eCommerce in America according to Rick Watson - RW Consulting

Speaker A: Welcome to the E Commerce Growth show brought to you by Segmentify.

Speaker B: So hello everyone, this is Carlos again for another episode of the E Commerce Group show USA Today. I'm um, joined by my good friend Scott Emmons and Rick Watson. So Scott, would you please introduce Scott. Uh, Rick. And then we get started.

Speaker A: Great, thank you Carlos. And uh, uh, great to have you uh, uh, with us today Rick, uh, for our audience that uh, don't know Rick. Rick Watson founded RMW Commerce Consulting, uh, after a 20 year career as a technology entrepreneur, uh, uh, and expert in the E commerce, uh, industry. He's worked with companies in the past like Channel Advisor, Barnes and Noble, Merchantry and Pitney Bowes. Today uh, we find ah, ah, Rick's work centered around supporting investors, management teams, uh, and incubating and growing direct to consumer businesses. Rick is a rich source of content and insights on retail and E commerce, uh, and was recently recognized as a top 100 retail influencer by Rethink Retail, which makes it even more of an honor that I also received that recognition. So welcome um, again Rick.

Speaker C: Thanks a lot Scott and Carlos. It's good to be on.

Speaker A: Right, so, um, um, Rick, you know, when you know I go and research a guest, uh, before a show, a lot of times I don't necessarily, I'm not super familiar with what they've been up to. That's not necessarily true, uh, in your case, uh, because I follow you and read your uh, posts and content and your podcasts and these things all the time. Uh, so I was really excited uh, when I saw uh, that Carlos had lined you up, uh, to come join us and chat with us for a bit this morning. Um, and so, you know, I think the first part of the show, maybe we'll focus in on some of the news that's happening. There is a lot going on uh, in the world and in the world of E commerce, uh, especially, uh, here we are. And you uh, know, at least it feels like a lull in the pandemic, uh, here in the U.S. anyway, uh, you know, we have a little bit of you know, a window where everybody seems to be getting around and trying to, you know, be back to normal. And you know, that's exciting and um, uh, fun and you know we, we see uh, you know, a lot of activity in retail which. Let me start with one that's near and dear to my heart. Um, the amazing news that the Neiman, uh, Marcus and Farfetch, uh, partnership and you know, I'd love to get your take on that.

Speaker C: Yeah, I think There. So it's an interesting question. Um, Farfetch'd has obviously been a kind of growing uh, cross border e commerce player with their very well positioned luxury fashion, uh, cross border marketplace, which there aren't that many of them in the world. As soon as you have to start talking about companies like Tmall and JD to get to the level of luxury and fashion and other types of things that are available cross border, um, so, so I think the one side of it is um, Farfetch has been quietly incubating this cross border platform services business. So not just being a marketplace but being uh, a service provider. And that was um, they really made a big splash in there several years back with uh, Harrods and they managed, managed the entire Harrods cross border e commerce business, um, which is a pretty large business uh, for anyone. And I think they are always looking for new customers in that space so expanding their revenue. There is sort of one side of this. The other side of this is um, and probably the prime mover of this is Neiman's is out there looking for funding. And I don't think this deal would have happened on its own or maybe it happened kind of independently in both directions. But probably the bigger mover is Neiman's whole uh, came out of bankruptcy two years ago and did retire a huge amount of debt. And obviously a lot of retailers had been in trouble in the last few years and Neiman's was not immune to that. Coming out of bankruptcy it really makes sense for them to look for a strategic investor that kind of believes in the vision that is aligned to luxury but also could give them opportunities. So that's, that's probably where I would start the conversation.

Speaker A: Great, great insight. And you know, from my own perspective and having been an insider, you know, on the name from the Neiman Marcus side up until the end of 2018, uh, you know I think that the technical platform that Farfetch brings to the table, you know, besides the $200 million cash infusion which you know that's nothing to scoff at but the fact that they're bringing their technology platform to the table, uh, uh, and I guess you know they talk about well we're going to put Bergdorff Goodman on it. Uh, you know, well Bergdorf Goodman's on the same platform today as Neiman Marcus.com as well. So uh, I would think that maybe they're going to start with Bergdorf Goodman but uh, I would suspect that everything goes that way if that goes well. Right, yeah. Uh, and look you know, Neiman's, they had a very adept internal technical team and were very good at building all this stuff themselves. Uh, and in sometimes I think that took away from the focus of being a great luxury retailer to be quite honest, because they had so much invested in technology. And now as they move towards more services oriented approach, uh, this Farfetch deal, uh, looks like a really good marriage to me.

Speaker C: Yeah, uh, it kind of gets back to what are you, are you a technology company or you are a retailer? And most retailers that are not named Amazon have no business trying to be technology companies. Uh, because even if you can build something, usually it doesn't necessarily mean that you should. And even if for a brief moment it's best in class, the chances of it remaining best in class for years to come is uh, that's the problem. Yeah, that's the big problem. That's the problem that people get around. And so as your business changes you realize that, oh, rather than just going to ask my vendor or picking a different vendor and plugging in a new one, now I'm having to refactor this massive code base that I built up over the past five or ten years or longer.

Speaker A: Sometimes that's a technology debt that is hard to keep up with. Uh, and I've seen that firsthand. Uh, and so understand that and understand the allure uh, of uh, looking at platforms that uh, outsourcing some of those capabilities if you will. So uh, that would lead us into some recent uh, uh news. Uh, you were in your podcast talking about Target, uh, and your Target, uh discussion was uh, really centered around them being data centric and uh, they employ an army of data scientists. And no surprise there, I think, you know, we've seen this, you know, across the industry that uh, everybody recognizes that uh, if you don't have great data about your customers, uh, you have a hard time uh, uh, being successful uh, in this business. But let me tell you, one of the things that I took from that, that discussion, um, was uh, you talked about how Target has moved from a huge outsourced model. And I was, I was aware of that. In fact, one of my uh, bosses at Neiman Marcus was a former Target executive. And so I was well aware of that outsourced philosophy and uh, uh, he even brought some of that with him to uh, Neiman Marcus. To be honest, there was a lot of outsourcing going on at Neiman's at the time as well. Uh, and so now uh, they're almost 100% insourced as what caught My uh, so is that a trend you think, across the industry? Is it unique to Target? What's going on with that?

Speaker C: Yeah, I, I think it's, you know, the pendulum, like we just had the opposite conversation about Neiman's. Right. And, and I think the pendulum goes, uh, you know, kind of swings both ways over time in a company's history. And I think what Target found was that if you kind of go back to 2013, what happened in Target's history, they had one of the largest credit card data breaches in retail history, period. And I think they found I lived

Speaker A: through one of those.

Speaker C: Yeah, they found themselves in quite a bit of trouble um, with consumers and everyone. And so as Brian Cornell came on and they hired new leadership and, and built out their management team, I think what they saw was in source outsource, innovation has to be the priority and you can't innovate without data these days. And they started putting in place those sorts of capabilities so that we can, you know, they can move the teams forward. I think it's, if you look at how they've set themselves up, it's, it's a very Amazon like structure, uh, where you have autonomous teams that are responsible for small pieces of small to mid sized pieces of functionality that are releasing new uh, enhancements all the time. Uh, that sounds like a startup and it sounds a lot like how Amazon innovates and I'm sure some of that is outsourced too. But you need control over your own destiny and you need to be innovating quickly regardless of what's in your pipeline.

Speaker A: So I live through the all in house to almost all outsourced world. In fact, uh, when uh, The Neiman Marcus IT infrastructure was outsourced, I was one of the 19 remaining employees. After that very stressful process by the way, uh, uh, I lived through the going to the outsourced model. Uh, one of the things that's not even, I don't really feature on my resume but you know, at one point I was the transition manager as we went from one huge uh, Indian, you know, uh, IT outsourcer to another one. You know, once our five year contract was up and we decided we weren't getting what we wanted out of vendor one, we went to vendor two. Right. Uh, so I've lived deep in that world of outsource. And so uh, the long way around to the question is right as part of your discussion about Target, you mentioned that that whole they wanted to be in control of their destiny. That was the promise of outsourcing was you were going to get cheaper labor but with all the same skill sets and you were going to be able to do all the same things just better and faster. Um, so that's just not possible to realize, you think?

Speaker B: I think

Speaker C: if it's being realized, it's not often put it that way because I think what happens with a lot of these teams is it becomes a ticketing system and the teams think about it that way, they're executing it. And the business certainly thinks about it that way because that's their reality. They go to a portal or they send an email, they say, I want X project. It's not a collaborative, dynamic innovation environment by any stretch of the imagination, unless the business responsibilities also in that organization, um, or the company might have a local presence that's near those suppliers. You know, for instance, there's nothing, you know, Apple, despite doing a lot of its own manufacturing, one of their biggest manufacturing is outsourced to Foxconn. But, uh, it doesn't necessarily mean that they just say like, oh, whatever Foxconn comes up with, we're going to be okay with. No, like Apple has its own very talented people and obviously Foxconn does, or else they wouldn't be a supplier to Apple and they need to be co located. In some cases, co location really matters. Um, particularly when you have responsibility for an important project, it's hard to talk to that person every week and assume things are going well.

Speaker A: I guess it'd be safe to say that maybe it's that the lesson is pick your battles on where you want to send that work outside of your doors. Uh, obviously no retailer wants to go build their own cloud, right? And so obviously, uh, that gets outsourced to Microsoft or Google or whoever, right? Uh, uh, uh, whoever it is, uh, is your platform provider. Uh, and the same with this kind of E commerce sort of thing. I think it's interesting. I guess we'll see. Like I said, I'll watch this Farfetch thing with great interest circling back around. But, uh, um, really interesting times. And it's been fun to live through those pendulum swings, I have to say. Uh, and the pendulum definitely tends to overswing. Um, and the answer is probably more in the middle, uh, of that arc. Right?

Speaker C: Yeah. Look, there's no one single answer, I think, to your point. Differentiation, I think profitability, I think reason to exist. Uh, those are all things that are, I think, core to that decision. And if you look at something like could Target, would Target be successful today if they outsource all their shipping to ups, um, you know, and integrate, you know, an end to end provider rather than taking control of their own supply chain. You know, when their stores are such a integral part of who they are and their biggest costs are in supply chain, it's really hard to outsource that if that's part of your core DNA and your shopper promise and something that drives your, the main part of your P and L. Right, right.

Speaker B: Okay.

Speaker A: Well, moving on. Uh, another recent uh, topic, uh, I, uh, saw you post about was red warning lights flashing on economy from recent retail earnings call. Uh, and that caught my ey. And you know, I dived into that and uh, let me tell you that the thing that really caught my uh, uh, interest, uh, was uh, when you it started referencing 2008, uh, in that, in that, you know, especially after having lived through 2008 as a retailer myself, where I always describe that time as we burn the furniture to keep the lights on, uh, uh, it was horrible. So tell me what's going to happen, do you think? What's your take?

Speaker C: Yeah, I mean, look, I'm no economist or anything like that, but I pay attention to what the retail CEOs are thinking about. And for me you have costs going up across the board, whether it's people or materials. That's a huge trend and that's not going down anytime soon. You have interest rates starting to go up, so capital is going to be getting a little bit, uh, more expensive. And you have, I mean, you also, I mean the world is getting more competitive. People are coming back out of COVID and where, um, you know, the biggest worry is that how much of this sort of the European situation and the horrible tragedy and the war and all the consequences of that that's happening. That's one more thing. I don't know if it's a straw that broke the camel's back, but it's not a simple thing to have gas prices go up for consumers. Um, that has effects all over the economy and all those things. When you put them together, consumers start to worry. Consumers start to pull back a little bit and become a bit more nervous. Like, well, every time I go to the gas station it's 10% higher. And if that happens week after week after week, you're going to start reallocating your budget a little bit.

Speaker A: Ah, it's noticeable. Uh, I can tell you that, uh, since I've worked from home during the pandemic, so I've taken over the grocery shopping, uh, from my wife who still has to go into her office uh and so I'm more closely attuned to what's going on there. And definitely the cost of a grocery run is significantly more uh, uh, no doubt. You know everybody feels the gas prices and that's also happening on my utilities, my gas bill, uh, uh, uh, natural gas bill and uh, everything uh, all the way to even hey, you want to buy a house or move, sell the house you have and move to a different one. Well I can sell the one I have. I can sell the one I have no problem within hours probably. But I can't afford any of the other off the options of where to go if I were.

Speaker C: Yeah.

Speaker A: Ah, so uh, no 100% and I think there's uh, you know you've had this sort of uh, two years where there was some government support you know uh, uh, for folks in terms of extra unemployment and ppp, uh and all these things uh, that uh uh uh kind uh, of lifelines uh that were opportunities to grab uh, onto that uh, aren't there anymore, have expired and have moved on and uh, I think it's coming home to roost right now as um, uh all these costs go up. Yeah, I think you know, we don't want to say the R word but you know it's certainly on people's minds I think.

Speaker C: Yeah. And I think as you unpack it a little bit you start to think about uh, okay, what happens, you know, during these times again you had a retailer was um, was looking at this. Obviously there are things you spend money on. Uh, you spend money on your, on your kids, your family, your pets. Those things don't go away. You're looking for value in other areas. Maybe you're cut back on extras and luxuries and tighten the belt in certain areas you're trying to get more especially in things that you're spending every week on that make the bulk of your expenses like food. Maybe you go eat out a couple times less and maybe you're getting a few extra things at Costco versus wherever you normally shop at groceries in bulk or something like that. So as you think about the theme becomes a more value oriented theme, um, which benefits I think some categories and sectors and sort of disadvantages others.

Speaker A: Well I guess it continues to emphasize that sort of the discounters have been doing great for some time and at the other end luxury has been doing pretty good. Those that had the money to shop luxury continued to shop it and the middle struggles. Um, uh, the middle has not found its footing to this day and you have the Steve Dennises and others of the world that have been shouting this for some time. But it's definitely true. The trend continues. Um, Carlos, you've been awful quiet. Uh, so what's it feel like from the Denmark, the Europe perspective, uh, in terms of uh, economy wise? Uh, you know, what's the, what's the feel?

Speaker B: Uh, the feel here is that well, utilities, my, my gas bill went up by 50%, which is a lot. But in Denmark they, they are offering a grant like for a lot of uh, for the households and they're saying that they want to become independent, uh, from Russia and in regards to gas. So they're definitely within, I think, um, it's a company called Oersted. They said that within the next 10 years they're going to definitely focus on um, uh, renewables and they're not going to depend on Russia anymore Russian gas. So they have this like 10 year run now that they have a contract and they have to fulfill um, their obligations. You can definitely feel also that groceries, uh, the price of uh, groceries um, increased a lot. So that's another thing. People are um, going out a bit less. And this is weird because uh, myself coming from Brazil, you're used to inflation, but when you're in Denmark where you usually have negative uh, interest rates, especially for uh, banks, you have interest rates that are negative. And now people are feeling that well, they're paying more for, for groceries, they're paying more for energy. There's something uh, weird, right? So the sentiment isn't the best. Also I'd say like Rick was saying, people are a bit, um, was saying, uh, it's not scared but you know, um, the trust, uh, or you know, the willingness of spending money and I think people are pulling back. Uh, that's what I feel here as well.

Speaker A: All right, uh, let's switch topics and hopefully we'll hope the economy finds a solid footing, uh, and we'll move on for now. So uh, you had recently uh, written about EU and the Digital Markets Act, Rick. Uh, as someone really kind of my day job currently is I work with a company that does live chat and messaging uh, for brands across the globe. And so we've already. Personally I understand how difficult implementing GDPR was, uh, and uh, the kind of uh, uh, the ramifications of that law. And so now here comes the eu, uh, and they are forcing, uh, looking to force a lot of new requirements. Uh, it looks like it's mainly aimed at big tech, but uh, uh, I'd love to hear your thoughts in this area.

Speaker C: Yeah, it's it's obviously very new and I uh, don't even think the full legislation has been written yet.

Speaker A: Still. Still being formed.

Speaker C: It's still being formed. You know usually those things take a couple of months to, to shake out. It looks like it's the one big thing I noticed was about messaging and you can kind of see it in the US with like messenger and WhatsApp and texts and iMessage and they're all a little different and everyone looks, you know, there's so many different fragmented platforms. Uh, EU um has said that you know, they're going to try and standardize some of those things which uh, it's an interesting you know, question. Is that the role of government or the markets? And I think Europe, uh, in the US that would be a, almost a ridiculous, It's a ridiculous question.

Speaker A: We know the answer.

Speaker C: It's a ridiculous question. But in Europe that's not the case. And so if you think about um, you know, where does this lead? Um, you know again you have such a fragmented marketplace in Europe compared to the United States was much more homogenous. It's absolutely in their interest more to make things interoperable than there is the United States. And so I think that that's the genesis of a lot of it, number one. And then second is it doesn't hurt to give a black eye to some of these big American companies at the same time that they see as potentially preying or taking advantage of consumers.

Speaker A: Well, I mean that's actually helpful your answer because uh, I struggled uh, a little bit to understand why interoperability would be beneficial to be honest. You know, the way What I use WhatsApp for, uh, is so that I have easy communication with my over overseas and out of country friends to be quite honest. And uh, uh, uh, you know, I use imessage, you know, for you know, basically talking to family and you know, things, you know, personal things, that sort of thing. Not necessarily business.

Speaker B: What is imessage? I'm sorry?

Speaker A: Oh, that's it. That is uh, the Apple uh, uh, messaging platform, uh, which is a little, it offers a little more features than just straight old sms. Right. You know, which when I talk to my daughter I have to use plain old SMS because she's on an Android. And uh, iMessage is not interoperable with what happens over on Android. So it's just plain old simple text messaging when we communicate. So it's weird. Um, so um, hold on, get back to my notes and uh, uh, let's see what's going on, uh, else in the news, uh, I see, uh, uh, one of the stories I've been following that I found interesting was, uh, on the grocery side in Kroger and uh, Bed, uh, Bath and Beyond's new partnership. Uh, have you had any time, uh, to form any thoughts on that, Rick?

Speaker C: Yeah, I was looking at that. Actually. I wrote about it this morning, um, which is, uh, Thursday. I'm sure this is coming out later. But, um, again, like any of these partnerships, it has to work for both sides. I think Bed, Bath and Beyond is transforming, but the question is, are they transforming quickly enough and do they have enough distribution for their private label brands that are going to be kind of the core of their profitability story going forward. And on the other side you have Kroger, which is being, um, I think they're investing, they're doing a lot of good things. They had a tie up with Instacart, they have a big partnership with Ocado. They seem to be trying a little bit of everything, to be honest with you, which is actually the same thing I think about Albertsons, that they seem to be trying a little bit of everything. Um, but Kroger, I would say even to a greater degree, um, where I think the simple theory is that consumers value convenience. If you can consolidate trips, then that could be worthwhile. Kroger has many more stores than Bed, Bath and Beyond and they're visited more frequently. So if Bed Bath can get in Kroger stores and that's valuable, that's kind of number one. And then second is, I think competition in grocery is getting more fierce. Uh, online grocery has really accelerated in the last couple of years and that really plays to Amazon's strengths, uh, in the space. And you still kind of have Instacart kicking around, but you have Walmart, who's the number one grocer in the US that is building its omni capabilities and its fulfillment capabilities as well. And so I think Kroger feels like if we're only in grocery, that's not a good thing for us long term. We need to broaden our focus so that if we lose one thing, we have a little bit of a multi category basket, uh, to weather the storm.

Speaker A: I guess the warning is don't lose focus on what you're good at. However, uh, with that. But yeah, I can see that. Look, uh, you know, Walmart did a pretty good job of winning me over, you know, with all the new kind of delivery fulfillment, you know, online shopping options, uh, it got, you know, pretty good, you know, I thought. And uh, uh, where I was exclusively a Kroger shopper pre pandemic. I shop a lot at Walmart now I would say. So I can see where in a bigger picture, a broader picture where Kroger would be looking for ways to be, you know, relevant, uh, bigger, uh, to be more relevant. It feels to me like the deal is probably better. Is it even bigger for Bed Bath and Beyond? More beneficial for these guys. Right. You know where they are. Definitely one of those that are in the middle that we talked about that struggled a bit.

Speaker C: Yeah. I mean look, putting a marketplace on the Kroger website, I don't expect it's going to move the needle a whole lot because consumer has to find it and oh yeah, it's not simple. Uh, I mean I looked around on there to search for baby products and yeah, there's a link to it from the press release but the consumer isn't going to be able to find it. Um, so the digital component I think is going to be not that interesting. Plus that the digital component is not going to play with the curbside and all these other things that Target is doing and Walmart is doing, um, kind of, kind of from that side of things. So um, the effectiveness remains to be seen.

Speaker A: Maybe this is, you know, where the metaverse finally comes into play. You know, where it's. Maybe that's how I find these things. Right, yeah.

Speaker C: Uh, Kroger escapes to a virtual reality away from Amazon and Walmart. Right, Carlos?

Speaker B: Yeah, sure.

Speaker A: Lets you jump in.

Speaker B: Yeah. Uh, Rick, uh, there's a post of yours where you talk about Shopify and I'm going to ask you that because, uh, I work with a few E comm platforms so I'm very keen on listening to your take here. So you say basically that Shopify, uh, still wins because it works better. And then you talk about their checkout and their app store. Uh, but then in your opinion, what's the opportunity for other platforms? So for example VTechs, maybe you heard of them, is a client of mine here in Poland. You know, they talk a lot about composable commerce these days and there are so many names for the same stuff. Sometimes headless and you name it. So what's the opportunity for uh, platforms like VTech, commerce tools and you know, Shopify. They also, they have their Shopify plus which is, I mean they're trying to go for the enterprises with it. Right. And I mean I would love to hear your take on. Yeah, uh, on, on this.

Speaker C: Yeah, I think Shopify is so we're talking about roughly two separate markets. By and large you have small and medium brands that start on Shopify and then grow up to, you know, a little bit more. Again. There are lots of big revenue numbers on Shopify, but once people start to get into 50, 100 million, then they, you know, many of them have more complexity in their business that maybe Shopify doesn't fit. And the tier above it is where traditionally has been something like a Salesforce.

Speaker A: Mhm.

Speaker C: And the way I look at VTechs is it's trying to be sort of the alternative to Salesforce. That's kind of how I see it. It's a cloud based provider. It has many different modules, it's composable in a way, but it's also they're trying to put everything under one roof. You know, they aren't trying to say like, oh, only use our PIM or only use our oms like some of the other headless providers. They're saying like you want to use our whole thing plus our marketplace and that's what makes us different, similar to what Salesforce is doing. Um, and so I kind of view them as trying to be seen a little bit as the more uh, modern and they're focused on global brands. If you have entities in multiple countries, that doesn't describe most of Shopify's business. Mhm, the 80%. Whereas VTechs grew up in the South American market, correct?

Speaker B: Yeah, the footprint is huge.

Speaker C: Yeah, they're a dominant provider in the, in those markets and I think um, they've even forced some moves from Salesforce to require providers in that markets to keep pace with it. And so I think um, as I think it's very hard personally, I think it's very hard for VTechs in the United States. Um, but I think when you're looking at like if you're going to do an RFP for a global cloud provider that is maybe not truly headless, I would say it wasn't necessarily built that way, but it's cloud based. Um, it's a lower cost of ownership than traditional E commerce. Vetex is probably on the list somewhere.

Speaker B: Sure. The next question then is you talk about Amazon and at least this is what I'm uh, interested also in. Um, your view, like why is it Shopify putting some, it's probably the only provider that is putting some fight against Amazon today. Ah. What is it that they're trying to do?

Speaker A: Well, let me jump in quickly and just say, didn't I just see or read that the actual Shopify Is, uh, actually ahead of Amazon's, um, marketplace, you know, in terms of visits and revenue. Did I, or am I, did I

Speaker C: dream that they're still, you know, it's something like a third to a half. That's, that's the number I see something like 30, 40% was the last number I saw several months ago. Um, especially when you're just measuring and usually people are comparing it to the marketplace revenue, uh, not the first party Amazon revenue. And so, uh, Amazon overall is still huge because you can also add in the first party business, um, too I think. Like, look, first of all, I think there are certain employees at Shopify in the last four or five years that really wanted to create a narrative. Uh, and so it makes, ah, it makes a nice story, makes nice print. Um, people like to write about it, employees like to get excited about it, uh, even if they're not necessarily waking up every day and competing with Amazon directly. Because Shopify is a software company, Amazon is a retailer. Amazon's a lot of things. So one of the things Amazon is, it's a retailer. Um, and um, so I think that's where some of it comes from. And if you kind of look at, to me the bigger clash has always been the clash of sort of the worldview Amazon has. The worldview of Amazon is that everything's here, your account already is with us, you're going to get it tomorrow. Why shop anywhere else? And it's a pretty amazing proposition that's turned out to be correct. Um, but what it doesn't mean is that people care about the brand you buy when you go there. If I'm on Amazon, I could buy three or four things depending on like, oh, I, maybe I went to buy this brand, but if they show me something that has better reviews and is a little bit cheaper, I might try one of those things because I'm already here on Amazon. That's, that's Amazon's thinking. Shopify has almost the opposite worldview, is that brands matter. Quality, you know, quality matters, your presentation matters, kind, um, of all your typical brand retail things. Shopify really wants to be the champion of the brand and that sort of merchant focused mindset. And Amazon is sort of the, you know, Amazon is in for them. Let's be honest, everyone's in it for themselves from a different point of view. But um, that's to me where the world views uh, are shifted a little bit.

Speaker A: And just to correct my earlier statement, so you are right, Shopify is 50% as large as the Amazon marketplace at 175 billion. Uh, with Amazon being at 390, just uh, I went quickly looked that up after I realized I was wrong.

Speaker B: Go ahead. My next question is when you advise companies, Rick, uh, what's your take on how much you should have of your sales on a marketplace, say Amazon, and how much uh, you should bet on your own brand because you cannot have the data right when you're selling on Amazon. I mean you're just making sales but you don't acquire the customer, so to say. But especially when you're going abroad. Like one of my customers,

Speaker A: they help

Speaker B: brands go abroad via Amazon. Uh, but then there's always the question, right? How do we acquire this customer? It's a, it's maybe a cheaper way of getting started, but not very sustainable in the long run.

Speaker C: Yeah, look, a lot of it depends uh, on the goals of the brand. It's a brand that wants to be known as the brand. And you're selling, um, luxury, upscale, uh, specific merchandise. I think marketplaces aren't necessarily the best thing except for certain outlets, you know, maybe, maybe live shopping or luxury sites like Farfetch. But if you go, there are so many brands that are quote unquote, white goods. You know, who, who sells it is doesn't matter as much as does it work. Like why do I have uh, an iPhone charger made by Anker? You know, they, they started their business on Amazon, now they're a multi billion dollar, multi channel brand. But Amazon is the vast majority of their business. Do they care or not? Ultimately, consumers are shopping everywhere. Consumers are price shopping on Amazon first. Then they go to the brand website to figure out is this a real thing, then I should trust it. And then they kind of go everywhere else. Maybe they might go to Macy's or something, uh, as a less resort. But obviously every category is a little different. So it's hard to make these, you know, generalizations. But um, the short answer is Amazon for most people. For most traditional brands, that wannabe brands, it's about customer acquisition. And it is a huge, huge mistake to ignore the place that 70% of people start their product searches.

Speaker A: Well Rick, the time has flown by, so let me have one, I have one last question for you. Uh, so, and to lead into that, I was at NRF back in uh, January, you know, which is, uh, for those who don't know, the, you know, the biggest retail focus show. Uh, and I will say that attendance for that was disappointing. Uh, vendor attendance was so, so and the retailer, you know, uh, attendance was, was bad in my opinion. Uh, uh, it definitely was a skeleton of its normal self. Were you at Shop Talk?

Speaker C: Yeah, I was at Shop Talk.

Speaker A: How was that?

Speaker C: Um, I think it came off pretty well. Attendance seemed mostly back at least 80, 80% plus of what its previous size. It certainly. It wasn't noticeably quiet or missing vendors pulling out. None of the stuff that happened at NRF or ces, uh, where huge, big pavilions pulled out. I don't think Shop Talk had that, um, situation. So it was a big, um. This was really one of the first biggest events where a lot of people in my network, um, were telling me this is the first event that they've been back in a long time.

Speaker A: Yeah, great. Well, that's good to hear, because I look forward to actually getting out into the world again. Uh, and, uh, it wasn't going to be sustainable, at least the way the world was in January. But we all know everything changes so quickly.

Speaker C: Yeah.

Speaker A: Uh, okay. So good to hear. So, Rick, amazing. Uh, we'll love to have you back. You know, obviously, uh, uh, you have lots more to say and share, so hopefully we'll get an opportunity to spend some time with you, uh, again in the near future. Uh, and, uh, both Carlos and I really thank you for taking time out of your busy day to chat with us.

Speaker B: Thanks, Rick.

Speaker C: Yeah, thanks a lot. Uh, Scott and Carlos, I appreciate the time and look forward to coming back soon.

Speaker B: Thank you so much. Thank you.