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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: Long-term vision is key: You can spend a lot of time and money on the “cheap thrills” of marketing promotions, but those customers will never repeat buy. Instead, focus on retention and getting those high-value customers. Catalog Crazy: There are certain page and product count requirements that will determine whether or not a catalog is the right tool for a company. When those numbers are met, though, there are few better avenues to tell your brand story and drive conversions… and it may even perform in ways that an Instagram ad never could The cost to acquire customers: There is a high amount of risk involved when you acquire customers at a loss. You can predict customer behavior pretty accurately in the short term, but predicting long-term trends and purchasing is much more difficult. Therefore, it may not benefit you to model out a one-or two-year strategy toward profitability when it comes to customer acquisition. For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length. --- 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 u…
Full show notes at the publisherThere 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: There are challenges to selling on Amazon, and it all comes down to whether you choose the seller-central or vendor-central route. If you choose seller-central, you have more control, but have to provide the inventory and warehouse the product on your own. With vendor-central, Amazon purchases directly from you, but then they resell on the Amazon site and the algorithm sets the price, so you have to constantly monitor that aspect to make sure you are not cannibalizing your own business Today, there are many companies that have a social good aspect to what they do. However, very few take the steps toward setting up an actual sustainable enterprise that truly benefits the people you are trying to help. By providing jobs and then programs that teach financial literacy and other skills, you create an impact that lasts longer There are certain pitfalls that small businesses encounter when pursuing the retail path. Whether that is claiming shelf space, creating market-ready packaging or understanding inventory needs and retail term agreements, there are headaches involved, so you need to be prepared to deal with them or find a different strategy For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length. --- 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.…
Full show notes at the publisherIf 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: First impressions matter. You have very little time to make a lasting impression when someone visits your page. Relaying the information that will get them to convert must be delivered in the first few seconds a potential customer visits your page. Returning customers is the holy grail metric for a small or start-up company, especially as it relates to the slow-fashion industry. When customers return to buy more, it tells you that they value you and your products and you can build a stronger relationship with them. Invest in pop-up shops and omnichannel strategies to help convey the quality of the clothing. These tactics yield a more valuable and loyal customer. For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length. --- 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 th…
Full show notes at the publisherThe 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: Learnings from Costco: Not only does Costco have a membership model that can be replicated, as Thrive has done, they also were instrumental in leveling up the private label model and building trust with customers. Thrive has leaned into the private label model, but has taken it even further by working with the other brands in the marketplace to ensure there are no “us-vs.-them” situations. By building trust in their private brand and with their partners, both have been able to prosper. Hacking the Supply Chain: The biggest barriers to achieving the mission of making healthy food affordable and accessible was pricing and availability. To solve that, it all came down to streamlining the supply chain and leaning into the membership model. Incrementality is the No. 1 Metric: Anyone can judge whether or not a promotion led to a jump in sales, but the incrementality of that jump is the most important metric to look at. Knowing who clicked on what exact promo, who then went on to purchase form that click or where they dropped off, is important information that brands need but can’t get in most places, particularly brick and mortar shops. For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length. --- 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 o…
Full show notes at the publisherWhat 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: Conversion rate is so context-specific that it's not that helpful of a metric. Instead, analyze conversion rate relative to average order value and relative to the traffic sources the customer came from. Before you invest in anything else, you need to drive traffic to the top of the funnel. Currently, Facebook ads are the core driver of customer acquisition for online shopping. Andrew suggests that most Ecommerce brands should invest in the platform and then trust the algorithm to put you in front of the right audiences. You have to take big swings with your experiments. Don’t get hung up on micro-details like the color of your buttons or rewriting your copy. Instead, find big ways to make changes and then see how the outcomes stack up. Because we are all riddled with our own biases, we often cannot predict accurate models of the future on our own. Instead, use data as your guide as you peer into the future. For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length. --- 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 advertis…
Full show notes at the publisherAs 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: Bring in the Right People. Scaling requires people — employees, execs, investors, and mentors. Lean on your network, ask questions, hire carefully, and create a dialog with other D2C companies to learn from them. Pro tip: It’s time to bring someone else in when you start to ask questions that neither you nor anyone on your team can answer Ask Yourself, “What Matters More?” When it comes to getting better conversions, don’t let shiny objects distract you. For example, changing the copy or placement of a video matters a lot less than the speed of the site. The faster your site speed, the more conversions you will have. Stay focused on what investments really convert Transparency Impacts the Bottom Line. When employees feel invested in the company and comfortable in the environment you create, they begin to ask more questions, buy-in to the company mission, and work harder to achieve success for themselves and the company For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length. --- 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 intern…
Full show notes at the publisherAuctions 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: The gamification of the buying process and the gamification of internal innovation are proven ways to create more engagement with your customers and your employees. Both will keep coming back if they are enjoying their experience, and creating a game-like environment helps build fun into everything It is impossible to build a marketplace or create a successful business without first understanding unit economics. It is good to have a story behind your business and a plan for where you want to go, but you need to have data points that prove that your story is true and that your plan will work out Retail consolidation is going to be a major factor in the coming years. There will be much more emphasis on creating omnichannel experiences that will completely change how we shop For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length. --- 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 hav…
Full show notes at the publisherEveryone 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: It’s important to build a structured data foundation from the start so you can move to a place of making decisions with data You must teach your employees how to interpret and analyze data and make sure they are comfortable using the data to make decisions. Individuals must be taught to lead with data and then let their gut take them the final 20% of the way toward a business decision Understanding the entire customer journey and where there are points of failure will help you create a strategy on optimizing your data and building an Ecommerce experience that is successful from start to finish For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length. --- 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 t…
Full show notes at the publisherYou 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: A brand like Kellogg’s has the power to up-end the typical Ecommerce strategy. Instead of asking how to get customers to buy more, they ask how they can help their customers sell more. In doing so, their customers and partners become more successful, and it’s a win-win for all parties Change management is important because many of the small businesses Kellogg’s works with have to fundamentally change the way they think about doing business.hey have to rely much more on technology than ever before. But the appetite is there because A.I. and predictive analytics are proving to be critical tools in helping businesses determine what to stock and how to look at consumer behavior B2B Ecommerce is still in its infancy, but there is an appetite for innovation across the board from brands to retailers to distributors. They’re eager to test, iterate and experiment with new technologies in order to create better one-to-one engagement at scale For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length. --- 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.…
Full show notes at the publisherYou 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: There is a delicate balance you have to strike when working with retail partners and also selling products D2C. You have to work collaboratively and across multiple channels to ensure that you have the products selling where you want them and not competing against themselves Amazon is a price-leader, and in order to get any market share, you need to have an Amazon strategy that allows you to live there, while also ensuring that other partners have exclusive access to other products Product reviews and product-usage videos are absolutely essential to achieving a high conversion rate. Generating about 15 reviews and placing a usage video front and center are two strategies to implement to help grow conversions For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length. --- 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 gu…
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