOed and a lot of people are talking about their negative unit costs. And I was wondering, how are you guys thinking about that with your direct to consumer strategy? Are you willing to have negative margins to add a new customer, or how do you think about the digital growth around them?
Taylor:
I think the way we've thought about it in a lot of ways, is in the concept of, getting reviews on Amazon is so critical to helping ramp up. If you're giving a discount or something, that you may be selling your product at a loss initially to help gain those reviews, gain some initial sales traction initially. I think it has to be for a finite period of time, right? That you turn the corner and have a clear path to profitability. You can't just do it indefinitely. Right. But I think that there are definitely values to doing it, in that, you get your brand out there, you get some exposure, user generated content is so powerful right now. I think if the world is telling us anything, the power of social media and viral media, the same can be true for user generated content and reviews. If you get a really good review or a really bad one, people can upload them, they're always going to be there. Right. It's so important.
Stephanie:
That makes sense. Is there any model that you developed around we're going to, we're okay with going in the negative for this amount of time with this campaign, or is there any models that you build to influences these decisions, around adding new customers?
Taylor:
In terms of the review thing, it's still an algorithm that we're working out, what's the right quantity of review that moves the needle towards a product being successful. That's mostly in our space, right? When you're syndicating in a retail environment, so products sold across many retailers, because really the review is a key way to optimize, each retailer has its own search engine, right? Now, if you're your own brand, right? Selling direct to the consumer. I think it's a different calculus, you have your own tolerance with whoever's providing your investment.
Taylor:
If you're going to go negative for a time. What is the strategy? How do you become cashflow positive? In the industry, a lot of these, just e-commerce mattress in a box guys, is really, they're marketing companies if you think about it. There's a lot of articles, a lot of them are made by the same folks in terms of manufacturers and who pours the foam, et cetera. So it's interesting.
Stephanie:
That's really interesting to think about. I think I have three different brands of mattresses in our house, but I'm pretty sure they're probably all the same or made from the same people.
Taylor:
Or from the same cloth.
Stephanie:
I think so. They all feel pretty similar. How do you think about returns, for something as large as a mattress or, I'm thinking about furniture companies and stuff, how have you seen some brands lower their return rates? What are some best practices around them?
Taylor:
I think for the industry, for the mattress in a box, we've seen return rates average out between 10 and 15%. I would include basically everything in that, including the comfort trials and everything. Right. So, when you're a direct to consumer mattress in a box guy, that has to be factored into your pricing. Some other things that we've seen creative ways to save the sale, a lot of, one of the big complaints with sleep products is, maybe the bed is too firm. Maybe you'd send a topper or something to make the mattress more plush, as a method to save recouping, returning the mattress. Because ultimately, right, wrong or indifferent, in the mattress industry once somebody slept on a bed, you can't resell it. It's just one of those things. People don't don't buy used mattress.
Stephanie:
Good. All the things I'd never really thought about. So you were just mentioning how... I'm glad that you have to deal with that and not me. So we were talking about how a lot of the brands that maybe we think are unique, maybe are utilizing the same types of underlying materials and things like that. So they're kind similar. I saw that you guys sell on Amazon. Are you ever worried that Amazon could just knock you off and just make a mattress that's so similar, that it's maybe not beneficial to be on there, or what's your reason for selling products on there?
Taylor:
Well, I think, so many things nowadays, if you're searching for a product, folks don't just begin on Google anymore. There's a large contingent of the population that are Prime subscribers and really begin the product search phase on Amazon. I think you pretty much have to be there to have the share of voice, whether you like it or not. I think, for us, Amazon's a growing partner. Certainly it's hard, we have a lot of rebates and allowances with them, from a margin standpoint and I'm sure you've heard this from many folks. It's hard to find products that, you can be profitable. But, I think brands have to make a decision to have an Amazon strategy.
Taylor:
It is delicate. Obviously, retailers are very sensitive to being comped on Amazon. So it's a very nuanced delicate road that we walk. We have an assortment that we have on Amazon, but we also offer exclusive products to other channels, that we don't offer to Amazon.
Stephanie:
Got it. Is there any other advice that you would give when it comes to selling on Amazon, but making sure that it's beneficial, like you said, one idea is keeping exclusive content to where not everything you offer is all on Amazon, but is there anything else that you all do, where you're like, this works well?
Taylor:
I think, really it's ensuring that you're being thoughtful about your assortment, if you're selling on multiple outlets. We've learned in our experience that Amazon is a price follower. Well, we're a first party vendor. Obviously many of your listeners, maybe third party sellers were there. They set the retail price, but as a first party vendor, we have a wholesale price that we give to Amazon and there are, like I mentioned, rebates and allowances. But ultimately, they then retail it to make a profit or not, in some cases.
Taylor:
They're pretty aggressive in price scraping and seeing what others are doing and commanding the market share to come to them, if they see a lower price out in the market, they will likely try and beat it. So I think, you just have to be prepared, before you open that flood gate, if that's your strategy, making sure that you're ready to enforce, map or, D inventory Amazon as needed. I think, certainly if you're a third party seller on Amazon, you're in much more control of your destiny in that respect, as you can, you set the retail yourself.
Stephanie:
That completely make sense. In terms of SEO, I'm thinking it's pretty tricky for you guys to, you want your brands to be seen as leaders, but then you also want yourself to be seen as leaders. What SEO tactics do you all use for yourself and your brands?
Taylor:
Great question. I totally think, in our space in particular, features and attributes are more important than the brand overall, in terms of the search volume. Obviously, if you build a brand, which obviously we all are in the business of doing, you can build search volume that way, but, most of our SEO strategy exists around, trying to optimize and rank for generic keywords, based on the features and benefits of each product. For us, the brand story and value proposition is more of a conversion factor rather than a volume driver, if you will. We as a company have invested more in building a robust e-commerce interface, to target that non-branded search term versus building, paying money for our brands to be the most searched today.
Taylor:
That's not to say that, our brands don't have an impressive story and value proposition, but I think, part of that comes into cost, right. A brand that spends a lot in marketing, a direct to consumer mattress that may retail for $1000, queen size, roughly, you have a very similar product that we offer under one of our brands, through Macy's or J.C. Penney, or Walmart, Amazon, that retails for 350 to $400. Is there much difference in the product? I would say they're very similar in terms of features and attributes, but it comes down to advertising and price point, right?
Stephanie:
So what have you seen works? How do you win?
Taylor:
I think, again, each retailer is its own search engine and each retailer's algorithm for the sort that they show, when somebody types in a pillow, I'm searching for memory foam pillows or pillows or mattresses, is a little different. They take into effect or into account different factors, all of them leverage the trailing sales history, review quality. So, is your product good? Four stars or better? Are you getting reviews recently? So review count and frequency and recency. And then how does it relate to the query that was searched?
Taylor:
So, for example, there's a lot of backend keywords that we look to put with our products and we've really gone through and looked to optimize those to make sure that we're calling out things like, if a product is antimicrobial, it is tagged appropriately, or if it's got some certifications or whatever it is, such that, when you're searching on a retailer, if you're typing in the keyword or leveraging a checkbox menu, faceted navigation, that we're optimized to show as much as we can.
Stephanie:
Got it. So how are you finding new brands who would be willing to work with you on selling your product? Are you marketing to them? Are you approaching them directly, cold email? How do you find new partners in your space?
Taylor:
It's a great question. A lot of our business is, if you put it into two buckets, hunting and farming, it is farming. You bring new ideas and new product and new concepts to the same folks you've been dealing with. But we absolutely have hunting strategies as well. Honestly, I think Soft-Tex has taken a position as an industry leader of research. We've undertaken bedding industry research initiative, both of bedding buyer trends. We work with, many, many retail partners, and especially during COVID times, we've been able to survey our partners on what they're seeing and aggregate the results and provide that as a free service, that I think has been really valuable to folks in the industry. And then also not just industry or retailer, B2C information, but what the consumer is looking for in bedding today. We've actually just completed a large scale research initiative for bedding consumer tastes and preferences in 2020.
Stephanie:
Very cool. And are you plugging in some of your products, because consumers are very interested in cleanliness going forward and what do you know? We have an antimicrobial, I'm saying that wrong, but you know what I mean, product?
Taylor:
It's absolutely the type of a feedback loop that fuels our product development cycle. So in our bedding buyer survey, we just got the results back on that. As you might imagine, anything with fresh and clean attributes has been on a positive sales trend and we've for a long time had anti-microbial infusions and treatments in our products, but obviously we're ramping that up now, given the favorable sales trend that it's seeing. We're looking forward to, seeing the full landscape of what consumers are shopping for, how they shop, as that's in constant flux, especially with COVID and beyond. I think, consumers are more comfortable shopping online, increasingly daily, more and more orders, for all of eCommerce, not just bedding are taking place digitally.
Stephanie:
Do you think this is a longer term trend? And if so, how have you guys shifted your strategy? What things are you planning on doing differently or changing going forward?
Taylor:
I think, like I mentioned, we've done a great job at Soft-Tex in optimizing our product pages and the end retailer optimization. We are making the investment now, in that top of funnel or off of retailers sites discoverability. So we want people to have our brands, enter the consideration phase earlier in the process versus, just see them on a retailer site and click on them. So we're definitely investing there, because we do see the shift towards e-commerce, increasingly as a longterm trend, just rough numbers that I had looked at before this podcast. When I started at Soft-Tex, e-commerce was, just under 10% of the total business.
Stephanie:
That's four years ago, right?
Taylor:
That was in 2017. And I think, ultimately even then we were under-indexed as a company. This year, I think, just given how the trends are going and how we're pacing, it's looking, 35 to 40%. And that's not to say that the brick and mortar piece or other channels of business have shrunk terribly either. It's just grown that much, just organically as well.
Stephanie:
The pie has increased.
Taylor:
Exactly.
Stephanie:
With that much growth, I'm thinking about your tech stack now. And I saw a quote on some article, where you said, our approach is working, and we believe that the tech stack we've built is well positioned for continued growth. So what does your tech stack look like? What are you guys investing in? What platform are you using? What does it look behind the scenes?
Taylor:
I think, product information management and taxonomy, and really taking control of your data as the expert of whatever product you make, is so critical. Before I started, all of our product data was in, 50 million Excel sheets, right. Now it's much more systematized. And also, not to mention, different retail partners require different fields and everybody's set up processes a little different, whereas, before that, was institutional knowledge and it lived with a person, now that lives with platform. So that's a huge process improvement that we've made.
Taylor:
Digital asset management is so critical, particularly from being able to rapidly get new images out to different syndication platforms, but also tests. We've done a lot in push the envelope on image standards. We talked about how we can play a consultative role with retail partners. We'd seen some really nice boosts when we added some batches to images, as trust symbols, like if something was featured on, Better Homes & Gardens, sticking that, in the bottom right hand corner. Sometimes that's been a little tough, because certainly main images get picked up in Google shopping and there's some rules against how much text can be in the image.
Taylor:
That worked well for a time, when we were able to get it approved. From a text tech standpoint, email marketing, that's super important, leveraging, and also of course social, being able to leverage all of our digital assets and brand voice and value, getting it out there consistently to the customer as well, has been really important.
Stephanie:
What metrics do you look at for success around, whether it's your B2B type of backend or your eCommerce platform, what metrics are you reviewing to see if things are going well?
Taylor:
An early indication, skew count. So how many skews do we have in our assortment and how many places are they set up? Obviously if we have a thousand skews, they should all be 50 places, ideally, right? For full skew syndication. Certainly not every retailer is going to take every skew that we have. A lot of retailers still have more of a curated assortment versus an endless aisle. Certainly I think, we see a value in an endless aisle, because of how we differentiate our products. Literally we try to create every product to be a little different, to have a little bit of unique feature and value proposition. So that concept that, there's something for everyone, right.
Taylor:
So skew count, a very important metric, ultimately total sales obviously, unit sales and how are retailers trending, particularly ramping up impression volume, how many people are getting to a product page and certainly for folks listening, they're probably like, well, how do you get that? Not every retailer provides that information. But you certainly can leverage tools out there, on Amazon, there's intelligence tools to look at, how many views your products are getting and other things of that nature. I think that, being able to just check that and see the demand for your product over time is very important.
Taylor:
Other metrics that we really look at, sale, when we give discounts, how things perform, because ultimately a lot of things come back to the law of supply and demand, right. We might have a price in our mind where we think something should be, but that's not the price that the consumer wants to pay for a product. Finding that right price that moves the volume, through discounts, just finding that equilibrium is interesting. And then obviously we talked about reviews a lot, review count and quality. The quality is a big feedback loop that we take very seriously, in terms of work with our quality assurance and customer service teams, to make sure that, we don't have an issue. And we're very proud, that our products have about a 4.7, 4.8 aggregate rating.
Stephanie:
That's great.
Taylor:
It's huge. I said at the top of the call, what works for one person doesn't for another. So you might think that a pillow, if left long enough to its own devices might net out around a three. So the fact that, we're at a 4.8 overall, is really encouraging.
Stephanie:
That's awesome. Do any of your partners right now, not having an eCommerce platform? I'm thinking there must be some people who don't, how do you work differently with them if they only have a retail location versus your eCommerce partners?
Taylor:
There are, sometimes e-commerce is challenging to jump into. It can seem daunting for folks that aren't doing it, because you're talking about things at the each level versus, big old fat POS, the way you retail used to run, right. You order a bunch to a warehouse and it gets distributed. There's a lot of implications to that, especially when you're talking about commitments for product, with e-commerce and drop ship the risk is inherently on the supplier or the vendor. There's no risk for the retailer, right. The retailers is like, Oh, sure, I'll put it up on my website, but you're inventorying it. Right. You're going to ship it for me, just when I sell it.
Taylor:
A lot of companies, that's their biggest objection, I think, is, without a hard commitment or a retailer to commit to bulk units upfront, if they don't have that, they won't offer it for e-commerce. They won't bring it in, because they don't have that driver to pull them into it. Because it's very easy, if a retailer's ordering 10,000 units of something, pepper and a few thousand more free commerce while we're at it. But if e-commerce is the first channel you're thinking about, it can be a riskier equation.
Stephanie:
Do you see that changing going forward? Do you see a lot of these brands thinking about now going online?
Taylor:
Yeah. I mean, even within Soft-Tex it's changing, right. We have now for, within the past couple of years, now digital first product, whereas, not saying that my e-commerce department was a recycling bin before, but pulling off of the success of things in brick and mortar initially, was really what drove eCommerce previously, which is not necessarily a bad strategy. But I think today, for innovation and new product, more and more stuff, if you're confident in it, you have to commit and leverage on e-commerce.
Stephanie:
I completely agree. So I saw you guys had some showrooms, I think, for your product. How are you all thinking about that?
Taylor:
We have permanent showrooms in New York and Las Vegas, and participate in market events where we host, the buyers from many different retail partners, so much of that. The importance of an in person event, has been blown up now through COVID. We went through a virtual market in March, which, obviously is hard to convey everything through a video, but, we had fun doing it and a lot of people really enjoyed it. That whole concept has been a challenge. Right? Being able to find that dedicated time to get in front of your customers and have them, if anything, particularly for stores, it's all about creating an experience to surprise and delight.
Taylor:
Those buyers really want to feel the product and experience it, to ensure that it's worth, that it will monetize that floor space, that it will take up. With the first touch point being a virtual video, that can be a challenge sometimes, but, we're adapting through virtual markets, mailing samples for, Zoom calls to review them. But it certainly has been different, it looks like, the Las Vegas market furniture show was pushed back.It's likely that, at least for us, it's virtual still, just given everything that's going on. And many of our customers are, you've seen probably the announcements, a lot of travel moratoriums. Some through the end of the year, they've already come out and said so. It's been interesting from that standpoint. I guess from that point-
Stephanie:
I can imagine.
Taylor:
I think home products, more folks will spend money, through e-commerce on home and other products, that they're not spending on travel. So, positives for us and for many others.
Stephanie:
That could be a good opportunity. I'm thinking of, these virtual events right now to sell to buyers. I think, I would just run and jump on the mattress and then just go to sleep and then people would just be interested to see if I'd wake up, that might pull people in. That's how I would sell it.
Taylor:
That's a very attention grabbing headline, for sure.
Stephanie:
It'd be like, is she asleep or is she dead, what happened or is she frozen? I don't know.
Taylor:
That's all right. Maybe we'll use that in our next market video.
Stephanie:
Great. I can be the star of it, I'm pretty good at sleeping and internet freezing, all of the above I'm good at. Are you thinking about incorporating these virtual strategies going forward? Is it something even when the pandemics over, that you're like, this is working well, we might try this out in the future and use it for, our initial targeting effort to then retarget them to an in person event afterwards. Or how are you thinking about that marketing strategy going forward?
Taylor:
I think it's something that, we're definitely going to do. It's something that we had been doing, I guess, even before. We would do video walk throughs of our showroom and our virtual experience with an industry publication called, Home Textiles Today. But for the most recent market, we produced the virtual market video ourselves. So, leveraging, either internal or partner capabilities, we still think it's very important to address that. There's always going to be people that can't come to an event, even forget COVID times. So it's always good to have that digital touch point to be able to send to them. And also, to your point, it absolutely can sit on our website and exist as a lead generation tool as well, for people to sign up, to see our latest innovation and then fill out a lead form and then go watch the video.
Stephanie:
There is definitely a lot of opportunity there, for content that is being created now that maybe wouldn't have been thought of before everything that was going on.
Taylor:
Right. It's a delicate situation, because a lot of what we produce for a trade show like that, and our competitors, is very future looking and conceptual. There is a level of security. Most of what we sell at a trade show is not yet fully commercialized. Sometimes it is, but in many cases it's like, this is new brand new technology and we're introducing it here. So, there's also a dimension of, yes, we want people to see it, but no, we don't want everyone to see it.
Stephanie:
That's got to be a little bit, get a little FOMO there and make it a secret.
Taylor:
That's right.
Stephanie:
So you have an interesting intersection between B2B and B2C. Is there anything that you wish existed right now in the eCommerce space or technology wise, or you're like, we're struggling with this right now, that you could see getting better in the future or that you hope to get better?
Taylor:
We have some partners now that help us provide really high quality CGI imagery. Obviously that's been around, but, making that process easier, it takes a lot of work to stage a live photo and video shoot, especially for our product class. That's something that we're looking to get better at, such that we can, as we commercialize new products, we don't have to have crazy processes to stage a photo and video shoot. Certainly there's value to that, and we will continue to use it. We have to use live folks for a lot of things, and models and videos, but for the static, just e-commerce imagery, getting those images up front can really increase our speed to market.
Taylor:
I would think the other thing, that perhaps we're missing today, is really seeing an aggregation of reviews across platforms. So obviously we see reviews that are syndicated. But we don't always see every review out there. So getting notified when there's a negative review in particular, such that we can see, is it just a one off? Somebody just didn't like it, or, is it the start of a trend of some sort. That happens very seldom with us fortunately, but it's always good to be on the forefront.
Taylor:
If you think about it, I'm sure we're not alone. A company like Kraft, they have millions of skews probably, having that feedback loop automated is so important. You can't have a person, tracking every review manually, right? So the more automation that's out there, the better. And we've done a really good job, I think, building out partners with the scraping capability to monitor our product pages and also, with advertising as well.
Stephanie:
Very cool. That's two very useful things. I'm sure a lot of people will be looking for, going forward as well. So we have a couple of minutes left and I do not want to let you get out of the lightning round. So let me know if you're ready and we can start that, Taylor.
Taylor:
Let's do it.
Stephanie:
All right. The lightning round is brought to you by Salesforce Commerce Cloud. It's where I'm going to ask you a question and you have a minute or less to answer. Are you ready?
Taylor:
Yes.
Stephanie:
All right. First one. What's the next sleep product that you're excited about buying or what are you most excited about right now?
Taylor:
CBD pillows.
Stephanie:
Tell me more about that.
Taylor:
Our CBD, we're really proud of the chemistry. It's microencapsulated into the cover. So with body pressure and as you toss and turn, as you sleep, the capsules break open and release the CBD up through the fabric and it's absorbed in the CBD receptors in the skin.
Stephanie:
Oh my gosh. That sounds very interesting. I have to check that out.
Taylor:
Coming, next quarter.
Stephanie:
Cool. I'll be on the lookout for that. What's up next on your reading list or audible?
Taylor:
That's a really great question. I don't read as much as I should. Mostly, I'm reader of the news. I would love a good mystery. I don't read enough fiction, sometimes it's good for diversion, especially during COVID times, right?
Stephanie:
Yep. We'll have to find one for you then. I'll source one and let you know.
Taylor:
Yes, please.
Stephanie:
What's up next on your Netflix queue?
Taylor:
Ozark. We just started, it's been really intense. So my wife as a mental health counselor, and I have some stressful days at work, so we both agreed, it's pretty much a weekend thing, because it's so intense, we can't watch it.
Stephanie:
Yes. I agree. You got to balance that out, put on a Disney movie or something.
Taylor:
Exactly.
Stephanie:
And the last one, what one thing, will have the biggest impact on e-commerce in the next year?
Taylor:
I am going to say, voice search, I think more and more people will leverage, Siri or Alexa or the Google voice piece, for searching on stuff. I think, particularly, so much of our population is aging. For whatever reason, when I see somebody have a question, I see them using the voice search the most, like my grandparents, that demographic. As it gets better, we'll see it used more and more.
Stephanie:
I completely agree [inaudible 00:57:15]. To take anymore, too much work.
Taylor:
I know. That's all right.
Stephanie:
I like that. Well, Taylor, it's been a blast having you on. Thanks so much for coming on the show. Where can people find out more about you and Soft-Tex International?
Taylor:
You can check us out on the web at, soft-tex.com. We're also on Facebook and Instagram. You can also check out any of our brands, like SensorPedic, SensorGel or BioPEDIC. For me personally, I'm on LinkedIn and Twitter, Taylor Jones. There's a lot of Taylor Jones's, but I'm out there.
Stephanie:
We'll link you up. We will find you, don't worry. All right. Thanks so much, Taylor. And we will talk to you soon.
Taylor:
Okay. Thanks so much, Stephanie. This is great.
You never know when inspiration will strike. For Jordan Nathan, the idea for his company came after an unfortunate incident. Jordan got Teflon poisoning after burning one of his pans while cooking. After researching the dangers of Teflon, which is one of the most prevalent materials in all of cookware, Jordan knew there was a chance to carve a niche for himself in the market with a non-toxic and eco-friendly product. Thus, Caraway Home was born and it launched with a waiting list of more than 150,000 customers. Jordan has been building on that initial buzz by focusing on his Ecommerce platform and selling a vision of a company that can go far beyond just non-toxic pots and pans. On this episode of Up Next in Commerce, Jordan explains how he builds a pipeline to drive customer reviews, which he uses to organically grow the business. Plus, he reveals the growth strategy for Caraway Home and why he believes that if you want to truly take on the big brands in an industry, you need to use an omnichannel approach to take market share and shelf space away from them in all areas.
3 Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Stephanie:
Welcome back everyone to Up Next in Commerce. This is your host, Stephanie Postles from Mission.org, and today, we have Jordan Nathan on the show, the founder and CEO at Caraway Home. Jordan, thanks for coming on.
Jordan:
Yeah, thanks for having me.
Stephanie:
I feel like we have to start with the story of you poisoning yourself which brought you to your company. Can you please tell me about that because I read that in the notes and I'm like, I didn't know you could poison yourself from pans, like pots and pans, so I wanted to start the episode that way if that's okay. A great way to start, on a high note.
Jordan:
Definitely. Yeah, back in, I think it was late 2017, I was cooking just like any other night and unfortunately left a fry pan on my burner for about 45 minutes. I think I ended up getting a call right when I was starting to cook and forgot the pan was there. Call ended, ended up feeling kind of nauseous and light headed and the apartment was feeling super fumy and soon realized that I had forgot the fry pan on the burner. Yeah, ended up getting sick. I was nervous based on having inhaled a bunch of fumes, live in a really small couple hundred square feet apartment in New York City and ended up calling poison control. They basically had told me that I was likely exposed to Teflon poisoning which occurs either from overheating a fry pan with Teflon in it or scratching it and it getting into your food, and really just was really surprised that something that I was cooking off of and touching my food could potentially get you sick. Also, further research showed that there were definitely some longer-term consequences that have been proven through a number of studies related to Teflon and felt there was a big opportunity to build a brand in the kitchen space around launching non-toxic products and eco-friendly products in the category.
Stephanie:
That is a very good reason to launch non-toxic products. Before deciding that you wanted to start Caraway Home and build non-toxic pots and pans and things like that, let's hear a little bit about your background and what brought you to moving to the world of Ecommerce.
Jordan:
Sure. Well, grew up in New Jersey, went to school at Colby College, up in Maine. Studied consumer psychology there. I tried launching my first startup out of school, which was a Ecommerce marketplace built for direct to consumer brands. This was back in 2015. Really got it as far as I could, but unfortunately, really struggled with that fundraising process and coming right out of school, didn't have much experience, but it was really a great kind of launchpad to testing and learning and trying to do my own thing.
Jordan:
I then joined a company in New York in early 2016 called Mohawk Group. They're a consumer product holding company owning about four brands and I joined them to lead Vremi, which was their kitchen brand and ended up basically working there for about two and a half years. Launched close to 200 different kitchen products. The brand itself was really focused on a post-college consumer. Average price point was $10 to $20, so definitely someone looking for something that was lower cost, colorful, and was my kind of first really great experience at obviously working in the kitchen category launching a number of products and really fortunate to have done more or less the exact same thing prior to Caraway.
Stephanie:
That's awesome. What were some of the lessons you learned, especially at Vremi when you were launching all of these products that you brought into Caraway?
Jordan:
Yeah, I think biggest lesson was don't launch 200 products in 18 months.
Stephanie:
Sounds intense, but why? Why not?
Jordan:
Yeah. Well, it's definitely a lot of fun and learned about a lot of different materials and categories, but definitely caused a lot of issues with inventory forecasting and quality. I think through that experience really got to see the power of selling through digital mediums. At Vremi, we really did focus on Amazon, which is quite different than what we're doing at Caraway, but a lot of the same kind of growth principles that carry over that we now implement at Caraway. It's really a good opportunity to leverage data, use that to inform product decisions and the beauty of online, obviously, is the ability to test. Really taking a lot of those same principles into what we're building at Caraway.
Stephanie:
That's great. Were you any bit nervous when you were moving from a large company that had resources and infrastructure and more funding and all that, to then start your own company where you had to do everything on your own?
Jordan:
Definitely. I think when you take that first leap, it's super scary and you leave a comfortable job. You end up initially pitching investors and getting rejected a lot, you're not getting paid anything, and really, you are the only person in the world who actually believes in what you're building. It's definitely scary, but I had enough conviction in Caraway and having sold all these products before and had experience, felt really there was no better person to go do this. The supply chain and the manufacturing were really easy for me just because I had done a lot of this. It was more of the fundraising that was kind of a challenging and new process for me.
Stephanie:
You had some recent success around fundraising. Right?
Jordan:
Yes, that's correct.
Stephanie:
It was a seed round?
Jordan:
Yes. We just closed and announced a $5.3 million seed round.
Stephanie:
That is awesome. How did that feel closing that when I think earlier on you said it was a bit of struggle trying to attract the investors. How did you find the right investors and get them to believe in your vision?
Jordan:
Yeah. Well, we're really excited. It's a big step in our journey and I think validation for what we're building. We took a little bit of a different route than most brands and I think something that's maybe becoming a little bit more common in consumer, but we raised from over a hundred investors in the round, a lot of founders and execs a number of funds and a lot of consumer-focused investors and really took the approach to building a large network, which we felt would be much more valuable in the long-term. As you can imagine, getting a hundred investors means I probably pitched a thousand investors and it took a long time, but I think in the long run it will net out much better because we're more or less one introduction away from any company, given the large pool of investors we have.
Stephanie:
Were some of the key differentiators that either excited the investors or that they saw about your company?
Jordan:
I think there have been a lot of news and some companies out there over the past number of years who've really focused on growth at all costs and really prioritizing top-line growth and thinking about things like profitability at a much later stage. Coming out of my prior experience, I had a really great grasp on economics and how to manage cashflow. I think since day one, our pitch has always been really growing a sustainable business in a category that's super-exciting and stale and hasn't seen much innovation. As a brand, we call ourselves Caraway Home for a reason in that cookware is our hero product, it's where we've launched and felt there was the biggest opportunity, but we really see taking those same product principles and applying it across the whole home. I think what's really exciting, that investors have really been attracted to is basically the breadth of how big the home is and how many products there are within the general category. Really, an opportunity to build a lot of products and a pretty large brand across a variety of categories.
Stephanie:
Got it. Yeah, that's great. When it comes to organic and non-toxic cookware and things like that, how do you convey those type of unique differences on your website because when I was looking at it, it's like, I wouldn't automatically maybe know that Teflon can poison you. I mean, I kind of have heard it before, but it's not something I think about every day, maybe when I grab out my pans. Especially if I'm on a Ecommerce site where I'm looking and shopping, how do you show people this is why we're better than all the other brands out there?
Jordan:
Yeah. I think for us, storytelling's a really big piece of DNA. Most places where people are coming to from the site, whether it's press or a Facebook ad or Google, we do our best to tell that non-toxic story through those mediums, so they're coming into the site with an idea. We're not here to use any scare tactics; we're here to educate consumers. We try not to push it too hard on our site. We've got sections on materials that you can go deeper, we have a lot of blog posts, so we really provide those educational resources in case you're interested to read more and educate yourself on the subject, but the site's really meant to emphasize all the points of differentiation, whether it's design or color or the storage components that come with our sets. We really want people to get the full picture there, but in those kind of advertising mediums and press, the nontoxic is really who we are and what we stand for. Hopefully, before coming to the site, you get some type of idea of that product feature.
Stephanie:
Got it. The one thing that I liked when I was browsing through your site was it had this very risk-free feeling to it because it has that free returns and 30-day trial and it had a ton of reviews. I mean, all over the page and it had a whole tab, like a tab for just reviews. Was this something you did from the start or is this a more recent implementation?
Jordan:
Reviews have been a really big piece of the brand since we first launched and this was a big learning from my prior experience, especially on Amazon, which is so driven by reviews. It's one thing to just show a product on a website, but you can't touch and feel it and reviews are really the only way to create validation for the quality. Really, since day one, we've been focused on our review funnels, we also want to get feedback to improve our products. Yeah, we continue to improve that pipeline, but we're excited to really continue building that out. As a brand, again, with no brick and mortar presence at the moment, it's really the best place customers can go, especially for a brand that's six, seven months old and they've never heard it before.
Stephanie:
Mm-hmm (affirmative). How did you go about getting those reviews because that, to me, seems like one of the hardest things to do, especially with a new product or podcast? For anyone that hasn't reviewed this podcast yet, please help us and share the word and review it. How did you go about getting those reviews because some of the places that you were getting them from where pretty big media brands? What was the strategy there to bring people in to actually review the product?
Jordan:
Yeah. I mean, on the site, we've run post-purchase email funnels, SMS funnels, we hit each customer with it a number of times to get their feedback and then, when it comes to press, we did a lot of gifting at the early stages and really tried to create a culture amongst editors of getting the products into their homes and actually using them at home. Not really pushing them to write stories on us, but getting them to experience the product and if they love it, have them come back and write their honest opinion.
Stephanie:
Mm-hmm (affirmative). That's great, yeah. I think if you get something in someone's house, even if they didn't originally maybe even ask for it, you kind of feel obligated to give a review. I know on Amazon, I left a two-star review on something for a baby product, and they sent me a new and different product just saying like, "Hey, we're sorry that the first product didn't work out, but if you could please reconsider your review because here's three new things we're sending you to try out." Even though I didn't ask for it, and I didn't expect it, I kind of felt obligated to get on there and test out the product and re-review it if I did end up liking it. I think that's good to get it in their house to get people to start thinking about it.
Jordan:
Definitely. We see the same things with influencers as well. We want to be working with people who organically love the brand and product. We're very confident in the product that we've created and the quality. We've seen just a lot of success of once we can get it into people's hands and they cook with it a few times, it's really a great bridge to starting a bigger partnership conversation.
Stephanie:
Yeah, that's great. The one thing that I saw that was interesting was, it was on a blog post where you mentioned that when you were launching, you had a wait list of I think it said 150,000 people who joined pre-launch to get the product when it was ready to go. Is that the right number and, if so, how did you garner that excitement for people to get on a wait list?
Jordan:
Yeah. That is the right number and that wait list was a really incredible kind of launch platform for us. I think early days, it really started with me pitching just a lot of investors and talking to as many people as possible. Created a lot of word of mouth, which drove to our landing page and then, prelaunch, one of the things we did was partner with other brands on things like sweepstakes and giveaways and start building our brand rep through a lot of those partnership campaigns. Then, towards the end of the funnel, we started building, not dissimilar from what Harry's did to build their prelaunch, I think hundred-thousand wait list, ended up doing a referral campaign within that existing list we built and that referral was super-successful. We got a lot of word-of-mouth and people sharing out of it. By the time we launched, we had a nice grouping of customers who were really excited to test and be our early adopters.
Stephanie:
That's really fun. How do you keep them coming back and engaged because I think of cookware, I mean, I got mine, I think, at my wedding and I haven't really thought about it unless it breaks, which has happened a few times when we've dropped it and it's gotten all bent up. It's not something that comes top of mind or would bring me back maybe to a site easily. How do you keep those customers, especially the really engaged and excited ones, coming back to the site and checking out your new products?
Jordan:
Yeah, it's really through content. We're pretty active and it becoming building a much stronger content platform, both on the site and social. For us, we obviously want people to buy the product, but we also want to provide education outside the physical pots and pans, so we see a lot of activity from consumers coming to us. Actually, less about food and cooking and recipes, but more about design and colors and seeing Caraway kind of inspired them to redo their whole kitchen or rethink the products that they have in their homes, so whether it's our blog or social or writing in through chat or email, we work to really provide these pieces of education to the consumers.
Jordan:
As we grow, we have aspirations to build a pretty large portfolio of products, so what's fantastic about cookware is it's a larger purchase item, we're not waiting for revenue to come in through a subscription. We get that first purchase and then, really have opportunities as we launch more products to focus on those for upselling and reengaging customers.
Stephanie:
That's great. How are you thinking about retail locations or like your omnichannel strategy?
Jordan:
Yeah. Right now, we are solely focused on our website, we are on a few marketplaces like Zola and Goop and Huckberry and a few others. Omnichannel is super exciting to us. I think going back to our mission, if our goal is to really get non-toxic cookware into as many people's houses as possible instead of Teflon, really the only way to truly embrace that and do that is to replace the products that are on shelves and currently saturate the market. Online right now is really our main focus, but we see big opportunities with partnerships in retail, with our own brick and mortar. Still, today, we're a young brand, so we're focused online, but have some exciting new plans coming up in the next 18 to 24 months.
Stephanie:
Fun. What's the experience been like selling on marketplaces versus just if you just CBA your website?
Jordan:
Yeah. I think for us, we see it as opportunities to reach different demographics than what we've... are currently seeing on our site. We've gone into it with a really open approach and have seen a lot of success. Obviously, being in the kitchen and home category, a lot of these items are purchased through a registry process, so that's always been really important to us at the beginning, but also someone like Huckberry, who we're working with, it's an all men's marketplace, they do a really amazing job with curating and they really know how to talk to their customers. It's one of those marketplaces where we've just seen great success. It's a totally different demographic from what we see on the site. It's really a good opportunity to just test and reach new markets that otherwise we'd have no access to.
Stephanie:
That's great about the registry idea. I mean, it seems obvious when you say it now, but making sure that you're in on all the websites, I don't even know how they link up because I think when I built my registry, they were already linked to different marketplaces already set up. Do you have to go to the marketplace to get that relationship or is it a brand who controls the marketplaces all in one place? How does that work?
Jordan:
Well, most of them are marketplace controlled, but they're all standard kind of retail relationships and a lot of the major registry players are all digitally driven. Some of them allow you to add any product from any site onto their platforms. They're all a little bit different, but we want to be at the top of every registry platform and also, encourage users who come to our site, who are getting married, to go to those platforms as well to add us.
Stephanie:
Yeah. I think just your colors and I saw some of your videos, that should be enticing enough for people to want to add it to a cart because it does look very different than the typical black or light gray items and I haven't really seen many videos of cooking where I'm like, "That's a nice pot or pan or whatever it is," and I'm not even looking at the food. I'm looking at how they're cooking in this nice, colorful, bright product.
Jordan:
Yeah. Color's a big part of our brand and this was actually a big learning from my prior experience, but there's just a big lack of color in the category and the colors that do exist are typically like bright reds or really de-saturated baby blues and I think there's definitely a place for those. Also, we just saw a big, kind of wide-open space of colors like navies and sages and creams that exist in the rest of your home, but for some reason don't exist in the kitchen. I wanted the brand to have a little bit of playfulness, yet sophistication through colors and also give people the opportunity where you can really create a kitchen that I think represents your personality in the rest of your home.
Stephanie:
Yeah, that's really fun. Why weren't there colors before? Is there something about creating that that makes it harder to incorporate colors?
Jordan:
The creation of colors certainly is challenging. It's a lot of back and forth, a lot of sampling. For larger brands, who I think are cranking out products and not really investing the time into innovation, it's much easier to just choose something like black or stainless steel. Quite frankly, that's been what's popular on the market for decades, so Le Creuset is really one of the first players to come in and introduce colors. KitchenAid has done and awesome job, but I think a lot of the legacy brands who dominate the category, they've been selling neutrals for such a long time that for them to even test colors, could actually potentially cannibalize their existing business. It kind of opens that door for us to try something new.
Stephanie:
Yeah. That is good. How do you go about creating new products? Is there a data element that you use to maybe get like customer input to know what they're looking for or what new products you're going to be exploring?
Jordan:
A lot of our product process is super data driven. There's definitely an element of asking consumers what they want and what's bothering them across certain product categories and what they like. We do that qualitative research, but a lot of how we think about products is looking at things like Google Trends, Google AdWords, what's trending on social. We have a number of internal tools that we used to model out what we find to be interesting. Obviously, there are things like market size and competitor mix, so we really like to take a data-driven approach and we were the same way at my prior company as well and where I learned this. Yeah, I think we would really like to lean into products where we've got a strong conviction that will sell well online. We typically like to avoid things that purely exist for potentially a brand marketing reason, which I think a lot of companies get caught up into in many cases.
Stephanie:
Yep. What metrics do you think are most important when it comes to, like you said, you take a very data-driven approach, which ones have been the most important and how should a company think about implementing that type of data and research into their product development?
Jordan:
I think it really comes from the channels that you're in and kind of working backwards from the core metrics that you track as a business. If you're on Facebook and Google, really understanding if there might be an opportunity at the micro level across the category, but you really want to make sure that where you're going to be spending your marketing dollars and efforts, there's an opportunity as well. I think that's even the more important piece is we found niches in certain places where we feel even at the macro level, it's very competitive and saturated, but we feel there's a big opportunity within the digital landscape. I think it's really focusing on where your marketing dollars are.
Stephanie:
Got it. Are there any website metrics that you pay most attention to like how many tests are you doing every single day to see what helps with conversions or what helps with your customer acquisition strategies? Anything that you look at there on a weekly basis or a day to day?
Jordan:
I think for us a lot of the focus right now is definitely on top line growth, but working back from that conversion rate, return on ad spend is incredibly important. We place a big emphasis as a brand on being first purchase profitable and making sure that we're growing sustainably and not burning cash on each purchase. A lot of the emphasis is really on that. As we grow, things like LTV and repeat purchase rate will become much more important. Within each specific ad platform, we've certainly got different goals and metrics we try to hit, but as a brand, the focus at the moment is really on metrics that lead to top line growth.
Stephanie:
Yep. Are there any platforms that you're finding your most success in or new platforms you're exploring right now?
Jordan:
Sure. We, similar to most D2C brands, focus a lot on Facebook and Google, but I think one thing we've really put a big focus on since the beginning is growing our influence or ambassador network. We currently work with a group of a hundred to 200 influencers and this is a group that's growing really fast, too. Similar to what we were chatting with before, we've gifted, they've experienced the product, there's really an organic relationship there built and really working with fantastic creators who I think are the best voices for the brand and they've got trusted communities who watch them every day and listen to them. Having those groups really tell the story for us has been tremendously success. As a brand, we've actually avoided the food and recipe market, which I think a lot of this category goes after, and focused a lot more on things like wellness and design and tried some new categories that I don't think kitchenware has really entered into until point.
Stephanie:
Well, that's smart. I'm thinking of utilizing Pinterest and places like that where people are, like you said, designing their kitchens or their homes-
Jordan:
Definitely.
Stephanie:
... and just thinking about things differently. That definitely seems like your kind of ideal customer.
Jordan:
Definitely, and we see Caraway as almost... and we hear this from a lot of consumers, that almost being that first kind of inspiration or purchase that they make, that then kind of put them on a path to redoing their full kitchen or wanting to create a safer and healthier home. We love being in platforms and working with creators who kind of align with that strategy.
Stephanie:
I think it's really important that you're moving in that other aspect of the home because that reminds me, when I got a... it was like a pastel green tea kettle, it was super cute and I liked it a lot and I put it in my kitchen. Then, I'm looking around and I'm like, "Oh, man. I don't have anything else that matches this tea kettle." I started trying to go around and search for that color and I couldn't find a match. Yeah, it did start making me rethink about how to redesign my kitchen and then, incorporate into my living room because they're so close. I think having multiple products, kind of help create that experience all throughout the house and that nice design principles could be very beneficial.
Jordan:
Definitely. Pulling that back to new products as well and color, it creates a really exciting opportunity where you make that first navy or sage or cream and having a bigger portfolio of products to really seed that throughout the rest of the home is really where we want to get to.
Stephanie:
Mm-hmm (affirmative). Do you pick colors that can't really be matched with other brands?
Jordan:
That's certainly part of it. All of our colors are custom made. A lot of brands typically lean towards choosing a Pantone color. Colors are very difficult to replicate. Just going through the experience, they do take a lot of time to get right. There's definitely some data that we look at when it comes to what people are looking for and searching. It's asking customers, but at the end of the day, we wanted to create something that was uniquely different in this category. I think in the initial research stages was really surprised that something as simple as navy, which you're wearing in your clothes every day and is such a prominent color in people's homes just didn't exist in the category. As a young brand, it's fun to have a website and be able to test into colors that just don't exist today.
Stephanie:
Yeah. Have you tested anything that you didn't actually have on-hand yet?
Jordan:
Nothing publicly, but we certainly do some stuff privately or in small tests across Facebook or Google.
Stephanie:
Mm-hmm (affirmative). Got it. Is there any time data's led you down the wrong path where I'm over here googling fluorescent pink pan and, then you make a product? You're like, "Eww, a lot of people were googling that or searching for that keyword and it was because of this and we probably shouldn't have made maybe a product around that or no one's actually buying that color." Any time when data's led you down the wrong path?
Jordan:
Yeah. Nothing specifically with Caraway, but my prior role with Mohawk Group and Vremi, we launched a lot of products, there were many that we had strong conviction on based off data. Sometimes, it doesn't work for whatever reason. It could be the product design, it could be the colors, it could be the price point. There are so many variables to it, but I think understanding all the variables that can impact the success of a product is super important and as long as you're really trying to make something different and really try to make it a compelling offer, I think, across all the categories you have a pretty good chance of success.
Jordan:
Really, I think this is a universal truth, but the product quality needs to be there. It can look pretty and the price could be great, but as long as that product's a really great product and people love it, that in and of itself should generate its own word of mouth.
Stephanie:
Mm-hmm (affirmative). Is there any way that you encourage that word of mouth with your customers?
Jordan:
Definitely. I mean, we encourage consumers to continually post on social showing us what the pans look like in their home, showing us how they organize their kitchens with the pan racks that we sent over, showing us what they cooked. As we roll out new products and expand the brands, I think there's definitely some areas we can improve in, in word of mouth, but so far, it does make up a large percentage of our sales and having reviews built into the brands I believe also encourages that.
Stephanie:
How are you measuring the organic growth right now? Like you said, referrals make up a large part of the sales. If you don't have a referral program yet, how are you tracking that to see where the customers are coming from.
Jordan:
It's definitely tough. We run a post-purchase survey after people purchase. Obviously, not everyone fills it out, but we get a lot of data through there in terms of asking consumers where they came from. That's really the best indication, but we're also very... in a position where we really understand how many sales are coming from Facebook and Google and a lot of other channels, so we're able to kind of parse out between those two methods what we think the word of mouth effect is.
Stephanie:
Got it, got it. It seems like it would be kind of hard to keep people, not only just customers, but also even like the influencers engaged because I think about when someone sends you something or you buy something new, you're really excited for maybe a week and then you're kind of, like a lot of people, at least myself, maybe not everyone else, it's on to the next thing and excited about the new thing. How do you keep, not only your customers, but also those influencers that you were sending products to, engaged for the long haul?
Jordan:
I think a big, important piece of our influencer program is that most of these relationships are tremendously organic and we work with people who truly love the product. Just like anything, there's always more excitement at the beginning when something's new, but we like to work with people who are sharing content around cooking and sharing content around storage and design and our products are always in those content pieces. It's really been a pretty organic relationship and we haven't seen a massive drop-off in sharing amongst that group. In terms of customers, we put a lot of emphasis into email and SMS and new blog posts and social and really try to get people into those funnels and onto the social page, so they're staying up to date with everything that's going on with the brand.
Stephanie:
Mm-hmm (affirmative). Do you have any events or things like that where you bring together your influencers or maybe even customers to build that camaraderie feeling? Something that I think back to, when I was at Google, we had this local guides' program and they would do big events where all the local guides could come and meet and get some swag and really feel like a community. Is there anything like that that you guys are planning for in the future?
Jordan:
Definitely. I think community is tremendously important. We, obviously, really focus on that with our consumers, but for our ambassador base, it's still really early days and early stages. Looking at companies like Glossier and I think they've done such a great job at creating that community amongst ambassadors and the people they work with are tremendously proud to represent Glossier. Events and dinners and opportunities to gather are certainly among top interests for us. With COVID going on, it creates some more challenges, but-
Stephanie:
Yeah. A Zoom happy hour.
Jordan:
Yep. Yeah, we're looking to roll out a community base whether it's on Slack or Facebook groups in the coming months for all of our influencers to connect. It's also a good opportunity for them to share best tips on what's working for them and what's not on their social posts or maximizing engagement.
Stephanie:
Mm-hmm (affirmative). Yeah, that definitely seems like it could be really beneficial because you have this group of people working for you behind the scenes, teaching each other best practices, that you're not having to employ-
Jordan:
Exactly.
Stephanie:
... which is great. Circling back a little bit to your background, I saw or I think you mentioned that you studied consumer psychology. Is that right?
Jordan:
Correct.
Stephanie:
Okay, cool. How did that background help you with building your company, if it did, or what kind of principles did you take away or remember from your studies?
Jordan:
Yeah. Back in school, I was really interested in understanding why people chose the products that they did, why they align with certain brands, and I think at Caraway, we take a pretty granular focus when it comes to that. A lot of that's reflected through the messaging that we put out. We're, at any given point, running dozens and dozens of tests across our ads and our website and there's obviously demographic information on people, which we try to segment based on, in terms of our consumer, but there's also personality traits and more of a psychology of further breakdowns of certain demographic categories. We do our best to collect this information from consumers to really understand who the customer is, what they're thinking about, who they are as people and that, in turn, really informs the macro messaging, what's on the website, and branching out to the brand principles.
Stephanie:
Mm-hmm (affirmative). Yeah, very cool. Is there any element of personalization right now when you come to Caraway based on the data that you just mentioned, whether it's demographics or anything else?
Jordan:
At the moment, not onsite. We're really focused, and this was highly intentional at the beginning of launching the brand that is we really want to create a product and brand that are really accessible to the most people possible and also, kind of narrow down the decision making that they have to do.
Stephanie:
Yeah, super important.
Jordan:
Right now, we've got one set, it's really simple, really the core decision is the color that you have to choose. As we grow and we start launching more products, I think that's where we'll start to see a lot more personalization and trying to help people, once you buy the cookware set or you buy another product, like what's that next piece that you should add into your kitchen and why do you need that product. I think that really comes with expanding the brand into those new categories and then creating sub-segments based on what their initial purchases were, where they come from, who they are as people, and how we can help them better merchandise and support them in their home.
Stephanie:
Mm-hmm (affirmative). Very cool. You've been in the world of Ecommerce for a while. What's one thing that you wish online sellers would either start doing or stop doing?
Jordan:
Great question. I think for me there's become this really big mentality of consumer products of growth at all costs. I think a lot of venture-backed companies have really, really pushed into achieving most of their sales through buying ads and buying customers. That's certainly a piece of growth, but I'd also encourage to really, especially in your early days, like growth's not that challenging to come by, you're starting with a smaller number and really putting the emphasis on word of mouth and expanding your return on ad spend. I think it's easy to get caught up in high growth, but you want to make sure those founding principles are there from day one.
Jordan:
I think generally as a piece of advice, that's one thing I think we've done well at Caraway and I learned from my prior experience. I just see a lot of sellers and vendors I think focusing on top-line growth a little too much in sacrificing something that's going to be more beneficial in the long-term.
Stephanie:
Mm-hmm (affirmative). Yeah, that does seem like something that a lot of companies, especially over the last couple years, have lost sight of. Because, like you said, I mean, when you have these VCs who are telling you that you need to hit these crazy growth numbers, it is kind of like, well, we just have to do whatever it takes to do it and to hit those numbers. It seems like in the process, a business wasn't actually built behind the scenes. Kind of like a fake business where there's only ads, buying customers, but then not having a good product and I think we're seeing a lot of the problems from that right now.
Jordan:
Absolutely. I think a big piece of it, too, is it's really building that mentality internal with your team and building a culture where it's just as much exciting to lower the cost on something as it is to increase growth or launch a new, fun marketing initiative. For me, I'd love to see more founders and teams focusing on that sustainable growth.
Stephanie:
Mm-hmm (affirmative), completely agree. Is there anything top of mind that we missed in this interview before we jump into a quick lightening round?
Jordan:
Nothing off the top of my head.
Stephanie:
All right. The lightening round, which is brought to you by our amazing sponsors, Salesforce Commerce Cloud, is where I send a question your way, Jordan, and you have a minute or less to answer or 30 seconds, whatever you want to do.
Jordan:
Perfect.
Stephanie:
Are you ready?
Jordan:
I am ready.
Stephanie:
All right. What's up next on your Netflix or Hulu queue?
Jordan:
Oh, tough question. I'm excited to watch Ozark, season three, have yet to get to it, but I've heard it's a good one, so that's been at the top of my list to get to.
Stephanie:
Nice. Yeah, that is definitely a good series. If you were to have a podcast, who would your first guest be or what would the podcast be about?
Jordan:
Would love to focus a podcast on brands that really focus on doing good for the world and, whether it's non-toxic products or eco-friendly products, really hear more about their journeys to creating those items and hearing about the larger impact that they have on the world.
Stephanie:
Oh, that's a good one. If there's any sponsors out there, hit Jordan up. We can help you out with that. All right. A slightly more difficult one where you might have to think for a bit. What's one thing that will have the biggest impact on Ecommerce the next year?
Jordan:
I think the short answer to this and tying it into, obviously, what's going on in the world is I think people staying more in their homes and what that means in terms of general macro online sales, brick and mortar. I think we'll come out of this with really a different world and excited to see how the retail landscapes starts merging with the digital landscape.
Stephanie:
That is a great answer. All right, Jordan, it's been such a fun interview. Thanks for coming on the show. Where can people find out more about you and Caraway?
Jordan:
You can check us out at www.CarawayHome.com and thanks for having me. This was super fun.
Stephanie:
Yeah. See you next time.
Chad Ledford likes to say that his Ecommerce journey started with a van and a fax machine. And it’s true. Chad has gone from selling socks out of a van to building one of the first and only online sock-sellers in the early 2000s, to his gig now, as the co-founder of AddShoppers, a company that was named one of the fastest-growing startups in Charlotte for two consecutive years, and an application installed on thousands of eCommerce websites There were obviously many twists and turns on his journey, and he explains them all on this episode of Up Next in Commerce. But the main idea that drove Chad throughout his winding road was the idea of diversification. Long-lasting success only comes through diversifying marketing platforms, acquisition tactics, and communication channels where you can build those coveted one-to-one relationships with customers. He explains it all here.
3 Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
---Transcript:
Stephanie:
Hey, everyone, welcome back to Up Next in Commerce. This is Stephanie Postles, your host, and today we have Chad Ledford, co-founder of AddShoppers. Chad, welcome to the show.
Chad:
Thanks for having me.
Stephanie:
I would love to dive into your background a bit, because it seems like you've had a really interesting background, and getting into ecommerce, I want to hear all the stories around that, and how you got to where you are today, if possible?
Chad:
Yeah, you got it. I like to say that it started with a van and a fax machine. So, to give you a little background, my grandfather who raised me has been in the hosiery industry for the past 25 years, so he kind of introduced me to just entrepreneurship in general, but whenever I turned 16 I took one of his vans and loaded it up with socks and went door-to-door to small businesses to sell the socks. So, I did that pretty much throughout high school, saved up enough for college, and then whenever I went to college, my freshman year I didn't do a whole lot, played probably too many video games, but it really introduced me to the internet.
Chad:
So, my sophomore year I started to get the itch around trying to make money again, and that's when I basically took the socks that my grandfather had, and then put up my first ecommerce store. It was built on Microsoft's ecommerce platform, I don't even remember what it's called today, but it was back in the early 2000s. We just put up a couple SKU's, I gave my grandfather a fax machine, put a fax machine in my dorm room, and then as I would get orders I would fax it over to him, and it would print the labels off for it.
Stephanie:
Oh, my gosh, that's amazing. So, what kind of socks were they to be selling like hotcakes like that?
Chad:
Yeah, it was pretty much every type of sock. So, I think Bombas has probably made it cool, but at the time we didn't really have a brand, it was just socks. It was like ankle socks, or crew socks, but nobody else was selling them online at the time, so we got really good at the search marketing side of it. If you bought socks in the early 2000s, you probably bought them from us, because we were number one on Google for the keyword socks, and-
Stephanie:
Wow.
Chad:
Yeah, it was kind of a fun adventure at the time.
Stephanie:
So, was your grandfather any bit hesitant to go online, or work with his grandson? What was that like working together? That sounds, yeah, just really fun.
Chad:
Yeah, he was really supportive early on until it got to be too many orders that he didn't want to do it anymore. So, he basically said, "We have to find someone else.", and then that's when we got introduced to the idea of dropshipping. We basically just needed to find somebody that wanted to handle the capacity, and then that's when we learned about dropshipping, and how that fits in ecommerce.
Stephanie:
Wow, so you've definitely seen it all from the very start. What are some of the biggest shifts that you remember where you're like, "Man, dropshipping used to be like this.", or building up a website I remember silly things that would be super hard. What were some of the things that you remember from back in the day that just kind of look silly now looking back on the processes that you were doing, or the things that you were undertaking?
Chad:
Yeah, I think whenever we started doing it we were just thinking about it more from like a tactical execution standpoint. But what I mean by that is we could basically put up a site, put some products on it, and then we could rank for it pretty quickly. We weren't really focused on creating a brand, we weren't really focused on lifetime value, or how do we kind of cross-pollinate between multiple brands and things like that, it was really just how do we rank number one for this thing, and then push as many orders through it as we can? So, I think part of that is just being young and figuring out what business actually means, and how to maximize lifetime value.
Chad:
But at the same time, just the shifts that we saw, search was starting to gain more momentum, and more people were going online to start to look for things, and that's when we started to see the shift from retail dollars going a little bit more online, obviously that's accelerated a lot recently. But yeah, it's just kind of interesting, at the time we just saw it as a way to make money, but now kind of in hindsight it was a bigger shift that was happening with people, and people wanting to get more convenience, and better deals, and things like that.
Stephanie:
So then what brought you to co-founding AddShoppers? At what point were you like, "This is something I want to do."? And could you give us a little background on what AddShoppers is?
Chad:
Yeah so, that first business, 3tailer, was really built around Facebook. Whenever Facebook made a change to their algorithm we had to react as fast as we could to try to keep up. So, whenever we started AddShoppers ... we tried to be a little bit ahead of the market when it came to social media. Again, this was before everybody had a Facebook profile, and Pinterest was just sort of coming online, but we saw that a lot of people were spending time there, and a lot of people were engaging there.
Chad:
So, the first version of AddShoppers was to try to figure out what was happening inside of social, and is it driving sales for people? So, it was mostly an analytics product that a brand could plug in and it would tell them if a social channel was driving sales, and if so kind of break that down and tell you how and why that was happening. But the thing that we were trying to solve is diversification of revenue. We had the 3tailer business, which was really built on SEO, but we saw social kind of up and coming, so we wanted to figure out how to monetize that and drive sales for our own business.
Stephanie:
Wow, that's great. It seems like you guys were definitely very ahead when it came to spotting these trends, and seeing something that could get big, and starting to offer solutions around it to give deeper data insights for that. How did you realize that was a problem for companies back then, when I doubt a lot of companies were like, "We need access to the data, we need to do more with it."? I mean, now it seems obvious, but back then were you getting customers who were looking for help around that?
Chad:
Not really, it's just what we felt through our business, we had felt the revenue impact. We didn't have a wholesale channel set up or a physical in-store, so whenever something changed online we had to be on top of it to figure out what was going to happen next, and as social was kind of coming online we saw it as an opportunity. So, it wasn't a stroke of genius, it was we had to to survive, and that was the main reason that we focused so intently on it.
Stephanie:
Very cool. So, what does AddShoppers look like today? How has it evolved?
Chad:
Yeah so, similar to the early days of search marketing, Google kind of won the market, and then same thing happened with Facebook, Facebook won the market. At the time when we started it there were probably about 20 different social networks that we were kind of tracking, and figuring out how to drive influence on, but once Facebook became the clear winner it was obvious that the same things were going to start happening, Facebook was going to make changes, that was going to impact people the same way that search did for our business. So, we decided to look into other channels, and more specifically we wanted to looking into channels that don't change often.
Chad:
The ones that don't change often are usually kind of the baseline architecture of the internet, it's the open protocols, basically email, or SNTP, being able to send a message to someone has been around since the internet started, and as much as people have tried to kill it, it's still one of the top channels, and it's one of the few things that a brand can really own and be able to have that direct communication with a client without having to ... or with a customer without having to pay some sort of an ad tax, or CPM to really get in front of those people. So, today our solutions are really focused on creating ways for brands to tap into those open protocols a little more of like email, and being able to message a customer directly without having to go through the big guys.
Stephanie:
Got it. So, how do you get those emails? Is it something that a brand could already access, or what does that look like? What problems or pain points do the brands have when they come to you?
Chad:
Yeah so, most digital commerce brands realize the value of email today, especially whenever it comes to retention and lifetime value. So, the conversations are a little bit easier now because they understand that it is a really strong channel, and it's one that they have to defend, but most brands can only tap into what's considered first party data. So, first party data is data that the brand captured themselves. So, a lot of people build up emails from popups, or they capture it during the checkout process or things like that, but that usually ends up being anywhere from like three to 5% of their traffic that they've spent a lot of money to get to their site that they're actually able to capture, and be able to continue creating that relationship with them. So, the problem that we help solve today is tapping into that other 95% of people that are on the website, people that haven't given them their email address yet, but they're still showing a lot of engagement, and they probably still want to try to get those people to be their customers.
Stephanie:
Got it, so the people who are just casually browsing, or maybe added something to the cart and then left, the people like that who didn't directly give the brand their email, but maybe seemed kind of interested.
Chad:
Yep, exactly.
Stephanie:
Very cool. So, one thing I've read a bit about is that you said brands have been over-reliant on Facebook and Google when it comes to customer acquisition. How do you envision sellers getting around those two giants? If that's a main channel like you mentioned, like they're dominating the market, how should a brand find customers if they're not going to rely on those two areas?
Chad:
Yeah, I don't think they should neglect those. I think they need to figure out how they can push as much volume on those as possible profitably, but as a lot of D-to-C companies have seen more recently, as everyone starts to do that, it gets more expensive for everyone, because it's an option. So, it's more about creating diversity in the revenue streams, and it's more about just creating a closer relationship to the customer, and the ways to do that is through one-to-one channels, or really any kind of open protocol. So, if email is an example, another example is SMS, push notifications, direct mail, really anything that can kind of get you one-to-one with that customer and really build the relationship. Those are the things that should be valued a little bit more. There's ways to do it where it's not scary, and you can track the revenue quite easily. So yeah, I would say that diversification of the revenue is really the big thing, it's not just about avoiding working with the big guys, but only using them as much as you need to.
Stephanie:
Got it, that makes sense. So, what are some maybe, not a case study, but an example of a brand who came to you and diversified their channels to start maybe using ... texting is one thing that a lot of people have come on here saying they're thinking about or they are experimenting with sending texts to customers or potential customers, but they're not always really sure how to check that or how to measure the results. What are some maybe examples where you've seen that work well, or other channels that have worked well that maybe a brand normally wouldn't have explored?
Chad:
Yeah, I think the one that comes to mind it's a pretty big omnichannel retailer, they have about 50 locations and they sell sporting goods. I don't know if I can share the name, but basically-
Stephanie:
That's all right.
Chad:
... they did a lot with the traditional advertising, so they ran local TV commercials, they ran local radio ads, and then they did a bit on Facebook and Google mostly around retargeting. They didn't really see those things as kind of top of the funnel activities, and because of that they basically relied on it for retargeting for the most part. So, they were basically spending on these offline channels, and then they were using digital as a way to retarget and try to convert those people, because it was the only way they could tie together the conversion of, "Hey, this person is on the website, and they just bought something.", and they could pretty much always get like a 10 to one return on ad spend.
Chad:
So, for them, they were kind of stuck in this omnichannel box where they couldn't do additional things for branding or impressions, because they didn't have a great way to track it, so whenever they started working with us, we helped them expand out into these other channels where they were still able to get a guaranteed 10 to one return on ad spend, because we were using things where we didn't have to buy media, like email and some onsite personalization things that we did for them. Today we don't have an SMS product, it is on the roadmap, along with push and a few other products, but really the email is still one of the biggest revenue drivers that we found for clients.
Stephanie:
Very cool, and do you help with looking into the data after you start these campaigns for the different brands and whatnot, because I know before we were recording you mentioned that you're really big into data and you love diving into that, so how do you incorporate that into the product, and with your clients?
Chad:
Yeah so, for us, there's two kind of chunks of data. There's the first party data, which you'll see in like Google Analytics, or if they have a CDP they can kind of analyze what their specific customer base is doing. The data that gets us really excited is network data, what's happening across a huge chunk of people. Our network sees about 200 million people each month, and kind of what they do throughout that purchase cycle, and then what they're actually responding to. So, whenever we think about data it's more about the overall trends and how you can change a visitor's behavior by creating a nudge, or creating some sort of incentive or offer to actually get the person to come back and convert.
Stephanie:
Got it, how do you have that big of a network, and how are you able to kind of see what people are doing?
Chad:
Yeah, so there's kind of two data sources that we have. One is a blind co-op, which I would say half of our clients are participating in that, and the blind co-op is the brands submitting data into it in exchange for being able to use the data that comes out of it to activate the campaigns. We don't sync data, we don't actually put data into another system, it's all self-contained within our system, but about half of the volume that we see comes from that co-op of data. And then the other half comes from publisher relationships that we have where we license the data, and again, we don't sell data, or we don't push data out of it so that users can still control all their data, but it gives us additional scale so that we can start to match who these people are.
Stephanie:
That's awesome. Was there any hesitancy with the brands sharing their data initially, or is it a little bit easier once they heard that other brands you were working with were already doing that?
Chad:
Yeah, we offer both. If they want access to the co-op data, they have to be part of it, so they have to submit to get access to it, that's basically what makes it the co-op. So, they can still work with us, and they can still tap into that publisher data, and a lot of the enterprise brands that we work with will never submit any data to any other system including us, and it's just off the table, it's not going to get through legal. We can still work with those brands, we just do it through our licensed publisher data. But the thing that gets us really excited is that idea of the co-op, and the brands being able to work together to do more together.
Stephanie:
Yeah, that's really cool. What's some of the most interesting things that brands have seen when they utilize the co-op data where they're like, "Oh, I never realized this or that."? Have you heard any underlying themes from these brands where they're getting access to something that maybe they never even knew to look into before, or had enough data to see that trend?
Chad:
Yeah so, we're still pretty early on the insight side of this and being able to open up things that they haven't been able to learn on their own. I would say we're a lot further along on the activation side of the data, so being able to actually perform a campaign that drives incremental results. So, just as an example, whenever we send out browse abandon or cart abandon emails, we end up sending about five to 10 times more emails than they're able to send internally. So, if a brand is sending out like 10 cart abandon emails a day right now, we'll probably send 50 to 100 of those by leveraging the data that we're tapped into, and then the benefit of that is revenue and less cart abandonment.
Stephanie:
Yeah, that's really cool. How do you guys identify shoppers that maybe were unknown before? Like if a brand couldn't identify them before, how are you all able to identify that shopper more easily?
Chad:
Yeah, so the core technology that this is built on is called deterministic identity resolution. It's a little bit of a mouthful, but Facebook has the biggest identity graph which uses deterministic identity resolution, and the way that it works is pretty simple. You, as a user, you've signed into Facebook on your phone, tablet, laptop, all of these various sources, and as you've done that, Facebook has given you an identifier, your Facebook ID, and then it's linked that to the different devices that you've done it on. So, our system works the same way, if you go to a publishers site, and you use an email address, our system encrypts the email and hashes it, and then we link that to the device that you do it on.
Chad:
As you do that across a network of devices and different publishers, that's how we're able to link an individual, or a hashed email, back to the actual devices that belong to that person. Once you have that link, then you're able to perform different types of marketing campaigns. So, what we're doing is actually no different than what Facebook and Google are already doing, except we activate the campaigns differently. Those guys, you can only get access to that identifier if you buy media through them and if you show an ad on Facebook, or across Google's display network. Ours lets you do the same thing, but we're doing it across open protocols like email, and SMS, and other channels.
Stephanie:
Ah, got it, and are you able to create like a shopper profile once you have all that data to then know how to maybe personalize your messaging to them, or really cater to that buyer who left?
Chad:
Yeah so, we don't append a lot of data to the actual identifier currently, mostly it's just the actual product that someone looked at, just so that we can dynamically include that product inside of the email, or anywhere else that we want to kind of push that product data to. So, we don't include anything like gender data, or demographic data, anything like that, right now it's just the email to the identifier. But as we continue to grow the dataset then that starts to get more interesting, and that's what's going to enable opening up insights and things like that. But today, we're really just heavily focused on the use case of kind of winning back those lost people using this unique dataset, and then from there we can start to append additional data to it as we go.
Stephanie:
Got it. It seems like there'd be a lot of new customers coming to you with this new D-to-C movement and a lot of people getting online really quickly now, especially with everything with the pandemic going on, have you seen a surge of customers coming to you and saying like, "Chad, help me. We have a bunch of people now visiting our site, and we actually don't know where they're coming from, and how to bring them back."?
Chad:
Yeah, most of our business is still driven through word of mouth, or through our agency partnerships. So, it's definitely been an influx this year, we're growing probably 20 to 30% month over month right now, just given-
Stephanie:
Wow, nice.
Chad:
... everything that's been going on. So, it's a pretty exciting time, and it's awesome to see people looking outside of just Facebook and Google to figure out other ways to monetize.
Stephanie:
Yeah, that's awesome, congrats, that's great numbers, of course. When these brands are coming to you, are there any blind spots that you're like, "You obviously are missing this.", that a lot of larger brands just haven't looked into before?
Chad:
So, larger brands have a harder time kind of doing the up and coming things. Obviously they have a lot more things like infosec and legal that they have to go through. So, my only criticism of big brands is just that they don't test enough or fast enough, it's more about just speed of iteration. The space that we're in, digital commerce, it changes so fast, and by the time you're doing something that everyone else is doing you have to pay a premium for it. If the bigger brands could just get a little bit earlier in the adoption cycles of things, then they would be able to capture more market share and more of a customer base, and not have to worry so much about the D-to-C guys.
Chad:
But that's really the biggest difference between the big brands and why D-to-C's continue to capture more market shares, because they iterate so much faster and they test so much faster. So, my only feedback to big brands would be to figure out how to do it faster given all the internal constraints, and if you can figure that out it's not about finding one silver bullet, it's just getting through those iterations a lot faster.
Stephanie:
Yep, yeah, I definitely have seen that in practice before with having to go through a million approvals just to get one website, or one bug fix, or whatever the case may be. I'm thinking though right now might be a great time where brands have kind of broken down some of those barriers, because they had to move fast because of everything with the pandemic going on, they had to quickly stop campaigns, start different ones. I mean, so much has gone on over the past couple months, have you seen that on your end where it's shifting needs, and shifting a pace that maybe they weren't ever acting at before?
Chad:
Yeah, there's really kind of three camps that we're seeing play out. One is sort of the travel camp, which is at a halt, nothing's going on, and then at the other end of that is food delivery services, or really any kind of online education, which is just exploding, 400 to 600% over what they were before, and they're just getting hit so hard that they can't take on any additional projects for lack of resources, they're just trying to keep up with what they have. But then there's kind of this sweet spot in the middle of brands that are growing, maybe they're growing like 20 to 100% over where they were last year, and they're starting to hit kind of those Black Friday levels that they were at in Q4. They weren't really ready for it, but after the first couple months of this, I think people have started to realize this is probably going to maintain, and those are the brands that are really kind of what I see is capturing a bulk of the D-to-C movement right now.
Chad:
The guys at the other end of the spectrum where they're just getting hit so hard, yeah, they're winners but all the other competitors are also winners. So, we don't really know who the winner is out of all the winners yet, but in kind of that middle range, those guys that are competing in the middle, and still getting pretty reasonable growth rates, the ones that are getting another 10 or another 50% growth because they are able to iterate a little faster, those are the ones that are going to come out the big winners in their categories.
Stephanie:
Yep, yeah, completely agree. It'll definitely be very interesting to see who sticks around, because it seems like a lot of these trends, and I know it's been debated for the past maybe month of like what's going to stick, what's not going to, I think the data's coming in now that quite a bit of it seems like it's going to be here for the longterm. Do you have any thoughts on what's going to last trends wise, and what's going to maybe revert back to how it was a few months ago?
Chad:
Yeah, I think the ... we've just been kind of playing it out month to month. I think we're assuming that half of all the growth is probably going to stick. So, if you were doing $100 last month, and you're at $200 this month, then your new normal's probably 150. Maybe that's conservative or completely wrong, but I don't know how else you'd model out in this world. I think it's definitely inflated right now, but I don't think it's going to go back to where it was, so we just kind of picked the middle of the road there, and assume that half of it's probably going to stick.
Stephanie:
Yeah, no, that's probably a good initial methodology to use. I think one thing that's always interesting is looking at what's happening in China. I think I was reading about the Starbucks app how maybe it went to 85% usage from maybe 10% or something like that, and then it dropped back to, I think, like 33%. So, it showed that, like you said, it was inflated at a certain point, but now it was a huge channel shift to more people never probably going back to waiting in line, and ordering at the kiosk, or whatever it may be. Same with Philz here, I ordered online, or through the app a few times, and I'm like, "Why have I never done this before? Why do I walk up and stand in line?" It feels silly now. So yeah, I agree, that's probably still a bit inflated, but there would be quite a bit of a large shift that maybe not everyone's anticipating.
Chad:
Yeah, and the lifetime value approach to this, or figuring out how to get retention right is really going to determine the winners out of it. I think a lot of people are doing it now because they have to, so they're getting exposed to different things like an app, or they're buying something online for the first time, but if the experience is better than what they did before, they're going to keep doing it and then you can create the new behavior. But if the experience is worse, then they're going to sour on it, and then if it's not any better than what they were doing, they're going to go back to it.
Chad:
So, part of the onus is on the brand to really own that, and this is definitely a window of opportunity for every brand to get in front of more customers, and to acquire a customer for a little bit less, but the more that they can just focus on creating that great experience the easier it's going to be. A perfect example, we ordered a couch from Costco, like some outdoor furniture, and they shipped the complete wrong set to us, and it's still in our driveway after three weeks, and they haven't replied yet-
Stephanie:
Oh, my gosh.
Chad:
... so it doesn't make me want to buy from Costco online-
Stephanie:
Oh, no.
Chad:
... instead of just going to Costco. But yeah, any time that those kind of scenarios play out to the customer, they sour to that experience from that brand.
Stephanie:
Yeah, I'm trying to think of ways of how brands can rise above the noise, because I think through all the push notifications I'm getting right now, and some of them are helpful to keep them top of mind, I think it's like Uber Eats, and DoorDash, they're sending me coupons, and I'm always seeing notifications pop up that kind of remind me like, "Hey, you did this once, don't forget about us." But then a few other brands it seems like they're silent, and they haven't thought about maybe how to actually keep me engaged and retain me after all this dies down. How do you think about keeping a customer who maybe wasn't on that channel before retained to come back for the long haul?
Chad:
Yeah, I think it comes down to trying to create that personal experience and letting them know that you're always going to have their best interest at heart. I think that's probably where most people are under-investing right now, they're over-investing in supply chain or logistics because they have to have those things, but if they really go above and beyond on the customer support side and try to find those ways to have a conversation, it doesn't always have to be phone, it can be chat, it can just be a really responsive email team, but that's really where you can separate is ... most people kind of understand right now that things are going to be a little bit delayed, and shipments might take a little bit longer, but if you can't get back to a person in time, and if you're not letting them know that you're going to bust down walls to do what's best for them, then you're risking losing that person. And I think that's been proven with Zappos, Amazon, pretty much any one-to-one ecommerce, Chewy, it's all about the customer experience, and customer support is really what drives lifetime value.
Stephanie:
Yeah, completely agree. It seems like right now is a really good time too where you have the customer is a little empathetic to, like you said, things being delayed. I know I ordered something off Etsy, and it's like three weeks delayed. However, the person who is selling it has been constantly keeping me updated of like, "Here it's in San Francisco, here it's ... I see it on the map, I'm so sorry it's delayed." But I feel actually okay with it being delayed because she's been so open about where it is and why it's delayed and all of that. I think that's a good point of if a brand gives a good customer experience, even if something's not going well, that customer could still walk away with feeling good about it and having a good relationship with the brand just because they knew what was happening throughout the whole process.
Stephanie:
So, you've been in the world of ecommerce for a really long time, so I feel like it's good to kind of make sure you answer some high level ecommerce questions since you seem to be a good expert to ask. What's one thing that you wish online sellers would either start or stop doing?
Chad:
Yeah, I think starting's probably going go back to just iterations and testing faster. I think it's ... Most ecommerce teams, and the VP of ecommerce and CMOs, they'll usually set a KPI of like, "Let's hit 200,000 next month in sales.", or whatever it is. What they don't really set is tests, how many tests are we going to run next month, and whether those tests are successful or unsuccessful, being able to really emphasize that, and get through those cycles faster, that's the fastest way to really kind of have a process that lasts a long time in this space, because everything else is going to change. The channels are going to change, the way we market is going to change.
Chad:
So, the thing I would say do less of is kind of trying to squeeze a little more out of the lemons that you've already squeezed. So, if you've already done a lot through Google shopping, and you kind of optimized AdWords, then yes, there's always room for improvement, but if you try to get in front of that next thing that happens, it's going to pay dividends down the road. So, I would say do more testing and more iterations, and a little bit less optimization on all the things that have already worked once you're comfortable with those.
Stephanie:
Ooh, I like that, that's a good answer. It seems like brands right now are pretty hesitant to either do a lot of iterations just because of everything going on, or market in general. Have you also noticed that trend?
Chad:
Yeah, I think that's starting to loosen up a little bit now. I think a lot of brands just didn't know what to think early on, and for better or worse it was a great reason for them to go back and renegotiate a lot of things with a lot of people. So, I think they've kind of gone through that, probably cut some costs, and now they're realizing, "Oh, we might not have had to do that, but that was good to do. So now what are we going to do with all this extra stuff that we have?" So, I think people are starting to be a little more open to it now. Marketing budgets, any time there's a downturn, is always a thing that gets hit pretty hard. But ecommerce is definitely kind of in its own bubble, in its own world right now, so I think it's going to get a lot more attention that it didn't get before, and I think it's going to get a lot more emphasis on growth than it did before.
Stephanie:
Yeah, yeah, I completely agree. Is there anyone that you watch in the field ... not in the field, but I guess in the industry that you're like, "This is a good brand to watch.", where they stay ahead of trends, they're always kind of one step ahead of everyone else?
Chad:
I think wish.com is one that probably doesn't get talked about a whole lot-
Stephanie:
No.
Chad:
... but they do a lot of really interesting things. I think when people think about D-to-C they end up leaning more towards the actual brands like Allbirds and those guys, which do a great job, but I think it's really interesting to watch the guys like wish.com, and even some of the stuff that Pinterest is doing right now is starting to get pretty interesting, more of kind of the marketplace approach. So, if I'm a D-to-C brand and I'm selling shirts, those are the guys that I'm trying to work with a little bit more.
Stephanie:
Got it. So, what is Wish doing, because I haven't kept up with them. I downloaded the app back in the day, and it wasn't the type of things that I would want to maybe buy quality wise, but I heard it has gotten better, so what kind of things are they doing, or Pinterest, that you got your eye on?
Chad:
think they're realizing that discovery is becoming more of a thing, especially on mobile devices and mobile apps. So, Wish does a lot with kind of endgame ads, and driving media buys directly from publishers. They don't do a whole lot on Facebook and Google, because it just gets too expensive, but they've gotten really good at running kind of the remnant ads, and driving downloads, which they can kind of funnel all the way through to a conversion.
Chad:
So, their conversion path is a little more complicated than just like, "Here's a Facebook ad, and did they buy a shirt?" But the way that they're able to monetize that is because they're focused on a little bit higher funnel conversions like an app download, and they know if they can get the app download, let's just say half the people are going to end up buying something for $1, because most of the stuff on Wish is $1, and then after that maybe they'll start to buy more expensive things on there.
Chad:
It kind of goes back to the ... there's a psychology study about a guy that was running as a candidate, and he wanted to get people to put these big signs in front of their yards. So, he went to half the houses and gave them a huge sign and said, "Will you put this in your yard?", and then he went to the other half of houses and asked them if they would put a small sign, but then he went back a week later and said, "Can I replace that small sign with a big sign?"
Stephanie:
That's good.
Chad:
Half the people would let him upgrade to the big sign after they got the small sign in place instead of asking for the big thing upfront. So, I think the brands that are really doing a good job right now are focusing more on those type of tactics where you have a small ask for the consumer, and then you sort of build on that over time instead of just asking them to buy a $1,000 mattress.
Stephanie:
Yeah, I like that story about the signs, I'm going to have to use that one in future episodes. Do you think it's ... Is there any reason to be nervous around relying on marketplaces like Wish, or Pinterest, or even Amazon?
Chad:
When they get too much market share that's when it becomes a problem, because then they can kind of control the ocean. It's best if there's a lot of players, usually five plus players, because then you've got options and you, as a brand, have a little more negotiating ability, and you've got some more leverage. So, this is what happens in the world, everything kind of gets consolidated, and then it starts to break apart again, or it gets unbundled. So, I think we just kind of keep going through those cycles, and then as you can, as a brand, capitalize on those cycles and try to do enough testing where you can figure out what that next shift is going to be, that's when you really start to hit your strides.
Chad:
A lot of the D-to-C brands that we look at today, and we're like, "Hey, these guys are awesome.", it was because they were early on Facebook Ads, and then they diversified outside of that. So, they really got their momentum by finding that market opportunity where there wasn't a lot of competition, and then capitalizing on it as fast and as hard as they could until it became too competitive, and then they expended it out, now they run TV, and they're basically a traditional brand like everyone else. So, if you want to be a successful D-to-C brand you have to find one of those market opportunities where you think that a wave is going to happen, and then you just ride the wave as long as you can.
Stephanie:
I like it. So, are there any platforms that you're paying attention to right now, or that you've heard some of your brands are looking into that are maybe more early?
Chad:
TikTok's probably the biggest one [crosstalk 00:38:46]-
Stephanie:
Yep. A lot of people have brought that up.
Chad:
Yeah.
Stephanie:
But tell me your thoughts on TikTok.
Chad:
So, they still have a lot to figure out with TikTok's ad platform, but this is always how it happens, they have a huge group of customers, and they're getting a ton of impressions, but they don't necessarily have all the data that they need to be able to get the highest CPMs for those impressions. So, right now it's sort of a ... they're just kind of running brands one-off, and you can get CPMs for pennies and just hope that it does something. TikTok doesn't have a very robust attribution system as far as like, "When they saw this did they actually convert?"
Chad:
But that's always how it works. If you can find something that really resonates then it's going to ... you can just maximize it, you can just push it as far as it'll go, and as far as your supply chain can handle it. So, there's no clear, "Do this on TikTok and you get this.", and that's what makes it appealing. If you can get into a platform like that, run a ton of experiments, and figure it out before the next guy figures it out, then you get the cheapest CPMs, and you get a huge growth rate from it.
Stephanie:
Got it, yeah, that's really interesting. It's funny how many people are starting to look into that, but no one's fully explained it how you did about why you want to find a platform, like you said, that it's not a, "Do this, and then you will get this result.", because if it's like that it's probably everyone already knows how to do it, and there's a lot of competition, and it's expensive.
Chad:
Yeah, I think Gary Vee probably said it best, but marketers kill everything. Once you figure out something works, then every other marketer's going to do it, and then it's going to stop working.
Stephanie:
Oh, he is heavy on TikTok, so he's-
Chad:
Yep.
Stephanie:
Yeah, I've gone on there a couple times and seen him all over the place on there. Are there any other platforms like that that you're looking into?
Chad:
I've heard retargeting on Snapchat's pretty good depending on the audience that you have, if they're under about age 40 then you can usually get pretty good results on there, who knows what that's going to keep growing into. There are some D-to-C companies that get pretty good traction on Twitter. I don't know if either one of those are really kind of growth channels anymore, they're more like optimization channels either for retargeting, or just figuring out how to get a little bit lower CPM, maybe it's half the rate of Facebook, but it could still work pretty well.
Chad:
I think what's going to happen next is that a lot of the publishers are going to start creating their own ad systems for this stuff. I think a lot of the publishers are sitting on a lot of data, and being able to target that data with them directly is going to be enabled by CDPs, or customer data platforms. So, a lot of these guys are starting to build those out now so that they're less reliant on Facebook and Google's ad systems for all the ad buys. So, I think that's where the unbundling is probably going to happen, it's probably going to happen with the publishers as they start to pull inventory from those guys, and start to figure out their own ad system. And if they can start to figure out lookalike models that work on the publishers sites, then you can cut out some of the middle guys, and then drive down the rates, which makes it more appealing to the D-to-C guys.
Stephanie:
Yeah, ooh, that's interesting. That'll definitely be fun to watch, because yeah, I've seen a lot of posts right now around people going to the more expensive platforms, maybe like LinkedIn where everyone's like, "It is not efficient budget wise to try and run ads on maybe LinkedIn.", but if you run a small subset on there, and then you retarget on Snapchat, that is way cheaper. That's how a lot of companies seem to be trying to get around the more expensive platforms right now. So, it'll be fun if more open up that aren't like that, or you don't have to go through that many steps to actually find your audience.
Chad:
Yeah, definitely, and I think another one is Tabula, if you haven't tried Tabula, you probably should, they've got lookalike models now and some retargeting, and the CPMs are still pretty low, so they're definitely one to keep an eye on.
Stephanie:
Oh, I haven't heard over time that, I'll have to check that out. So, is there anything that you want to share before I move into the lightning round where I ask a couple questions, and you have to have a quick question answer? Anything around ecommerce, or AddShoppers that's top of mind that we missed?
Chad:
So, we deal a lot in customer data, so sort of the elephant in the room with us is always upcoming regulations, and how do customers actually want to use their data, or how do we create an environment where we can have trust in the marketing world without violating someone's personal data. So, we as a company, we launched a brand called SafeOpt, it's S-A-F-E-O-P-T.com, and SafeOpt is basically the endpoint for shoppers so that they can tap into our data. A lot of companies have created things for CCPA, and GDPR that are limited to just California or just Europe, but we've created the SafeOpt brand to be exposed worldwide to anybody that ever wants to get access to their data, and I think that's how we, as marketers, build trust with consumers is by making everything transparent.
Chad:
I know like my grandparents and in-laws and things like that, they sometimes think if they're near an Alexa and they say something, Alexa's picking up on it, and all of a sudden they're going to start to see ads for those things. As a marketing technologist I know that the amount of data they would have to ingest to do that is pretty much near impossible, and that they're probably not going to do that. But it's little things like that, that create this perception of marketing being a bad thing, or marketing being a thing that is like this black box of it knows everything about me. So, I think that we, as marketers, have to continue to push towards versions that create transparency, and versions that give control to people that want control.
Stephanie:
Yeah, that's great. So, for the brands that are just optimizing for the California or European rules, what could you see happening for people who aren't thinking more holistically? Could they lose access to ... maybe if they had a whole customer subset dataset where maybe if they didn't do things correctly from like a privacy protection area, would they lose that whole entire dataset and couldn't use it in the future, or what do you see happening if they don't get ahead of this?
Chad:
I think a lot of it's more hyped up than what customers actually want to do. We get very few CCPA requests, or GDPR requests. Most people are just curious, they want to know what's in there. They don't necessarily want it to go away as long as there's some sort of benefit for them. Some people do, and you want to purge those people as easily as you can, because you don't want to violate their trust either. If they want to be completely anonymous that's up to them, but I would say that's probably less than one to 5% of all people, and it's probably the group of people that isn't the highest lifetime value. But yeah, I would say just focus on creating a ... It's one thing to just do what the regulation requires you to do, and it's a completely nother thing to do something that creates a good customer experience while accommodating the regulation.
Stephanie:
Yep, yeah, I love that. Cool, all right. Well, with the last couple minutes I was going to move into the lightening round, brought to you by Salesforce Commerce Cloud, are you ready, Chad?
Chad:
Let's do it.
Stephanie:
All right. What's up next on your podcast list?
Chad:
Ooh, I like Joe Rogan.
Stephanie:
Yep.
Chad:
I think he's pretty much just constant.
Stephanie:
But now you got to go to Spotify for him, right?
Chad:
Yeah, pretty much.
Stephanie:
Yeah, I like him, too. What's up next on your reading list?
Chad:
I'm reading Great by Choice from Jim Collins right now.
Stephanie:
Mm-hmm (affirmative), awesome. You'll have to go to our Mission Daily podcast, we are having Jim Collins ... we had him on the show, but we haven't published his episode yet, so I think it's coming out in a couple weeks.
Chad:
That's awesome.
Stephanie:
So, you'll have to go over there afterwards. What's up next on your Netflix queue?
Chad:
I've got a eight-year-old and a four-year-old, so I don't really get a Netflix queue right now. By the time nighttime comes around I'm ready to go to sleep, so I've got nothing.
Stephanie:
All right, I like it. What's up next on your travel destinations when you can travel again?
Chad:
Yeah, we go to Maine every year, this is going to be the first year we missed it in probably like 14 years-
Stephanie:
Oh, no.
Chad:
... so we want to get back to the Maine beach as fast as we can.
Stephanie:
Oh, that sounds fun. Yeah, Maine seems really pretty, I need to check that out. All right, and the last, slightly harder question, what's one thing that will have the biggest impact on ecommerce in the next year?
Chad:
All right, that's a trick question. One thing with the biggest impact ... I think it's probably going to be the unbundling of Facebook.
Stephanie:
Tell me more.
Chad:
I think that ... So, Facebook is ... I would guess that they've hit their prime, and that micro-networks are going to start to grab users away from Facebook and push them over to their platforms, and all the various iterations that that's going to happen in. Mark's done a great job of kind of buying all the scale and everything that Facebook has now, but I think that without them continuing to innovate there, and with all the things that are happening inside of Facebook right now, I think they kind of hit their peak. I could be totally wrong, people said the same thing about Microsoft and a lot of other brands, but I think that's probably what's going to happen next. And then that's going to drive, for ecommerce, new opportunities like we were just talking about where if you're early enough on those you're going to be able to drive huge brand awareness and a lot of sales.
Stephanie:
Cool. Yeah, that's a great answer. All right, Chad, well this has been a blast, where can people find out more about you and AddShoppers?
Chad:
Yeah, so AddShoppers is A-D-D Shoppers.com, and I'm on Twitter @ChadLedford.
Stephanie:
Awesome. Well, thanks for coming on the show, and we'll see you next time.
Chad:
All right, thanks, Stephanie.
Making the switch to online shopping has been easier in some cases than others. Buying laundry detergent online, sight unseen doesn’t feel quite as high-risk as a larger purchase like say a car or a house. It makes sense, then, that certain industries have been slower to fully embrace the Ecommerce experience. Bridal is one of those industries, but Leslie Voorhees Means thinks that it’s time to shake things up. Leslie is the co-founder and CEO of Anomalie, an online-only custom wedding dress company, and on this episode of Up Next in Commerce, Leslie explains why she thinks her model is going to be the one to disrupt the market. Thanks to a blend of tech and human stylists all focused on customization and personalization as well as taking control of the supply chain, Leslie says that Anomalie has found a way to solve many of the pain points brides run into during a traditional wedding dress shopping experience. Thousands of customers agree so far, and as growth continues, Leslie has her eyes set on new technologies that she believes will lead to a sea of change in the entire Ecommerce world.
3 Takeaways:
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
---Transcript:
Stephanie:
Hey everyone, welcome back to Up Next In Commerce. This is Stephanie Postles, your host. And today we have Leslie Vorhees on the show, co-founder and CEO at Anomalie. Leslie, thanks for coming on.
Leslie:
Thanks for having me. Happy to be here.
Stephanie:
Yeah, we're really excited. So, where are you located at right now? What are you up to?
Leslie:
We are in San Francisco. So, the company was founded and is headquartered here, but we have a couple offices around the U.S and the world. We've got our customer service stylist operations in Scottsdale, Arizona. And then we've got a team that manages our supply chain operations in Hong Kong.
Stephanie:
Oh, very cool. Hong Kong sounds awesome. So, I'd love to hear a little bit about Anomalie then. We're jumping into it quick, but yeah, talking about offices in Hong Kong, it sounds like it's expanded quickly and grown from where you started. So, I'd love to hear a little bit of the background there and what brought you to Anomalie.
Leslie:
Yeah, for sure. So, I never actually expected to be founding a company and was not expecting to be in bridal. This idea for the company came about through my own frustration when I got engaged and shopped around for my perfect wedding dress and had a really, really hard time finding, I had this picture of a dress that I really wanted and couldn't find it in boutiques and was pretty horrified by the prices.
Leslie:
My background is in mechanical engineering and manufacturing. I've always worked for big companies. Started my career at Nike and fell in love with the factory environment and product development and being able to create real physical products. And was working at Apple at the time that I got engaged and was working on the launch of the Apple Watch and was in China quite a bit. Did a little bit of research because I knew co-workers of mine had custom clothing made, mostly men's shirts and suits and things.
Leslie:
And ended up finding Suzhou, China, which is outside of Shanghai, which makes most of the world's wedding dresses. 80% of the world's wedding dresses are made in and around this amazing supply chain hub of expertise and craft. And worked directly with one of the workshops there when I was out in China for work and was just absolutely floored by the price but also the quality and the levels of customization.
Leslie:
I could pick out everything from the lace to have it be custom-tailored to my body. And mentioned it to a couple of friends and almost immediately started getting requests for orders before this was even really a company and realized pretty quickly that other women felt the same frustrations that I was feeling around not quite finding what they want for, arguably, the most important garment that you're ever going to wear.
Leslie:
And then another interesting insight besides just the virality of those original orders was the first couple dozen requests were coming from women that said they wanted something really special, and really different, and really unique. And in reality, the dresses looked very, very similar. People were like almost ordering the same dress because wedding dresses are uniquely low variable. It's white, it's ivory, has lace or no lace, there's limited silhouettes, there's limited styles, has a longer product life cycle than a lot of garments and fashion.
Leslie:
And so, there were the seeds of this idea for mass customization that was really exciting to me as an engineer to think about how we could scale this to give tons and tons of options to brides, but on the operations side be really efficient and be able to have the benefits of scale by thinking about these modules that can be customized. So, the skirt, or the neckline, or the straps, or the sleeves, et cetera.
Leslie:
So, we've thought about that a lot as we've grown in the past. So, that was about three years ago, a little over three years ago that we started and since then have grown to serve thousands and thousands of brides. And are building, from the technology side, a way to be able to visualize the dress in an easy and fun way, given that we don't have brick and mortar shops.
Stephanie:
That's amazing. Yeah. It's very interesting hearing the story of your background of being like, "I need a wedding dress," and actually going to the district in China where they're made. I can't think of many people who would solve their own problem like that. Was there any surprises when you were going and meeting these companies there and just thinking through, "Hey, this could actually be a business," or any findings when you went there that you weren't expecting?
Leslie:
Yeah. I think one thing that was really stark that I noticed right away was I was the only foreigner in this area. It was very apparent that Chinese women knew that this is where you can get really high quality, almost like haute couture type of like custom garments. But I was the only foreigner, the only white person walking around getting a lot of stares.
Leslie:
I think that was really representative that there was a secret that was being uncovered. That was how I was thinking of it was, this is something that can be untapped. And just given my conversations with friends, and then friends of friends, and then friends of friends of friends, as the idea started growing was, women really want to be able to tap into that but need a trusted source.
Leslie:
There's a lot of direct from China websites and horror stories about women ordering a dress and then when it actually shows up it's low quality or not what they were expecting at all. And given, again, this is a very emotional important purchase. Having someone that you know and trust on the ground, I thought was something that was going to be really important and that has remained important the entire history of the company.
Leslie:
And then I think the other thing that was surprising was just the breadth of quality in Suzhou. It was, you could get everything from a very, very, very inexpensive cheap wedding dress for a couple of bucks all the way up to dresses that were almost as much as it would cost in America and wide ranges of quality.
Leslie:
I remember I vetted probably a hundred or so factories when we were first starting up and it was pretty apparent the ones that didn't take quality as seriously. There was one factory that I remember where everyone in the factory was smoking cigarettes-
Stephanie:
Oh my God.
Leslie:
... which is not something that you would want in a high quality [crosstalk 00:07:03].
Stephanie:
What's their reviews on Amazon? People are like, "Hey, it smells smoky. I wonder why. Now we know."
Leslie:
Yeah, exactly. So, that one was an easy one to cross off the list. But then on the flip side, there were a lot of really, really sophisticated entrepreneurial factories that we met with that I think could feel the shift that's happening in bridal, which is that it's one of the, I think, last verticals that hasn't really been disrupted by an online presence. Wedding dresses are still 95% brick and mortar in the U.S.
Leslie:
And a couple of years ago, it would have been crazy to say that you're buying your eyeglasses, or mattresses, or TVs, or books, or whatever on online. And it's still a little bit crazy to say that with wedding dresses, but I think that's exactly why I was so interested in it because it felt new and different. I think that that's the making of a really good startup, a good, crazy idea.
Stephanie:
Yep. Yeah. I completely agree. It seems like there could be a lot of D2C opportunities that go directly to the source like you did. Because a lot of them, people are coming online. They want not go through someone else to sell right now. Is there any other areas that you can see going direct to actually help with the business model, or maybe friends, or mentors in the industry where they realize, hey, there's a lot of opportunity if you go directly to the factories and see how they make it and develop your own relationship, instead of always relying on a wholesaler, or drop-shipping, or whatever it may be?
Leslie:
Yeah. I have to credit my internship when I was in business school. I was really, really lucky enough to be a part of the core founding team of M.Gemi, which is direct to consumer high, high quality Italian footwear. And I was able to go with the founder over to Italy that summer-
Stephanie:
Wow.
Leslie:
... which was the coolest internship ever. Much more glamorous than some of the factories in China.
Stephanie:
Wow. I want that internship now.
Leslie:
Yeah, exactly.
Stephanie:
Can I sign up for that?
Leslie:
It might be the coolest job I've ever had. But it was really, really interesting because they had set up relationships with these Italian craftsmen that make shoes for, I mean, the factories we saw were for Yves Saint Laurent, and Prada, and Valentino. And the same hands that were making those shoes had extra capacity to make high quality shoes that didn't have the designer label and then designer price tag.
Leslie:
And tapping into that direct to the workshop and direct to the craft idea was something that I got to see that M.Gemi was doing and is apparent all over e-commerce with, I know Away luggage, I think, started with making partnerships directly with the workshops and, I'm trying to think of another. Oh, the mattress, a lot of the mattress companies are... There are these pockets of expertise and by being able to sell direct to consumer, it cuts out the middlemen and obviously cuts out a lot of the costs.
Leslie:
And then also for us, especially being able to centralize stylist operations, and tech, and our finances, and all of that allows us to scale nationwide without having those costly retail footprints. And then also we can scale the experience from a customer experience side.
Stephanie:
Very cool. So, if you're looking back now on picking factories and workshops to work with directly, what were some of the lessons that you took away from it where you were like, "I would do this over again," or, "I did it this way and it worked out really well," if someone were to try and start this process from scratch?
Leslie:
Yeah. Well, I'd say definitely no cigarettes present in the factory.
Stephanie:
Step one.
Leslie:
Yep, step one.
Stephanie:
All right everyone, that's all you need to know.
Leslie:
That's the secret. No, I think also the appetite for international partnerships. And we were lucky because we started really small with just a few orders. And a lot of partners, especially in China, require minimum order quantities to be able to produce with them. And we found partners that were aligned with our vision of entrepreneurship and scale, but we really had to sell the vision probably similar to fundraising and selling the ideas to venture capitalists to get funding.
Leslie:
We had to sell the idea to the workshop managers as well to buy into this idea because we did not have massive amounts of orders at beginning. And so, definitely alignment on a strategy of customization and a strategy around scaling through tech and having technology-enabled operations to be able to get bigger and better. That helped a lot to be able to find some partners that were really, really aligned with that vision.
Stephanie:
Yeah. That definitely makes sense. It's like when you're looking for a contracting job or something like that, the people who apply maybe aren't the ones you always want versus going out and actually sourcing the exact person that you want to work on your project, or employee, or whatever it may be.
Leslie:
Exactly.
Stephanie:
Always seems to work a little bit better.
Leslie:
Yeah.
Stephanie:
So, for Anomalie, when I was thinking about, I've had a wedding before, I've bought dresses, and I was thinking, "Oh man, that seems like it could be pretty hard to do direct to consumer online because of the measurements, and making sure it fits, and wanting to feel the fabric and all that. How can technology replace that kind of experience that makes the consumer more comfortable with buying something so important online?
Leslie:
Yeah, it's a great question and a great call out. It is hard. It is a hard hurdle. We have a really, really high bar of trust. This is a really, really important garment. I think what's really exciting to us is that a digital experience solves a lot of the pain points for brides' shopping experience in brick and mortar boutiques by offering, one, a much better price.
Leslie:
So, high quality brick and mortar boutiques you wouldn't balk at a price tag from, the average is in the two to $5,000 ranges where the bulk of the dollars are in the market. And designer dresses can cost $10,000 or more. And by being able to cut out the cost of the shop and then also having a stylist we're able to offer a much better price. So, our average dress right now is right around 1700, which is-
Stephanie:
That's really good for custom.
Leslie:
... [crosstalk] in industry standard. Yeah, we think so too. And then another pain point that we hear over and over from brides is around inclusive sizing. So, the average American bridal boutique doesn't carry the average American woman's size, which is a bridal size 14, normal size 12.
Leslie:
And the inventory is expensive and boutiques have a limited set of gowns. And that gets even smaller when you think about sizes that can include plus size women. And so, by making our dresses made to order, made to measure, we're able to make the pattern to fit the woman's body, regardless of whether you're a sample size or up to a size, I think it was made up for a size 32 before.
Leslie:
So, that I think addressing the inclusive sizing has been a big unlock for us. And then I think the biggest advantage we have is we can offer dramatic advantages with customization of the design because we can bring together any element that a woman wants. So, more often than not, we hear a bride say, "I tried on dresses, I have a Pinterest board with all my dream wedding dresses, and I love this element of this dress and this element of this dress. I love this skirt and I love this top and I wish I could make it long sleeves."
Leslie:
Or, "I wish I could swap out the lace." And so, from a supply chain perspective, that's exactly how we're thinking about building every single dress is with those modular components to be customized. And because we don't have to hold inventory, we can offer literally billions of permutations of designs to bring together all of the parts of different dresses that brides want.
Leslie:
And so, we're really empowering brides to discover and then also create the exact product that they want. And then that tech is supplemented by a human component, which is still really important to have a stylist on the other side of the phone to bounce ideas off of, talk about pros and cons of different design elements, and really reaffirm the decisions. Yeah, because it is hard, because she's not trying it on in a store.
Leslie:
But the question is always the same, which is, I want this dress to fit, I want this dress to look beautiful and flattering on me. And that is a problem that we can solve with tech and with data. We're collecting hundreds of thousands of custom measurements right now, and developing IP around pattern making, and fit, and have a fit guarantee that you're not going to have any more than $499 of alterations. And if so, we'll cover the costs. That's something that we just launched last month.
Leslie:
And so, we feel confident that we can tackle the challenges with not having an in store experience, but actually offer much, much more value through better price and sizing and fit. And then also that customization element.
Stephanie:
Very cool. So, when it comes to entering in data for sizing, do you have the user do that? Do you have the stylist work with them? Because that seems like it could be a process where it could be painful if you're measuring your wrist, measure your shoulder area. I mean, it seems like there's a lot of spots that you'd have to measure to know how to get an exact fit. So how do you work with customers on that to where they don't bail? Like 50% of the way in they're like, "Ooh, there's a lot of work. I'm out."
Leslie:
Yeah. We benefit because women are really committed to getting this garment right.
Stephanie:
Got it.
Leslie:
So, it's shows up in lots of different areas. For example, we have a really long, intense survey and we have a crazy, crazy high completion rate. If it ever drops below 95% completion, we're thinking something's wrong with the website, because this isn't just purchasing a pair of pants or a pair of earrings or something online, this is your wedding dress. So, women are really, really okay with sharing a lot of data.
Leslie:
So, that shows up with measurements too. So, process-wise, we send a little fit box, which includes physical swatches of our fabric, because that's something that we've found is really hard to digitize, the color, and then also being able to touch and feel the quality and what the fabric feels like.
Leslie:
And that includes measuring tape. And then we've got pretty in-depth instructions on how to have someone take your measurements, whether that's your fiance or a friend. We also have a connection with local tailors. So, if women want to go in and get measured by an expert, we cover the cost of that. But what we've seen over time now is actually, we have hundreds and hundreds of thousands of these points of measurement. And so, our system can algorithmically flag if something looks off too.
Leslie:
So, oftentimes, we'll come back to a bride and say, "Hey, this measurement doesn't quite look right and it's a typo that we were able to catch." And so, by just having that back and forth, and then also this foundation of data to ensure that the measurements are accurate helps a lot. And then, in the future, I mean, we've seen a lot of technology pop up around digital measurements. I'm hoping someone else can solve that problem. And then we can fold in the technology through our process because it is for sure a challenge.
Leslie:
What we're thinking more about is once we have measurements that we feel really, really good about, how does that translate to the pattern making and being able to create a 3D physical garment that will fit a 3D object, which is a woman's body? Which is hard, but that's something that I think, in particular, our investors are really excited about. Because once we figure out that part of the problem, that can be applied to other things besides wedding dresses. That can be applied to garments just overall for women. So, thinking a little bit longer term about how we can build some really cool IP around women's fit.
Stephanie:
Yeah, that's awesome. I was just thinking about how nice it would be to have someone take a quick video of you doing a spin, where then it has all your measurements there, so then you can actually virtually try on the dresses and see how they look, because that seems like it'd be hard to know how something would look on your body without actually seeing it on the computer screen or something like that.
Stephanie:
At what point did you realize, like, "Hey, we're getting a bunch of data." We probably should incorporate machine learning or build an algorithm that helps with either recommending styles or like you said, checking the fits or the measurements that the potential bride was putting into the tool? At what point were you like, "This is a lot of data, we need to actually implement some type of technology," and how did you go about that?
Leslie:
Yeah. It's funny. I would say it's probably the way we figure out anything else with the company and probably other startups will empathize with this as well. It's like, once things start breaking, that's where you're like, "Oh, okay, we got to fix this." It's like the leaky faucet or the balancing plate's analogy. It's once things really start to wobble, it's like that's where time and attention and resources need to be applied.
Leslie:
But another part of this is that I've always really, really admired startups and D2C startups in particular that have this differentiation with tech, or data, or supply chain, or operations. So in particular, I really, really admire Stitch Fix and Rent the Runway, which Stitch Fix famously has said they employ more data scientists and engineers than they do merchandisers, and they're a fashion company.
Leslie:
I think they recognized really early how much leaning into that data strategy can help them scale and get really, really good at what their core value proposition is, which is similar to ours in terms of personalization. And so, we've always tried to follow after their ways because they've been so successful. And so, that's been on my mind since day one as like, this is going to be an important part of how we can scale successfully.
Stephanie:
Yeah. Stitch Fix is definitely a good example. It's amazing how much data they use and how they are working to perfect every single fit of clothing and using all the feedback they get every single second to make it better and better.
Leslie:
Yeah. What I love is it's not data just for data's sake or tech just for tech's sake. It's like really core to how they're delivering personalization to their customers. And they see it as a big competitive advantage, which I think is why they've been one of the few successful e-commerce exits. You haven't seen that many in B2C, I think, because it is really hard, but that seems to be a really, really smart way to differentiate your company and your brand.
Stephanie:
Yeah. I completely agree. Do you have a model that you're looking at right now where you're like, "We're going to spend this amount of time thinking through the tech and the future of where our industry is headed to get ahead of it, and then this percent is spent on the product right now?" Or how do you think about balancing those two initiatives?
Leslie:
Yeah, I wish it was that organized. We're probably not quite there strategically yet, but it's always been these three core pillars of our business, which is the tech and the visualization really around solving these frustrations around visualization, and measurements, and fit, and developing a really amazing digital experience through our tech. And then second is our human part of the customer experience. So, our stylists team that is just really smart, and empathetic, and helpful and, I think, necessary to make this big decision, this big purchase online.
Leslie:
And then third is our supply chain operations and being really on the cusp of vertical integration and being super, super involved in our workshops on the ground to make sure that we're maintaining a really high level of quality and that we're covering all the areas of ambiguity that comes from making custom garments.
Stephanie:
Yeah. Awesome. So, right now when I think of the wedding industry, I think of the big brands, the major players. How do you think about building a bigger share of the market or getting a bigger piece of the pie when you're competing with companies like that?
Leslie:
Yeah, it's something that we've thought about since day one. And because bridal is so unique, I think we're really uniquely suited to disrupt the market. So, as I said earlier, bridal is still 95 plus percent in brick and mortar. And then the other funny thing is that it's really fragmented. So, the biggest player in the market is David's Bridal, which is a third of the market. And then the rest, there's no one with more than a 1% market share.
Leslie:
So, it's just super fragmented, independent, usually mom-and-pop boutiques. And the crazy thing about David's Bridal is they're failing, they filed for chapter 11 in November of 2018 and have been repackaged and sold off to a number of different private equity firms and just continues to be-
Stephanie:
That's not good.
Leslie:
Yeah, really I think struggling because of the costs of their retail. They have over 300 stores in the U.S, and salespeople, and I think it's a model that's not going to work long-term. And so, we have our sights set on taking that big of a share of the market similar to David's Bridal. And we think we're really well set up to do that because we're doing it in a direct to consumer way. We're not burdened by the cost of having a retail presence.
Stephanie:
Yeah. Yeah. I read a really interesting report about the David Bridal's of the world, where once retail locations are bought by PE firms, that there's a very high correlation of them going bankrupt because of just how-
Leslie:
It's not a good sign.
Stephanie:
Yeah. Yeah. I think Toys "R" Us was the same way and there was a whole list of them.
Leslie:
That was actually the, I think it was Oak Tree or Oak Hill that took Toys "R" Us into liquidation. And they were the same ones that just purchased David's Bridal in [inaudible 00:27:54]. Yeah, it's not looking great for them, but it's wild that there's still one in every three wedding dresses in America and no one else is really stepping in to take them on.
Leslie:
And we're going big here. The answer I think is not to just open up another boutique or another online boutique, I think the answer to unlocking a big portion of the bridal market is around price, and customization, and fit, which is why we're spending a lot of time and a lot of dollars on building tech to support that. Which is hard and our investors understand that, but I think it's also why we're a great venture opportunity is because there's a lot yet to be discovered, which is what we're working really hard to build right now.
Stephanie:
Yeah. I completely agree. When it comes to your marketing efforts and getting that market share and growing bigger, what kind of tactics do you use right now to either convince the buyer who's maybe very skeptical of buying online to come and try you guys out and making it a easy process for them just to get involved versus the people who you can tell are like, they're in it, they're ready, they've already paid the stylist fee, they're here? How do you think about advertising those two different types of audiences to make sure they convert to hopefully customers?
Leslie:
Yeah. For us, it comes down to transparency, which is very authentically Anomalie, especially in the early days when we were first starting out. It's not trying to make us bigger than what we were, it's acknowledging, "Hey, we're a young upstart, but we're going to work really hard to make your wedding dress perfect." And being really upfront about the challenges and being upfront about the questions that are in bride's minds.
Leslie:
It doesn't help to gloss over the fact that you're not going to be trying on the dress until it arrives, but having an honest conversation with our customers around that has always helped. And what also helps is that we've got a lot going for us in terms of, again, the price and being able to bring together all these design elements that you could never find in a store.
Leslie:
So, yeah, it's addressing concerns around what customers might be thinking of, and then also just education around this new experience. And what's cool is I think our authenticity really shines through our social. So, we have really, really great word-of-mouth viral growth, but more and more finding new customers through Instagram and Facebook. Which we have a pretty cool way of reaching our customers because oftentimes if women become engaged, they change their relationship status on Facebook, and so they're easy to find.
Leslie:
Also, especially newly engaged women love content. They want to read all of the wedding blogs and browse Pinterest for hours. And so, we're working a lot on how we can make our digital experience really fun and easy to browse tons and tons of potential dresses and then also real dresses.
Leslie:
So, our Instagram account is just chock-full of women, real women, not models on the happiest day of their life with our product being the centerpiece on the bride. It's a really cool evergreen content machine too, because every day we get dozens of new wedding photos from women who have professional hair, and professional makeup, and professional photography on this very happy day. And it's just really easy to-
Stephanie:
Perfect.
Leslie:
... feed that back to potential customers to show the breadth and depth of our customers and customer types and body types, and also design. And I think it's a really cool way to communicate our value proposition to potential brides.
Stephanie:
Yeah. That definitely makes it much easier. How do you think about encouraging the brides to share that, not only with you, but also in their socials? Because I could see some people being hesitant to show where they got their dress from, because then everyone knows about it and it's not as special and fancy. I've just seen this hesitancy in brides to tell you like, "Hey, I got this bracelet from here and this dress from here. And here's where I got my veil from." It seems like it's an industry or, at least, a group of people that sometimes don't always want to share that. Have you experienced that?
Leslie:
Yeah, it's funny. And this is another funny thing with bridal. I mean, we've never developed an influencer strategy. We've never had to work hard or twist a bride's arm to post pictures because it's almost always a really, really happy customer experience. Brides are shouting it from the rooftops, especially brides that had frustrations finding a dress that they wanted and then discovered us. They want to tell their friends about it. They want to help future brides know about us, which is just super cool.
Leslie:
And I think it's something that we've worked really hard to develop because, again, this idea of having a lot of trust, but we've earned that by going above and beyond to make sure our original customers were advocates for our brand by delivering a really, really amazing experience and a really, really beautiful, perfect dress.
Leslie:
And so, it still amazes me how much brides love to share about their experience. It's funny also because oftentimes the wedding dress is a secret, especially to the fiance. So, women will go as far as posting on their Instagram stories their sketch for their custom dress, but then we'll scribble out so you can't quite see what the dress looks like, but they still want to post the fact that they are so excited about getting their sketch, even though you can't even see it. It's pretty amazing.
Stephanie:
That's great. Yeah, that's really awesome. I'm sure also having that relationship with them, I mean, by the time they get to the very end, I'm sure they feel very connected with you, and the stylist, and your team, so it probably makes that better.
Leslie:
Oh, we've had stylists invited to so many weddings. It definitely is a relationship that is, I think, pretty unique. I think other companies would kill for this type of loyalty we have. Our stylists, we joke, get presents all the time, cupcakes and flowers and things delivered to the office because the bride was just so delighted with our experience, which is so cool.
Leslie:
It's really empowering, I think, to know that you've had a difference in what should be the most fun, enjoyable time in a woman's life and unfortunately oftentimes it's super stressful. So, I think just having an ally through that and then really wowing her with the delivery of the dress is the experience that we want to deliver every time.
Stephanie:
Yeah. I think a lot of brands would kill for that kind of relationship. And it's just a really good reminder of how important it is as a lot of companies are either coming online or moving more to direct to consumer that keeping those relationships, even if they're virtual, is super important to get that trust and to make sure it's, even after the sale, you have champions who are talking about your brand and wanting to send more people your way. Because, like you said, word of mouth is key.
Leslie:
Absolutely. And that becomes something very defensible as well, more so than a cool brand or, potentially even those tech and operational differentiators. Having customers that are singing your praises and having that community of advocates is something that we really, really want to keep building.
Stephanie:
Are there any digital e-commerce trends or patterns that you're really excited about or that you see coming down the pike?
Leslie:
Yeah, and I'm biased, of course, but I think the idea of personalization and customization is so, so key. And I love other brands that are tackling that as well, like Stitch Fix. I also think the idea of vertical integration and being really involved in your supply chain has popped up. And I'm a supply chain nerd, so I always appreciate other companies taking action there as well.
Leslie:
So some of the razor companies, [inaudible] of them purchased an actual razor factory in Germany. And I was just talking with the founder of Haus, which is a new liquor brand direct to consumer [crosstalk 00:37:29].
Stephanie:
We just had them on the show.
Leslie:
Oh, amazing.
Stephanie:
Yeah, Helena. Yeah, she came on.
Leslie:
Helena is awesome. And I think there is a lot of innovation happening right now in terms of the front end, which the customer's experience, how you're interacting with brands in a digital way versus in a physical store. But I think the innovation from a supply chain side will also be really, really important for brands to differentiate, especially if they're making things in a new way. So, I'm feeling good about our investment in time and resources with developing a really strong supply chain presence. And I'm hoping it'll benefit us long-term.
Stephanie:
That's great. Are there any channels, like digital channels that you guys are looking into to expand to? Whether it's, I know a couple of brands we've talked to have talked about TikTok, which people laugh when I say that. But I mean, they've said that they've had great success on there. Is there any areas where you're seeing success that maybe others aren't trying out right now?
Leslie:
Yeah. It's funny you bring up TikTok, because months ago I would not have even really known what that was. TikTok is going to be very important for brands. We had a woman post just a quick little video around like, "Hey guys, if you are bored in quarantine, check out this website, you can visualize your own dress. I'm not even engaged, but it's pretty cool." It was something literally that simple. Her post went viral. We had over 200,000 people sign up in one day last week.
Stephanie:
Oh my gosh.
Leslie:
Or about a week and a half ago, crashed our website, our engineers were working until four in the morning trying to get our capacity back to where we could actually serve our customers, just bombarded with TikTok traffic. So, it was half the team trying to fix the website issues, and then half the team just trying to figure out what tikTok was. And quickly getting up [crosstalk 00:39:36].
Stephanie:
What is the source?
Leslie:
Yeah. So, it's, I just saw a stat this week that they were the fastest social media company to get to a billion users. It's just amazing what they've built and the speed at which they've built it. And I think it's something for sure that leaders of brands will need to keep an eye on just given how viral it is.
Stephanie:
Yeah. Yeah. I mean, I know people are still questioning how many of the users are real versus not, but I brought this up in a team meeting with my team. I'm like, "We should try out TikTok. One, it looks fun. And two, I've actually heard of quite a few brands saying that it's working well." And my entire team laughed at me and said, "No," so.
Leslie:
Well, they will be eating their words now, I think you were ahead [crosstalk 00:40:23].
Stephanie:
I agree. I agree. So, 200,000 signups, crashed your website, that's a great segue into building platforms for e-commerce. How are you thinking now about, I mean, it sounds like you could be at a place where you're maybe outgrowing the platform or you're experiencing some friction because you guys are growing and you're going to have large spikes in volume coming your way. How are you thinking about developing a platform that fits you where you are now and where you're headed?
Leslie:
Yeah, I mean, it's a balance of building a robust tech foundation and serving up an experience that customers really want. It has to be a balance of both of those for us...
Leslie:
(Silence).
Leslie:
About six months ago. And being able to tie any possible design element and having logic built into it to not show a sketch to a customer of a dress that can't be created. We worked really, really hard to do that. That being said, it's a big load on our tech. And so, we're thinking about ways to, from a technology perspective, how do we continue to have a really cool mind reading type of experience, but also be able to potentially surge to have sketches available for hundreds of thousands of people in one day?
Leslie:
And one thing that we're building right now is, you mentioned earlier, there are a number of different types of brides that come. So, some brides come in and are like me, and they have an idea of exactly what they want and having a very mind reading survey experience works really well for that type of customer. But where we're moving to right now, and the team's building a brand new browsing experience that should be online just hopefully within the next couple of weeks is this idea of being able to filter down based on a couple of different elements and being able to view lots and lots of designs side by side.
Stephanie:
That's great.
Leslie:
Other Ecommerce companies have the same type of experience in terms of filtering down based on different price ranges, or colors, or sizes. And we're thinking a lot about that. And then also building that in a way now with the TikTok viral event fresh in our minds with a way that we can access our amazing data and logic that we've worked really hard to build, but also be able to have an easy load on our servers to be able to show this to hundreds of thousands of people at the same time.
Stephanie:
Yeah, that's great. I was actually just thinking when thinking through your business model of like, I'm probably the consumer that wants to... I don't know what I want until I see it. So, I would probably instead want to come in and be able to see different designs maybe on models that look like me so then I can choose it that way. Yeah, if someone were to say, "Hey Stephanie, design your own wedding dress." I'd be like, "Ah, it's white. It's all I got."
Leslie:
Such a big task. Yeah, for sure. We just created this algorithm within the last couple of months called... it's called a similar dresses algorithm, which takes all of these, I think we have millions of photos now at this point of real women, real weddings, real dresses, real Anomalie dresses. And based on the sketch that you get served up, you can see what that dress would look like on women that look similar to you.
Leslie:
If you've used Rent the Runway, which I'm a big consumer of Rent the Runway, you can see what does this look like on a woman that looks like me, which I think is really helpful in terms of addressing that question around the visualization and like, what is this actually going to look like?
Stephanie:
Yeah. Yeah. That's great. I'm excited to hear how that goes. How are you thinking about measuring performance when you have these two different types of models now? How do you think through, is our website working? Is it converting well? Yeah, what's your process around that?
Leslie:
Yeah. Well, our conversion tank, as you can imagine, just within the last couple of days, it was really exciting to see the site traffic and just the number of sketches being generated and just, I think overall excitement. Which isn't quantitative, but just the qualitative excitement and virality around the promise of what we're building was really, really exciting.
Leslie:
As far as like our KPIs, it's really just around growth. It's like we have a lot of interests. We need to make sure we're converting that interest into real purchases and real dresses being made with Anomalie. So, that takes a little bit more time than that initial visit to our site to get a sketch. And what we really look is the conversion of interactions with stylists. Our process right now is that you pay a small design deposit, so $29 to be able to connect with a stylist, and talk through the design, and talk about pros and cons, and iterate the sketch to be absolutely perfect.
Leslie:
And then the decision to move forward with Anomalie is after that call. And so, that's what we're really, really focused on is just making sure that we're converting the interest from our cool tech and our cool website experience to actual dresses. And that's where we're growing a lot right now, too, which is exciting. The conversion is not looking good right now-
Stephanie:
Temporary.
Leslie:
... in terms of all the TikTokers, but that's where the rubber hits the road in terms of dresses actually going to the factory.
Stephanie:
That's awesome. Have you seen any hesitancy with paying that $29 fee? Have you seen traffic come there and hover a bit and be like, "I'm not so sure." And then people bounce because they don't want to pay something right upfront? And have you thought about maybe a quick freemium model where maybe they have a stylist for a couple minutes or would that ruin the business model of making it super personal and the relationship?
Leslie:
Yeah. We've thought about this a lot. And this actually is something that we're talking about as a team quite a bit right now is, is $29 too high? Is it too low? I think having a posture of confidence in our process that this is a good value is really important and we've adjusted the price and also if it's refundable or not, and then also having the calls be completely free or not it's something that we're looking at really closely and just continue to listen to what our customers like.
Leslie:
And we've got enough of a growth team set up now where we can measure that quantitatively rather than just viewing it qualitatively. So, yeah, it's a great question and something that we're thinking about a lot. What we want to communicate is, speaking with a stylist is important and absolutely necessary before you purchase the dress. This is not a typical e-commerce experience where you drop something into your cart and purchase it. This is your wedding dress. And so, making sure that we're delivering a really positive high quality customer experience and making sure brides are feeling good before they make that final decision is important.
Leslie:
And the exact makeup has changed a little bit over time and probably will continue to change over time, especially as we add more and more features to our website. But yeah, it's an exciting challenge that we're working on every day.
Stephanie:
Yeah. Yeah. I liked the idea too of sticking with your guns to keep that quality high. I know when I was looking through your website and you were mentioning transparency earlier, but you have a whole section where it says, can I get my wedding dress in six months and I still want a custom? And at one point you're like, "No, you can't do this, this, and this. If it's seven months, yes, we can do it for you. Eight months, here's what we can do for you."
Stephanie:
And I thought that was really smart to just show like, "Here's our boundaries and here's what we can and can't do." So, let's just set expectations up front and same with that stylist fee. It's like, "Here's how we work." If you go, "Well, this is the process where we see works best right now."
Leslie:
Yeah. And what's great is we've got a couple years under our belt now and have made thousands and thousands of dresses, so we know what's best. Which in the early days, I think we're a little apologetic and wanted to be super flexible, but now we have a lot of confidence in our process as it stands right now. Another place that shows up is the pricing of the actual dress.
Leslie:
A lot of brides come to us with a tight budget for their wedding, rightfully so. Weddings are really expensive. And so, being able to talk through with the stylist, what are the big price drivers of a dress? So, for us it's, there's hand beading. That takes a really long time and it's really expensive and adds a lot of costs to the dress. And so, being able to talk to a stylist about how to bring in elements of sparkle with less expensive elements is, I think, something that really appeals to brides.
Stephanie:
Yeah, that's great. So, we have a couple minutes left. And I want to jump into the lightning round, brought to you by Salesforce Commerce Cloud. It's where I ask you a quick question and you have a minute or less to answer. Are you ready, Leslie?
Leslie:
I am.
Stephanie:
All right. What is up next for your travel destinations? Any factories you're visiting? Where are you headed?
Leslie:
Yeah. Well, right now everything is still locked down for quarantine, so it is really hard to think too far in the future. I mean, in 2017, when we were starting this company, I was in China pretty much half the year. I think it was like every month I was out there. So, thankfully we've got an amazing team on the ground, so I'm not having to travel out there as much. And it'll be more traveling to our Scottsdale, Arizona office to chat with our stylists and customer experience. So, that's taking much more of my time now versus to China in the old days.
Stephanie:
Yeah, very cool. What kind of hobbies do you have or ones that you have on the map that you want to try out?
Leslie:
Almost none, I would say, which I don't know if-
Stephanie:
Work. Work. Work.
Leslie:
... this is the most healthy answer, but starting a company and building a company is all consuming, which I love. That was exactly what I wanted. And that's what I'm dedicating my life to right now. My husband also is my co-founder, which is crazy.
Stephanie:
Sounds similar.
Leslie:
So, we don't have a personal life, but that's what we want right now. And we love what we're building and it still remains exciting, and cool, and our biggest hobby for sure.
Stephanie:
Yep. Completely agree on this side too. What's up next on your reading list or podcast list?
Leslie:
Oh, I'm just finishing a book called The Upside of Stress, which is super fascinating. It's a Stanford PhD researcher. She had done a ton of research on how stress can impact people's health in a negative way. But what she started uncovering is that it was believing that stress is bad for your health is what was making people unhealthy.
Leslie:
And so, the book is all around how you can... stress isn't going to go away, especially in meaningful lives or meaningful parts of your life that stress represents that you care about something and something is important. So, she has really practical tips for how to hone and manage stress in a way that helps. Which is focus, and energy, and care in what you're stressed about, which I'm really, really enjoying reading that and would highly recommend it.
Stephanie:
That sounds like a good one. I'd love to check that out too. All right. And the last, a little bit harder of a question, what's one thing that will have the biggest impact on e-commerce in the next year?
Leslie:
Oh, I mean, I have to say right now COVID is going to really, really append retail. With retail essentially being completely shut down in the U.S right now, I wonder about if there are decisions being made at both startup companies and large companies about what value they're getting out of their stores. And they are a lot of really expensive components of having a physical presence and we're benefiting from the value of having a digital experience in terms of the data, and the personalization, and delivering value to our customers.
Leslie:
And I wonder if we're just going to see a lot fewer stores. It's probably a pendulum and we'll swing another way in the future. But yeah, I just have to imagine that a lot of stores are going to be closed once the economy opens up and once quarantine is over. That's what I'm thinking about.
Stephanie:
Yeah. That's a great answer. Well Leslie, it's been a blast having you on the show. Yeah. Good luck with everything and we'll see you next time.
Leslie:
Thank you so much for having me.
Sometimes an opportunity comes along that’s too good to pass up. For Matt Hulett, that happened when a friend approached him about a job at Rosetta Stone. The famous language-learning company was stuck in the analog world and they wanted Matt to be the guy to bring them into the digital future. It was no small feat, but Rosetta Stone has made progress on the digital transformation and Ecommerce journey, including introducing a subscription model and overhauling its tech stack and app. On this episode of Up Next in Commerce, Matt discusses the challenges of transforming a world-famous brand, including how he chose a free-trial subscription model over going freemium, what it was like to achieve buy-in from investors, and the future of Ecommerce and why he thinks social selling still hasn’t reached its full potential.
3 Takeaways:
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
---Transcript:
Stephanie:
Welcome back to Up Next In Commerce, this is Stephanie Postles, co-founder of Mission.org and your host. Today, we're going on a digital transformation journey. Matt, how's it going?
Matt:
Oh, really good. A little cooped up here like we all are, but I'm hanging in there. How are you doing?
Stephanie:
I'm doing well. Yeah, same hot, very hot. It's 92 here and the places in Silicon Valley usually don't have air conditioning so just a little sweaty in the studio.
Stephanie:
So I must admit, I have not checked in on Rosetta Stone in a while and when I started browsing through you guys' website, I was like, "Whoa, you all have come a long way from CD-ROMs and everything that I was used to when I was growing up and thought of Rosetta Stone." So I'd love to hear a little bit about what brought you to Rosetta Stone and your background before you joined.
Matt:
Yeah. It's interesting, just before I dive in, it's rare to join a company where everyone knows your brand and your product like just about everyone in the United States does Rosetta Stone.
Matt:
And so actually, it's an interesting story because there's not many ed tech companies that are a public companies, you could count them on your hand and the company has been a public company for over 10 years.
Matt:
It's been around for 27 years and it's a really interesting backstory on how the company was founded and so some of that came into play with what got me attracted to the business.
Matt:
So a friend of mine who's a recruiter talked to me about this opportunity and I typically do restarts, pivots as they are [crosstalk] for startups.
Matt:
And even the startups that I join are typically pivots. So there's kind of this pivot transformation story that typically is a draw for me for whatever weird reason why I attracted to these things and when he said, "Oh, it's Rosetta Stone."
Matt:
I was like, "Oh, the CD-ROM company, the yellow box." I was like, "Yeah, but they're trying to be digital." I'm like, "They're not digital yet?"
Matt:
And so the draw for me was typically, I take on jobs and assignments that are very difficult where I have to either completely change the strategy or get new financing on a new idea.
Matt:
There's generally something really, really wrong and Rosetta Stone was so intriguing to me on the surface for the intellectual reasons why they brand the product, people love it.
Matt:
It's not one of those iconic brands that people are afraid of. It's not like saying, "Matt, do you want to restart Myspace? I was like, "Oh my God, it's Rosetta Stone, of course."
Stephanie:
That's your next project. Myspace.
Matt:
Yeah.
Stephanie:
Just bring it back.
Matt:
Making it great again. Too soon. But what personally drew me, that's kind of the intellectual business level, what personally drew me into the company was and is the fact that I'm dyslexic, and a third of the revenue for Rosetta Stone is actually one of the fastest growing.
Matt:
We sell software into K-12 schools primarily in United States that help kids learn how to read, better learn how to read which is a problem. I've seen my own youngest son struggle with his dyslexia as well.
Matt:
And so on a personal level, it's very emotional when you can kind of tie that emotional tie to a company to its mission and vision. It's really intriguing. So it's been one of the best career decisions I've ever made.
Stephanie:
Yeah, that's great. Were there any universal truth that you discovered as you are kind of pivoting from different companies and trying out different roles and turning them around? Was there anything like yeah, universal truths that you saw while doing that?
Matt:
Well, that's a great question. Yeah, a couple things. One is it's so crazy to me, when I step into a company how basically from week one, maybe day one, no one really understands how the business works, like truly understands it.
Matt:
The key insight, what makes the business special, what can you do to apply capital or a time or attention to improve your strategy or your outcomes? It's just so, it's so weird when you go to a business that's operating, and maybe these are the only businesses I look at where it's not quite tight inside around the strategy and what makes the kind of the economic engine run. I think that's the biggest one that I see off the top of my head.
Stephanie:
Yeah, that's interesting. I can definitely see a lot of companies struggling there especially as they grow bigger and they have many business units and everyone's kind of chasing a different path, I can see people losing sight of what's important and what's actually driving this business like you're talking about and making it profitable or maybe it's not, but it's the lost leader, something that we still need. So yeah, that's really interesting.
Stephanie:
So when you joined Rosetta Stone, it hadn't been digital. I mean, only a few years, right? I think it stopped, maybe it didn't stop doing CDs, but it went online. Wasn't it in 2013?
Matt:
Yeah, I would say it was like half digital. What that means is we were selling one of the most expensive products in the App Store at the time and we didn't really have the concept of really effective sales funnels, a well thought out pricing and packaging strategy based on the type of customers that we're going after.
Matt:
We didn't have a lot of mobile native features and capability. So I would say it was kind of a port of the CD product in the mobile environment and that was kind of the approach.
Matt:
And also the approach was really not to focus on the consumer business. So not only did we make this kind of business model and digital transformation move, but also when I came into the business, the big focus was for the language side of the business was to focus on enterprise customers.
Stephanie:
Mm-hmm (affirmative).
Matt:
I thought that was actually the wrong move because enterprise is difficult, it's a smaller market, yet consumers where everyone knows Rosetta Stone, everyone likes the product. They actually remember the CD products in many cases and want to use them again, but they want to use them on your phone.
Matt:
So I thought, "Well heck, everyone knows who I am from a brand awareness perspective, I'll have an easier time deploying less capital against the consumer space and enterprise space." So there was not only just a business model shift, but also a strategy shift.
Stephanie:
Did you end up sticking with that business model shift to focus on enterprises or did you kind of make it a mix of 50/50?
Matt:
Oh, good question. So it is about 50/50 today, although consumers now are growing fast. I mean, we're a public company so I can only speak to our public company numbers, but in Q4 of last year, we grew the consumer business about 20% year over year and this is from a business step was growing at single digit.
Matt:
And then our last reporting earnings quarter, we grew the consumer business around 40% year to year and the enterprise business has struggled more primarily because of the C-19 impacts this year because obviously, we're in a never before seen macro economic headwind, but generally, it's the right decision to make and I view the enterprise business as more of an extension of what we want to do for all adult learners versus creating as a separate entity.
Matt:
That's a long answer to say consumer turned out to be the right move. It was not clear when I joined the company that even joining Rosetta Stone was a smart move.
Matt:
I had a lot of folks that I know, acquaintances more so than friends say, "Good luck. There's a lot of error in this company." And I just think it's just a really exciting problem and it's a ... Sorry to keep going because I've had maybe 80 cups of coffee today and just, I don't know.
Stephanie:
No, keep it up.
Matt:
It's like the two big verticals that are the most expensive that increased their prices to consumers over the last 50 years are healthcare and education and they have the lowest penetration of digital, and like, "Well, those are hard problems to solve. Why wouldn't you want to be involved?" So anyways, I think it's really fun.
Stephanie:
Yeah, that's fascinating. So when you came in, what were expectations for your role? What did people want you to do? Did you have a 90-day plan? How did that look?
Matt:
Oh yeah, if anyone thinks these are scripted questions, these are not scripted questions. These are very good questions. So during the interview process and I'm sure you've had this experience before, when you meet with somebody in a company, you're like, "I'm going to do whatever it takes to get this job."
Stephanie:
Yup.
Matt:
And I had one of those experiences with Rosetta Stone. I knew I wanted this job and so I came into maybe the first or second interview with a 90-day plan before I even started, this is the first or second interview.
Matt:
And the 90-day plan did change slightly because then I knew a little something, but I've done enough of these transformation projects, these pivots where I knew there's these basic building blocks in a format, I have a toolbox of things that I do that really didn't change.
Matt:
The inevitable strategy didn't know before I started, I didn't know the team members, were they the right fit or not, I didn't know any of that, but the basic building blocks I definitely put together.
Stephanie:
Got it. So what was on your roadmap, did you have to think about how to re-platform to support your commerce journey and shifting into enterprise and then consumer? What was on that plan that you laid out?
Matt:
Yeah, and I kind of learned some of this years ago when I was ... Sometimes I think my best work, I can't speak for you or anybody else, but my best work is when I'm completely ignorant of the challenges in front of me and so when I was younger, I worked for ... Well, actually, we sold our company to Macromedia and they had a division called Shockwave.
Matt:
And Macromedia at that point was not bought by Adobe, and this is Web 1.0 bubble, so I'm dating myself which is not legal in Washington State and these jokes have all jail time.
Stephanie:
[crosstalk] get us in trouble.
Matt:
I know. And so we step back through that experience and I learned a lot from the Macromedia Adobe kind of M&A folks about how to approach a problem. And that plus some other work experience over time really got me to the point of thinking through things from I call it the insight, the math in the heart.
Matt:
And no one framed it that way to me, but that's kind of how I framed it and so when I think about the insight, I think about the addressable market, the position that we are in the marketplace, so supplier's demand competitors.
Matt:
Then I think about what value we're driving to consumers, what value are you driving to your suppliers if you have them. And then what are the decisions you're going to make based on the strategy that you're laying out for the best outcome?
Matt:
So you want to grow market share, you want to grow revenue share. Do you not have enough capital? Do you actually need to raise capital and buy companies in order to get size and scale that's the outcome?
Matt:
So it's kind of a process that I've done over time and I want you to figure all that out, and it takes a while, maybe 90 days, maybe a little bit more, then it's really like how do you put a process together and dashboard is a little trite, but how do you actually run the business so you understand what things are working, the unit economics, what key layers of the business are you looking at, and then figure out an organization to support that and then you find the right team.
Matt:
And it sounds kind of exhaustive in terms of an answer, but I think too many people come in situations and they say, "Okay, I started this job, I got to restart it. What's my team look like?"
Matt:
And it's always I think the tail wagging the proverbial pivot dog and I typically, you can find startup people that are good at startups and sometimes, you find startup people that are good at later stage.
Matt:
You can find every dynamic possible, but until you do the work on, "I need this type of person for this type of growth stage, it's the right person the right time."
Matt:
If you don't do the work upfront, then you end up having a team that isn't the right team for the outcome that you want.
Stephanie:
Yup. Yeah, I've heard ... I forgot who said that startup advice where a lot of startups especially around here, are looking to hire that VIP level person, you have to pay a bunch of money to and someone was making the point of like, "Well, will they help you right now where you're at?"
Stephanie:
And it's okay to kind of grow out of people, but it's not okay to hire someone who's way above that actually can't get their hands dirty and do the work of what needs to be done right now.
Matt:
That's right. There's lots of people that have different approaches. I actually like to be pretty data driven in terms of how I think about people so I use like employee satisfaction studies and I use different personality profile tests.
Matt:
Obviously, you're not trying to like ... Hopefully, no one is like applying an AI filter looking at my reactions on this live video, but you can go overboard with data, but I do feel like you need to get the right alchemy talent for your team.
Matt:
And I've made mistakes where you have that senior person that doesn't want to get their hands dirty when you're like, "Look, I'm in build mode, I'm painting the fence, and I'm the CEO and I'm painting the fence and then I'm talking to the neighbors and driving Uber ..."
Matt:
The alchemy of that is hard to do, but that's a long winded answer to say there's there's a process and I think it's figuring out what's special about your company, how do you improve it, how do you run it? How did the inputs become the outputs and then what team is required for that?
Stephanie:
Yeah, very cool. So with the company having to shift as they did to go online and create mobile experiences, what kind of challenges did you see come up when you guys were going through that shift?
Matt:
Yeah, so there's multiple. So I always think about kind of the four constituents in most businesses, its investors, its customers, it's your internal employees and society.
Matt:
Not in that order. The order depends on lots of different things and so when I kind of checked down all those boxes, I think the big one, the first one I pick is investors because you're having to explain a model where the CD is purchased up front, it's very expensive versus you don't get all the revenue upfront, you amateurize that revenue and recognize it over 12, 24 whatever terms of the span of the subscription.
Matt:
So it's a change in terms of how you're reporting revenue, explain it in a consistent way, explaining the new metrics of subscription is challenged one I think from an investor perspective explaining why we have a language business, the Lexia business that I mentioned that focused on literacy is a 20 to 25% growth business, it's growing pretty nicely and language was declining.
Matt:
So then explaining to investors why do you still have this business and why are you changing the direction from enterprise to consumer, I think for employees.
Matt:
I always like to think through the employee piece, get the employee piece right, you can do anything and so getting the employees reason to believe, I was the first president to actually run the language business.
Matt:
It had multiple owners of the P&L and I was the first person probably since the CEO, we had one CEO that that started Rosetta Stone and took it public 20 plus years ago.
Matt:
I was the first single leader to ... I also tried creating a reason to believe a compelling vision, mission and culture and then when I think through kind of the customer piece, it wasn't as hard to be honest because there was so much brand equity that was good brand equity that doing little bit of things in a way that was kind of planful and data driven actually generated a lot of great outpouring of support.
Matt:
So the customer side of what we were doing wasn't as difficult as I would have thought and we also had an enterprise business that had already integrated things like digital tutoring with the software and demanding Fortune 500 companies.
Matt:
So there was some DNA in the company where we knew, "Boy, you can earn every interaction with every interaction." So that was that piece and then later, I started building more hooks into society as part of that and so I kind of view it as a self-fulfilling positive effect of you take care of your employees, they take care of your customers, the investors get great outcomes, and society benefits and you keep kind of turning this crank and you start getting much more reflective about it.
Matt:
And it does have, it does pay off. It takes I think, in general, I think people brag about how fast they can turn around companies. I don't know why people brag about that.
Matt:
I don't know, my experience is two years and taking a business from bad to like growing, at least, believing in itself is very hard and so I look at those four factors and I think the society piece is one that's super important that a lot of companies pay lip service to and there's a lot of discussion especially in Silicon Valley about some large companies that are controversial there.
Matt:
But I'll give you a for instance why if you can tie together the vision, mission, culture values to society, how that's self-reinforcing, we had a obviously horrible global pandemic that we're still pulling ourselves out of and everyone's kind of living through this experience at the same time.
Matt:
And we basically took just two days to decide that we're going to give away our software for free for three months for students. And we run a current business and selling software to enterprises and adults and we said, "You know what? We know that parents are actually going through hell because there's kind of a make your own adventure right now and schooling."
Matt:
[crosstalk] and I can feel it myself and we are like, "Oh my God, this is so stressful and the anxiety I heard from our own employees about it was overwhelming and I'm asking them to work harder."
Matt:
And so we said, "You know what? We're going to give away three months subscription and we're going to just do it and you just have to ... The parents have to put their email address in the school and that's it."
Stephanie:
Mm-hmm (affirmative). That's awesome.
Matt:
And we're not a free ... We're a paid subscription product. We're not, there are other competitors that have a freemium model and as you know, changing models or mixed models generally don't have a long history of working and we said, "You know what? We're just going to do it."
Matt:
And so the team decided to do it, I just said, "Yeah, let's do something." They said, "Here's exactly what we're going to do." And it was live, and then the amount of positive benefits, we got that from pure impressions.
Matt:
It actually helped our adult business to ... Adult language learning business. That's just one quick example of when those things all start working together.
Matt:
It's transparent, it's engaged and it's consistent. It becomes kind of operating leverage as well. So it's fun. It's fun to see how that work.
Stephanie:
Yeah, that's great. It's definitely a good reminder of do good things and good things will come back to you. Did you have any struggles with maybe like surges and people logging in and trying to get on the platform that maybe you hadn't experienced in the past? Because it was maybe a bit more predictable since it wasn't free?
Matt:
That's a really good question. Not on the system, the system's basis, but certainly from a support basis because we had a lot of, we outsource most of our customer support, and we debated for a while whether we we're going to continue phone support, we still do and I still debate that one, but a lot of our service providers were in outside United States and they all of a sudden had to work from home and then some facilities shut down and so we are just constantly playing whack-a-mole with our support organizations.
Matt:
And then also, I would say to our frontline heroes were our tutors and we employ a lot of highly educated tutors that have degrees in language learning and they all work from home primarily, they're part-time employees.
Matt:
And they turn out to be like our heroes because they took some support calls in addition to one-on-one digital tutoring. And so there was unique ways in which we had to adapt with the demand, but I would say more on the demand side regarding the support elements and we definitely saw a surge do the work from home trend as well, but that didn't impact kind of service levels and general software.
Stephanie:
Okay, cool. And I could see it being a bit tricky to develop and maintain a platform that has so many different layers to the business. I'm thinking about the enterprises who are going on there and buying seats for employees, and I'm thinking about the school is going on there for students, and then the individual consumer like me who's maybe like, "Hey, I'm going to Italy and I want to learn Italian."
Stephanie:
I don't know, but like it seems like it would be pretty tricky creating a platform that does all of that. How do you think about creating that so everyone gets a good experience and also being able to monitor and measure it in a successful way?
Matt:
Yeah, I've never seen the complexity Rosetta Stone before at the smallest scale, but what I mean by that is we have three businesses and we're a small cap public company. So that's unusual and the business was run on the language side ... Well, let me step back.
Matt:
So the literacy business is a business that was acquired seven, eight years ago and that's a 30-year-old company that was acquired, it's called Lexia and it works as a distinct operating unit from my business and is run by an awesome gentleman.
Matt:
And I use that word loosely and if he's listening, sorry Nick, he's a great guy and so passionate and his team is so good and it's ... I've never seen before a product that's built with like academic research combined with awesome data product engineering that gets results.
Matt:
It's just, I've never seen anything like it and they had the time to build this product over these many years, it was always digital first and so they're run separately.
Matt:
My language business was run on two different tech stacks. Actually, it was like five and when I started, I was like, "Well, wait a minute, why is this product that looks the same running off this underlying architecture? Why don't we move everything to react?"
Matt:
As I kind of went through this morass of tech stacks, it was a lot of M&A that generate a lot of complexity and a lot of tech debt. And so I would say majority of our innovation was not innovation, it was just keeping these old tech stacks up.
Matt:
So from an R&D perspective, in addition to all the other complexities we just talked about in this interview, I was trying to grow the consumer business, trying to change the business model, swapping out new team members for more growth orientation and doing a huge tech migration.
Matt:
And the complexity around that is mind boggling. We finished that late last year like de-flashing like old weird services, moving to a services architecture. All that stuff we end up doing and inevitably, the goal is to have one learner experience, just like you use Google, Google Mail for your enterprise, or personal.
Matt:
There were some admin privileges and other things that are associated in the back end, but in general, the product kind of looks and feels the same and that's, the inevitable goal which we're very close to execute on.
Stephanie:
Got it. Were there any pitfalls that you experienced when going through all those different pieces to the business or anything where you're like, "When we implemented this, or we move to this type of tech stack, this is when we saw a lot of improvements with conversions or anything around the consumer or enterprise business."
Matt:
Yeah, just on conversions, yeah, one thing on that is interesting is the amount of improvement we saw just with like putting different team members with specific goals and this is going to sound kind of crazy because everyone is going to like, "Yeah, he's talking about agile."
Matt:
Just getting very specific about areas in the funnel to improve and how to adjust the trial experience at certain times, and experiencing and showing customers different things at different times.
Matt:
That had like a crazy amount of upside for us. And I would say less architecturally that we see an improvement other than we had just less stuff that wasn't moving the innovation forward, but just these small things have big impacts and get and I must say like if any one of my team members is listening to this and say, "You haven't solved all that yet is."
Matt:
It's very difficult to take a business that is so complex, and then all sudden kind of say, "Look, we're going to reduce all the complexity, networks are innovating again." I think there's still a challenge of like, faster, smaller teams, we use a safe framework which is kind of scrum like.
Matt:
I don't think we figured all that out yet, but it's way different than when I came in and felt very waterfally to me. We're going to issue a press release, what this release is going to look like in one year and we're going to work back from that, I'm like, "Yeah, that's very Amazon."
Stephanie:
Yeah, yup.
Matt:
I'm like, "Well, how do you even know this is the right thing if you don't have any customer?" So there was there's a whole evolution of trying things, validating them, making sure that you're deploying enough capital against that makes sure it gets a fair shake, but not too much where you're, you're in over your head and we've had some public black eyes on some of our tests, and I don't care.
Matt:
We were trying some things internationally with tutoring, it didn't work out, it didn't have the capital honestly to support some of it and I kind of feel like those are good experiences to understand whether you're going to invest more in something or not.
Matt:
And so I think the fact that we can start doing those things now because we simplified the platform or if possible. Yeah, I think it's hard to say no to things and yes to things. And some of that discipline is easier when you're a startup because you just don't have people to outsource to.
Stephanie:
Yup. There's always an excuse. Nope, no one else can help us with that. Can't do it.
Matt:
Yeah. There's never like I'm a product manager by training and I've used every product manager tool under the sun and now I've kind of just resulted in my using Google Sheets again and what I'm trying to triage like epics and themes and stories, and I still like to play around with those types of planning elements, I just always look at all these people in these points available. I'm like, "You guys have no idea the luxury we have."
Stephanie:
I'm sure they like hearing that.
Matt:
Yeah, there's nothing more pure than a startup and it's like five people, five engineers and like a product manager that codes and the seat goes, doing UI, UX and it's ...
Stephanie:
Yeah, that's really fun. So you mentioned earlier a free trial which I actually went on Rosetta's website and I ended up going through the entire trial of learning Spanish. How did you all think about creating that free trial and actually convincing people to do it?
Stephanie:
Because a lot of times, I think I would see something like that and I'd be like, "Oh, that's too much time and I don't want to start that process right now."
Stephanie:
And I eagerly jumped in and started doing the lesson plan because it was engaging and fun, and it kind of felt like the real world with the person walking around and you're stopping and talking to them. How did you think about creating that? So it actually converted users into paying customers?
Matt:
Oh, thanks for saying that. Yeah, I think we have a long ways to go. I think in terms of what we could be doing is we're just, I just feel like we're sprinting to the start line because of the late start, but I think the core piece is for most companies and they think about like what business do you want to be in a lot of people will default to like whatever their venture capitalists said they should do from their other companies they manage or whether they read on TechCrunch or whatever, or listen to on this program is I think you have to be very specific once you figure it out the approach to the product that you're going after.
Matt:
Are you going to be freemium? Are you going to be paid trial? Or are you going to be for lack of a better term I call it force-trial or upfront trial and there's elements of this that change, there's kind of nuances.
Because that's more of a nuanced discussion is the freemium players in the language space for instance would be Duolingo.
Matt:
How do you get the most amount of MAUs, Monthly Active Users and get enough of them to convert? Or the Spotify example, and you're using basically cap ex as cap, you're using your R&D to drive user and usage and that's kind of Slack-like.
Matt:
Slack is slightly different obviously. Then the paid trial is, "Well, I have enough of something that's good that I want a lot of people to use it, but I want the conversion to be pretty good."
Matt:
And so for the first one with freemium, you have to say, "Okay, it's going to be so fun and compelling and I'm going to actually invest in growth that isn't there yet because I think I have scale effects —I can crowd out everyone else."
Matt:
The second one is I actually have a pretty good product, I need enough people to use it and then feel like I use it enough to want to use more of it. And that's what I decided to do and I'll explain why.
Matt:
And then on the upfront paid thing is typical like for low ACV, Annual Contract Value SaaS companies you'd see, please just call my ... Just call us and we'll walk you through it with one of my sales reps.
Matt:
And we'll do a guided tour through the demo or whatever and the decision why we did the second one was it was a good decision and is people knew enough about what the Rosetta Stone brand was like that we knew people would want to try it and that for people that remember what it was like, they definitely would want to use it again and we felt like the pinch was more compelling if we gave everyone a little taste of that.
Stephanie:
Mm-hmm (affirmative).
Matt:
We could have said, "Please pay up front." And we're the gold standard and giddy up, but we felt like we needed to earn our stripes a little bit into proving to people that we weren't just like a port of a CD product.
Matt:
And so that's why we decided to do that and we've played along different roads before. We've never done full freemium and I would argue at this point in the market, we would not be better served to do that because Duolingo has done a really good job of growing their monthly active users and have built some advantages there and we're not trying to play that game.
Matt:
I'm trying to play the game of being a really good, effective language learning product and I'm trying to set the tone in the trial experience that when you're using the product, it's not going to be like a game.
Matt:
It's not going to be like Clash of Clans. I guess Clash of Clans is a bad example, or the jewel or like Candy Crush I guess is what I was thinking of.
Matt:
Every day, I collect coins and I'm collecting coins to benefit my gameplay. It's kind of how I think about Duolingo a little bit and it's ... I think they're masterful of what they do, but I think they're designed to do something different than what I'm trying to do.
Matt:
And if you're serious about learning a language, and you stick to what I'm doing and you do a couple tutor sessions that we offer, you're going to get there.
Matt:
And so the business model and what we're trying to do in terms of posture, not market share, but revenue share really drove kind of the philosophy on the trial experience.
Stephanie:
Yeah, it definitely, it felt more serious especially where you could speak in the language and it would tell you I guess if the tonality was right, and if you were saying it correctly, and it would keep kind of advising you on it, once I saw it had that feature, that to me was when I was like, "Whoa, this is really serious, and I better be ready to learn this language because it's not like a game, it's not just saying random words."
Stephanie:
You're actually kind of conversating and having to hear yourself which I think is really important. That seems like a big first step to getting people to try it.
Matt:
It's an interesting observation because we are very oral first in our pedagogy. We want people to engage with the product and speaking is actually just in general a really good way to learn and then the key outcome of speaking well is not sounding stupid.
Matt:
And so if you're trying to learn a language, you want to sound somewhat authentic. So for Rosetta Stone, I would say, for anyone that really wants to learn a language, we'll get you there, but if you're just kind of trying to build like, it's like counting your calories kind of.
Matt:
If you wanted to do something like that, then I would say, pick a freemium product over ours and yeah, it's not like super intense scary, but it's like, "Yeah, you better do your lessons before you do your group tutoring session."
Stephanie:
Yeah. No, that's, I mean, that's great to incentivize people like you're paying for this, you might as well get the best out of it. Is there, so one thing I was thinking when I was interacting with the free trial was, "Wow, this would be really cool if there was like a virtual world where you could be walking around and talking to other students who are learning."
Stephanie:
Are you all thinking about any technologies like that to implement or is there anything on your radar where you're like, "We're moving in this direction or planning on trying this tech out or this digital platform out?"
Matt:
Yeah, we've played with VR in the past. I've been kind of like bearish every time someone says, "Let's go into VR." I'm like, "This is [crosstalk 00:39:27]."
Stephanie:
It's a hot word for a while. VR everything, it doesn't matter to the problem.
Matt:
Yeah, I know and I have a lot of friends. One really good friend of ours, she has a pretty successful, his definition of success and I think it is honestly successful VR games company, but like I have a lot of other friends that went into VR that gaming or especially verticals that just had a hell of a time just because there's not enough handsets that are available.
Matt:
Well, we have dabbled in in terms of immersive experience. I think what you're saying is is there a way to since we're immersive, use technology to make it even more immersive and what I really want to do is enable more AR in our experience.
Matt:
And we have like a little feature called seek and speak where you can ... It's like an almost a sample app where you can use your phone, we use ARKit to do a treasure hunt for things around your house like fruits, objects around your house and incorporate that in your speech practice.
Matt:
And I always thought that was like a really cool thing for us to expand into and if we ever get the Apple visor, some AR HoloLens or whatever, it'd be cool to start interacting with your world around you, not just with translation, but also to see if you can actually interact with folks that are kind of ambient around that experience.
Matt:
I personally and maybe this we're going too deep here, but I always thought it'd be cool if like I can visit another country and just decide how much of the spoken language am I going to generate myself, how much am I going to have my device do it because I'm not going to spend the time.
Matt:
And then how can I phone a friend? How could I have my tutor or my guide integrated experience where I'm going to sound really authentic if I do this or here's an experience that I could do here.
Matt:
I think the goal for language learning inevitably is different based on where you are in the world, but if you're from the United States or one of ... Maybe some European countries like the UK, it's kind of like this is a cool way to get engaged with a culture.
Matt:
If you're not in those countries, learning English primarily is a necessity and so I think some of these AR ideas that you just mentioned would be really good and speaking more frequently to other folks that are even not native speakers, but just trying to generate language is a very good way to teach.
Matt:
We have a product coming out called Rosetta Stone English this summer, literally like a couple months and it is a version of Rosetta Stone for EL kids or English Learners K through six.
Matt:
And this product is an oral first product and this blew me away. The stat if you're trying to teach a kid English primarily from lots of different countries is written communication.
Matt:
It's like 20% spoken and so our product is like 70, 80% spoken because this ... And so it's just really interesting. What could you do that's more immersive using AR or VR?
Matt:
I think there's, I'm with you. I think there's a lot of cool things you could do and I think you could enhance the travel experience quite a bit. I think you could enhance the young learner experience quite a bit. I think there's so many cool things you could do.
Stephanie:
Yeah, I completely agree and there seems like a lot of opportunities there. So what kind of disruptions do you see coming to the world of ecommerce and online learning?
Matt:
Yeah, it's a weird market and it's weird because like depending on what we're talking about in terms of overall commerce, it's like a $6 trillion education market, 6 trillion.
Matt:
Consumer is probably the largest out of that and then obviously, there's higher ed, there's middle school, high school, there's elementary, and then there's adult education and then where it's coming from, is the consumer paying, is the government paying.
Matt:
And so take all this aside, less than 10% is digital right now and I think there's going to be this massive realization and awakening because of the C-19 pandemic of everything that I do has to be digital.
Matt:
And it's not that we're replacing teachers, it's how do we integrate digital curriculum and conductivity between the teacher and the student, how do I build a data layer that personalized that experience.
Matt:
I think that can happen between, language learning, it can happen in lots of different curriculum like reading and writing. And not having a digital enabled kind of curriculum I think is going to be like if you don't have a solution for that, if you're an education system, if you're a college, if you're whatever, and if you don't offer these types of products in the future, you're going to go the way the dodo bird.
Matt:
I think higher education has a wake up call. J.Crew, I like J.Crew, they're in bankruptcy now. Hertz, I used Hertz. They're in bankruptcy now and I think there's this massive pull forward right now that's happening because the product that we've been using in education hasn't changed in like 40, 50 years.
Stephanie:
Yup.
Matt:
It's the same problem. If I time warp myself from 50 years ago into most classrooms, it would look the same.
Stephanie:
Yup. Yeah, I've always kind of thought that a disruption was definitely coming around higher education, but this seems to have moved everything forward by many years and especially around K through 12 where that felt like it would be much harder to change.
Stephanie:
For colleges, it's like, "Okay, now it's changing pretty quickly with all the boot camps coming out and company's not really always requiring degrees, at least in this area."
Stephanie:
But K through 12 felt hard to change and it feels like this is going to be an interesting forcing function now that like you said, a lot of kids are home and parents are figuring out how to be a part of their education more in the online learning process.
Stephanie:
It just seems like there's going to be a lot of opportunities that come up because of this.
Matt:
Yeah, I agree. And I also think that now I'm sounding like the tech utilitarian, but I would say that ed tech and I'm not from the ed tech space, but I am in it now.
Matt:
I would say that the ed tech providers that ... We're now entering the third wave I guess is how I think about it. The second wave which is typical of most other businesses that you and I have seen before, like ecommerce or sales ops tools, now you can talk about those and go, "Remember Omniture and it was badass?"
Matt:
Yes, it's now part of Adobe Cloud Matt is when you talk about these generational shifts in how we think about things, I think a lot of the ed tech players, people who are selling software to schools or directly to the parents or kids or whomever, they've definitely oversold or oversold the efficacy of some of those products.
Matt:
And when I talk about digital transformation, I'm not talking about the ability to do things self serve, and have the teacher look at some flat experience.
Matt:
Right now and this is not against teachers. Teachers, they're like little mini MacGyvers to me. I mean, they're like doing amazing things streaming together curriculum on the fly.
Stephanie:
Yeah, both my sister and my mom are teachers and I do not know how they're doing it and how they had to pivot so quickly to being in the classroom and my sister is actually a ESL, English as a Second Language teacher. Yeah.
Matt:
Oh my gosh, okay.
Stephanie:
Yup, because I have a twin sister and she always tells me about the difficulties that she's experiencing right now trying to bring her students online and develop curriculums online and a lot of them don't have internet access and it's just very interesting seeing how they kind of develop workarounds to make it work for their students.
Matt:
Yeah, my criticism of education isn't the teacher clearly, a lot of it is kind of the cost basis in the bureaucracy and when I talk about ed tech, it's like I think it comes down to and this is not a Matt Hulett Rosetta Stone specific thing is educating a group of young individuals or even old individuals, it doesn't matter the same way at the same time makes zero sense.
Matt:
And so building in the ability for the student to do some things themselves, having a data layer so that a teacher understands the areas in which that student is struggling, and so that the instruction becomes very personalized.
Matt:
It is generally what I'm talking about and it's right now, I think we have a billion and a half young kids around the world that don't have access to computers.
Matt:
And if they do have access to computers, they're scanning in their Math homework and sending it to a teacher. Well, who knows if I struggle for five minutes on this problem versus long division versus multiplication? The teacher doesn't know.
Matt:
And so I think the ed tech software that I'm more in favor of what I'm speaking about is how do you build curriculum-based, efficacy-based software, not unlike what your mom and your sister think about because they have degrees and know how to actually educate someone, they're not software [inaudible 00:49:10].
Matt:
And if they're wanting to provide very explicit instruction, my guess is they're really swamped. They've got other things they need to do, they're probably paying for materials that are [crosstalk 00:49:22].
Stephanie:
Yup.
Matt:
And so I think about all these stresses and we're asking them to provide excellent education, it's just, it's too much. And so I really feel like this third wave of technology, and I think it's going to happen is it's going to integrate this we call AI and HI, how do you integrate the best of what software can do and integrate that into the lesson planning of the teacher versus let's try to create AI for the sake of AI and disintermediate teachers which I think is ridiculous is and that's what I'm talking about.
Matt:
Because I see a lot of tech companies playing the game of ed tech versus education companies that are actually trying to be technology companies.
Matt:
I think the latter will be the software and the providers that will end up actually being the most successful and the most adopted, but obviously, I'm passionate about this because I've seen this with our Lexia software.
Matt:
And we have like 16 plus academic studies that show that the software works and I'm like, "How is this possible that two-thirds of kids still today by the time they're a third grade or reading below their grade level that continues through eighth grade?"
Matt:
Two-thirds are reading below level. How is this possible? And I'm not here to tell my own software. I'm just like, "Why is this possible?" Well, it turns out we don't train teachers to teach kids how to read.
Matt:
There's an approach to it, and we don't do real time assessments of kids struggling, the teachers swamped, they don't know what's going on.
Matt:
Anyways, I could talk about this for hours, but I do think there's this world where at some point, the $6 trillion business of educating all these kids and adults and young adults will be digitized.
Matt:
And I think that will be an interesting space. Ed tech is that one space where most VCs wouldn't want to touch.
Stephanie:
Yup. Yeah, I know. It's a hard ... I mean, health care and education. It's a hard space. So yeah, I completely agree. I know we're running into time and I want to make sure we can jump into the lightning round.
Matt:
Okay.
Stephanie:
Is there any other high level thoughts that you want to share before we jump into that?
Matt:
Nope. I think I hit the verbose button when I answered that question, but I didn't realize you have some familiar background on education which got me going so I [crosstalk]
Stephanie:
Yeah, no, yeah.
Matt:
I will be [crosstalk] lightning round.
Stephanie:
Yeah, we need a whole other podcasts where we can just talk education stuff and I can have my family be the call-ins and they can give us a little advice and ideas.
Stephanie:
All right, so the lightning round brought to you by our friends at Salesforce Commerce Cloud is where I ask a few questions and you have one minute or less Matt to answer. Are you ready?
Matt:
I'm ready.
Stephanie:
All right. What's up next on your reading list?
Matt:
Words that matter. I don't know the author.
Stephanie:
Cool. What's up next on your podcast list?
Matt:
This podcast of course.
Stephanie:
Hey, good. That's the right answer.
Matt:
And then Masters of Scale. There's a new podcast actually with one of my competitors from Duolingo.
Stephanie:
Oh-oh. Very cool. Yeah, that's a good one. What's up next on your Netflix queue?
Matt:
God, it is embarrassing. Do I have to say it?
Stephanie:
Yes you do.
Matt:
Too Hot to Handle.
Stephanie:
Oh my gosh. I can't believe you're watching that. I'm judging a little bit, but I've also seen a few episodes. So if you were to choose a company right now to turn around, not Rosetta Stone, some brand new company, not a brand new one, but maybe one that's in the industry right now where you're like, "I could jump in and help." What company would you choose?
Matt:
That's a great question. WeWork.
Stephanie:
Woo, that would be an interesting one to try and turn around.
Matt:
Yeah.
Stephanie:
All right, next one. What app are you using on your phone right now that's most helpful?
Matt:
I listen to a lot of podcast, I love Overcast. I don't know if anyone ever mentions that. I just love it because I listen to things 2x.
Stephanie:
Yup, yeah, I know. I agree. I like that app as well. What language are you or your family working on right now to learn?
Matt:
Well, it's funny. I'm kind of barely competent in Spanish. My 16-year-old is actually I would say pretty intermediate level Spanish and my 10-year-old is oddly learning Japanese.
Stephanie:
Oh, go. Go him. A boy, right? Yeah, that's great. All right and our last, a little bit more difficult question. What's up next for ecommerce professionals?
Matt:
Oh boy, ecommerce professionals. I think to me it's a lot of the same topics in ecommerce have been discussed for so many years and I think that the interesting one is how do we actually make social commerce really good.
Matt:
And I think I spend a lot of time just, I'm not serious with it, but playing with like, TikTok and Twitch, and I think there's some elements to the social selling piece that I think are super interesting that no one's really figured out and I buy actually a lot of products off Instagram, and it's still too much friction and it's not quite working right for me.
Matt:
So I think there's some ... How do you integrate ecomm and then TikTok in a way that's native to that audience? I think there's some things there.
Stephanie:
Oh, that's a good answer. Well, Matt, this has been yeah, such a fun interview. Where can people find out more about you and Rosetta Stone?
Matt:
Rosettastone.com for the company and I'm matt_hulett on Twitter and it was a pleasure to talk to you today.
Stephanie:
All right, thanks so much.
Matt:
Thank you.
If you think back to just a few years ago, when someone asked you to name a company that delivered food, you’d probably only be able to name a few pizza joints or the local Chinese food place. But today, the world has shifted and online food delivery is a booming business. Last year alone, Grubhub sold $6 billion worth of food, and the company delivers more than 500,000 meals per day. So how did Grubhub enable this massive shift to digital meal purchasing? On this episode of Up Next in Commerce, we welcomed Alex Weinstein, the SVP of Growth at Grubhub, and he explained to us exactly how the company has been able to become a market mover. From the initial education process to then focusing on customer retention, Alex and his team have been deep in the weeds of it all, and they have built a culture of experimentation, data analytics and a focus on ROI to stay ahead of the curve. Alex explains it all here.
3 Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
---Transcript:
Stephanie:
Welcome to Up Next in Commerce. I'm your host, Stephanie Postles, co-founder of mission.org. Today, my stomach is rumbling, because we're talking all things Grubhub. Alex, welcome.
Alex:
Thank you for having me.
Stephanie:
Yeah, thanks so much for coming on the show. I just pulled up the app earlier to be like, "What should I have for lunch today?" Because it's 12:00, and it's time to order something.
Alex:
What did you end up ordering?
Stephanie:
I'm looking at pad Thai right now, we have a really good Thai place down the street. That's usually my go-to, but I started to get influenced by sushi, so if you have any advice, let me know.
Alex:
I don't know the restaurants in the area, but look for those that are well-rated, and look for deals. We have a ton of deals going on right now.
Stephanie:
Ooh, nice, that's perfect. You are the SVP of Growth at Grubhub, correct?
Alex:
That's right.
Stephanie:
I'd love to hear a little bit about your role there, and what brought you to Grubhub.
Alex:
Sure, sure, thank you. I've been at Grubhub for a little bit over three years. My responsibility is for the consumer business. That is, how do we get more new customers to try us out for the first time, and how do we get existing ones to order with us a little more often? And hopefully they'll return.
Alex:
This spans all aspects of marketing. We do a whole bunch of stuff in-house. I'd love to explore that a little bit later. But it also involves a lot of work cross-functionally, across the product. When I say product, I don't just mean our apps, but the totality of the experience that the customer has, from our apps to the delivery, to customer care, if that's ever necessary.
Stephanie:
Very cool. Previously, were you at, I think I saw Microsoft and eBay, or what did your past life before Grubhub look like?
Alex:
That's right, that's right. I actually am a very strange Head of Marketing. I'm a software engineer by training.
Stephanie:
Oh, interesting.
Alex:
I've written a bunch of code. I switched over to product management, and then darkness had me, and I somehow ended up in marketing. I indeed was at eBay before this, also for around about three years. Similar role, maybe a slightly more narrow role, focused on customer retention, marketing technologies.
Stephanie:
Very cool. I'm sure that was great help working at a marketplace, albeit not maybe a three-sided one, but still maybe a really helpful to transition to Grubhub with as your background?
Alex:
It very much was. I have to admit, I thought I knew marketplaces after eBay, then when I started Grubhub, I discovered so much complexity. Our business, exactly as you said, is a three side marketplace. Restaurants, food delivery drivers, and consumers. It is a hyper local business. People who live in Palo Alto whole heartedly don't care how many restaurants we have in San Jose, and how good our delivery network is in San Francisco, right?
Alex:
It has to be block by block, and we have to make sure that we have good restaurant selection there, good demand, and good supply of drivers. Otherwise, if the three sides aren't in alignment, bad things happen.
Stephanie:
Yeah, that seems like it would be really tricky to keep all that balanced. How have you found success keeping everything balanced? Like you said, it's so hyper local, I'm thinking there could be a driver over in Sunnyvale, and they're definitely not going to go to my local Thai place to pick up the order that I'm looking at.
Alex:
Yeah, this is where a lot of fun in this business comes from, and a lot of complexity in this business comes from. We have to be really good at predicting things, and predicting demand. And we have to be really good at engaging all sides of our marketplace so that drivers actually want to be online at the time when we want them to be online.
Alex:
Consumers end up placing additional orders if perhaps we have a little bit too much supply. Restaurateurs want to create deals. Basically, being able to influence three sides of the marketplace in a automated, personalized, hyper local way, is really the only way we can survive, right? This, to me, is super joyful, and super complicated, and where a lot of learning, personally, for me, has come from.
Stephanie:
Yeah, I'm sure every day it's adjusting a little bit more, and you keep have to kind of changing things up and experimenting a bit. How do I think about where Grubhub is at right now? To me, it seems like it's the market leader. How many meals are being delivered? How much is that in dollar-wise of food that's being sold? How do I think about that?
Alex:
We're a public company, all of those numbers are public. Quick summary for you. We deliver more than half a million meals a day. Last year, we delivered more than six billion dollars worth of food. Of course, with the arrival of the pandemic, the demand for food delivery has also increased. The expectation of all of our constituents, and of our community, all of us, have risen tremendously. Because, from something that restaurateurs really on for a portion of their revenue, they now rely on delivery as the majority of it.
Alex:
For consumers, where they would perhaps order delivery occasionally, now is the only way for them to order restaurant food. A lot of expectations on us have increased throughout these past couple of months, even though we already started from being quite a large company with high expectations.
Stephanie:
Yeah, have you had to adjust quickly with everything going on with COVID-19? What have you seen, other than increasing orders, and how have you had to pivot to meet the customers and meet the drivers in where they're at today?
Alex:
Yeah, absolutely. Well, most definitely, yes. First and foremost, we began by focusing on safety of all the participants of our marketplace, right? This began with our work on personal protective equipment for our drivers. We distributed hundreds of thousands of PPE sets for free for our drivers. We invested a bunch of work into enabling contactless delivery within our apps. Which, of course, is something that makes the entirety of the marketplace safer.
Alex:
We basically have to take our product roadmap, and, in many ways, revisit it fully, and focus on things our community demanded of us in that moment. Similarly, we had to do something like that with marketing, as well, because we had a certain strategy. You of course know that a lot of our effort is in making sure that consumers can get the best value on Grubhub. If you spend money on food delivery, your dollars will go the furthest on Grubhub. This really is our brand positioning.
Alex:
When COVID came, we had to take a pause, because this rewards positioning, or this value positioning, really had to take a step back, because consumer's interest... Sure, they were looking for deals, but they were looking to be safe, first and foremost. Secondly, they were looking to support their community. So we had to reposition a lot of our marketing work to make it so.
Stephanie:
Yeah, that makes sense. I'm thinking that could be a trend that stays around, even after everything's over, keeping that contactless delivery at least as an option, and thinking about how to actually prove you have the safety measures implemented, and you're tracking that every month. Are you all thinking about how to scale that and keep that for the long term, or is it more just a short term play until the pandemic's over?
Alex:
Couple thoughts for you. One is, I don't think that we're going to be looking at a pandemic being over and everything coming back to normal. I think we need to get used to the new normal, at least until the vaccine is here. Which means that people's lifestyles, their habits, will be fully adjusted by then.
Alex:
As such, it's not like we were developing a set of patches for three months, and then after that, we just turned those patches off. But also, there's meaningful, positives coming from this change, right? Like any crisis, it is both a danger and an opportunity. What we've discovered is this contactless delivery, for example, besides making everyone safe, it is actually making our network a tiny bit more efficient. The delivery driver does not need to engage with the consumer in-person. They can just drop it off, take a photo, and keep going, and keep working. Which shaves off a small amount, but in the grand scheme of more than half a million deliveries a day, this starts adding up. It helps our drivers earn more, and it helps our overall network be more efficient, which means food comes to consumers faster.
Stephanie:
Yep, yeah, that's definitely a good change. There's a lot of food delivery players in the market right now. How do you create an experience that's completely unique to Grubhub? Where people, they're like, "That's where I want to order through."
Alex:
All of this, in our minds, has to do with differentiation. And you're exactly right, maybe two or three years ago, where consumers didn't really know much about the food delivery category. A lot of what we had to do was to educate them about our existence, which is why a lot of our marketing, a lot of our product, was geared towards a first-time experience of someone who's never gotten anything delivered other than a pizza. Because really, that was the state of the world, right? You would ask an average consumer on the street, "Name a couple companies that deliver food," and they would name pizza brands.
Stephanie:
That would've been me a couple years ago, too.
Alex:
Totally.
Stephanie:
I'd be like, "Domino's."
Alex:
Yeah, yeah, absolutely. Maybe Chinese food, if you've ever tried it. An average consumer didn't know that there's hundreds of restaurants that deliver to them, and that they can find them on Grubhub. So that was the focus of our messaging.
Alex:
Three months ago, even before COVID, if you asked an average consumer to name food delivery brands, they would name us, and maybe a handful of our competitors. In that environment, I'm prompted, right? This is unaided awareness. Not, "Have you ever heard of Grubhub?" But, "Name a food delivery brand."
Alex:
Our work switched from creating awareness to driving consideration. Helping consumers understand, what is it that they get if they buy from us versus perhaps one of our competitors? Last year, a lot of our focus has been on stating this extremely clearly and delivering on that experience quite precisely. As I mentioned a little bit earlier, it is all about value for us.
Alex:
Now that we're entering a bit of a new normal with COVID-19, we're beginning to come back to some of this foundational brand positioning. Talking about rewards and value. We have a TV spot that's actually launching today and tomorrow on national TV. We're one of the biggest spenders on TV in both the category.
Stephanie:
Oh, interesting.
Alex:
Generally we're one of top 200 brands advertising on U.S. television that talks about rewards and value. You might be scratching your head and wondering, "Why in the hell is a digital first brand spending so much money on TV?"
Stephanie:
Yes, I was wondering. Tell me.
Alex:
It actually is kind of counterintuitive. We, maybe about three years back, we started scratching our heads and thinking, "Okay, if an average consumer doesn't really know what food delivery options are out there, how do we create that awareness? And how do we do that in a way that can confidently map the efficacy of our spend?" Because creation of awareness, let's face it, is the most expensive thing a company can do.
Stephanie:
Yep. Everyone wants it, but then actually implementing it, tracking it, and seeing how it did, seems a little tricky.
Alex:
It is so very tricky. Most mechanisms for doing this are actually kind of arcane, right? You do media consumption patterns, which, frankly is a large-scale survey that perhaps an agency would run and say, "Okay, New Yorkers, they absolutely do not watch any TV. They spend a bunch of time in the subway, true. And then they're all very much on digital."
Alex:
So, a brand that's trying to advertise in New York then would say, "Okay, television in New York, totally worthless. And our consumers are probably just like the average consumer in New York." That's kind of how the line of thinking typically goes. We, despite having a general applicability product, right? Everybody wants food delivery, right? Everybody from 18 to my mom, most definitely could benefit from food delivery.
Alex:
And yet, what we discover, is that the media consumption patterns of an average New Yorker are not the average media consumption patterns of our consumer. Moreover, what we discovered three years back was even though our intuition was that someone who orders food delivery online is most likely an early adopter of technology, and most likely a cord cutter, right? I mean, if you're about to order food online, you of course are ordering your socks from Amazon. You of course are watching shows on Hulu Plus without any commercials, as opposed to on cable TV, right?
Stephanie:
Yeah.
Alex:
Of course that intuitively made sense, which is why we've been spending a lot of money through digital video channels. That intuitively made sense. We stumbled upon a set of techniques that allowed us to, with confidence, compare the efficacy of our awareness spent between digital video and the digital awareness darlings of Hulu and YouTube and Facebook for some of the dimensions, here. What we've discovered is that the bull drought of digital first is actually not as efficient, not at all as efficient per dollar spent, comparing to the-
Stephanie:
Oh, interesting.
Alex:
... boring, stodgy, nobody watches it, cable television.
Stephanie:
Is it because of the audience that's there, where the digital, like you were talking about, advertising to them, they may already know about you and it's an easier conversion, whereas the people who are keeping the TV running in the background all day, maybe actually need the ad right then and there where it can put a little inception on them and they can hear about it a couple times while they have the news on?
Alex:
Yeah, I think that's one of the reasons. Other reasons are that, just on a per impression basis, your digital video is dramatically more expensive. Even though I'm a nerd of machine learning, and I love personalization, I don't believe that personalization can cover a five X price difference. It can make something 50% better, but not five steps better.
Stephanie:
So how do you think about creating that culture of experimentation like you're talking about, where most companies right now are probably not focusing on TV campaigns? How do you think about putting a budget behind that and actually empowering a team to do that, where when I think about teams who are running with marketing budgets, or just budgets in general, it's very scary to not show a great ROI, because you either aren't going to get that budget again. It's a use it or lose it type of culture, it seems like every company operates that way. Maybe Grubhub doesn't, but how do you think about creating good incentives and a culture of experimentation to come up with some of those projects?
Alex:
I think a culture where you ask for confidence in measurement for your spend is a good culture. Where you ask for feedback loops is a helpful culture. Now, you can take this too far, and you can start trying to map everything to revenue or [inaudible 00:16:56], and that doesn't particularly help with upper funnel marketing campaigns. But, the other extreme isn't particularly better. I see a lot of marketing organizations end up in that spot, where we say, "We demand perfect measurement," from what they call performance marketing.
Alex:
And the brand marketing side, the one where vast majority of dollars actually have to be spent to create awareness, is not working to the same level of rigor, and the same level of intellectual honesty with measurement. To your question about how to actually create those frameworks for the team, a couple things come to mind.
Alex:
The first one is, trying to pursue incentive alignment. If people on your team genuinely believe that learning and optimality of investment for the entire team is how they get promoted, is what the company actually values, they will pursue exactly that. Let me give you-
Stephanie:
Let me hear an example.
Alex:
Yeah, let me give you a counter example. A counter example is what happens if you hire an agency to manage your Facebook spend. Have you ever heard an agency that managers Facebook spend come back to you and say, "Your Facebook spend is terribly inefficient. You should spend less on Facebook."
Stephanie:
Definitely never.
Alex:
Right? That's what their incentives are, they get a portion of your Facebook spend. The same exact thing happens for your TV agency. The same exact thing happens for someone who's managing your Google spend, right? If you have a bunch of outsourced agencies, each of which is responsible for one of your channels, their survival, their ability to feed their children, depends on you being able to spend more money on the channel that they're managing for you.
Alex:
Of course, they don't have an incentive to try to tell you, "Hey, take money from Google and put it into Facebook." They will personally suffer. A setup like this creates a true misalignment of incentives. Let me contrast that with, let's say, an in-source structure, or perhaps a structure where you have a larger performance agency that is able to reallocate dollars between Google and Facebook without personalty suffering.
Alex:
In a structure where you in-source, which is how we operate, you're able to create a shared destiny, and you're able to say, "Hey, person running Facebook. Your incentives are all about learning." So if you have a current level of performance, which is a certain level of incremental CAC, and a certain level of incremental LTV. Your goal is to improve that by this percentage over the course of next quarter.
Alex:
Find some way to do so through whatever experiments that you're able to run. One of the potential outcomes is an improvement in efficiency by reduction in spend. They're able to raise their hand and say, "Hey, I actually want to spend your dollars. Take away some of my budget, and reallocate it over to TV, because they can spend it better. I hear they have a way to spend at a lower incremental CAC than I can."
Stephanie:
Have you seen that in your culture so far, of people actually being like, "Hey, you can have this budget, move it over here"? It seems like a lot of times, people are personally tied to their budgets, and whoever has the bigger budget is the more powerful one, and I haven't often, at least in my previous days at other companies, I haven't seen people say, "Hey, you can have this budget and move it here."
Alex:
You are exactly right. A lot of our, I guess, legacy from many of our previous jobs, associates the size of the budget with the influence in the organization, most definitely. This is where the job of a leader really is to create the right incentives and to catch people doing something right.
Alex:
If you hire somebody off of a company that had that culture, of course, their initial inclination will not be to raise their hand and say, "Hey, my area isn't working so hot." You need to indoctrinate them, if that makes any sense, into a world where it's okay to raise their hand and do it. The way you do it is by upholding folks who do this, and pointing at them and saying, "This person is doing it right," and celebrating their successes. And celebrating their experiments, where, perhaps, they didn't see the immediate success, but they learned something.
Alex:
So, as a leader, I think you have a lot of power to create these incentives. As such, structure what your team actually holds as valuable versus not. If you point to enough examples like this, you'll actually end up transforming the culture, even for someone who comes in from an organization that wasn't like that.
Stephanie:
Yeah, it seems like it would also allow someone to wear multiple hats, and kind of become a polymath when it's like, "I don't just focus on Facebook ads, or I don't just focus on this kind of marketing." They get to experiment with a bunch of different areas. Have you seen that happen in your organization?
Alex:
Oh, most definitely. My paid social folks, just like everyone's, they were super focused on Facebook. What we discovered is them raising their hands and being very creative, and being some of the first folks who ever tried TikTok, for example. This was a little while back now, but we were one of the first handful of brands to invest a lot of money into TikTok, and do large scale experimentation with them. What we've discovered is if you're one of the first ones, there's very meaningful... Effectively, arbitrages to be had, where you're able to not only get a great deal, but shape the product to your liking. As such, get a temporary advantage over the rest of the market.
Stephanie:
That's fun. How did you think about creating your first campaign on TikTok? When your team presented this idea to you, were you like, "Yeah, let's do it," or were you a little hesitant? What was the first campaign you had go out there, versus what does that look like today? Are you still utilizing it?
Alex:
Oh my God, this is quite a story, to be honest with you. The team came to me and said, "So, we're thinking about doing TikTok." My reaction at the time was, "TikWhat?" They explained this to me and I read up a little bit about it. My immediate reaction is, "Okay, you are attempting to sell a luxury product." Let's face it, ordering delivery, you're still buying food from restaurants. It is a luxury product in many of the cases, right? To, "You're trying to sell that to people who have no disposable income of their own. The average customer of TikTok at the time just could not have their own credit card."
Stephanie:
Yeah, they have allowances, maybe.
Alex:
Right? Exactly. "Why in the world could this possibly work, you guys? Our average consumer is fairly affluent, and you're now trying to go into a different demo. How is that even remotely possible?" But, luckily, at that point, I had already observed that my team knows better than me, and that they have much, much better ideas than I do. Essentially, we just did a test. We did a small test, and we experimented in earnest. Surprise, surprise, they came back and they showed me the numbers, and they were meaningfully better than Facebook at the time.
Stephanie:
Wow.
Alex:
We ended up investing more. That was genuine, true learning. Not just for the organization, but frankly, for me. There's multiple possible explanations for why it ended up being so efficient, and I can go into some of them, but the thing that matters to me most is that the crew felt inspired to pursue something new. They felt passionate enough about it to structure a test when there was no framework, really, out there. And they were unafraid enough to basically tell me that I'm wrong, and that my intuition is off.
Alex:
That made me feel like the culture is actually right. The culture is exactly what I want it to be. The opposite of that, where you're going with the highest paid person's opinion, if that makes sense.
Stephanie:
Doesn't work.
Alex:
It doesn't work, because all of our intuitions, no matter how successful we've been previously, we are sometimes wrong. Why hire smart people if you don't trust them to try things?
Stephanie:
I think there's a good mix between trust your gut, but also don't trust it, because you could be wrong. Yeah, go with other people's ideas, as well. How do you think about those efficiencies that you're mentioning when you're exploring new channels like TikTok?
Alex:
Sure. To me, it's indeed about being open-minded and experimenting with new types of media, and being unafraid to try things that aren't immediately, obviously, going to work. A similar type of experiment happened with Snapchat a little bit earlier, where I also was convinced that this can't possibly work for the same reason. Luckily, I, again, was wrong.
Alex:
I guess a pattern of learning is what inspired me to basically create this incentive structure for the team, where they're unafraid to raise their hand and say, "Hey, the way we've been doing this before is really off." If you want, I'll tell you a story of a channel that's not really a channel that I guess formed my opinion on that topic.
Stephanie:
Yeah, let's hear it.
Alex:
This is a story of a couple marketers that were attempting to turn a specific city around.
Alex:
As we talked a little bit earlier, we can be doing super well in one city, and not well at all in another city, or in a corner of a city. A lot of what we do has to do with how do we turn a specific city or neighborhood around? This couple folks, their job was to turn a specific city around, and I was expecting them to come to me and say, "Hey, I'm going to take the budget that you've given me, and I'm going to buy some Google ads, and I'm going to buy some billboards, and maybe I'm going to buy some Facebook ads."
Alex:
What they did instead, these were two marketers. What they did instead was actually really curious. They experienced the product for themselves. They placed a couple of food delivery orders, and they came to me and they said, "Hey, I don't want to buy any ads," they said. "Instead, whenever I was placing the order for food, there really weren't enough food photos. I was ordering from restaurants that I hadn't ordered from before, and I don't really know if their pad thai looks good. I don't really know if their sushi is something that I want to try."
Alex:
They were in your position. They said, "Screw it, I'm not going to buy any ads. I'm instead going to hire some photographers to come into those restaurants and take the photos. Then after that, I'm going to measure the incremental impact of the added photography, and see if the efficacy of that is actually comparable or high enough, comparing to the efficacy of ad spend." Effectively saying, "I'm going to open a brand new marketing channel, and that marketing channel is going to be photos."
Stephanie:
Photography.
Alex:
I'm like, "Okay, let's just do it."
Stephanie:
A whole brand new, the vision, of Grubhub, just photography.
Alex:
Exactly, exactly. These two folks get on the phones, start calling photographers, start calling restaurant owners and scheduling appointments to have the photographers come in there. That becomes basically their job for the next two months.
Alex:
Then they organize a really [inaudible] visitors for these specific menu pages see the photos, and others don't. They do some serious math to try to say, "Hey, here's the incrementality in here, and here's the efficacy of the spend comparing to what Google ads would be, or Facebook ads would be." They discover that those photos are actually a better way to spend marketing dollars, than any actual marketing.
Stephanie:
Yeah.
Alex:
I, at that point, am kind of floored. I come to them, I'm like, "Okay, you guys are on fire, this is amazing. Let's take your thing and give it to operations and scale up this thing." They say, "No, no, you don't understand, you don't understand. This whole project sucked. We spent our entire days on the phone with restaurant owners, trying to schedule appointments. We are going to make it better."
Alex:
I'm like, "Wait, what's going on?" They say, "No, no, instead of scheduling appointments with the restaurant owners to take photos, we are going to rent Airbnbs and photo studios around town, then order food from the restaurants, bring it to those Airbnbs. Our food stylist is going to make it look good, and we're going to take photos."
Stephanie:
Oh my gosh.
Alex:
I'm like, "Wait, wait, what? What?"
Stephanie:
That's another level.
Alex:
Yeah. My immediate reaction from this is, "Have you ever seen delivered food? It does not look good." They obviously told me to go pound sand, as they should have, and they showed me the first photos from these experiments. Oh my God, those first photos look much better than anything taken in a restaurant, because food stylists are really good at their jobs. If you were able to control the lighting, you're able to take much better pictures.
Alex:
When they actually tried it, they discovered that instead of doing two photo shoots a day, the photographer, who's the most scarce and expensive part of the whole operation, is able to do 20 photos shoot a day.
Stephanie:
Wow, that's efficient, that's amazing.
Alex:
As you can imagine, at that point, my mind was completely blown. We indeed operationalized this with folks whose day job was operations, as opposed to marketing. This was the example of really learning what learning means.
Stephanie:
Mm-hmm (affirmative). You kind of picked the markets to do that in, or you kind of see a market not doing so well, and those are the ones that you focus on getting the good imagery for, versus allowing that... UGC content to work well in other markets, or how do you think approaching that? Because it seems like something that would be really hard to scale, ordering a bunch of things all the time from every market in the U.S. How do you think about creating those campaigns?
Alex:
Yeah, yeah, yeah. With hundreds of thousands of restaurants on the platform, we indeed have constrained resources to do these photo shoots when we can. We can't do all of them next month. We had to be somewhat thoughtful on prioritizing things. A few things came to mind for being able to select the right restaurants to do this in sort of the right markets.
Alex:
First is, conversion. If consumers land on the menu, and end up buying stuff anyway. Well, that's cool, I guess they don't need the photos. If on the other hand, conversion isn't amazing, but the number of visitors to the menu page is super high, hey, this might be an opportunity to actually add some photos and improve that conversion.
Alex:
By digging into the data, and looking at where the majority of the incremental impact can be, we develop this framework for allocating this constrained resource, which ended up effectively being an investment of marketing dollars into a channel that's sort of marketing, but sort of not. Is it product? Is it operations? I have no idea.
Stephanie:
It's something, all the above.
Alex:
Right?
Stephanie:
How do you think about, you mentioned incrementality quite a bit. How do you think about that throughout your organization, when developing these experiments and seeing what works and what doesn't work?
Alex:
Sure. First, if you don't mind, allow me to define it as-
Stephanie:
Yes, please.
Alex:
Because I think that's super important. Incrementality, to me, is what would have happened anyway? If you didn't do your glorious marketing campaign, or this amazing product improvement that you just rolled out. This is a difficult question, because it's really attempting to attribute the entirety of this success, or entirety of what's happening during a campaign, to the campaign.
Alex:
Let me give you some intuition behind this, right? Let's say you go to, I don't know, gap.com or something like that. You see a banner in there that says, "10% off." Well, obvious, a lot of people are going to click that banner, and a lot of people are going to use that coupon to get 10% off of their transaction. The key question, though, is, what portion of those people would have transacted anyway?
Stephanie:
Yeah, they went there directly. They probably would have.
Alex:
Exactly, it's clearly not zero, because before you launched that awesome 10% off coupon, some people were buying jeans yesterday. Being able to, with confidence, judge what that incremental behavior is, and what is the incremental CAC, and incremental LTV, is super important. Simple back of the napkin as to how you judge this is, let's say yesterday, a hundred people bought those jeans. Today, 110 people bought those jeans. It's not a real AB test, obviously. But all 110 people used your 10% off coupon. You can wrongly suggest that all 110 converted because of your coupon, or you can look at the truth in the eye and realized 110 used the coupon, but 10 really only needed it.
Stephanie:
Do you think a lot of brands are missing this when they offer these discounts, and maybe unintended consequences that could come from it? I could see a lot of consumers, if they get used to you always having discounts, then they just wait. They're like, "I'm going to wait for that next 10% off coupon," then they don't have a buyer at all.
Alex:
Yeah, it is super dangerous. I do think that in some industries, there's exactly that happening, right? We know of the right times during the year to buy a TV, so we don't buy a TV until then. We know when the right time of the year to buy home improvement equipment, and we don't buy it until then. Exactly what you're describing is a real danger.
Alex:
It's not just a danger of delaying the purchase, it's a danger of create a permanently less profitable business. Imagine is, every Friday, Grubhub was to, let's say, give all our consumers three or five dollars off. Not only are Thursday orders going to be delayed, because our consumers are going to be like, "Hey, I don't really care when I get takeout. I'll cook one night and I'll get takeout the other night." They'll delay it until Friday, but those Friday orders are going to be less profitable.
Alex:
So we permanently teach our consumer base, if we take that route, to not only delay their orders, but to make them less profitable. That is a real issue and something you got to be super careful with, which is why you must measure incrementality.
Stephanie:
Yeah, especially right now. You see so many people discounting everything, it's kind of scary to think. How are you going to come back when your entire, everything on your store online, is 80% off? How do you come back from that?
Alex:
Most definitely. Now, if you have physical inventory, the opportunity cost is not zero. Right? Let's say if you're selling digital goods, for example, right? Let's say you're selling access to, let's say a song, or a book, right? Your fixed costs in that situation, your cost of an action, is terribly low, right? As opposed to if you have goods in the warehouse, and you aren't able to sell them, there's very meaningful fixed costs for you that you need to deal with.
Alex:
It might be, actually, quite reasonable to be running these high promotions, but if you are, you better be running it as a real AB test. You better be able to confidently say that this is the true incrementality of this 80% off coupon, and that's the true value that I'm getting out of it from both not needing to keep these products in the warehouse, but also from just sheer revenue from the consumer.
Stephanie:
Yeah, that makes sense. Do you have a good platform or way that you've set up metrics and things like that to measure that incrementality in a way that's not really manual, and then you can just kind of see how the campaigns and what they're doing is performing against each other?
Alex:
Yeah. In lower funnel channels, it is actually fairly easy to set up a platform for this, and we have. There are tools that you can use for it, right? Google Optimize, for example, or Optimizely, right? We have a combination of in-house and these third party tools to do product experimentation, for example.
Alex:
For things like CRM, couponing in the apps, or issuing emails with coupons, or push notifications, really good experimentation platforms don't exist off the shelf. We had to do some math ourselves. Some of that math turned out to be fairly fine tuned to Grubhub's needs. Here's what I mean by this. We're an LTV business. It's not just about the immediate transaction, it's about what happens after that transaction.
Stephanie:
Yep.
Alex:
For example, if a consumer ends up converting at a higher rate, and then afterwards has a poor experience and doesn't come back, that actually is terrible, terrible, terrible. Your typical, immediate conversion optimization tool, would just look at the first part of this. Oh my God, they converted at a better rate, great, awesome, keep it.
Stephanie:
Yay. Yep.
Alex:
We had to build tools specifically designed to capture these long-term effects. We typically look at the results of these long-term activities over the context of a month, right? So we need to see what happens to consumers for a meaningful amount of time to have high confidence that it indeed is net beneficial or not.
Alex:
Of course, we're able to look at things fairly early, and if something's a terrible idea, we're able to kill it early. But, in order to be able to confidently say what is the impact on the LTVs, we had to build tools. These in-house tools for many CRM things that we do today.
Stephanie:
Got it.
Alex:
Even then, it's just for lower funnel. It's just for CRM and product. How do you judge the incrementality of TV versus billboards? That is a whole other, super complicated story.
Stephanie:
How do you think about the intersection between your CRM and your content management system and your actual commerce platform? How do you create a good environment where they all interact together, and people can see a holistic view of everything that's going on?
Alex:
Great question. I don't think I have a perfect answer for you, other than enabling as many work streams for experimentation as are possible. That is, allowing the CRM team to run experiments on their own, without involving a bunch of product people, without involving a bunch of finance and analytics people. Similarly, allowing the front end or pricing optimization team to run experiments on their own, and do very specific price optimization experiments just by themselves.
Alex:
The more work streams like this you have running in parallel, the more you're going to be able to learn, as an organization, per unit of time.
Stephanie:
That seems like a great answer to me. It also seems like you would get a lot of, you could have a customer with a negative experience, but it would be because of maybe the restaurant. It seems like you guys would have a lot of insights into maybe how to help restaurants improve, where it's like, hey, every time someone orders this thing of sushi, you always forget the wasabi, and man is that making people upset. Do you ever send that data back to restaurants to improve the products as in their food, or the customer experience, or anything like that?
Alex:
Most definitely, you hit the nail on the head. We are in a really unique position of knowing not just who the people were, or when they placed the orders at your restaurant, but knowing exactly what they ordered. We can see exactly that pattern, right? We can tell you that on Tuesday night, the reviews for people ordering sushi, are actually worse than on any other night. We can help you see that, so that you can train the person that's working on Tuesday night.
Stephanie:
[crosstalk 00:43:21].
Alex:
These kind of insights... Yeah, totally. These kind of insights are exactly what we believe is what is something that we can uniquely provide to our restaurant partners, besides demand. Of course they come to us because they're interested in demand, particularly now. But we can do more, and we've been building a lot of systems specifically about that, that are effectively... you can think of this as recommendation systems in the grand scheme of the word of giving recommendations to the restaurants about how they can lend the totality of their business more efficiently. For example-
Stephanie:
It seems like that could be a whole different business for you guys to also operate.
Alex:
It's quite synergistic in our minds, right? If we're able to make our restaurants more successful, it actually makes us more successful, in turn. Because, those consumers who are placing orders and are not getting any wasabi with their sushi, they are ultimately not happy with Grubhub. We want them to have an amazing experience.
Alex:
Whether the restaurant wins just on Grubhub, or throughout the totality of their experience, because, let's face it, that restaurant might be serving other delivery platforms, and soon enough, hopefully, dine-in, as well. That retraining is going to help the restaurant across the board. We actually very much welcome that. That means that we're able to create the value not just for our platform, but for the restaurant, and increase the chance that this restaurant will, ultimately, be successful.
Stephanie:
Mm-hmm (affirmative). I think that's a really good point, especially as a lot of brands right now are shifting quickly to the world of Ecommerce and trying to figure out how to sell online. There's going to be a lot of new touch points that they maybe aren't anticipating that could actually hurt the consumer experience. If you've got the UPS guy throwing your box over the fence, and it's getting crush, there's a lot of things that actually, you maybe wouldn't even think of, as a brand, of, "That's not my job," when really, everything form start to finish to delivery and afterwards, and the follow-up, all of that's your job. And how do you think about controlling that experience with so many touch points?
Alex:
You are so right. The totality of this is their job. From the first ads that they see on TV, to what shows up when they look on SEM or on paid social and discover your brand there, too. The first purchase experience to the interaction with the UPS guy, to the interaction with customer service. All of that, in totality, is what the brand relationship really is, what the product really is.
Alex:
As marketers, we can't just care about that ads. As product people, we can't just care about the bits installed on the phone. They, in their separation, they don't particularly matter. As you saw from my story with the photos, that really was quite profound to me, right? We kept looking for a solve to get more customers and more sales through marketing, and that solve wasn't there at all. The most efficient solve was far outside.
Stephanie:
Mm-hmm (affirmative), yeah, such a good reminder for all brands to think about that, like you said, totality of the process. Because you have a software engineering background, I feel like I'm allowed to ask you tech questions. I saw on your, you guys have a blog on Medium, or your engineering staff does. They were talking about how they were creating discount codes using crypto. It made me wonder, what other kind of technologies are y'all experimenting with, or seeing success, or how did you think about running the platform that Grubhub's built on now?
Alex:
Sure. A few things are super important. One is having a scalable platform that can withstand demand, and that can withstand massive spikes in demand. As luck would have it, most people in Chicago, want to get dinner approximately at the same time.
Stephanie:
Yes, who knew?
Alex:
Right. What a pain in the butt. We've been trying to convince them to maybe come a different... No.
Stephanie:
Come on, 3:00's your time, come on.
Alex:
Exactly, exactly. Your dinner delivery window. Which, of course, creates formidable demand. Not just on the services in the backend of our systems, but a formidable demand on our logistics network. A lot of our work goes into being able to spike in response to customer demand. Let me give you one intuitive example of this. Outside of COVID, before COVID, when rain would start during dinner hours, demand would massively spike.
Alex:
At that moment, we're supposed to magically materialize a lot of drivers on the road doing deliveries. Being able to do so, technically, and when I say magically materialize, I'm of course referring to creating incentives and creating appropriate communication channels with our drivers so that they actually want to get on the road. A lot of our engineering work has to do with how we were talking about in the beginning, balancing the three sites of the network, and being able to respond to either a massive spike in demand, or response to a set of orders that were placed in the specific part of the city on the logistics side.
Alex:
Or, respond to an onboarding of an enormous partner, like Shake Shack, or Sweet Green, or Taco Bell, with their own unique needs. Remember, we work with such a variety of restaurants, right? We do point of sale integrations with a variety of our enterprise customers, which of course means that we have to have nimble systems that are able to onboard those same customers. They have to be resilient, as well. So, a lot of our work has to do with both scale and being able to deal with these spikes.
Stephanie:
Got it. Any favorite pieces of tech that you guys are implementing or trying out right now to help with those large spikes in demand? Or where you guys think the future is headed that you're kind of preparing for?
Alex:
Favorite pieces of tech. Huh. Huh. I'm going to think marketing tech. Braze has been an outstanding tool for our marketing teams. What we've discovered is it effectively enabled a whole work stream of experimentation for our CRM teams. They're able to run pretty sophisticated experiments completely independently from engineering, which increase our velocity of experimentation.
Stephanie:
Hmm, that's awesome. I'll have to check that out. Cool. So to zoom out a little bit, 30,000 foot level, what kind of disruptions do you see coming in the world of Ecommerce? What's on your radar right now? It doesn't have to be for Grubhub, it can just be in general.
Alex:
I think that the disruption is already here, where over these past couple of months, we've seen the portion of online transactions, and portion of consumers who have tried buying things online just catapult through the roof. All of those new consumers, let's face it, my 90 year old grandmother is using Zoom now. All of those consumers are a new opportunity. They have very different expectations. They don't yet know much about your brand.
Alex:
Being able to understand this newly online wave, and heightened expectations of the consumers that already happen online, but perhaps not as active with your service, right? Those, I think, are super important. This to me takes us back to velocity of experimentation, being more important now than ever. That is, truly learning from your customers. Observing them, creating experiments, measuring, and getting a feedback loop from them, so that you're able to focus and find the one thing that you can improve to make the whole story better. Maybe photos. Maybe it's something else.
Stephanie:
Yep. Yeah, I love that. It definitely seems like with these new people coming online, you have to have a bunch of different tactics to meet them wherever they are. The ones that have been working for the past year, might only work for a subset of the people because you have 50% more people that you need to market to, or develop a platform for, and it's going to be very different with how you approach those new consumers than what you've been used to.
Alex:
Exactly.
Stephanie:
All right, so, we're about to jump into the lightning round. Any higher level thoughts, Alex, that you want to share before we do so?
Alex:
If you're able to structure your organizational incentives to focus on learning and feedback loops, I think now you're going to see an even bigger reward for it in the form of market share, in the form of growth, in the form of being able to adapt to the world around you and leapfrogging the competition.
Stephanie:
Yeah, completely agree. All right, so the lightning round, brought to you by our friends at Sales Force Commerce Cloud. It's a fun and easy, quick round of questions where you have a minute or less to answer. Are you excited and ready, Alex?
Alex:
Very scared.
Stephanie:
Dun dun. All right, first one. If you are starting a podcast, what would it be about, and who would be your first guest?
Alex:
Whoa, what a fascinating question. What a fascinating question. I am obsessed with all things culture, and how do you actually create the right incentives for a technology/marketing organization? I love Simon Sinek. He is outright amazing. I learned a ton from reading him. I would probably to get him and if I can't, I'd get one of my former mentors in there, as a consolation prize.
Stephanie:
Oh, that sounds good. I would listen. I would be your first listener, and I would give you a five start review.
Alex:
Oh my gosh, thank you.
Stephanie:
You got me at least. What's up next on your reading list?
Alex:
Hmm, next on my reading list? I am reading Russian sci-fi novels these days, as a means of escaping from a tiny, one bedroom apartment.
Stephanie:
Any good ones that we should check out?
Alex:
I'm actually reading them in Russian, so I don't know-
Stephanie:
I was going to say, unless they're in Russian, then I don't know if I'll be able to read Russian quick enough to read it.
Alex:
Oopsie, oopsie, I do have a few people at my work who've been reading Tolstoy before the whole COVID situation started. I don't know if I'd recommend it now, Tolstoy does darkness extremely well. We have enough darkness around us now.
Stephanie:
That is true. Yeah, maybe not. Alright, well, what thing do you normally buy at a store that now you're just going to buy online after everything with COVID?
Alex:
What a great question. Only online now. Hmm.
Stephanie:
Tricky, tricky.
Alex:
I used to, actually a lot of my electronics. I used to come to the store and look at them and experiment with them. I have a feeling that I'm never doing that again. I used to come to a Best Buy and just try to look at different mice and monitors and all that. I got a new laptop and a new mouse online. I really like them, and I really like the experience. I was unafraid of returning them. That's it, online I go.
Stephanie:
Yeah, completely agree, especially as a lot of these companies are making the return experience a lot more seamless. Yeah, I could completely see the same thing happening. Buy things, test it out, and send it back if you don't like it.
Alex:
I was just chatting with a colleague about this exact same thing with returns around fashion. I think there's a lot of innovation to be had with moving the fear in fashion through that.
Stephanie:
Yep, completely agree, except I could see them having to now to figure out a way to resell those items in a way that proves that they've been quarantined, disinfected, and yeah. I was just thinking about that the other day. Man, that's tricky, especially for second hand market places to try and prove to the customer that these items are clean and good to go, and you can buy them.
Alex:
I agree. Solvable, I think, but I agree.
Stephanie:
It is solvable. All right, so the last final question. What's up next for Ecommerce professionals?
Alex:
I think we're going through a time when from being on the early adopter, early majority demand for most of the brands. We've become the critical source of revenue for every single brand. If you think that your company was going through a digital transformation, and is now trying to make digital just a better channel, hold on to your seats, because it's not the only channel, and the majority channel. So, the demand for expertise in our area is increasing very rapidly, and the demand for learning in our area is also increasing rapidly. I think this is a wonderful time to be in Ecommerce. I think this is a wonderful time to be learning and doubling down on Ecommerce. I'm excited for all of us to be right at the center of this transformation.
Stephanie:
I love that, love the positivity, and yeah, it's definitely an exciting time to be alive and experiment and try new things. This has been a blast Alex, thanks so much for coming on the show. This is your second appearance on a Mission podcast, so yeah, we're so thankful that you came back and joined us again.
Alex:
Stephanie, thank you very much for inviting me.
Stephanie:
All right, talk to you later.
Alex:
Cheers.
When Christiane Lemieux was looking to sell her first company, she knew she wanted to find a buyer that understood that the future revolved around Ecommerce. She found that buyer in Wayfair and for the next few years, she worked with the company to cultivate as much knowledge about the eComm space as possible before venturing out on her own once more. Today. Christiane is the founder of The Inside and the author of numerous books, including her newest called Frictionless. The idea of her new company and the book revolves around the concept that in order to have success in the world of Ecommerce, you need to give your customers an experience that is so easy and efficient, that they never have a reason not to buy. On this episode of Up Next in Commerce, Christiane explains why that frictionless experience is so important, and how to make it a reality.
Key Takeaways:For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
---Transcript:
Stephanie:
Christiane, welcome to the show. How's it going?
Christiane:
Hey. It's going really well, Stephanie. How are you doing?
Stephanie:
Doing great. So, for all of our listeners, I want you to pronounce your own name since I did not do it this time.
Christiane:
My name is Christiane Lemieux. It's very French and a huge mouthful, so I completely give you a pass on that.
Stephanie:
Thank you for doing that, so I did not have to. So, you are the founder and CEO of The Inside, a direct-to-consumer home furnishing brand. I love to hear a little bit about that and how you started it?
Christiane:
Well, this is my second foray into the world of home furnishings. I started my first company, it was called DwellStudio, out of college. I went to university at Parsons School of Design here in New York. And I started a home furnishings brand from my New York apartment. 13 years later, I sold it to Wayfair. And speaking of what's up next in commerce and the digital landscape, part of the reason that I did that was that... Oh, you know what, I should cut my nail Hold on. Sorry. Let me just cut this so it doesn't ding on you.
Stephanie:
Okay.
Christiane:
Sorry, I'll go back to Wayfair. So, I sold my first company to Wayfair, and part of the reason that I did that was that I got to be entrepreneurial fork in the road where I had never really raised money before. And I realized that if I was going to continue down, the growth trajectory that I was on, it would involve me opening more than the one store I had in New York. It would involve me raising money for the first time, substantial amounts of money for the first time, to roll out stores.
Christiane:
And at the end of the day, I sat and thought for a very long time about the business model that I was on, that was growing, that I had started, and I realized that it didn't feel right to me. I really believed that all businesses were going to, at some point, in the near term or distant future, transition to eCommerce. And what I wanted to figure out was, who could I either partner with or sell to that would understand that idea and philosophy?
Christiane:
And so, I hired an investment bank in New York and they actually had me meet with a whole bunch of home furnishings companies, most of them, you would probably know. But when I walked into Wayfair's office in Boston with 1,800 people and 800 engineers, I realized that we were really aligned from a conceptual point of view in terms of what the future of DTC look like, direct-to-consumer look like. And so, it wasn't the best offer financially but, to me, it was the best offer intellectually and philosophically. So, I sold my business to Wayfair in 2013.
Christiane:
And then, I went on their executive committee. I mean to say that it was a learning would be doing a disservice. It was like a full immersion into eCommerce with one of the best teams in the country, and by far, the best team in my particular category. And so, I learned so much from them.
Christiane:
And as I was sitting there, I was like, "What would make me start another business? What in the world after building one from the ground up and selling it, what would I do?" And so, I realized that if I could take my first business, which is really design-first and brand-first, and then merge that into what I had learned at Wayfair from a digital commerce-first perspective, that I might be crazy enough to do it again. And that's what I did.
Stephanie:
Yeah, that's amazing. So, what were the key learnings that you took away from Wayfair, and maybe the pitfalls that you saw where you're like, "Oh, I should avoid that."? Because when I was looking into Wayfair, I think they're still very unprofitable. And so, did you see things like that and you're like, "Oh, if you just adjusted this part of the model or this part of logistics, I wouldn't have to worry about that."? Or what kind of things do you take away from that experience?
Christiane:
So, I would say there's almost nothing wrong with Wayfair. And I'm saying that, I mean that honestly. First of all, Niraj, their CEO is one of the smartest digital executives in the country, if not the world. I think that he's very much following the taking market share approach pioneered by Bezos, of course. And so, I think we're just very much on the same path. He will own the furniture category online and he will very quickly, if not even now. I mean, the last quarter was insane for them because now we're all sheltering at home and [inaudible] in a very different way than we did maybe nine weeks ago. But he'll take market share and he will be very profitable, and he'll own furnishings online.
Christiane:
There are other companies that have pursued that line of growth that weren't necessarily as equipped as he is. And he's equipped to do that. So, as relevant as that is in the post-WeWork discussion, I think in his particular case, he's already got the groundwork done to be able to do that and do it fairly flawlessly. I think for me-
Stephanie:
I mean, definitely still... The first company that comes to mind when I do think about buying furniture or looking for anything, even above Amazon and Walmart... I mean, they're the first ones I would go to so I agree.
Christiane:
Also, because they've got the best selection and they've also got the back-end figured out. And so, they taught me things like overpack centers. I was like, "What is an overpack center?" And so, they take-
Christiane:
They have overpack centers where they take in the goods from the manufacturers and they overpack them, so they don't break. And by diminishing the chance of something being damaged, not only do they make the customer experience better, which is really necessary in this day and age, but they also ensure that their margins don't get completely depleted by goods that arrive damaged. And so, it's not a crazy thing to do, but at the end of the day, it's totally crucial.
Christiane:
So, I mean, they taught me so much about, first of all, UX, customer experience, and then the logistics and the profound necessity to really think about delivery in a way that is beyond just parcel delivery or white glove delivery. They really think about it from a 360 perspective all the way from margin protection to a really flawless customer experience. Some of the things that you don't necessarily learn when you're building a design brand, I learned at Wayfair, so I'm forever thankful.
Christiane:
The difference is that they're like Amazon, they're a marketplace. And so largely, they don't design and produce their own SKUs or their own products. And they don't need to because their value prop is that in COVID-19 when every single person in the country, all of a sudden, needed some kind of a home office and/or home school. I mean, you went right to Wayfair and you ordered a desk and they came to you perfectly, right?
Christiane:
I wanted to take the ideas of brand and design but apply the Wayfair rigor of digital thought around how I executed this next brand, some of the things like having no inventory, having exclusive product, having a 3D studio to do the photography, dropship, largely dropship the product. So, instead of sending it through a more expensive white glove delivery, have it lightly assembled so that UPS or FedEx could do the delivery. And so, all of these things add up to really beautiful customer service, exclusive custom product to the customer, and then margin improvements around delivery, around no inventory, around a decreased cost in photo assets.
Christiane:
So, what I wanted to do is I challenged myself to think of all of the substantial problems with a home furnishings business, solve them first, and then start the business. And so, that's how I did it this time.
Stephanie:
That's super smart. So, how long has The Inside been operating and how's it doing today with everything going on?
Christiane:
So, I left Wayfair in 2016 and I called up my favorite supplier. She went into business with me on a B2B beta way. And so, we did that for close to two years. And then, I met the extraordinary, Kirsten Green of Forerunner, and she said to me, "This is really interesting, Christiane. Why don't I write you a pre-seat check and you go figure it out."
Christiane:
And so, we came out of beta in July of 18th. We're a year and a half in, and it's going very well. It's going very well. In this pandemic, I did not have the category breath that Wayfair has which made this a very interesting business time for them, but enough of a product breath that I think that we're helping people improve their homes on a daily basis right now, which is what we set out to do.
Christiane:
And listen, I feel extraordinarily lucky that it's a digital-first company. I don't have stores, I have a very lean staff. We were working from a work kosher, which we closed down at the end of April. So, we are going to be dispersed until, at least, the beginning of 2021, so we won't have an office. We can do all of this virtually. We hold no inventory, so we have no warehouses. Essentially, we had to let go two people just to preserve the business. But we've come through this, I think, as well as you can. My whole MO right now is making sure that nobody loses a job, really, because that's the scariest part of all of this is the unemployment numbers. I mean, that just keeps me up at night.
Stephanie:
I know. Yeah, seeing how high they're trending is definitely that's scary. Was there any big digital pivots you had to make or that you made quickly when COVID-19 started, or right now?
Christiane:
Well, I think that what we did... Apparently, from my digital marketing, either cohort or people that we work with, there are three DTC areas that have done very well in this particular pandemic, I mean, the Starling pandemic, so this pandemic, but it's athleisure, home, and alcohol. So, those three things had extraordinary growth. We happen to be in one of those categories.
Christiane:
I think one of the things that we did, which I think, anybody in a growth category in this particular time, we stayed the course with marketing. So, a lot of people caught their marketing. And what we're seeing is customer acquisition costs have come down, the cost for all of these paid marketing initiatives across all the platforms have come down. And so, we really leaned into that.
Christiane:
The other interesting thing that's sort of trend that's come out of this is not the digital marketing, I don't know if you've noticed this, but a lot of people are doing direct mail. Direct mail a huge resurgence obviously, depending on the category you're in, but people are home, and they're reading their direct mail.
Stephanie:
You shifted into that space of it?
Christiane:
We're looking into it now.
Stephanie:
Cool. Yeah, that's great. When you were first building The Inside, were there certain key technologies that you leaned on to build up the website, or are there any favorites that you utilize? I mean, I saw you have quizzes on the website, which seemed amazing. Is there anything specific where you're like, "This is my favorite piece of tech we use or a plug-in how we build our website." Any details around that?
Christiane:
Well, it's funny, this is our third iteration of our website.
Christiane:
So, we actually had to build our site from the ground up, which has its challenges.
Christiane:
One of the things that happened to us is we were on a really new version of Java, and Google couldn't index our site in the beginning so we had to do all kinds of back-end hacks to fix that. But for like three weeks, we're like, "Why is our traffic so bad?" And then, we realized that we weren't showing up at all.
Stephanie:
That's not great.
Christiane:
No, it's so horrible. So, just all these learnings along the way have been really interesting. So, because of the customizable aspect of our business, we had to build our own site from the bottom up, and that's given us the ability to keep growing our SKU count and keep allowing people to customize each and every one of the pieces.
Christiane:
I think that there's plug-ins. Everybody loves the Affirm or any kind of extended payment plan. There are things that are so unbelievable like Apple Pay and Amazon Wallet and all these things. If you don't have them, I mean, you're putting yourself at a huge disadvantage. I mean, they're not necessarily plug-ins, they're more payment tools.
Christiane:
I think the name of the game now is, it goes right to the core of my book, is making the experience frictionless. I mean, this is philosophical, but I think if frictionless extends even beyond that digital aspect of our lives, people are used to getting what they want, when they want, at the price they want, with the look they want, because of...
Christiane:
And I would say that Bezos might be the grandfather or the father of the frictionless experience. I mean, he changed the way we consume, and buying, shopping, whatever, fundamentally, in the same way that Steve Jobs changed the way we think about media. I mean, Bezos changed the way we shop, and he made it frictionless for us, and he keeps going beyond. Because if you think about Amazon Prime, he made everything accessible to us in two days. I mean, not necessarily right now, but generally speaking, and that just removes the friction from everything.
Christiane:
And philosophically, it's given us time back in our lives, right? Especially, let's think about others, me as a mom, I never have to take two hours of my day to go to the toy store to get the Lego for my son, William's friend, Gray's birthday party ever. It gets delivered to my house and it takes me no time. And that time that I get back, I mean, pre-COVID, I think the digital generation looks at time in a completely different way and the generation that preceded that, right?
Stephanie:
I absolutely agree.
Christiane:
Yeah, because there is all of this found time, and I think the digital generation also understands that it is the only non-renewable resource, right? If you have money, you can throw it on almost anything, right? I mean, you can have a jab for a trainer or whatever, or if you're clever and you have to be resourceful like me, you can find, I don't know, a meal delivery service or the stretch class on Mindbody, or whatever it is you're looking for. There's ways to hack almost anything. The only thing we can't hack is time.
Christiane:
And so, the more frictionless your experiences are across every single thing you need to do every day from like your healthcare all the way down to your grocery shopping, the more of this found time essentially you get back or digital time.
Christiane:
Pre-COVID, the people were applying that to travel, experience, I don't know, wellness, self-care, working out, all these things. Because it's the first generation that doesn't have to wait in line to get their license renewed at the DMV.
Stephanie:
Yeah. I mean, that's definitely a very different generation now who knows nonsense and they're not going to put up with the old way of doing things. How did you think about designing your website and your customer journey to create that frictionless experience? I mean, like I said earlier, I love seeing the quiz. I actually took it to see what kind of bedframe I should buy. How did you think about designing things to make it easy for people to buy? Especially furniture, that's kind of tricky. People are usually used to testing it out.
Christiane:
They're used to testing it out. So, my caveat is the following, that is definitely a work in progress. We look at this every day in every way, I don't think we've made it frictionless yet but we're trying to. And I think that for home furnishings, in some ways, we have to act as your decorating friend, as well as your place to buy the product. And so, to the extent, we can make your choices easier, so the quiz or you can text us or email us or set up an appointment for a design consultation with us. If we can help you be your trusted friend and design advisor, that I think is one of the tools to a frictionless experience.
Christiane:
Like every other eCommerce site, there's table stakes things like, "If you don't like it, you can return it," and you have 30 days to return it. Because you know what, that's just the name of the game today. And also, we have to ship it to you for free because that's also the name of the game today.
Christiane:
So, there are things that have been institutionalized, I'd say, by Amazon first and then adopted by everybody else that are just table stakes. And so, we started out with those and that was, I think, like 1.0 of frictionlessness online. And then the companies that are really forward thinking are the ones that could build on that on a near constant basis. So, yeah, that's very much where we are philosophically and trying to make the UX better every day.
Stephanie:
Got it. What kind of metrics are you focusing on when you're making all these iterations and trying to make the experience even better? Are there certain things you pay attention to or that you sync up with your team every week and go over?
Christiane:
A lot of it is Google Analytics and then we look at the Facebook metrics for the paid marketing, all of these things. But some of the things we look at are, obviously, like the really basic ones like bounce rate. One of the things that people are looking at now is, they call it dwell time, how long people spend on each page and how in-depth they go. So, we look at that.
Christiane:
We look at who designs a piece of furniture, and then transacts, and then who abandons the cart and why. And so, we're trying to finesse the experience all the time so that people feel they're not stuck with paralysis of choice. Because I think the thing about customizing is that, especially if there's 16,000 different iterations you can possibly make, you might get paralyzed by choice.
Christiane:
So, the quiz is very helpful there because you may have learned that you like coastal mid-century, your favorite color is blue, here are three patterns that you like that are foolproof for you. And then, you can go from there. You can iterate from there. So, you can choose a brass leg or wood leg or whatever that works for the rest of your interior. But at least you've narrowed down to the extent you can, algorithmically what you like. And so I think that, I mean, all of those things are super important.
Stephanie:
And I think less choices is definitely key. Especially I've seen a model where they're populating an entire room for you of like, "Here's the whole entire bundle, so you don't even have to think about it. You can swap things in." And like you said, having someone that you can text is so super important, where you feel like you have a friend where you're like, "How would this look? What do you think about this? Show me something that's similar." I think all of those are really strategic.
Stephanie:
But when it comes to some of those metrics, how do you... For dwell time, for instance, I think any of these might lead you down the wrong path based on what's happening right now with the current environment where I heard that, well, times are up, but then conversions aren't maybe up at the same rate. Is there any metrics where you're like, "Oh, they might be reading into that the wrong way, and we shouldn't maybe take a quick action based on that right now."
Christiane:
I think that's right. I think people are... Because we have so much time, and content looks different from one person to the other, the content they like. So, if you're in the middle of decorating your house, you might be on all these sites, and because you have, all of a sudden, more disposable time at your fingertips than you have in the past. So, I think dwell time is important, but add-to-cart is really the thing you want to see, and then the final conversion.
Christiane:
So, we look at where people are hanging out from a GA perspective and then look at the add-to-cart and then look at the conversion on that add-to-cart. Of course, for us, the metrics that we want to focus on are getting from add-to-carts to conversion to the extent we can, and so trying to make the PDP and the the checkout page as flawless as and as inviting as possible to really get people to transact.
Christiane:
I mean, in front of that is as much inspiration as we can possibly allow people to consume, whether it's through Instagram or through Facebook Ads or through whatever means to get them inspired. But really, our job, especially on a site level, is to make it so easy that why wouldn't you buy it? And to the extent we can quell your paralysis of choice. That's really where we're focused right now, is really helping you design the space of your dreams digitally.
Stephanie:
Very cool. So, you just mentioned Instagram. I saw that you launched an Instagram Live series called Go Inside. Can you speak a bit about how you're utilizing that to potentially drive sales and the strategy behind that, and ROI that you've seen on that content or how you measure that?
Christiane:
Well, I think, for us, part of this... The interesting thing about the home furnishings business is that there are two distinct consumers, there is the DTCs, so the consumer you think about who wants to buy an upholstered headboard and goes on and chooses their fabric, and executes on that, but there's also the trade.
Christiane:
And so, our particular category has interior designers, and many of them who, at the end of the day, are a very big part of this business, and a very, very important customer to anybody in the home furnishings business because they are buying on behalf of multiple people. And if you make the whole experience frictionless for them, it's not just one bed every five years, it could be five beds every month.
Christiane:
And so, I think part of our Instagram strategy is really letting the rest of our community meet the interior designers that really work with our product, not only so that they can see what this community does, but also, at the end of the day, we would love our interior designers to get business and to really think about this, not only as a home furnishing company, but as a community that we're growing for people who love design and who want to, as we call it, live beyond the beige. And for us, that's really people who want to personalize their spaces, and think about their spaces as something that is theirs and that is customizable, in a way that's frictionless. And so, by going live with our interior designers, we're introducing the world to this great community of people who can service that.
Christiane:
A little early for ROI right now, but if we circle back in a little bit of time, I can let you know, because data has to have like a decent subset, right? So, we just launched a home design 30-minute consultation, and that's really helpful in terms of conversion. Because if people get you on the on the line and walking through their spaces and really helping them, chances are it's the kind of help that they're looking for. So, we find that useful.
Stephanie:
Well, how do you think about scalability when it comes to having those one-on-one interactions with the customer and consulting them on the products and whatnot?
Christiane:
Well, that's where these two things dovetail together, right? And so, if we build a really beautiful, robust design community that is local... Because every different area has a different design philosophy. In California, you can live indoor or outdoor, in New York, a lot less. And so, if I can introduce you to a design in your area via Instagram Live, and he or she is showing off some of the projects they've done, there's a good chance that you will then reach out to them and let them know that you were introduced to their work on The Inside.
Christiane:
And the rest, I think, is just great for everybody involved. I mean, that's my business philosophy. I love a win-win-win, so the customer wins there, the designer wins there, and we win there not just because of a sale, but because we've made somebody's home and life better.
Stephanie:
Yeah, that's a really good strategy. And this thought that you are partnering with the designers and having them do the consultation, that's super smart, where you don't really have to worry too much about hiring a bunch of people and customer support to do it who don't really have good design principles probably.
Christiane:
Yup. That's how we'll scale. So, we're just at the inception of this, but you get it, right? So, they can meet Maureen Stevens on Thursday night or tomorrow night, and if she's in New Orleans and if they love her design, they can call her up. And when she finds out that they were sent to her via The Inside, then she'll most likely, I mean, hopefully, use one of our upholstered beds in her next project. But even if she doesn't, if somebody gets a better interior because of something we did along the way, then I feel pretty good about that.
Stephanie:
These micro-influencers and designers who are helping with these consultations, are they starting to request metrics and wanting to see data and things that your team will have to start supporting eventually?
Christiane:
I hope so, but not yet. I hope that... Listen, that's part of that frictionless post-COVID change. I think everybody is going to need data, digitally-driven data, so that they understand exactly what the reach is beyond this traditional business models that they've had prior to all this.
Stephanie:
Yup. I think that because of COVID, a lot of people are definitely putting on their entrepreneurial hats and they're going to want to see those metrics. And I think it'd be really interesting to have some type of leaderboard that would show which designer is doing the best and who's helping customers, and just gamify it a bit.
Christiane:
That'd be so much fun. It's almost like you're at, whatever it is, flywheel and who's biking the fastest.
Stephanie:
Yeah, I know. Just implement that tomorrow. Easy. So, are you-
Christiane:
Stephanie, I'm going to take a note right here and actually do that. That's pretty interesting.
Stephanie:
Yeah. I think that's where a lot of the world is going when it comes to gamifying certain purchases and making it more fun. Well, when it comes to gamifying, are there any pieces of tech that you're thinking about? I was just playing around with IKEA's app where they have AR that you can put the product in your room, which was really fun to play with. I was just putting full-on dressers on top of the bed and just being silly with it. But have you thought about doing that since your products are so unique, it seems like it would be really good to get them in the room where people are trying to design it?
Christiane:
Absolutely, yes. And in fact, we were talking to a company in Palo Alto, who was on the forefront of this, probably right around the corner from you.
Stephanie:
Oh, we're neighbors.
Christiane:
Yeah. And they are pioneering this incredible drag and drop. So essentially, you can take a picture of your room, and then you can drag and drop furniture into it. It's so well done. It's so well done that they can tell where your window is and they can have a shadow underneath the furniture so that it looks perfectly real. Interestingly, a lot of the technology that people use for gaming is really applicable here. So, it can create a really unique and kind of true-to-life experience.
Christiane:
So, yes, we're looking to this all the time. I think that as a brand spanking new startup, we're trying to make sure the fundamentals are frictionless before we add all kinds of layers of complexity to the customer experience. So, we want to make sure that it's really easy for you right now to go in and say like, "I love the modern platform bed and I like it in polka dot. I'm going to transact," versus... Because I think that we got to make sure the customers where we are in terms of technology, too. So, I think we're taking baby steps there, but the answer is absolutely yes. And all of that technology is fascinating to me.
Stephanie:
Yeah, completely agree. I'm definitely watching that market closely and it seems like people are leaning heavily in, but agree that until you understand how you want the customer journey to work and the product to work and everything, I think...
Stephanie:
We were just talking with someone from Lenovo who's saying that after years of being in business, you have to just start killing a bunch of things because too many things build up and it starts worsening the customer experience. So, it's probably good to figure everything out first before pulling in a bunch of new trendy tools.
Christiane:
Yeah. We need to have a really beautiful conversion rate indicating to us that the customer journey is frictionless before we can start throwing pretty complex essentially gaming ideas at them.
Stephanie:
Yup. And it would seem like you would need a pretty large catalog as well if you're going to develop an entire AR app for your company. I mean, people probably slip through placing furniture. I mean, at least that's what I was doing. I was like, bang, bang, bang, bang. I was putting in front of everywhere. It seems like I would need a pretty large catalog for that, too.
Christiane:
I think that's right. I think that's absolutely right. And so, somebody like IKEA touches every part of your house. I mean, we're too young to have that kind of SKU count. It has to be in every single category, right? You can't just have the dining room chairs, you have to have the dining room table too. So, we'll get there. We're not there today. And so, I think that you're right. That's a very good point. And so, IKEA is a layup for them. It's a layup for Wayfair as well.
Stephanie:
Yeah. Are there any specific follow ups you do with your customers to keep them coming back, or ways that you're acquiring new customers that is maybe unique?
Christiane:
What's great about our category is that design is a process, right? I mean, even if you hire an interior designer, it usually takes quite a while. And also, people are thinking about their homes in a different way than they used to. It's all these things where it's done, you live in it, and that's it. I think people are constantly upgrading or adding in seasonal elements. And so, once we know you, Stephanie, are coastal mid-century from your quiz, we can keep sending you design ideas that-
Stephanie:
Did you just see my quiz?
Christiane:
No. Is that-
Stephanie:
That's what I was. I'm like, "Did you see me?"
Christiane:
But I have a feeling. Well, first of all, I can see your personal file from our Zoom earlier today, so I-
Stephanie:
You mean, hoodie and sweatshirt? Just kidding.
Christiane:
I also know where you are. I know how old you are. I know where you went to school. But this is all I do all day long, so I can pretty much-
Stephanie:
You're good.
Christiane:
... figure it out. So, since you are coastal mid-century, I would know what to send you as a follow-up. I don't know if you have outdoor space or not, but I might send you some really cool outdoor furniture that would work with the bed you had. I will try and assist you in decorating your space, getting the home of your dreams pretty subtly until one day, you pick up the phone and say, "Hey, Christiane, will you just call me back because I want to do my entire living room?" And I will say, "Of course," and I will call you back and you'll FaceTime me through your living room and we'll decorate it.
Christiane:
But until then, I'm going to show you all the beautiful things you can have at very reasonable prices to make your space exactly the mid-century coastal dream you want it to be.
Stephanie:
That's great. It's a good process. So, to pivot a little bit, you've written a couple books and I'd love to dive into them because they're all around everything eCommerce, it seems. And so, if you want to maybe start with your most recent one or your first one, whatever one you want, I would love to hear about them.
Christiane:
Well, so I've written three books and I'm working on two other ones right now. But the first book I wrote was called Undecorate and it was really, for me, that watershed moment in design when I realized that the way people approach their interiors was no longer going to be like, "I design it. I live in it for 25 years. My kids take a few things when I die and that's the end of it." I realized that people were approaching their interiors the way they were approaching fashion. And that was largely because for the first time ever, things like Pinterest, that was right after Instagram launched... But all these things, all of a sudden, we were surrounded by content and media in a completely different way. So, you didn't have to buy a magazine to look at a beautiful interior, you got to see it all day long on your phone.
Christiane:
And so, what that did was, I believe, it raised the design IQ, not only of our audience in the United States, but globally. And so, all of a sudden, people are interested in interiors, they're interested in design history. They're interested in all these things that they weren't before and they think about their spaces in a less static way. So, I wrote that book.
Christiane:
And then, I followed it up with a book called The Finer Things, which was my first Instagram-generation encyclopedia of the decorative arts on the same day, and I'm writing right now the Instagram-generation encyclopedia of important furniture. This one's take me a long time, I think, four years to write. It's a big project. [inaudible] is the one I'm writing about furniture right now. Will probably take me between two and a half and three.
Christiane:
And then, I wrote Frictionless, which is really my first business book. Because I realized that I had started a business out of college in 2000. I grew it organically for 13 years. And if I hadn't written a book at the end of that journey, it would have been useless. It would have been fire-starting kindling at this point, because everything had changed, every single thing.
Stephanie:
It makes you wonder if you can rely on books these days anymore because, I mean, especially around eCommerce, everything's new and so quick. It's like what sources should I even look at to stay up to date with things? It's definitely probably not a book.
Christiane:
Yeah. I mean, I sat and thought what is the underlying differentiator? What makes something win or something lose here, right, if I look at all the incumbents in my industry. But just generally, what is it? What's the winner or loser? And what I realized was that it was the frictionless experience that allowed somebody to get into a, it could be a crowded category.
Christiane:
But if you can do in the least invasive way, you will win because all people want is as few clicks as possible to get exactly what they want with the commerce table stakes and have it delivered to their home and they don't want somebody calling them up with a delivery time. They don't want 37 phone calls. They don't want a helpline where nobody helps them. When you get into those scenarios, you're like, "I'm not doing this. I'm never coming back."
Stephanie:
Whenever someone wants to call me, I'm like, "Oh, can we not? And don't leave me a voicemail. Can you just text me, please?"
Christiane:
Yeah, just text me. Or my favorite thing is Slack. Just Slack me.
Christiane:
Slack is frictionless. I mean, it's beautiful.
Christiane:
And so, experiences like that, I don't know, equal parts art and science, I think is the big differentiator. We, as human people, now that we've experienced it, that's what we want. We want the Slack experience in every single facet of our life. And if it's not-
Stephanie:
No one's going back after that.
Christiane:
No, no. And if it's not that, then you're like, "Why does this suck so badly?" And then, you find the experience in that, I don't know, that milieu that you need, and you can find it. I mean, if you can't find it today, you'll be able to find it soon. And that's what every business should go after.
Christiane:
Because all the rest of it is table stakes, right, like fast and free delivery, great design. You can do those things, but to do it in a frictionless way is what's going to change your business or give you the competitive advantage you need to take market share. I mean, that's what Wayfair taught me. And when I sold to them and I understood how far ahead of the commerce game they were, it was amazing to me.
Stephanie:
Yeah, that's such a good experience. When you were doing your research for Frictionless, was there any surprises that you found or companies that you're following that were doing something surprising that you hadn't thought of? Or just a good process that you were like, "Oh, that's really neat. I can see why it works for them."?
Christiane:
There's so many nuggets in this book. I mean, I find just talking to the founder of Ixcela, she does a gut biome. You send in your... I'm obsessed with that. You send in your blood sample through the mail. I mean, the idea that we can have MIT science level help digitally is amazing to me. I mean, all of these... That is going to be the outcome of this particular pandemic because what we're realizing is that all of the things we thought we needed to do like endless in-person meetings, we just don't need to. I mean, I will never take 60 subways in a day in New York again to go to in-person meetings unless they're absolutely necessary.
Christiane:
So, I'm thinking about my life through the lens of frictionless experience. Those things, that's a lot of friction, like running around, being late, being stressed, when we don't need to do it. I mean, Zoom has also changed our lives, all of these platforms.
Christiane:
And the interesting thing is that I believe the entire world, regardless of what generation you are, just got schooled in technology, right? We all just got fully immersed in what it means to be a digital citizen.
Christiane:
Even my 75-year-old mom in Ottawa, Canada knows how to use Zoom now and thinks it's the greatest thing ever, and I'm like, "Mom, I told you so." But sometimes it takes being forced into something to realize how extraordinary it is. And now she realizes she can have all of her grandkids all over the world on one Zoom call and everybody can talk to each other. How amazing is that?
Stephanie:
That sounds very similar to my parents as well. They were teaching me how to put backgrounds on Zoom. I'm like, "Mom, I got it. But thank you." Actually, she did send me a pretty funny article that showed how to loop a video on Zoom so it looked like you were moving around and paying attention in a meeting, which I guess her... She's a teacher, so I think some of her students were doing that. They were looping themselves just moving around a few times, and it looked like they were really on board with the whole lesson.
Christiane:
Oh, my God. That is hilarious.
Stephanie:
I'm like, "That's good. Thank you for sharing that wisdom."
Christiane:
One of the partners that we're working with at The Inside, it's a very big home furnishings company and they are pretty sophisticated digitally, and all of them have a constant Zoom competition of who has the coolest background. Apparently, somebody had something like a 1980s workout video. That was fantastic last week. These guys are thinking about this on a near constant basis like your Zoom background now is a reflection of who you are and how creative you are, how digitally savvy you are. I think it's hilarious.
Stephanie:
So to zoom out a little bit, what do you think the future of online commerce looks like after the pandemic's over? Do you think things are going to shift back a bit to how they were? What kind of disruptions do you see coming down the pipe?
Christiane:
People would think "we're going back to normal," I think normal has changed. And I firmly believe that the companies that weren't thinking digitally are thinking digitally very seriously now.
Christiane:
Because as I told you, here I am in SoHo, New York and it turns out when there's a pandemic, nobody lives here. At 7:00 at night is when we all cheer. I mean, there's now six of us on my block who I see every night, and everyone else is gone. And there is one coffee shop that's open, and that coffee shop very early on had a contactless app. So, you could order your coffee in advance and then go and pick it up. Nobody touched anybody with gloves and a face mask on. I've gone there every single morning for the last nine weeks because I want to get out of my apartment and I want to see some of the world, and they have really good coffee.
Christiane:
And across the street from them is the fanciest coffee place in New York that people are die hard lovers of, and you know what, the doors are closed and they never came up with a contactless app and they never figured out how to digitally bring themselves into this particular pandemic and keep their business going. And I think that that's only like a neighborhood version of what the rest of commerce is going to look like, and not only commerce, just like service as well. I think that people are going to have to think about how to pivot their particular businesses digitally as quickly as possible.
Stephanie:
I don't think this will be the first event where businesses have to come online quickly and figure it out. And we'll definitely see the people who did do that this time and the ones who didn't.
Christiane:
Yeah, especially some of the ones that didn't and who are waiting for things to go back to normal might not make it through this. And that breaks my heart because there are fairly... You could probably scrappily do something fairly quickly, but you have to want to. And I think that people that didn't have their head in the sand... Is that what the ostrich does? Stick their head in the ground?
Stephanie:
I think so.
Christiane:
If your head wasn't in the sand, and you were iterating, or at least pivoting during this, it's going to serve you really well on the other side.
Stephanie:
Mm-hmm (affirmative). Yeah, it seems like it'll be, well, it is an environment right now where people have to learn quickly, but they'll probably look back and be like, "Glad I did that." We learned and we moved at the pace that normally would have taken us maybe on a five-year roadmap, we were able to get it done in a week or two weeks. We got pushed into that, but I'm sure they'll look back and be happy they did.
Christiane:
But also, look at the very fast category options. I look at the home furnishings category where, I don't know, it'd be those between 20% and 25% of consumers were willing to buy the category online. I think, in the last ten weeks, it went up to 60% or 70%. I mean, that is massive, world class adoption in a very short period of time. And I would imagine that that is universal across some of these categories. So, it'll be really interesting to see what happens post the pandemic.
Christiane:
But the people that are listening to the CDC won't be rushing out and shopping and going to the beach as quickly as... Some people will and some people want. So, I think that digital adoption is going to be extended, at least for 18 to 24 months, if not, forever.
Stephanie:
Yeah, I completely agree. So, before we move into the lightning round, which I'll explain, is there any other thoughts or ideas you have that you want to share?
Christiane:
No, I think we've covered up everything. I mean, I could go off... You and I are philosophically aligned that this is the way of the future. I mean, I could talk about this for days, but we need a whole Round 2.
Stephanie:
Yeah. It'll be really interesting to see what the landscape looks like in 8 to 10 months, if not, and then again in 24. Because I think you're right, I think that the people that are thinking on their feet and iterating constantly and really pivoting their businesses to be digital-first in whatever, incumbent-second are the people that are going to win here. It'll be a really fun way to look back.
Stephanie:
All right, then the lightning round, which is brought to you by our friends at Salesforce Commerce Cloud, who sponsored this podcast, of course.
Christiane:
Excellent.
Stephanie:
This is where I... Yes, they are great. They're amazing.
Christiane:
They are.
Stephanie:
This is where I ask you a question and you have a minute or less to answer. Does that sound good?
Christiane:
Sure.
Stephanie:
All right, what's up next on your reading list?
Christiane:
What's up next on my reading list? Oh, I have a really good friend in New York City who just wrote a book, Lauren Sandler, and I'm going to read her book next and it is called
Christiane:
Her new book is called This Is All I Got, and it's A New Mother's Search for Home. She is an investigative journalist. She writes for The New Yorker and New York Times. And she actually followed a single mother through the shelter system in New York. But I've just started it, it's pretty amazing.
Stephanie:
I'm going to check that out.
Christiane:
Yeah, it's pretty amazing. I'm trying to think what else? What am I reading that's like business-related? What is it? Harder Things? I just started it.
Stephanie:
The Hard Thing About Hard Things?
Christiane:
The Hard Thing About Hard Things is the business book that I'm reading right now. My editor at Harper who did Frictionless, also was the editor on Ben Horowitz' book.
Stephanie:
Oh, cool. I got to read that.
Christiane:
Yeah. I highly recommend that one.
Stephanie:
Highly recommend?
Christiane:
Yeah. I think that there are probably universal truths. And also, we're going through hard things right now. And I think it's people that are accepting and fluid in the hard things that end up being okay.
Stephanie:
Yeah, I completely agree. What's up next on your podcast list?
Christiane:
On my podcast list? Oh, my God, there's so many on my podcast list, but I'm stuck on the daily right now, if I'm honest, because, first of all, the news is so completely crazy and riveting. And also, I'm obsessed with all the COVID data. You know, I just had the test because my son was exhibiting some symptoms, and all three of us are negative.
Stephanie:
That's good.
Christiane:
Yeah, it's really good. But as a parent, the whole Kawasaki manifestation of this is very scary. Because the first bill of goods we got sold was that, "Oh, if your kids are under 20, you're fine." I was like, "Great." I don't care if I get it, I'll figure it out. But if my kids get it, I don't know what I'm going to do. And now, that's not the truth at all. So, that's generally where you'll find me. It's hard to take your ears away from the news right now.
Stephanie:
I know. Yeah. I have to, every once in a while, take a break because I have three kids under two and a half.
Christiane:
Wow. You're like me. My kids are 21 months apart.
Stephanie:
So, who do you follow in the industry or any newsletters or sources that you go to to stay up-to-date on all things eCommerce?
Christiane:
Wow. I mean, everything, like Crunchbase and TechCrunch. Oh, and I've been watching some of the podcasts, some of the live stuff on Extra Crunch. I'm trying to think eCommerce. I mean, there's just so much of it. I don't know, where else do I follow?
Stephanie:
Or if nothing comes to mind, we can also skip this one.
Christiane:
Okay. I mean, all of the above. And also, all the inbound newsletters and things like that. But just generally, the newspaper.
Stephanie:
Oh, newspaper. Okay. The last harder question is what's up next for eCommerce professionals?
Christiane:
What's up next for eCommerce professionals? Wow.
Stephanie:
Big shift.
Christiane:
Well, I think that everyone is going to have to become somewhat of an eCommerce professional first of all. I don't think digital and analog are going to be two separate things anymore after this particular pandemic, and I think that everybody out there is understanding that in a pretty profound way. I think that digital immersion is not only necessary, I mean, I think it's the only way to actually stay relevant and push your career forward.
Christiane:
Part of the reason that I wrote the book was also to try and understand being the parent of two children, what the future would look like for my kids and what does that mean for college and all these things? Because I wanted to understand 72% of people want to be entrepreneurs, and what does that mean? And so, I think that if they think about that from a digital perspective, it's actually a pretty great place to be, right? It means you're immersing yourself in the digital aspect of things. I think that it's not just eCommerce professionals, it's going to be every single professional.
Christiane:
I do think when I look at the landscape, that the content part of this is really important, right? Because even when I was at Wayfair, I mean, we did content but it wasn't merged the same way. So, your AR question I think is really important. I think that we're going to shift online for a lot of the things that we did in analog ways before this.
Christiane:
So, if I'm an interior designer, I'm not thinking about what my career looks like when I come into your house, I'm thinking about what can I learn online so that I can do it for you from a distance, right? And I would apply that to every single aspect of every single job out there. If I have an analog job, how can I digitize that? And I think everybody's going to have to think about that.
Christiane:
I mean, look at doctors are doing it through telemedicine and designers are doing it through FaceTime. You can go down every single career. I mean, pharmacists are doing it through telemedicine as well. One of the people that I profiled in the book is Eric Kinariwala from Capsule in New York. And I mean, that's a genius business because he's delivering everything from the drugstore, all of your pharmaceutical needs, anything that your doctor has prescribed, you can get delivered to your home. I'm talking to him next week, but I think he probably crushed it in this particular scenario.
Christiane:
So, I think there's no... You're not on one side of the fence or the other, like this silo in the company does eCommerce and this one does regular commerce. I mean, I think that the two now are going to be forever conjoined.
Stephanie:
Yeah, that's such a good point. Completely agree. Well, this has been such a fun interview. We definitely need to be back for Round 2. Where can people find out more about you and The Inside and your upcoming book?
Christiane:
Well, my upcoming book is at frictionless.pub, and you can get a copy of it there. It links to Amazon and Barnes and Noble and every other great book place to buy books. The Inside is theinside.com. And the rest, there's an endless breadth of information on Google.
Stephanie:
Yup. Awesome. Yeah. Thanks so much for coming on the show. It's been such a blast.
Christiane:
Thank you. Thanks, Stephanie.
There is an evolutionary process for every business, and Beardbrand is no different. When Eric Bandholz co-founded Beardbrand back in 2012, all he had was a Tumblr blog with a modest amount of followers and an Ecommerce shop selling other people’s beard products. Today, Beardbrand is a seven-figure business with multiple high selling products of its own and an entire catalog of content that customers gobble up with each new release. On this episode of Up Next in Commerce, Eric tells us how he fortified his brand, and how success in the digital world is all about going beyond offering just a product in a box — it’s about delivering value and the best possible experience to your customers
Key Takeaways:---
Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
---Transcript:
Stephanie:
Hey, everyone. Welcome back to Up Next in Commerce. I'm your host, Stephanie Postles. Today, we have Eric Bandholz on the show, founder of Beardbrand. Eric, welcome.
Eric:
What is going on, Stephanie?
Stephanie:
Hey, hey. Thanks for hopping on here.
Eric:
Yeah. I'm excited for our conversation. It's going to be a lot of fun.
Stephanie:
Me, too. You are a true brand. You're rocking an awesome beard. Just what I expected when I was hoping to see you on video. I'm like, "He better have an epic beard, or this conversation won't go well."
Eric:
Well, it was funny because, actually, I shaved it all off in December, the beginning of December, of last year. That was kind of a big deal for us. That was the first time I shaved my beard completely off.
Stephanie:
Oh, man.
Eric:
She's like, "[crosstalk 00:00:44] your beard," or something like that.
Stephanie:
How many customers did you lose when you did that?
Eric:
Well, I'd like to think that we actually added a lot of customers, because Beardbrand is not about the beard. It's about the man behind the beard. We kind of support a guy's right to grow his beard as much as his right to shave it off. I really wanted to make that point, especially today, with a lot of our competitors challenging people's masculinity by not having facial hair. We want to kind of say facial hair doesn't matter at all. It's just a style.
Stephanie:
Cool.
Eric:
We did some YouTube ads on it as well, which was a lot of fun to do.
Stephanie:
Awesome. I'd love to dive into the background of how you started Beard Brand and the story behind that.
Eric:
We're in business, I think it's got to be, eight years now we launched.
Stephanie:
Wow, congrats.
Eric:
We launched in 2012 after I had grown a beard out for about a year. What happened is, at that time, I was trying to do this graphic design business or design business, and I would go to networking events and everyone would call me Duck Dynasty or ZZ Top or Grizzly Adams. Those are super cool dudes. They've got epic stories as well. As an individual, I don't identify as those kind of guys. I've got the softest hands you could ever imagine. I never touched an axe. I ended up attending this event where I met other dudes like me who are other entrepreneurs and designers and doctors and lawyers and dads. I realized there's this whole community of guys that do not fit the traditional stereotype of a bearded guy. That was the inspiration to kind of call myself an urban beardsman.
Stephanie:
I like it.
Eric:
Beardbrand was going to be the community to unite urban beardsmen and give them the tools they needed to feel confident about rocking a beard. To us, the tools don't mean just the grooming products. They mean, videos. They mean blog posts. They mean style inspiration. They mean community. Over the past eight years, we've been rolling all that out. We've gotten an epic blog and a YouTube channel with over a million and a half subscribers. We've got a private community where we connect with people. We've put on conferences for our customers to be able to connect in person. We've really worked hard to support our audiences, support our customers. I've got two business partners. We're completely bootstrapped. We have no debt. We have no outside funding. We've been able to grow to a nice size seven-figure business.
Stephanie:
That's amazing. Congrats on all those YouTube followers. How do you think about utilizing your content to sell your products? Was that an idea and a strategy from the beginning, or was it more organic, where you started on YouTube, and then you're like, "Well, now, we have all these followers, we should launch a product as well?"
Eric:
Yeah, if we'll hop in our time machine a little bit more. We launched 2012 as a blog, a Tumblr page, which I don't think anyone's ever heard the word, "Tumblr," five years [crosstalk 00:03:53].
Stephanie:
Long time.
Eric:
We had a Tumblr page. Then, we also had our YouTube channel. This time, it was just me, as kind of a side project. I'll make a couple of posts on the blog. Then, I would just re-blog some things on Tumblr to make it look active. I think I did six videos on YouTube. It's not like, in that first year, we really built this thriving community. I think we had 300 subscribers on YouTube and just a couple of thousand visitors to our blog. It was enough that a reporter from the New York Times saw the blog and kind of quoted me as an expert.
Stephanie:
That's awesome.
Eric:
We utilized that opportunity. I convinced two of my friends to go into business with me, and said, "Hey, why don't we turn this blog into an e-commerce store?" We found a product. We started reselling it. We literally launched the website a day before the New York Times article went live-
Stephanie:
Wow, perfect timing.
Eric:
[crosstalk] a couple of days. That was kind of the spark to the business to really give us the energy to continue. Then, I had the vision that Beardbrand, the Urban Beardsman, is going to be like how Lululemon is to people for yoga or Vans shoes is to skaters. Beardbrand and the Urban Beardsman was we're going to serve these urban beardsmen. I always visualize that as apparel or accessories or clothes. I really didn't have the industry knowledge to be able to do that, and the margins are so tight on there, and some seasonality that we found grooming products was going to be that product that united the community.
Eric:
After, I guess, a year or two of failure after failure after failure of trying to get apparel up and accessories up, we finally admitted that we're a grooming company. For us, the content that we've created was more of not to drive sales. The products we have allow us to share our word more. We sell products as a way to kind of expand our voice and to grow our content, not as a way to create content to sell products. I think we're one of the companies that kind of view it a little bit differently.
Stephanie:
Got it. How do you utilize newsletters and reaching your subscribers once you have them or engaging with buyers or prospective buyers? I think I've read about some newsletter strategy that you have from day one, everyone kind of starts out in the same place to go on the journey with you. Is that still accurate?
Eric:
Yeah. We utilize Klaviyo to, I think they call it flows, where you have these series of emails that you send out when people join your email list. We've launched that, I think, in 2015. That's been really good. When you think about building a business, as much as you can automate and build systems and processes, then the more you're going to be able to scale your business and the more traction you're going to be able to gain.
Eric:
This series that we opened up with is really like an education series. I think it's a 5 or 10-part series where we teach them how to care for their beards, teach them how to care for their hair. A lot of guys still don't know how to shampoo and condition your hair. Basics like that where, honestly, they've been doing it wrong, but there's opportunity for them to improve their techniques and, ultimately, get better outcome through their journey. That's been big for us. Then, at the end of the flow, we give them a little thank you product, or free shipping, or something like that for taking the time to invest in themselves.
Stephanie:
Got it? Are there any best practices you would recommend other e-commerce sites when it comes to utilizing that newsletter or where you're like, "Conversions were high when we did this," or, "They were lower when we did this," or, "That thank you product really does help drive future sales," any insights around that?
Eric:
Yeah. A couple of things that we've found that work over the years is we have a product that is not available on our navigation. It's kind of a hidden kit that is only available to people who join our newsletter.
Stephanie:
Interesting.
Eric:
The retail value of that kit is $50. We give them a pretty aggressive price point to be able to get on board. It's kind of like a tester kit, sample kit, so they get exposure to a lot of our products. We found that that works really well because we can say, "Hey, get this tester kit, try all of our products, use these products as you're learning about the things that we're telling you, then, in two weeks or a month or whenever, when you go through the products and look to re-up them." We found that that works really well at getting people into the ecosystem and trying our products.
Stephanie:
Very cool.
Eric:
What other best practices do I have? For us, it's so much about content. I think a lot of people really err towards sales and discounts and buy from us and chest thumping. That's really not our style. I would challenge people out there to think about how you can bring value to your audience's lives. Then, if you bring enough value to their lives, then, kind of the whole Buddhism karma thing, it will come back to you. People will end up buying from you. We kind of have that outlook on the world, that if you do good things, good things will come back to you.
Stephanie:
Love that. How do you think about your buyer experience and making that personalized and unique to all your customers as they come in?
Eric:
We've invested a fair amount into our packaging to our products. The unboxing experience is nice. We use nicer primary packaging, which is going to be your bottles and your labels and your caps and all that. Then, we use nicer secondary packaging as well. When they actually get the boxes and they open it, it's pretty nice. In addition to that, we're working with our own 3PL or a third-party logistics, our own fulfillment center. We make sure that we work really closely with them that they wrap it kind of to our specifications. There's a nice little unboxing experience, a little bit of tissue paper, and a Beardbrand sticker. Then, we have what's called a thank you kit. Within this thank you kit, we have a little booklet. The booklet usually changes every quarter. For instance, one quarter, it was a book of reminders, which are kind of my nine reminders that I tell myself in life as I face adversity.
Stephanie:
That's great.
Eric:
Daily planning. It's all tied around our core message or our tagline, which is keep on growing. We're trying to, again, bring more value. You buy from us and, not only did you get great products, but we brought you a little more value outside of what the products can do. Hopefully, by delivering this experience, we can grow through word-of-mouth and loyalty and customers who want to stick around, rather than kind of going on to the next hot thing.
Stephanie:
I was just going to say I could see that adding to that viral experience by giving people those little presents that are really fun to share, then, just engaging with more customers because of that. It's really interesting to hear about.
Eric:
I'll tell you this. If you're trying to build a bootstrap company, the reality is you've got more time than money. When you're cash-strapped, you've got to think of creative ways to be able to grow the business without capital. One way to do that is word-of-mouth. You can't incentivize word-of-mouth. You have to really just truly focus on such an amazing experience that your customers want to talk about it. When you have that mentality, not only is it healthy for your business, but it's going to be healthy for your growth. It's just kind of a win-win, and the world's a better place because you're bringing that much value to the customers.
Stephanie:
I completely agree. Are there any success stories or big failures that you've had come from trying to generate that word-of-mouth and getting people to spread the word? Any advice around that?
Eric:
It's actually not a metric that we really track or keep an eye on. It's just more of a philosophy internally of just being customer first. I think, to a certain degree, you do have to integrate data. We used to include a little sample of products for people. We found that those samples weren't driving any additional sales of those products in a significant way. When you look at that, you're like, "Well, are you actually bringing value to customers if you're giving them something for free that, maybe, they didn't want or they didn't want need?
Stephanie:
How do you track that, or how did you know that people weren't really using it or that wasn't helping drive sales?
Eric:
We would send a beard wash, a little sample, a one-ounce container. Then, we would look at if there's any increase in sales of beard wash. Your data is always going to be muddy, especially when you're a company that's our size and really small. We fundamentally can't get the data. You do have to go off of a certain gap. You have to also look at, "Well, every sample is costing us," let's say, it's $1. Every order is going out, five orders is $5,000 a month. Then, if we're not seeing a boost of really $10,000 in sales to justify the cost of that, then the margin and the future order, then, you're not building a sustainable practice. Again, as a bootstrap company, you do have to think about your marketing efforts being sustainable and being able to exist on their own for a long time.
Stephanie:
How do you think about creating these marketing campaigns, whether it's YouTube videos? How much do you guys put out per day or per week? To me, that feels like it could be not sustainable if you don't have the right team in place, the right video crew. Especially right now, I'm thinking everything with COVID-19. Has it been hard to keep that content going out and recording the videos and launching them on YouTube and everything? Is it still pretty good, because it's a remote team doing that?
Eric:
It's been a really long, hard journey. To the listeners out there who are hearing our story now, eight years in is like we've had eight years to build these processes and systems and relationships. You're not going to be able to do all the things that we've done on day one. We're still cranking out about six videos a week. We've been able to do that by leveraging multiple personalities, just like you guys have multiple shows. We're kind of the same thing. It's not all on my shoulders, and worrying about me getting burnt out.
Eric:
We have four different regulars on our smaller channel called the Beardbrand Alliance. Then, we have, probably, maybe 4 to 10 barbers who will hit on to do these kind of barbershops style videos. We've been able to really spread the burden of the YouTube channel. Then, we have an in-house video editor who is constantly video editing. He's a machine. Then, in addition to creating these YouTube videos, we do a fair amount of advertising in the video form as well. We do have video editing handled by our ad person as well, our advertising coordinator. She'll be cranking out content that way as well. Video is great, man. I would highly suggest anyone listening that if you invest in video, you could have a pretty good competitive advantage in the marketplace.
Stephanie:
I completely agree. Video is where it's at. How do you make sure that your videos and your content is found? A lot of people create some really awesome stuff and then be like, "Now what? I've only had one view on it," or, "I don't know how to get people to view this video, and then take the action that I want afterwards, which is, probably, buying one of the products that I'm highlighting?"
Eric:
There's two answers to that. One answer is you pay for it. Really expensive, but if the content is truly remarkable, for instance, when I shaved my beard off, we filmed it. We created a 45-second ad on YouTube. To get exposure on YouTube through their advertising system, if the video is engaging, it's extremely cheap. I think we're paying a third of a penny per view.
Stephanie:
Yeah, that's cheap.
Eric:
A million impressions was, I don't have the calculator in front of me, what does that look like?
Stephanie:
Something great.
Eric:
Yeah. It's astronomically inexpensive. At the same time, you may not be targeting the right people. Now, organically, I think YouTube is going to be the platform to go, because of how they recommend videos. It's a little more evergreen than Facebook. There's certainly opportunity on Facebook and Instagram, but I'm not as strong on how to perform there. It comes down to, in the early days, the reality is no one's going to watch your content. You think that sucks, but the reality is it's awesome. Maybe, you'll have one person or two people or 10 people watch it. Then, you'll get a couple of comments. Well, you'll use those comments to get your content better and better and better. Then, by the time you've built a larger audience, you've kind of figured a lot of these things out, so you're not really damaging your audience. You think what you create is great, but the reality is it's not.
Stephanie:
I agree.
Eric:
[crosstalk] will be shared. By creating and by doing, you get the hang of it, you get more natural in front of the camera, or you get more natural on the editing process and telling the story. As you learn, it compounds on itself. If you're thinking about getting into organic video on YouTube, then plan on having, really, 20 or 50 videos that you want to produce before you really even see any kind of traction. I think it took us three years before we got 10,000 subscribers. Then, again, it compounds and you learn and create more content. You create more content faster that's more in line with what people want. Then, all of a sudden, we're able to grow to daily content and getting 10,000 subscribers a month. It takes time and it takes learning. There's a lot of insights in YouTube that you'll need to learn as well.
Stephanie:
I think it's really good as a reminder to kind of detach yourself from the content, because when you put something out there, it's like, "It's my baby. That was my best one yet." I remember when we were starting our company, the first couple of episodes we did on Mission Daily, Chad and myself, it didn't get any downloads. It's a brand new podcast. No one had heard about it. We didn't know how to grow the podcast at that point. I remember thinking, "That was my best episode yet. I'll never be able to do something that good again." Now, I look back on it. I'm like, "I'm very glad no one was listening to those episodes because they were not good and the audio wasn't great." It's just a really good reminder to put stuff out there more in the learning phase. Then, eventually, you can move into the really trying to find those subscribers and followers, once you get to the point where you're a bit more experienced and you've tried a bunch of things out. I love that.
Eric:
Yeah. So much of it is just the process, for a podcast, making sure you can line up those guests and you can post it early. That's hard work. It's easy to get the first one done, or maybe, the first couple and queue it up, but to also record and organize and plan is a very big challenge. Those are the things that you'll be solving when your audience is small. Then, as you solve those, that allows you to grow your audience.
Stephanie:
I agree. When it comes to solving problems when you're small, when you got the visibility from, I think, you said New York Times, and I think I read Shark Tank, when you got that visibility, were you ready? Was your website ready, your product ready, your fulfillment strategy ready? How did that go when you got those bumps in visitors?
Eric:
New York Times drove about $900 of sales.
Stephanie:
That's huge, just kidding.
Eric:
It actually is. I think we had $100 worth of product. It was nine times our inventory. Fortunately, we were able to solve all that. You have a lot of growing pains, I think. This is my first successful business. I had no relationships. We didn't know where to get our wooden boxes made. We always dealt with supply chain issues. Really, the first two years, as we were growing rapidly, it was just always like a fire was being put out. Then, eventually, we moved to quarterly planning, which has helped significantly in managing our inventory.
Stephanie:
What was the Shark Tank experience like? I haven't talked to anyone who's been on there yet.
Eric:
Oh, no. I'm your first breaking your show.
Stephanie:
Yeah, you're my first.
Eric:
That's virginity. This was 2014, I believe. Yeah, it's got to be 2014. Halloween 2014 is when the episode aired. A lot of things may have changed since that time. I know Shark Tank was really popular at that time. A lot of people were watching it. It's a very stressful process, because during the whole campaign, not only 80% of the people who go through the whole process are going to end up on the show. You could end up investing a lot of energy, a lot of time. You could pay a lot of money to build out this fancy display case. You could fly out there, step away from the operational needs of your business in a time where your business really needs this stuff. Then, do all that and not make it there.
Eric:
We always knew there is a good chance that we didn't make it there. Subsequently, we didn't put too many resources into Shark Tank. We kept our display stand, I think, we paid $300 to rent some furniture. Then, we put out some products there. It's just me going on show. It wasn't my business partners, so they could kind of focus on building the business and I just kind of focused on the Shark Tank pitch and stuff like that. Then, you get up there and it's stressful, not just because of pitching to the Sharks, which is how they make the show seem, but also knowing that whatever you do is recorded in front of seven million people. If you make a mistake, you're like, "Seven million people want to know about that."
Stephanie:
It's replayed over and over again, and reruns.
Eric:
Yeah. And, fortunately for us, I feel like Shark Tank, they did a pretty accurate representation of how I felt the conversation was. They're cutting down 45 minutes to seven minutes. They're trying to craft a story in seven minutes. Then, the hard part is all five of those sharks, they talk to you all at once and you don't know that on the show coming in. They all ask you a question right at the same time. When you see the people pitching and they're looking all over the place, it's just because five people are talking at once and they're just trying to figure out who to talk to.
Stephanie:
Wow. Sounds very intimidating. I do love Shark Tank, though. I hope to try and find your episode and see if I can watch it.
Eric:
Yeah, do it. It was a fun experience. It was like how your heart can race and go on through a roller coaster. It was really that. The whole time, it's just like the adrenaline is pumping. I'm not very good with words. I'm kind of dyslexic. I'm just hoping I'm not saying anything too stupid. I think it was a great experience all over. I think what they're doing for entrepreneurs is great, too.
Stephanie:
I completely agree. In early days, were you completely selling on your website? How much of it was selling direct to consumer versus wholesale, versus, maybe, utilizing Amazon would your sales strategy look with your brand?
Eric:
We've done a little bit of everything. We started off direct to consumer. We actually started off, as I said, as a simply an e-commerce retailer. Another people's products in the early days, until we're able to develop our own products. As we were able to get traction, we had passively, companies like barber shops and salons and pharmacists who would want to sell our products. We would kind of sell to these smaller retailers. It was never a core focus of us to bring on wholesale retailers.
Eric:
Then, we would get on the Amazon. This was the early days of Amazon. Hindsight is 2020. We probably missed a fair amount of opportunity on there. We really always focused on selling on Beardbrand.com. Amazon was never more than 10% of our sales. After a couple of years, we ended up pulling off of Amazon completely. You can't get our products on Amazon now. That's been a great decision for us. Then, we also brought in Target as one of our wholesalers. That happened 2018. Today, we're about half the retail and half direct on Amazon, and on any other market.
Stephanie:
Very cool. How do you think about separating yourself from your competitors? Not that I watched the beard space often. I don't have a beard that I know of, but I have seen a lot of beard oils coming on the market and just things focused around that. How do you separate yourself from the competitors, especially since you're an e-commerce site and you don't have a bunch of retail locations or not in a ton of places? How do you show that value on how it's different from other products?
Eric:
The reality is, you're always going to have a competition. If you have no competitors, then your competition is ignorance. We've kind of always embraced competitors and knowing that we're going to have competition in the sense that it's going to force us to elevate our game and provide such an amazing experience to our customers, that they'll have no option other than to go with us because we are the best. With that mentality, we've also come to terms with certain things, like we're not going to be the low price product on the marketplace. If that's the game you want, then we're not going to be a good fit for you.
Eric:
We try to be really clear about the value that we bring and the things that, maybe, we're not great at. There's always going to be trade off. To us, I think we do a great job because we bring all that value to our customers. Like we talked about earlier in the show, the content marketing, the education, the blog articles, the email flows, the YouTube videos, the customer service experience, the unboxing experience, I think, all of those things are what makes Beardbrand a different company and why someone would want to buy from us. If they're just some dude who doesn't really care and they just want whatever's cheap, then Beardbrand probably isn't going to be the best product for them.
Stephanie:
I like that idea of being upfront with, "Here's what we sell. If you don't want quality, then, maybe, go somewhere else to find something different." Do you market differently based on that?
Eric:
To be fair, there's other quality products out there as well. I don't think there's quality products out there that also do the education, that also do the packaging, that also do the customer experience. There's so much more to a business than what's in the package or what's in the box? I think a lot of companies get so focused on their product. Anyone can rip off your product. They can exactly copy your product. They can come down to an exact tee. Then, if that's all you're standing on, what do you have there? Then, it becomes a race to the bottom for the price.
Eric:
When you build a business, you have to think beyond your product. You have to think about, "How can I really bring value to my customers that is beyond the product?" The product alone is not going to do it.
Stephanie:
Got it. I love that. How do you think about building better business models for other e-commerce companies? I was looking at, I think, on Twitter, you had an experience with West Elm. I guess they had marked down a table. You kind of went through how e-commerce companies need to figure out how to develop better business models. What is your advice around that? Maybe, you can highlight that experience a bit, because I didn't read the whole thread.
Eric:
Yeah. A little background story. I bought that table, that table I'm actually using for my podcast studio. 25 days later, they put on a sale where I could get the exact same table, but it cost me 75 days, or excuse me, $75 less. As a consumer, that's kind of frustrating, because you kind of feel like an idiot for not waiting out. I would have waited 25 days to save 75 bucks. Personally, I don't think that's a good experience. I recognize they're doing sales, they're doing weekly sales, and some sales are better than others. To me, I feel like, have some kind of policy in place where, within a certain time frame, whatever you feel is appropriate: two weeks, a month, two months, whatever, that you can guarantee the offer that you're giving to them.
Eric:
It doesn't even have to be a money back guarantee. It could be a store credit guarantee. Then, I think that's going to encourage a lot more confidence in the consumers. Also, consumers will be more likely to buy from them again, because if you have the alternative where you're just like, "I know you screwed; you missed out on this one; you already bought it," then, it's like, "Well, next time, I'm just really going to wait. I'm just going to wait until I know there's an incredible deal," or, "I'm just not going to buy at all because I don't want to feel like I want to be made a fool again."
Eric:
You run the risk if you're running sales all the time and they're not the exact same sale. Not everyone will feel this, but some people will subconsciously be feeling this. There's quick and easy ways to really just guarantee the experience about it. I don't want to tell people how to run their business and their policy. I'm not mad at them. I'm just kind of calling them out that I think they could do better. Then, to be fair, West Elm reached out to me on Twitter and they offered me store credit.
Stephanie:
That's nice.
Eric:
You don't want to have to really fight and argue for that. You just want them to make it right.
Stephanie:
I think that's a good point, though. Also, that big brands are looking to smaller companies and the individual consumer to kind of learn from. That's a really good point of making the consumer feel good after a purchase and not having buyer's remorse. I've definitely had that experience before of buying something and then seeing a discount afterwards, and then waiting the next time, and then there's no more inventory. Then, I just never go back again. Those little moments definitely matter.
Eric:
Well, then you think about, the whole West Elm experience for me is, I couldn't do a live chat or email them about it. I had to call them. Then, I called them and I was on hold for 25 minutes. Then, after 25 minutes, they pretty much told me I could ship the thing back and then buy a new one, but shipping would not be reimbursed. Financially, it wasn't going to make sense. It's like, "Okay, this is how you're going to do it." Then, as a small company, you think that these large companies have all the advantages because they can buy in bulk and get better prices. Well, a lot of people don't buy based on products. They buy because they want to be able to reach out to you and talk with real person, not be on hold for 25 minutes. Those are the things that I want you to think about as you build your business, how you can compete with Amazon and how you can compete with West Elm and Walmart and these giant companies out there.
Stephanie:
I love that. What's one thing that you wish online sellers would start and stop doing? I'm asking you this question because I see you're big in the e-commerce community, always talking and highlighting different e-commerce stores. You've probably seen a lot of best practices that sellers do, and some things are like, "You should just stop. That's not good."
Eric:
Going back, I don't want to tell anyone how to run their business. There's a lot of ways to build a business. It kind of comes down to who your audience is and what they're okay with. A couple of things that we've always avoided is we don't want to do pop-ups. There's no pop-ups. There's no tricks. There's no immediate discounts. One of the things that is a pet peeve of mine is, "Here's a pop-up. Do you want to save 10% on your next order?" Then, they click x or, "Close out of this if you don't want to save money," something kind of condescending like that; or, with the little spin wheel. I think a lot of these has become a little hokey.
Eric:
The people selling those software as a service thing always claim that they work. We've actually cut a significant amount of our third party plugins, just because it made our websites so bloated.
Stephanie:
I was reading about that, how quick were you able to get your website down? I think I saw four seconds.
Eric:
Oh, my god. We were doing a speed test on our old website. The homepage on the desktop, I think it would have been in the 40 range score. Then, I think the mobile side would have been in the 20 to 25 range, the score [crosstalk 00:34:34]. Then, we essentially rolled out a new website template, a new website theme, killed all the third-party plugins. The new speed is now around 77 for the desktop and around 40 or 45 for the mobile.
Stephanie:
That's great.
Eric:
I don't know what that is in actual load times, but in terms of data, according to Google, it's a significant increase. Some of our blog posts would take 10 seconds to load. We really just went and found the stuff. It wasn't just the theme, too. We had some images that we uploaded, which were two megabytes in size, something ridiculous like that. It's just kind of like eight years into having a business and a lot of people putting their hands into the business, it gets a little you lose sight of things. It's always good to circle back every once in a while.
Stephanie:
I think doing that audit is really important, because like you said, after many years, people are implementing their own things without thinking about the long-term strategy of it and how it might impact things. I think, web chat is one thing where a lot of websites have the digital chat, but that increases the website's load time by a ton. Maybe, people don't even fully utilize it. They would rather call or send an email. It's good to just do that audit, I'd say, at least yearly.
Eric:
We had one of those live chats. I think it presented some issues because, sometimes, a little pop-up would block information or block the "Add to Cart" button.
Stephanie:
Oh, man. They're like, "I'm just trying to buy and you're not letting me."
Eric:
Exactly. It's just like as templates get uploaded or themes get updated, things get reverted. We killed it. We no longer have that JavaScript burden of loading. Those chat bots are fundamentally the things that slow down your page load speed the most, I've seen. We haven't seen any drop in conversion rates or sales. Then, in addition to that, the alternative, what we did is we just moved to a phone number that people can text. I think what we're getting is people who are more serious about needing advice rather than just kind of casual looky-loos who see a little pop-up and they're like, "Oh, yeah, da-da-da-da-da."
Stephanie:
I that, looky-loos.
Eric:
That's what my mom calls them.
Stephanie:
That's good. What metrics are you paying attention to most? You've mentioned conversion rates. Now, we've talked about website speed. Are there a certain set of metrics that you pay the most attention to?
Eric:
Yeah. I'm like your typical A.D.D. entrepreneur. Being in the details on a daily basis is really hard for me. Everything I do is kind of on an ad hoc basis. When it comes to YouTube, the things that we really look at are our watch time and our click through rate. They're going to be the big indications if a video is going to be successful or not. Then, on our website, really, I'm the top level kind of guy, so I'm looking at revenue. I'm looking at orders. Then, on the ad hoc level, I look at how our blog is converting, then, how our traffic outside of our blog, two of our stores is converting. Then, our page speed has been something that's been a pretty big metric for me, lately. Then, there's so many other more metrics that I should be looking into that I'm fortunate that we have team members who are looking for [crosstalk 00:38:09]-
Stephanie:
Do that for you.
Eric:
... email performance and how those are doing.
Stephanie:
Is there any themes around either video content that you put out or blog content that you've seen, certain types of videos? Maybe, funny ones convert better or more how-to blog content converts better. Any best practices around releasing content in a strategic way that will actually create a future buyer?
Eric:
Our strategy is to leverage YouTube's organic growth. To do that, you need to have the viewers want to watch more of your content and stay on YouTube. The strategy isn't really so much of, "Hey, buy this," or, "Be aware of this." It's more of get awareness of the brand. We try to integrate a lot of branding on our videos. We put our taglines on every video, to keep on growing and change the way society views beardsmen. All those call outs in the lower thirds. Then, we try to integrate product placements in our videos as well. It's just bringing awareness to it and not driving people off the YouTube.
Eric:
Subsequently, when you do that, you're less concerned with any kind of direct sales that you're getting from videos. One great plugin tool that we've used on our Shopify store is called Grapevine. Grapevine allows you to have a simple one-question survey that you put at the end of after they've purchased. We use that to say, "Hey, how did you first hear about us?" We have about 20 different options, from Shark Tank to our YouTube channel to various YouTube personalities. We found that 40% of our customers have first found out about us from YouTube.
Eric:
Being able to attribute that any particular video, we can kind of segment it a little bit. 18% of it is from our barbershop videos, which was a fair amount. Beyond that, you just kind of have to trust the process.
Stephanie:
Got it? Do you find influencers in the space? When you're talking about having these barbers do these videos, do you find someone who already has a following? Do you kind of create that following organically through under your brand? Maybe, it's someone that no one would have ever known about, but you just know that they're a great personality to do the video?
Eric:
A little of both, I would say. One of our most or one of our longest tenured relations, well, we've got a couple of long tenured relationships with influencers, Carlos Costa. We reached out to him back in 2013. He's been with us kind of since then as an influencer for the brand. Then, he's grown to make videos for us. Then, he reached out to Greg Berzinsky, who at that time, I think he had, maybe, 20,000 or 30,000 followers on Instagram. He's a big believer in the brand.
Eric:
We try to find people who really love your brand, who love the products, who love what we're doing. It's just easier for them to be excited about it. We also try to work with smaller influencers, those who are, maybe, still getting established, or who have a following because they're not influencers. Tobias van Schneider is another one. He's another business owner. He's got other businesses. He's not making money from promoting products. He's more likely to talk about our products and not ask for compensation, which is something that you need as a bootstrap company, to be able to make your dollars go far.
Eric:
It's been a little bit of that. Then, we have had employees at Beardbrand who are like, "Hey, man. Get on camera. Talk about this. You've got a great beard." They've done that. We've done a little both and have had success and challenges and both processes as well.
Stephanie:
That's very cool to experiment with all those different types of models. I like the idea of having the employees be the influencer. I know that a lot of companies in Asia are doing this. I haven't seen a lot of companies in the US fully utilizing that model of creating micro-influencers within the company, and then developing their own followings. That's just a nice organic way to do it. Having someone who is an actual expert on the product without being too salesy, because they're not a salesperson.
Eric:
We try it, too. If you look at our Instagram account, the Beardbrand account is replying to comments, you'll always see Sylvester. He's replying to him. He'll sign his name, or whoever's replying to a comment. On YouTube, they'll sign their name. We're totally in favor of get to know our people, get to know our copywriter, Mike, and get to know our growth marketer, James.
Eric:
Again, we talked about how you compete with Amazon. Amazon doesn't have a James. They don't have a Mike. They don't have a Lindsey. They don't have a Jordan. They don't have Chandler. But, we have those people. The more we can help them get to know the team. Then, the risk is if you just work with one person within your company, then, that person could hold you hostage or quit or leave or getting a DUI or do something like that. If you have 10 or 20 different people on the regular who you integrate into your content, then, in the natural course of business, as people move on and things change, then, you'll still be able to move forward.
Stephanie:
In a world where everything is becoming automated and you always know you're talking to bots, I think it's actually nice how certain business models are kind of flipping that. You're mentioning about developing a relationship with the person at the company where you are used to seeing the same name and you kind of are developing an Internet relationship with someone at the company that you trust and grow to love. I like how that model is kind of reversing a bit over the past year.
Eric:
Sylvester, who I mentioned, that's his full time job, is he runs a community. His responsibility is to build those relationships. He's heading up our private forums. He's putting on these events. He's interacting with people on Twitter and Instagram. As they chat on Twitter, and as they chat on YouTube, and they see the same name over and over again. They start to learn about him.
Eric:
In our emails, we'll have a photograph of him. We'll talk about him. We'll talk about the style. People will start to trust his input because, obviously, me as the founder, a lot of videos or a lot of views to those videos, a lot of people want to come and talk to me, but I can't interact with 40 people a day and still run the company and have sanity, really. Well, to scale up what I bring, and not only that, Sylvester's got way more incredible style than me. He's a lot more empathetic than me. He's able to really provide these people great advice in a way that I cannot. It brings a lot of joy to me to be able to offer that to our audience, and also, that Sylvester is able to do what he loves.
Stephanie:
That's really fun. To zoom out a bit, go a little bit higher level, what kind of digital commerce trends are you most excited about that are coming down the pike right now?
Eric:
Probably, the thing I don't follow too much is the trends. I feel like we just kind of fall into them. SMS is something that a lot of people are talking about, and something that we've actually been doing for a good half a year now. We do it in a way that, I think, most people aren't doing it. Most people see SMS as just another channel to market and throw sales and discounts. That drives consumers crazy. If I see someone marketing to me on SMS, I'm just like, "You're dead to me." How we're using it is as style consulting. You text us, send us a photo.
Stephanie:
That's good.
Eric:
SMS is perfect for that because you got your phone there, take a selfie, send it to us, we can tell you where you're trimming your beard, how your neckline is coming in, what your hairline looks like, and what kind of hairstyle will work for you. I think that's an excellent way to use SMS. It's funny. Once we started using SMS that way, the company we work with, Emotive, they actually changed their whole marketing position to be more about style consultants and beauty consultants, and things like that.
Stephanie:
That's funny.
Eric:
I want to take full credit for that, but I would like to say we had a little bit of influence in the way that they're selling us on this. I think that's better for the consumer as well to be able to connect with them on a one-to-one kind of consultant basis, rather.
Stephanie:
How do you make sure they stick with your brand? I can see them, maybe, not having the expertise, like you're talking about, how you're trimming your beard wrong, or what kind of product you need, because of whatever they see in the photo, how do you make sure that they stick with your brand guidelines and make sure they're speaking in the way that you want and they're recommending things correctly and not giving bad advice?
Eric:
This goes back to our core values, which are freedom, honor, and trust. Part of the hiring process is making sure that we hire people who align with these core values. Then, it's not blind faith with trust, but through experience and interactions. I know Sylvester. I know his style. I see him show up every day in the office and what he's wearing and how he's behaving and how he communicates. It's like, "Dude, man. Go at it. Be yourself." Our brand standard is communicate to our customers in a way that you communicate to your friends. Those no corporate speak, nothing.
Eric:
If you're a goofy guy, talk goofy. If you're a serious guy, talk serious. Be yourself. You are going to have different experiences. Interacting with Sylvester is going to be different than interacting with Matt. They're two different people. That's totally okay.
Stephanie:
That's great. Are there any other channels that you're utilizing or looking to utilize over the next couple of years?
Eric:
For us, our goal has been, again, going back to me being an A.D.D. entrepreneur, you try a little bit of everything. The past two years has been fixing all of my A.D.D. new channels that we've been in. We killed Amazon. We killed selling in the Europe. We've cut marketing channels. It's really how do we get better at the channels we're in? How do we get better at Facebook marketing? How do we get better at Instagram marketing? How do we get better YouTube content?
Eric:
Like I said, we have a newer, smaller YouTube channel that we're trying to grow and build that awareness. In terms of just completely introducing anything that we've never done before, like TV advertising or radio advertising or podcast advertising, we're going to be staying away from that until we feel like we've completely capitalized on the opportunities of the channels we're currently in.
Stephanie:
That makes sense. I think killing projects and platforms is a good first step to making sure that you can focus on what's actually working to, then, move into a new channel around the tryout. It sounds like a good strategy to me.
Eric:
I'll tell you, it sucks, though, when you kill something and then you don't get better at the thing you're supposed to get better at.
Stephanie:
Yeah, that's a big bummer.
Eric:
We've done that.
Stephanie:
That happened a few times?
Eric:
Yeah. When we pulled out of Europe, Europe was about 20% of our business. We did this March 31st of last year. It was about 20% of our business. The intent was with the new focus of not having to deal with multiple fulfillment centers and different time zones and multiple stores and things like that, that we could get really good at serving our customers. Subsequently, 2019 was a terrible year for us. We weren't able to capture the lost sales that I thought we'd be able to by having more focus. We've had to really analyze. It wasn't so much selling into Europe. That was the thing. I think it was more of the internal structure of our team and kind of red tape that got put in place after seven years of business and systems and processes that kind of built up on itself. We should have taken an axe to all of that, rather than, maybe, potentially taking an axe to the UK channel.
Stephanie:
Got it. Is there any big initiatives that you undertook that you were like, you talked about internal processes and structures, is there any one thing that led to kind of riding the business back to where you wanted to go after the whole shutting down Europe?
Eric:
Yeah. Transparently, we had the worst fourth quarter we've ever had. It was a bloodbath. We were just losing a significant amount of cash and just burning through cash. We just had to make hard decisions about the business. When you're hemorrhaging money, you're not profitable, we had to scale back to 15. A leaner team means, "Hey, we're no longer going to have people proofing your work anymore. You're going to have to be responsible for your own work-end. You're no longer going to have someone who's kind of being the quarterback of the marketing team. You have to kind of interact directly with your audience, or your coworkers." By scaling back the team, you were almost, by necessity, forced to cut a lot of that red tape and focus on getting stuff done.
Stephanie:
Super important. All right. At the end of the interview, we'd like to do a lightning round, which is where I ask you a question and you have under a minute to quickly answer whatever comes to mind. Are you ready, Eric?
Eric:
I am electrified.
Stephanie:
Woo-hoo. All right. What's up next on new product launches coming to Beardbrand, if any?
Eric:
Our big thing is killing scent confusion or ending scent confusion. We want to provide head to toe fragrance and matching products. We don't have anything in your midsection. That's a little hint of a product that will be coming.
Stephanie:
Fun. I'll have to stay tuned for that. What's up next content or video-wise that you're excited about producing or creating next?
Eric:
We want to systematize our barbershop and winding in five different barbers and record over the course of a week, which would be a new way for us to perform. I can't wait to do that, but, this whole quarantine has got to end first.
Stephanie:
That sounds really fun. What's up next on your reading list?
Eric:
I hate reading.
Stephanie:
Podcasts, audible, anything?
Eric:
I hate reading. I'll tell you I just finished the book called Rocket Fuel which talks about integrators and visionaries. It was the one book that I've read over the past year. I'm just going to piggyback off of that one.
Stephanie:
I don't like it. What's up next on your Netflix queue?
Eric:
Again, man, I just had a baby five weeks ago.
Stephanie:
Congrats. Me, too.
Eric:
Oh, no way.
Stephanie:
Yeah. I had twins eight weeks ago.
Eric:
Oh, poor you.
Stephanie:
Poor us.
Eric:
It's got to be crazy, right? We're in the quarantine.
Stephanie:
Yeah. No Netflix for us then, huh? I don't know. I watch Tiger Kings in my off time when they're sleeping.
Eric:
My answer is a lot of primitive survival type of videos on YouTube. That's my go-to content that I consume.
Stephanie:
That's great. All right. A little harder one, what's up next for e-commerce pros?
Eric:
I think there's going to be a move away from Amazon from both a consumer perspective and a seller perspective. I think Amazon is really kind of twisting the screw in a lot of people. There's going to be a little bit of blowback from that.
Stephanie:
Completely agree, especially with everything going on right now where Amazon's picking what products are essential. I think they just said that they are going to be optimizing for its margins. Instead of showing people, maybe, what they want to find, they're going to be showing people products that have higher margins. I can see that also happening.
Eric:
They're also neutering a lot of people in the affiliate space where they just literally cut their commissions in half.
Stephanie:
That's not good.
Eric:
[crosstalk 00:54:51].
Stephanie:
Well, it sounds a good prediction, then.
Eric:
Yeah. Less people will be pointing links to Amazon, I think.
Stephanie:
All right. Any final words of advice or wisdom, Eric, that you want to share before we hop off?
Eric:
The big thing I always like to tell people is, in life you always have doubts and questions about what you need to do. The reality is you need to just go out there, execute, and do it. Action, a lot of times, is better than no action. Just go out there. You know what you need to do. Go and get it done.
Stephanie:
Yes, do it. All right. Thanks so much for coming on the show, Eric. It was a blast. See you soon.
Eric:
My pleasure.
The alcohol industry is worth more than $250 billion in the United States, but the bulk of that money is being raked in by the biggest corporations and distributors with very little room for independents to break in. But Haus has found a way to be a disruptor. On this episode of Up Next in Commerce, Haus founder Helena Price Hambrecht hopped into her recording studio (AKA her car outside the Haus warehouse) to explain how her small aperitif company has taken advantage of deep industry knowledge, organic growth, and the complete ownership of the supply chain to build an Ecommerce-based alcohol experience that the younger generation is embracing.
3 Takeaways:
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---Stephanie:
Welcome everyone to another episode of Up Next in Commerce. This is Stephanie Postles. And today we're joined by Helena Price Hambrecht founder at Haus. Helena, should we call this a happy hour episode even though it's only 11:00 AM.
Helena:
Every hour it can be a happy hour.
Stephanie:
I think so too. So tell us a little bit about Haus. I was looking into it and it looks like a really fun brand and it already was getting me excited with some of the new products you were launching. I think one of them was called Lemon Lavender that, like I said, I was ready to order at 11:00 AM. So I'd love for you to detail a bit about your company, and your background, and how you started it.
Helena:
Yeah, so Haus is an alcohol company. We launched with me and my husband. We co-founded it together. His name's Woody. We live on a farm in Sonoma County and we joke that it's very much the product of a techie marrying a wine maker. And our goal is to create the next portfolio of alcohol products that reflect how our generation drinks and what they care about in food and beverage.
Stephanie:
Very cool. And how is Haus different from other spirits brands or liquor brands or wine?
Helena:
Oh God, where do I begin? I think it's interesting because most people don't realize that alcohol can be better than it is. Right? I think alcohol has gotten a pass for a long time because it's a vice. And I think people can just assume, "Well, it's bad for me. So doesn't ultimately matter what's in it because it's just bad." And corporate alcohol has kind of run with that for a long time. So a lot of the products that you're drinking are worse than you think. You're feeling bad, you're feeling hung over when you drink and you think it's just because it's alcohol, but alcohol is only a tiny piece of that puzzle.
Helena:
In reality, corporate alcohol is made with things that you just wouldn't believe, take wine for instance. You can intervene in your wine production with milk, and eggs, and clay, and fish bladders, and artificial flavors, and tubs of processed sugar. You can engineer it to taste good, but it's going to make you feel horrible. It can be made with grapes that are full of pesticides. Your favorite whiskey might be full of petroleum-based, caramel coloring. It's kind of a racket. And we're a generation that's cared about where our food comes from, where our beauty products come from, is it organic? Is it locally processed? Is it responsibly made? For some reason, alcohol has gotten a pass and we wanted to raise the bar. So we approach things very, very differently.
Stephanie:
Very cool. So it seems it'd be very difficult getting into the alcohol industry. I was reading a little bit about the three tier system where distributors and bartenders are the gatekeepers and they tell you what to drink. How did you have the courage to get into that industry? And then how were you actually able to become the only direct consumer spirits brand?
Helena:
Yeah, so I mean, it's really Woody, right? I used to work in alcohol industry, but as a bartender. I wasn't really deep in the production side of it until I met Woody. And Woody is a great farmer. He's been running the family's grape farm for the last decade and he also makes wine, and was making aperitifs when I met him before Haus. And he was doing everything right as a independent wine and spirits guy. His products were in the best bars and restaurants in America. They were in the best cocktails in America.
Helena:
But because of the three tier system, which is pretty much controlled by corporations, you don't have a lot of leverage as an independent brand. So you don't really have control over how your product is used and Woody would just find that he was a little sprinkle in a fancy 10 ingredient cocktail. So while he could name drop his full accounts, he wasn't moving any product, the drinker had no idea who he was. I was observing this and thinking, "Man, this is not a great way to build an independent brand." And the more and more I got to know the industry, the more I got to know the three tier system, which it's a hundred year old prohibition era laws.
Helena:
For those who don't know the tiers, which I would assume you don't, it's just distributors, producers, and retailers. So if you're a producer, you have to go through a distributor to get your product into bars and restaurants. And then bars, and restaurants, and retailers then sell to the drinker. Unfortunately, the way the laws have been designed, it's actually allowed corporations to just be in cahoots with distributors. So corporations ultimately decide what you're drinking and it's why you're still drinking Jack Daniels, and Gregger's, and Absolut and you've not really heard of any other brands that are playing in the liquor space.
Helena:
So for us, we didn't know that there was a way to go around the system. And I started doing research because I was curious about just how our generation was drinking, what were we looking for out of alcohol? Because I was certainly looking for a better alcohol experience. And I saw a huge opportunity. Like I said earlier, millennials are looking for better made products. They care about their health, and their image, and authenticity, and transparency, and convenience. And when you looked at what alcohol was doing, it was almost nothing. So I was really complaining to Woody about this, saying, "Gosh, what a shame that you can't build independent brand, like a Glossier or an Everlane of alcohol because of the three tier system and you have to go through the distributors." And that's when I said, "Actually, there's a loophole that I never thought about until this moment."
Stephanie:
Dun, dun, dnn.
Helena:
Yeah. If you're an aperitif, you're typically in the liquor category. You're federally regulated like a liquor. You can't sell direct to consumer. You can't go online, but if you're under 24% alcohol and you're made mostly of grapes, which is a loophole you would only know about if you're a great farmer who makes great base aperitifs, you can go around the loss, you can go direct to consumer, you can sell online. And it just had never occurred to anyone to use that loophole to build a direct to consumer alcohol company.
Stephanie:
So no one else in the industry found that out until you guys did and you're the first ones to actually be able to sell to consumers directly because you leveraged that loophole?
Helena:
Yeah. And you know what? We thought that we'd stumbled upon a treasure and that, "Oh my gosh, when other people find out about this loophole, we're going to have competition, which would be fine." But when we were pitching it to folks in the alcohol industry, they thought it was a stupid idea. They could not understand why we would want to go direct and why we would sell online. People are so used to doing things the way that they've been done forever and they just couldn't process that we thought that we could just go on the internet and create a brand and sell something to the drinker because it had never been done before. Over and over and over again people were just like, "Why would you do that? That's stupid."
Stephanie:
Yeah. That's awesome. And this loophole also lets you guys have a brick and mortar store, right? Whereas you would never see a Jack Daniels store on the streets of New York. But you all could open one if you wanted it to, correct?
Helena:
Exactly. Yeah. We could open two different brick and mortars in California today. It's state by state. Every state has different laws and it's still kind of a nightmare to navigate. But yeah, we can do so many things that other brands and liquor space can't do. We can be sold without a liquor license. We can sell online, we can do a wine club style subscription service. There's just this whole world that opens up to us. And we were the only people that decided to try it.
Stephanie:
That's amazing. So what was the first steps looking like when you started Haus and you were thinking about building the website and the experience, like the buyer experience? How do you think through designing that process for consumers who have never done that before?
Helena:
Yeah, and that was the challenge, right? It's like as a brand, one thing we had going for us was we weren't just two people in class who had an idea and had to create a backstory. The backstory was there, right? We were people trying to solve our own problem and a problem that everyone we knew was having and that was great. And we live on the farm and we make it ourselves, and all of that's hopeful as a brand. But the real challenge that we had was how do we take this type of liquor aperitifs, which has been in Europe for over a century ... it's a style of drinking that's very common in other parts of the world, but is relatively unknown in America. How do we take this type of liquor and make it mainstream? Without having to pitch people in person just through the internet, how do we very quickly educate people on what this is, the problem it's solving, convince them to buy it, get them to get their friends together and drink it together? So that was a challenge.
Helena:
But for us, our goal was to just approach it as education, right? And bake education into as many touch points as possible, not just through copy on the website, but through photography, through editorial, through different touch points post-purchase, in the packaging. It was really about how can we make the most of every single touch point that this customer has with our product so that by the time that they receive it, they deeply understand it and where it lives in their life.
Stephanie:
Yeah. I could definitely see the difference from your photography versus a lot of other e-commerce companies. I could see that you were teaching the buyer how to enjoy Haus. I think one thing I saw was as you went from page to page, you had a couple images flash showing how it's being enjoyed at the table, sitting on the table with a bunch of friends. It was very different than the typical product images with the white background and no one really having a good time with it. How did you know to utilize that imagery to encourage that buyer behavior to then hopefully spread the word about Haus?
Helena:
Yeah, that was a very conscious decision. So my background's in brand. Before Haus, I had a production company that did everything from visual brand strategy to producing commercial campaigns including photography. So when we thought about photography for Haus, first things first, I didn't want to do what every other direct to consumer company at the time was doing, which was product on a plain colored backdrop, very simple, very polished, very digital looking. It didn't feel right for us because there was no context, right? Haus isn't supposed to live on a seamless backdrop in a photo studio, Haus is supposed to live at your dinner table. And it just felt like a missed opportunity to show the customer where Haus belongs.
Helena:
And that type of photography of the product on a plain backdrop, that exists for a reason, right? It performs well in paid. It's very straightforward. People can physically see what they're buying. And, in an era prior to now where paid drove most direct to consumer growth, it makes sense that people use what performs well. But for us wanting to grow organically as much as possible, we didn't care so much about that sort of metric and for us the priority was way more about how can we use this opportunity to just show people exactly what they should be doing with the product. And that's really how we approached it.
Stephanie:
That's awesome. And are there certain metrics or data and analytics that you look at to see what's performing well and what's not or how do you think about success when it comes to utilizing a different kind of buyer experience?
Helena:
Yeah, I mean, in the beginning up until December we were 100% growth. And that's hard to measure, right? There's no real way to examine where those customers are coming from. There's not a whole lot you can do with that data, which makes it very daunting for most companies to pursue. Right?
Stephanie:
And you said a 100% organic growth, right? You cut out there for a second.
Helena:
Yes.
Stephanie:
Okay. Got it.
Helena:
And now we're experimenting with paid and now about 20% of our customers come from paid. But for us, we're still a primarily organic company. So I think for us it was more of a philosophy and some hypothesis around our product and how it could spread, right? Our product is something that is inherently shared, right? If you're having a drink, you're very likely having it with another person, you may be having it with a group of people and that's certainly the customer that we were going before. So for us, we wanted to make sure that the product and the customer experience was so stellar, which sounds common sense, but it's not necessarily, especially when you have limited resources that you have to put into certain buckets. We put everything into product and everything in the customer experience so that when people received that product, they gathered their friends together, they shared it with their friends, they all had an amazing experience together, and then all of those friends went to buy a Haus. So that was this organic flywheel that started taking off. And our growth was through word of mouth.
Helena:
We also prioritized press quite a bit. My first career was in PR, running comms for startups. So I'm a big fan of working with press to tell your story because, you can tell people what to do all day, but people are going to really listen when someone else tells them to go buy your product and that it's great. And press is also hard to quantify, right? A lot of press doesn't actually tie to purchases. It's more of a long game of having this validation and the customer being able to come to your website and see that the New York Times, or GQ, or Vogue said that you were good. So it's one of those things where a lot of what we pursued in the beginning birthwise was really hard to quantify and it was also kind of long game. So I think it rests outside of the comfort zone of a lot of founders and a lot of growth managers because of that. But it worked so well for us and it continues to work well for us.
Stephanie:
Yeah, it definitely sounds like it. How do you think about leveraging press? Because when I think about that, it seems like there's a lot of agencies and companies who are ready to do a PR release and tell you that they're going to get you press. But then afterwards you're like, "Oh, what did it really get me?" And a lot of people maybe can't get on the Vogues and the bigger name brand sites like that. How did you pick out strategic places to be seen and found? And how did you even get those relationships to get that press?
Helena:
Yeah, I mean, it takes time, right? There's plenty of people that I wish were writing about us and they still haven't. But for us, my philosophy since my early '20s when I was doing comms is like you can't expect anything from anybody immediately, right? Because even if the person writes about your beat, even if it's obvious that they would find your product interesting. You just don't know what they're going to be writing about for the next year. And maybe they're not going to be writing about anything where you're particularly relevant and maybe they don't break news, maybe they're writing trend pieces. A lot of the media relationship building that I've done over the last decade and that we continue to do with Haus is about just getting on people's radar and not wanting anything upfront, not being so transactional about it, and just saying hello, sending them some information about Haus or your company, sending them samples of it, any new products as you release them.
Helena:
There's a lot of parallels I think between media relations, and fundraising for those who have fundraised where building relationships with investors is similar, where a lot of times it's just reaching out over and over, being like, "Hey, hope you're well, remember that thing that we said we were going to do, we did it. Check it out. It's pretty cool." And not expecting anyone to immediately do something about it, whether it's write you a check or write a piece about you. If you have news to share, you can always pitch it and formally ask if they're interested in writing about it.
Helena:
But I think approaching it more casually and again, really thinking about the long game, helps forge a more authentic relationship as well, where they are people and if they're interested in your space, you probably actually have a lot in common, you could probably be friends. And if you just treat them as a person who's interested in a space that's similar to you, then it's just going to be a much healthier relationship versus only reaching out last minute when you want them to write about you right now. It's just not going to happen.
Stephanie:
Yeah, that's such great advice. Be persistent, but don't be annoying. So how do you think about selling something on a website that a lot of people want to experience? I know you just mentioned samples. Do you see samples working well to get people to come back and buy? Because I've heard mixed experiences with that from a few of the guests we've had on the show. Some people completely took samples away because it wasn't working. Other people said it worked well. What's your experience with having the buyer be able to try before they go too deep into the buying experience?
Helena:
Yeah, well, we don't actually do samples for our customers. We have a starter kit that are two smaller bottles of two of our flavors that people can buy. And that's definitely a popular first purchase. I think for us there was a risk to selling smaller form factors direct to consumer, right? Like the margin is lower, it's just not a productive purchase from a business standpoint. But we released those smaller sizes because we saw a behavior where when people would buy even one larger bottle of Haus, they would come back and they'd buy more. Their next purchase would be two bottles or six bottles. So for us, there was that confidence because we had the data that showed that people that bought that first smaller size, they would come back and they would buy something bigger. So that's worked for us. I think if we were losing money on it, we wouldn't do it. But we still make a decent margin on our small sizes. So for us, really the challenge was how can we give people the best idea of what they're going to experience?
Helena:
And part of that was us being really thorough on the site, just explaining the kind of flavor components, what they can expect, showing the ingredient list, showing the nutrition facts. And then reviews have also been really useful for us where we work with Yoko. And for that it's been great for someone who's on the fence to go and read from 50 people who tried the product and liked it and talk a little bit about their experience. But ultimately, it's still a challenge for us. We're exclusively an online company. This is kind of a great problem to have. It's a problem that most companies want. But when we last looked at our newsletter, 70% of our newsletter subscribers who open our emails, and read our emails, and love the brand, they haven't bought yet a Haus yet. So it's an interesting phenomenon where people like the brand, and they're interested in it, and they're thinking about trying it one day, but they just haven't pulled the trigger. Though what we've seen with COVID, a lot of those people are starting to pull the trigger.
Stephanie:
Got it. And what are you including in your newsletter because that's unheard of to have a newsletter for a brand where people love the newsletter, but maybe haven't tried it yet. What kind of content are you putting out there that's pulling people in so much and how are you thinking about converting them in the future?
Helena:
Yeah, I mean, it's nothing crazy, right? It's not like we've built some robust editorial platform. But we share recipes, we share behind the scenes, we share occasionally elaborations that we do with other brands or people in the food and beverage space. It's nothing that's too robust. We haven't put a ton of resources into the editorial side of our business yet, but we are very careful to not be too promotional or too self serving and really make it something that people are going to enjoy looking at and enjoy reading even if they aren't actually drinking Haus right now.
Stephanie:
Got it. That's awesome. Are there other brands in the e-commerce space that you look to, to either learn from? I know I read that you've described Haus like the Warby Parker of booze, so are there people that you are inspired by, that you test out maybe different website models or AB tests or what are your content that you're releasing that helps iterate that?
Helena:
Yeah. Oh my gosh, it's so many, right? Like the Warby Parker analogy came from Luxottica outright who Warby ultimately disrupted and Luxottica feels very similar structurally to what you see in the alcohol industry. I mean, Away is one of the kind of OG brand branded did such an incredible job of building a movement and building a community around something that wasn't considered very sexy prior to Away. And they did such a great job with curating content and working with their community on photography and they did such an incredible job. Glossier does an incredible job. I love that they started editorial first and they really focused on building a community that was very, very different than what you saw in the beauty community. And they utilize channels in a very different way than other beauty brands did. And that really came to help them. I think the bottom line is really focusing on creating content that serves the customer and makes them really excited to participate with your brand. And for every brand, that's different. But it's finding that thing that gets your customers really, really energized and engaged.
Stephanie:
Yeah, I completely agree. Are you focused on a certain demographic or are you trying to pull maybe a demographic who's always been used to going after the name brands, are you trying to also pull them away and try something new?
Helena:
Yeah, I mean, our initial demographic was a hunch based on us, on our own personal use case and how we came up with Haus. We made it for people who drink quite a bit, and they're out and about, and they're building their careers, and they're networking, and they're at events, and they're catching up with friends, and they're going on dates, and they're around alcohol a lot. Right? Like we're not going for the kiddo person. We're not going for the super, super health nut, we're not going for sugar-free people, we're not going for people who are trying to get sober. We're going for people who love to drink, but they have certain values that they apply to other industries like food, and beauty, and their clothes and they just didn't know that they could have those same standards for alcohol. Right?
Helena:
And those people, our hunch was that they lived in urban areas, large and midsize cities, they were career focused, they were probably millennial though the age range extends beyond that. Gen Z also exhibits the same kind of behavioral demographics and they're starting to turn 21, definitely early adopter types have some sort of aesthetic sensibility. And we had a hunch that there would be overlaps between us and other direct to consumer brands. And so far that seems to be correct.
Stephanie:
Yeah, completely agree. So something else that's really interesting about your company is that you guys are a fully vertical company, so you own everything from the production to the distribution. Can you speak a little bit towards how that gives you an advantage when it comes to launching new products and how you even came about thinking like, "I'm going to do everything." Instead of going with a more traditional model of sourcing things. And I mean, you said stuff came from your farm, like the ingredients and whatnot. That's insane from thinking about how other alcohol companies do things. So I'd love to hear a little bit about that.
Helena:
Yeah. It's not normal for alcohol and it's not normal for direct to consumer, right? Take Warby Parker for instance, who's like the OG in the direct to consumer space. I mean, take most direct to consumer companies. The advantage to being direct to consumer in the beginning was not owning your supply chain and being able to go and work with vendors that you own the brand experience and the purchasing experience and you're able to take a brand and make it a thing. And, and so for us, we wanted to take a very different approach for the most part because we knew how to do it, right? Like we're good at it. We make aperitifs already, we have the warehouse, we have the farm, we have the infrastructure. So we didn't want to outsource that to anybody else.
Helena:
But we also had a hunch that being fully vertical would give us a huge advantage from a product development standpoint. We could super nimble, we could iterate every day if we wanted to based on customer feedback. We could launch new products quickly, we can kill them quickly. We had a lot of abilities that other companies wouldn't have. And then we would also be prepared for any sort of supply chain curveball that comes our way. Right? The only thing that we don't personally own is making physical bottles. So we always have to make sure that we're prepared and have inventory for an inflection point. But everything else we do ourselves, right? We make it, we bottle it, we ship it.
Helena:
And so for us, we of course never expected a pandemic sized curve ball, but it was the ultimate test, right? And we're one of the few companies that haven't been impacted at all by the pandemic and we were even able to release a ton of new products during the pandemic. So it's one of these moments where we made some philosophical bets early and we didn't know how exactly it would benefit us, but we had a feeling that it would longterm and it's benefited us in a massive way now.
Stephanie:
Yeah, that's great. It seems like it's very opposite from what a lot of brands and companies and e-commerce companies are doing right now where everything's about outsource that and only take care of the front end part of it. So it's really nice hearing about someone jumping in and doing the whole process. Are there any learnings, or best practices, or failures you've experienced when setting that up?
Helena:
Yeah, for sure. I mean we've definitely made some mistakes on the production side, but the beauty of it is if you accidentally leave a hose open and the product pours out all over the floor, you just start over and you make it again. I think for us, the biggest learning curve was the one part of our supply chain that we didn't own, which was bottles. And again, this industry has its own politics. It's pay-to-play, it helps to be owned by a corporation. And so it took us some effort to be taken seriously by a bottle vendor because we were a new brand. We didn't have the backing of Diageo or Pernod. What were they to expect us to do? Right? Even if we were like, "We're going to be big." How are they supposed to believe us?
Helena:
So we were sold out for most of the first two months of our existence because we just couldn't get bottles. They just wouldn't take us that seriously. And it got to a point where we had to say, "How big of a check do we have to write for you to believe us?" So the downside of that is you have to buy more bottles upfront than you may have wanted to. But again, in a time like this, during a pandemic, we're really happy to have made that.
Stephanie:
That's great. So when it comes to the pandemic, I saw that you were able to quickly shift where I think your profits were going. Do you want to speak a bit about the initiative that you have going on and how you were able to quickly pivot because you own the entire process and supply chain?
Helena:
Yeah, the pandemic has been a roller coaster for everybody, us included. In February, we saw that it was calming and potentially already here, which it was. So we had to do worst case scenario planning, right? Like, "Okay, what if the economy bottoms out? What if nobody's buying anything? What if like every direct to consumer company burns to the ground?" So we did a deep dive in our P&L and we cut a lot of costs that kind of felt more like nice to have versus must haves. We luckily didn't have to fire anybody, but we wanted to just make our business very core, very nimble and that ended up being a good decision regardless.
Helena:
But pretty soon after, our business started growing and that's due in a large part to e-commerce growing, it's due in a large part to alcohol growing. We happened to be the one alcohol company that directly delivers to your door and the press started writing about us because of that. So there were a lot of domino effects from being in this space. And we were also starting to see a lot of efficiencies around paid, so we were putting more money into that. There are a lot of things factoring in, but long story short, we were growing, like our business right now it's up more than 500% than it was in January.
Stephanie:
Congratulations. It's amazing.
Helena:
It's crazy. And so for us, obviously that was a huge relief knowing that we didn't have to let anybody go. We could continue building the business. But there was definitely a question of this pandemic is way bigger than us, right? It's something that we're all going through as a society and it feels a little strange to be wholly focused on yourself, especially if you're doing well. And so for us it was really thinking about the rest of our industry, right? We're in food and beverage and not everybody is faring as well. Restaurants in particular, they are in huge trouble. They're a very low margin business. They're a labor of love. They are a beautiful industry, but largely they're traditional, right? And they don't have alternative revenue streams. They're serving only local walk-in patrons, so they're in huge trouble.
Helena:
And we took a step back to really think about like, "Okay, we could just launch a campaign or something like that." But that didn't feel right. There was too many of those already out in the world and it just felt overwhelming. So we thought like, "We have infrastructure, we have a warehouse, we have a production facility, we have resources, physical resources. How could we use the tools that we have to help others in our industry?" And pretty quickly we realized if we ... obviously we had to test it with them and see if they were into it, but if we made a product for restaurants, like if we made booze with these restaurants, use the chef's vision, the chef could direct it because that's very important to a restaurant. They don't want to promote someone else's group product.
Helena:
We could make and ship booze for them that's their recipe and we could donate the profits to the restaurant, which is a healthy margin. We could make a significant impact on their business. So we tried it and we got signed on from a bunch of the best chefs in the country, partially because of our connections and connections of our investors and our friends. And now we're making 13 new products this month. And we're sending a lot of money to restaurants. I think at this point, we've probably sent like $80,000 to restaurants and we're still in the preorder phase. So it feels good.
Stephanie:
That's great. Is this the first time that you've had someone help influence the ingredients to create a new product? Like you're mentioning how the chefs are creating their own. Is this the first time you're trying out this model or have you always had help from the industry when it comes to new products?
Helena:
No, Woody's done everything himself. So what is this magical man who is such an artist and he has a vision and he's really, really good at making wine and aperitifs. So all the products were his vision and then this is still very much a collaboration, right? It's like these chefs don't have experience making alcohol, so they talk to Woody, they share their vision, right? Like what they would love for it to taste like and ingredients that they would like to feature. It's a very similar collaboration between a chef and their kitchen, right? They give the vision, the kitchen executes it, and it's similar here where Woody can take that vision and then he can play around with the recipe and different combinations of ingredients to get somewhere that he thinks is up to par. Then he sends those samples to the chefs, the chefs give some feedback, whether that's like, "Oh, it could use some more acid." Or, "Maybe a little sweeter." Or, "I'd like to taste more of this particular fruit." And then and then it's done.
Stephanie:
That's great. Do you see that kind of partnership continuing even after the pandemics done? Because it seems like a really nice way to have like UGC content or alcohol created for you and then creating those partnerships could only help scale all the different products that you have with the help of other people who have a specific idea in mind. And then you have a buyer from the start.
Helena:
Oh yeah. It's a win-win for everybody, right? It's like these restaurants have a new form of revenue, which is great. It allows them to monetize their audience, which is for the most part national or international. They're just collect revenue from a much, much bigger group than they could four. And we've made these products, they're so good. These are incredible aperitifs. It feels like a new frontier for alcohol in America. It's really exciting. And so for us it's great that we can collaborate with these chefs to make these really unique recipes. So I wouldn't be surprised if we added most of them to our permanent store after the project is over because they're just awesome and this makes sense. It's a win-win.
Stephanie:
That's really fun. So to zoom out a little bit, go a little higher level, what kind of trends do you see coming to the e-commerce industry or what are you most excited about right now?
Helena:
Yeah, I mean, I have a feeling that there's going to be a new level of scrutiny applied to direct to consumer, right? This is a real moment of reckoning for a lot of companies where if you can't do business for a month, you have to shut down or you have to lay off a majority of your workforce. It's probably not great that supply chain is so fragmented right now. And I think there's also at the same time a bit of brand fatigue that was already happening prior to the pandemic where there's so many direct to consumer companies being made right now where the founders don't actually have much expertise in the space. Right? They just had the idea, they were able to get venture capital because they're connected in that world, and they were able to launch a company. And they can put all that money into pay it, and they can acquire a bunch of customers.
Helena:
But the problem with not knowing your space is that you're not able to iterate quickly. And it seems like we're about to enter a world where we just don't know what curve balls we're going to see. Right? Like international trade is a bit testy right now. We may see people become a little bit more nationalistic in terms of supply chain. We don't know. So I think at the very least we're going to see more money going to founder teams that have at least one founder with deep, deep industry experience, whether that's a generational family heritage or whether it's a decade plus of experience in the industry because you at the very least need the connections on that side of things to have leverage, right? You may not have to own it all yourself, but if you don't have any real leverage in that world, then you're toast. So I think that's going to impact a lot of what brands, not just survive right now, but what brands get funded in the future.
Stephanie:
Yeah, completely agree. It definitely feels like we have been in an environment where it's like just try and create a quick MVP and see if it works and if not, go on to the next one and keep trying until you find one that maybe works. And I think that's a really great point of you should probably have some kind of deep expertise in whatever you're going into. Because one, you have to love it for a long time if you're going to actually follow through with it and being good at something probably means you're going to have a good business as well.
Helena:
Totally. Yeah. I mean, it's like, of course it goes good when it's good, right? But at the end of the day, it's not just about product market fit. If you don't have real control over your life business and how your product is made, then as soon as a curve ball hits, you realize you're just as fragile as any other business.
Stephanie:
Got it. Yeah, completely agree. When it comes to someone either launching a new product or building a whole new business, what's one thing that you would suggest for them to try out based on the success that you've had from your store?
Helena:
I mean, again, it sounds like obvious, but it's not, I would put so much more effort into product than you may feel comfortable with. It's riskier. It takes more resources. But in consumer, I just don't think that MVP is going to cut it anymore. So in a time where paid right now is performing well, but ultimately we're in a postpaid world. We're in a post soft bank high growth venture capital world. People have to start taking organic growth more seriously. And the easiest way to do that is to have a product that's good, and tastes good, and feels good, and looks good. It's one of those things where it feels easy to cut corners up front, but you really only have one chance to make a first impression. And those first impressions, they carry the weight of viral growth. So I would really put more resources into that than you're comfortable with and it'll pay off.
Stephanie:
Yeah, completely agree. And I saw you all doing that in your unboxing experience. Do you want to talk a little bit about that buying experience and how you thought about creating something that would ... you would make something that would be socially shared potentially, like a pretty box, a pretty bottle? I think you were putting different pamphlets and stuff inside that people actually wanted to share. How did you think about creating an experience that would go viral like that?
Helena:
Yeah, I mean, it's pretty amazing to watch how much the bottle and the box is shared because we haven't asked anyone to share it ever, and it just keeps getting shared. But again, I think for us it was about like, "Okay, all of these touch points are important to the person." Right? Like they're not just buying an aperitif, they're buying an experience. They're buying even a good website experience. They're buying a good post purchase flow. They're buying a good unboxing experience. They're buying a good bottle. All of those things are just as important in direct to consumer as the actual liquid in the bottle. So for us, we put a lot of effort into the glass bottle. We wanted it to look beautiful in your home. We wanted it to feel good. We wanted it to look really tight.
Helena:
And we wanted the same with the box, right? Woody has a great relationship with a box maker from his many years in the industry. And we were able to do custom boxes really easily with him. And we just wanted to make something that was very simple that fit into as many homes as possible. And just the point where it was looking beautiful, right? The point wasn't to sell the product because they already bought the product, [inaudible] doesn't need to do that. It really was about looking good and making the customer feel good.
Helena:
And then with every package there's an editorial that comes in and that's more of that educational component that I was talking about where that's another opportunity. Yes, it costs money to make an editorial pamphlet, but in that pamphlet, the customer can learn about me and Woody, they can learn about the farm, they can learn about what appetites are, the history of them, where they belong in the world, why they exist, they can learn a few ways to make a cocktail with Haus. It's this kind of deep wham bam education right in their face. They didn't have to pursue it. It's just there for them. And by the time that they're done reading it, they have a deep understanding of how to use the product and they feel like they know me and Woody, they feel like they deeply understand where it comes from, and we didn't have to do anything. Right? We just did all the work upfront.
Stephanie:
Yep. Do you personalize that experience after the first time they buy they might get one type of editorial and then when they come back, do you send a different one and do you keep track of how they're doing like how each editorial or unboxing is performing?
Helena:
Well, we've started only sending editorials with the first order that people make. But we've found that actually people like, "Oh wait, no, I was going to give this as a gift. I want the editorial." So we're still trying to figure that out. Because there's so many people that gift Haus to other people that we've realized that the first order or the second word doesn't necessarily mean that it's that person's second bottle. It might be someone else's first bottle.
Stephanie:
Yeah. That's a really good point not to make assumptions like that and also just really great developing that relationship. I mean, if I were to see a picture of you and Woody, and the whole background and history, I would feel like I have a personal connection with you where I would want to come back and buy from you all instead of going to a liquor store to buy something from someone that I don't know. So yeah, that all sounds really smart.
Helena:
Yeah. I mean, it's me and Woody like Haus is me and Woody and it's a competitive advantage, right? There's very few companies where the founders are physically making the product. So we want you to know us because this is our life's work and we're really proud of what we made. And we want you to know where it comes from because that's important to us, so it works out.
Stephanie:
Completely agree. All right, and these last few minutes, we do something called a lightning round where you answer the question in a minute or less. Let me know if you're ready and I will start firing them off.
Helena:
Ready. All right.
Stephanie:
What's up next for the next product that you're going to be enjoying from Haus?
Helena:
A summer flavor that was around last year and it's coming back for this year.
Stephanie:
Ooh. Any hints to the ingredients or what that could be?
Helena:
It's Rose Rosé. People know.
Stephanie:
Yeah. I didn't know that sounds delicious.
Helena:
It's amazing.
Stephanie:
All right. What's up next on your Netflix queue?
Helena:
Ooh, probably more cooking documentaries. I can't watch a lot of TV. It stresses me out, but I love cooking shows.
Stephanie:
Yeah, those are very relaxing. What's up next on your Workday? We heard Woody outside your recording studio, AKA your car that's outside the warehouse. So what's he doing today? Why was he trying to get you to move your car?
Helena:
Woody is trying to move a bunch of pallets of product. They're making a new batch of Ginger Yuzu right now and they're finishing up some prototypes for the restaurant project. I am going to get off this podcast, answer like a hundred more emails and write a bunch of gift cards for people gifting Haus, and then I'm going to do another interview this afternoon.
Stephanie:
Very cool. All right. In a slightly harder one, what's up next for e-commerce pros?
Helena:
Ooh. I think it's taking a big step back and reflecting. That is the most important thing you can do right now.
Stephanie:
Completely agree. All right, Helena this has been a blast. I can't wait to try Haus. Where can we find you and buy some of your amazing beverages?
Helena:
You can buy them online at drink.haus. And you can follow along with us on the internet @drinkhaus on Twitter and Instagram. And yeah, we hope to send you some booze soon. It's great for breastfeeding, by the way.
Stephanie:
Yum, I will have to indulge in that. It sounds perfect for me right now.
Helena:
Yep.
Stephanie:
All right. Thanks so much for coming on the show. It's been a blast.
Helena:
Thank you again. Talk soon.
There are more than eight million dynamic pages that run on Lenovo.com, where the majority of shoppers go to buy their products. It is a massive Ecommerce platform that has to work for more than one billion website visitors per year. Ajit Sivadasan is the Vice President and General Manager of Lenovo, and even though managing those pages is part of his job, what he’s more interested in is making sure that those pages are offering relevant content and an efficient experience to a new generation driving Ecommerce growth. On this episode of Up Next in Commerce, Ajit explains why figuring out what content is relevant to Gen Z will be the driving factor in how successful your Ecommerce platform will be.
3 Takeaways:
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible Ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
---Stephanie:
Hey everyone. This is Stephanie Postles, your host of Up Next In Commerce. Ajit, how's it going?
Ajit:
Good. Thank you for getting me on the show, Stephanie.
Stephanie:
Yeah, I'm excited to have you on. So I'd love to hear a little bit about your background at Lenovo. You've been there 15 years, right?
Ajit:
Close to, yeah. This is my 15th year.
Stephanie:
So I'm sure a lot has changed since you joined the company back then.
Ajit:
Yeah. I joined Lenovo in 2006, and came to Lenovo to build a consumer brand online. And obviously, when I joined, we didn't have much of a infrastructure or even sales. We were in a very limited set of countries. We were actually in four countries and we probably had a very small amount of revenue. Since then, obviously, we have scaled the business about 10X on revenues, and profits have grown about 10X. And we have scaled from four countries to 35 countries. And in the process, we have seen several acquisitions. We acquired the Motorola brand. We acquired the System X brand. So we have had to integrate all of those businesses. So Lenovo has gone from a company that's sold PCs, to being a company that basically is trying to drive intelligent transformation for its enterprise customers, and for its consumers around the world. Obviously, we have a footprint in more than 165 countries. So it's exciting.
Ajit:
When I joined the company, we were number six in the world. Obviously, we've been number one for a number of years now, and have a significant market share in the PC space, and we continue to make progress in the data center space, which we acquired from IBM. And the Motorola phones, you might have seen some of the latest phones that we introduced. We were the first ones with the foldable phone, that was a take on the Razr phone, the iconic Razr phone. So, yeah, it's been very exciting. We have obviously enjoyed our ride. I'm very excited because we get to interact with a number of customers on Lenovo.com and really bring the technology to life, and the brand to life, using the platform we have. So yeah, it's been a good ride.
Stephanie:
That's awesome. And what does your day-to-day look like at Lenovo?
Ajit:
I manage the platform for Lenovo, which is basically Lenovo.com. And since it serves all of our stakeholders, we have the Lenovo.com footprint in more than 90 countries. So I have to manage both the sales side, which is primarily a combination of B2C and SMB. And then I have to manage the enterprise side of the customer. So mostly B2B customers that buy from us using a procurement type of strategy, where we actually service them one-on-one. So I have the sales part, which is basically running the whole end-to-end business, all the way from marketing, CRM, UX/UI design, sales and marketing, phone sales, to really even trying to help with the supply chain piece, working closely with our supply chain organization.
Ajit:
But then the other side is really trying to figure out how to position Lenovo.com to become a brand voice, and figure out how we bring to life all of the innovation, and the products, and the enterprise strategy we have, for the stakeholders that come to Lenovo.com around the world. We get over a billion people coming to the website any given year. So it is a pretty substantial property. And so we have a ton of work that we need to do to manage all of those aspects that take care of basically all of the customer needs we have.
Stephanie:
Wow. What are some of the key learnings when it comes to moving globally? So it started out, I think in 1985, and it was just a reseller in China, right? And then, now it's a global company. What has that transition been like, and what have you learned in the process as you open up new countries and start selling there?
Ajit:
When I joined, obviously, my journey beyond Lenovo, was at Gateway. I was at Gateway for five years. So I've been in the PC space for about 20 years. And what you have to really understand is, all the transitions that have happened in the business model. When I started, internet was relatively new, and people used it as a very siloed organization that was doing just the phone and the web. So it was very limited. But today, as you know, 70% of the traffic that comes to the website is mobile traffic. The patterns have shifted quite a bit. So the business model transformation that has happened over the last 15 years has been interesting.
Ajit:
And what you see is, initially when we started, a lot of our colleagues around the world were maybe a little apprehensive. They were worried about things like conflict. They were worried about issues like pricing and things like that. And what you notice as things have evolved is, what you find is that, that is a very complimentary system. A number of our customers that are very sophisticated, technology-focused, innovation-focused, want to buy online. They want to be able to customize their products, they want a full breadth of products. And then there is a bunch of customers who would like to go to retail stores, look at our products, touch, understand it a little bit better before they actually make a purchase. So what we have found out is, thought we had a lot of skepticism, maybe even like six, seven years ago, that has changed into, people now trying to figure out how to leverage the business models, including connecting retail and the offline presence we have. How do we get our enterprise customers the best experience possible? How do we make sure the supply chain is responsive? How do we get them more capabilities that love them to buy products on credit, allow them to buy using a subscription type of service, give customized services that add them for SMB customers.
Ajit:
So, if you really think about it, the evolution has been quite interesting. And look, day-to-day, there's tons of things that you need to do because it's a fast-pace, technology-driven, very innovation-focused space. And people like Amazon and others, they're really driving the paradigm as far as online commerce is concerned. So it's not sufficient for us to just look at our traditional competitors. We also have to understand that the customers are getting sophisticated, and their expectations are much, much higher than what they used to be. So in many ways, the decision to go into a country now, is much more driven by the customers, than it is even proven by our direct stakeholders. And when I say stakeholders, internal folks, because customers really demand that you actually have an online presence. And they really want to transact with you online. So the transition has been interesting, but I think it's accelerating and the business models getting very complex. And our ability to actually react to them fast is going to be critical, as we move to the future.
Stephanie:
Yeah. I completely agree. So I heard that you have eight million dynamic and other pages, on lenovo.com. Maybe it's more at this point, compared to when I heard that stat'. How do you keep up with all the pages that you have, behind the scenes, being custom, depending on who's coming, depending on what country they're coming from? How do you make sure that it doesn't turn into a black box? like an algorithm when it starts getting too much stuff in it, you're like, "I don't even know what's happening behind the scenes anymore." How do you keep up with the pace?
Ajit:
A lot of this is automated. If you really think of our bulk of the products... I'll give you an example. So we sell thousands and thousands of third party products, accessories. Whether it is hard drives, whether it is even headphones and monitors and lots of things that are serviced and provided by other companies. And those are all managed automatically. So it's in a database. It's a data-driven process. So you don't have to worry about it. But if you multiply those into the number of countries, suddenly the numbers look staggeringly big. Now, having said that, it still is a pretty big number of pages. And clearly, there is a process for us to manage level one, level two, level three type of page, home page, right? If we look at the efficacy that is periodic checks on usage of the pages, there's teams basically managing content across the site, across the countries. Obviously, there is a strategy for how many layers of product pages we want to have. We look at data to understand who is using it, how often are they using it, and things that are not being used. Obviously they get [inaudible] as time goes by.
Ajit:
But more and more, it is clear to us that we need a very cohesive data strategy for formality content. So the formats customers prefer for content is changing. A lot more focused on videos, a lot more focused on how to do things, through a short-form video. Even content that you provide in terms of words are very succinct, and to the point. So you let customers pull the data, pull the content, as opposed to publishing everything and letting the customer go through stuff. Clearly it takes a lot of time and effort. And the key is to make sure that your systems, from the product management, all the way to what the customer actually sees on the glass, all managed in a way that makes sense. And that clearly is a challenge, because you've got a lot of legacy systems. And what somebody puts in as they're designing a product, may be marketed different from the marketing content that somebody needs to see in order to make a decision on a sale.
Ajit:
So you really have to figure out the process, streamline it. You need to make sure, periodically, you look for paradigm shifts. You need to understand demographics. 70% of the population that's going to be in the workforce is going to be millennials. And I can tell you that they are not really interested in reading a lot of stuff. They prefer much short-form formats, and they like videos and things like that. So if you're not connecting with them, and your engagement is not right, I think you're going to have a problem in the long run. So, I think the page count is less of a problem, than relevance. And I think that what we really are trying to do is to figure out how to be relevant, and drive content that truly drives engagement with our audiences.
Stephanie:
That completely makes sense. Are there certain trends that you see coming that Lenovo is preparing for, when it comes to, like you said, videos, preparing for millennials? What things are on your radar right now that you're preparing for the future?
Ajit:
So I'd say a couple of things on that. We are definitely seeing a pretty significant shift in demographics. Though we see a bimodal distribution. And by that, we see a lot more older people, and we see a lot more younger people. And the number of people in between actually is very low. So you would see very young people. 60%-70% of the population will be in the 20-30 age group, going forward. Which means that, these are native millennials. These are generation Z, Gen Zs, who basically are native digitally. And therefore, their expectations and how they consume data, and how they consume information is very, very different. So we have to really worry. I think everybody needs to worry, if you're online, as to how they are going to be part of your community, how you're going to get engaged with them, how are you going to keep their interest in the products that you have?
Ajit:
Part of the challenge is that they are so sophisticated, and are pretty much, in my mind, no nonsense, in terms of technology, that it's highly unlikely that they are going to support anything that is cumbersome, or verbose, or anything that basically takes away from efficiency, in terms of how they deal with online content. And so, I think the big challenge is for companies to truly make that shift of saying, "Look, this was the audience in the past. They had a very different predisposition to how they looked at data, and how they analyzed things. And then there's this new generation that truly is looking at content differently."
Ajit:
Now, the key points will be when they start truly having money in their pockets, and they're going to be in positions where they're going to be making decisions for companies, in terms of purchasing, technology decisions. And many of them already are making those decisions. And then if you are not able to engage with them appropriately, I think that you have a challenge. So truly trying to figure out how to build that relationship with the gen Z, millennial audience, I think is key. We are definitely looking at a couple of segments where we believe that that's an area that we need to really get good at, which is, gamers who are basically a big part of the online ecosystem. They are very sophisticated. They know exactly what they want. They are very community-driven. They're very content-driven.
Ajit:
And so, the proxy for us, at least in my mind is, "Look, you now have to figure it out how to engage these people online." Because you will learn from that set of experiences, that if you are, as a brand, not able to work that in your favor, it becomes increasingly challenging, I think, for the brand to have relevance in the future. And so, we are really focused on gamers. We believe that we have to cater to them end-to-end. From content, from products, online experiences, capabilities, giving them access to a broader set of products and portfolio, game titles, being able to give them subscription services and other things.
Ajit:
And the second audience that's really, really important are students. So a big part of students are going to be online, and quite frankly, this Covid crisis brings out the issue much more readily, where you see high schoolers, pretty much all schoolers, including colleges, basically offering courses online. And everybody's online study. I can tell you that it looked like a big deal when it happened, but we have been thinking about this thing for several years now. And this crisis obviously has accelerated that thinking even more. But the reality is that this is going to be the new norm. And, what is interesting is that a lot of people that aren't online students, because of the fact that for 1,000 years we have always told students that they need to go to a school, and be an apprentice, and study and learn because they can find a job.
Ajit:
And now, companies have come out and said, "Look, you don't really need a college degree to get a job. All you need is knowledge. And if you're good at something, then we'll figure out a way to test you, and you'll be fine. You don't need a formal degree." And we think that that trend will accelerate in the coming years. And I think that universities and colleges and institutions will figure out how to deal with it. And then at the same time, people like us, brands, we'll have to figure out how to engage this audience. Because, they're looking for information, they're looking for technology, they're looking for solutions. And the question is, "Can we provide them solutions and technologies that make learning online easier for students?" So that is the audience. Obviously, we make PCs, and we make phones, and we made monitors and all these things that really are part of the technology solution that enables people to learn online. And therefore, we believe that we should figure out how to engage with this audience who are basically online, and in a direct way, so that we understand their needs much more concretely. So those are two segments that are key. Stephanie, you had a question?
Stephanie:
Yeah, that makes sense. When it comes to thinking about this new generation, and they're, like you said, no nonsense. They want things quick. The website better be super quick. They better be able to buy fast. They have, I'd say, a higher risk tolerance when it comes to ordering online, as long as there's a good return policy. They're probably okay with just buying right away and hoping for the best. How are you thinking about your retail strategy? Because like you said, a lot of people in the past have been used to going into stores, and trying things out. Do you see that being something in the future? Especially with Covid, it seems like a good forcing function, where it's pushing more people online, and to just try it instead of having to experience it in person. Are you all shifting your thoughts around that area?
Ajit:
Well, I think Covid clearly will be an outlier. It will accelerate the digital transformation. But I still think that retail will have a pretty important place and role to play in the long run, but it will get redefined. And for our part, we are doing a couple of things. We are trying to figure out how to help our resellers, how to help our retail partners, and quite frankly trying to connect offline and online in a meaningful way. So where we own stores like in China and India and other places, we are trying to figure out how to connect the online experience with the offline experience, so that people can buy products online. They can go to the shop and order it online there. So really trying to figure out how to manage the customer experience a little bit more readily.
Ajit:
Now, having said that, I think the interesting transformation that's happening is really trying to connect the social, the retail, and online together. And if we can, at some point, get the mobile piece to work, then it becomes a very, very interesting value proposition for the customer because you truly have the customer for the whole cycle. So if they are outside, we know where they are, and therefore we can give them recommendations if they're interested in looking at our product. If they're online, obviously they can do things online. But if they do stuff on their phone, we can actually translate some of those things meaningfully to their desktop, and therefore we make it very, very easy, experientially for them to experience a good a brand experience. So we don't have to act surprised when the same person is in two different places, or as two different ways they connect to the brand. We just need to figure out how we connect those pieces.
Ajit:
And I think that these are the types of business model shifts that we will see accelerated as we go through this crisis and beyond. I think that people are finally trying to figure it out, "How are we going to connect this?" Look, Amazon has already done some of this with what they have done with Whole Foods and the Prime. So they've figured out how to connect the store to Prime users, and the online stuff. So the blueprint is there, and I think that most companies are doing some stuff. But I think that you're right. It's going to get accelerated as this crisis progresses.
Stephanie:
Yeah. I think connecting those platforms is key to making sure you understand the customers and can deliver value to them wherever they're at. Are there any technologies that you guys are experimenting with, to try and connect that online, to offline, to social, and mobile?
Ajit:
Yeah. It depends from place to place, and it depends on the companies footprint, right? In China, obviously, I think we are the most progressed in terms of the technology piece. We have a substantial online, merged with offline footprint, which connects WeChat, and online cloud, and our application layers, which allows our customers to actually be connected fully with the brand. And it actually connects all the retailers also to the brand in a very, very meaningful way. So that is, I think, the aspirational model for everybody. We have a very different model in Japan, as an example, where we are connected in kiosks, in the retail store, that's connected to the online world. In Taiwan as an example, we have an offline store that we are connected to. In India, it's the same thing. It's an offline-online model.
Ajit:
So yeah, the business model is different from different country to country. But it also depends on who is innovating more, and what's the landscape look like in the country? So it's not one size fits all. And I would be remiss if I didn't mention that privacy, as an example, is a key consideration in some countries, and some countries they're more relaxed. So it just depends, also, on some of the privacy laws that enable customers to share information more freely versus some others where you can't.
Ajit:
But my sense is that depending on the country, and depending on the business, you will see hybrid models emerge. They already are emerging. And some will have much more traction than others. But I would see a lot of partnerships being formed between online companies and offline retailers, to really manage the customer experience to be much smoother, and much more productive, going forward.
Stephanie:
Got it. And I saw that Lenovo is leaning more into focusing on the consumer and their needs, and becoming a more consumer-first company. Is there certain data points that you all are using to meet your consumer better than you were before? Or were in that end-to-end consumer journey do you see the most room for growth or improvement?
Ajit:
Yeah. Lenovo's history and its heritage has always been a product company. We have some of the best brands in the world, whether it's Thinkpad, Yoga, Moto, System x, these are all brands that are at the top of their game when it comes to their specific categories.
Stephanie:
I used a ThinkPad at Google. I love my ThinkPad.
Ajit:
There you go. And nine out of 10 people that I speak to in the business will tell me the same thing. I used to use a ThinkPad before I worked for Lenovo long, long time ago, as well as a consultant for Deloitte. And there's plenty of people who actually use ThinkPad because it's an iconic brand. So we always have been a company of engineers, historically. But as we move into the internet era, and as digital becomes more mainstay, it is absolutely critical for us to really understand what our end users look like, what they are doing with our products, how do we collect feedback that's more direct? And truly, really understand and have a pulse on what the customer sentiment is for our brands.
Ajit:
It becomes extremely difficult for us to get feedback more directly, as from an indirect channel, because of the fact that we don't really talk to the customer directly. We have to remain and collect information in an indirect fashion. And depending on the privacy laws and other things, it becomes very, very complicated for us to collect information. Having said that, three or four years ago, as a company, we decided that it was such an existential reason for us to really start thinking customers first, and truly trying to figure out how to connect with them, and drive digital transformation, that we decided to start measuring all of our customer segments, whether it's direct or indirect, in either use proxies or direct measures. But mostly, the entire company has been on a Net Promoter Score basis, and trying to understand how customers value our products and our services, and what they actually think about the brand.
Ajit:
So our employees and our executives get paid based on a customer satisfaction metric. At one point, it was actually imperative, in terms of how they got paid. So we take this very, very seriously. And the transformation is clearly much more evolved than what it was three years ago. And now, pretty much every group in the company has a customer-focused metric. Whether it's product development and supply chain, eCommerce, or our global accounts customers. So everybody is measured on a customer-centric metric, which allows us to then drive the focus that's stated. And it's one of the top priorities for our COO, our CEO, my boss who basically runs all of the PC plus the IDC group. It's a key focus for him. So clearly, it's something that we take very, very seriously, and we are all trying to evolve with this one metric that we can look at and say, "Are we making absolute progress as a company, or not?"
Stephanie:
Got it. So a lot of times, metrics can actually have unintended consequences where maybe someone's trying to meet that metric and they're not doing the best thing to meet that. Did you see that when you guys were thinking about creating that customer metric? Did you see anything go wrong where you're like, "Oh, that's actually not a good one to rely on?" Any learnings throughout that process?
Ajit:
Yeah, look, e-commerce, we have been measuring customer satisfaction for the last, I don't know, 13 years or so. So as soon as I joined the company, two years into it, I figured out that, "Look, we need some form of getting feedback from our customers." So we have a very robust and mature process for eCommerce that we've been collecting roughly 20,000 customer feedback from a survey that we do online. So we have had a model for a long time, that uses the feedback. The biggest challenge, always, I think, is trying to figure out correlation of what factors will drive it. I think that's been the big controversy. So is it delivery metrics? Is it quality metrics? Is it product design? Is it the call center experience? So, I think there is a ton of data, and we have requested data to find out the top factors. And those factors keep changing. So-
Stephanie:
What are the top factors right now, that you see?
Ajit:
So what we see is product quality is undeniably the number one thing that the customers actually value. Hybrid customers truly value delivery. So delivery times and making sure that you're keeping your commitment in terms of products. They definitely value help in the call center as a metric. So there's probably a list of about 20, that we track. And the big ones really are product quality, delivery, out-of-the-box experience, those kinds of things. Service, as an example, right? We do surveys of customers on their service. That's a pretty important part of their feedback. But the purchase survey that we do is more around the purchasing experience. And customers are not shy, and they give you exactly you know what is important to them. And the one thing that we find is that some of the metrics that are difficult to move. Like product quality, as an example, Lenovo's product quality is very high. So it's always in the 90% range. And for us to move a percentage point on product quality is very, very difficult.
Ajit:
But there are several others where, like delivery and other metrics that float a lot more in this, there's ability for us to go change that, if you are focused on trying to drive certain changes. So the key for us is to say, "Which are the metrics that we can influence, that the team can actually take actions? Whether it's on the website, whether it's on trying to do training, or whether it's really trying to figure out how we message things to the customer differently, do proactive phone calls." One of the things that we do. But the key is to really identify those things that truly can be moved meaningfully, and we can put energy behind it, and then keep going.
Ajit:
Last year, we moved our CSAT score, or our NPS score by almost 35%. So that's a pretty substantially good jump, in terms of effectiveness. And that's because we identified a few things that we thought compelling. We had a business management system around it, we made IT changes. So all those things configured into us focusing and moving things in a certain direction. So I think that's the key. When it comes to customer-centricity, the challenge is that the customers are not standing still. Their expectations are going up every single day. So you have to do a lot more, to make meaningful progress. So you can't just stop. You have to continually change and continually improve the processes.
Ajit:
And that's always tricky because you have to really be at it, and you've got to use data to really understand what's changed, what's moving, what's the new irritant? You have to do social listening, you have to really start scanning your data that you get from your customers to figure out what's the new irritant, and how are you going to manage them. So it is certainly not an easy process. It's a very challenging process. But it is also something, I think, that is very, very important, if you, as a brand, need to keep your customers happy.
Stephanie:
Yeah, I completely agree. If you were to point to, the larger theme of being able to improve your customer satisfaction score, what was the largest thing that you changed, or adjusted, that made it so you could improve that score, by, I think you said 35%?
Ajit:
Yeah. So the one big thing that we changed was, we always had a very high amount of customization on the website. So ThinkPads, as you know, can be customized. And obviously, a customized product takes a longer time than if you had something in stare. So we have traditionally had a lot of our ThinkPads customized. And we made a conscious choice to really figure out how to keep stock of some of our high-flying products, or the fast-selling products. And so, that is a pretty significant shift, because when you have to ship something centrally from one warehouse, versus, you have to ship products from a warehouse or a manufacturing facility to a distribution center, and manage inventory, it obviously is not as efficient as trying to run something directly from the factory.
Ajit:
But we made the choice to move some other products to local distribution, to speed up delivery of our products. And that definitely helped. And we had some issues with supply. We're having some industry-wide constraints on some of the supply. And therefore, this whole process of managing inventory locally really helped us manage customer expectations a little bit better than what we're used to. So that is one example of what we did, that really helped.
Ajit:
Now, we also made a number of changes on the website, from messaging, whether it's a credit card processing screen, or whether it's a product page, or whether it's a configurator design. Any number of things that we feel are irritating customers, we have it list of maybe 500 items that we work through at any given time. And everybody is going through those things and fixing it. And then that incrementally adds a little bit of help. But the big ticket items are always around supply, product quality, call center management, pricing, promotion challenges. Some customers see discounts that are different, and I.e. managing those correctly... So it really is those big buckets that we want to make sure that we are focused on, we're fixing. And ultimately, the customer feels like we are being responsive to their needs.
Stephanie:
That's really fun, haring how you're able to drill in on a few of those things, and shift customer perception and happiness so much. Are there certain metrics that you use when it comes to, like you said, looking at what's irritating the customers, or where the website is maybe failing in certain areas? Is there a set of metrics that you look at, maybe bi-weekly or weekly with your team, to see how things are doing? And if so, what are those metrics?
Ajit:
Yeah. So when you talk about metrics, we have a website, a technical side of looking at metrics for the website, which is the IT organization that basically looks at all the technology stuff. It is, "What does the response time look like? What is your mobile performance? What's the page performance? 404 errors, page not found, the timeout errors on your checkout page, blah, blah, blah, blah. So there's probably like 100 things that somebody looks at every single day and then we manage those by exception. So we know what the numbers are. There's somebody constantly looking at those.
Ajit:
Then that is the website feedback mechanism, which is, when a customer comes online, something like our opinion lab, or a survey mechanism that basically allows customers to give you a feedback. So we randomly select customers that are on the website. We actually give them the opportunity to respond to the experience. We collect experience on their research process, their buying process, the website complexity, blah, blah, blah. So we get a ton of feedback from our customers on that particular thing. And then like I mentioned to you, we have this thing called the online ordering experience, and the purchase experience. So we get 20,000 or so responses every two weeks from all these countries, which we analyze.
Ajit:
Then, we obviously have social listening, where we actually listen to what the customers say. And then that is a common section where customers give us comments, and we use some form of AI stuff, to actually binge through all that stuff, to really get the sentiment analysis, and big ticket items that are coming back. And we take all of these things into a composite score that then allows us to go look at and say, "Where are we falling short? What are the benchmarks? What's the threshold? What's the competitive benchmark that we should be looking at for each of these categories? Best in class." And then we benchmark ourselves and figure out what actions we need to take, based on why this mentions the regression analysis to say, "Okay, these things actually have a meaningful impact through the customer experience. And therefore, we got to go figure out how to remove people who are giving us ones twos and threes. How do we increase our nines and tens? And then everybody in between, how do we move them up," to basically minimize the customer irritations that we have in the system.
Ajit:
So it's a very systematic process. There is a team that basically looks at it. There's a supply chain element that's very real. There is a services element. There is a phone sales element. There is a chat sales element. So it's a very complex set of metrics that basically transcends all of the functional groups that have a small stake in that experience, as the customer goes from the website research, to buying the product, getting it serviced, talking to a customer rep'. So we take the end-to-end customer with journey and figure out all the points, if they touch something, and figure out how to measure them, so that we have an accurate understanding of where the irritant is, and what we need to do to make it better.
Stephanie:
Got it. So I know when it comes to getting feedback, I go on websites all the time and it's asking me to do a survey, give feedback, and at least for me, I don't normally do it. I just X-off, and I try and find what I want. How are you incentivizing these potential buyers or buyers to give you the feedback, and take these surveys, and get them to do what you want?
Ajit:
It's tricky. You have to do it in a way that doesn't bias the sample. And that's what I'm most worried about, is that I don't want to incite people to do the wrong thing. So what we do is, we have a... What I've noticed is that the core customers, they are actually always very vocal, especially if they are a brand loyalist. So we get a steady stream of feedback on brands loyals, which is great because I think they are finicky, and they are brand zealots, and they really take pride in making sure that they're providing feedback on things that they like and things that don't like. And quite frankly, it shapes perception and product strategy in many ways because it's a big group of customers.
Ajit:
The tricky part is the random customer, or the customer that truly hasn't built a relationship with us but just bought something. Those folks, we have to figure out how to drive the subscription into the process a little bit more meaningfully. We periodically a 5% off coupon. We periodically send out emails to people who have bought product. We always send out emails to people buy products for us, saying, "Give us feedback. Tell us what is it that we have done well, and what are the things that we haven't done well." On the phone, obviously, we have more success because we get a chance to talk to people. But it's a combination of things. In the past, I remember like five, six years ago we would run contest that basically gave prizes for people to actually participate. And then we reduce that a little bit, because it may tend to bias the sample a little bit.
Ajit:
Look, online reviews is the other one. We have a very robust online review process that we have on the website. So we get a ton of online reviews of our particular products also. So we use that, sometimes, to also incent people to give us more feedback. So there isn't a one size fits all answer for others. It just depends. Again, in some countries we get local feedback, and some others... And so, countries where we don't get as much feedback, we try to figure out what's the right way? Can we leverage our community? Can we leverage our brand? And other things. Can we gamify it? So there's lots of strategies depending on which country and which part of the world you're in, to incentivize the customer to actually engage more readily. In some countries it's a challenge. Just because it is challenging in countries like Europe, where trying to get around some of the privacy laws can be tricky. So it's a balance. But we have tried discounts, newsletters, contests, reviews, and rating, promoting them.
Ajit:
Having said all that, I do believe that building a community and trying to nurture that community is probably the easiest way for us to get more and more feedback, which is what we are trying to do, is to try and figure out how to engage these customers more meaningfully over a longer period of time, beyond the purchasing. But we're connecting them with the brand. And then, I think that that solves some of the feedback issues, because I think we can get a much higher response rate when that happens.
Stephanie:
Yeah. I've heard a lot of brands leaning towards that community aspect, at least from the people that we've had on the show. What are some of the initiatives that you guys are doing, to create that community?
Ajit:
Well, I won't give away all the secrets, but-
Stephanie:
Just give us a couple. Come on.
Ajit:
So the big communities that we are focused on, obviously one is SMB. SMB, we fundamentally believe are underserved. And I think that there's going to be a lot more SMBs in the workplace, going forward. Because I think a lot of them are millennials and Gen-Zs are very entrepreneurial. With the advent of technology progressing the way it's progressing, and digital technologies becoming more ubiquitous, but with the online space, I do believe that we will see a lot of internet businesses springing up. It's no longer really difficult for somebody to actually open a business or start a business if they have a good idea. So you will see a significant number of people actually coming online in the SMB space. And we are obviously very aware that we need to provide them an experience, a community, and a set of resources that make them productive and useful. Useful in the sense that, we give them something that is useful for them to be more productive.
Ajit:
So part of our challenge is to try figure out what is really important for them. So we definitely think community is important. But the work, I think, is very, very important. And the question is, "How do we drive relevance? What is really important for the SMB customer as they are online, beyond the products that they buy from us? How do we get them more out of technology? How do we get the more out of their work, their productivity, and how do we make sure that they are ultimately successful as they are part of our ecosystem?"
Ajit:
So I'll give you an example. Maybe they can hear from other SMB customers who are probably struggling with similar challenges. Maybe the ability to belong to a community that has other people doing similar things, or at least dealing with broad themes that they're dealing with, money, resources, training, those things become important. So the question is, "Can we provide some of those things to our SMB customers that make their lives a little bit easier, and therefore their affinity for our brand a little bit higher?" So that's one thing that we are definitely doing for SMBs. A lot of work to be done. We are just at the very, very early stages. But we do believe that a well thought out, longterm strategy will definitely help our ecosystem and our customers. Likewise, we will be thinking about students and gamers, and trying to figure out what we can do meaningfully to nurture the relationship we have with them.
Stephanie:
Got it. Have you shifted your strategy around online learning, students, gamers, since Covid started? Did you guys have to go into a quick pivot mode to start doing something different or planning for a different future than what you were maybe planning for six months ago?
Ajit:
Well, we started this strategy two years ago. Haven't changed much. So therefore, we do have a leg up because we have been thinking this for a little while. Covid just made it a little bit more easier to sell, and get traction. But the strategy we are on has basically been in place for a while, because we have been building IT capabilities and some of those things that we need to service our customers. This is not something you can just spin up in a day. These take much, much more longer-term. And there's plenty of partnerships and relationships that are [inaudible 00:42:24]. So it's not, certainly, something that you can just copy, or you can just do. It is capital-intensive. You need to put money into it. You need to do a lot of development. Do you need to really start thinking about the strategy much more clearly? So it's certainly not something that's the thought about yesterday. But I think that there's a lot more that we need to do to be relevant and to drive this to a scale.
Stephanie:
Cool. So I've heard that you like behavioral economics. I was wondering-
Ajit:
Yes.
Stephanie:
Yeah. I watched a few videos. I'm like, "Oh, me too." What principles have been useful, or how have they shaped the digital experiences that you build at Lenovo?
Ajit:
Yeah. Look, pretty much everything that you do on a website, or you do on business lends itself to some of the principles from behavioral economics. And some of them that are really interesting... I became a fan of behavioral economics with Dan Ariely, who basically is local here at Duke. And we had Dan come to campus and speak to our people a couple of times. This was like maybe seven, eight years ago. So I've been a big follower of it. And clearly, what I understand from it is that people are predictable, and they can be predictably irrational in how they make decisions. So sometimes, common sense is probably overrated, believe it or not, when it comes to some of the design principles and some of the things that we do from a merchandising and marketing standpoint.
Ajit:
So big couple of things for me is, look, people want to compare things, right? And they freeze when they're not able to compare things that are similar. If you give them these similar things and ask them to compare it, they always rationalize it to something that is a common denominator. So as an example, you don't have to bet an apple to an orange. Obviously, they are very different fruits. And to ask them to really say which one you like more becomes a preference issue, more than a rational exercise. And so, if you're truly asked them to assign value to it, more likely, they are going to say an apple cost $1 and an orange costs 50 cents. So maybe the apple is 2X better than the orange. That would be the natural way of thinking.
Ajit:
Now, when you tell them to compare a PC of one kind to a PC of a completely different kind, they are likely to be completely lost because they just are not able to understand the fundamental differences between them. Or, it would take them an inordinate amount of time for them to actually compare the products, disparate products. And so what they do is they start thinking about price. And price is not necessarily the best way to make a decision on something that basically is going to be your technology partner for a few years, and going to make you productive in the kinds of things that you need to do.
Ajit:
So I've realized that look, you have to really enable a comparison of products in a much more meaningful way. So make sure that the customers don't have to really go out of their way to think about how to compare products. And obviously, it's challenging when we have so many products coming out at this breakneck speed, that some of the technology cannot keep up. But to me, comparing things is an important paradigm, in my opinion.
Stephanie:
It brings back the memories when I used to open up a bunch of tabs to compare products before the company started shifting to that comparison model. But I do still think there's a long way to go when it comes to, especially comparing tech. Because when I'm looking at a computer and it's saying, "Here's all the specs of this computer." A lot of those things, I don't even know, why would I want to upgrade? Whereas if it said, "Well this means that you'll be able to store this many pictures versus this." Or, "You'll have a much faster internet speed," or, "Remember how your computer's working really slowly when you try and open up Photoshop? It won't do that anymore." It would be nice to start seeing a more consumer perspective of, "What does this do for me?" Instead of just being like, "It's this many terabytes," and all the technical specs to it. Are you all thinking about that kind of shift, or how are you incorporating them?
Ajit:
Definitely, comparison of products is a big thing. Search, how you do search comparison is a big thing. So we are absolutely focused on it. And to make things worse, the mobile form factor doesn't facilitate very readily, comparison of complex things. So we have to figure out more elegant and meaningful ways in which we can have people compare products on a small form factor like a phone. So yeah, clearly very, very important, on top of our list. Always challenging, always evolving. So yeah, we have to go figure out how to do that.
Ajit:
One other thing that I would tell you when it comes to behavioral economics and behavioral science is, bias, the role of bias. And I think that this is a big one because I think people will generally, when they're making decisions, executives like me included, we make decisions based on anecdotal evidence, based on what we have done. And we take that size, and of one, and we try to generalize, hypothesize our theory based on a bad experience or a good experience. And we extrapolate that to the population and end up driving everybody crazy and not looking at numbers the right way, and ignoring numbers, and making decisions that are suboptimal.
Ajit:
So, the work by Kahneman and some of the work that the Israelis have done, especially because it seems like that's where all of the cool stuff is coming from on behavioral economics, from the Hebrew University, the work is really, really telling us not to be biased, and to suspend judgment, and to really focus on what the data tells us, and to pay attention to not fall into the trap of the bias. So, it takes a while, and it takes a lot of effort, but I think it's a good reminder for us to really focus on managing and minimizing our biases, so that we can make optimal decisions that affect our customers in a very positive way.
Stephanie:
Completely agree. Do you all do trainings at Lenovo? Whether it's for the executives, or the employees, when it comes to how to create surveys and look at the data in a non-biased way, and collect data from certain people, where it's not biased. Do you do anything around that to teach those principles?
Ajit:
I also teach, sometimes. So I have been pushing this very heavy and hard with my teams. And obviously, a lot of the executives read these books, so it's not lost on them. But look, because we have such a huge direct customer-facing interface, the focus on the online space has to be much inordinately higher, because I think the impact is much, much higher on the direct interface. So we are definitely driving this. A lot of our people are classically trained. They all go to classic UX/UI trading. But more and more, I also have started relying on quantitative data at scale, for making decisions, rather than opinion. So I am not, and my team hates me for this. But I'm not a big fan of qualitative information. I would much rather not ask people anything and just look at the data and interpret the data and start making decisions.
Ajit:
Because people say one thing, and they do another. And it's not a new notion. I think a lot of people know this. And at scale, when you're talking about tens of millions of records, I think the data doesn't lie. In fact, if the data says that, then that's what we should do because it services a majority of our customers positively. So that's the other principle that I use is, "Don't ask, just look at the data and try and make decisions based on the data. Try to understand the data, and then design your tests and your experiments based on what you see, rather than asking a bunch of people in a panel, and they'll tell you some stuff." And I'm sure it goes in some places, but I am always skeptical when that happens because I'm worried about bias.
Stephanie:
Do you think, from your experience, a lot of companies are still focusing on that qualitative data and it's actually leading them down the wrong path, or they're creating either new products or new website experiences that are probably going to fail because they're using that qualitative data?
Ajit:
I am sure people are. But I think people also... They all read these same things. But I think there is probably enough anecdotal evidence that suggests that there's lot of people who still use those principles. So I don't know the exact number, and any guess that I would venture would be wrong, so I would not venture it. But my sense is that yeah, it requires activism, like for some of the people and the executives, to actually read the books, get interested, get excited, and then drive everybody to get to follow it and understand it. It's a field that's still evolving. So it takes effort. Right? And then the infrastructure that's needed to do at-scale testing, and A/B testing, they're not cheap. It's expensive.
Ajit:
So, I think the question is, how many people are driving digital transformation? How many people are digitally savvy? How many companies are? And my sense is that that's a very small number. I think everybody's talking about digital transformation now, because of all the issues that are around them. But I can tell you that the number of companies that are digitally savvy after you take out some of the tech companies and the internet companies, is very small companies. There are a few who companies have a pretty big gap. So my sense is that they're not, probably, using it as much.
Stephanie:
Yeah. I completely agree. So, zoom out a bit for the last couple of minutes. In the world of e-commerce, are there any big disruptions you see coming or what do you see in the future, that you guys are planning for?
Ajit:
Well, I think this whole transformation, this whole crisis actually points to the fact that the digital transition will be much faster. I think that people have realized a couple of things. One, travel, may be overrated. People have realized that education, going to school, sitting in classrooms, may be overrated. People are going to realize that working from home is not such a big deal. And so, I think the workforce productivity, the online education, travel as a paradigm, and how companies operate, all of that will, I think, become ripe for disruption. So you will see, increasingly, technology solutions practices that's going to upend a lot of the work practices, and the educational practices. So that's happening. That's going to happen, and it's going to accelerate.
Ajit:
Clearly, I think that this will also boost some of the technology things like AR, VR, IOT, both from home and from work. I think it'll accelerate some of those things because it'll be a natural extension of some of the things that people are doing. I think the move to cloud is going to get accelerated, because I think everybody wants access to everything. As 5G comes, I think a lot of these things that are laborious today might experience a complete revival, and complete transformation when it comes to speed, and feel, and what's possible. So I think that the time is right for us to get much more digitally-connected.
Ajit:
The last one is mobile, in terms of what's going on with mobile and how mobile is going to get a face, or as 5G comes on. So it'll be interesting to see how retail, how millennials and gen-Zs, how SMBs, all of these groups of people that make up a pretty significant part of the population... I think students, gamers and SMB is probably at about 40% of the world's population. So you'll see that there's going to be a significant shift, quite rapidly, in the next three to five years. And there's going to be a considerable amount of disruption that'll happen as a result of this.
Ajit:
You will see winners and losers. This will be probably a long list of people we're going to go out of business if they're not able to adapt quickly to some of the changes that are happening. The companies that get it naturally will have much bigger gains, which will make them much more competitive, and difficult to beat. So you will see a lot of winners and losers emerging out of this whole crisis, and as the digital evolution continues in a significant way.
Stephanie:
Yeah. I love that answer. So before we move on to the lightning round, which is where we ask a question and you have one minute or less to answer, are there any other high-level thoughts or words of wisdom that you want to drop in the podcast?
Ajit:
No. Well, I just tell the people who are in this space, the eCommerce space, that their time has come, finally. So they should just buckle up and help their companies and see where the ride goes.
Stephanie:
I love that. All right. So the lightning round, like I said, brought to you by Salesforce Commerce Cloud, is where I will ask a question and you have one minute or less to answer it. Are you ready Ajit?
Ajit:
Okay.
Stephanie:
All right. What's up next in your travel destinations, after we're allowed to travel?
Ajit:
I would like to go to Cuba because I'm running very low on my cigars.
Stephanie:
Wow, that sounds cool. All right. What's up next on your Netflix queue?
Ajit:
I just finished Ozark. And I'm trying to figure it out how to watch The Last Dance. But it's not on Netflix, unfortunately.
Stephanie:
Maybe Hulu?
Ajit:
I've been watching Heist. So maybe I'll keep watching that.
Stephanie:
Cool. What's up next for... Is it lunchtime there? I guess a little bit past lunch. What's that next for dinner?
Ajit:
Dinner, I had cooked on the weekend, some lamb curry and some roti. So I'm going to just reheat that and eat it.
Stephanie:
Yum. What's up next on your podcast list or your reading list?
Ajit:
Ah, reading. I'm reading The Billion Dollar Whale.
Stephanie:
What's that one about?
Ajit:
It's about this dude, Wall Streeter, who basically flees a billion dollars right under the nose of Wall Street and big finance people and everybody else in the world. So it's like DiCaprio movie.
Stephanie:
Oh, which one is that? The Wolf of Wall Street?
Ajit:
The Wolf of Wall Street. So it's loosely a character like that. So I'm just a quarter into it. It's unbelievably engaging and interesting.
Stephanie:
I have to look into that.
Ajit:
Yeah, you should. It's pretty cool.
Stephanie:
You have a few, you said? A few more books that you're working on?
Ajit:
I still haven't finished Homo Sapiens, and some of the books that he had written. So I'm still trying to figure it out when I can finish those, with things slow.
Stephanie:
All right. What's your favorite tool or technology that you're either learning right now or you're thinking about implementing in the future? Or it could be a skill?
Ajit:
I don't know about skill. I don't know very many skills. Technology. We are constantly thinking about technology. And the big technology that we are thinking about is how to drive the subscriptions business. So it really is trying to figure out how to give customers the convenience of buying something as they pay-for-use concept. Because I think it's becoming very, very clear that the reason why people like Netflix and Adobe and some of our other customers and clients are successful, is because people are able to pay. And in [inaudible 00:58:45], I think that business model is very appropriate. People don't want to spend a lot of money upfront. So trying to figure out how to make their lives a little easier.
Stephanie:
Awesome. Yeah, I definitely-
Ajit:
Hello.
Stephanie:
Subscription business. All right, the last big one. So it sounds like you guys are doing a great job of staying ahead of expectation, and your competition. So in your opinion, what's up next for e-commerce professionals?
Ajit:
Well, I think it will become a key priority for most organizations. I think the digital transformation plus e-commerce, if they are in a business that does e-commerce, will become a major priority. The key will be to try and figure out how to build out that strategy in a meaningful way. If they are global, I think they have to figure out how to make it more global. If they are not global, they have to figure out how to get more local. Either way, you really have to figure out what that business model will look like. And it's not going to be easy because you have to deal with legacy systems, and you have to deal with legacy operating processes, and you have to deal with the legacy sales force and the legacy set of go-to-market strategies. So trying to figure out how to meaningfully make sense of it. There's a bunch of companies that are doing well. But there's going to be a bunch of companies that will have to figure this thing out. So they will be busy, and they will be in demand.
Stephanie:
Awesome. Love it. Any final plugs before we hop off the podcast?
Ajit:
No. I just want to say that if you have good people that work for you, you should try and figure out how to hold on to them, because it's going to get a mad rush to get to good people.
Stephanie:
Oh yeah. I completely agree with that one. All right. Ajit, it's been a blast. Thanks so much for coming on the show.
Ajit:
Thank you so much, Stephanie. I enjoyed our conversation.
After working for some of the biggest tech companies in the world, Nate Bucholz was ready to leave his Google and Facebook roots behind for something smaller and an opportunity to experiment and move fast. He found that opportunity at Cardlytics, where he serves as the Vice President, eCommerce Partnerships. In this role, Nate and his team are working in new and exciting ways on a platform for an industry that isn’t typically considered new or exciting. Cardlytics works exclusively with banks to build their digital and eCommerce platforms, connect with customers and create rewards programs that lead to mutually beneficial relationships between customer and company. And to do all this, Nate and his team are analyzing troves of data and using technology in unique ways to truly perfect the digital experience for all involved. On this episode of Up Next in Commerce, Nate explains it all, including what data is the most telling and how to utilize said data in the best ways possible while also building and maintaining trust among all parties involved.
Key Takeaways:---
Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible eCommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
--- Transcript:Stephanie:
Welcome back to another episode of Up Next In Commerce. This is your host Stephanie Postles, and today I'm joined by Nate Bucholz. Nate, thanks for coming on the show.
Nate:
I'm happy to be here. Thanks for having me.
Stephanie:
Yeah, and where are you in the world today?
Nate:
I am sitting in my office/guest bedroom in Alameda, California.
Stephanie:
Yeah, keeping all the kids out as best you can. Right?
Nate:
The door knob rattles, but it is locked so we should be safe, I hope.
Stephanie:
We'll see. Yeah, once all this is over, it'll be nice to be able to bring people back to our studio and not have to do bedroom meetings anymore, but for now we'll make it work.
Nate:
Sounds very scandalous, but yes.
Stephanie:
It is a little scandalous. So I'd love to hear a little bit about, actually, I want to go back, back background on you. I want to start in the early days because I saw where it led up to, of working at Google, and Facebook, and where you're at now at Cardlytics, and I actually was wondering, I'm like, what is Nate's first job he had because everything else looks amazing. Was he working out on a firm when he was little? What was your first job?
Nate:
I was a dishwasher at a local restaurant in Lake Oswego, Oregon where I grew up.
Stephanie:
Oh, that's awesome.
Nate:
Worked my way up to busboy and waiter at some point.
Stephanie:
Very cool. Yeah, I think a lot of us started out in those kind of, I was a silverware roller, and so I would just roll silverware for eight hours a day. And I asked to be a hostess and they were like, "No, you can't be a hostess yet. I mean, you're not that senior."
Nate:
You've got to earn that.
Stephanie:
Yeah. It was good times. So you went to University of Oregon, right?
Nate:
I did, yeah. I did my undergrad there and then went on to work in public relations for a little bit. I had the, not so enviable job of getting good press coverage about Windows in Millennium Edition which is quite old now, but it was pretty the bad operating system and that was my first time-
Stephanie:
Oh, man.
Nate:
... post college job.
Stephanie:
I'm sure you learned how to be pretty scrappy in that job though, don't you think?
Nate:
Yeah. I mean, there's always something good I think that you can find or an audience for a product if you can find the right one. After that I was in the Peace Corps for a couple of years in Ukraine doing business development and volunteer work. And then I came back for graduate school here in the Bay Area at the hospice and school at UC Berkeley.
Stephanie:
That's Cool. And then did you head right to Google after that or was there something between?
Nate:
I did, yeah, there was a brief internship, but after getting my MBA I went on to Google, in a travel vertical, or their travel vertical, I should say, up in the Seattle office.
Nate:
I was going to say that I was with Google for quite a long time, almost 11 years, and got to move around in a good way quite a bit. So I started out in Seattle and travel, then moved over to our London office for four years where I led a sales team there and so I oversaw the advertising sales for airlines and car rental. And then my wife and I had a son while we were in London and it kind of changed the lifestyle a little bit. We decided to get back to the US, moved back to the Bay Area, in retail-focused industry, mostly e-commerce, for about a year and a half, and then, actually, the last intake Google was in Malaysia where I was in the office in Kuala Lumpur looking after the branding and YouTube partnerships.
Stephanie:
Oh, wow. Very cool. What was that experience like?
Nate:
It was great overall, personally, it was amazing. We had this amazing expat lifestyle where our son was in this wonderful private school, we had lots of travel and so forth. Professionally, it was a real challenge, there were some of my, I'd say professional strengths that kind of turned into weaknesses in a different environment. Being quite loud and outspoken, and non deferential, didn't apply necessarily so well in some of the situations over there. But I mean, it was great. It was a good learning.
Nate:
At the same time my whole career had been and is now, once again, focused on more direct response marketing. And I had jumped not only into a new geography but also into the more brand forward environment working with Johnson & Johnson and Procter & Gamble and kind of the sort of traditional marketing that would have been on TV before, and online now is more about reach and frequency rather than getting people to buy things immediately. So that was also a new world.
Stephanie:
Got it. So then you quickly decided to head back to your e-commerce marketing type roots and go to Facebook afterwards?
Nate:
I did. So it was a finite assignment over in Malaysia and when I came back with Google I kind of felt like I was coming back to the same thing that I had left and I wanted to do something different. Facebook offered me a role, very similar but leading the team that that worked with one of their very largest advertisers. And that was more of a product heavy role in terms of working with the product teams to build things that would allow the largest, most sophisticated advertisers to grow their spend more.
Nate:
It was interesting, there were a couple of things that prompted me to leave. Which one was, it was very similar to Google, which is a wonderful thing, but you're part of a giant machine and it's hard to feel like you have a real big impact. And at the time, though they've changed this and allowed people to work from their San Francisco offices as well. I was commuting down to Silicon Valley from Alameda, which is about an hour and a half each way. So-
Stephanie:
Yeah. No, thank you.
Nate:
... it's kind of brutal. And actually a colleague at Facebook connected me to someone they knew at this company I had never heard of, Cardlytics. It's a ad platform, much like Google and Facebook, except it operates entirely on banking channels. So if you log into Bank of America or Chase, Wells Fargo, one of many, many banks, you'll see offers from different companies for some sort of incentive to purchase like a cashback rewards or something like this. And that's where we operate.
Nate:
And it's a much smaller company for one so I enjoy feeling like I have a bigger impact, but the common thread through these three companies that they all sit on an amazing trove of data. So Cardlytics can analyze the purchase behavior of about half of the credit and debit card swipes in the US and we're in the UK as well.
Stephanie:
Wow. That's a lot.
Nate:
It is. It's amazing. And so I've learned from Facebook and Google that when you've got an amazing first-party data set, then you can kind of get a seat at the big kind of table and so it's a lot of fun to analyze that and see how it can apply to marketing.
Stephanie:
That's cool. Were there any learnings that you had from Google and Facebook that you kind of brought with you or best practices when working with large brands or a large e-commerce like store owners that you saw where you're like, Oh, a lot of people were doing this and we noticed that was actually the wrong move, or here's some best practices we learned from the top brands that smaller brands could apply, that you maybe brought with you to Cardlytics?
Nate:
Yeah, I mean, the first thing that I tried to do with my team when I came into Cardlytics was change the mindset about what is big and the impact that we could have. So we'd gone from this really small company to now, there's about 400 employees, and we've been public for about a year and a half, but it's still pretty early, pretty young. And I think a lot of the Cardlytics employees had viewed the going public as, Hey, we've reached the big time and we've made it. And I kind of tried to share this viewpoint of the ad budgets, the marketing budgets that are out there, the potential for growth that I saw at Facebook and Google to really kind of pay them big I would say.
Nate:
And I also saw that because Cardlytics is a different sort of advertising platform, but a lot of the language was language that we spoke internally and we have kind of impressed that upon the marketing teams and so there was a lot lost in translation. So I think one thing, Facebook and Google have almost been able to use their own language because they're so large, but it's become industry standard and we need to conform to that to make it easy for marketers to make apples to apples comparisons when they're thinking about their budgets and how they spend it. But there's been an evolution. So I started Google in 2007 and at that time it was all about search and it was all about clicks and-
Stephanie:
And still is.
Nate:
Well, it is, it got more sophisticated though, you know what I mean?
Stephanie:
No, no. I mean, I just left, let's see, two years ago from Google and I still feel like they're so heavy on search.
Nate:
This is true but it was the greatest sales job in the world. I'd go in, I'd say, well, you got a hundred clicks, but your competitive group got 200 clicks so let's go ahead and double your clicks. Here's the budget that'll do that for you. But it evolved, it went to measuring the money that was spent off of each click for example, looking at your conversion rates and getting into the mobile experience, trying to get marketers to catch up to consumers in terms of the fact that everybody was shopping on their phones or a good enough amount of people to warrant some serious attention.
Nate:
And then moving on over to Facebook, because Google had that first mover advantage of everything being based off of what you see from the click, it was trying to open up people's eyes that there's more than just last click when you look at an attribution model, that there's a lot of influence that happens prior to that. And Facebook always, we always said internally they figured they were undervalued by like 30% because of all this view through attribution that they're losing.
Nate:
And then ironically getting people to stop targeting so granularly, even though it's possible to let the machine do its work and start doing machine learning, based targeting so that Facebook could open up its inventory more. And I think that the evolution, and I'm definitely biased obviously, these are the moves that I've made in my career, but part of the reason I've made these moves is I see the next stage of marketing getting more and more rigorous about what is actually bringing an impact. This is why it was so hard when I was doing branding work in Malaysia. It was not so much a return that was required, but a reach and frequency, and it didn't really matter how that was gained.
Nate:
It was just, let's hit a lot of eyeballs a lot of times, and Cardlytics is on a totally other end of the spectrum where it's not even about your interests online. It's just, where do you lay down the money, on what sort of categories, what have you done in the past, what's the basket size and the frequency, and these sorts of things. I think that's a natural evolution of marketing as you get better data, you're able to cut out the waste more and more and get more efficient. At least that's the idea.
Stephanie:
Yeah. How do you see marketing spend evolving over the next couple of years when it comes to measurement and ROI? Do you think it'll change how people think about things? Like you said, they used to just think about clicks and maybe impressions and then they started niching down a bit and wanting to actually target maybe who their customer is, and where do you see that heading over the next five years?
Nate:
Five years is a long time to make-
Stephanie:
I was going to say 10.
Nate:
Oh, my gosh but yeah. It'll be implanted in my retina somehow in my screen. I think, obviously I'm talking to you now from my guest bedroom and there's this whole pandemic going on. These kinds of catalyst events are what I think make large vector changes in things that would happen slowly over time anyway, right? There's a shift to digital over time. If all of a sudden everyone's TVs had exploded, there would have been a faster shift. And I think that the fact that a lot of marketers have either pulled back their spend or just paused all spend entirely, means that there's going to be a whole new shift when they go back to whatever the new normal is because you're going to look at every channel from a totally fresh perspective.
Nate:
And obviously things have shifted online more and I have some interesting stats that I can share about that as well. There's been this online shift of people who maybe had never purchased groceries online or maybe they were happy just with their broadband cable and now they're doing all sorts of streaming services, whatever it may be. So I think online is going to benefit a lot as people see that they didn't have such a huge downswing or maybe they didn't notice a big change when they canceled some channels and not others.
Nate:
But I also think over time, and we were really good selling with data at Facebook and Google to explain why more and more money should be shifted through those channels. And they weren't bad decisions but there are a lot of other marketing channels out there. Obviously, Cardlytics is one on my mind but there are several that have the scale and have the data to challenge some parts of the marketing budgets that have just almost, not mindlessly, but I don't know if they've followed the trends to shift to Facebook and Google.
Nate:
And so both of those channels have diminishing returns. Like your first audience that you target on Facebook will have amazing ROI and pretty soon you're going to get a look alike audience and pretty soon you're going to just kind of expand it out and the ROI falls as you do that because it's a less rich pool of potential consumers. And it's the same thing with Google, if you think about the keywords and for some reason I use running shoes as an analogy a lot, but that first keyword that says, I want to purchase running shoes today, will have an amazing return if you bid on that.
Nate:
But there's only so many and if you want to grow, pretty soon you're bidding on tips for healthy lifestyle or something like that. You're still trying to sell some shoes, but it takes a lot more clicks to get those shoes sold. And so one of two main points that we try to make when we speak to marketers is, Hey, listen, you'll be fired if you don't advertise this on Facebook and Google because they're amazing channels and you should use them. But there's a point where just because it's easy doesn't mean you pump more money into those. You need to take the lowest performing set of your marketing spend and see where else you can put it. So that's a lot of the conversations that I'm having these days.
Stephanie:
So you said you have access or, Cardlytics has access to lots of data and I think right now is a perfect time to wonder what kind of spending habits are happening in this COVID environment? What are the changes occurring? What are people spending on? What kind of info do you have to share around that if any?
Nate:
I have some interesting info. So we have a great marketing team but what I meant to say was, also we have a great analytics team and no more than a week into this stay at home lock down that most of us are experiencing, they built this dashboard where we're looking at quite granular categories and how the spend is changing year on year, updating every week, looking at all the different DMAs in the United States, and so we can see what happened. And right around the beginning of March, all spend everywhere just plummeted, as you'd expect, online as well. And if you look it's quite a depressing heat map. It's just a red United States with various shades of red.
Stephanie:
Yeah. As expected I guess, but still sad.
Nate:
It was sad, it was sad. However, we've seen some interesting shifts and there's some that are pretty obvious, like people shifted to online grocery for example. There are others that are coming in that I think are kind of interesting and you saw where it was quite depressed in the home improvement category for example. And now online for home improvement has gone up like 64% last I saw, and you'd see where there's this trough of people not doing anything and hunkering down and then all of a sudden they start spending on their homes. What happened-
Stephanie:
Oh yeah. Getting all handy at home. I can-
Nate:
Exactly.
Stephanie:
I started looking at things being like, could I fix that? No. But it's a good idea.
Nate:
Following home improvement was when parents I think started to lose it a little bit and so the online toy purchases and kids' products have gone up significantly. We just bought a small kitty pool to put in the backyard as we realized we can't go anywhere else.
Stephanie:
Yeah, I bought into that as well. I bought a, let's see, a scooter for my two year old, a lawn mower bubble machine. I'm like, anything that helps, here just take it.
Nate:
Absolutely. Exactly. So health and beauty has gone up a lot and pet goods up a hundred percent. A lot of that is shifting from offline to online, but that's one that happened almost right away. And so you see, and I guess these aren't surprising, it's following what you'd think of in human behavior, but make sure the kids are occupied and, Oh my God, what if we run out of pet food? And so that's gone up quite a lot.
Nate:
But I think the bit about online versus offline was a little bit surprising to me, but I suppose makes sense. And lends itself to how I think marketing is going to change, is how it's changed geographically over the United States. So if you look at online spend year on year, it's gone up across the United States, but on the coasts, especially if you think of DMAs like San Francisco and New York, it hasn't gone up as much because I would hypothesize there's not as much change in behavior that's really needed. People are already buying largely online.
Nate:
If you look at the smaller DMAs, especially the more in the middle of the United States and just smaller city areas, they've spiked a lot more. And so their year on year changes are more toward the high, not high, but mid double digits increases in online spend. So that's one of those catalysts like I mentioned where maybe people were just fine doing their brick and mortar shopping because that's what they were used to and their peers and people around them in their communities were kind of doing the same thing. This has really changed the behavior specifically in these smaller DMAs. And that's where I think after this whole thing is over, you'll see a level rise in e-commerce. Some people will go back to their old behaviors, but I think a lot of them will stick.
Nate:
And I was reading an article of some, there was a financial article and this guy was, I think he managed a hedge fund or something like this, and he was writing about how shocked he was at how easy online banking was, which is like, well, I've been doing that for a long time, but there's some people that were just stuck in their old ways. And once people realized that it's quite easy to get your groceries delivered online or to do whatever shopping it is online, online banking, we've seen an increase, which has obviously helped Cardlytics since that's our whole platform, is online banking.
Nate:
But I think those customers, some of them will stick around and the challenge for marketers that we're starting to talk about now is, Hey, if you are lucky enough to see an increase in your category, as soon as things start going back to normal and businesses start opening up in reality, like brick and mortar, how do you retain those customers? And I think that'll be a big challenge for marketers just to hold onto as much as they can of whatever they've gotten from this if they're online already.
Stephanie:
Is there any advice during that transition of like, here's some ideas of what you could do to kind of keep that clientele? Because I could see you're saying the more urban areas who maybe were not online before, having to use different messaging for them to convince them, this is still the way, which it probably is. Like online banking, whenever my parents were like, I'm headed to the bank to cash a check, I'm like, Duh, why? And they're like, I'm not doing that on the phone they might take my data. And I'm like, okay, go ahead. You drive 15 minutes to go cash your check mom. But is there any different advice that you would give for those kinds of communities who maybe weren't online for certain things before versus other ones that didn't really change as much?
Nate:
Yeah. I mean, it's going to be, a loyalty marketers are going to be in their sweet spot where that'd assist building that, but there's a lot of companies that we work with that are all focused on customer acquisition, and they're loath I think to spend advertising dollars on existing customers because they already have their access to these customers, whether it's a mailing list or whatever it might be. But the reality is a lot of those emails aren't opened or bounce or for whatever reason. I mean, even Amazon advertises quite a bit with us and just because you have people shopping in one business area doesn't mean that it's easy to get them to shift to another business area. Right?
Nate:
So what we've been saying is, before these people leave let's anticipate who's likely to leave and we're looking into models for propensity to churn, for example. So we can look at who stops using a certain service or stop subscribing, and then look back at six months and when I say who, this is all anonymized data. By no means do I know you and your bank account. I would know bank account, 5632 or whatever it might be and a whole group of them, but what is the change in purchase behavior that happens leading up to this and then who can we identify that hasn't yet churned but is starting to exemplify that sort of behavior. And so you can start isolating groups that maybe haven't reached this type of loyalty that means they're going to stick around.
Nate:
And it could be as simple as just analyzing your own data as a marketer and seeing what's the average frequency of purchasing or the spend amount of those who have stuck around for a long time. And then those who are, we call them one and done, right? They try the service because they have some offer and then they're gone. And the people that are still beneath that threshold, whatever it is that you designate, are the ones that you need to invest in and hit up with a message before they go away.
Stephanie:
Got it. What are your views on how e-commerce is going to change after all this is done? I know that certain people will be doing more things online, some of them might drift back to their old methods. Is there any other things that you see happening or changing for good or are new things coming about over the next year or two after this kind of calms down?
Nate:
Speaking as just a consumer one thing that's been convenient I would say is, I'd like the ability to go into a store of course, but those that are open, that do curbside pickup and things like this, they all want payment beforehand online, right? So there's no contact between two people. I think I could see a mesh of online and offline happening a lot more frequently where you've already selected whatever it is that you want, maybe you've already made your payments, whatever it is. So that when you go into the store, it's more like an Amazon store almost where you go in and you get your goods and you just leave. Right?
Nate:
So using technology even in the brick and mortar environment to make a more seamless process and it can allow for maybe fewer lines, better customer service, that sort of thing. I think on the marketing side, e-commerce is nothing new, but I think this shift is going to mean even those that had topical knowledge of things like measuring incrementality or looking at the analytics of their marketing programs, they're going to be forced to dig in even more because it's just going to have a shift in importance and you can no longer be on the surface and do your marketing. I think there's going to be a requirement to dig in a little bit deeper on the numbers and know the impact of your marketing. Which I guess is a natural trend anyway, but as I said I think this will accelerate that.
Stephanie:
Yeah, completely agree. So you said you have 50% of insight into the spend in the US with people moving to more banking online. Where do you guys project yourselves to be within a couple of months? Do you think you'll have 60%, 70%? What are you thinking?
Nate:
Well, the percentages is derived from the banks that we have partnerships with. I'd love to say they're nimble and quick to form these agreements, but it takes a long time. But Cardlytics, when I joined, or I guess for most of its history it was this long tail of credit unions, there is something around 2000 financial institutions in our network, but it's a really, really, really long tail. The anchor partnership that we had was Bank of America, and then early last year we brought Chase on as a partner, and then Wells Fargo and later this year will be US Bank. So it will grow but it happens slowly over time. The shift online just means that there's going to be more people who are, hopefully, interacting with these offers and looking a little more closely at their finances and hopefully, using our ad network kind of more regularly I suppose.
Stephanie:
Got it. How does that partnership work? Because I was reading through that you guys partner with the banks and you run their rewards programs, right? And in turn you have access to the data and all that. Can you explain that a little bit more because it's a super intriguing model, but it also sounds very complicated where I'm like, wait, who's doing what? And so you guys are running rewards programs, and you're doing marketing stuff. How well does all that work?
Nate:
Yes. So we kind of think of it as three groups that that can benefit. So you've got Cardlytics and we take in advertising revenue, which is wonderful and we like that. You've got the bank and the reason the banks are motivated to do this with us is because they get to offer something to their customers that's a value add. So we call them offers rather than ads, which they are. And so a logo that'll allow you to have say, 10% back if you go and purchase with a certain company.
Nate:
And from the bank's perspective, they're differentiating themselves from some of their peers who might not offer this. And a customer comes on and says, Oh, well, because I'm a customer of Chase, look what they're offering me, this 10% back or $5 back or whatever it may be. And in fact, when you do get your money placed back into your account, the money comes from the bank. So this is why the average consumer hasn't heard of Cardlytics, because Cardlytics is simply the, I guess the technology behind the platform and the Salesforce to bring on these brands.
Nate:
And so we will share some of the revenue that we bring in with the banks, but a large portion of what we share goes to the customers. So I think we've rewarded something more than $500 million in these rewards over the course of when the company's been doing this, which is great. And then we retain a portion as well.
Stephanie:
Okay. Got it. And then how do you take that data that you have access to? What do you do with that afterwards?
Nate:
Right, so the data, it all remains behind the bank firewall and when we analyze it at all, as I said, is anonymous as far as who it is. But we can look down to spend at a zip code level and we look at category spend and all this. The way we do it is in a couple of ways, primarily it's to target. So we might say, Hey, we know people that like to buy pet food but they've never bought pet food with your company, and we'll show an ad. We can get quite granular with that. We might say someone who did buy from your company six months ago but then hasn't bought since is a lapsed customer so let's target them.
Nate:
At the end of the campaign a big differentiator is that we'll actually look at the incremental impact of the ad.So we'll do a holdout group, and it's just a test versus control, which is not totally uncommon in marketing, but the difference is we know who's spending the money and who's not spending the money. And so we'll take this holdout group, we'll make sure that the way that they spend is the same as the test group by and large over the past year or so. And then we'll just look at the lift in spend between those who saw the ad and those who didn't, and the idea is that it would take into account anything you're doing on TV, on Facebook, on Google. So at the end of it you can actually say, well, what was the incremental gain that I got for the money that I spent?
Nate:
And incrementality is tossed around a little bit, but at an analytical level, at a 95% statistical confidence, you can actually see what the impact is of the ad spend, which is kind of the-
Stephanie:
The goal?
Nate:
The end goal. Right. And so that's quite interesting, and then I would say the targeting and the measurement are the primary ways that we use the data but we'll also work with some of our advertising partners to show a different business insights. And we can look at where the, if you shifted spend to you, where did it come from and how did that change over time or we can look even at, for brick and mortar companies, we've helped them decide where to open businesses based on where they have low market share and where there's increases in demand and things like that.
Nate:
I mean, it's almost endless, the possibilities, as long as we are careful about observing our, we don't want to give too much data that anyone would be able to make market decisions or certainly not reveal anything personal about a customer, which we don't have access to any way, the banks scrubbed that before we get that information.
Stephanie:
Yeah. They know better. So is there any themes that your partners come and ask you guys for help with, like you said some of them asking for where to open a brick and mortar location. Is there a couple of questions where you're like, Damn, we get this a lot, them coming and asking us for help around this or that?
Nate:
I think a lot of them are curious if their perceptions of market share are real and whether they really are strong or weak in certain areas and we can confirm that for them and help sustain it or change it depending on the situation. I think that's kind of the most common but I'd say also, as far as spend categories, people are curious about who their competition is. And by that I mean it might not be the same type of service.
Nate:
So if you think about audio streaming, is that a competition for book purchases or is it competition for music streaming? Is it books on audio or is it podcasts or is it music or is it something entirely different? Is it, I don't know, travel or sporting goods or something like that, and so we can actually look at, in a campaign, if you bring over customers, where does their spend decline in other areas?
Nate:
So for example, on podcasts and books, the competition is share of ear, if you will. So they might decline in how many books that they're purchasing, but actually they'll be more correlated to maybe fewer premium subscriptions for music, as an example. Which makes sense I guess, like there's only so much time you can put something in your ear and go about your business and listen to it whether it's a spoken word or it's music, really makes no difference to the customer.
Stephanie:
That's great. And how do you guys, you were talking about there's a lot of privacy efforts that you guys make sure when it comes to the bank data or your data, what are some big things you're doing to make sure that data is protected and similar there'll be one question everyone's like, Oh my gosh, Cardlytics has all this data. What are you guys doing to make sure it's protected and used and not abused?
Nate:
Sure. We take it very seriously obviously, it's something, I remember a same question would come up to me at Facebook and Google. It might be about the customer or it might even be, Hey, you're also working with my competitor. Right? And the first thing I would say then, and I'd say now as well is, look, if we messed up here and did anything wrong, the whole model comes falling down, nobody would trust you, nobody who does business with you. The bank certainly wouldn't partner with us if we weren't responsible. Right? And the banking industry is one of the most regulated that we have in the US, and so there are a lot of safeguards, for one, before we see any data from the banks, the banks are stripping out anything that we could see that would actually tie to us that person. Right? So we don't even get that.
Nate:
Second, we have to operate behind the firewall so any data that we see about market spend and so forth at a raw level doesn't leave our servers. So we don't actually give that to the marketers. So by the time it gets to the marketer we'll definitely share specific insights, but it'll be trends that are grouped together in terms of people or companies. And so we've got quite explicit guidelines on our data practices that we follow. There's a few different checks and balances I suppose.
Stephanie:
Got it. That makes everyone feel better I'm sure. But yeah, like you said, Google and the Facebook Store, when you see how much data they have, any other company's no match to that. How do you think about, when it comes to acquiring new customers in your, like to me all the customers you're working with sound much harder than some of the other guests we've had on the show. You know, acquiring normal consumers, you're having to acquire banks and big brands. How do you all go about creating those partnerships and keeping them and keeping those clients happy because I could see banks being hard to keep happy because they're just kind of, some of them anyways are in a different era it feels like, at least some of the banks I work with.
Nate:
There is a spectrum of the banks that are more or less progressive or more or less digitally savvy. I work on the advertiser side, but we have a great bank team which partners with these guys, our founders, our CEO, they came from the banking environment as well so we kind of speak that language. And I think what we offer is one, there's this reassurance that on the, for example, the privacy side and the data protection that we do well with it. We take it seriously and we haven't breached that trust with any partner before. And then every bank wants to please their customers and retain their customers and you might not always see that in practice, but that's what they want and they're all competing with each other.
Nate:
So if we can offer a great customer experience where the customer can get some cash back from some different brands and make some money from it. Some banks are more concerned with the revenue share and some would rather plow that revenue share back into the customer rewards, just kind of depends on their approach, but it's a way to help their customers and retain their customers. But it takes a long time to form those partnerships and it's a lot of technical integration as you can imagine. And so once they're formed they tend to stick with it for a while because there's a lot of investing on both sides.
Nate:
On the advertiser side, I mean, once we get to the point where we've really explained everything, typically they want to advertise with us, but the challenge is one, they've maybe never heard of us so we have to start from zero. Two, we have to explain how we're different than something else, like an affiliate marketing channel or something like that. And then to really figure out if we're worthwhile, you have to dig into the incremental return, which is why I touched on that because we are behind the bank firewall, we're not going to share all the impression data and who your campaign reached exactly on a one to one basis. And so if we don't plug nicely into whatever you formed when you're marketing with Facebook and Google, it's a bit of extra effort and there's a lot of work getting our data scientists together to kind of verify, what we say we do is what we actually do and so there's this rigor that's needed.
Nate:
Which is why, going back to what I said about the shift that e-commerce and marketing experts having to get more under the hood with what they're doing will benefit us because if you're willing to spend the time on looking at the numbers, we usually benefit. But people are busy and they don't always have the time to do that.
Stephanie:
Yeah. Do you spend a lot of time training them on, here's some metrics you maybe should look at or here's things that are important that you never considered before, and if so, what kind of things should they be looking at that maybe a lot of them aren't right now?
Nate:
Sure.
Stephanie:
Or what data do you give them where they're like, "Ooh, that's good I've never seen that." And you're like, "You should have seen this before."
Nate:
Yeah, we've kind of got two sets of advertising partners. There's those who don't really want to be bothered with those details, and it's a little frustrating because I feel like there's this wealth of data that they could analyze. They just want to know that they're getting a customer for 20 bucks a pop or whatever it is and they're good. And then there's others who dig in more and tend to eventually become our larger partners and they really want as much data as we'll give them.
Nate:
And the things that we educate them on, it might be like what their expectations should be on marketing incrementality, like how much bang do you really get for your buck? And when you do bring a customer on, like I said, where is that share coming from? Where are they declining in spend? Because it's rare that somebody just spends more money. Sometimes they do, but not on a frequent ongoing basis, and so where's the money coming from and is your competitive set what you actually thought it was or is it something a little bit different?
Nate:
And then looking at why people stopped using a product so I mentioned this propensity to churn, which is kind of predicting the future of what somebody is going to do, but you can statistically do this in a lot of cases by analyzing large groups of people who have had this behavioral change in the past and then seeing who else fits that model, has it quite reached the point of stopping their spend. That's something that I think is kind of surprising to some as well.
Nate:
And we've got a kind of an intro slide that we use where we say, you see these three data points from your customers, once they're on your platform you know what they're doing, but we know everywhere that they're spending their money. And that sheds a lot of light on to the type of person that they are. And the analogy I use in, University of Oregon wouldn't really like this, but I love Oregon Sports and Facebook would look at me and say that I'm a huge sporting fan, specifically Oregon Sports, but I almost never spend any money on it. Right? I do a lot-
Stephanie:
You're the worst kind of customer.
Nate:
I'm the worst kind of customer and so there's this discrepancy between kind of your behavior and so a marketer would say, Ooh, let's target him for a lot of jerseys or whatever. Cardlytics would say, no, this guy, he's a cheapskate. He's not going to go and buy-
Stephanie:
Stay away.
Nate:
... anything. Let's get the person who, whatever they do online, they're plunking down their credit card for certain products and so I think that's kind of a different mindset as well. Looking a little differently about how you form your ideal audiences for targeting.
Stephanie:
Yeah, that makes sense. Do you give them dashboards that they can actually play with or do you kind of give them customer reports based on what they want, and if so, how do you manage those different types of clients. It sounds like a lot of different clients to manage how do you keep track of it all?
Nate:
Yeah, so it kind of depends on how big the partnership is with us. Right? We haven't really built out our long tail so most of it is pretty white glove service, but by and large, a smaller advertiser will get certainly access to their ad spend, how many clicks, impressions, conversions and all that. And then we'll make agreements as part of a partnership. Certainly if someone makes a commitment to be with us for a year and to be advertising over time, we'll agree to it. Certain analytical, custom analytics is what we call them, and that's jointly determined by our, was really designated by the client themselves, but our analyst team will come in and talk about what we can do and we'll figure out what the problem statement is and what they want to figure out and we'll deliver a customer report.
Nate:
And then we're starting to develop a dashboard as well which some advertisers have access to. And there you can look at the competitors and the competitor category that you'd like your information on, geographic areas. And then that data is updated periodically and it's limited set of data but it kind of answers on an ongoing basis what the customer analytics might do on a one off basis. So we're moving in that direction, providing more and more insights into the business or we're trying to. There's always a challenge of you've got a lot of data, but making sense of that is another matter altogether so we really try to figure out what the business problem is rather than, it would be interesting to see, and then throwing out a lot of requests.
Stephanie:
Yeah. Got it. But therefore the other-
Nate:
But it is pretty interesting.
Stephanie:
That sounds really insightful to be able to provide that information to them and see how they actually utilize it to change their marketing strategies or product strategy or any of that so yeah, that sounds really cool. All right, so we only have a couple minutes left. At the end of each interview we do something called the Lightning Round, brought to you by Salesforce Commerce Cloud. It's where you quickly answer a question, whatever answer comes top of mind, and you have one minute to provide an answer.
Nate:
Okay.
Stephanie:
Let me know if you're ready, and I'll start with the easy ones first.
Nate:
I'm worried but ready.
Stephanie:
All right. What's up next on your reading list or audible or podcast?
Nate:
Yeah. I want to sound a lot more intellectual here, but I've been into C.J. Box as an author and it's like this super fictional reading about this game warden in Wyoming and it's kind of an escapist.
Stephanie:
Hey, I like those kind of books I feel like I have to read it right now. All right, what's up next on Netflix or Hulu queue?
Nate:
Netflix. I would like to watch Extraction.
Stephanie:
Okay.
Nate:
Yeah. But typically we're watching a lot of cooking shows, we've gotten into that a lot.
Stephanie:
Any good recipes recommended, [inaudible 00:45:02]?
Nate:
Mostly they've been focused on restaurants that I can't go to, which is really frustrating.
Stephanie:
Oh man. Yeah, that's sad. All right, what's up next on your shopping list? Doesn't have to be groceries, it can be anything that you want to buy next.
Nate:
I've heard about the therapeutic values of pressure washing. I want a pressure washer. We'd go out there and just clean the house. It's part of that home improvement upswing.
Stephanie:
Yeah. You're that person. We're going to walk by and be like, Nate, take it away from him. He's been doing it for eight hours. All right. The next hard question. So your job is to stay ahead of expectations and your competition. What do you think is up next for e-commerce pros?
Nate:
I think within the marketing budgets that you're spending, up next is slicing those more and more granularly, and by slicing, I mean looking at the impact of each portion of your marketing, even within the same channel, and figuring out if that can be better employed elsewhere.
Stephanie:
Great answer. All right, well, this has been a really fun interview. Thanks for coming on the show and see you next time.
Nate:
It was a pleasure. Thank you very much.
They say that a goldfish grows to the size of its tank. But what if that small fish is ready to launch into a bigger pond? That is the situation Sea Bags has found itself in recently. With a rabid following and millions in revenue, the Portland, Maine-based retail store has outgrown its initial eCommerce setup and is ready to grow into a major totes and accessories brand thanks to growth fueled by personalization, storytelling and an incredible social media presence. On this episode of Up Next in Commerce, Laura Hnatow, the Vice President, Marketing & Ecommerce at Sea Bags, explains how she is helping to expand the eCommerce platform using a cross-platform social media strategy, and she digs into the re-platforming experience she is leading to help Sea Bags utilize tools like A.I. and M.L. to grow their business both online and as they expand to brick and mortar locations.
Key Takeaways:---
Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible eCommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
--- Transcript:Stephanie:
Welcome to the show.
Laura:
Hi, thanks for having me.
Stephanie:
I'm really excited about you joining me today. I just was browsing through your website, Sea Bags, and I wanted to buy like about five things.
Laura:
Oh, that's flattering.
Stephanie:
Yeah. It's awesome. An awesome product. I'd love to hear a little bit about what Sea Bags, in your own words, and why you joined it.
Laura:
Yeah. Sea Bags is a company based in Portland, Maine, that manufacturers bags, totes and accessories from recycled sails from sailboats. We gather those sails one at time from the boating community all around the country, and bring them back to Portland, where we cut them down one-by-one. Each sail is a little bit different, therefore each bag is a little bit different from the next. People come to visit us in Portland, where they can actually see the bags being made on the waterfront, at our building that actually overhangs the water, with the hum of lobster boats outside, along with the sewing machines and the seagulls. It's really a great experience in quintessential Maine.
Laura:
The reason why I joined Sea Bags... It was almost seven years ago at this point. The opportunity was presented to be by the current CEO. It was the story effectively. The whole story about the brand. It was so compelling. I've worked for a number of brand manufacturers before, L.L. Bean and Cuddledown. They all had great manufacturing stories to tell, but this story was so much more authentic and rich. It was that authenticity that made the story so easy to tell. They also had built the brand up on these three core tenets, that drive the business every day. It was this very defined mission behind the company, of being made in the U.S.A., sustainable in product and practice, and also committed to giving back to the community generously. Those three things guide all of our decision-making in everything that we do. With such a clear mission and mandate, in terms of how we were going to grow the business forward, to me it seemed like a no-brainer to join that team.
Stephanie:
Yeah. That's very cool. What is the story behind Sea Bags? I think it started with the Founder's dad. Right?
Laura:
Yeah. Many years ago, the original founder, Hannah, her dad, he was in the sail bag-making industry, for the actual bags that hold sails in between seasons. He made a recommendation to his daughter, "You should try to figure out what to do with these old sails. They're just going to landfills." She crafted the first ones. It's our current COO, Beth, who actually grew the business from there. She partnered with her and then grew the business to where we're at now, with the help of our current leadership and CEO. Yeah. It started as a hobby business, and now has really ground to be a lifestyle brand.
Stephanie:
That's amazing.The one thing I really liked, which I didn't know before, was I didn't realize that sailboat sails actually can't break down. So when you guys say you're focused on sustainability, you really mean it. Nothing would happen with those sails, if you didn't transform them and give them a second life. Is that correct?
Laura:
You're absolute right. Yeah. Predominantly sailboat sails are made out a material called Dacron. Dacron has an element of plastic fiber in it. It's that resilience that lets the sail hold up to the strength of the wind and actually propel a sailboat forward. But it is that strength in the fiber and how it's made that makes our bags so durable as well. Because of that inability to break down in the landfill, we knew that that material, itself, would be perfect for a bag. They wear like steel. People have gone into our store to show off, "Here's my bag. I brought it 15 years ago." They wash it regularly in the washing machine. They look great. Yeah. They do wear really well.
Stephanie:
That's so cool. How do you convey that uniqueness to your customers, especially through an online experience? I saw some really great videos that you all had on your website, which I thought were amazing. Is that part of the way that you convey that?
Laura:
Yeah, absolutely. Storytelling is one of the things that we do best. Like I said, that's why I joined the brand, is this rich story. We do a lot of content creation on our team. It's easy to do content creation when you have a lot to work with. Building really great video content... We have a new line of products all the time. We have new partners that we're collaborating with regularly. So being able to stitch together different videos, content pages on the website. We integrate a lot of user-generated content into the website and our marketing.
Laura:
So things like customer testimonials, but also customer images. We have a very rich user-generated content campaign, called our Sea Bag Citing campaign. It's a hashtag. And customers in that campaign will tag us and show us all the places they take their Sea Bag. It's really a great opportunity for us, because when we see a great picture, instead of us having to go out and stage a photo shoot, we've got a really authentic image of somebody vacationing using their bag in the environment that it was intended for.
Stephanie:
Yeah. I was very impressed when I saw your social media following and how engaged people were and the really great photos they were tagging you all in. I definitely see the world of online sales seems to be moving to social media and building a community. How do you think about building that up, and creating relevant content, and keeping those followers engaged?
Laura:
Yeah. I'd say it's one of the things we're really good at, but it's also probably one of the things that's the most challenging in what we do. Because people spend a lot of time on social media, but everybody's competing for their attention. I have a social media team with multiple partners on it. I've tasked them with making sure, across all the platforms, that, number one, we're showing different content, to keep different types of people engaged. And the other thing is that we're hitting the breadth of content that I'd like us to do.
Laura:
They have a filter that they put all of our content through, to make sure that we're showing the right variety of, and frequency of, things like behind the scenes images, testimonials, new product launches, PR news that we're doing. We're trying to make sure that we hit the breadth. And also, we're tailoring it to the specific types of platforms. Obviously Facebook and LinkedIn are not a synonymous platform so we make sure that some of the content goes on one location and we speak to those audiences a little bit differently.
Laura:
I think customers want to be invited to participate and we do a lot of that with either surprise and delight opportunities, where we ask people to come and bid on something for a chance a win to a wristlet. A wristlet is a small item. It's not like a vacation getaway. But that alone... people love the gesture. They love to participate. It's really interesting. When somebody does win a prize, it's funny how authentically and genuinely thrilled for the winner the other customers are. It does become very communal. They're like, "Oh, my God. I'm so happy for you. Great job. You're going to love it."
Laura:
Then we also find that customers... Getting back to this idea of engagement. This is delightful for us. Customers sometimes answer on our behalf. We'll get comments that say, "Do you have this bag in this color? Are you ever going to offer this again?" Before we can even comment, we'll have other customers saying, "Yes, they have it. You can go to this page." It's almost like we've got these brand ambassadors stalking us right within our social media. That is so flattering. It really does speak to a highly-engaged social media following.
Stephanie:
Yeah. That's amazing. Having people who are working for you and your brand without even asking.
Laura:
Yeah. Yeah.
Stephanie:
It's a key strategy, if you can figure it out.
Laura:
It is. It's great.
Stephanie:
Are there any new emerging digital channels that you are excited about or focused on right now?
Laura:
I think in terms of new channels, I don't think there is one. Social media really is where we're spending a lot of our time as a channel, in terms of trying to grow audience and engagement. We are playing around with some things like influencer marketing, which is important. I think some people might not call it new and emerging either. We're doing quite a bit in just dabbling in lots of different spaces. There is a lot of overlap. I think video is probably where we found the most success, in terms of developing content and distributing. Video specifically for Facebook has been fantastic for us. We're repurposing a lot of that video content again. We like to recycle. We put it in a lot of places. We're trying to incorporate it into the site. We use it for things like Instagram Stories. It's been really fruitful, so that's been really fun.
Stephanie:
Very cool. Any key strategy that you have when it comes to guiding a customer through that buying journey while utilizing social?
Laura:
It's interesting. We have a really defined and fine-tuned digital marketing strategy. We work with a great partner that helps us distribute all of our paid advertising. That would include paid social. One of the things about paid social that I think is challenging for people... I do chat with folks who say, "Facebook doesn't really work for us." I am always surprised to hear that. I think part of it is, it's the type of content that you're putting out in terms of advertising on Facebook advertising. Making sure you have the right mix of video, and static ads and then dynamic remarketing ads are really important.
Laura:
I think the other thing, too, is how you measure it. Of course, there's different attribution models. Last click attribution and first click attribution. Of course, Facebook measures the performance differently than some other folks might measure it. We base it on Facebook's measurement. When you base it that way, you'll see that the programs themselves actually perform much better than if you base it on the other attrition models out there using Google Analytics.
Stephanie:
That's interesting. I definitely see Facebook stepping their game up with the launch of I think it's Facebook Shops just yesterday or the day before.
Laura:
Yeah. It's so interesting. The landscape is changing quite a bit. I was actually talking about this recently with the CEO, because we see organic shifting quite a bit. We're doing a lot, in terms of SEO on the website and building organic content. We have a blog that we try to regularly publish. It's made a big impact on our SEO, but then all of a sudden when you have the search results pages changing to favor, again, more ad space? You do immediately see a falloff in your organic search results. Paid search all of a sudden is also doing much better, but you're also spending a lot more money perhaps than you had intended to.
Stephanie:
Are you guys doing any quick pivots to try and bring back the organic searches? How do you think about that when things change so quickly?
Laura:
Yeah. I don't think there is a quick pivot with organic. Organic is a long game, as always. The pivot that we're doing right now, and I wouldn't even call it that. We are looking at our digital strategy on a daily basis and really refining things. So if we see something taking off, we are chasing it. A great example is shopping at one point was doing very poorly. We didn't know why and watched it for about a week or two. It was right when things were headed down to a flat line period at the end of March. Everybody was in kind of a lull. Then all of sudden things turned around and a lot of e-commerce folks were seeing a spike. As soon as we saw that spike, we chased it. I think that's the thing. You really have to be on top of it and know when to chase it and keep increasing your budget.
Laura:
We've increased our budgets in area like shopping more than we've typically been comfortable. I would say the same goes for Facebook Prospecting. We found that Facebook Prospecting is performing incredibly well for us. We do a lot of prospecting with video ads for Facebook as well, and those are very productive too.
Stephanie:
Very cool. Did you have to adjust any messaging when it came to acting fast on that? With everything going on with the pandemic, did you kind of change how you target people and market to them? How do you think about that?
Laura:
We changed the messaging. Yeah. We definitely wanted to make sure we weren't being tone deaf to what was going on. We definitely pulled down any ads that had anything to do with travel-related products. We have a great travel collection. We pulled down all of those because nobody was going to be traveling. I think the thing that we did more so than the actual ad strategy was our product strategy changed a little bit. We wanted to look at our product from the viewpoint of how we could add more value to it, to help solve problems for people who were now stuck at home and still had life to conduct.
Laura:
The example I'll give is Easter came around and people were kind of caUght off guard by the idea that, "Oh, our Easter family celebration is not going to happen. The Easter egg hunt is not going to happen. I have a grandchild. How are we going to commemorate this holiday that is very important to a good portion of the population?" We quickly partnered with a local chocolate company that had just laid off most of its workforce. They were able to bring back five of their employees to help produce chocolate to put in our Easter buckets.
Stephanie:
That's great.
Laura:
Within a very short period of time... We thought, "We might sell 50 of these over the next three or four days." We sold over 700. It was one of those things that every day, we said, "How many more do we need?" It was really a matter of how much chocolate could the chocolate maker make in that short period of time? It was a real success story, in being able to reach out, help a fellow business in the community, but also solve some problems for customers. The comments we got from customers were unbelievable. Just saying how appreciative they were because they weren't going to be able to see their family and bring them something. This is how they were able to do that.
Laura:
So that was really rewarding. That afforded us a lot of opportunity in our digital advertising to reach new customers, to convert customers who were prospects and who were already looking into the brand. It was more about just being relevant with a message that solved a problem for customers. So then we took that same product strategy and same digital strategy and expanded it onto Mother's Day, and Father's Day, and Graduation. Even though a lot of the stay-at-home orders have been loosened a bit? I think a lot of people are still looking for some convenience to eliminate any unnecessary visits to stores that they don't want to make.
Stephanie:
Yeah. I completely agree. That's such a good strategy, to find partnerships like that. I could see that lasting into the future, where a lot of brands start thinking about who they can partner with. That seems like it would help future-proof both brands, if they figure out ways to work together and send business to each other. I think we'll see more of that over the coming years.
Laura:
Yeah. I hope so. I know for our brand, we're not going to stop doing it. It was a pilot that was a success. Now we've realized there is an opportunity here and the customers see the value in it. We've always been very collaborative as a brand. We typically do reach out and collaborate with a handful of companies that are like-minded in their business practices and approach. What we often bring to the table is that we're a sustainable product and they might not have that same messaging in their product that they can offer. Or the fact that we're a Made in the U.S.A. product, which again is really valuable to a lot of brands to partner with us. So we have similar mindsets and very much focused the Coastal lifestyles perhaps.
Laura:
A more recent relevant example, we're partnering right now with Life Is Good. If you're not familiar with that brand, they are an apparel and accessory company that basically delivers the message of optimism in all of their designs. Really quirky designs that we are now able to add to a Sea Bag, and then with these really important optimistic messages during this time that we're all going through. It resonates really broadly with customers. That's another example of ways that we reach out and collaborate. It's given Life Is Good an opportunity to have a Bag story that they sell to their audience, and it gives us a different story in terms of different designs and messaging for our audience as well.
Stephanie:
That's great. When it comes to messaging, does the consumer know the background of the flag, where it came from and the journeys that sailboat went on? Do they have any insights into that, so they can find of feel connected to their bag even more?
Laura:
Yeah. It's interesting. We would love to be able to pedigree every bag, but when you start talking about 700 tons of sails that we've saved from landfills, it's really, really challenging to figure out how we could actually catalog that many sails. On a one-to-one basis, no. But what we do is when we take a sail in, our customers are so great about wanting to share the stories. So we've had many cases where a Sail Trade, is what we call it. The customer will bring a sail into our store, for example. Just show up and unfold the sail right in the middle of the retail store and start talking about, "Oh, this is the sail that was on my grandfather's boat. As a kid, we sailed." They just go into this long elaborate story. What we try to do is get somebody from the marketing team downstairs to take notes, and talk to them about it and basically interview them a little bit about what the story behind the sail is. Because that stuff is so meaningful.
Laura:
We have a really great one on our website called The Santana Sail Trade Story. The gentlemen, Ben, tells the story about how this boat meant everything to him. He had this boat since he was 15. At this point, he was in his late 40s, maybe early 50s. He still has the boat but was retiring the sails. He talked about the different moments that that boat was present for his life and every smudge and stain on that sail means something. He hoped that everybody who buys a bag really understands how meaningful the heart of the sails are.
Stephanie:
That's great. Feeling like you're connected to a community like that, and another person, without even knowing them, I think it's super important. What people are going to want after all this. Now we're all getting in the state where we're connecting with people that we don't even know online.
Laura:
Right.
Stephanie:
We're getting used to that now. I think moving in that direction is really smart and also just fun. Knowing that you have something that has experienced things that you could never even think of.
Laura:
Yeah. Yeah. We like to say that carrying a Sea Bag is like carrying a story on your shoulder.
Stephanie:
Yeah. That's great. Have you ever had a sail come through where you're like, "This is from a pirate ship?"
Laura:
I don't know about that. There is a type of sail called tanbark. It's like a dyed tan-colored sail. The lure of tanbark, it's not often used in sail manufacturing today. It's definitely not as common. The lure is that the pirates, they used to use tanbark sails so that they wouldn't be seen on the horizon with the sunset. It was the way that they were able to sneak about in the ocean and not be spotted in the distance with a bright white sail.
Stephanie:
That's cool. So if you see one of those come through, you'll know. You'll know where it came from.
Laura:
Yeah, exactly. I do think we have some tanbark on the site right now. It is definitely a little bit more rare and we tend not to offer it all the time. But I think we have a handful of tanbark designs right now. They're just so cool because they are really uncommon and we don't always offer it.
Stephanie:
I'd also be giving the side eye to whoever brought that in, like, "What did you do to get this sail?"
Laura:
Exactly! I could be looking for their medallion. "Are you actually a pirate?"
Stephanie:
Yeah. I know. "Tell me." Obviously retail is on hold right now, but I saw you guys were expanding. Expanding actually one place that is close to my heart, Rehoboth Beach, in Delaware.
Laura:
Yeah. Yeah.
Stephanie:
We used to go there every single summer. I'm from Maryland. Such a cute beach town. How are you thinking about utilizing brick and mortar stores? How are they lifting each other up and accelerating your e-commerce as well?
Laura:
That's a great question. By the end of this year, we'll have 33 stores, spanning 12 states. That's really exciting for us because when I joined the company, we had two stores. That's a lot of growth. We open four to six stores a year. We're opening eight this year, alone, which is really, really exciting. I think that one of the important things with meshing the retail business and the online business is just a general omnichannel approach. Right?
Laura:
Our CEO likes to say that the e-commerce site is our biggest retail store. It carries all the products for the brand and you can see them all there at any time. And you go to our stores, and the stores may have most of those products but some different selections that might be regionally appropriate. For example, you mentioned Rehoboth Beach. There might be some coastal nautical chart bags down in the Rehoboth Beach store relevant to that regional area. So there's some things like that. But we try to do...
Stephanie:
Crabs all over the bags and whatnot?
Laura:
Right. Yeah. To customize and be relevant to that local region. If you were to go to a store and they didn't have a product, the great thing is that you can log onto the iPad at the store. They can get the bag for you that you were looking for and ship for free. We're using an endless aisle concept that leverages the flexibility that we have as a just-in-time manufacturer. We make our bags on demand for customers. It's great to have that flexibility, where we don't have lead times to worry about. We're sourcing everything locally here in the United States. Most everything we source is within New England. That's really criticaL, in terms of being able to take an order and turn it around in a matter of days.
Stephanie:
Yeah. That's huge. With all this expansion that you guys are experiencing, how have you had to adjust your technology, your platforms you're using. What does that process look like with such a large amount of change that you guys have been experiencing?
Laura:
Yeah. It's great. I'm actually really excited about this. It's very timely. We decided right in the beginning of this year to move forward with replatforming our website. It's a huge endeavor. We realize that over the last six years, we've been on this very exciting ride of growth and expansion. Quite simply, we've outgrown the website platform that we're using. I do find it really rewarding to think that we have squeezed every ounce that we could get out of the current platform we're on. There's nothing that we have left unturned.
Laura:
Embarking onto this new platform, we're working with Salesforce Commerce Cloud. There are so many new opportunities for us to improve the customer experience and to refine our practices, in terms of how we approach selling to customers. Using new technology like artificial intelligence and machine learning, personalization, I think we're going to be as a team much more efficient and much more sophisticated in how we are able to speak to our customers and give them what they want. It's going to take us a lot less time to manage that. I'm really excited about being able to grow the business utilizing those types of tools specifically for the e-commerce website. But the great thing is that it really does trickle into the other channels as well that we sell in retail, for example, too.
Stephanie:
Yeah. That's very cool. Tell me a little bit more details around how you plan on using AI. When you think of using that with Commerce Cloud, what are your ideas around how that's going to improve the consumer experience? What does that look like?
Laura:
Yeah. We have some personalization currently on the site that we do. Not too much. It's mostly personalized recommendations. I'm really looking forward to using that, in terms of... One of the most exciting things for me is the merchandising of the site and making sure that the predictive sort of the categories. When a customer lands on a page with 150 different wristlets, that the ones that are most relevant to them are actually rising to the top. It's not based on a static presentation of what we think is the most important things to put at the top.
Laura:
I think that's really important. One of the things on our roadmap after the site is launched, is to actually take a look at the marketing opportunities in terms of email marketing and how we can pull some of the artificial intelligence into the journey map of the customer and how we message to the customer in their lifecycle. I think a lot of those components as well will be really exciting to start to create not just a series. I think in the past, people have created a welcome series, or a trigger series after they buy X product.
Laura:
I think instead what I want this to be is a more dynamic opportunity to generate emails to customers that are, again, pulling in predictive content. So the customers have performed certain activities, and then the machine learning decides, "Okay, great. Because they did these five things, the most relevant thing to put here is this item and a message about this." That's what I'm excited about. And then being able to look at that data. I think the data is so exciting too, and knowing what works and what's not working. And being able to do site tweaks and adjustments to it will be really helpful.
Stephanie:
Yeah. I completely agree. I was just going to ask, were there any metrics that you paid attention to in the past that you think it will be way easier to get to? Or that you weren't able to access easily because it was too hard to maybe compile all the data and see it easily. What are some of those metrics if so, that are now going to be accessible to you that'll really help?
Laura:
I'm not sure if this definitely going to make it easier. But what I'm really more excited about is seeing... The measurements are customer lifetime value and customer acquisition costs. Starting to really understand the customer lifecycle better. So that once we see customers logging onto the website. Also, we just launched a Customer Loyalty program. Getting customers more engaged and in the habit of, "To get your reward points, logging in and making sure." We're keeping track of what customers are doing and delivering them relevant content, as opposed to just sending them too many emails.
Laura:
I think I was telling you, I'm in the process right now of cleaning out my email and unsubscribing from everything possible. I don't want people to have that experience with our brand. Saying, "You guys just email me too much." I want the contact that we're sending them to be interesting. The one thing I will tell you, and again this goes back to how we engaged our audience is. The open rates on our emails are really high. The click through rates are high. Our customers, like when we do these auctions periodically on the website.
Laura:
After the auction is complete, we usually take a look at who won the auction. We'll just see who the customer is. What's their lifecycle like? Almost every time when we do this, the customers email open rate is over 80%. They're highly-engaged people. Of course, they're participating in an auction. You would assume that. But it is so interesting to see somebody opening that emails from us. That to me, is a real testament to the strength of the brand and how engaged people are.
Stephanie:
That means you're definitely doing something right. For sure. How are you assembling the team for this digital transformation that you guys are about to undergo? How are you thinking about aligning your organization and your team members so everyone can help make this transition quick and easy?
Laura:
Yeah. That is critical. So what we did, it's probably not so different than what a lot of other folks might do. I assembled a core team. A Project Manager whose in charge of managing the project with our Systems Integrator. Then I have a Lead Developer in-house. His job is really to get into the technical details behind the development and transition. Because he has been primarily responsible for all of the development on our current website. I'm on the team, more from a strategic guidance standpoint and decision-making. Then our CEO has been really involved as well, which I really appreciate.
Laura:
This is the biggest project that our company has undertaken in the last six years, to do this type of major replatforming. It's a totally new platform. We've done some previous site launches and relaunches, but this one's pretty huge. I still have a number of other people on my marketing team who will participate and we'll start pulling them in one-by-one. We'll also embarking on a training curriculum, that we're developing in-house for our team. That's going to be going on while we're doing the developing, so that we're ready to go when the site's ready to launch.
Laura:
We're also looking at peripheral technology that is impacted by this transition. So an example I might give you is, our shipping platform and how we ship products. That was impacted. We needed to make a decision to shift to another provider. We assembled pilot team to get together and review the technology available and the vendor. We got all our decision-makers in one room and everybody agreed said, "Yes, let's do it." We've been making these decisions quickly. Kind of in that agile methodology of those sprints.
Laura:
Part of that is a function of how the Systems Integrator has outlined and structured the project. We have a very tight timeline, too. We're looking to have the website launched by October 1st. We started it in mid-March. We're definitely on an accelerated scheduled and we don't want to miss any milestones. Knock on wood, we are currently on target. So I'm excited about that.
Stephanie:
That's so fun. I can't wait to see the new site and try it out. Are there any digital commerce trends that you guys are preparing for, as you're launching this new platform and putting out a V2 of the brand? Are you preparing anything in the e-commerce space that you think is coming down the pike, that you're thinking, "We better get ready for this, or this trend?"
Laura:
No. I can't say that we're focused on anything like that right now. We're definitely mostly looking at the capabilities of the new platform. Like I said, the AI and machine learning component is so rich, that we see that as foundation to changing how we approach, how we do our marketing strategies and communicate with customers. So I think that's really the biggest opportunity for us.
Stephanie:
Very cool. One side question I had was, when you have your customers tagging all these photos and they're flowing into your website, are people able to buy from those photos right now?
Laura:
Yeah. On a limited basis right now. When we launch the new site, it'll much more prolific. You'll be able to buy from almost all of them.
Stephanie:
Yeah. That's great.
Laura:
I think that's really critical and it's important.
Stephanie:
Yeah. I know. When I was looking at all the different photos that you guys were getting tagged in, I'm like, "Oh, I want this Bag." There was this one alignment. It was like a tan orangeish bag but it had a duffle bag, and a bigger bag and there was like three of them together. I'm like, "If I could just click in and get this set, it would be so much easier than going into the website and trying to find out what this is called, or trying to figure out which one it was."
Laura:
Yeah. It's really interesting. The thing about user-generated content is that the customers put the product in context that we wouldn't necessarily be able to in our marketing because it wouldn't make sense. I'll give you an example. Just this week, we received a review from a customer, that was a picture of what they were calling a COVID Survival Pack that they were sending out their friends. It was a Sea Bag's beverage bucket bag. A beverage bucket is kind of a like a tall 14-inch high bucket that has handles, and the interior has six pockets for six beers. Then in the very middle is like a cavity that you can put ice and it has a grommet in the bottom, so that the ice can melt and escape out of the bottom of the bag. So it's a collapsible cooler.
Laura:
While they were filling the buckets with six Corona beers, and then put a roll of toilet paper in the center. They were mailing these out to their friends as COVID Survival Packs. It got such a laugh for us. It also is great, in terms of giving other customers ideas on ways to use our product in a way that is memorable and fun. Yeah. There's a lot of that. But like I said, that whole idea of content creation... While a lot of stuff can come from us and we can push it out, when it comes our audience, it's even more relevant.
Stephanie:
Yeah. That's such a fun idea. I want one of those Survival Packs right now. Person whoever made that, please send one my way. I want lime as well.
Laura:
Yeah. The lime would be great.
Stephanie:
Yeah. That's a necessity. That's a good point, too, for larger brands. We work with a lot of larger brands developing podcasts for them and whatnot. When you have your customers, where they can actually interact how they want. They don't have to go through the brand policy team and all these approvals and things like this, where maybe 80% of it would never get past the company's PR team. But when the customers are able to engage the way that they want to, it seems like it allows for more organic conversations to start and just things that maybe wouldn't normally get past the actual internal policies. It makes it more fun to have those customers who can do that stuff.
Laura:
Yeah. Absolutely. I agree.
Stephanie:
So to shift a little bit. Are you the founder of Women in Retail Leadership Circle?
Laura:
No, not the founder.
Stephanie:
Tell me about that.
Laura:
I'm very flattered. No. Women in Retail Leadership Circle is a national organization that basically connects senior women in leadership, C level and director level, in retail organizations. They were started about seven years ago. They're backed by NATCO Media. I was a founding advisory board member, on the team there. So I've been involved over the last almost seven years. They've grown significantly in size over that time. It's one of the most energized and engaged leadership groups I've ever participated in. They have an Annual Conference that I can say is nothing short of transformational. It has been rescheduled this year for October. I'm hoping that I'll be traveling, to be able to go to it.
Laura:
Even so, during COVID. The conference is usually in April. They were very quick to figure out how they could be of service to their audience. They set up peer groups that leaders could participate in on a biweekly basis with opportunities to share advice and experience with other senior female leadership. During more normal times, they do regular what they call On The Road Events, where you can connect in a major city, like Boston or New York, over an evening of cocktails or something like that with leaders like Rebecca Minkoff talking about her leadership struggles perhaps. It's a great way to collaborate with other companies.
Laura:
I've been able to uncover new tactics and strategies for growth. I also use it as a tool to refine my leadership style, because there's a lot of inspirational leadership that we share in those, like I said, events that they sponsor. They're doing a lot of stuff virtually right now. The thing I like the most about it, is it's noncompetitive. It's just great personal development at the senior leadership level, which I think there doesn't happen to be a lot of that typically. A lot of the personal development that happens in organizations usually is more at a junior level.
Stephanie:
That's really cool. Is there anyone in the industry that you look to for not only leadership, but maybe different tactics or strategies that they're trying out or doing? Do you keep an eye on anyone to incorporate at Sea Bags? Like incorporate what they're doing?
Laura:
Yeah. I look at a lot of brands, which is the reason why I need to pair down my emails so much. I do. I track a lot of folks. I also follow a lot of people on LinkedIn, because I feel like it's just a great opportunity to see what everyone's doing. As a brand, we try to spend time benchmarking and keeping our eye on brands, again, that are very, very correlated with our DNA. Coastal lifestyle brands, like Sperry Top-Sider, Life is Good, a very inspirational brand. We have a lot of partnerships like that. We also try to keep an eye towards some more local name brands too that we partner with, and just benchmarking what they're doing.
Laura:
And we also share a lot of information too. An example of that would be Stonewall Kitchen, which is a gourmet food brand. They also are on Sales Commerce Cloud. While we were going through this whole replatforming project, being able to reach out to people within our network and benchmark around what their experiences were on their websites platforms and technologies that they're using is really important.
Stephanie:
That's great. Having that little network that you can tap into and be like, "Hey, how did you guys do this?" Or, "Does this work better, or this strategy?" That's really fun. And all about, once again, tying it back to having that community that you can tap into to get answers from and learn from people who've already gone through that.
Laura:
Yeah, absolutely. Over the years, that's one thing that I learned very early in my career. Some of my leaders, actually one that I'm still working with today, who is on our Board at Sea Bags, taught me how important that skill of networking was and that networking is a two-way street. It's really important to make sure that you're not only asking things of people and keeping in touch with them, but you're also being a value to them as well, in terms of that networking relationship.
Stephanie:
Yeah. That's such a great point. Coming up next we have the Lightning Round, which I can tell you a little bit more about in a second. But do you have thoughts or ideas that you want to share before we move onto that?
Laura:
Geez, thoughts that I want to share.
Stephanie:
Anything that we missed?
Laura:
I'm sure there's something we missed. But I think we covered a lot, too. I'm excited to hear what the Lightning Round is all about.
Stephanie:
All right. Cool. So the Lightning Round, bought to you by our friends at Salesforce Commerce Cloud. It's where I ask a question and you have one minute or less to answer. Are you ready?
Laura:
I guess so.
Stephanie:
All right. What's up next on your reading list?
Laura:
Oh, on my reading list. I am about to start... I'm like one chapter in. A book by the founder of IDEO. I think his name is Dave Kelly, if remember correctly. It's a book all about innovation and idea generation and how to approach innovation a little bit differently. I'm really excited about that. I'm definitely one of those people that reads multiple books at once, too.
Stephanie:
Yeah. Me, too. I think they did have a space here in Palo Alto, right down the street from us.
Laura:
Yeah. I think you're right. I think you're right. The name of the book is The Art of Innovation.
Stephanie:
Okay. Cool.
Laura:
It's Tom Kelly. I got his name wrong.
Stephanie:
Tom Kelly. Got it. For everyone, Tom Kelly. Yeah. That's really funny. We went and we were touring office spaces. We toured through their building. It was very forward-thinking and innovative. I mean, just like what you were talking about. It was all about R&D and trying new things. It was cool to see the inner workings of their space.
Laura:
Very cool.
Stephanie:
What's up next on your Netflix or Hulu Video?
Laura:
Oh, I am watching Ozark. I know I'm a little painfully behind. Yeah. I'm trying to make my way through into, I think, season three of Ozark. I am really enjoying that and it's a problem I will sometimes stay up way to late trying to fit in just one more episode.
Stephanie:
Yeah. Me, too. I love that show. What's the next conference you're excited about attending?
Laura:
I am really excited about the Women in Retail Leadership Conference. Like I said, I hope it's happening in October. This is, as I mentioned, it's a transformational opportunity for me to go talk with other senior female leaders about their challenges and opportunities and where they're seeing growth within their companies. I've walked away from this conference before getting lots of new ideas, new business opportunities and third-party partners to work with and collaboration opportunities. So that to me is what I'm most looking forward to and I hope that it still happens, especially because it's in Miami in October, which will be a really nice time of year to be there.
Stephanie:
That's very cool. I'll have to check that out. What are you doing for fun these days? Any passions that you have?
Laura:
I am actually, after this podcast, going to jump on my boat with my husband and two kids for the first time this season. That is actually our big passion. This is the kickoff to boating season in Maine, Memorial Day weekend. Usually while I'm on the boat, the things that I do is knit. I've been knitting a sweater for four years now, that I am committed to finishing this year. That's my goal.
Stephanie:
You have to post a picture when it's done, so we can all see it.
Laura:
I will. I hope it actually fits. I'm kind of laughing at it going, "I don't even know if this is going to fit." I end up probably giving it as a gift.
Stephanie:
Yeah. My mom got into sewing and knitting and all that. She was trying to make us outfits, just for fun. Sweaters and things like that. She ended making one that ended up having to go towards our Shih Tzu dog because it... She was like, "Oh, this went really wrong."
Laura:
Yeah. It can go wrong quickly. That's what I'm worried about. I've ripped out a few rows of this a few times and I'm not sure I recounted correctly. So we'll see. I post a picture regardless of what it looks like.
Stephanie:
Great. It's a journey.
Laura:
Yeah.
Stephanie:
The next hard question. You guys at Sea Bags are moving quick. You're having to transition platforms. It's your job to stay ahead on the expectations and your competition and all that. What do you think is up next for e-commerce pros?
Laura:
Up next for e-commerce pros. I think that we really are going to have to focus on is how to take omnichannel retailing to the next level. I think that that term, omnichannel, is really broadly thrown around. I think that people don't really understand what it is. I think that we need to be able to deliver a seamless customer experience regardless of where they're shopping and figure out, also, how to do it without inconveniencing customers with asking for their information repeatedly.
Laura:
I think that's one of the challenges in retail, is being able to know when somebody places an order in one of your retail stores, and being able to translate that into their customer profile so that you have, again, that really full 360-degree picture of that journey of that customer and really knowing what their full lifetime value is. Again, so that you can come back and customize and personalize their shopping experience and make it more rich. They feel valued because they know that you're speaking to them in a way that is informed and caring about what value they play for your brand.
Stephanie:
That's a great answer. Laura, it's been blast. Thank you for coming on the show. For all our listeners, go check out Sea Bags and don't forget to subscribe, rate and review this podcast. Let's help spread the word and spread stories like the one Laura shared today. Laura, thanks. I hope to have you back.
Laura:
Thank you so much for having me. It was an absolute joy.
Stephanie:
It really was. Yeah.
“What will my customers like and buy?” The timeless retail question today is answered with enterprise-grade purchasing, inventory, and sell-through analytics for big box sellers, but not SMBs. SMBs have long made these decisions with their guts and intuition. But what if a marketplace powered with those same analytics could enable small shops to purchase with the same information? Faire has discovered this opportunity is worth $1 million in sales per day, and growing.
Faire is a wholesale marketplace that helps retailers find and buy wholesale, while also connecting makers with physical stores or businesses. and it was built using a data-first model that evens the playing field for those small shops. On this episode of Up Next in Commerce, Marcelo Cortes, the Co-founder and CTO of Faire, joined us to explain how the company got started and the steps it took to reach the billion-dollar valuation it boasts today. Much of the success is thanks to Faire’s ability to analyze data and iterate based on what that data tells them, but it is also built on a sense of community between makers and buyers, who have been able to find each other in a world filled with outside noise.
Key Takeaways:---
Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible eCommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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Transcript:
Stephanie:
Hey everyone, and welcome to Up Next in Commerce. This is your host, Stephanie Postles. Today, we have Marcelo Cortes joining the show, the co-founder and CTO of Faire. Marcelo, how's it going?
Marcelo:
It's great. It's great to be here, thanks for inviting me.
Stephanie:
Yeah, thanks. It's fun having someone, you said you were in Toronto, or a little bit north, right?
Marcelo:
Yeah, that's right. Our office in Canada is in Kitchener-Waterloo, which is about an hour from Toronto.
Stephanie:
Cool. Do you ever make it out to the San Francisco area?
Marcelo:
I do in normal times, I go very often. I usually go there once a month.
Stephanie:
Next time you're around, you'll have to stop by our studio and we can do an in person interview.
Marcelo:
Yeah, that would be great. I hope that can happen soon.
Stephanie:
Yeah, I hope so too. Fingers crossed. I would love to hear a little bit about Faire, and your background and role at Faire.
Marcelo:
Yes, of course. Faire was founded in 2017. Me, Max and Daniele are the co-founders, the original co-founders. Jeff also started the company with us, but he left and came back after a few years. Faire is a wholesale marketplace. We help retailers, basically mostly physical stores, brick and mortar, find products to buy wholesale. Then on the other side of our marketplace, we have all the brands or makers on our platform that are selling products, and we help connect those makers with the physical stores.
Stephanie:
Very cool. The makers reminded me, in a way, of the Etsy makers that normally would never be able to have their products in a large retailer, like a Nordstrom. Is that accurate?
Marcelo:
Yeah. We are somewhere in between Etsy ... I would like to say there is a little bit of intersection with Etsy, but a little bit a level above as well, where we do have smaller manufacturers or makers that have a small operation, but we also have some more sophisticated ones that have warehouses and things like that.
Stephanie:
Cool. How did you think about creating Faire? How did that idea come about?
Marcelo:
Yeah, it's an interesting story. Max, who is our CEO, back in the day after he graduated from school, he was working on bank consulting. He was always an entrepreneur by heart, so he was always trying to do businesses on the side. A friend of his asked him if he was willing to try to build a business of selling a product or distributing a product in the United States. The product was actually a physical umbrella, a rain umbrella that was manufactured in New Zealand, called Blunt Umbrellas. It's a very cool umbrella. It has cool shapes, cool colors, doesn't break with wind. He was like, "Yes, let's do this on the side."
Marcelo:
That's when he learned how the wholesale industry works, especially in North America. He searched on Google, how do I start selling products, or how do I distribute products wholesale like everybody else does? Basically, there were a few ways. You can go find sales reps or hire sales agencies to have all the sales reps trying to sell your products. You have to go to trade shows. He did all of those things. Eventually, he got this company to be successful distributing the product in North America. But at the same time, throughout all this process, he couldn't stop thinking that there's a lot of areas here that could be improved with technology. This whole market is really in the dark of technology.
Marcelo:
Years later, we met at Square. We all worked at Square together for four or five years each. Combining the expertise we had there with dealing with small businesses with this idea of, how can we really add technology to wholesale distribution, make it better? We finally came to the conclusion that ... we found the data that's available online as well on products, and on makers and on retailers, we could put it all together and build this idea that could add a lot of value to everybody in the industry.
Stephanie:
That's awesome. Were there any technologies or insights that you gained while you guys were at Square that you took into the business when creating Faire?
Marcelo:
Basically, there isn't anything .... technology that's advanced. There were combinations of many smaller things. For example, the fact that if you think of a small store, a brick and mortar store that might have one to five locations, which is usually our target audience, they're trying to compete with much larger brick and mortar stores, big buck stores, or with eCommerce. They have no data. If you think of Walmart, they have data on all their products. They know what sells well where, what time of the year. The little store, they're buying products basically all by intuition. They see a few products, they look at it and they have to make a decision whether they're customers are going to like it or not.
Marcelo:
We realized that we can actually build something that will give them the ability of having the same type of tools that much larger businesses, or big buck stores, or eCommerce platforms have, to make much more well informed decisions on what products are going to work well in their stores. On top of that, another thing that we learned a lot of course at Square is how to deal with underwriting the small businesses. We helped Square do Square Capital, which is the landing program that they have at Square. Part of that process, we learned a lot about how do you decide how much credit to give to a store like this? That's also part of what we do.
Marcelo:
As a store comes into our platform, we give them the ability to buy products that they can pay 60 days in the future. We give them credit to buy products, and we allow them to return any of those products if it doesn't work. So, basically-
Stephanie:
Yeah, that's huge. When I saw that you all did that, I'm like, wow, I don't know how you make that work. But not only giving store owners credit and saying you don't have to pay me right away, and you can return products? I haven't heard of anyone else doing that.
Marcelo:
Yeah, that's how we are combining and adding technology to this ecosystem to make those things possible. We have to do our job well to be able to offer these value propositions. We have to make sure that we are recommending the right products to the stores, and guiding them into buying the right amounts as well. We can't just let them buy way more than they would be able to sell. We should be steering them away from products that we don't think are going to perform well in their store. If we do that part of the job well, the other part is also making sure that the makers or brands that we're onboarding on the platform are also very high quality and good, so that, again, the products that we are selling have a much higher chance of performing well in stores.
Stephanie:
How did you build that platform to cater to different types of clients? I can see the one person in Arizona making bracelets versus the larger person who's used to fulfilling large quantities, because maybe they've sold on other platforms before, and then different sized retailers. How did you build a platform that caters to all of them?
Marcelo:
Yeah, it's a very hard problem. That's another place where technology is used to our own advantage. We need to be very good at serving customers differently, and providing a completely customized experience to different types of stores. That's what we do. That's why data science is so important for us, and we have a very strong data science team tackling this problem of ranking and personalization. The reality is, we really treat each customer differently. Every different store that comes to our platform, they have a completely different experience. If you are a store that sells gifts, you're going to see a lot of gifts. The more we learn about you, the things that you like to see, the search that you make, the products that you sell and you buy from us, the more accurate we get at serving you products that will connect well with your store.
Marcelo:
But what we can't have, for example, in our platform is that you are a store that sells apparel mostly. You come to our website and all you see is candles, or back products or things that are completely disconnected from your business. From day zero, we have spent a lot of time and effort making sure that we have data, and we are very data driven, and we are building a very custom experience for every different person that comes to our website.
Stephanie:
Yeah, that seems super important because it can be really easy to get lost when there's tons of products, and you're automatically seeing the wrong one to start with. How do you gather that data on, especially a new customer who's never bought from you before and they're coming on for the first time, how do you have any data to even know what to show them?
Marcelo:
Yeah. Sometimes it's hard. Sometimes we can't do it and we have to start with products in different categories, and then start to learn as they navigate the website. But there are things you can do in advance as well. Even a brand new customer ... they usually have a reason why they came to your website. A lot of those reasons are they were recommended by somebody, they clicked on a link somewhere. If they come from an ad, it's very easy to know what's the ad that they clicked on, and we at least have some idea of what caught their interest. Obviously we have too this mark into serving things or products that are related to what are where they came from. If they clicked on an ad for a candle, we're going to show them similar types of candles, or of course that same candle that they clicked on. But we are also trying to show, oh, here's some apparel categories as well, or here's some best sellers in a different category.
Marcelo:
Again, we have to show relevant data, and then show enough of other types of data that we can give them a chance to tell us more about who they are and what they are interested in.
Stephanie:
Got it. Then most likely, I'm guessing you encourage that sign up process, so then you can learn more and more about them. Then you can recommend products even further after that?
Marcelo:
Exactly. As they sign up, we have some quizzes. We ask them for more information. We keep adding and changing how we do that, of course. But we will try to do a Netflix style, like, what are the types of products that you're interested in, or categories? How big is your store? Things like that. The reality is, we are in 2020. Every little store, brick and mortar store, they have a presence. Once we learn who they are, what store they are, we will find if they have a website, and we will learn more about them by looking at data that we can see online. Publicly available data that's on the internet as well.
Stephanie:
Got it. Yeah, that's so cool. I saw that you leveraged machine learning and AI to recommend and show these retailers what's going to do well in their store. How do you know what would do well in San Francisco versus Washington DC? What do you utilize to help teach the retailers what they should and shouldn't buy?
Marcelo:
Yeah. That's obviously part of our secret sauce. There isn't-
Stephanie:
You don't want to share that with me? Come on, Marcelo.
Marcelo:
No, I can share it for sure. It's just ... there isn't a very easy answer. It's not like, oh, if you're in San Francisco it's for sure that you're going to sell candles very well. But there is a lot of input and a lot of signals that we gather. I can give you some examples that make a lot of sense and they're very obvious. For example, we have so many stores on our platform today. There's a lot of correlation. Remember I told you Max was selling those umbrellas, Blunt Umbrellas?
Stephanie:
Mm-hmm (affirmative), yup.
Marcelo:
Even from his time selling those umbrellas, he realized and he learned very quickly that there are correlations between products as well. If there is a store that sells well the umbrella, there are some products that will also sell well in that store. They could be completely different categories of products. It could be a watch. It could be a sunglass. But the customers that are usually interested in this Blunt Umbrella, which is a high end umbrella, are also going to like and very likely buy products that are in a similar style, or similar type of high level upper cost product.
Marcelo:
Imagine now instead of one umbrella, we have millions of products that we sell, and we get data back from these stores. We know what's selling in each one of these cuts because they're buying it again from us. So we start to be able to correlate things. You can have a gift shop in New York, and you're selling three products that are very similar to a store in San Francisco. Now you add the fourth product, and that product performs very well in your store in New York as well. It's very likely that that store in San Francisco will also have that fourth product performing well.
Stephanie:
Got it. That's really cool. Have you ever thought about running on the side a point of sale system that you can put in the store, so then you don't only have access to the stuff that's sold from Faire, but then you have access to their entire inventory and catalog? Then you really have full insights into what's happening in that store, what sells together. Then you can even recommend things at, I guess, a better pace?
Marcelo:
Yeah, 100%, we have thought about that.
Stephanie:
Are you doing it? Did I already uncover more secret sauce?
Marcelo:
Maybe. What we do today, of course we don't have our own point of sale system today. But what we do is, we integrate with their point of sale systems.
Stephanie:
Got it.
Marcelo:
We add value to them if they connect their point of sales with us as well. For example, imagine that you are a small store and you just placed an order for 20 products. Then next week, you're going to receive all those products in your store. You need to start selling them right away, but you restore all of them in your point of sale. So it takes time and effort. You need to type in the prices, the descriptions. You need to upload photos to the point of sale system. If you were a store that gave us access to your point of sale system, we do that completely automated for you. As you place an order, as soon as the order arrives in your store, all the products automatically show up in your point of sale system.
Stephanie:
Got it. Yeah, that's definitely-
Marcelo:
Of course with that, we get some more data from the point of sale that we can help with recommendations as well, and learning more about what performs well in your store.
Stephanie:
Cool. Yeah, that's awesome. When you started out, did you build your eCommerce platform from scratch? Or did you buy and eventually move everything over to custom? What did that transition look like?
Marcelo:
Yeah, that's a good question. We actually built everything from scratch, and we built it on the go. On the early days, we started ... and we went to Y Combinator in San Francisco. When we were accepted at Y Combinator, it was end of 2016, I was still working at Square. Max had left already. Daniele was still working at Square. We basically quit our jobs at Square, and we started Faire in January, 2017 at Y Combinator. We had nothing built. We had this pressure that three months later, we would need to do a Y Combinator demo day presentation to thousands of investors, and we needed something to show. Usually the companies that join Y Combinator, they have been doing something already for a year or two, and they get there to try to scale their business. We started from scratch.
Stephanie:
I was going to say, that's ... well, maybe it's not unheard of now because I think they do accept a lot more people now. But back in 2016, if you didn't have an actual product, you probably weren't going to get accepted if they couldn't see something. So that's awesome.
Marcelo:
Yeah. But then what we had to do is build it on the go. That's also a lot of how ... it dictates a lot of how we operate today and through the history of the company. We have always been very data driven. When we started, of course we knew this idea of let's let people try the products before they buy. We told Max, we're like, "We really believe in your idea, but let's prove that people really want this."
Marcelo:
Again, without any technology or any website, we went into stores that Max had contacts with because he used to sell the umbrella. We told them, "Listen, we are going to give you products that we think are going to do well in your store. You don't need to pay us. If you sell the products, you pay us. If you don't sell them, we will come back and pick the products up." The stores were like, "You just want to give me free products to try to sell? We're going to do it, for sure."
Stephanie:
Yeah, no brainer.
Marcelo:
That's how we validated the idea. We also got lucky because we had no idea what we were doing when it came to picking products, so we just bought random products. Turns out that one of the products we bought, it's called Pyropets. It's this candle in the shape of animals. When they burn, the skeleton of the animal shows up.
Stephanie:
Oh, that's awesome.
Marcelo:
Yeah, it's pretty cool.
Stephanie:
I need to look that up.
Marcelo:
It's very cool. They have many different animals. That was one of the products that we gave to the store in San Francisco. The feedback we got from the store right after was that, "Listen, I would never have bought this candle to sell in my store. But since you gave it to me for free and I could try it, I put it on the shelves," and the candle happened to become one of their best sellers.
Stephanie:
Wow.
Marcelo:
That's when we saw, okay, there is definitely something here, especially if we can use data to find actual good products, not just random products that we picked on the internet. From that point on, we started to build the experience on the go. Very quickly, we built a website where people could place orders. They would see products and place orders. Everything in the background happened manually. An order would be placed on the website. Basically, people would be able to add products to cart and check out. We didn't even collect payment information. We weren't even charging people. We would deal with payments later over the phone.
Stephanie:
Oh man, that's great.
Marcelo:
Yeah. We would get an order. We had one contractor that we hired in the early days, he would be in charge of calling the manufacturer and placing the order over the phone. He would call the maker and be like, "Hey, just got an order. Five Pyropets to be shipped to this store in San Francisco. Here are the details. Here's our company credit card, we're going to pay for this order." There was no automation, nothing else built behind the scenes. Again, we kept building it on the go behind the scenes very quickly.
Marcelo:
Fortunately, there are a few good things that happened with our company. Very quickly, we found product market fit in the summer of 2017. We started to grow a lot. But by that time, we had automated all of this process. We financial managed to build all the technology so that all this order placement with the makers, and the fulfillment and everything, was fully automated. But it was really like building the train as the train's going forward.
Stephanie:
Yeah. But a lot of people ... some of the best advice is do things that don't scale in the beginning. That's how you learn what you actually need to build on the backend, instead of doing it all upfront and realizing, oh, that's actually not even how the seller or buyer interact with our platform and now we need to redo it. Now you guys are valued at over a billion, right? A billion dollar valuation, or higher, probably.
Marcelo:
That's right.
Stephanie:
That's insane. Congrats, that's awesome.
Marcelo:
Thank you. Yeah.
Stephanie:
When you were setting up your website in the beginning, is their any best practices, either setting up the buyer side or the seller side where you're like, we've seen this work really well on the buyer side of the platform? Or these types of ... setting up the eCommerce like this, or having certain pop ups or anything? Anything that you would recommend to someone who's looking at starting a marketplace, or improving the marketplace that they're already running?
Marcelo:
it's very hard to learn without doing it. We didn't have any facts. We never built a marketplace or an eCommerce platform before. What we did do is, we moved very fast and we built very simple things. We spent a lot of time scoping things down. We thought we had very good intuition that something is going to work. Of course, eCommerce is a problem that's figured out today. There is many very successful eCommerce platforms that you can see how they do things. We always looked at the successful examples when we built our things, and then we tried to build our own version of it. We built the simplest thing possible. We all talk about building the simplest possible thing, but we really tried to do it. We spend time removing anything that would be essential, but we managed to build things that would add value.
Marcelo:
We built things very fast. We launched things very fast. We gathered information on how people are using it very fast. Then we integrated a lot, improving the experience with our learnings. Many times, our intuition was wrong, and things that we built were not the right things, and we shut it down. But at least we didn't spend a lot of time doing those things.
Stephanie:
Was there anything that you shut down that you see a lot of other store owners using right now where you're like, oh, we saw that didn't work well, you might want to look into that on your store?
Marcelo:
Well, it's hard to know what is not working for other people. It might not have worked for us. There is one very interesting thing. It's not really, I think, we'd do it. But when we were in the early days trying to finding product market fit, our very first idea for Faire, as I told you, we walked into these stores and we told them, "Just keep this product. If you sell them, you pay us. If you don't, we are going to take them back." This is pretty much a consignment system. That's what we wanted to build. That was our very first big mistake, I think. We were very sure that we could build a successful consignment eCommerce platform where we would connect to the point of sale systems in the stores, and we would know when they sell something, and they would pay us when they sell. They would keep things, I don't know, until they don't want them anymore.
Marcelo:
Turns out that the word consignment, the term consignment is really ... people really dislike it in our market. They think of consignment as products that nobody can sell, and they are willing to give it to you for free to try to sell it for them.
Stephanie:
Yeah. That's what first comes to mind when I hear that word. It's like when you go and you can sell your clothes to a company, and they're like, "Well, we can either do consignment or we'll just give you money upfront." You're like, oh, I'd rather just have money because I don't want to take that risk of you not being able to sell it because you bury it down in a bin somewhere.
Marcelo:
Exactly. It turned out that whenever we told people consignment, they ran away from us. We couldn't understand it. We're like, it's a good thing, we're giving you very good products. We've built this machine that finds good products, and we'll let you carry them for free. Then we changed our message. We started to call it try before you buy. We're like, listen ... we completely erased the word consignment from our vocabulary. We were like, "This is try before you buy."
Stephanie:
That's great.
Marcelo:
You get the products, you have 60 days to pay. Within those 60 days, you can return anything. If you sell, great. Basically, we didn't change much of the consignment idea, but it completely changed how customers understood our business.
Stephanie:
Yeah, that's great. Such a good lesson too of how little things like that can go a long way, and how just doing those simple tests could really help your business completely transform into a way bigger one if you stop using certain words that maybe are throwing someone off, that you're so deep in the weeds you didn't even realize it.
Marcelo:
100%. There is this, of course, concept that people talk a lot of, product market fit. But in this case, there's this other concept that people don't talk much about, which is the message product fit. You need to have a message that people really understand quickly what you're trying to do, and it resonates with them.
Stephanie:
Yeah. You guys would have to have two different messages, one for the buyer, one for the seller, and not try and make them both be the same, I'm guessing.
Marcelo:
100%. The way of selling Faire to a maker or a seller is much different than the way we sell to the stores or buyers.
Stephanie:
Do you have different teams focused on that messaging? Because it seems like it'd be hard to where different hats where it's like, one second I'm trying to think how the buyer things, and then I'm going to shift over and think how the seller thinks. Is it different teams, or the same one working on all of that?
Marcelo:
Yeah. Today, it's completely separate teams. Sales teams, ops teams, everything is completely separate. The market team is the same. The messaging is one team that creates both. But how we deal with them internally in operations and sales is completely separate teams, and also product. There is teams building products for the makers, and there is teams building products for the retailers.
Stephanie:
Cool. That's awesome. I saw you guys had a podcast that you just launched, and it made me want to ask a little bit about your content strategy. What was the thought behind launching that podcast and the goals behind it? And what kind of ROI you're looking at for that project, if any? If you want to talk a little bit about that, that'd be great.
Marcelo:
Yes. The podcast was also part of a thing that we wanted to do for a while. But our customers, even though we are online, our customers are not online. We are dealing with offline local retailers, and they love community. That's one of the initiatives that we're trying to build, to help them with community, to listen to each other's stories, to learn from each other's mistakes and connect them more. It was especially important to launch it now with this whole COVID-19 era. People need more information-
Stephanie:
Yes. Yeah, perfect timing.
Marcelo:
We rushed it out at this point to really get more data and get more information. And really, to support more of the retailers and makers in this time that they really need it.
Stephanie:
That's great.
Marcelo:
Yes, thank you. For me, I love listening to it. It's so ... I am motivated to listen to our customers stories, and how they are struggling or how they are being creative to deal with these issues. The feedback I have seen so far has been amazing as well. People really love listening to each other's stories and hints. Again, they see that other people are also struggling, they're not alone in this. They feel more connected. So far, the feedback has been amazing. I personally love to listen to these stories.
Stephanie:
Yeah. No, that's really fun. I love anything like that that shows I'm not the only one in the struggle right now, and then that you can bypass any future struggles that maybe you don't have to go through if you hear someone else detailing it. You can skip right over it, if possible.
Marcelo:
It's called Brick and Order.
Stephanie:
Brick and Order?
Marcelo:
Yes.
Stephanie:
Is it on Apple, Google, everywhere?
Marcelo:
Yes, it is.
Stephanie:
Cool. Yeah, we will also link that up in our show notes so people can find it.
Marcelo:
Thank you.
Stephanie:
Because it sounds like it's a good one. With the pandemic right now, and putting out different types of content and all that, how have you had to shift, if at all, your business model? Because I'm assuming what people were coming to buy before COVID-19 is very different than what they're coming to your site to buy now. How did you have to think about shifting not only what you were maybe recommending, but also what you were suggesting to stores who are probably, a lot of them closing down right now? How did you make that transition or shift?
Marcelo:
Yeah. COVID has been very big for our company. It hit our customers really hard. Our customers, of course, are small stores. Most of them are still shut down at this point. It was a big transition for us as a company, as well as for our customers. We are this high growth startup that has been adding more customers on both sides of our marketplace very quickly, and a lot of our focus is on growth and adding value to these stores. Suddenly this happened, and we had to shift focus very quickly.
Marcelo:
The first thing we did when this whole thing started to happen is, of course, to take care of the employees and making sure that everybody's safe. We started working from home very quickly, I think seven weeks ago. Then very quickly, we shifted focus to, okay, now how about the business? Very fast, we had to change from this high growth mindset, sell, sell, sell, to how do we help our customers get through this pandemic? For us, we are a well funded company. We have a lot of money in the bank. It's easier to, again, slow down and survive for whatever it takes, a few years, a few months. But we were really worried about our customers. We're like, what's going to happen with these small brick and mortar stores or the small makers around?
Marcelo:
We started collecting data. That was the first thing we did. We ran surveys with thousands of makers and retailers on our platform to understand their financial situation. We were asking things like, do you have money in the bank to be shut down for two, three months? How is it going to affect your business? We collected all of this data. We of course shared the aggregate of the data with the community, with everybody on our marketplace. Then we changed focus very quickly to try to help makers and retailers do the right things for them to survive. There was so much confusion on what's going to happen, so much information all over the place that they had a hard time, and they were all overwhelmed with it.
Marcelo:
We tried to inform them. We tried to guide them on what are the right things to do right now. We changed our focus from growth to helping our customers survive this pandemic. We built tools to help them apply for the government relief funds.
Stephanie:
That's great, much needed. Applying for that was crazy.
Marcelo:
Yeah. We tried to help guide them through it and help them understand all these programs. It's a lot of legislation, a lot of language. We tried to spend hours ourselves learning about everything, and writing it in a very simple way that they will understand it, and they know what applies to them and what don't apply to them. We built financial calculators so that they can understand what are the things they need to do? Do they need to renegotiate rent? How can they reduce expenses so that they can basically survive longer with the funds that they have?
Marcelo:
Then the next thing that we did is really, okay, now another way of helping stores survive this is helping them adapt to this new world. First thing we did is help stores and makers, makers that could sell essentials, they could make different things, or they were already making those different things that were essentials. We started to help them focus on that. For stores, the same. We're like, listen, you might not be selling gifts right now, but you could be selling masks, you could be selling hand sanitizers. You could be selling other categories, like food, that's still in high demand. We definitely changed recommendations. We guided people into adapting their business into this new world.
Stephanie:
Wow, that's great. Did you see the makers be be able to shift and adapt quickly, or what did that look like when you were recommending maybe tangential things, but also maybe something that hey hadn't focused on before that.
Marcelo:
Honestly, it really impressed us at how resilient our community is, our customers are. Most stores, especially small business owners, they have survived for so long against brick and mortar stores. They survived Amazon, giant online eCommerce, to keep their business operating. So they are also surviving. They're being super creative on how they change their business to survive this pandemic. Stores, of course, struggled more than makers because, again, they were completely shut down, and some of them didn't even have access to go to their store. Makers adapted much faster. Some of them already had wide presences, and they just had to switch more of their traffic to online. But the stores also were very resourceful. They are really trying very hard to survive. They are doing a lot of the things and following a lot of our recommendations as well.
Stephanie:
That's awesome. Yeah, that's so great hearing how you shifted everything you were doing to focus on how to help them, give them the tools that they needed that didn't exist in the marketplace, because who knew that this was coming down the pike? What were some of the top learnings from the survey that you sent out that you heard? Because something that comes to mind I just heard about was that apparel retailers, smaller ones don't have more than two month often times of cash on hand to keep them going. What were maybe some overall themes that you got from your survey that maybe you were surprised by?
Marcelo:
Yes. At the time, and remember that the survey was done over a month ago now when this whole pandemic really stared, but I'll tell you some of the numbers and the things that we learned here.
Stephanie:
Yeah, I would love that.
Marcelo:
76% of the retailers only had enough capital available for up to three months of operating expenses.
Stephanie:
Wow. Yeah, that's crazy.
Marcelo:
At the time, and I'm pretty sure this has shifted a lot since then, but at the time only 30% of the retailers had anything with regards to selling online.
Stephanie:
Some of that seems hard to believe. It makes you realize the importance of surveying someone and not just going forward with assumptions that you have about them, because I would've never thought the numbers were that high.
Marcelo:
Yes. We keep trying to survey them more often as well to see how it's changing. Other things that we learned was that 45% of retailers, they were already connecting with other businesses. Again, trying to build more community, learning more from each other and sharing information. 41% of the makers at that time had already started changing or reprioritizing their product assortment.
Stephanie:
That's good, being scrappy entrepreneurs.
Marcelo:
Yeah. Of course, we adapted. We started launching and selling a lot more face masks. Today, we have already over 200 brands that are selling face masks on our platform. The masks that we sell, they are produced in the United States by local makers. Most of the products that we sell are actually today still made or partially made in the United States. With the results of the survey, we tried to also create a lot of educational content to help everybody else learn about what's happening and how people are shifting their focus to try to help more of our customers to do it as well.
Stephanie:
How are you getting the word out about that educational content? How do you bring traffic to the content you're making?
Marcelo:
Yeah, there is a few ways to do it. Of course, we very often email all this information directly to the customers on our platform. We have two blogs. We have a blog for makers, we have a blog for retailers. We have community forums for retailers and we have a community forum for makers as well, both on Facebook at this time. We also have hosted a few webinars that had almost thousands of people attending at the same time.
Stephanie:
Oh, very cool. How do you see the webinars paying off? Do you see people enjoying that? Do you think that's a good use of time? What have you seen perform the best?
Marcelo:
We got amazing feedback from the webinar. People oversubscribed. We actually had a hard time dealing with all the subscriptions because ... the platform we were using was not ready for the amount of people that showed up.
Stephanie:
That's a good problem to have.
Marcelo:
Yes, always a good problem to have. But me, being the CTO and having to deal with the technology makes my life harder.
Stephanie:
What did you do to have to try and quickly ...
Marcelo:
We used to platforms at the same time, and that accommodated all the traffic. But yeah, people came back and they watched again and re-watched it. They shared it a lot. Webinar is not a thing that we have done a lot, but we are definitely going to be doing more of it.
Stephanie:
Yeah, that's very interesting. With everything that's happening now, what kind of digital commerce trends or patterns do you see coming down the road? Especially because you're so close to retailers and makers, it seems like you guys would have a good idea on what the future could look like if you had a crystal ball. How are you maybe thinking about what the future looks like, and how to adjust Faire based on where you think it's headed?
Marcelo:
I really wish I could ...
Stephanie:
Come on, Marcelo. Just tell me the future.
Marcelo:
I had a crystal ball. Of course, we can't tell the future, but we can pay attention to how fast and what direction things are going. It's obvious that everybody's trying to do things differently online and remote. How that's going to affect makers and retailers too, yet to be seen. I think honestly, from my own personal experience and from the platform, there will be a lot of behaviors that will change, that we do expect to change, but they are for the better. For example, curbside pickup is a thing. I don't think it was nearly as popular as it has become. I think it is going to be a thing that will stick with us. People do enjoy the ability of buying something, and whenever they have a chance, they go and grab it.
Marcelo:
I think for our platform specifically, that's going to become a very powerful thing. Because now, as I said, we launched this shop neighborhood. We can get consumers to find cool products online that they would never have found otherwise. They will find all these stores around them where they can go and find those products, they can buy it online and go pick it up. Not only go pick up the product that they bought, but they can also see all the other products in the stores, and actually meet the people that are selling this in person. That's one thing that people already loved in local shopping. They like the experience of walking into a shop, and talking to the owner and listening to the stories of the makers or the products.
Stephanie:
Yeah, that's how eCommerce started. I think back to, I don't know if you watched this, Marcelo, but Little House on the Prairie, huh? Any fans of that? They would basically, the shoppers would go into the store, and they would talk to the store owner and say their problem. He would go in the back and figure out exactly what they needed, and then would check back in with them to make sure it solved the problem. It's getting back to the roots of Little House on the Prairie days.
Marcelo:
Yeah. My prediction if I had a crystal ball here, if I were to make a prediction for the future is that, what this is going to change is that it's going to make the relationship between online and offline stronger. There will be more intersections. There is a world in which you are both online and offline at the same time, and that's the wold we're living in. We have been getting to this world slowly by having only online interactions and only offline interactions. I think what this is really accelerating is the merge of the two where you have both online and offline experiences with the same companies at the same time.
Stephanie:
Yeah, I definitely can see that happening. Are there any digital transformations or tech transformations you see necessary to make that happen?
Marcelo:
I think the technology, a lot of the technology already exists. Of course we have all this video technology, video chatting, video broadcasting. They have been available for a while now. But the applications of these technologies are going to change a lot. Again, another thing that we are working on, I feel like I'm here just marketing the things that we have been doing, but-
Stephanie:
Hey, that's all right. I'm sure people can learn from it.
Marcelo:
Another thing that we are working on is a product that will allow people to connect virtually, the same way that they have been doing offline. Think about it as the experience of a local market where makers are going to just be able to show videos, or have a live experience where they connect directly with many or very few of their customers at once, in a private or public type of meeting set up.
Stephanie:
Got it. To deepen the relationship that maybe all was virtual, or through just emails or just ordering, and you never know who's on the other side. You're trying to enable that relationship more kind of in person, but virtually? Is that how to think about it?
Marcelo:
Exactly. It's hard to give you more details yet, but we are going to be launching it this summer.
Stephanie:
That's great. When it comes to thinking about digital transformation, I know earlier you said that you would look to successful examples of other companies, of how they set up their eCommerce stores or strategies they were utilizing. That was the early days. Is there anyone now that you look towards as a leader when it comes to digital eCommerce, or someone that you're following closely where they have best practices that you guys like to keep tabs on?
Marcelo:
I don't think there is one company. I think, of course, coming from Square, we look a lot at Square and what they have been doing. But I think our platform is special in the way that we combine these local stores, these local relationships into an online global marketplace. I think of our platform as being or having some intersection with Pinterest, for example, which creates a very nice experience for people to navigate through things that they are interested in. We as a platform, I want our customers to enjoy this experience of finding products. Our customers, if you think about it, they start at a small store because they love to find products to show people, to sell, to show their friends. To be able to get these type of people to shop online, we need to create an enjoyable experience for them as well. They need to come to a website where they enjoy navigating, they enjoy looking at products. We're going to show products that are always relevant. They can keep diving deeper into a category and finding new, cool products that they like.
Marcelo:
Again, it's not just looking at eCommerce, but looking at what are the platforms that are offering the best possible experience that really get people to be hooked onto them? And trying to merge it all into our own platform.
Stephanie:
Yeah, I love that. I think that's such a good reminder that just because maybe you sell clothing, you shouldn't just look at other clothing companies. You should maybe look at how food companies are doing it, or like you said, looking at Pinterest and how they display images. Trying to just tap into completely different verticals to then pull those best practices up into your company, I think is super smart. All right. We have a couple minutes left. We always do a lightening round at the end where you answer a question in a minute or less. I was thinking about starting with the harder one first, and then doing the fun ones afterwards. How does that sound?
Marcelo:
Sounds good. Let's try.
Stephanie:
All right. All right, Marcelo. It's your job to stay ahead of tech and expectations and competition in the industry. In your expert opinion, what's up next for eCommerce pros?
Marcelo:
Oh, I need to think. This is a hard one.
Stephanie:
Yeah, got to start with the hard one first. Then we get to the fun ones.
Marcelo:
Yeah. Answering from experience, of course, that's very important. That's Faire. eCommerce is not just about showing products anymore, or letting people navigate through categories of products. The future of eCommerce is really a very customized, personalized experience. Data science is mandatory for successful eCommerce today.
Stephanie:
Yup, completely agree on that. All right. What's up next on your reading list or podcast list? It can be your own podcast, if you want, the Brick and Order.
Marcelo:
It's definitely our own podcast, talking about podcasts. I have enjoyed it so much. It inspires me to keep doing my work. The next book that I'm reading, I have just started, is Finding Genius, which is VC related. It's not really eCommerce, but it's pretty interesting.
Stephanie:
That's great. Yeah, exploring different industries and verticals. That's what it's all about. What's up next on your Netflix or Hulu cue?
Marcelo:
I have just been watching random things. I haven't had much time to watch TV lately with all the things we have been doing. I finished watching The Vikings on Netflix. That was the last series I watched.
Stephanie:
Very cool.
Marcelo:
After that, only random movies that I just find. They might even be old movies. There's nothing exciting. Usually I fall asleep if I start watching it.
Stephanie:
Hey, that can be a good way to slowly drift off to sleep.
Marcelo:
Yes.
Stephanie:
Once you can leave your cottage in Toronto, what's up next for travel destinations for you?
Marcelo:
Oh, that's an easy one. I was just about to grow on a cruise.
Stephanie:
Oh, where to?
Marcelo:
Actually, I was considering going on the cruise when this whole thing started. Max and Daniele were telling me, "There is no way you're getting to a cruise ship right now." We were going from New York all the way to the Caribbean and back.
Stephanie:
Oh, fun. Well, hopefully-
Marcelo:
I'm hoping to do that at some point in the future. I was really excited about it.
Stephanie:
Yeah, I hope so too. All right. Then the last one, what's up next on your shopping list? It can be tech stuff, it can be something you saw on Faire that you're like, I want to try and order that. Groceries, anything.
Marcelo:
On Faire, I have been ordering a lot of things. The next thing that I want to buy is a drone.
Stephanie:
A drone? Okay. What kind of drone are you thinking?
Marcelo:
As I am at the cottage, that's why I want to buy a drone. As I have stayed at the cottage since this social distance has started, I would love to have a drone that I could use to explore the forest around us here, and maybe find some of the animals that are around. Deer, and rabbits and things like that. That's next on my shopping list.
Stephanie:
That's fun. Well, maybe all the COVID stuff has a little plus that is making you explore different hobbies that you didn't have before.
Marcelo:
Exactly.
Stephanie:
All right. Well, this has been a really fun interview. Everyone go check out Brick and Order after this. I know I'm going to do that. Marcelo, thank you for coming on the show.
Marcelo:
It's my pleasure. Thank you very much for having me.
For those not in the know, The Mars Agency is an independent agency that combines the best of technology with the best human intelligence to provide solutions to businesses throughout the world of retail and eCommerce. And one of the Martians who leads the charge at Mars is Amy Andrews, the SVP Business Development & eCommerce. On this episode of Up Next in Commerce, Amy walked us through all the trends she’s been seeing in the eCommerce industry, including the changing consumer behavior, the rise of omnichannel experiences, and why companies that can crack the code of using voice plus video technology could see a huge payoff.
Key Takeaways:For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible eCommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
--- Transcript:Stephanie:
Welcome back to Up Next in Commerce, this is Stephanie Postles, co-founder of Mission.org and your host of this lovely podcast. Today we're joined by Amy Andrews, SEP of business development and eCommerce at the Mars Agency. Amy, how are you?
Amy:
I'm doing well Stephanie, how are you doing?
Stephanie:
Doing great, yeah as great as can be. So, when I heard of the Mars Agency, I saw that you called your, was it your customers or your employees Martians?
Amy:
We call our employees Martians, very lovingly.
Stephanie:
Oh man, I love that. I was trying to think of a name I wanted to give our employees, but nothing comes close to that. Tell me a little bit about the Mars Agency and how all that came about.
Amy:
Sure. So the Mars Agency has been around for over 45 years, started by an amazing woman, Marilyn Barnett, and really our focus has been on marketing to shoppers over that last, almost half a century. And Marilyn was really a pioneer in this space, she used to be when she started kind of the grocery model who would hold the box of laundry detergent as people walked by. And really just, yeah, and talk about women in business. She was just such an interesting leader and saw that as a marketing opportunity for brands at retail, and started the Mars Agency. And we have a long history in shopper marketing, and shopper marketing is really just marketing to shoppers so, as that has evolved and how people shop has evolved, we followed them and led them to all those different places.
Stephanie:
Got it. So are you working with large brands to kind of teach them the trends in the industry and how to market to, like you said, the shoppers, is that how to think about the Mars Agency?
Amy:
Yep. We work with a lot of large consumer package good clients so, like Campbell Soup, Nestle Waters, several others across top retailers. So Walmart, Target, and for me in the eCommerce space, Amazon is definitely a huge player.
Stephanie:
Okay, cool. And what is your day to day look like there, what is your role look like?
Amy:
So I lead our eCommerce team, which I mentioned some of the retailers but we really work across all eCommerce retailers and digital platforms. If you think about things that some of you probably use more recently than others like Instacart and other delivery services. We help brands market to their shoppers in those spaces, and really anywhere that you can buy a product online. Which used to be physical stores would convert it online, or your kind of Amazon, Pure Play retailers, and now as I'm sure you've experienced definitely, there's a lot of different options to buy online as you're scrolling through. Instagram you can shop now and kind of always be almost we're moving towards one click away from a purchase in any environment so, that's really what my team focuses on, for our clients, how do we help them market and ultimately sell more online?
Stephanie:
Got it. Has everything with COVID-19 kind of adjusted your strategy of what you're advising your clients to do? Or what kind of shifts have you made when it comes to that advisory role?
Amy:
Yeah that's a great question. I think we have seen a lot of data as this, sadly continues for us. But it has definitely had a huge impact on the eCommerce space, particularly for grocery, since a lot of our clients are the CPG packaged clients. We've seen online grocery projections in the last couple of weeks reach what we thought they would be in 2025. So there's been, yeah huge growth in this space, and a lot of new users to this space so, we know that's out of necessity, but again as this kind of continues, we think that a lot of these people, like 60% of people tried a delivery service for the first time in the last six weeks. That's a ton of new people who are buying new groceries online and, yeah there's been a lot of experience as I'm sure you've heard with, not being able to find what you want, or having slow delivery time-
Stephanie:
Yeah. Being out of stock of my favorite matcha tea, very disappointing.
Amy:
Out of stock, yes. Which is a little bit easier to deal with than toilet paper but-
Stephanie:
Yeah, I guess.
Amy:
I guess it depends on where you are on both with your supply but, no we've had ... Yeah, a lot of people are having to make different choices and having to try things but as this continues, I think people are forming new habits, and even new preferences, so it's definitely influencing how we're advising our clients and where they should invest. I think what's also interesting is because of a lot of those issues, a lot of our clients and a lot of retailers have just put their marketing on pause, to make sure that they can get things in stock, and for retailers to make sure that they're not price scourging or kind of promoting things in the wrong way that would send the wrong message.
Amy:
So I think what will be interesting long term is, some retailers and brands kind of catch that, and once they have products in stock, once, even Amazon this week has fixed some of their Amazon Fresh delivery issues. As those things start getting worked out, I think they'll be a lot more interesting marketing opportunities, especially as you think about all those new users, either to a retailer or to a brand. I don't know if you bought a different tea brand when you couldn't find yours.
Stephanie:
I did, I did.
Amy:
Yeah, a lot of people are having that experience right, so then it's like how does that new brand try and keep you and then how does your old brand try and get you back? So we're definitely working with our clients on all those types of questions.
Stephanie:
Got it. Do you think clients should be turning off their marketing budgets? As you mentioned, a lot of them are doing that right now, do you think that's a good strategy, or should they till be maybe thinking of ways to experiment because this is a whole new world, it might be actually a good opportunity to kind of experiment a bit without offending people if possible?
Amy:
Yeah, no, I think ... Yeah, I think it is a bit of both. I think initially, not just marketing but a lot of businesses and industries, just kind of paused to figure out and make sense of what was going on and determine what they should do next. And I think that was, probably a smart move at the time, just to not make any rash decisions. But we're definitely partnering with our clients now on, what is the right way to market. I think one of the trends that we'll see is probably a lot more regional and geographic differences. Like we in the Bay Area are still sheltering in place for another month. So, online shopping here will be very different than other states that are opening up.
Amy:
And, marketing to those people might be very appropriate now, and I would definitely recommend testing and trying things in that space.
Stephanie:
Got it.
Amy:
So I think it's going to have to be a combination.
Stephanie:
Yeah, completely agree. Do you see the companies you work with coming to you with similar struggles? Like other themes that you're hearing and any advice around some of those struggles that they're experiencing?
Amy:
Yeah. I think a lot of the marketing struggles, or just some of the struggles on a more macro level of just the unknown, especially in terms of timing and how long it will continue. And then we kind of have some of the same issues in terms of data, you know there's so much out there, like when you turn on the news, you see so many different stories and different points, sometimes it's kind of hard to determine what are the right guidelines, or what's the right data that you should follow. So, we're really treating this as an ongoing conversation with our clients. And it does differ by geography, it does differ by category or industry. So, I think taking a really custom approach and being able to adapt now, and have a strategy where you're also able to easily adapt moving forward, is going to be really important.
Amy:
We typically do annual planning with our brands, and we've already been talking, you know we're already in the stages of re-planning but, I think re-planning will be something we do all year now, I don't think it's kind of the pre COVID plan and the post COVID plan, I think it's going to be continuing to adapt. And the brands and retailers that are able to evolve in that way are probably going to be the most successful.
Stephanie:
Yeah, completely agree. It seems like a good time to kind of pivot in certain areas, cut projects that aren't, maybe as necessary, and thinking in a completely new light based on everything that's happening. What kind of things do you see being cut or changes be made in these re-planning sessions at these companies?
Amy:
I mean, the big question now, which the Mars Agency is tackling with our clients is, what might come back in-store and what might not, in terms of marketing and planning around that? There's the kind of legal or even not legal, but kind of the official guidelines or restrictions side of things, in terms of how people shop and how many people can enter the store at what time. But then I think there's also a very real consumer behavior piece of it. So, one thing that has happened in stores and that a lot of our brands being food brands, we've done is, things around sampling and trying new products. And whether that's a cooked piece of food outside of a wrapper, or a sealed up new product, I think in both of those cases, I don't know if for myself, and if I think about other shoppers, I don't know how eager we're going to be to take either one of those samples now.
Amy:
So, we're trying to rethink things like that that have been really traditional vehicles to encourage trial, how do we think about that in a new way? Either if that's a re-plan in terms of, what do we do with those dollars and invest them in something else? Or what I think is maybe more creative and exciting is, how do we think about sampling in a new way? Or how do we think about demos in a new way? And that's where we really see the in-store and the eComm world kind of colliding, and really creating some of these omnichannel is the word that we use a lot.
Stephanie:
Yeah.
Amy:
Omnichannel experiences, so that we're moving towards that anyway, and I think COVID has been an interesting tipping point to, as you said, kind of pivot and think about these things, and push ourselves to think about them even more differently now, to deliver the best shopper experience.
Stephanie:
Yeah, it seems like it could be with everything bad that happened, maybe a good forcing function to kind of push some brands into the eCommerce world who maybe weren't fully utilizing it before, or not at all. Do you see them being able to adapt to some of these changes that you're recommending them or being able to shift something that they've always been focused on selling in-store, always focused on someone having that in-person experience, like you said, whether it's a sample, a demo, have you seen them be able to pivot on to eCommerce, or being open to that, or even having the technology to do it?
Amy:
Yeah. I mean I'm pretty optimistic, so I think yes, I think all brands can do this and adapt and pivot and do so relatively easily. I think that was a big question before all of this, and the crisis was just how quickly should each, brand based on their category, be moving into this space? And a lot of brands were over-invested in eCommerce because they felt that that was going to be the future so they're a bit of a step ahead. And that doesn't mean that other brands can't catch up but, I think COVID has just been a kind of internal tipping point for a lot of organizations to think about how they're treating eCommerce and maybe prioritizing it a little bit differently.
Amy:
So, yeah for brands or companies who weren't thinking about it before, I would definitely say, now's the time. And, because the whole industry and the whole world is really shaken up, it's a great time to think about how you're treating eCommerce differently, and then within the eCommerce space, what we can be doing differently there as well.
Stephanie:
Got it. Is there anyone that you ever looked to in the industry, where you maybe point your clients in that direction of being like, hey, here's an industry leader when it comes to the checkout experience, or the shopping experience, or the unboxing, or anything like that? Anyone that you guys kind of look to as like a leader in the space?
Amy:
Yeah, that's a great question. I think there are a lot of examples of brands or retailers doing, I would say pieces of the puzzle really well. The one that comes to mind for me as someone who is creating a really holistic, best in class experience, is actually a retailer. I think IKEA does a phenomenal job in this space, in terms of just digital experiences. They have different digital technologies, and apps and platforms, and AI, and all of that, that is really just helping recreate the experience of going to an enormous, huge physical retail destination, I mean, I can't think of a more traditional shopping experience than kind of browsing through those huge displays in IKEA.
Stephanie:
So many levels, at least here in Palo Alto.
Amy:
Yes, definitely. I think of like a huge retail footprint that they've had to translate into a digital experience. There's one now where instead of IKEA saying, what's the best .com site or digital catalog? They are thinking what's the best shopping experience? And now you can as a shopper, walk through an IKEA store, through virtual reality, and pick different products, and then also using AI to see them in your own bedroom. So I think they've just done a great-
Stephanie:
Oh wow, that's awesome.
Amy:
... Job. Yeah, I think I've just done a great job of thinking about it a little bit differently, and kind of doing it in a fun way that that's the biggest piece for myself as a shopper as well, that's sometimes missing from the online shopping experience. It's so convenient, and there are so many wonderful, wonderful benefits that come along with that. But you do lose kind of the fun of shopping, and browsing around, and I think IKEA has done a nice job of bringing some of that physical experience in a fun, very branded IKEA way, to their shoppers digitally.
Stephanie:
Yeah, completely agree. I think sometimes people forget that it's not just shopping and trying to buy the thing, but really, like when I go to IKEA, it's my day. It's a whole experience, I'm ready, I'm prepared, I've had my snack, and I'm ready to go through every single setup area to like look at their bedroom, and see how they set it up, and look at this living room setup and incorporating VR into that shows that they know exactly why their customers, at least customers like me come there, is to be able to experience it like I'm actually there. So yeah, that's great. Are you advising other companies to kind of, not only think that way but maybe moving into technologies like that, that they weren't utilizing before? Whether it's VR, or AR, or any of that kind of stuff?
Amy:
Yes. And I would say just even more broadly, we're advising our clients, and working with a lot of our clients right now on, how do we create the best digital content that's going to be relevant for an eCommerce shopping experience? So, yes that could be an amazing VR IKEA type experience, or that could be a six-second video on a product page, that tells you exactly what you need to know about the benefits of this new water that you're drinking. So I think it's about, what's right for those different brands and, then having that content strategy that then dictates what technology you might need to use to deliver it.
Stephanie:
Got it. Yeah, I definitely see that shift of a lot of companies, brands, turning into kind of their own media companies when it comes to producing their content, and focusing heavier on that, and not just on a paid strategy where maybe that's been, how it's been for a couple of years.
Amy:
Yeah, I think I've also seen brands, hopefully, using technology to deliver experience instead of just kind of using or testing, technology for technology's sake, or to have something new. So, it used to be QR codes, and then maybe some AR that just, is just kind of there for the fun, cool factor, that's interesting. In some cases, it's kind of fun, but I think if you're just doing it for the tech's sake, and it doesn't deliver a consumer, or a shopper benefit, it's really a fad and kind of dies quickly. So, we're always trying to think about, what's the need first, and then what can we use to deliver against that?
Stephanie:
Yeah, it's good to flip that mindset when it comes to that, because yeah I can think of, especially QR code, that's a good example. I've seen random places it's on there, like a cereal box or something that delivers no value, and I don't actually want to even see what's behind that QR code, it seems like it was just placed there because everyone was doing it. So-
Amy:
Right someone told that-
Stephanie:
... You definitely-
Amy:
... Told that marketer, "You need a QR code." And they checked that box.
Stephanie:
They did it.
Amy:
Yeah.
Stephanie:
Have you, when it comes to content, I know a lot of brands right now like you said, are focused on that and trying to make sure they get, of course, new customers in that vertical, and also make sure they put out great content. Have you seen any best practices with their clients around like you said, short product videos seem to really increase conversions where you know, like something on YouTube, if you've never been on YouTube maybe isn't the best way to go? Is there any themes around that?
Amy:
Yeah. I would say generally we always start with what's going to be the right message for the type of media, or for the type of tactics. So, you mentioned YouTube, that's obviously a very different format than say Pinterest, who's also having quite a moment with everyone at home looking for inspiration and recipes, and all of that. Obviously, that type of content you would develop for that would be very relevant to our brands, but also relevant to that platform and what we know people are looking for there. Yeah, I think we're definitely moving towards kind of more bite-size, or smaller content formats, in general. So definitely short format, we always give the example of, you don't want to have your 30 second or 67, 60 second, excuse me, TV spot and just use that everywhere, on your eCommerce sites or on your digital media more broadly, we want to be tailoring it for the environment.
Amy:
I think another thing that we're trying to do a lot more of now, in terms of a trend, is how are we leveraging influencer and user-generated content in a new way? So, if we talk about relevancy, especially in the eComm world where reviews are so important, and the new mom, you might go on and you're testing the reviews of a stroller, or a really important product for your baby more than you trust advice from your own parent, or from your mom peer group even right? So, people play a ton of influence on that, especially in the eComm space. So, thinking about how we merge eCommerce and influencers, has been really interesting and we've been working with our clients on taking influencer content from a particular shopper since we're in that space.
Amy:
So, how do you leverage Walmart influencer content on walmart.com, and Amazon influencer content on their site? And in doing so, you create an even more relevant experience for the shopper, because not only do they have those product details and reviews, but you've kind of put all that influencer content in one place, so they can have more ideas on how to use your products, or just more relevant images and messages based on people like them.
Stephanie:
Yeah, that completely makes sense. I wonder if right now, with how the market is, if it'll kind of give the wrong signals to companies. Like maybe, you have all these people at home so, if you see content is very easy to get right now, you have people maybe at home who actually want the longer podcast and the longer clips. Whereas after all this starts to calm down, I wonder if it'll be hard for brands to kind of pivot again, if all that reverses. And, all of a sudden there's not many consumers who want to create content for free anymore, and long reviews and, people want those shorter clips, like you talked about. Do you see any problems coming up by brands acting too quickly right now, to kind of pivot to what the environment is now? To then it reversing maybe again in a month or six months.
Amy:
Yeah, I think that's a good question, and that's why I think, as I kind of mentioned earlier, we're taking a proactive but kind of cautious approach. So, one thing we did for one of our brands was, we just went out immediately and pulled out content that, I don't want to say offensive, because that's almost too strong of a word, but pulled out content that wasn't culturally sensitive. For example, a group of people in a home that was more than 10 people.
Stephanie:
Got it.
Amy:
We went in and took all of that content down, you know, just to make sure we were being sensitive, and we were also being relevant. Even if someone wasn't particularly upset about it, and maybe they had no thought on it, but we want to make sure we're giving them the most relevant message of how our brand can be used in their lives. So I think that it is going to be an evolution, it's going to be really interesting to see kind of what behaviors stick. I think bread makers was one of the top terms searched on Amazon, the last several weeks. So, I wonder if we're going to get burnt out on making bread anytime soon.
Stephanie:
That does sound delightful but I'm like, yeah, I don't know how long that trend will last because, my mother-in-law makes bread, and man is it a process.
Amy:
Well, maybe she needs a bread maker.
Stephanie:
I know, she does.
Amy:
But yeah, I think it'll be interesting to see how much of those are kind of the COVID trends that then people get sick of it, or people want to, I'm not sure, maybe people will want to race back to the stores like you said, it'll be maybe really exciting when an IKEA opens, and you can go back in, and browse around and get your meatballs and all that. And I'm thinking people are going to do that in a different way. And I think that we're going to have to continue to evolve. So, that's what I mentioned about the kind of planning, I think annual planning is dead. I think we're going to be planning over and over again, if that's monthly if we can get kind of more on a routine, or maybe that's just continuous as things change, and as the news changes.
Stephanie:
Yep, completely agree. So, the Mars Agency has been around for almost 50 years I think, how does the company and the Martians of the company, recognize trends and then act on it quick enough to help your clients?
Amy:
Yeah, I think, I honestly think that's why we have been able to be around so long. In the marketing and advertising world, we're one of the few independents who's left, we're still family-run, the company is now run by Marilyn's son and Ken Barnett. And I think that having that independence, and having really just a lot of still that entrepreneurial spirit, has allowed us to really adapt as the industry has adapted and, in most cases kind of stay one step ahead. We talk a lot about our Martians, as you said, and really think that there's a balance between, our people and our technology. So, over the years we've, of course, as most industries have invested more in technology and data, and all of that, we've also really balanced that with our Martians and having, what we say is the latest technology and the smartest humanity.
Amy:
I think some companies, especially in the eCommerce space, because there's so much data there, and so many different tech platforms, I think if you go too far in that direction, well one, there can just be kind of data overload, and you're not able to find the insights and all the data. But two, I think you just lose a lot of that humanity, and kind of that person who we like to be who's saying, "Well, why is that the case? And, what does that data point mean?" And kind of taking it that step deeper, so that we can really understand what the human behavior is because I think that's where you have the best marketing ideas that really resonate with people, instead of just kind of trying to attack a data point.
Stephanie:
Yeah, completely agree. Are there certain metrics or data points that you've seen many brands use that you're like, you guys are all using this, but it actually doesn't really tell you much. Instead, maybe you should look at this instead.
Amy:
Well, because we're focused on shopper marketing and conversion, I mean, our ultimate data point is always sales. So we're always looking at, how many products were we able to sell as a result. Along with that though, you obviously want to understand what other impact you might have had on engagement. Or, in some cases, there are other circumstances that are affecting sales that are out of our control. We, of course, want to measure all the other media metrics as well. I think to answer your question on, are there certain metrics that brands are looking at that they shouldn't? I don't know if I would say you shouldn't look at this, but I think a lot of brands are placing a disproportionate kind of weight in the eCommerce based on their ROAS or their return on ad spend.
Amy:
And there's just some interesting ... There are some ways that you can get a very high ROAS, and that a lot of media companies or retailers will say, you had a very high ROAS and it's typically because you are reaching people who would have purchased anyway. So I think that's one where, it does beg the question of sometimes having a person or maybe a smarter data set that's kind of suggesting, why is that the case? And digging a little bit deeper to understand the why behind that metric.
Stephanie:
Yeah, that seems like an easy way for someone to be like, hey, look how great those ads doing when you're like, all those people were already previous customers so.
Amy:
Right if you're ... Yes, if you're targeting past purchasers, you can typically get a pretty high ROAS so.
Stephanie:
Yeah, that's pretty funny. Are there any new emerging technologies that you're advising marketers to look at or other like eCommerce platforms that you're telling people to check out?
Amy:
I don't know if I would say this is an emerging technology, but just in light of all of the changes around COVID, I would say looking more at new delivery platforms or channels. And this is something that, we're just having early conversations with our clients on now. But, there are a lot of what used to be in the world of retail, relatively niche players You see a lot of those platforms having really explosive growth now, kind of during this COVID period. So it'll be interesting to see how that behavior might change over time.
Amy:
I think we're also seeing some really interesting partnerships, so you can have your 7-Eleven order delivered by DoorDash. Or you can make a reservation to shop at a local store on OpenTable. Again, those aren't new technologies, but I think it's kind of new platforms and new channels that will be really interesting to test and learn as we go, as you're suggesting, and then also as things, hopefully at some point, kind of start to normalize.
Stephanie:
Yeah, cool. And then how do you think about, I saw on your website that you were talking about getting the most out of voice technology and how to conquer Amazon? Do you think, I know voice technology, it feels like it's been trying to ... It's been like that up and up for a while and no one's really cracked it. Even when I was at Google, it still felt like they couldn't crack it. How do you think about incorporating that into what your clients are doing? And same with Amazon as well?
Amy:
Yeah, that's a great question and you nailed it. I think it has been growing, we have on my eCommerce team, a dedicated voice specialist has a background in user experience. And, similarly, I think we've had tons of great conversations around voice, we've seen tons of great data in terms of how it's growing, but I don't think we've reached the tipping point yet of voice shopping. I think it's still, some of the data and it'll be interesting again, to see kind of how this being at home more might change that. But, there are definitely different behaviors that have grown with voice more than shopping has. We're still actively pursuing and exploring that with our clients. Mars is the preferred Alexa developer, we also work with Google Voice as you mentioned.
Amy:
But I think it just comes back to, really the foundation of what we do which is, how can we create better shopper experiences, and voice definitely has the technology to do that. I think it's just about the adoption, especially in the shopping space. So to date, we've worked with our clients on, creating skills that can be useful to shoppers based on their different categories. But I think it'll be interesting to maybe see how COVID changes the voice space as well.
Stephanie:
Yeah, I could see that becoming useful, especially as the catalogs get bigger of what the brands are putting on their eCommerce sites. It'll be easier if you're able just to tell the website like, I want to find this, instead of having to go through the whole catalog and try and find exactly what you want, and it probably growing by 50% from the time you were there maybe two months ago if they can crack, getting the voice technology to actually work and be seamless, and not an extra step.
Amy:
Yeah. And then I think another thing that'll be interesting now is just, I even have to remind myself as we're talking because typically we think voice and we think, speaking into the speaker, but with the combination of voice and video. Plus people being at home and maybe wanting more, we know there's been a huge surge in recipe searches for example. I think having the voice plus visual is a different way that brands should be thinking about voice now, and something that we're working with some of our clients on.
Stephanie:
Yeah, completely agree. And what about the conquering Amazon piece? I'm only thinking about how that maybe has shifted a lot, especially lately because of everything Amazon is doing of like, only surfacing maybe essential things, and changing shipping times, and maybe kind of burying certain retailers if they didn't view them as essential. I could see a lot of people kind of getting scared about relying on Amazon as their platform to sell from, and maybe moving away from that and trying to build their own eCommerce store on their own, and just do their own thing. Do you see that kind of happening? Or what are your thoughts around Amazon?
Amy:
Yeah I mean, Amazon could probably be a whole nother topic or hour.
Stephanie:
A whole podcast one.
Amy:
Exactly, I'm sure there are millions. But, I think in terms of, we've been really digging into what has this last six or so weeks meant? And where have we seen new growth? Walmart.com in March was the number one downloaded app in the grocery space and surpassed Amazon for the first time. So, it's interesting to kind of see all these stats and you think, oh, maybe Amazon isn't as important. Amazon just still dominates the eCommerce space. Which is why you mentioned, we have it on our website. I would say even as of two months ago, people were using Amazon and eComm interchangeably, almost.
Amy:
So, it's great and it's exciting to see that, and as we have always advised our clients, we should think about this holistically across this space and across all different retailer dot-coms and delivery platforms like your eCommerce strategy should be comprehensive. But I don't see Amazon ever not being a component of that, at least not in the near future. There are a lot of issues now from a user experience, from a shopping experience, also as you mentioned with brands and maybe being deprioritized for essentials or not being able to market in the way that they have been able to before. But it still really is the lion's share, it's still seeing the most growth during this time period.
Amy:
So it's not, I don't think it's a place that brands can afford not to be, with the exception of maybe a couple of the really big ones. But I think the idea of trying to tackle eCommerce without Amazon, or without having a strategy around Amazon, and there's by the way, a bunch of different ways that you can do that, it definitely doesn't have to be every brand's number one eCommerce retailer. But I think it probably has to be part of the strategy, just because of the number of shoppers that are using that as their primary eCommerce destination.
Stephanie:
Yeah, agree. So earlier we were talking about brands creating content, how do you think about the intersection, or what do you advise your clients when it comes to the intersection of content management system, their commerce platform, and their CRM? How do you see that working in their space are any best practices around that or advice?
Amy:
Yeah, I think, I mean one is to be thinking about the total experiences we've been talking about, and making sure that, no matter what agencies or, in our case, we're oftentimes working with a lot of other agencies either at different parts of the funnel or that the brand is working with for different pieces of their advertising. A lot of our clients are large enough that they're hiring multiple agencies. So I think it's, having IT as planning processes that are very integrated, and making sure you're connecting all the different partners so that you can leverage all of the different content and all of the different wonderful assets.
Amy:
In terms of, what should the content strategy be, I think it comes back to, what's going to be best and what's going to be needed and relevant for the shopper in that environment. So, we're really working with our brands in the eCommerce space on, how are you creating eComm content that typically doesn't always exist in other brand channels? So, how are you creating content for your product pages with information that people need to know when they're at that point of buying you versus buying a competitor. If you don't have that right content, let's create it, we help our clients map that out on what's needed in terms of assets, and videos, and enhanced content, and all of that.
Amy:
And then really track that over time to make sure that we're constantly optimizing it. We have a new technology, an eShelf maximizer tool that uses data to look across different websites, and identify across thousands of skews for a lot of our brands, what product pages might have some issues or some areas of opportunity, and then we can fix those right away. And with the retailer's constantly changing their algorithms and limitations, and all of that. This is kind of a huge pain point for our brands so, even though we'll optimize content as brands change their packaging, or new products launch, there's kind of continual issues and continued opportunities to optimize. So we're using technology to make sure that we can stay ahead of that and be really proactive for our brands.
Stephanie:
Got it. Do you see them being able to kind of manage that in a way that stays organized? Because, I kind of view a lot of brands having their content management as one silo, and their CRMs another one, and their commerce platforms another one, it doesn't seem like they've been able to integrate like, well, here's how our content is affecting our customers and actual conversions. Do you see that kind of shifting now? Or are a lot of your brands already ahead and they're already kind of all intertwined, and they got it?
Amy:
Oh, I wish that was the case. No, I think, I mean, I think we have silos within the Mars Agency, I think most companies have silos, I think most of our clients would say that they have silos within their companies as well. Unfortunately, I think that is a reality so I don't want to gloss over that picture too much. I think it's about, how do you look for ways to work and collaborate across those silos, for more of a common goal? So, I think eComm has been a silo for a lot of brands today. We've kind of siloed it off and said, let's deal with that separately because we don't quite know what to do with it, or maybe it's still a little bit too new for our brand or company.
Amy:
And this is really a moment when I think we can be integrating it in, we certainly have done that at Mars. Our team is now integrated with our customer development team. So when we're working on a Walmart plan, it's not the Walmart in-store plan and the walmart.com plan, we're all one team. So I think hopefully, that would be an outcome of this time period is kind of breaking down some of the eCommerce silos. But I think as you pointed out, there's definitely still an opportunity for, I would say most brands, to kind of better connect. I think content and eComm are coming together much more naturally. I think CRM is still a piece that we could, as an industry, probably better connect to some of the other pieces.
Stephanie:
Yep, completely agree. Have you seen, like what do you think the first step is to that digital transformation? Or have you seen a company really do it well? Is it like start from scratch, throw everything away and start over? Or, how have you seen that work?
Amy:
I think that actually, most companies have kind of, that we've worked with, have kind of taken eComm out and brought it back in, or taking the digital team out and brought it back in. And I think that's actually an okay approach in terms of, especially where you are with your company's growth in this space, some kind of half joking that eComm has been a silo. But, in a way that's been necessary for some companies because, as eCommerce has grown, it typically starts off as an add on within a current team, and then as it grows, it kind of gets its own silo, or its own little team on the side, and then as they get big enough, they come back into the integrated team, typically the marketing team, or in some cases, the sales team.
Amy:
And I think that that makes sense because, as the space grows for different clients, it needs different resources. I think a lot of companies are going to be fast tracking that now, so they might skip that step of having the separate eCommerce team and just automatically integrate it. I don't think that's a bad thing, I think that could be beneficial to, instead of kind of separating it or starting from scratch, just integrating in from the team from the beginning.
Stephanie:
Yeah, that makes sense. That sounds like good advice. So, do you see any disruptions coming to eCommerce? Like one thing I've been paying close attention to, or reading up a bit is about these pop up retail stores. And I think maybe that could be a trend that a lot of retail stores are closing down right now, and people might be scared to actually set up locations for 10 year leases, after all this dies down. So I'm wondering how maybe that could influence the future of retail and eCommerce. Do you see any disruptions like that that is on the horizon that you guys are looking into when it comes to eCommerce?
Amy:
Yeah. I mean I think there's going to continue to be a lot of disruptions, and probably a fast tracking of what would have happened anyway. So, some, as we've seen in the last several years, some really established big box retailers have closed down, or shut several of their locations, because that huge size of space didn't make sense anymore, and to your point that frees up space for other types of retailer formats. I think coming out of this that, one of the disruptions will be, what we go to a physical store for, versus what we continue to buy online. So I think there's going to be a lot of differences in those categories, and even in in subcategories within that. I think what's going to be interesting about the physical stores is just, how do we deliver an experience in those stores that is worth kind of leaving your house for?
Amy:
And I think some of the best retailers, and some of the best brands have been talking about that for years, right? How do we create a physical experience of our brand? If you think of like the flagship stores, that's meant to be bringing the brand to life and delivering on that experience, and then you think of retailers who have been improving their in store experience, to get people to browse other categories, or browse other sections. I think a lot of that was a trend that will now really be pushed and challenged, and fast tracked as we rethink about what that physical space means to a shopper. So, pop ups, as you mentioned, were great because they were delivering a different experience and that was a reason to go, see something new, or maybe see something that you could only buy there.
Amy:
I think exclusives will probably continue and be played around with in a new way in terms of what's exclusive online versus in store. But I think it's a little early to tell what disruptions are going to continue, and how people are going to use those physical spaces. I mentioned it earlier, but I could also see there being a big difference in geographies. The coasts have always been a little different anyway, but I could see the the retail experience on the coasts being a little bit slower to change at first, and then probably having more disruptions in the end.
Stephanie:
Yeah, completely agree. I can see also when they start streamlining the return process, I've already started see that at least with Amazon, where it's like, you don't even have to bring a box now or anything, just bring the good back there. Once that starts feeling easier, it seems like a lot of things could shift because, to me that's been the biggest hang up of ordering things online and, not knowing how to really return it, and not knowing if I'm going to feel like doing it, and keeping the box, and printing out the label and all that stuff. It seems like that could be a big shift too, and it's kind of already been forced that way over the past couple months.
Amy:
Yeah, no, that's a great example of now people are having to get creative in how they do things, both retailers and shoppers. And also, just as you try things and get used to it, you might realize that the return process wasn't as bad as you thought. Or the delivery window that your groceries came was actually more convenient than what you'd wanted before. So, I think some of those habits are going to change, which is always interesting to see, because now we're still in kind of the survey phase of, what do you predict that you're going to do? Or will you use this service again? And it's always interesting of course, to see what people say versus what they actually do.
Stephanie:
Yeah.
Amy:
And I think just over time as we all keep doing this, we could say, we hate it and it's a pain. But some of that we're going to be adopting those new habits that will stick with us in the longer term.
Stephanie:
Yeah that'll be really interesting to see what actually comes from that. So before we move into our lightning round, is there any other thoughts you have for eCommerce leaders or trends or anything else you want to highlight?
Amy:
No, I think you've covered it. I mean, I think this is just such an interesting time for the eCommerce space that, if you talk to someone else next week, they might say something different, and that's what's kind of exciting about it is watching how quickly it's changing, and just really being able to adapt quickly to stay relevant.
Stephanie:
Yeah, that's why this podcast is so fun. All right. So the lightning round brought to you by Salesforce Commerce Cloud. This is where you answer each question in a minute or less. So you have a minute, you don't have to rush too much, but it's kind of whatever comes top of mind. Sound good?
Amy:
Great.
Stephanie:
All right, I'll start with the easier ones first, and then move to the harder one towards the end. What's Up next on your Netflix queue?
Amy:
Oh, this is the lightning round. Let's see.
Stephanie:
When your eight month old and three year old aren't hanging on you.
Amy:
Exactly. I have to move into my adult entertainment mode which also doesn't sound like the right phrase to use, so that shows that I've been watching a lot of cartoons lately.
Stephanie:
No more Daniel Tiger for you.
Amy:
I know I'm just glad that I can get off Disney Plus and over to Netflix. We are big fans of Nailed It, and with the at home baking, I know I'm a season behind on nailed it, so I need to get caught up on that.
Stephanie:
Cool. What's up next in your travel destinations after the pandemic is over?
Amy:
Oh, we were supposed to go to Vienna for my husband's 40th, so hopefully we can get that back on the agenda. But, next week I'm going to be driving from the Bay Area to Aspen to see my new niece so-
Stephanie:
Oh fun.
Amy:
It will be a road trip.
Stephanie:
Sounds awesome. What is the best shopping experience that comes to mind that you've had lately? Other than being in a store?
Amy:
Yes, I have not been in a store lately, nor had a good experience in a store lately. Well, just this week was the first time that I could get an Amazon Fresh order, and I am a pretty heavy user. So they had a lot of issues, so I was really excited this morning at 7:00 AM when my Amazon Fresh order arrived.
Stephanie:
Yeah, that's game changing. I love seeing them come up and deliver it. I'm like, this is nice. Not having to do it.
Amy:
Yes.
Stephanie:
What was the last thing you bought from an ad? If you remember?
Amy:
The last thing I bought from an ad. That wasn't one of my clients products?
Stephanie:
Yes, yep, that wasn't one of your clients [inaudible 00:51:31].
Amy:
Yes, that I was actually buying as a consumer, let's see. I bought some Hannah Andersen Star Wars pajamas recently for my three year old. They're very cute and available now and actually they did arrive quite quickly so.
Stephanie:
Awesome-
Amy:
I'd recommend that for the-
Stephanie:
... For PJ's.
Amy:
Yes for the toddler PJ's, they are great.
Stephanie:
Yep, I know all about that. All right, and the hard one, what's up next for eCommerce pros?
Amy:
Oh, that's a big switch from PJ.
Stephanie:
I know, that's why I saved it for last.
Amy:
Yeah, I think eCommerce pros are going to be ... Have much higher regard in their own industries, and have a lot more influence. So, hopefully what's next for them is being able to kind of take a greater role in that brand and marketing experience across retailers. I know we've talked a lot about Amazon, but I think it's, how do we integrate eCommerce and into everything that we're doing, and that should be really exciting for the eComm pros.
Stephanie:
Cool. Love it. All right thanks so much for coming on the show Amy, this has been fun.
Amy:
Thank you so much. Appreciate you having me.
How do you build a successful eCommerce business that has attracted nearly 5 million visitors in a month? For Jerry Hum, it took a few failures and a couple of stumbles out of the gate with his cofounders before finding the winning combination of users, demand, and products all in one. Jerry is a co-founder and the Executive Chairman of Touch of Modern, a members-only e-commerce website and app focused on selling lifestyle products, fashion, and accessories to men. On this episode of Up Next in Commerce, Jerry takes us through his early struggles and how he found the secret sauce to making his eCommerce platform one of the most popular among male shoppers. Plus he explains what metrics other eCommerce pros should be looking at, and gives some advice to other entrepreneurs.
Key Takeaways:---
Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible eCommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
--- Transcript:Stephanie:
Hey everyone. This is Stephanie, your host of Up Next In Commerce. Today we have Jerry Hum. The co-founder and executive chairman of Touch Of Modern. Jerry, how's it going?
Jerry:
Pretty good. How are you? Thanks for-
Stephanie:
[crosstalk] good. Yeah, how's it going? So you're in a loft right now, right? In SF, living the quarantine life.
Jerry:
Yeah, in San Francisco.
Stephanie:
Yeah.
Jerry:
Yep.
Stephanie:
How-
Jerry:
[crosstalk] for a little longer than most other folks.
Stephanie:
Yeah. So what's your day look like with being sheltered in place and... I think San Francisco is even stricter than Palo Alto where you guys [inaudible] allowed to do even more than we are.
Jerry:
Yeah. Well, we actually started preparing for it a little bit earlier actually, just as it was making news headlines and most companies were still up and running. We were planning kind of contingencies and all that planning and seeing how work from home would be like if we had to do it. Luckily we came up with a plan just in time. We actually went into it before even California started making statements about it. So I think we are kind of in a pretty decent groove in terms of keeping the business running smoothly and all that. In terms of a day to day, I'm actually surprised as to maybe how engaged people have remained.
Stephanie:
Mm-hmm (affirmative).
Jerry:
Being that we have to do it all through technology. I actually started thinking about it, why is it that work from home is almost a little bit easier now than it was in the past. And I think it's because when it's the only option then you just do it. Right?
Stephanie:
You have to make it work.
Jerry:
Yeah. It's not like if half the office is doing one thing and then... Or not like half the office. If most of the office is at work and a few people are work from home then it's actually more difficult because the people in the office are like, "Oh, I'll just wait for that person to get in or something." But if this is the only way that every one is communicating then it's actually fairly smooth. Obviously everything takes a little bit more time and all that.
Stephanie:
Yeah.
Jerry:
[inaudible] day is actually longer than usual.
Stephanie:
Yeah.
Jerry:
All things considered, I think it's working pretty well.
Stephanie:
Good. Yeah. Hopefully it will all come to a close soon. How have you all handled... I mean has there been any struggles, I'm imagining taking photos of your products and things like that? That's probably a very in-person type of thing that [inaudible] people have perspectives on and all want to help. How are you handling things like that with your business that seem pretty hard to do virtually?
Jerry:
Yeah. So luckily, some of our folks have set-ups at home.
Stephanie:
Good.
Jerry:
Yeah. Because usually, photographers, this is not just a job. It's also a passion and a hobby. Right.
Stephanie:
Yeah.
Jerry:
So we've been able to make due... Obviously at a reduced capacity. Yeah.
Stephanie:
Yeah. Well, good. So maybe that's a good point to dive into what is Touch of Modern. If you were to explain it to the listeners and give us some background.
Jerry:
Touch of Modern is the only shopping destination that men visit daily. And we offer a [inaudible] mix of remarkable products across all categories and that you can use everyday.This could be anything from a flame thrower you can strap to your wrist, or the newest exercise gadget, or anything in between.
Stephanie:
Are women allowed? Because I was on there and I was like, "I want to buy some of this stuff." I would buy... Maybe not a flame thrower but there was some good stuff on there that I'm like, "I want this."
Jerry:
Of course, women are allowed. It's just kind of more... A little bit more of our differentiator. Because most E-commerce sights out there are catered toward women.
Stephanie:
Yeah.
Jerry:
[inaudible] we're not the only one but one of a few that really cater to men.
Stephanie:
Got it. Yeah. It looks awesome. A lot of the products. I was afraid to hit buys right away. How did you come to create the idea of Touch of Modern? And I think I read it was the third... The third times a charm. That you had done three other things, or two other things before that until you got to Touch of Modern. What was that like? What was that journey like?
Jerry:
Yeah. I'll give you the long story here, maybe.
Stephanie:
Good.
Jerry:
[Four] founders, guys from New York. The business actually was a peer-to-peer experienced market place. And this is kind of similar to what Airbnb has now. Obviously they built that on top of their existing business but we were trying to start from scratch at the time. That was extremely difficult because you're telling folks to change their lifestyle. Right? If you need to suddenly offer a cooking class, that's not a easy thing to do if you don't have the customers for it. Right?
Stephanie:
Mm-hmm (affirmative).
Jerry:
Or the time for it. And then we're telling customers to come on this platform and book stuff. But if you don't have the activities, what is there to book?
Stephanie:
Yeah.
Jerry:
So it becomes this chicken and egg problem.
Stephanie:
Yeah.
Jerry:
It came out of our own need because we were guys from New York, you're kind of looking for interesting things to do all the time, just in the city. Right? The second business was called Raven. Well, the first one was called [Scarra 00:05:24]. I don't know if I mentioned that. Second one was called Raven. That was a slight variation on the first. And that was we took out half of the equation because we realized, double sided marketplace, super hard. Right?
Stephanie:
Yep.
Jerry:
We started offering activities that already existed. This could be like hang gliding. This could be sky diving. This could also be day at the spa. Right.
Stephanie:
Mm-hmm (affirmative).
Jerry:
We also layered on a recommendation algorithm where you could like stuff. And based on your activity, we would offer you a daily feed of different activities and things that were new to discover in your area. We got a lot of engagement out of that. People found really cool things. If you look at my feed versus somebody else's, it would be really different based on what we like. When we looked at it, it was like, oh this is a pretty accurate description of things I'm interested in and my hobbies and such. Right?
Jerry:
And that was difficult because people would then discover stuff but they wouldn't actually book it with us. They would just call directly [crosstalk 00:06:29].
Stephanie:
Wow.
Jerry:
What we learned from that was, well, we need reason for people to transact. Right? And we need maybe something to make us relevant for right now. So the second generation of that business was actually arranging events where we built a mobile app as the early days of... Not the iPhone but when apps started getting the more complicated... Better than just the kind of beer pouring app.
Stephanie:
Yep.
Jerry:
Those simple things. Right? So we used Geofencing to create this thing where if you went within a certain perimeter of something going on, we would tell you about it. We'll alert you and be like, "Hey, like... Street fair over here or something over there." And that was really cool because there wasn't another app like that. At least that we know of... That we knew of at the time that was doing that. Also at the time, a lot of folks were moving to San Francisco.
Stephanie:
Yep.
Jerry:
Probably even more so than they are today. A ton of messages from people saying, "Wow, you're really helping me discover the city. Every weekend we pull this out and, you know, see what's going on." Especially because San Francisco is the type of city that always has something going on.
Stephanie:
Yeah. Like on the side streets, you're like, "There's a whole festival going on right now."
Jerry:
Yeah. So that was really cool but again, a lot of these things were free. So it wasn't there wasn't a real business model there. There's just a ton of engagement.
Stephanie:
Mm-hmm (affirmative). It seems like you guys are kind of ahead of your time with that. Because even when I'm hearing about that now, I'm like, oh, if you would have kept going with that one, Airbnb probably would have acquired you.
Jerry:
Yeah. Right.
Stephanie:
Oh, if you kept going with the Geofencing thing, Google would acquired you because I worked for Google Maps before this.
Jerry:
Oh, yeah.
Stephanie:
They're still trying to figure out how to show you where the festivals are, where the farmers markets are based on your location. So maybe you guys are just ahead of your time with everything.
Jerry:
Maybe. That would be the positive view of it. So I think the lesson we learned from that was... Incredibly hard to scale location based things. because you could sell out all the tickets to this one show or a certain percentage of it but there's unlimited margin and you're constricted by the location and therefore we couldn't justify the kind of business mechanics that were necessary to actually make that sustainable. I mean, it raised a ton of money. Right? And so this isn't going to get like... Where it wasn't like, hey, we're going to get to a billion people and then it's going to work. It's not like that.
Stephanie:
Yeah.
Jerry:
So we were like, what were we good at and what were we not good at? We were really good at getting people engaged. Really good at discovery aspect of things. We just needed something more scalable to be the thing that we featured. And realized that, hey, products... You get scale with products. Right? Mass distribution and all that. There's real margin there because that's kind of built into the modal that [inaudible] already exists.
Jerry:
We had always kind of liked products, just as the people that we were. But we didn't want to touch it because we didn't want to deal with real world problems of moving things around, shipping, [crosstalk 00:09:46]-
Stephanie:
Yeah. Logistics.
Jerry:
Yeah. Logistics. Right? After going through the struggles of the first two business, we realized that things are not really... It's not rocket science. Right? This has been done. We started thinking about what kind of unique angle we could take at it. I remember we were in the living room and we're talking about speakers for some reason and who made the best speakers. Dennis had his idea. Jon had his idea. And then Steven, who's real audio files, was like, no, these are the best speakers. He knew all these brands that we didn't even know about. We knew the mass market brands but not the kind of stuff that he was into.
Stephanie:
Mm-hmm (affirmative).
Jerry:
He had all this knowledge. Okay, you win that debate. Right? And we realized that we have this thing that we geek out on. Right? Jon was really into cooking and he had these really expensive knives that he would keep in this [inaudible] that he would have to take out and show us. Dennis was really into outdoor activities and all the gear that's associated with that. I use to be an architect when I was in New York so I spent way too much money on furniture. So that was my thing. Right? And so everyone had our own thing. No one out there was catering to this desire or whatever it was that ties all these things together. Right?
Jerry:
So we just started sourcing things that we thought were cool. Hey, if we think it's cool, other people are going to think it's cool too. Right? It wasn't like a men thing. It wasn't even necessarily a discovery thing. It was just these were the things that we thought were cool.
Stephanie:
Mm-hmm (affirmative).
Jerry:
Through that process, right away it kind of hit in a way that the other two businesses did not hit at all in two years. Right? Where day one we started getting real transactions and kind of buying activity. Right?
Stephanie:
How? How did you get buying on day one? How did people even find your website or know where to go?
Jerry:
We did not even have a website on the very first day. We actually... What happened was Dennis, who ran marketing, would just start running ads and would go to a landing-
Stephanie:
Okay. Facebook?
Jerry:
Yeah.
Stephanie:
Or what kind of ads? Okay.
Jerry:
Facebook. Earlier in the days of Facebook too. I think a lot of what we did, now, can't be exactly replicated but there's probably some learnings to take from it.
Stephanie:
Mm-hmm (affirmative).
Jerry:
So we basically just collected emails and say, "Hey, there's this thing that's coming soon." Right? I think [inaudible] probably remember years ago there was tons of these types of things that are just coming soon and you're like wow [crosstalk 00:12:39].
Stephanie:
Yeah. That was the strategy back then of just like just put up a landing page and see if people want that fake product that you could create. I remember books where they would suggest that and I'm like, that's a good idea.
Jerry:
[crosstalk] that is more less of a pit. I mean, we were creating it.
Stephanie:
Yeah.
Jerry:
I'm not talking about like, let's just run ads and see if people like it. We were just building it at the time, that same time we were running ads against it. And basically we had an idea of what that metrics needed to look like in order for a business to work. Right? We just made assumptions down the whole funnel. Right? If we acquire an email for this much, and if this percent of folks convert, and assume a certain order value, and certain repeat rate then this is what our business would look like. Right?
Stephanie:
Mm-hmm (affirmative).
Jerry:
And no data for anything outside of what it would cost to acquire an email. Basically, we knew the cost of that. Then we started sourcing products and building the website behind it. Then we just went down the funnel and firmed our assumptions. Sometimes they were better and sometimes they were just different. We kind of just proved it out from the top down.
Stephanie:
Got it. That's really cool. Has it always been a member's only platform? Has there ever been a time where people could just go to the website, the app, and just see the products without inputting their email?
Jerry:
Yeah. So, we require folks to input the email for the upfront reason that we are talking to... And this is also maybe one of our differentiators, is that we are not a clearance channel per se. We talk to vendors who have products that are new to market. Right? So they may have endeavors to go to traditional retail or something else, and they may not want their prices shown necessarily to everybody.
Stephanie:
Mm-hmm (affirmative).
Jerry:
So that's one [inaudible] been the case.
Stephanie:
Got it. Okay. Cool. So when I was looking at your catalog and just seeing everything that you have, how do you go about curating something like that? I mean, it sounds easy in the early days of, oh, so and so likes knives so he pulled in his favorite knives. But I saw how many products you have on that page. Maybe it's like... How many a day do you release?
Jerry:
It's about 300 a day. It's quite a bit.
Stephanie:
How do you find 300, even a month, cool products that are so unique like that and keep up the level of quality that's on there?
Jerry:
We have a team of about 30 or so folks on the sources and buying team and they're out just looking for what's cool and unique. And obviously we have our standards and things that we look for and they just go out and try to find things that meet those standards. And they also try to find things that are... that we've just never seen or heard of before. Right? Then we bring it back, it goes through an approval process, and then we put it up and run it. It's fairly simple.
Stephanie:
Does it still go through you to approve of every single product?
Jerry:
Not every single product.
Stephanie:
No.
Jerry:
In the early days it was and now we have a team of folks that can do it.
Stephanie:
Got it. And you also have an app that people can buy from. Is it the same functionality? Does the website mimic the app or how did you think about expanding to mobile?
Jerry:
It's mostly the same functionality. We expanded to mobile fairly early on. Like I said, our previous companies were... We were already experimenting with mobile back then. I don't think we had one on Scarra but Raven, we definitely did.
Stephanie:
Mm-hmm (affirmative).
Jerry:
That was a core part of it. So we went to mobile pretty early on and I don't think we knew this per se, but it was interesting because men tend to be more comfortable buying on mobile too.
Stephanie:
Mm-hmm (affirmative).
Jerry:
And maybe that influenced part of our strategy or vice versa. It seems to actually be the more popular platform for us. Both in terms of actual use engagement and revenue as well.
Stephanie:
Okay. And do you see different customer profiles when it comes to the mobile user versus the website users? And do you cater to them differently based on that? Or personalize things different?
Jerry:
No. The experiences are pretty congruent on both sides. The mobile users tend to have a little bit of a higher value. But that could also be because you kind of have to self select into mobile.
Stephanie:
Mm-hmm (affirmative).
Jerry:
You go on to the website and then you're all, hey, we're really into it. And then you go on the app. Right?
Stephanie:
Yep.
Jerry:
It's kind of hard to say what's [inaudible 00:17:21].
Stephanie:
Go it. Very cool. So in the early days you were doing Facebook ads. And I think I read that you were doing TV ads as well at a certain point. How has your marketing strategy evolved over... since you started?
Jerry:
Yeah. So in the early days of Facebook it was like a wild, wild west. Right. Big brands weren't really on it. So it was a great time for companies like us. And this is why I say a lot of it can't really be replicated today exactly the same way we did it back then. So when a lot of competition started moving in, in order to compete, we kept broadening our category just... I mean, just becoming a stronger business. Right?
Stephanie:
Mm-hmm (affirmative).
Jerry:
So it would be a lot harder to start with just a handful of products the same way we did. When we started, I think we launched with 12 products and that was it. It was like 12 individual products, not twelve vendors, just 12 [inaudible] things you could buy. Right?
Stephanie:
Yep.
Jerry:
That was enough to make it work. Probably impossible now to do that. As the business grew we could support more channels. We went into Google and then eventually got to the size where we can actually start experimenting with TV. I think also, TV has evolved over time as well because of visual advertising. Because so many brands see the benefits of digital advertising. You can track things and kind of go after a more specific audiences. That TV now kind of has changed to have some of those properties as well. So we use them both kind of together and they enhance each other. You can tell when, if you're spending too much on TV and not enough on digital, then TV starts to suffer. If you spend too much on digital and not enough on TV then the opposite happens.
Stephanie:
Got it. How do you find that ROI of the campaigns? Then decide, okay let's scale back on TV and increase mobile ads or something. What metrics are you looking for?
Jerry:
We actually have the exact same metrics on TV as we do on digital. Right? And this is just... cost acquired customer and lifetime value and all that. The way we track it is now you can know exactly when your spot airs and basically we have a baseline of traffic that we know that, hey, if nothing is airing, this is what are organic traffic looks like. Right. So when we air a spot, we can see that spike. We do a [inaudible] analysis to say this much of the traffic following that airing is probably through the TV.
Stephanie:
Got it. Okay. Very cool. So when it comes to metrics, when you think about E-commerce, what metrics do you think are most important to keep track of? Or how do you define success when it comes to E-commerce?
Jerry:
Yeah. There's a ton of stuff. I mean, it really depends... It depends a lot on what kind of product you're selling. Right? I'll give you two extremes. One extreme is like us, and for us we are a multi-brand retailer. Right? You can buy a number of things and also we change our selection everyday. So you can keep coming back to keep buying different things. Right?
Jerry:
So what's important to us is lifetime value and retention. Right? How fast do you break even on the cost to acquire a customer? At the end of the day, that's kind of like the most basic thing for any kind of company in our space. But the products that you're selling may influence how you look at it. Right? If you're selling cars or mattresses or something that you just don't buy very often, then you may think about it very differently because it's just not feasible to thing that the retention rate is going to be nearly what ours is. Right. Or at least not be frequent enough for you to be able to plan your marketing spin around.
Stephanie:
Mm-hmm (affirmative). Go it. How do you keep your customers... How do you retain them and keep them coming back? Versus acquiring new customers. How do you think about that mix?
Jerry:
I mean, you always have to acquire new customers.
Stephanie:
Yeah.
Jerry:
I think [inaudible] is just like a natural part of business. You can't deny that it's there.
Stephanie:
Yep.
Jerry:
[inaudible] you can be great but there's going to be some folks that it's not for. Right? It's not like 100 percent of your folks are going to stay with you forever. Even the folks that do eventually they may change taste or things like that may happen. So in terms of splits, I think that also varies on performance for us. For us we care about kind of a payback on the spend that we're doing and pending on where we see better performances kind of where we'll weight it. And also kind of seasonally because I would say for retail there's holiday season and all that, you may want to do one thing versus another. But that's going to be really specific to the kind of company that you're running.
Stephanie:
Yeah. So when it comes to changes in spending pattern, what have you seen with everything from COVID-19 going on? Like what kind of differences? I saw you have a... I think a stay-at-home section or something similar like that. Shelter in place, on your website. How have you seen things change since that started?
Jerry:
People's priorities definitely change very quickly. Luckily for us because we can change our assortment everyday, we were actually able to adapt really quickly. We got that store up from... From when we said we were going to do it to when it was up was a matter of... Like the morning to that afternoon.
Stephanie:
That's impressive. How did you line up all the vendors? I mean, to me that's like a long process of picking the vendors and picking out the product and making sure they can ship enough, depending on demand. How did you get all that lined up so quickly?
Jerry:
The thing is... I mean, when this first started happening especially. And we need to agree now still, it seemed as if time had just sped up suddenly.
Stephanie:
Yeah.
Jerry:
Things that would take an entire quarter could happen now in like a day. Right?
Stephanie:
Yeah. It has to.
Jerry:
Everyone was wondering what would be different? All of our vendors, suddenly their retail channels dried up. Right? And they had to move things around. So we just called them up and said, "Hey, this is what we're doing." Obviously most of the folks that were on there, day one, were folks we've worked with already in the past.
Stephanie:
Mm-hmm (affirmative).
Jerry:
Or coincidentally we were talking to and hey, this fits, kind of thing. Right? It was tapping existing relationships. And parallel, the design and engineering teams were building up the store. We were using some existing infrastructure that we could repurpose and re-skin for the store. It was an amazing feeling. I didn't think we were going to do it in a day but it happened.
Stephanie:
Yeah. And are you changing that catalog? Like each day or week or...
Jerry:
[crosstalk] as well. Mm-hmm (affirmative).
Stephanie:
Got it. Does it... How do you think now your company is going to change based on now you know how quick things can move if it has to?
Jerry:
Yeah.
Stephanie:
Do you think that your internal policies and all that stuff could change going forward based on how quickly you can see thing go through? And maybe seeing things aren't a priority or approval for certain things might not be as high priority as you thought they were or... What's your view on that?
Jerry:
Yeah. I mean, in terms of policies first... I think in more so than anything it was like validation of a lot of policies that we had in place.
Stephanie:
Mm-hmm (affirmative).
Jerry:
It was confirmation that we could move quickly. Because we always thought we could. I think that's always been our thing. One of the questions people always ask is how does a company that sells premium products, how does that respond in a recession? Right? This isn't a recession but it's a time when people's priorities are going to shift maybe away from things that were... seems more frivolous to things that are now more essential. Right? For us, we always said, well you know, we can respond quickly but it's never been proven. And now it's been proven to an extent that we can respond quickly. And we can move to things that are more essential. It's still essential with a twist. Right?
Stephanie:
Yeah.
Jerry:
It's still within our brand. And it's going to bring a bit of uniqueness and delight into people's lives that are staying at home.
Stephanie:
Mm-hmm (affirmative).
Jerry:
I think it's validation that the modal can move quickly. The way we thought. And that our brand can extend to the different categories. And address people's needs as they change.
Stephanie:
Mm-hmm (affirmative). Do you think these buying behaviors are going to last for a while? And if so, are you shifting maybe your thoughts on what Touch of Modern looks like in 2025, 2030? Is it kind of having you re-think things a bit?
Jerry:
I think that people's buying behaviors will change because I don't think it's going to go back to exactly the way it was. You know.
Stephanie:
Mm-hmm (affirmative). I agree.
Jerry:
Yeah. People are going to be much more... And I hope they're going to be much more health conscience. I hope that this introduces some good habits. Right? I think people take a bit of time to reflect and think about things like self improvement. Maybe they didn't have the time to do before because I think some people staying home are going to realize like, "Hey, there's this new hobby that I've always been wanting to do that I can do now." Or, "Maybe I should drink less." Whatever it is that they discover when they change their lifestyle, that there's actually parts of this that are good, that they can take away and keep with them.
Stephanie:
Mm-hmm (affirmative). Except for the drinking lessening. I think that one's going the wrong way.
Jerry:
Wait. I don't know. I don't know how some people are-
Stephanie:
Happy hour time keeps getting earlier and earlier. I'm like, I need to set up rules around this house. Oh my gosh. It's only like two o'clock, what am I doing?
Jerry:
Well, I mean, another silver lining here is that I think people now have actually seen how quickly the environment can actually improve just with... And in a short period of time. Right? Because in the past I think it always seemed like this insurmountable thing to certain folks where it's like, "Yeah, you know, we can recycle and do this, but we've been doing that for a long time and nothing has really changed. It's actually been getting worse." Right?
Jerry:
And then suddenly you take a step back and it's like, hey, things change quickly. Right?
Stephanie:
Yeah.
Jerry:
So maybe it's not as impossible as we thought. We just have to be deliberate about habits that we have and maybe where we spend our energy.
Stephanie:
Yeah. Yeah, I think sometimes a little shake up like that can be good for people and the economy. And good things could come from it. Even though there's a lot of bad going on as well. I think, yeah, it depends where you're looking, I guess. So when... Oh, go ahead.
Jerry:
Yeah, I mean, [inaudible] other wise it's just all bad. Right?
Stephanie:
Yeah. No, everything can't be all bad. There has to be something good out there. That's what I'm hoping for anyways. So when it comes to outside of Touch of Modern, and more of the E-commerce industry as a whole, what destructions do you see are coming? Especially with COVID-19 now. We're seeing some of that already happening. But what are you betting on in the future... Yeah, coming?
Jerry:
Well, I'm going to bet probably more on E-commerce. Right? I think people are going to build habits from shopping at home that are not going to go away. Right? I think certain things that maybe people use to only buy in person are like, hey, I can buy this at home. It's actually a pretty decent experience, probably going to keep that habit even after this. And I think people are going to maybe focus a little more on preparedness for things than they have in the past. I think human nature is that you never think that these kind of outlier type of situations can happen, but they do. Be that once... Once in a century, I'd never think about it. But a person lives a long time. Right?
Jerry:
You may see a once in a century thing in your life. That's probably going to happen for a lot of people. Right? And this is that thing for us.
Stephanie:
Yeah. Agree. It seems like there's going to be a lot of new people coming online who never were online before. And it brings me to a point I saw on your website that I liked a lot is kind of meeting a consumer where they're at. There's two things I saw on your website that I thought would be perfect for a new consumer who doesn't normally buy online. The first one was you have a toggle button on your homepage that says, "View as." And you're about to actually change how you view products on the page, depending on what you prefer.
Stephanie:
So I thought that was genius. Any insight behind that? Or any thoughts when you were creating that? Because I haven't seen many websites allow you to toggle that view to what you prefer.
Jerry:
Yeah. It's just like a preference thing. Right? Our experience on the landing page is we just drop you right into our offering. Right? It's not like a landing page where you then click in and search and do all this other stuff. Mostly E-commerce is catered to search. Right? You just go on the page and automatically thing is you type in what you're looking for. Right? That's not really our experience. It's there but it's kind of secondary. It's mostly a browse and kind of meander your way through our offering.
Stephanie:
Mm-hmm (affirmative).
Jerry:
We let people maybe pick the way they want to meander. Right?
Stephanie:
Mm-hmm (affirmative). How do people meander through 300 hundred things? Because I was going through and I wanted to look at all of them but after a little I'm like, oh, this is too many. And I kind of wished maybe like... What did I see? There was this screen that extended your screen. So you have your MacBook or something and you plug in a little cord and you have an extension of your screen, which is awesome.
Jerry:
Yeah.
Stephanie:
I'm like, that should have been shown to me first because I want to buy that right now. Whereas, what was the second thing? It was showing maybe like an expensive bottle of wine, which I'm like, oh, push that down some because I'm not fancy like that. How do you think about helping people get through these products each day?
Jerry:
Well, I think your first time experience is going to ne a little bit different than your second and your third time. About almost half of our users, and I'm not talking about customers but just people that visit, will actually come back at least once a week. And so-
Stephanie:
Wow.
Jerry:
Yeah. And so if you're doing that and then our most frequent visitors are coming back every single day, then it's not as hard to browse through everything. Because then you can browse through it and then you'll hit a point where, okay, now I'm looking at yesterday's stuff. Right? And so, if you keep up with it everyday then it's not actually a ton of stuff.
Stephanie:
Mm-hmm (affirmative).
Jerry:
But for your first time, you're looking at all the days that have accumulated in the past five days. And certain events will also extend beyond that. I think the first time experience is like, wow, this is a ton of stuff. And also because you probably want to click through every single thing. Right?
Stephanie:
Yep.
Jerry:
But after awhile you're probably just looking for the things that catch your eyes. Or you're just going to scan and be like, okay, that's really cool. That's really cool. But you're not necessarily going to check out every single thing. Right?
Stephanie:
Yeah. [inaudible]
Jerry:
Also, on the mobile app, the scrolling screen is just much slicker and smoother too.
Stephanie:
Mm-hmm (affirmative).
Jerry:
I think you might just browse there. A lot of folks also will tell us that it's just something that they peruse through when they're waiting for something or commercial break or something like that.
Stephanie:
Mm-hmm (affirmative). The second thing I saw that I really liked, which I also haven't seen... Maybe I'm just not on enough websites. I don't know. But I was looking through... It was an about shipping section. And it showed a visual of what does your shipping status mean.
Jerry:
Yeah. Yeah.
Stephanie:
And it just... It showed everything from like, we place our PO, and than it goes to the supplier, and here's what it means if you see... I don't know the whole... I can't remember the whole layout. But I thought that was genius showing it in a visual format. And I'm sure that probably brings down a lot of customer support emails. But tell me how you all are thinking about giving that transparency to the customer.
Jerry:
Yeah.
Stephanie:
And hopefully prevent a million a emails of, hey, where's my product.
Jerry:
This is another product of our business modal. Or kind of what differentiates us a bit. We sell across all categories. Right? Meaning that we have to be able to accommodate all the categories. So it's not like, a company that just sells furniture ships one way. A company that just sells clothing ships another way. Right? And so their customers go there expecting a certain experience. A company that sells everything needs to ship all the different ways. Right? So a customer might not know exactly what this shipping process is going to look like when you buy something because they may not realize... I mean it's obvious now when I talk about it but if your company goes on a site, you're going to expect shipping experience to be generally consistent. But for us it's like, we're going to ship furniture differently, then we're going to ship clothing differently, and then we're going to ship, you know, this cup, right?
Stephanie:
Yep.
Jerry:
And so for us it's just more like informing the customer, this is what's going to happen. This is what it's going to look like. And this is what the different steps mean. For us, we found that more so than anything, they just want to know what's going on. That it's moving and... like internal. Yeah.
Stephanie:
How about when it comes to relaying the value of the product? How do you convince someone that something is really good? Because I don't think I saw reviews on the website. Unless I missed them.
How do you... That's usually the first thing I look for. Is it five stars? You know, I want to see if someone has the same kind of experience that I'm looking for. How do you tell someone something's valuable without that?
Jerry:
Yeah. I mean, a lot of what we do is educating the customer. Right? Because a lot of these things they never heard of, they didn't know it exist. I wish we could say we do an awesome job at it and we provide all these reviewed stuff but... And we vet the product. We'll go and look at the reviews and we'll test the product and all that. But it does take a leap of faith in the first purchase and maybe you get a learned trust after some time, that like we've done the research.
Jerry:
Because if you go and research these products you're going to find that they're pretty highly regarded.
Stephanie:
Yep. Which I think actually might be the modal that it's headed is just show me one or two people at your company that I trust to review product, and I trust them. Because a lot of reviews, I mean, at least on other places... Marketplaces and things like that. They're paid reviews. And so you go through and you're like, well, I can't trust 90 percent of these anyways. So I think it is kind of shifting towards just give me the one person that I can trust. Or the one company that I can trust to curate something for me. And I know if it's coming from them, it's going to be quality and good.
Stephanie:
Are there any big transformations that are going to be on your plate after the environment kind calms down? Or any big projects that you plan on starting or changing within your strategy?
Jerry:
Yeah. We're working on shipping things a lot quicker. The reason being that a lot of our products do take a little bit longer because we have these various modals that we work with. And we found that when we can ship things more quickly people are generally way more happy and more likely to come back and purchase.
Stephanie:
Got it. How can you speed up the shipping for... when it's a bunch of different, I'm guessing, retailers who all their own different practices? How can you kind of know that you can speed that up and make it all pretty uniform?
Jerry:
Consign the product. Right? So they will house it in our warehouse and we essentially act as their distribution center.
Stephanie:
Oh. Okay, cool. Tell me a little bit about that. Do you have to buy warehouses in different parts of California? Or how is that modal set up?
Jerry:
Right now our warehouse actually has a good amount of space. And we've actually developed our distribution system to fit with our model, right, which is that we run things in these short spurts. Right? And what's cool about that is that things come in and they go out really quickly so we're not sitting on mountains of inventory. I mean, we're nearly inventory-less. We're very inventory light. We don't actually require that much space to run a lot of products.
Stephanie:
Mm-hmm (affirmative).
Jerry:
So right now, for the foreseeable future, it's to keep it within our distribution center. It's a long winded way of saying...
Stephanie:
Okay. Got it. How did you learn to do that? When I even think about shipping products to a warehouse and making sure everything goes well, how did you learn best practices around... Yeah, around all that?
Jerry:
Yeah. This is interesting because when we first started we were shipping our own products from day one. And so-
Stephanie:
From your house? Or from where?
Jerry:
From the house. [inaudible 00:41:45].
Stephanie:
That's awesome.
Jerry:
... of just tons of boxes in the living room. And then when the FedEx guy came we would... The first day we just piled it in the lobby and our neighbors got really pissed at us for doing that.
Stephanie:
I can imagine.
Jerry:
So the second day, we knew when the person was coming and we just did like bucket brigade style where we just passed packages from our living room down to the... Basically we had our four founders there. And we would just pass it down, bucket brigade style, down the stairs as quickly as the guy could load it into the truck.
Stephanie:
Oh my gosh.
Jerry:
And then the first day we finally opened the office, we set aside half of it for fulfillment. And the reason why we did that was because we realized our model is just very different than a traditional pick and pack modal, which is what most 3PLs... What's called a third party logistics provider. At least back then, they were mostly doing pick and pack type operations. And it didn't really fit our modal and we realized that at a certain scale we'd have to bring it in house. It's better to learn it now than to try to take it in when it's already at scale and have huge disruptions in customer experience. So basically, we just started doing it at a really small scale and built our operations all custom to that. So our, kind of, back office technology is all custom. Right? So everything ties together and it suits us in a way that... If you went with a just a third party provider, it probably wouldn't work as well.
Stephanie:
Very cool. Well, definitely have to get that picture from you so you can post it somewhere to show people because that's... Yeah, a really fun story of starting out.
Jerry:
Yeah.
Stephanie:
What do you see for new people starting out, building their stores and all that? What is some advise that you give them? Or best practices or things that you did that you're like, don't do that, that actually worked out really bad.
Jerry:
So this probably goes back to your first question about the two businesses that we had before. We made some classic mistakes. Right? Which is, I think the big one is you build the whole thing and you spend like a year building it and then you think that one day you're going to open and people are just going to come in. Right?
Stephanie:
Yep.
Jerry:
Then you start thinking, hey, maybe we just keep tweaking the product and eventually people will come. Right? Really all you're doing is staying busy.
Stephanie:
Mm-hmm (affirmative).
Jerry:
Because if the demand is not there, it's not going to suddenly show up, almost like the world changes, right? And you would be at the right place at the right time. So it's prove out the demand first. And then when the demand is there, you can take your time with the product. Right? It's like, you don't want to be in a place where you're convincing yourself that the reason you're not succeeding is because the product is not quite right.
Stephanie:
Mm-hmm (affirmative).
Jerry:
If there's a real need for it you can come out with something that's pretty minimal and just addresses the core need. And it doesn't even have to run perfectly and be totally ironed out. And that will give you enough signal that there's something there that people want. And then you can find it down the road and keep expanding your market to... [inaudible] but this is now more mass market. And so on and so forth. Right? Because the early folks, they want your service, whatever it is, so much that they're going to put up a little bit with you in the early days of like not having it all totally together.
Stephanie:
Mm-hmm (affirmative). [crosstalk]
Jerry:
And so... Yeah. Yeah. You got to prove out the demand first before you totally refine the product.
Stephanie:
Cool. And what about when it comes to technology? How do you think about... It sounds like you guys did a lot of just in-house... everything. In-house logistics. In-house website stuff. What would you tell someone right now? Should they try and build things in-house? Or... Yeah, what are your thoughts on that?
Jerry:
It's easier now to build anything in-house than it use to be. Right? Back then it was actually a little more difficult because a lot of the frameworks that are being used today were really fresh back then. Right? So people weren't learning it in school. They had to teach themselves. There weren't the coding bootcamps back then either. So engineers were still a little bit hard to come by. Now, resources are there and everything.
Jerry:
We were lucky because we did our own coding in the first versions of the site. It was me and Steven, our CTO. More him than me but we built the early versions of that and didn't hire engineers for a long time. Maybe longer than... we probably should have hired engineers a little bit earlier than we did. But we got by with just two folks building stuff. Right? But you also learn a lot. You are kind of like more intimate with the product, even today, just because we have that history with it.
Stephanie:
Yep.
Jerry:
And I think one of the things that's really important to us early on was the data ownership. Right? We don't want to have all these different things talking to each other and not have a clear picture of what's going on. Right?
Stephanie:
Mm-hmm (affirmative).
Jerry:
We don't want any black boxes. There's things that if we don't have access to all the data then we're just going to cut that service and we're going to build it ourselves.
Stephanie:
Got it. Very cool. Yeah. Great advice. So with a couple minutes left, we're going to move on to... it's called the lightning round. Brought to you by [Sales Force Commerce Cloud 00:47:37]. Sales Force Commerce Cloud. This is when I shoot a question over your way and you have a minute or less to say the first answer that comes to mind.
Jerry:
Mm-hmm (affirmative).
Stephanie:
Are you ready?
Jerry:
Okay.
Stephanie:
Dun, dun, dun, dun. We'll start with the easy ones first and then we'll end with the harder one. Sound good?
Jerry:
Yeah.
Stephanie:
All right. What's up next for dinner?
Jerry:
Left-over Chinese food. Some more.
Stephanie:
Yep. What's up next that you're buying from Touch of Modern?
Jerry:
What am I buying next? Well, I'll have to see what comes up next. It changes everyday so I don't know yet.
Stephanie:
All right. Well, what did you just buy recently? Or what's your most recent purchase?
Jerry:
My most recent purchase was, funny enough, it is a cast-iron rice pot from [Le Creuset 00:48:22].
Stephanie:
Okay. Have you tried it out yet?
Jerry:
No, it hasn't gotten here yet. It was very recent. This was probably... couple days ago.
Stephanie:
Cool. What's up next on Netflix or Hulu queue?
Jerry:
I actually don't have either. I don't even own [inaudible] TV. I don't watch a whole lot of stuff, actually.
Stephanie:
Okay. Hey, that's an answer. What's up next in your travel destinations after the environment calms down a bit?
Jerry:
I think an easy one from California would be Hawaii. I like to go there to relax and it's a relatively short trip. So I like to go there [inaudible 00:49:05]. Yeah.
Stephanie:
What's your favorite island there? Have you been?
Jerry:
Yeah. I go to Oahu fairly frequently. I really like Kauai, I've been there once to do a hike.
Stephanie:
Yeah. That's my favorite island with all the waterfalls there and the crazy hikes that-
Jerry:
[crosstalk] been to the weeping walls?
Stephanie:
Yeah. Yeah.
Jerry:
Yeah.
Stephanie:
Yep. Oh, yeah. I want to go back though. We were only there for a couple days and I feel like there's so many different hikes and waterfalls and just things to see there. I mean, it's... Yeah, like a jungle. It's awesome. On to the hard question. What's up next for E-commerce pros?
Jerry:
E-commerce pros. Hmm. Man. What's next for the pros? I think, I mean, it's going to be adapting to the changes in customer behavior that are coming out of this. Whatever that is. I don't have a crystal ball for that one.
Stephanie:
Got it. Hey, that's an answer. All right, Jerry. Well, this has been a fun interview. For everyone who hasn't gone and checked out Touch of Modern, you should. It has really fun products on there. And yeah, thanks for coming on the show.
Jerry:
Thanks for having me.
In the world of eCommerce, one of the biggest challenges the pros come across is selling something to a customer who physically cannot experience the product at the time of purchase. For Dmitri Siegel, that was one of the hurdles he has had to overcome as the Vice President of Global Brand at Sonos. Dmitri cut his teeth in the world of eCommerce at Urban Outfitters and then moved on to work for Patagonia. And while the number of products he was selling was reduced with each move, the challenge of building a platform that could connect with target buyers remained. On this episode of Up Next in Commerce, Dmitri explains all of the lessons he’s learned in facing those challenges, including the importance of culture, what a successful brand and website redesign looks like, and what some of the most important metrics are when you’re judging the success of your eCommerce platforms.
3 Takeaways:For a more in-depth look at this episode, check out the full transcript below.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible eCommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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Transcript:Stephanie:
Dmitri, how's it going?
Dmitri:
It's going as well as it can. I'm enduring. How about yourself?
Stephanie:
It's going well. It's bright and sunny, and even though we can't go anywhere, at least we get to hang out here, right?
Dmitri:
Yeah.
Stephanie:
So I'd love to hear a little bit, Dmitri, about your role at Sonos. What is your title, and if you can give me a little bit of background on what you do at Sonos.
Dmitri:
Sure. I'm the vice president of global brand for Sonos. It means I oversee all of our brand creative and marketing, product marketing. I oversee all of our digital experience and physical retail experience, so our web site and our physical store displays as well, and marketing operations. So kind of all the touch points that you have with our brand except for the product itself.
Stephanie:
Got it. And how did you get into that role, because it seems very wide ranging whereas a lot of people are like, I only control the web site or I just have this one vertical. It seems like you have a lot under your purview. How did you move into that role?
Dmitri:
I had kind of a crazy pivot in my career early on. I was at Urban Outfitters and I was the digital creative director, and this was about 15 years ago. It was very early days for e-commerce. And my boss left, and we were interviewing people to run DTC, and there just was nobody really that had much more experience than I did. And so I kind of made the dumb youthful move of being like, hey, I think I could do this job. And my boss at the time, Ted Marlow, was like, all right, well, we'll give it a shot. And so I went from really running creative and the web site product to running the whole business, and they were so good at operations and merchandising and finance and all these things that they felt like they could teach that to me. And so I just had this opportunity to run a P&L and run operations, and that gave me the sort of balanced background between those two things.
Dmitri:
And everywhere I've been, I've sort of since then, I've just sort of had that balance of the e-commerce business and creative side, and it just came out of basically someone taking a risk on me early on in my career. So yeah, it's been an interesting, interesting journey.
Stephanie:
That's awesome, really fun to hear about someone betting big on you like that. Was there anything where when you jumped into that role, you're like, I actually don't know anything about this-
Dmitri:
Oh yeah, so much.
Stephanie:
And what did you do in those moments if so?
Dmitri:
So much.
Stephanie:
And what are some examples of that?
Dmitri:
I mean, at that time, merchandising, I looked at everything as what would be beautiful, and so understanding this one might be beautiful, but it's low margin and nobody's buying it. That was an important thing to learn. And I also, I remember really early on in sight merchandising saying, oh look, we should put this in the upper left hand corner because it will sell more, or I think we should put this in the upper left hand corner, it's my favorite product or whatever. And I remember the merchandiser at the time going, you know what? I could sell a lot of old flip flops if we put them in the upper left hand corner too. You're not some merchandising genius. So understanding that, just learning the way that shopping actually happens in that medium and the mechanics of it, very humbling from that point of view.
Dmitri:
But I think having a learner's mentality is important at any stage in your career, I still have that feeling. There's so much that I don't understand, there's so much to learn, and most often honestly from the people who report to you or who are in your own organization. I think being promoted young into that role, I had to very quickly get comfortable with the fact that people who worked in my team knew more than I did and just being humble about that and learning from them, so that's part of what makes it fun to go to work, so.
Stephanie:
That's great. Have you seen your role at Sonos change since when you started because of the environment or consumer buying behaviors to where it is now? And if so, what are the biggest changes that you've seen?
Dmitri:
I think that I came in early on to really get the digital side of the business going faster, and we did a lot of the sort of fundamental blocking and tackling of re-platforming, redesigning the web site, but I think quickly realized that this is really a holistic business and a multi-channel business, and what's happening in the product marketing, for example, has just a huge impact on all the channels, including e-commerce. And I think some of the stuff in this field is very optimization oriented, and it's actually not as impactful sometimes as what your naming a product or defining the core benefits of that product that would actually help it in every channel. So my role has definitely gravitated more to the general brand and product messaging overall, and how that comes to life in e-comm is the harshest test of it, the best place to test that. But it's not the sole focus any more.
Stephanie:
Got it. Yeah, how do you think about bringing a product that's ... You really need experience. Nice speakers or great food or something like that, how do you bring that experience to life on a web site?
Dmitri:
It is challenging. I mean, the core benefit of Sonos, sound, is invisible, so you can't see it. And if you're listening on a laptop or on a phone, you're not going to experience the quality of sound that we go for and that we create. But really, I think every product has that challenge. I mean, I like to think that Sonos is more complicated and more difficult, but I think you always have to just be really, really rigorous and relentless about what the value is for the customer and then illustrate that in words and pictures in a very slavish way. And I think it has to be like a pop song. There's no guitar solo, there's no 15 part middle part. It's got to be really to the point and verse chorus, verse chorus. And I think that rigor is really, it's true for us probably more so because it is an invisible, ethereal, emotional kind of thing. But I think it applies to just about any product.
Stephanie:
Yep. Yeah, I agree. One thing I saw on your web site that, I don't know if it just hit home with me, but I thought it really made me think about the experience was when I was scrolling, I saw the speaker on the page and it had little sound bars bounce off the speaker, and it made me be like, oh, cool. And it gets you kind of in that music mode and just thinking about, I wonder how that sounds now. I'm assuming that was intentional, and if so, was that your project?
Dmitri:
Yeah, so we actually have an entire style guide of how to show sound and how to talk about sound. What are the words that you use? What are the circles that emanate from the speaker, and is this stereo sound or are we showing the tuning of the speaker? And our brand design team, I think in some of the ways that ... Oh, God, this is a random story, but I remember going to a creative summit for McDonald's, and they had an entire session on the Coke and how to make the Coke look delicious and thirst-quenching. And then there was the burger session, and that sound is that for us. We have to be really consistent and relentless again about how do you make this thing look like it sounds great?
Dmitri:
And there's actually different ways we do that. So in above the line media, for example, we use this very bold waves of sound coming out of the speaker that really grab your attention. When we're doing an education piece like what you saw on the web site, we want to me more articulated about what the sound's actually doing in that moment, so ... And then we have to package that up as a tool kit so that marketers all over the world and partners can show it in the same consistent way. And it's true that repetition and that consistency that I think you actually build a sound brand.
Stephanie:
Yeah, very cool. And how did you come up with that style guide? Was it a huge project that took a lot of buy-in and everyone had a different idea, and then did you have to train your retail partners or other people of how to interpret it?
Dmitri:
I think everything always starts with listening and listening to your partners and understanding what they're actually going to use basically and what they really need. And so the style guide was sort of a culmination of a lot of projects where we would have conversations about, God, I can't see the speaker in this shot. I wish there was some way to call attention to it, or the sound of the speaker is so ... You have five speakers in the sound bar, but I can't really tell that from what you're showing me. So hearing a lot of that, and then trying different things and saying, well, this really worked, or this didn't work, and then compiling it ultimately into a style guide. But we didn't set out with a white sheet of paper. It's more listening to the needs and solving the problems of the marketing organization and the go to market organization overall.
Stephanie:
Got it. Very cool. And I think I saw y'all just did a whole brand redesign with the colors and all that. Do you want to talk a little bit about that, because I don't see many brands doing that. It's usually like, I pick my corporate palette, and it's blue, and it has to be blue for the next 100 years. How did you think about changing that?
Dmitri:
Yeah, this redesign, it was the coolest one I've ever been a part of because we were able to do the site and the brand redesign at the same time. So often those are two separate projects and maybe even two separate teams where you have the brand design team that goes and comes up with this really cool, hip, exciting brand identity, and then you have this web design team that's like, I can't use any of that. I don't know how I'm supposed to get that to work on the web site. Because we're all one team, we were able to really work on it simultaneously. So we would do some brand exploration, and then we'd be like, okay, maybe the product detail page with that, okay, settle on some core messaging, does that work on the home page, and go back and forth between web design and brand design simultaneously.
Dmitri:
And we just have a really good team that is really collaborative, and we all had that mission in the end, we want you to see an advertisement, go to the web site, and have it be totally consistent. We don't want these disconnects where the ad sells you something and then you get to the web site and you're like, what kind of ... I thought this was that kind of company, but it's this kind of company. And so that process was really digitally driven. But a lot of times, if you just approach a ... Like we just redesigned the web site, you don't get that sort of high-level brand thinking and strategy to it and communication hierarchy and stuff. And also, you just don't get the sizzle of brand to it. You sort of can get a very functional thing, and we're a premium brand and we command a premium price point.
Dmitri:
And I think if people show up at your site and it looks like an out of the box thing, then they're like, I don't know if they're really going to deliver on the experience side, so ... It was really cool to balance all of those. And then as far as the question related to color and our brand identity, our product is really black and white. That's the design philosophy of the product itself is that it's really bold, high contrast black and white. And our brand identity was the same way. It was very bold black and white. And what ended up happening with that is you couldn't really see the product because everything was black and white.
Dmitri:
And then also our category, all of a sudden everybody was just really severe black and white. And so we just, we didn't have a great context to show the product. We weren't standing out in the market. And so our brand is more about the lifestyle of the experience of your home, having high-quality experiences with music and content. And so once we started bring the color in, it just, the product could really pop out, and also just our brand looked really different in the category, so ... We didn't choose a brand color. These colors will keep changing over time, and they're more in a digital, kind of almost a seasonal fashion kind of usage. But this definitely feels right for our company and our product.
Stephanie:
Yeah, no, that's a great way of thinking. Are there any best practices you learned when trying to work with multiple teams to update the brand and update the web site? Any dos and do nots or places where you're like, oh, this went wrong, but this went really well, and ... Yeah, any guidance for other companies who are listening right now, like maybe that's a good idea to do both?
Dmitri:
I mean, you really have to build trust in your team, and it's about culture I think first. We couldn't have done that kind of project four years ago. I think our culture is at a place where we trust each other, we're collaborative, we have a shared goal in mind. We're willing to be honest with each other about what's working and what's not working. So I think you have to have the right culture to do that. I think also, when I very first got out of college, I taught school, public school. I was-
Stephanie:
How cool.
Dmitri:
An art teacher for a couple of years, and-
Stephanie:
What grade?
Dmitri:
It was junior high and high school, so-
Stephanie:
Okay, that's kind of a hard age to teach.
Dmitri:
It's very-
Stephanie:
They can little meanies. I was, anyways. I was a meanie.
Dmitri:
I mean, when you have 30 kids in a New York City public school, and you have no carrots and no sticks, I think what I learned from that experience is just like, you have to externalize the goal. It can't be personal, and it has to actually be written down and be agreed to as, this is what we're going to do, what's on this piece of paper. It's not about me and it's not about you. It's about what's on this piece of paper. And I think that was helpful with this redesign. We just had a really shared sense of purpose that wasn't the brand team's agenda or the product marketing team's agenda. It was like an external third thing that everybody was working towards-
Stephanie:
I like that.
Dmitri:
And I think that's really important.
Stephanie:
Yeah, no, that's great, because then if not, you've definitely got teams kind of battling it out and competing and trying to push agendas, and it's nice to ... It's kind of like putting it on a higher authority of, well, this is what we all agreed to, and this is where we're headed, not towards either one way. That's great.
Dmitri:
Yeah.
Stephanie:
Were there any tools or technologies that you utilized or implemented that really helped with updating the web site and updating the brand?
Dmitri:
I don't think that technology played a huge role in it. I mean, Google Slides. We use Google Slides a lot.
Stephanie:
Tried and true, yep.
Dmitri:
But I think that the tools of the trade are pretty consistent. I think that the ... I mean, when you ask it that way broadly speaking, Zoom, Google Slides, and Slack have really enabled us to collaborate with different agencies and with different teams, often in different locations. And because we were already working that way, this current disruption is pretty seamless for us in terms of how we work. It definitely posed a challenge in terms of our typography. That's a huge thing obviously that drives design and it drives my point of view on design, and when you're working in a digital medium, it's just, it's really different. That's actually one of the places that I think brand design and digital design kind of get crisscrossed is brand design is generally this print-driven medium where you can be pixel perfect on every single bit of typography, and digital is just, it's just much more dynamic and you have less control over every application. So I think that's one where we had to carve out enough time for the digital team to solve those problems.
Dmitri:
Often you throw over this PDF and you're like, this is how I want it to look. I want it to look exactly like this. And they're like, well, that's going to take some custom work, because type doesn't really set up like that in a browser. So we were I think good about leaving enough time to actually do that work.
Stephanie:
Very cool. Yeah, that's great, and how did you think about measuring success of the redesign, or what's the impact been since you launched it?
Dmitri:
Our business is doing great. I think in my experience with redesigns or re-platforms, there's usually a dip when you first launch, and then it normalizes. I actually see that a lot in product reviews and app updates, and it's something I wish someone had told me when I was younger, because I used to freak out in the first couple weeks when you launch something new. But what we've seen is a lot of people understand the product better. That was our big goal is, people still were saying they didn't understand how the system worked or how the products worked. And so the customer understanding was a big goal of ours. And there were things where design choices really helped that, and then there were things where design choices didn't help that. So for example, one of the ways we did image galleries when we first launched didn't make it really super-duper clear how to click to the next image. And so we found that ... We did user testing all through before launch and after launch, and that single change, for example, had a huge impact on customers' understanding-
Dmitri:
The product, clicking through the whole gallery of images or finding the support link on the site for example. We kind of buried that in the original design and then found, no, that's really important, because if someone needs support, they really want to find it and they don't want to have a hard time finding it. It's been a while obviously since we launched it, but all the product launches have gone really well. The cognition and understanding of how the products work together is way up, so it's going well.
Stephanie:
That's cool. How do you find out what the customers are struggling with? When you're saying the support link was too low, how did you know that was a problem?
Dmitri:
I mean, it's a mix of quantitative and qualitative. So you're looking at behaviors, and wow, people are stuck on this page or they're clicking on this part of the page more. And then qualitative of just asking them what their experience is as they go through. So saying all right, we want you to go to the site and buy Sonos One, and then kind of narrate your experience as you're going through it. And that's where you kind of get some of the specific things that you wouldn't see in behavioral, which is why someone is doing what they're doing. It's just as important as what's happening.
Stephanie:
Got it. Very cool. And have you updated the technology behind your web site in the past couple years, or have you stuck with one thing? If someone was coming in and building a big e-commerce store now, is there anything you would recommend to keep up with customer demand and inventory and, yeah, everything that it takes to run an e-commerce store?
Dmitri:
I mean, I think that is one of the things that's changed so much in my time in e-commerce. I think 15 years ago, 12 years ago, it was really a life or death decision about what's your e-comm platform? You're going to be stuck with this. It's going to take millions of dollars and years to implement, so a lot of your success or failure was based on decisions about technology. I think that the tech has gotten a lot better. It's gotten a lot more accessible from a price point perspective. Implementation's gone a ton easier. It's still painful to switch, so switching costs are real.
Dmitri:
But I would say you're so much better off starting today than even two years ago. The platforms are super accessible, and in a way, I mean, I think a lot of the skillset has actually become automated and commoditized too. Search optimization or even a lot of the sort of marketing tactics that drive e-commerce, that used to be a real differentiator. If you were an analytically driven marketer, you could get an edge. But a lot of times now, you're better off just going with the platform automation on these things. So I think my advice would be, the thing that always you forget is the content management piece. You can launch with a great web site, but every day, you're going to want to update it and launch new products and launch new features, so really understanding how you're going to make new templates and how you're going to add new content is the thing that generally people overlook.
Stephanie:
Got it. Yeah, how do you think about that intersection of your content management system, your CRM, your underlying commerce platform? How do you think about those three together? Do they work together in sync, or are they kind of separate entities?
Dmitri:
I'm going to be very unpopular probably for this opinion, but I mean-
Stephanie:
Good.
Dmitri:
I think you can spend so much time and money trying to create this temple to technology, everything seamlessly integrated on the platform side. But what I've learned is that, or I feel like this has changed since I got into this business, but is that if your message is consistent, then you can actually let the tools do what they do, and your customer journey will be consistent. And the more that you focus on consistency of your message and your customer journey basically, your customer communications, you can allow the different technologies to do what they do best and be less obsessive about connecting every single point of customer data. Now I mean, that's also relevant to our business. We have 10 products. If you're Amazon or Wayfair and you have just infinite complexity in your assortment ... That was more the Urban Outfitters experience. We had 20,000 styles and we launched 7,000 styles a week, and so there was this huge how do I connect the right product to the right person challenge.
Dmitri:
But for a lot of businesses, you're dealing with a finite product set, and as long as you're consistent in how you're showing those products and what you're saying about them, you can let your re-targeting vendor go crazy. You can let your CRM program go crazy, because it's all going to add up to the same story in the end. So I think that I often feel like people spend more money trying to back of house stuff than they do on the customer, and I always try to look at that split of, are we spending money on the things that the customer can see, or are we spending money on ourselves to make ourselves feel cool about the systems that we have, and just balancing those things.
Stephanie:
Got it. Is it very different with a platform that has, like you said, a huge catalog versus only 10 products, and is there a different way you would handle an Urban Outfitters model when you were there versus at Sonos?
Dmitri:
Yeah, I mean, it is really different. The three big brands I worked with are Urban Outfitters, Patagonia, and Sonos, and each time I've gone to a smaller and smaller assortment because it's such a pain in the ass to have a big assortment that I was like, I just want to get to a smaller assortment. But-
Stephanie:
You're going to be down to just one product soon, just that's all Dmitri sells-
Dmitri:
That's my dream.
Stephanie:
Just one thing.
Dmitri:
Live the dream. No, it's really different because all the tricks of merchandising ... I think of like, people have been shopping since the Roman forum, right? It's a very human experience to wander around and find the thing that reflects your sense of self and choose it over the other thing and buy the middle price point because it's not too expensive. All that stuff is super innate to people. And so I think when you have a big assortment, you have a lot of products to play those games with, like this is something new, so you should look over here because it's new, or this is going fast, so you should look over here. With Sonos, it's very much about getting people to understand the experience, and get it that it's like, you can mix and match all these speakers. You can buy one or you can buy three, and you can move them around the house. And they need to understand that gestalt much more than ... That's more important than them picking one speaker and having a box shipped to their house. Do you know what I mean?
Stephanie:
Yeah.
Dmitri:
They might get that idea, and they might buy something at Amazon or at Best Buy, but if they get that concept, they're a super high-value customer, for us that's more margin to better business for us to be in. So a lot of what high product count sites are about getting you to a decision and to put something in your basket and check out, and for us I think, and for a lot of businesses and a lot of DTC businesses that have these narrow assortments, it's much more about communicating the gestalt and the value of the product.
Stephanie:
Mm-hmm (affirmative), yeah, because I'm sure once someone buys one, two, three, then it's like you've got ... That lifetime value of that customer is bigger because they're going to come back. And now I'm looking right now, we have our Sonos speaker, hey, right next-
Dmitri:
All right.
Stephanie:
To me, but I don't know ... I mean, we have a couple in our house and all around the studio, but I don't know if I'm getting the full value of it because the only songs that seem to play on our speaker are Old MacDonald and Happy and You Know It, for my two-year-old, all day long. So I think there's a bug. I need to send it back and get that updated hopefully soon. I'm sure you have the same problem.
Dmitri:
It is fun, though, singing to your kids though isn't it?
Stephanie:
Yeah.
Dmitri:
I love that aspect of it, just sharing music with them and dance parties and ... We're so often with our headphones on in our little phone world, but having it be something that you can share with the kids is really fun.
Stephanie:
Yeah, but I also enjoy that you can ... I'll turn off the kitchen, just leave the living room running and be like, you go have your dance party out there. I can't listen to that song another time.
Dmitri:
Totally.
Stephanie:
So if you're thinking about defining success for an e-commerce platform, what do you consider successful? What metrics do you look at? Yeah, how do you think about that?
Dmitri:
Well, if I have to pick one-
Stephanie:
Yep, only one. Or you can pick two, but stack rank them.
Dmitri:
Oh man. I mean, the ultimate one to me is margin per session.
Stephanie:
Okay.
Dmitri:
It's not the easiest one to get at, but I think traffic is really a tough one because it's driven often by an e-mail or it can be driven by bad things or you can have a bunch of crappy traffic that's unqualified. So like, great, you've done this marketing campaign that's not converting. I think conversion, you can have people again, like you could be converting on a sale product that doesn't generate a lot of revenue profit for the company. And so I like per session because it just, it corrects for traffic basically. And then I like margin because it's like, it motivates you to sell the high margin stuff and sell the high-quality stuff, and those are generally your best products and the things that bring people back and make them more high-value customers, so that one's really, when you're really in the weeds of it, that's something that I look at.
Dmitri:
And then usually, you're designing a specific part of the site and so step conversion is really helpful to look at, did I get them to go from here to here? Because if I didn't, then I know they're not going to get to the final steps of the process, but ... I think that, in my role, one of the things that's important is just a very high-level business understanding of margins are basically what you can charge for the product. It's based on people's perceptions and perceptions of your brand, and you have to dedicate a certain amount of time to just faith in that. And that's a pretty high-level thing. I don't expect someone at a junior level or somebody who's responsible for the day-to-day revenue of a particular category to get, but if you don't invest some of your development time and reinforcing premium, then you just, you're not going to be able to charge the margins. And so that's one that's a little more high level, but ... I think of the brand comes through in the margin.
Stephanie:
Got it. I think I just heard that Amazon's switching their algorithm to showcase higher-margin items, where before it was always based off of what they thought the customer would want to see first. How do you strike that balance between maybe showcasing higher-margin products higher up ... I mean, I know there's not many, but how do you think about that versus making sure the customer experience is what they want?
Dmitri:
Yeah, so it is less of a challenge with Sonos because our product philosophy is to make the fewest number of products possible for the most number of applications. So we only have a couple home theater products. We only have a couple of music products. And it's really about the size of the room, but I think it's like, that's all merchandising stuff. We sell 80% black, but you always show the color because it's going to excite someone and make them feel like the experience of wearing a great new jacket. And I think with sound, it's the same thing. I kind of want to get people emotionally invested in the experience of music, which is awesome, and just remind them, listening to music is great.
Dmitri:
And so that's kind of the first thing that we try to lead with is just what a great experience this is and reminding people that they have ears and it's one of the only five senses they have and it can be really transporting. And so that generally is going to be more of our premium products that do that, but then they're going to ... Most people will buy the middle price point. That's just the rules.
Stephanie:
Yeah, got it. Very cool. So to shift a little bit to the present day, the current environment, everything with COVID-19. Do you guys see a lot of changes in your business right now with what's happening?
Dmitri:
Our business obviously is ... We do a lot of business in physical retail, and physical retail is closed. And so that has really been disruptive to a lot of our partners and the people that we work with. And so on a personal level, it's just, it's hugely impactful. And obviously, we are really invested in our partners and the people that we work with. And so we're doing everything we can to work with them. A lot of that volume has shifted to online channels, so most of our partners have a web site and they're seeing that too, so their business is shifting online. Our direct to consumer business is way up.
Dmitri:
And so I mean, I think that is a circumstantial behavior. People can't go to the stores. Stores are closed. That's a behavior, and I think what people expect ... I feel like everybody is re-evaluating everything 100%, and you have a complete clean slate as a brand, which kind of sucks if you have a great brand like ours. You're like, wait, remember yesterday you thought we were awesome. I think every brand has to kind of start over, and every action you take as a brand is going to be evaluated in this new reality, like do I need Sonos now? Do I need to travel now? What do I actually care about now? And I think that's an incredible, almost once-in-a-lifetime experience.
Dmitri:
And anybody who's, especially young marketers and brand people going through this right now, this is going to be the proving ground for the future. The greatest brands of the last century were defined in the world wars, and the brands that figured out how to endure the Great Depression and those disruptions, and they didn't do it by disappearing. They weren't created by going off radar. They figured out how to stay in the public consciousness and to be relevant, even when people felt so horrible. So that's what I'm thinking about a lot right now and observing in the marketplace.
Stephanie:
Yeah, no, I agree, definitely the clean slate idea of everything can change from this point forward is, yeah, good to remember. Is there anything that you're, like any big strategic projects or things that you're shifting either off your plate or a new thing that you're starting to work towards based off of consumer buying behavior over the past couple months?
Dmitri:
Yeah, we really had to take a look at how our brand shows up, as all companies and brands do. And we really, we tend to be a very aspirational brand, and I think in this moment, it's really important to be personal and to be helpful and to just kind of tone it down a little bit and be real with people. And that's a big effort when you have a global marketing offense that spans channels and geographies, and the team just did an incredible job of realizing, accepting, and taking action and is continuing to learn and adjust as we go through it. But I think we couldn't just show up the way we did two months ago. Everything you do has to in some way be relevant to what's happening right now. And so it's touching everything.
Dmitri:
We're fortunate in that our product roadmap hasn't changed. We haven't had to take major programs off the board in terms of not being able to fund them or whatever. And we're at an incredible busy time right now. We have these two major launches coming up. So we were in the final mile of that work, and so we've just been proceeding, but then also, yeah, got to look at it through the lens of what's happening today. Is this going to seem off, or is this going to seem weird to be doing this right now? And you have to pull the plug on it if it's going to not look good for the brand.
Stephanie:
Yep, yeah, completely agree. It seems like it's also a good forcing function to make larger brands be more agile and make decisions quicker and be able to adjust to the market, whereas before this, I don't think there was that forcing function.
Dmitri:
It's true, and I think it accelerates changes that were already happening. So I think that's a situation like this, anything you were thinking of doing, you're going to probably, you're going to have the opportunity to do. It's also just a giant dumpster fire that you can throw almost anything on. If you want to get rid of something, some old behavior or if you wanted to ... I mean, I see brands that were really struggling with their perceptions, again, they have this fresh moment. They can throw their old identity on the fire and re-introduce themselves, and it's almost like a once-in-a-lifetime opportunity to do that. So definitely looking to take advantage of that as well, like what do we want to shed? What do we want to get rid of? Because that's also part of the opportunity right now.
Stephanie:
Yep, yeah, I think the brands that'll experiment a bit with that as well and try something new like you said are going to be the ones that come out on top, because I've seen quite a few come through my inbox that just have the same messaging. And I'm like, did you all just hire the same PR company to just be like, title, addressing COVID-19 challenges. It's like, here's what we're doing, and it's so cookie-cutter. I'm like, I don't connect with that. But the brands who send unique messaging and you can tell they care, like you're talking about Sonos really showing that you want to be there for them and the retail partners and the customers, that's very different. And yeah, you can start from scratch and have a whole different journey from here on out depending on how you choose to handle it right now.
Dmitri:
Yeah, and I mean, some of that is luck of the draw. When we went into that process of self-examination, we're like, okay, our mission is to give people a really deep, immersive experience of music and content in their home. It's like, that's still pretty relevant. Our goal is to connect people to music and as a way of making their lives richer and escape. That's still pretty relevant. I mean, it's not luck, but we're very lucky that that's what our product and what we stand for as a brand is still really relevant, and then it's more about like, okay, how do we talk about this in a way that's relevant? But I mean, look at Zoom, look at Portal, products that you were sort of vaguely maybe aware of all of a sudden are completely relevant and useful in your day-to-day life. So you've got to kind of be grateful if you happen to fall into one of those categories.
Stephanie:
Yeah, and the fact that there's so many new customers who are sitting on the sideline that are now coming on board. I mean, I'm thinking about for Zoom, it's my grandmother sent a link and was like, family Zoom call? I'm like, Grandma, how did you know about Zoom? And then my mom's like, oh yeah, I've been using that for teaching. I'm like, you guys ... I mean, we just got on Zoom not too long ago. But it seems like a very good time to be able to bring people into your product that you never had access to before and you might never have had access to them, unless something like this happened maybe.
Dmitri:
I know, and I do think this is one of the things that you won't go back from. I think it'll go back to some extent, like you won't have every school in the world doing school through Zoom, but it works really well, and you can be more remote. I think about the follow-up doctor's appointment. You go to a doctor and then you're supposed to come back a month later for a check-up, and you drive an hour and you sit in the waiting room, and then you go in for five minutes for them to be like, yeah, you're fine. It's like, you're not going to do that any more. You're just going to get on Zoom and be like, I'm fine, and they'll be like, cool, you're fine. Everybody's going to save a couple hours. And so I think there will be lasting effects on our behaviors and we're not going to want to go back in every way to the way things were.
Stephanie:
Yeah, no, that's actually a good point about doctor's office visits. I have two twins, they're seven weeks old now. And we went to their doctor's appointment, and one of them had a little baby acne or something. And they're like, well, don't come back for a follow-up. Just snap a picture of it and upload it into a Google Doc, because we can't access pictures but we can upload Google Docs and just do that. And I'm like, oh, from now on, then I'd rather just always do that. I don't want to come in here and expose my kids to maybe get sick from coming here. I'll just send you pictures and let me know.
Dmitri:
Yeah.
Stephanie:
So, yeah.
Dmitri:
But I mean, we're in the orbit of Los Angeles, and we have our own traffic situations, and there's so many trips that are just a total waste.
Stephanie:
Yep.
Dmitri:
My wife's a therapist, and you couldn't really do psychotherapy or therapy via Zoom. It's not secure, but there's so much innovation happening in that space right now with HIPAA compliance. And so yeah, I think less time in transit isn't a bad thing. More time at home listening to Sonos. Sounds good.
Stephanie:
I know. Hey, I'm all about that. I'm definitely all about that. So when it comes to leadership, whether it's in times of change or just in general e-commerce leaders, who do you brands do you look for, what brands do you look to or people in the field that you kind of keep tabs on what they're doing?
Dmitri:
In terms of leadership, I mean, I think we have an amazing CEO. My boss is amazing, so I feel really fortunate that I don't have to look too far for leadership inspiration.
Stephanie:
Yeah, that's good.
Dmitri:
That would suck if you were like, I don't know, I can't find it in my company so I have to go read a book-
Stephanie:
No one here. Yep.
Dmitri:
But man, leadership is one of those topics that the longer I work, the less I really feel like I understand it, or ... It's such a human one-to-one thing, and I think that what I like about our company and our CEO's approach is that you really focus on the culture overall and not this meeting practice or this latest book or whatever. It's just this consistency of how we treat each other is really the focus. And every time you go back to that, it actually helps you through a management challenge. And I think right now, the thing is just to be really, really patient with people and really understand how hard it is to do this. You've got kids crying in the next room, you've got elderly parents that you can't go be with. It's emotionally really stressful and really hard, and the best thing you can do as a co-worker, forget being a leader but just as a co-worker and a human, is to just be patient with people and to understand that it's going to ... Their first reaction, they might be coming in hot to a meeting because of something else entirely. So I think that's really important, and then ... Yeah, I think as far as brands and companies that I look to, there isn't a single company. It's interesting, we have these sort of index fund companies, like Apple, Amazon, Google. They do everything. They do every single kind of marketing, they do every single kind of branding.
Dmitri:
So you can always find an example there of, well, if you had unlimited money, this is what you would do. So I feel like that's kind of an interesting resource that you can always ... Or if you have contacts there or whatever, asking them questions, and we do a lot of partnerships with them. So that's always a good test I think of whatever you're thinking about. I do tend to look at smaller brands as far as just what's happening and how you want to look as a brand. It's been really interesting, again, to see how fast everybody's adapted from a branding perspective. Every single ad right now is people on Zoom or healthcare workers. I think a month ago, I was like, I don't think people are going to be able to advertise. What will be in the ad? And then it's just so fast. Everything's moving so fast. You just have to-
Stephanie:
Oh yeah. Every ad's that's catered to me right now is sweatpants and work from home outfits, which are basically sweatpants that look like jeans. And I'm like, man, I mean, that's what I want to buy right now. This is great.
Dmitri:
This is one of the challenges I think for consumers and for brands is that because everything is so automated, algorithm-driven, you kind of get into these wormholes, and you get into this, I call it a coffin of your own preferences. You can't see a way out of sweatpants, like, how am I going to get these sweatpants off my Instagram feed? And brands, that's a challenge for us too, like how do we break through that just self-reinforcing? Yeah, you probably are interested in sweatpants right now, but getting you to see something else is challenging I think, so-
Stephanie:
Yeah, I agree.
Dmitri:
Have you pulled the trigger on sweatpants at all?
Stephanie:
Well, before ... I mean, I own many sweatpants. Thankfully, our company is work from here a lot, so I don't have to always wear nice jeans. But I did pull the trigger on one pair of jegging pants-
Dmitri:
Nice.
Stephanie:
That look like jeans, so at least when I go on a walk, people think I'm fancy. So, I did.
Dmitri:
I am in the sweatshirt business right now. I get in these shopping sort of really focused trapping things, but it's almost more as a way to work through some of what's happening in the market? What's the customer's mindset? But I do it through my own experimenting on myself kind of thing. Yeah, and it's pretty extreme what's happening, whole businesses that are 70% off. And at the same time, the options are totally unlimited and it's a really, it's a time when I think you have to stay incredibly alert in the moment, because it is moving so fast. You can't sort of ... People want there to be a new normal, like, oh, we did it, the new normal of marketing and e-commerce is this. But I don't think we're going to get there for a while.
Dmitri:
I think people, we're going to have to be on our toes adapting for months. And that's going to be a challenge for the teams, because the teams are like, we just did all this work and now we have to change it, or what do you mean we don't want to show Zoom in any of our coms any more or something. But I think the fall into the Great Depression took four years. This took like four weeks. This is just a hyper-accelerated world we're living in, and you've got to stay alert.
Stephanie:
Mm-hmm (affirmative), yeah, completely agree. So if we zoom out a little bit and have a conversation on higher level e-commerce trends, are there any e-commerce trends coming that you're most excited about or that you're looking forward to?
Dmitri:
I think the trends that I've noticed recently is really the commodification of digital marketing and that, again, there used to be able to be a differentiator. You could pretty much get a business going by raising some money and then using these platforms to grow, and the platforms were willing to kind of subsidize your growth because it was their own growth of market share. And then about a year or so ago, that really flipped, and the platforms are like, no, we're going to take the profits now. We're going to be profitable. And so you saw these DTC brands I think really struggling that their customer acquisition engine wasn't as profitable as it used to be. So I think what I'm really excited about is I do think that there's a rejuvenation of the social channels. I think the sort of toxicness of them, at least my experience over the last month, is that they've gotten way less toxic. Even Walt Mossberg is back on Facebook.
Stephanie:
All right.
Dmitri:
That's a big deal.
Stephanie:
Yep, that's a good sign.
Dmitri:
So I think that the potential of those channels never got fully realized of as far as really being able to connect with people and brands in an authentic way and have that follow through to your business, and I kind of feel like that might be what we're going to actually experience now, where the targeting is so good, the relevancy is so high, and the community aspect is getting less toxic because of just, people are not wanting to be assholes right now I think-
Stephanie:
Yeah, which is a plus-
Dmitri:
As much, yeah, as much, and I think the platforms, I hope they'll take a little more responsibility too in this moment and go, okay, this isn't just about an election. This is life or death now. We can't allow such misinformation and just toxic behavior, because it's costing lives. So anyway, I see this sort of perfect storm there of social actually becoming the commercial channel that it never really realized in the past. And so that's one that I'm pretty excited about. It's obviously the only way we can reach people right now. And the ability to pull it through to your actual business is getting really, really good. So that's probably one that I'm excited about.
Dmitri:
And then I think also for us, the integration with our app and just that part of the digital experience and connecting the online to the in-app. I just had a great experience buying a printer and using the app to set the printer up and having-
Stephanie:
Really? Which printer?
Dmitri:
Yeah. I mean, I don't want to shill for another company, but I bought an HP printer, and they forced me to set it up with the app, which I was super annoyed by at first. But then I was like, wait, this is actually really cool. It's just going to measure the ink and send me the new ink when I want it? Yes, please do that. I hate-
Stephanie:
Oh, that's great.
Dmitri:
Finding out that I need to order ink. So I think this integration of IOT devices and the app component with the commerce component, I'm super excited about that for us. I think we've taken a lot of steps in that direction, but I think people are going to get more and more comfortable with it because it's actually going to be a good experience. So those are two that I see.
Stephanie:
Completely agree. Yeah, and especially the first one. I've seen a slow shift to brands kind of turning into media companies and not relying as heavily on certain platforms, because yeah, I know a lot of brands that had been relying on Amazon so heavily. Well, now that Amazon's shifting to, okay, well, here's what we view as essential and here's what's going to get shipped out, and I think a lot of brands are going to rethink relying on those platforms and instead maybe think about how they can rely on themselves more and promote their content on their own a little bit more. So yeah, two really good points. All right, so let's ... I think we only have a couple minutes, so I don't want to ask you too many things. Let's see. And actually, maybe we should just shift right over to the lightning round, just to respect your time. So the lightning round is when I ask quick questions, and you have to just say whatever's top of mind, and you only get one minute or less to answer the question.
Dmitri:
Oh my God, I was not aware of the lightning round. Okay.
Stephanie:
Dun dun dun.
Dmitri:
I want to do a couple push ups. All right, I'm ready.
Stephanie:
Yeah, do some push ups, do some deep breaths, just shake it out a bit. It's just for fun. But yeah, whatever just first comes top of mind.
Dmitri:
Okay.
Stephanie:
So we'll do some easy ones first, and then we'll do a hard one last. All right, so, what's up next on your reading list?
Dmitri:
The Last Kid Left by Rosecrans Baldwin.
Stephanie:
Okay. What's up next on your podcast or Audible queue?
Dmitri:
Stay Free: The Story of the Clash and Music Exists. That's a podcast I'm listening to that's really, it's just ... It's Chuck Klosterman and one of the guys from The Ringer, and they don't talk about specific music. It's like music concepts in general. I like it.
Stephanie:
Oh, cool. And you have a art background, so does that ... Do you think everyone would like that podcast, or is that more Dmitri specific?
Dmitri:
If you like music, I think you'll like it, yeah. I mean, they talk about like why do bands change? Why do bands change their style?
Stephanie:
Got it.
Dmitri:
That will be a topic they'll talk about, and they'll be like, okay, ACDC never changes, but this band did ... So it's that kind of thing. It's just like hanging out with your friends talking about music, but your friends are really smart.
Stephanie:
That sounds cool. I like that. All right, what's up next on your Netflix or Hulu queue?
Dmitri:
Oh man. I started watching Black AF, which is the new show from the guy who created Black-ish, and it is-
Stephanie:
Me too, yeah.
Dmitri:
It is so funny, oh my God.
Stephanie:
Yep.
Dmitri:
I basically can't wait-
Stephanie:
I just saw it last night.
Dmitri:
To ... Yeah, I can't wait to just go binge that thing. Insecure just started again, which I love that show, and My Brilliant Friend, which is on HBO, which is the Elena Ferrante books. I just, every episode I'm dying when that comes out. So those are my picks.
Stephanie:
Cool, I'll have to check out that last one. I haven't heard of it. What's up next on your travel destinations after we're allowed to go out into the world again?
Dmitri:
I want to see my parents. That's definitely-
Stephanie:
Where are they?
Dmitri:
They're in D.C.
Stephanie:
Okay.
Dmitri:
That's mostly my friends. It's like it's less destinational for me, but ... I lived in New York for a long time. I want to go back to New York. I love that city, I love so many people there. It's been through such a hard time. I want to go there. We had dreamed of going to Japan before this, so that's definitely going to happen at some point. I love going there.
Stephanie:
Awesome.
Dmitri:
My kids have never been there, so those are a couple spots.
Stephanie:
Yeah, Japan's great. That's definitely one of my favorite places I've been. It's so fun. The people are so nice there. Yeah, just a good, very different environment. Did you do the hot spring baths? What are they called again?
Dmitri:
Onsen?
Stephanie:
Yeah-
Dmitri:
Yeah.
Stephanie:
Did you do those?
Dmitri:
Yeah, I would go. When I worked at Patagonia, I would go a bunch, and it was a cool way to go there because we actually didn't spend any time in Tokyo. We would go up to Hokkaido and go skiing and go down [inaudible] and go surfing. And so yeah, it was ... The culture, even outside of Tokyo, is just so cool. Just everything is so considered, and every experience is thought through, and yeah.
Stephanie:
And everything's so clean, and it just feels so safe. We were in I think Hakone area, and there's a bus system that goes around, and there was kids, and I swear they were only like five or four, getting on the bus by themselves, going to school. And I'm like, oh my gosh, in America, no parent would ever let you just walk all the way down the street, get on the bus by yourself. I mean, these kids are small. But then, there, it actually did feel right for some reason.
Dmitri:
Yeah. So I hope you get back there.
Stephanie:
Yeah, very cool. All right, the last one. So it's your job to stay ahead of expectations, your competition, all that. In your opinion, what's up next for e-commerce pros?
Dmitri:
I think that you can't just be shipping boxes to people. I think that your site experience and your commercial experience, you've got to break the mold of, pick a box on our web site and this box will show up at your doorstep. I just think that's not a competitive advantage, and it's just not a customer advantage. And you've got to figure out some other way of engaging your customers that isn't about shipping and getting a box delivered to their doorstep. So it'll be different for every business, but I mean, I think obviously subscriptions are interesting, but also just the way that you decide what you want, it's not navigating a bunch of little squares on a page, but really learning about me and understanding and what I need and offering me a solution versus a box that's going to get shipped to my house.
Dmitri:
So I think the site experience and how that connects to either if you have an app or your CRM programs, all that stuff, it's ... The paradigm is just dead right now, and I think if you're not disrupting that, then you're going to just be perceived as, why am I bothered? Why would I bother shopping here? I can get a box shipped to my house by a lot of other companies.
Stephanie:
Yeah, completely agree. Wow, you were very good at the lightning round. You really had answers right away, so yeah, nice job there. But yeah, it's been a blast, Dmitri. Thanks so much for coming on the show. I know after this, I'm going to go and play all my Sonos speakers and put on a little surround sound techno music going on to pump me up a bit for the rest of the day. So yeah, thanks for-
Dmitri:
Oh, that sounds good.
Stephanie:
Hopping on. Yeah, it'll be a good rest of the day. So thanks so much.
Dmitri:
All right, bye bye.
For more than 15 years, Dylan Valade was working at his own company designing some of the coolest eCommerce and technological projects in the world. One of his world-class clients? PUMA. So when the sports brand approached Dylan to join their team full-time to lead their global eCommerce division in Germany, it was a tough choice. But ultimately Dylan was excited about the opportunity to completely revamp the eCommerce platform at PUMA and turn it into a leader in the industry.
Today, Dylan is the Head of Global E-Commerce Technology, PUMA. On this episode of Up Next In Commerce, Dylan explains what he was focused on during those initial steps of the transformation process and how being a change manager is like being a time traveler. Plus, he discusses how eCommerce is changing and what he thinks is up next in the industry. (Hint: Get ready to see even more automation.)
3 Takeaways:
For a more in-depth look at this episode, check out the full transcript below.
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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we’re ready for what’s next in commerce. Learn more at salesforce.com/commerce
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Transcript:
Stephanie:
Dylan, welcome to the show.
Dylan:
Thank you. Thanks for having me.
Stephanie:
Yeah, we were just saying you're in Germany right now. How long have you been there and what brought you out there?
Dylan:
Moved to Germany a little over three years ago and Puma brought me out here. Puma had been a client of my digital company in the US and asked if I would switch teams and go internal, so that's what I did.
Stephanie:
Very cool. So was it your own company that you were running in the US?
Dylan:
Yes. Yeah.
Stephanie:
Can you tell us a little bit about that and how you started that?
Dylan:
That started out of just an interest in computers and the web and I began picking up clients in Colorado when I was there mostly for skiing, and snowboarding, but I did a little computing on the side and just sort of picking up clients and business. And I ended up doing that for 15 years. So it was a long period of my life and was really good opportunity because I got to work on all the most interesting projects that we could come up with.
Dylan:
And Puma came along in that time and doing to do some work for them for their global eCommerce team, which was based in Boston at the time. And then they did a reorg and shuffled the group back to Europe where corporate headquarters are. And in that time I moved to help rearchitect the way we do the technology.
Stephanie:
Okay, cool. And have you been there for a couple of years or how long has it been now?
Dylan:
Yeah, since 2016.
Stephanie:
Okay. And what's that change been like moving to year out from ... you said Michigan, right?
Dylan:
From Michigan. It's drastic.
Stephanie:
Yeah. What's the biggest change?
Dylan:
They are many. But first when you make the decision to move, it's a big choice. And so I actually had kind of dismissed the opportunity, but it was my wife who said, well if I woke up 20 years from now and we didn't do anything differently, I would regret it.
Stephanie:
Yeah, that's great.
Dylan:
Let's try it. So-
Stephanie:
And did you have kids at the time?
Dylan:
We had two kids and then we've had a third since we got here.
Stephanie:
Oh, great. Congrats.
Dylan:
And then after that ... Yeah. The change is pretty consistent as you talk to other ex-pats that the first six months are awful.
Stephanie:
Like I want to go home.
Dylan:
It's just, yeah, you've appended your whole life and then you've got all of the different government documents that need to be signed and notarized and you've got all these different appointments and you don't know how to get your haircut. You don't know where to go grocery shopping, you don't know how to pay your taxes. Like just all of the little things that you just know don't work anymore. And then you also don't have family and friends to talk to in your time zone, which is tough.
Stephanie:
Yeah, that's hard. So you went out there for Puma. What is your role look like now? Has it changed since you've gotten out there?
Dylan:
It has. So I arrived as a one person team, focused specifically on the eCommerce technology and then as a specialist for that. And the role was ... they said come in, figure out what we can improve and then begin the change, start improving what you can. And in that time a lot of the changes have been pretty successful. And so now we are at a point that would just keep expanding the scope and just adding more and more tools to what we do and more people to the process. So it's just grown in scale.
Stephanie:
Dylan, what's your philosophy or idea around change management?
Dylan:
That's a good question. Actually, I've got a couple of notes here as I look back over it. So my philosophy with change management is that you're really focused on mentality and time. So the mindset that the person who's bringing the change has his ... Is at a completely different point in time than the person who needs to adopt a change.
Dylan:
And so I got this input from Puma's change management program where we were taught that if you're the change agent, you're traveling from the future and you need to come back in time and, help everyone else realize that that something important is. And then based on that, you've got to be persuasive enough to say within the timeframe you've got to make a change or else.
Dylan:
And then that's where you get into how much time. And so if you look at what's happening in the public right now, we have a current crisis, which is, it was months, weeks, and days. The previous big effort is climate crisis, which it doesn't have people perishing every day. So it takes a lot of effort to keep the focus on it and pollution is part of that, but that's not something that's sensational.
Dylan:
So you have to be able to show visually that there's progress and what the steps are. So I like to give people the first step, and then show that progress over time, make it very visual and then that's how we report whether it's working or not. Time is really important. And another good advice that I got from a business consultant about 10 years ago was that about 50% of small businesses fail before we get to the five or 10 years.
Dylan:
And in that time, you only have 260 weeks to make whatever you are going to make happen to be successful. So you can't just say, I'm going to start this new initiative or shut this business and it's going to be successful. You have a bunch of changes in between. And then when you start breaking that down, then you're in weeks and if you're already 18 months in, you only got 185 weeks left to close. Okay. It's really ... this is coming fast.
Dylan:
But starting to think like that, makes it always urgent, which is kind of important if you really want to change anything. So getting that mindset and mentality of time in sync with the two parties is important.
Stephanie:
Yeah. I like the idea of having it visual as well. I think I saw this, I don't know where it was trending maybe probably on Instagram or something. Where it showed how many days left you have with your parents or like with your kids or something up until they're 18 and it put it in maybe like, I don't know, hamburger emoji or something like that.
Stephanie:
And then here's how many, days you have left until they go to high school or something. That was this whole thing and when it put it visually it's like, "Oh man, I don't have that much time and I've got to hurry." So, I like that idea a lot.
Dylan:
And the visual part is why the Kanban approach has been so popular. And then when you have a Kanban board, you actually see the work, whether it's posted or it's digital. To be able to really see it, you can focus on it and you can focus on it over time. That's the hard part, is how do you keep focused for enough time to make the change happen?
Dylan:
And the other thing that you would need is a coalition of the willing, you've got to have a partner in crime. You can't do it alone. And so that change has to be something that gives you joy personally, even if it's some sort of sick joy that you actually like web servers and making them faster and that type of stuff. But you have to care about it enough that everyday you're willing to get up and do it and you don't need to be talked into doing it.
Dylan:
And that when you come into contact with anyone who might be able to help you, you can quickly explain it in terms they understand so they can get behind you, and that's a big part of what's required and what I do.
Stephanie:
Got it. And what are some of the biggest changes that you made while you're in your role right now at Puma?
Dylan:
The biggest focus for me was getting to a modern software development approach. The way most companies in general but eCommerce and retailers seem to emerge is that there will be someone who has an interest in technology and they get control of the website and then control of the sales online. And then that either lives in kind of a marketing team or IT or some sort of a external party completely some vendor.
Dylan:
And what Puma had done was basically built up a whole bunch of those all around the world. And even if you have a common and starting technology stack, you end up changing that pretty drastically over the years as you move from country to country.
Dylan:
So that was where we began. Just with Commerce Cloud being the first major item and so focused on how to make Commerce Cloud fast, how to get the people working around it working together, especially across the national borders. And then you have the one piece which is just the actual technology, like make commerce cloud fast. And then there's, how do you bring all of the people involved together who are external, internal, so they're working on the same projects and that they have the same understanding. It was clarity around what's being built, the timing's understood and that the budget is properly tracked and when you see something's not working, stop doing it instead of just continuing on.
Stephanie:
Got it. That sounds like a huge challenge, especially if you're doing things globally. What kind of problems did you encounter when you were trying to bring all those teams together and people together, especially if you're trying to align marketing and sales and IT to all come together and work on the same project together? How did you decide what systems and tools to implement and how did you decide what was the priority?
Dylan:
The focus was, where's the money and the money's coming from ... or the future money is coming from digital. And so what's going to be needed in the future isn't what we need for right now. And so the approach that I took was, okay, what's working right now, I don't want to break, but the things that I know have symptoms of bigger process problems will be the ones that I'd want to focus on first.
Dylan:
And the time it was taking to get a new enhancement or a bug fix or something live on puma.com was longer than I thought was possible. So I said okay, this is where we should start, and in order to do that, what would make sense is also bringing the websites to a more modern technology set of technologies.
Dylan:
And at the time, Salesforce was working on this new architecture for their commerce system, so we offered to take the beta pilot route with them and build it together. And that basically extended what we were doing to a much wider scope than I had originally anticipated. So we basically rebuilt puma.com using Commerce Cloud, their new reference architecture. And that meant a full redesign of the site and new integrations though the tools, analytics, everything. It was a lot.
Stephanie:
Wow. Very cool.
Dylan:
In hindsight ... I would say in hindsight, the analytics piece was the one that I underestimated. People are very reliant on the data and the reports that they have. And when you start screwing around with the tools that they're using and the interfaces that they're using to collect that information, the reports will change. And even if the reports were wrong before they trusted them. And so when we made these changes, everybody's report is no longer accurate. And what we learned again later was that the reports weren't right the first time.
Dylan:
So there was a whole lot of discussion around who's got the true source of data, who's responsible for maintaining that. So then now as the new features introduced in one country and it might impact another, whose job is it to make everyone else aware? So a lot of the questions became, I'm focused around the communication when you start to really centralize services. And that was a big step for us.
Stephanie:
That hits home for me. Back in the day I worked at Google and there was a lot of issues around data and a BI team would come in and give people all these fancy dashboards and things like that. And people would be quoting numbers to find out that maybe those numbers weren't right. And people had weird filters on, or the source data wasn't even correct. And it turned into a whole thing where every time a new analytics project was being launched, they started figuring out how many people they need to staff to even keep that running, and if it was worth it and ... Yeah, that's a challenge. So was there any-
Dylan:
I wish you-
Stephanie:
Go ahead, I'm sorry.
Dylan:
I was saying I wish that you would have been there then on day one to help me, know that that was coming.
Stephanie:
I don't know if I'd signed myself up for that project. I saw too many engineers struggling and too many marketing people upset. No, it wasn't the happiest environment. Using metrics and data is a tricky thing, one thing I can think of is like when people would go off of impressions and everyone starts quoting impressions as being the best thing to find out. Maybe you actually don't want to use that number. Or another funny thing I heard was, I think there's this one company that goes around and they're saying that they serve up like a million custom landing pages every single day. So they're like the best company when it comes to personalization to find out that really they're just changing the name on the landing page and they're calling that personalization. Is there any metrics that you've seen maybe not Puma, but previous companies use or other competitor companies using, where do you think those metrics might be leading them down the wrong path? or they're quoting it in reports and they're using it as their north star and they shouldn't be.
Dylan:
Impressions is a perfect one. Anything that is, I guess what I would put in the vanity metric category, all the metrics that we focused on in the 90s and early 2000s because that's just what was available, since it was just a step up from server logs, and you ended up with just raw counts of things that have almost no value and that you didn't validate but it's real traffic at all.
Dylan:
So one of the biggest changes we made that ended up being really helpful was basically identifying that in your report at a country level if you're unable to deliver product outside of that country or that economic region, don't really consider that traffic in your actual conversion reporting because it's impossible for the person to convert if you don't even ship to where they live.
Dylan:
So when you start looking at it in a more like what's possible, where reality comes into this, I find that you get something you can make use out of. So now if we have decisions being made about the success of the campaign, but 20% of the traffic was people just coming in from other countries, it isn't realistic to say that this campaign was a failure or success?
Stephanie:
Got it. Yeah, that's a really key thing to know is what's going to be in the denominator of that equation. We talked about a metric maybe that you shouldn't use. What is your definition of success for eCommerce? Is it conversion or speed or design, scalability? And you can't say everything. You have to pick one or two if possible.
Dylan:
Yeah. It's not everything. For me, it's very simple. It's growth and net sales year to year and doing that without sacrificing profitability. You have to maintain your margin over time. You can't just continue to discount and run promotions. And if you're not growing, you're dying, so that's it. And then you use all of those other levers to control those two numbers.
Stephanie:
Got it. So if you dive into the profitability piece or the growing piece, what kind of initiatives are you working on right now when it comes to growing over the next couple of years or even decades to focus on them?
Dylan:
Good question. The disadvantage of the current pandemic is that we're hyper-focused on just those topics. The way we've done it is broken up our teams into temporary program teams, one focus on performance marketing, another focused on data quality and product data availability. And then the third focused on core technology projects. So those three pillars make up all of the work that our department is focused on delivering for headquarters and for all the regions.
Dylan:
And so within that we're really trying to make the absolute most out of every performance marketing dollar and euro spent. And in that, a lot of it is education for people who have been doing traditional brand marketing.
Dylan:
That's just getting Puma out in front of the whole world to what can we do to support Puma's direct to consumer path right now, especially when the retailers aren't open in all markets. So there's a lot of learning that's just new for the organization, which is a 70-year-old wholesale distributor model, product design and distribution, not direct to consumer. So it's a lot about education.
Stephanie:
Yeah. I was just browsing through Pumas website. What part of those campaigns be the live workouts that film was doing and like the engagement you guys are starting to do with consumers more real time. And did that just come up due to the COVID-19 and the environment that we're in right now? Or have you all been doing that for a while?
Dylan:
That's a perfect example, I'm glad you asked about that one. So the working out at home is certainly a focus right now that hadn't been in the past except that we had built this awesome app called Pumatrac that was incubated in the EMEA market in Europe and has a hundred plus video workouts in it from our celebrity athletes and tracks your runs. This has just been available for free for years from Puma
Dylan:
And so now we have all these tools and with all of a sudden we have these people working out at home and we see traffic going through the roof on the staff, we immediately pivoted and turned out a web-based version so people could use it on their computer and not need an app to download and then they'd be able to do it from anywhere and put it on any device.
Dylan:
So that was quick pivot to get brand marketing, local performance marketing and the technology teams all working together.
Stephanie:
Yeah, that's great. I need to hop on some of those workouts. It always seems like people in EMEA are the ones that spearhead. The best workouts and then we have the best looking clothes that's who I follow on Instagram. Everyone who's in Europe.
Stephanie:
So how did you get that app and the web page? Was it just organic people just started coming to it or how did you get it found? Because you can make great things and then if no one finds it or no one knows it's there.
Dylan:
That's the trick. And so the EMEA market and their regional marketing effort kept investing in campaigns to promote the app and they would do it at a country level. So roll it out in India you get a lot of excitement in a country and kind of do it that way. So you'd find a local celebrity athlete ambassador who would want to make videos and do workouts and has a following. And work with each one, and then which just grew organically that way and was also then given a big push from our innovations team at headquarters. And then the next place it when it was to globally commerce and turned it into, this is something that's working and great, so now let's improve the technology behind it and the process for maintaining it.
Dylan:
So now we've got it in the next evolution of all of these tools that had companies once they've been successful now you have to take care of it. And that seems to be the big difference between where there's a handover from kind of like a marketing or agency startup concept to know who's going to foster this and support it. So, it's our team.
Stephanie:
Got it. And people coming from all over, did you start testing things, doing AB tests, serving them, and directing different offers to different types of people based on this new traffic in the app? Did you change anything or just kind of keep it how it was and just keep adding more content?
Dylan:
The app we've been just improving, most of the traffic is, is coming directly to the eCommerce sites in each country. And so the big pivots there are making landing pages and categories that speak to being at home and spending a whole day in your pajamas or leisure wear while you're on your Zoom calls.
Stephanie:
That's me.
Dylan:
Exactly. So that was really where the change happened. It was reorganized the entire merchandising calendar to get the price people need right now in front of them.
Stephanie:
Got it. And how quickly can you make those changes? Because one thing I can kind of see coming out of this environment we're in right now is that a lot of things have been sped up, whether it's ... you see things that the government agencies being sped up or I'm wondering about internal processes. I can just think about, like you mentioned before, Google bug fixes and website changes sometimes could take like quarters. Everyone had a debate, it had to go through so many different levels. Do you think you guys are seeing different internal practices changing now with the current environment we're in?
Dylan:
Absolutely. That's one of the most exciting things for me about this whole quarter is that all of these traditional walls and barriers that have been up completely busted through everything is everyone's just able to talk openly and honestly about where things are, what's worth doing right now. What was a good idea six months ago, but isn't a good idea anymore. It's just not appropriate anymore and let's just stop doing those and let's put the focus on the ones that either weren't even on the list yet or were on the list, but we just haven't had time to finish them or focus.
Dylan:
That's where the conversation has moved to and then a lot of the hurt feelings or stepping on toes type conversations have gone away. There's just get it done and get it done as fast as we can. It's great.
Stephanie:
Yeah, no, I agree. It definitely feels like a time where you can kind of start from scratch and just say, "Hey, what are your priorities right now?" And everything else just can go to the second half of the year. It could be a great thing for a lot of companies. So what things-
Dylan:
One thing that-
Stephanie:
Go ahead.
Dylan:
So something that had changed in the last couple of years was that we centralized the communication and made the work in progress visual. That was really two of our primary focus areas. And by doing that, we had already built up, all of the places where we needed people to collaborate and we already had it internal and external. So we already had lists of the ideas, all the roadmaps from every country, all their top priorities. And when this all happened the last two months, we just said, okay, let's take the priorities that you've already documented and let's put a number to each one. Let's figure out how much you would make on this. How much would it cost, how much time, and just reshuffled the priorities and then do a quick overlap of who's doing what, so we don't duplicate effort.
Dylan:
And these were things we just couldn't do a few years ago because there was no place to have the conversation.
Stephanie:
Yup. No urgency.
Dylan:
There was no urgency and nobody even knew each other's name.
Stephanie:
Yeah. Yeah. That's great. And what if you were thinking about everyone coming together, did you deprioritize a lot of similar things and what things did you prioritize going forward and what things did you kind of shelf right now?
Dylan:
So just from our own list, we went from about a little over 100 parallel projects to 40. And so in that, say 67% we just stopped even looking at, and then the focus became what is going to drive business in the next four to eight weeks. So that's where ... time to change, it's about mindset and timeframe. And so when you're on a global team, you usually expect to look out quarters and advance, years in advance, while the market teams are trying to move product that's in a warehouse today, out of that warehouse as fast as possible. And do it in a way that's still exciting and valuable to the consumers.
Dylan:
So when you start moving all the global people towards that daily mindset, you get a whole lot of new ideas and different perspectives on what the other people have been looking at all the time. And then you also started to say, geez, the ideas I had, were flawed because this is how they actually work. And so we've also learned where we've made mistakes or were planning to make mistakes. So that's been kind of a nice benefit on the side of all this.
Stephanie:
Yeah. And are you using data to make those decisions for you when you're coming up with how to actually meet people where they are right now over the next four to eight weeks? How are you then coming up with what that shopping behavior looks like? What are you looking at to determine that? Or is it a gut feeling? Where you're like, "I think people are probably going to do this. Let's try that."
Dylan:
There's a bit of a gut feeling, which is people are at home, they probably need things that they would want to wear at home. And that's been correct. The other ones that are maybe a more subtle would be things like realizing that a bunch of products that we thought were available online because there's thousands and thousands of different sizes and articles online weren't. And it's taking the time to figure out what system along the chain did they get stuck at. And then going back and figuring out why were they stuck.
Dylan:
And so this would be then getting them into different marketplaces, not just under puma.com and the people that are there, we know they're there, we just didn't know that they couldn't get all of our products. So there's a bunch of work like that that's really low level and highly detailed. And we finally are by freeing up those other 70 projects that needed daily status reports or constant updates or whatever the people are free to look at the things they are looking at in a lot more depth. And so we're just getting more quality out of the things we're doing.
Stephanie:
Got it. Yeah. That's great. When it comes to determining those projects globally, is everyone kind of working on the same thing right now or is it region specific? Because I could see some areas experiencing different issues then ... maybe the US is experiencing one thing where Asia is experiencing a whole different buying behavior. How do you address those different markets, especially when something has to move so quickly like the environment we're in right now?
Dylan:
So this is where the centralized communication is so important that we didn't have before. So each of the regions there's separate subsidiaries for Puma. There are different trading companies and they have their own inventories, their own stores. And so it's like in the United States, those stores are closed right now. In China, they're almost all open right now, including Wuhan. So they have very different problems right now. And these are also focused on different things.
Dylan:
So these are the topics that they would focus on locally. And then we would say, okay, what is it that's on your top list? And my team actually flew into Boston to meet with our team there at our Westford office and Massachusetts and we did it couple day workshop just to go through this process. How will we figure out what we're going to work on and let's do it together. Fortunately we did that right before COVID, so we could still fly.
Stephanie:
That's good.
Dylan:
But that's how we do it. So we do actually in-person visits into the market and then that keeps a relationship kind of going and you get things face to face, you don't get over the phone.
Dylan:
And then coming back to headquarters, we've got our roadmap that we share with everyone. Everything's wide open, kind of operate as an open source software development community inside the company and with our vendors. So outside of financial information, everybody can see everything and that makes it really easy to see what each other's doing and avoid the duplication of effort.
Stephanie:
All right. To move on to a little bit higher level questions, what disruption do you see coming to commerce over the next couple of years? And I can even talk about maybe a consumer shopping behavior might continue how it is now, if that's going to disrupt the future or anything else you see coming down the road. You just need to take out your crystal ball. That's all.
Dylan:
Yeah. I'm thinking about my crystal ball. There is a big gap in what is considered foundational education for the type of work that we're doing today and the type of work that was needed when the current education systems were designed. In Germany-
Stephanie:
Please explain that a bit more.
Dylan:
Yeah. So in January for example, there is a large shortage of people that have IT knowledge and experience. So they are more willing to accept people like me in as resident because they want people with these skills in their workforce. And what I see coming is a digital disruption or eCommerce digital disruption where the groups and countries or cultures that have more comfort with change or risk are going to be more successful at transitioning to a lot of these ways of working and buying.
Dylan:
So in Asia, the mobile device is everything. And so everywhere you walk, people are on their phone consuming everything. And you'll see two or three phones out in someone's lap and it's just amazing how connected they are. And then I'll going to somewhere in the US and everyone's really comfortable with computers and they're also pretty comfortable with what's changing to using the devices their privacy's in between.
Dylan:
And then come to Germany and people like to pay by invoice. So you're buying a pair of shoes, for €50 or €100 and you're not going to pay for 30 days. It's not like they swipe your credit card, they're really going to check your credit history and send you a bill in the mail and you're going to transfer money later to them hopefully, or send the shoes back. So it's just a totally different way of working.
Dylan:
And when you've got then people who want to work with paper and pencil trying to build eCommerce digital into their manufacturing, their supply chain and their sales process like they just are going to struggle and continue to struggle to make that adoption. And so what I see being the big disruption or the communities that train their younger people to use the technology for good and for commerce and for manufacturing and logistics versus those who are just gaming with it or are just going to ignore it because they don't like it or understand it. I think that's what we're seeing.
Dylan:
And then either way the artificial intelligence and those things are coming. So if education starts to be built around that, whether it's primary or secondary, I think that's where you're going to see the most disruption. And all of a sudden you're going to see just different ways of working, people eliminating plastics or whatever it would be problems from their supply chain because it's not necessary anymore, and that they'll find solutions. And then it's going to be what companies operate like Google, where it's a software company, Microsoft, these companies are led by software developers founded by software developers. They completely embraced that way of working in and living and seeing things. And that seems to be the biggest difference for me.
Dylan:
So then the brands that have people in charge of their digital experience who also really have a strong foundation databases, networking systems thinking they're going to be the ones that just outperform.
Dylan:
So then regardless of what the disruption is, they'll be able to adopt it or assess that it's valuable or not. And that's a big part of what I'm asked to do at Puma is, is this a good idea?
Stephanie:
Yeah, that's great. Education is definitely key. I kind of am wondering if it's ... I don't know if it's the right term, is the leapfrog effect where certain regions or countries or industries that never had access to something, they kind of just skip over it. So I think Asia and maybe even India might be a good model of this where I think they never really had point of sale systems. And so they just skipped over that completely because they never had access to it and they just went right to mobile.
Stephanie:
And that was something when we were at Google, we always watched is that a lot of them ... like we were so focused on desktop and mobile, for the Americas, but when looking at India with the next billion users and China, it's like, well they don't really care about that, they really all just want right to mobile and we need to focus just on that.
Stephanie:
Do you think that's like something to consider as well when looking at different markets and education and all that? Is that there might just be a big portion if people just skip right over there like, "Oh, we don't need that. We already saw that it's happening in other countries and we never had access to that. So we'll just go on to the next thing." That might be how they actually get ahead?
Dylan:
That's perfect. Perfect explanation of how things are working and that's it.
Stephanie:
Are there certain markets that you look to learn from and then do you try and push that behavior on maybe the Germanys of the world, which because my family's from Germany, I'm allowed to say they're behind. But are you trying to push that on that consumer buying behavior and be like, "Hey, this is what's good for you? [inaudible] easier come on?"
Dylan:
I guess not so much a push it on to the other markets, but it's to identify what worked somewhere where you would see the trend going that direction culturally for the other groups. And so then what's popular with the Chinese market or in Japan and how they might be purchasing ... One example would be the PO box equivalent in Japan. It would be that the people would want to have their product delivered to the train station that they're gonna be at seven 30 in the morning instead of to their apartment, which there almost never at. So then do you need this whole logistics system for figuring out where people are going to want to be and make sure you deliver at that time, instead of saying, what's a five-day window to have it at your doorstep? They'd rather see it, like, "I want it tomorrow and I can be here tomorrow, can you get it to me?"
Dylan:
And then now you moved to the US years later. And then you have these career lockers that are being set up in different places where they're kind of doing the same thing, but you still have the PO box, but you have this reluctance of different carriers to deliver to a PO box. And even some brands won't do it.
Dylan:
And so it's just those are the things I'm looking at. Like okay, if you skip this idea that you have to deliver to someone's home and do it while they're there, what have you just unlocked? And that's the opportunity that I look for. This is what we could ... we're not going to push it on you but this is what's possible. Then you have the alternate payment methods as well like [inaudible] AfterPay. Like these are things that don't come out of the US but the US market's adopting.
Dylan:
And then what we're expected to do is make a flexible templated technology stack where you can substitute those different third parties and vendors and solutions in without compromising the whole of Puma security and technology approach, the enterprise architecture.
Stephanie:
Got it. That makes sense. Are there certain companies that you look towards who are either leading the change or you kind of keep close tabs on because they're always ahead. Just like looking at the different markets and stuff to see what they're doing? Are there people that you pay attention to in the industry or companies?
Dylan:
One company that really impressed me was Vail Resorts. They managed to take the idea of just moving somewhere from the bottom of a Hill to the top of a Hill with sticks on their feet to using the ticket that was [inaudible 00:41:33]is hanging up their jacket to turn it into RFID card that allowed you access to such a national park forest land. And to buy food and to get lodging deals and to do these transactions internationally all from ... Just to play loyalty card.
Dylan:
And that idea of just hyper consumer value and allowing the person to self service to me is exactly where we'd want to be. Any opportunity to let the person interact with the brand on their own terms to me is the right approach. I got to go on a digital retail tour of Chicago and a ran the runway had an awesome experience. So their ability to let people subscribe to have a certain number of articles of clothing in their wardrobe and then be able to go in and just scan and return or buy them or whatever, all by themselves in these boutique shops is amazing. And then backing that up, they've got the largest dry cleaning service in the United States.
Stephanie:
Wow, I didn't know that.
Stephanie:
I guess that makes sense.
Dylan:
Those are the types of things that then I just think, wow, like you said, you just skipping all of these steps that we thought we had to do. You don't have to have a sales associate talk to everybody. When they're needed, it's great. But if they're not needed and people still want the in store experience, we can give them that. Those are things that I would expect or the kind of disruptions that will be in the near term. And it's not for everybody. You wouldn't do that necessarily at Walmart, but you might for some things.
Dylan:
And that I think becomes more of the opportunity. Like how do you let your brands data flow into other physical stores or their digital environments as well. And if they have a marketplace, how do you make sure your data is available to them in the format they would need it and when they need it to take action. Like you said, three quarters later after we've had time to evaluate it and do a vendor tendering and figure out if it's feasible.
Stephanie:
Yep. How do you go about sharing that data with retail partners but also keeping it safe, so you're doing everything by the books? That's one thing I'm even thinking about now is that the rules on data and data privacy are probably only going to get stricter over the next couple of years. And I can see a lot of people right now who are collecting data. They might not be able to actually use it in the next couple of years because maybe they weren't collecting it the right way, telling the users how they are going to use it, following all the rules. How do you, it's all about striking that balance?
Dylan:
That's the question, isn't it?
Stephanie:
Yeah. Let me know. I'm trying to learn.
Dylan:
There is a first approach to the data governance is often segregating the data sources, so that you make it highly unlikely inappropriate data shared somewhere. And some of that might be antitrust data that the direct to consumer people can't see what the B to B people or doing or working on or their order volume, whatever it would be.
Dylan:
And then in trying to get Puma content or data to the retailers. We have a number of tools for that and a lot of effort just spending that even from my team that were direct consumer. But we're really trying to support the B2B business so they can be successful too because we need the same information.
Dylan:
So Puma does take the approach of anything that we have or willing to give to our retailers. So that we're not going to hoard product data to try to use for our own benefit more. And so that for me it helps because then we don't have to worry about trying to do something different. For search engine optimization, we end up competing with them directly with that exact same data.
Stephanie:
That's not good.
Dylan:
But that's just the way it works, so that's okay. But then the consumer data, you said that you're just collecting these massive amounts of it, and what's going to happen with it or what do you do with it? You're not going to take action right now. And I'm happy to see that it's being deleted. If it's not being used, and it's just sitting there, it's going to be removed.
Dylan:
There is a kind of an interesting proposal going on in the EU to create a data market. I guess like this current market is 27 countries that they would collaborate and share data with the citizens and with each other and then companies so that you've got government, private citizen data that everyone's able to benefit from. And that is really exciting to me that you have the handful of different pillars, but things like environmental data sets, manufacturing data sets, things that will help, where everyone could benefit, if this was out in the open.
Dylan:
And then there I believe there's going to be a a requirement to reduce the fear of companies or sharing what they have. Because in the past years it's been how do you just make sure it's kept us tightly under wraps as possible or not collected at all to an idea of actually there's a value in doing this, and if we do it together and safely we can unlock a lot of value and actually make life better for a lot of people. And so I think that the same thing is happening with these brands that Google and others have a ton of information and they'll continue to hoard that. But the brands are able to have information I think is just more useful for a person to have a good experience and a better life.
Dylan:
And so where you find the brands that you like and they're able to give you something back, you're happy to share more. Like with the Pumatrac, I work out with this app, I'm healthier because of the app. I don't mind Puma knowing that about me. And I actually would appreciate if they would be proactive about helping me even get further or convincing me to somehow convince my family and my friends to do more to be healthier.
Dylan:
So those are the opportunities that you get when you start sharing this data.
Stephanie:
Yeah, I can also see it being interesting when brands start partnering with that data, especially if it's combining location based data with the fact that you're using the app and it may be Puma partners with someone else to where someone's walking around a mall when they can go back to malls again, and they're getting different offers based on where they're at. But you're doing it in partnership with other brands because you have access to the same type of data about that person. I could see that being really helpful.
Dylan:
I agree with you, which is why I think we need more people with the technology understanding to know how to do that safely and when that's a good decision and then when they're ready to do it that it doesn't take years and they can get it done in weeks or months.
Stephanie:
Got it. So one last question before we go to a lightning round, which I'll tell you about in a bit. Dun dun dun! My final question is, I was on your guys' website and I saw this awesome idea where people were uploading images to your guys' website where they were in your guys' apparel and shoes and things like that. So you're started ... I don't know if you're just starting this, but UGC or user generated content was a huge thing. That's some of the companies I've been at a very hard thing to crack though. So did you all just implement this with the whole, the environment we're in and the Stronger Together campaign and all that, is that when you just started having people upload pictures in the apparel or how did you guys think about that campaign?
Dylan:
UGC has been a popular topic for a while. We started this maybe two years ago in earnest. And it's great because it lets people, sure how they use the brand of the products and what their personality is like. So it's just nice to see. And the integration was ... technically it's not very difficult. The problems are around moderation-
Stephanie:
I was just going to ask that.
Dylan:
... of the images.
Stephanie:
And quality.
Dylan:
The big hurdle is so nice when you've got a brand as big as Puma because there's plenty of people posting about it already. And so then it's like no one currently had the role of UGC moderator who was going to spend time doing it. So, there's a group within our department that just takes turns moderating the images that are coming through. And then there's some ... but then need to assign which products are actually in each one if there is a product. And so it becomes a lot of process around keeping that in compliance and doing it well. So that actually is where all the effort is. That tech part's easy.
Stephanie:
Got it. Yeah, that's there's this app LiketoKNOW.it app where you can screenshot apparel and then you can instantly buy from it. And that's right when I saw that on the Puma website I'm like, "Ooh, that makes it easy because that girl looks like my body shape and I really liked that tee shirt and now I can buy it and I know what size she's in." It just seems like a much easier conversion when it's organic like that.
Dylan:
That's the key. I give a lot ... like we have all of these requirements for photography models, stand a certain way and we take the pictures in these certain angles and the marketplaces have their own rules. But the reality for you and me, we're not sample size. We don't fit what a certain model ever was. So we were like, "Well this person looks like me. Okay, I'll buy it."
Stephanie:
"I look good like that, oh wait, now." Yeah. That's great. All right. Are you ready for the lightning round? Which is-
Dylan:
I think so.
Stephanie:
... I ask you a question and you have to answer it in under a minute. That's whatever comes top of mind is your first answer to that question.
Dylan:
Okay.
Stephanie:
All right. So I'll start with the hard one first and then I'll be fun ones after that. It's your job to stay ahead of expectations and whatever comes next in eCommerce. What's up next for eCommerce pros?
Dylan:
I would say getting the data moving through your systems as quickly as possible and using as much automation as possible. So everywhere that there is a repeated task, there's likely an opportunity. If it's in eCommerce specifically, it was probably a good opportunity to automate it. And then it might be just a simple automation or maybe it's machine learning that becomes smart and chatbots, things like that. But that there will be more and more opportunities for affordable automation and artificial intelligence that will just make all of these tasks that we've had hundreds of thousands of people working on basically eliminated. And then those people can start to do the work of making it a really great experience to be part of the brand. It's going from currently being more about transactional based experience where you're like, okay, I need to find product, buy product, wait for product. That that whole chain can be something enjoyable and surprising. And I think that's what the future is going to hold and what I hope to see more people doing.
Stephanie:
Got it. All right. What's up next on your podcast list or audible other than this episode when it comes out of course?
Dylan:
The often check on Radiolab, but there is a surfing podcasts that I'm now listening to, so, and I'll find out what happened with Quicksilver.
Stephanie:
Oh, fun. All right. What's up next for dinner? Is your wife making anything tasty?
Dylan:
She always makes something tasty. She's vegetarian and an incredible cook. So tonight I believe was a sensor to tacos, but she's an excellent cook.
Stephanie:
Yum. What's up next on your Netflix queue or Hulu if you prefer?
Dylan:
I just finished Tiger, so right now-
Stephanie:
Me too.
Dylan:
... I'm taking a break.
Stephanie:
Guilty pleasures. Oh it's so good. I judged it so hard when people kept telling me to watch it. I don't know if you were the same and then I watched, I'm like, "Oh, this is good." It's okay. You don't have to be embarrassed.
Dylan:
So now I am taking a little bit of a[inaudible 00:55:45].
Stephanie:
Taking a brain break. I think that ... yeah, I'm doing the same. And the last one. Once we can get out into the world again. What's up next on your travel destinations?
Dylan:
We wanted to go to Portugal and do some surfing in Portugal.
Stephanie:
Very cool. Well, I hope you can do that soon. All right, well this has been a blast. So much fun talking to you Dylan and I hope we can have you back in the near future. Thanks for coming on the show.
Dylan:
All right, thank you.
You hear it all the time — brick and mortar stores are on the decline. And we all know why — the internet. Digital and eCommerce have become the go-to shopping method for millions of people around the world and it might soon the method of choice for the majority of the population. But how are we going to get there? And what kind of innovations will we see along the way?
Join host Stephanie Postles as she interviews leaders in the industry who are on the front lines of this digital innovation. From Puma to Sonos to Touch of Modern and everyone in between, start-ups and enterprise companies are focusing on eCommerce more and more, and we have the inside scoop. New episodes come out every Tuesday and Thursday.
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