Jason & Scot Show Episode 292 – Q1 2022 Recap (Live)


A weekly podcast with the latest e-commerce news and events. Episode 292 is a recap of US commerce in Q1, live from Google HQ for Zenith Basecamp.


Sorry for the delay since our last show. We took a beginning of summer hiatus, and Jason upgraded to a new knee!

This episode was recorded in front of a live audience at the NYC Google HQ, for Zenith Basecamp.

Key Topics discussed:

  • Amazon’s rate of growth declined in Q1, what lies ahead for them.
  • Impact of App Tracking Transparency (ATT) on advertising platforms
    • Shopify vs. Facebook
    • Retail Media Networks
  • Q1 2022 US Department of commerce data and trends
  • Audience questions (including buy now pay later)

If you’d like to follow along, the audience could see this deck during the discussion:

Episode 292 of the Jason & Scot show was recorded on Wednesday June 8, 2022.


[0:23] Welcome to the Jason and Scot show I’m Jason retailgeek Goldberg.
This episode is number 292 being recorded on Wednesday June 8,
the beautiful New York City Google headquarters for Zenith base camp and is a special treat we’re recording the show in front of a live audience.

[0:45] That was a super important.

[0:49] That Applause is super important because I have no credibility with our audience so they wouldn’t believe me if you didn’t applaud thank you very much as I mentioned I’m Jason retailgeek Goldberg as always I’m here with my co-host Scot Wingo.

[1:01] Hey Jason and welcome back Jason Scott show listeners.

[1:05] I think I’ve met most of you but for those of you who I haven’t mentioned a met yet thrilled to do so today I as was mentioned earlier I’m the chief Commerce strategy officer for publicist your,
almost certainly going to hear from Scott that he thinks might title is super funny and,
I’m a fourth-generation retailer back in the Dark Ages I helped launch e-commerce at some funny retailers like,
Blockbuster and Best Buy and Target and today I get to work across all the Publicis groupe with all the clients that care about Commerce and I’m super interested to know which clients,
don’t care about Commerce at this point and so that’s me but like I said many of you have met.
My annoyingly successful co-host Scott you may not have met so Scott can you tell us a little bit about yourself as they flip the slides.

[1:56] Sure and congrats on that a win at Blockbuster on the digital that was that was good you crush that one yeah.

[2:03] It’s super fun every presentation ever done a publicist starts with a big Blockbuster logo and a saying like don’t let this happen to you.

[2:11] Isn’t there one still open in Alaska if you’re gone to visit them.

[2:13] Bend Oregon.

[2:14] Okay then yeah I knew you know that have you talked to them about their digital strategy.

[2:20] It’s on the to-do list.

[2:22] I’m a Serial entrepreneur from the Research Triangle Park area and so I started a company I have an engineering background started a company the developer tools.
And then this thing called the internet came along and I have a lot of weird Hobbies one of my hobbies we’ll talk about a lot of those today is I’m a Star Wars fan so I started I had this I sold my first company,
said this dangerous combination of e-commerce has born and I had a lot of liquidity so I started buying really big Star Wars stuff,
it stays at my office I have an agreement with my wife that it does not come into the house sadly I probably won’t be married if it did so there you go,
so that was there at the early days of e-commerce that company I parlayed into a company called challenge visor so started that in 2001 that’s a B2B soccer as a service platform for selling on marketplaces are there any channel guys are customers in the house
about 3,000 customers and
then so Channel visors biggest partners are eBay and Amazon so I’ve been I’m also he’s retailgeek I’m Amazon geek if we have to Brand ourselves maybe a little bitty big geek so I’m in the marketplace side and that’s how I met Jason we were on a board together at shot dot-org,
remember the first meeting I was there with Jason the CEO of NRF walks in and he’s like does anyone have a question Jason raises his hand and says why do we have the worst website on the internet and I was like.

[3:38] I need to get to know this guy so he called him out on the terribleness of the in R Us website which was kind of fun
and then took Channel advisor public so that was one of my things is an option where I always wanted to do was do an IPO so I got to do that in 2013 that was a lot of fun got to ring the bell I’m a
also a CNBC donkeys got to meet and Jim Cramer my wife calls him the guy that yells every night on TV and makes all the loud noises,
that was fun and then my current startup let’s go to the next slide next two slides yeah it’s called spiffy and next slide.

[4:12] So spiffy was actually good and go through this animation Jason was supposed to take this on and,
so spiffy was actually kind of inspired by the podcast so on our podcast would talk a lot about consumer behavior and for me I’m also an Elon Musk geek
and Elon talks about core principles his core principles are physics he’s always talking about well if you want to send a ship from here to Mars you’re going to have to you can’t use
let’s see welds you have to like mix the atoms together and because of physics we can do
we don’t do that on Jason Scott show we talk about consumer behaviors so we spent a lot of time talking about the bifurcation in the convenience oriented consumer
saw that was swirling around in my head I had my first Uber experience and the this the series of things that lit up for me was alright
services are going to go digital we’ve seen products go digital in the form of e-commerce if you look at GDP consumer services are twice the size of consumer products and then
the then as I looked out there there was a lot of companies in this space but none of them were going after the convenience oriented consumer.

[5:15] Another hobby of I guess it was a shared one is we like to coin phrases,
one of the ones that I coined was Zero friction addiction so when consumers have these low-friction experiences not only are they great.
But they amplify the friction of previously previous experiences you didn’t think we’re friction e Starbucks mobile app for example how many of you use the Starbucks mobile,
once you do that and then like the mobile app systems down it’s like the worst day of your life because you have to wait in line behind three people and you’re like oh my God I’m going to claw my eyes out.
And before the mobile app existed you’re like three people whoaa short line this is going to be a faster bruxism.
So all that was swimming around in my head and I was like I wonder where I could participate in this idea and I was gravitated to car care because I previously invested in a car wash and then I researched and Car Care has a minus 85 net promoter score especially with women,
how many of mean if you don’t have cars in New York but how many of you have had a bad car experience especially.
You’re my people so another thing that fascinates me is the Auto industry is going to go through this digital change that we’ve seen e-commerce go through but it’s also the car is changing so I’ve had a Tesla since 2012 since I’ve been living that kind of vehicle 2.0 lifestyle
so next line
so started spiffy in 2014 and today we’re in 27 locations about a 50 million run rate doubling,
we have 250 Vans across the United States and about 500 technicians so that’s a little bit of background on me.

[6:44] That’s amazing Scott and so you know Scott mentioned we started this podcast that the joke is he and I met at a board meeting it shop dot org and he and.
After the meetings we’d go to a bar and we would just talk shop about what was going on in Scotts Valley.
You know we should record this there’s like eight other people that would be interested in this conversation and the joke is that like the next day I showed up with like five thousand dollars worth of audio equipment I think.

[7:10] This 90 is forget your mom.

[7:12] That’s true yeah.

[7:12] 99.9 listeners.

[7:13] Including my mom who gives me notes on every show hi Mom.
So so that’s kind of how the show started and you know that one of the topics that’s most frequent in fact we often say it wouldn’t be a Jason and Scot show without talking about Amazon.
And so you know Amazon have their quarterly earnings last month and in the u.s. they’re gmv growth rate they sold 6.7% more stuff than they did in q1 of last.
Um so that is a alarmingly slow rate of growth by traditional Amazon standards and we click to the next slide.
This month you’ve seen all these news articles about Amazon actually having too much warehouse space too much what they call fulfillment center space and how they’re literally trying to sublease space to other people that they may have over-invested,
as e-commerce starts to slow down and if you cook to the this next slide.

[8:15] Actually graft my pandemic Hobbies I learned Tableau by the way if anyone super exciting other people are not a big bread.
I’m a geek what can I say so I graphed e-commerce has growth rate versus Amazon’s growth rate and historically in the u.s. e-commerce has kind of grown about 10% a year before the pandemic Amazon despite being.
35 to 40% of all e-commerce grows quite a bit faster as you can see the gold line above the blue line but when the pandemic.
Um they their paths kind of linked and and you know for these last several months Amazon has grown at about the race.
E-commerce and so there’s a bunch of analysts that are freaking out.
Is the gravy train over the good times done is Amazon selling off and so that’s the first topic we want to talk about is what the heck is going on with Amazon Scott.

[9:11] Yeah and it’s been interesting another one of my hobbies is Amazon Fulfillment centers this one’s riveting and
so this started I think it’s like 2005 I was driving to work and I saw some construction and you know you’re later they put a big amazon logo on it that’s like holy cow there’s like a million square foot building,
this is the Raleigh-Durham area so it’s like I wonder how many of these there are so I went on to Amazon’s website and they said something like we have around 10 fulfillment centers nice like that,
that seems low and then what I discovered at that point time was no one was tracking.
From the Wall Street analysts through Amazon fulfillment center roll out so so started working on that and quickly discovered that they had about sixty fulfillment centers
built and they were building like another 16 so I started publishing data on this,
and fun fact they always use airport codes so this was like RDU 3 soyuz rd1 and these numbers and this kind of thing so I get to know about the Amazon fulfillment center really
interesting you know really deeply so I think then one of our most popular popular episodes I think we got till like 12:00 listeners on this one so a 30 percent increase
this was February 18th we did episode 287 which is a deep dive into Amazon’s fulfillment.

[10:19] And to me it’s just endlessly fascinating I haven’t been to a fulfillment center but I have been able to sneak into some of the delivery stations and that’s kind of a fun thing so
what ties into this is what I think happened is Amazon was in front of their capacity needs before the pandemic and then the pandemic flip that upside down
so I think what’s happened is over that time where they’re in line with e-commerce they were just out of capacity they literally couldn’t ship the couldn’t build enough fulfillment centers fast enough and whatnot
so during the pandemic they have built an incredible amount of infrastructure so I’d have some data here
the other thing you need to know is in 2018 another this was probably the most popular one Jason I coined the phrase ship again is even heard this one.
And this is where we.

[11:03] We got on like The Today Show.

[11:05] Be on the Today Show they’re like what is this ship again and should we be concerned that was us that was us we cause that and we take all the credit,
and what happened is Jason has many of his Tableau slides he had this he has a slide that shows
the FedEx capacity USPS and ups and then Amazon’s growth and you can see that Amazon alone then you layer in e-commerce was going to we would run out of capacity for shipping well Amazon also saw those so in 2018 they started a program called,
the DSP now this is confusing because they have two DS p– programs there’s one in your world of ads I don’t know what that one is,
delivery service professionals is the one I focus on and what Amazon did is he basically took a page out of the FedEx Playbook
and they went and they built a network of 1099 contractors to do last mile deliveries so whenever an Amazon Prime van comes to your house that is an Amazon DSP.

[11:59] They’ve built that entire network since 2018 which is pretty crazy
okay so the problem with that Network though is they started it out of fulfillment centers and very quickly it was obvious the Fulfillment centers were when you have these million square-foot buildings and you’re just putting things through a door or a loading dock
you can’t reload Vans quickly so what they’ve done is they’ve come up with a new format called a delivery station,
this is a smaller about a 200 thousand square foot thing and what it is it’s largely attached to a fulfillment center and it’s pretty wild at eight am the Fulfillment center doors open and these rafts of containers come down and there’s these Vans all lined up,
staged in line,
where they go furthest packages away get loaded in the first Vans and then they’re off and then it’s like a military operation it’s like D-Day it’s like crazy to watch this happen hundreds of employees loading these vans that get deployed through the day.

[12:49] So just to give you some numbers that started at zero and now they have built 487 delivery stations for small products
108 delivery stations for large so they built about 600 delivery stations in the last 3 years
which is pretty crazy that represents so there’s so
nothing Amazon does each delivery station has four or five dsps and they play them off each other so they’re small businesses and then they give them all these scorecards and if you score well you get more routes and trucks so there’s like this gamification,
and I’ve met some of these guys and they’re just like constantly going at each other and and Amazon is very clever because they’re like stuck in this game
gamification they don’t really realize it that Amazon just playing them off each other the thing that fascinates me is they’re all run by this
you know data in the cloud so everyone in this operation there’s no real managers or anything they’re just like all looking at their their their devices and it’s telling them what to do every day that’s kind of as a computer science guy that kind of fascinating
we do have a i overlords that
that just kind of run things so there’s two 2500 dsps and 100,000 Vans and so they’ve invested a ton in that and then that’s just the delivery stations so they’ve also added you know
88 sortable fulfillment centers.

[14:08] Basically they’ve invested so much in infrastructure during the pandemic that I think we’re going to see these numbers they’re they actually have admitted they have too much capacity but I think it’s going to give them the ability to re-accelerate versus e-commerce because they now have the capacity in this new world.

[14:22] It was a long answer to that one but but you know I think what’s key to me is if you buy into this theory that getting product to the consumer fast and efficiently is going to be key,
they’ve gotten the cost to deliver a package and that last mile down to a dollar fifty with this.

[14:37] You know so many of you that are shipping products and you’re looking at FedEx at eight nine ten twelve dollars in different zones that’s kind of the economics they’ve baked into that
now for a long time thought one of the Amazons unusual playbooks is they’ll build something really really crazy expensive and you’re like this is insane and then they’ll open it up which for most people in the old score world you’re like,
that doesn’t make any sense because you used to build these proprietary networks like Walmart’s Data Center and computer infrastructure,
that was proprietary and gave them an edge Amazon’s philosophy is let’s open it up that makes the product better and we get third parties to help pay for the.
So this is obvious now that the AWS and Amazon third-party Network I believe that there will be a day when I could ship I’m enrolling your in Charlotte I’ll be able to ship you a package I’ll just put on my front porch the Amazon DSP will pick it up and I’ll ship you a package for
three bucks right so it’ll be half the cost of FedEx or UPS but don’t make a hundred percent are 50% gross margin on it,
so that’s going to be really interesting and they’ll be able to offer that they are actually
offering a lot of that kind of capability to other Merchants so so that’ll be interesting you’ll have to face this decision of if you’re your Cody or someone like that do you want to switch from FedEx to Amazon shipping your products and so there’s a lot of real interesting things going on in the Amazon World those are some of the big ones.

[15:51] Yeah yeah to kind of put that in consumer terms.
Before the pandemic Amazon had invested something like 50 billion dollars in their fulfillment centers and so on.
It wasn’t that long ago I would talk to clients and they’re like hey Jason we’ve got the secret plan to compete with Amazon where we’re gonna buy a warehouse in Kentucky because that can ship to the whole us and we’re going to compete with Amazon and I’m like.
You realize Amazon has 109 million square foot fulfillment centers and 50 billion dollars worth of infrastructure and that was before the pandemic from.
Mid 2018 to today they’ve invested another 50 billion dollars and literally double the size of their capacity so the likelihood of anyone in the u.s. competing with him in terms of.
Capacity is next to know and as Scott mentioned in 2018 we had this bad holiday where we didn’t deliver everything on time Amazon became
you know aware that they weren’t going to grow where they want to grow using third-party parcels and I think there’s this famous quote from Fred Smith it FedEx like.
Amazon’s an amazing company but they’re our partner they’re not a competitor they never understand the competitiveness of the,
the parcel business and back then Amazon delivered eight percent of their own packages that was 2018 today Amazon delivers over 60% of their own packages right and so in a very short period of time.

[17:16] They they’ve created this phenomenal capability so the magic question is is this a blip like,
is the are they going to start growing faster than e-commerce as soon as we get out of all this crazy economic Madness or like is this going to be the new normal for Amazon that they’re you know so big that they can’t grow as fast anymore.

[17:35] My prediction is yes they will I think they’ll get the capacity they’ll turn on these other things another area that I think they’ll get into and we’ve covered this on the show is where we call these things like to go Puffs the road you have a fancy name for.

[17:47] Instant delivery or ultra-fast delivery.

[17:49] Yeah Amazon part of this infrastructure they built out is in that similar vein so some same-day infrastructure where,
you know these delivery stations are getting smaller and smaller and closer and closer to the consumer so that they can do same delivery in fact at the delivery station I was at they do 7 a.m. to 10 a.m. load out and then everyone comes back at to and they do another load out of a smaller portion of vans,
for same-day delivery orders that have come in so so so I think I think what they’re going to do is they’re going to Crank It Up,
Prime will eventually go to same day and then that’s going to create a whole new stimulation of demand and then they will grow faster than e-commerce.

[18:24] I feel like that’s another funny one is talk to like there’s a bunch of new startups that are like trying to do e-commerce fulfillment and they’re like we’re going to do two day delivery just as well as Amazon.

[18:34] Yeah this is this is a good segue into Shopify so one of the things that there’s defied explanation for me is the rise of Shopify shopify’s a great platform great CEO
but they got this valuation of like 50 times forward earnings forward Revenue which just never made sense to me and then they started poking the bear so they started to give Amazon and Jeff Bezos so hard time like when his pictures
they were like making fun of him and I was like this you and I have seen this.

[19:01] They’re arming the rebels.

[19:02] We’ve seen this play out we’re like who was it the CEO of Macy’s said Amazon will never get into apparel and if they do it’ll be a bloodbath everyone that makes one of those statements they end up a you know
ruining their career and then be very being very wrong so.

[19:17] Terry Lundgren.

[19:18] Terry Lundgren yeah thanks he was also in the in that in our f word me the so
so so it’s really interesting is Shopify has been poking at Amazon and then Shopify announced that they were going to.
Arm the rebels with two day shipping and they’re going to build a fulfillment center we’re like.
Okay this doesn’t ever end well then in this then like literally 30 days later they announced and they were going to spend a billion dollars and build a fulfillment center
are two billion which you know Amazon spend 100 billion so that’s kind of a ridiculous
and then they were going to get everywhere two day shipping and Beebe in parallel with prime which doesn’t make any sense then they punted on that and they acquire deliver.
And then at the same time and this is a good segue into our next topic they basically said,
and this goes back to March of this year last year we saw that after Apple’s WWDC that year last year,
they announced IDF a and I-80 T which is next slide.

[20:18] Yeah jump to slides actually one more.

[20:20] So you and I were like this is going to change everything and destroy all these middle players so so basically you guys probably know what this is I’ll let Jason describe it better these new privacy things basically you get rid of not only third-party cookies for web-based things but if you have an app based
ecosystem you get rid of tracking it all together and we were like freaking out about it no one else was I,
and I felt like Shopify was going to be worse because if you think about Shopify the bulk of their traffic comes from
social then they sit in the middle and then they have the merchant well these things in the middle aren’t going to really exist in a world where you can’t track anything and sure enough this is really caught up not only to them but the social media guys.
So we’re entering this world where Shopify poked the bear Amazon has a bunch of stuff going on that hasn’t even come out to counteract Shopify and when that stuff comes out,
then I’ll know if you’ve seen it but Shopify is down like 98% or something like that because they’ve lost
you lost a lot of credibility with this fulfillment thing and then the overall economic has been a really interesting impact and then I think everyone realizes that they’re really exposed to these IDF a changes.

[21:25] Yeah and so I think most people in this room are probably painfully familiar with idea Fay but essentially.
It’s become harder to track a consumer across multiple website so all these advertising platforms that aggregate an audience and send them to third-party content sites used to be able to buy a super-efficient audience on that
third party site and then they used to be able to measure how effective it was when they sent people to that site and what they ultimately bought and so because of the tracking
deficiencies too bad things happen
we can’t buy as good an audience as we used to buy so the by is less efficient so the CPM is higher and we can’t measure how effective it was right and so
there’s a lot of impacts certainly for all of you folks that are involved in advertising there’s there’s a very direct impact on those changes
but the secondary impacts can I talked a lot about is before these changes it felt like Shopify and Facebook for example where cozying up,
like Shopify has a digital wallet called shop pay which is very exciting successful and they actually made it possible to buy items not from Shopify sellers on Facebook.
With Sharpay and you’re like oh man it’s very synergistic Facebook gets the audience and then they send them to Shopify seller to close the deal and it seemed like they had this partnership and we saw IDF a coming and were like oh man this is going to break up
because in the New World.

[22:47] The Facebook’s of the world need to own that conversion they need to own the sale so they can see the conversion data so they can report on the
efficacy they need instead of third party data they need first-party data and so now all these advertising platforms most notably Facebook and Google are
doubling down on becoming Commerce platforms which you’ve talked for a long time about Google is secretly Marketplace.

[23:13] Yeah and then I think ultimately Facebook has to buy Shopify or build show,
so that’ll be interesting now the price is down before when it was like 40 times for door like they’ll never do that but I think now but they do seem,
it’s hard to know what’s going to happen to Facebook because they’re so focused on the metaverse that I don’t know if Shopify fits into that somewhere inside of there you know someone watches Revenue versus like Ford things and and if you care about revenue and Facebook you would buy you would buy,
Shopify the other thing that’s really interesting another one of my weird habits is I love to listen to public quarterly calls.
Probably the worst quarterly call I’ve ever heard and I have a lot of empathy for this because I’ve done many of these is this the Snapchat the last the q1 Snapchat call they basically it was like they just rolled in there,
half drunk and had no idea what’s going on in the business and like the analysts are asking them questions like do you think this is the bottom of i d f a and the last quarterly call they had said that was the bottom.
They’re like well you know last time we said it was the bottom we think this is a bottom Jason do you know if it’s a bottom it was just like that kind of a thing so if you’re an investor and you’re sitting there like these guys have no idea how bad this is where the bottom is or how to remediate.
And you know that that leg down I think that really big one there that was right after that quarterly call everyone there while she was like these guys have no clue what’s going on.
So it’s really interesting.

[24:33] Wall Street is very much awake that these changes that apple and then subsequently Google have made and the Android have really just clobbered these ad networks that kind of our sit between AD networks and kind of relying on on third-party data
the converse of that so every time there’s a there’s a zero-sum game here every time there’s a loser there’s a winner the big winner here is retail networks and I heard that we’re going to have
talk about their ad Network I’m the Amazon guy so Amazon’s ad network doesn’t get a lot of play here but just as of last year it was 30 billion dollars in revenue and they’re growing that 25%.
And I know they have a massive amount of investment going on there they have a new marketing Cloud they’re doing a ton of stuff in there because they realize hey
thanks Apple and Google the you have created gold dust out of first-party data guess who has the most first-party data on buyer intent and conversion it’s Amazon.
But then if you’re other retailer be at a Walmart or Target and even smaller retailers are getting into this and kind of more of a,
I called a Battlestar Galactica kind of way but more of like a shared data kind of a way that’s going to be real interesting.

[25:41] You are yeah yeah I think you and I are the only ones to get them the,
so that’s that’s really fascinating to watch this one change in mobile platform just cause these billion-dollar ripples down there and you kind of wonder who it Apple did they think about this where they like,
you know that Mark Zuckerberg he’s too big for his britches let’s let’s clobber him in the rest of these guys but you know they don’t love app Amazon either so they have to be kind of frustrated that it has helped enable one type of competitor but that just clobbered the other ones.

[26:12] Yeah it’s I mean it’s super fascinating I.
The retail the emergence of retail media networks I think you know is a direct cause of this essentially that you know you now have all this first-party data it Walmart and Target and to your point like.
Craziest retail media Network to me is Gap in the reason I say that like most retail media Networks
primarily sell ads to endemic Advertiser so you know Cody wants to sell through Sephora so for launches retail media Network they have some leverage to get Cody to invest in,
in add-on Sephora but Gap doesn’t have any endemic advertisers like Gap only sells their own stuff right so they’re now you know trying to go find.
Advertisers that are synergistic with The Gap lifestyle and sell ad so I don’t think that could have ever happened in a world in which you could really cost effectively by that audience from Facebook but today because it’s harder for the Facebook’s of the world I think this is a.
A permanent shift we’re seeing and another reason that it’s really an imperative for Facebook to become a Commerce platform of Their Own.

[27:20] Yeah this is probably a good time to pause and see if there’s any questions yeah so Amazon or IDF a any questions on those two topics any other comments how many of you have felt some kind of an impact from the IDF a thing that’s called you to change strategy.
Wow I guess we’re wrong yeah.

[27:38] We usually are so there’s that I feel like a lot of the success of the show is Scott and I rarely agree and I feel like people like to hear us debate right and so the last topic we put together is.
Again one that’s probably only near and dear to my heart but the,
US Department of Commerce publish all this data about the health of the US retail right and I’m this dork that like wakes up at 8 a.m. I’m kidding I’m up at 8 a.m. right now I wasn’t supposed to say that out loud,
on the on the day the data is released to like load the stuff into Tableau and so may was a super exciting month because that’s the first time we get the.
Q1 quarterly data for all the retail categories and e-commerce and so I kind of put together a quick.
Quick summary and week I just want to hear if you’re surprised or not so first thing if sorry if you go back just one side for just a sec.
From from January through April in the u.s. we sold 2.2 trillion dollars of stuff that’s almost 10% more stuff than we sold in 2020.

[28:42] 36% more stuff than we sold in 2019 so everybody talks about how hard the last two years have been and how challenging and difficult and that’s all true.
What doesn’t get hit is it’s been the greatest two years in the history of retail like we’ve grown,
way faster than we ever have before and so if you flip to this next slide this is this visualization that’s got an icon of created
this is sales by month so that Gray Line is retail sales in 2019 and then the Gold Line is 20/20 so you can see
oh my gosh we all panicked in April when the pandemic first happened we have this dip but 2020 we actually sold more stuff than we did in 2019 even with the the pandemic.
What we sold changed dramatically we’ll talk about that,
and then we get to 20 21 and look how much higher 2021 was like 20 everyone was like oh my gosh was 2020 a weird year and growth is going to go down and instead,
growth went way up and so at the end of 20 21 I was advising all my peers that worked at clients to retire right because your comps are going to be impossible from,
from 20:21 so that was a great time to go out on top.
And I was really worried that 2022 was going to come in below that and of course we’re talking about all these economic headwinds and things that we may talk about but so far in 2022.

[29:59] Even ahead of 2021 so you hear all this news about how like.
Oh man the rate of growth has slowed we grew so much in 2021 and now we’re only growing a little bit and doom and gloom and all these things.
But when you see this picture you go wait a minute.
With the best year in the history of retail last year and we’re doing even better this year it’s actually quite a Rosy story but if you flip to the next slide of course there are certain categories that did.
Especially well right and so if you are a gas station and you got utterly creamed.
During the pandemic and one was driving anywhere it was easy as to grow fast if you are restaurant that no one went to it was easiest to grow fast apparel that.

[30:41] Miscellaneous that’s my favorite yeah I wish I sold more miscellaneous.

[30:46] It’s the hardest category to buy.
Um and so you can see there’s categories that kind of outperform the industry average and there’s categories that underperformed the industry average food and beverages grocery right so even though grocery had a really good time in the pandemic it’s actually underperforming,
the overall category because there were some of those other categories that were so much and whenever I talk about this people are like yeah Jason but all the growth you’re talking about isn’t,
consumer changes or more spending its inflation right and so I actually tried this,
experiment of taking the inflation out and I looked at the last three years of growth in 2018 dollars and as you can see,
information used to not matter very much in the data so through 2020 and then we started opening up this Gap where inflation legitimately has an impact on our sales right now
but even if you just look at the Gold Line which is taking all the inflation Outlook.
Um the growth is still very meaningful in phenomenal so it’s a like Well you certainly inflation is part of the reason that we’re seeing a lift in sales it’s a mistake to assume.

[31:51] People are just buying less stuff and they’re just having to pay more for that stuff in that there really isn’t a consumer change
the really is a consumer change here in so we want double click on a couple categories in the first category I grab because it’s super near and dear to Scott’s heart is Automotive right so they sold
half a trillion bucks last year they’re up 50% from the bed you have 20/20 and if you go to the next slide you’ll see the.
You know they’re their shape that obviously the you know the pandemic gave him a temporary dip but again like most categories they we did slightly better in 2020 2021 was a phenomenal year and then it seems like
20:22 is having a little bit of trouble comping against that what’s going on in the apparel or the automotive industry.

[32:34] Was a guy that buys like 30 Vans a month you can’t buy vehicles yeah so there are no vehicles out there it’s pretty crazy I had to buy my daughter a vehicle and we had to wait like six months and then had to pay like over sticker.
Against all grains of my being but had to do it yeah the things we do for our kids.

[32:52] Combo of like there’s increased demand and there’s these supply-chain constraints and there’s no chips right.

[32:58] Yeah yeah so it went from chips now they seem to have the chips but then all the zero covid policy in China is made all the other inputs go to hell in a handbasket so-so
so there was some Supply that got out because they had all these vehicles waiting for chips the chips have gotten there but now they can’t make a lot of the other components of the vehicle as my understanding
and we order we ordered 100 Vans and we got three delivered this year from from new which is just crazy.
The other problem I’m up against his there’s this other company buying a lot of ants called Amazon and they’re buying I’m buying I’m buying what it feels like a lot to us 100 and they’re buying like you know,
twenty thousand so so they seemed to get a higher spot.

[33:36] They’re higher in the queue than you yeah so if you take nothing else out of this this segment if you have to sell a car right now do not use Blue Book value your car is way more valuable than Blue Book value.

[33:47] And before you sell your car get a new car so it’s kind of like yeah because you may be hoofing it if you don’t you may be getting to know the Uber app really well.

[33:55] Yeah and whichever card you get get it clean by get spiffy.
So let’s a lot of people in here in the cpg space so grocery super important this is a category that I follow really closely almost 300 billion in sales in the first quarter and again it’s up its up.
By the way a new coin we turned is your over 32 years ago right like that’s the new the new black in earnings calls is everyone’s talking about their silver says 2019 which was the.
Quote unquote normal year so groceries up twenty Twenty-One percent from from that normally year and we’ve kind of had this 8% growth rate which is better than grocery historically grew if you go the next slide you see our shape again,
grocery is a unique one right like.
Yet average sales in 2019 and then 20:28 was great for grocery right because nobody went to restaurants like so all the calories that used to buy from restaurant you’re buying from grocery so that Gold Line is way up and then,
in 2021 they had trouble comping against it in the first half of the Year where all that growth happen but they still 2021 ended up.

[35:00] About 10% from 20/20 and 2022 is continuing to be up so far,
from from 20 21 and so the way I like to think about this if you jump to the next slide is Sheriff stomach so this gray line is how much.
Calories you buy from grocery stores in the Gold Line is how many calories you buy from restaurants and historically over the last 10 years it’s been almost a 50/50 split so then the pandemic happened and we got seventy percent of our calories from grocery stores
thirty percent of our calories from restaurants and everyone’s like wait how did we get any calories from restaurants they’re all closed doordash,
right it was all off Prem consumption and then we’ve been waiting to see what would happen could grocery permanently hang onto that lead would restaurants come back and you can see over the last year
it kind of close the gap but then look what’s happened these like this year restaurants are way above Grocery and so the magic question here is,
was their pent-up demand and we’re all rushing out to restaurants because we haven’t been there and that’s kind of a,
a one-time Spike and it’s going to normalize back to 50/50 or is the new normal that we’re all so sick of being in the kitchen for the last two years.
That groceries going to have a real decline because if you’re you know a leading Grocer in the US this this is a really scary slide at the moment you have a guess.

[36:21] Yeah I’ll throw a Freakonomics curveball in here I think a one input into this is the work from home trend,
so when you’re working from home it’s a lot easier to go to the grocery store prep the veggies between zooms or while you’re on his Zoom or something like that or like chopping below
below the line and just prepare a meal right but when you’re in the office and you work late and now you’re kind of gone back to that office lifestyle then I think that’s going to be a big driver I think.
I think we’re going to go back to working in the office I think when everything’s up into the right you’re like okay everyone can work from home but if things get tougher and we go into recession one of the levers Executives can pull as well we need everyone back in the office so I think we’re going to get back to that,
it won’t be the same so it’s not going to be whatever we were at before it’ll be ten to twenty percent lower but I think that’s going to be the Big Driver of this one is that work from from home Trend and I bet it’s spiking now,
um because of that so I’m seeing and we have data at spiffy for this so one of the things we do at spiffy is we go to office Parks as an amenity if I look at Dallas the Raleigh-Durham area and Atlanta,
we’re almost back to 80 or 90 percent to pre-pandemic levels at office parks.
Now you look at Blue States like California New York Etc you’re like a zero so so ultimately I don’t know if that separation remains or not but ultimately we’re seeing
people get back to the office park at least in this Southeast kind of region which is which is I think that’s going to drive this more than what you show her.

[37:47] And so then the the last category we’re going to talk about is obviously most near and dear to our heart is e-commerce.
in March we sold almost a hundred billion dollars worth of stuff inside baseball thing this is data from the US Department of Commerce it comes out every every month there’s better data that comes out every quarter this quarter we had a crazy thing happen,
the US Department of Commerce restated the data that they had published in the past and they actually added 100 billion dollars of extra e-commerce sales last year they said we’ve been
Under reporting how big e-commerce was so you may have earlier in the year seen these articles in the Wall Street Journal and elsewhere talking about how the e-commerce craze is over
and retailers caught up and it’s a much more complicated story than that again
e-commerce is up 55% from 20/20 so that’s going to be tough to comp against the if we flip to the next slide.

[38:45] Well I disagree with their methodology so we had them on the show and it was.

[38:49] US Department of Commerce.

[38:50] Here’s the geekish I had to like break-in Jason was like you were just like.

[38:53] It would be like if anyone mask was on the show.

[38:55] Yes yeah you’re just like slobbering all over yourself it was embarrassing and they God we’re.

[38:59] Tending that’s unusual.

[39:00] They got were Audio Only and the,
but then as we got into it you know they count like curbside pickup is e-commerce and to me as an e-commerce guy I have to kind of throw the flag on that one because you know going during the pandemic you know,
order online have it shipped to me and now I just go to the Best Buy and set outside they bring it to the store and now I’ve converted that to an e-commerce sale that doesn’t really pencil for me so I think these numbers are overinflated because all the curbside pickup flipped over to e-commerce.

[39:29] There’s a common debate and you and I violently disagree on that one.

[39:33] Digital influencer blah blah blah.

[39:35] Yeah yeah exactly but yeah I mean if you so if you what’s happening is
e-commerce orders are being fulfilled from the store but you think about all these orders at Target that you place online and get delivered to your home from a shipped person or even from a
u.s. post office targets fulfilling 96 percent of all their e-commerce orders from stores so curbside pickup is just another.
E-commerce order that’s fulfilled from a store and so again like to me.

[40:03] But I had to get my car ready to go to Best Buy and I kind of blue shirts only difference is the blue shirt walked 50 feet to me versus me walking 50 feet in the store.

[40:12] But so yeah we’ll agree to disagree.

[40:13] That’s e-commerce more people can disagree.

[40:13] Smart people can disagree and us so you see the shape again you know again 2020 accelerated e-commerce 2021 still did better although slower and so far in 2022 we’re doing better again.

[40:28] Boy what’s the one that you hate so much what’s the chart you hate the Goldman Sachs one.

[40:33] Well yeah I mean there’s a couple different.

[40:38] Mackenzie or McKenzie yeah that’s it.

[40:40] Yeah so we’ll talk.
Yeah so jump to the next slide so Mackenzie is the early in the pandemic came out with this thing and said hey e-commerce has been perfect permanently accelerated by 10 years.
Which is utterly wrong right like e-commerce.
White kind of went three years ahead and now some categories are still three years ahead like grocery but a lot of categories are much closer
to where we’d forecast which I’ll show you in just one sec before I get to that though I just wanted to kind of show you pre-pandemic
the Gold Line is have as retail grew this The Gray Line is how fast e-commerce grew again Scott and I would disagree about how to count e-commerce but still.

[41:18] Retail tended to grow three to four percent a year a great year would be 5% e-commerce grew ten to fifteen percent a year,
and and in the pandemic obviously e-commerce wildly accelerated and Retail kind of stayed flat people thought it went down but it kind of stayed flat so then we had this thing that’s never happened in my lifetime,
which is in like May of 2021,
because retail had been so soft for so long retail actually grew faster than e-commerce and we’re now having this topsy-turvy thing where the rate of growth for e-commerce and Retail are very similar and so you know I said hey.
Well what would have happened if we didn’t have the pandemic so this next slide is kind of showing the growth rate for e-commerce.
And showing where we would have forecasted e-commerce to go and again in the Wall Street Journal they showed the blue line under the Gold Line.
They have this old US Department of Commerce data and if you go to the next slide I zoom.

[42:15] They don’t wake up at 8:00 and put it into the table like it.

[42:18] They don’t know Tableau like I know tableau,
and shout out to all my friends at Salesforce for the own table so you can see it’s very noisy right now but it does seem like the pandemic permanently accelerated e-commerce.
You know 122 years of acceleration not,
not ten years and so then I think the very last slide I put together on the shape of e-commerce is in this is a scary one of me I’m curious what you think about this while e-commerce is continuing to grow well.
Is Gary is this is traffic to the top 10 eCommerce sites in the US and this is a different story
the gold on the grey line was before the pandemic the blue,
the Gold Line was after the pandemic but you can see traffic went down in 2021 even though sales went up and traffic is down even further in 2022 and so what this means is fewer.
Are going to e-commerce that the big eCommerce sites less often but they’re buying more stuff when they go so.
This will be our last question is we’re way over time is,
that like an inflation thing is that a change in consumer Behavior what do you have any hypothesis what’s going on here.

[43:30] So I think people were pegged at home for a while they bought everything they possibly could and they’ve bought forward so they feel like they got new laptops they’ve got their fancy exercise bikes.
They’ve got all that stuff their peloton’s and now they’re just spin out on stuff and now they’re wanting to do experiences and services so that’s where the dollars are going if you know I think the Gainer of this traffic is probably,
Airline sites hotel sites another we have visibility in this a spiffy because our largest customer set is rental car companies,
we had a record day yesterday so people are traveling like.
Pre-pandemic levels and which is really interesting so the dollars they do want to spend the discretionary dollars are going to experiences and not Services I’d call this a year to go I was a year early,
I’m sadly many of our predictions.

[44:16] We have a forecast every year and I get to cream Scott in the for.

[44:19] Well I don’t know what.

[44:21] History doesn’t show that but you guys don’t know.

[44:23] So I think that’s what’s going on so I you know
but I feel like a really really interesting indicator is going to be Amazon Prime day so that’s going to be in July of this year and we call it Prime day but every other retailer is glommed onto it and sees a bump from it so it’s kind of this fabricated holiday not unlike singles day.
That yeah that you know,
that is going to be really interesting data point so that could you know the the bullish cases that’s going to stimulate people to be like oh yeah I do need a couple other you know
cables or a battery or whatever it is so we’ll see that we’ll be a nursing data point that I think will set us up for holiday and we’ll get a pretty good indication of how this is going to go,
will the consumer be like okay I’m all travelled out and I want to buy more things or will they continue down this Services dollars been passed.

[45:11] I do think it’s really complicated economy right now part of this is inflation and inflation I think is hitting e-commerce harder than than the sort of CPI numbers because the price of a lot of the goods that tend to sell on e-commerce are tend to be.

[45:25] Their supply chain a lot of stuff you just can’t get.

[45:27] So there’s there’s constraints but also consumer Behavior has changed their categories that we would never sell on e-commerce before the pandemic that we are now so one of them that we talked about is Automotive
that’s a big ticket item right so you need less visits to sell a big Tesla then you then you did to sell a TV and another one is Grocery and when I say that people are
Jason are you hi Grocery and I am hi I just had my knee replaced and I’m on some Good Meds the I wore it out going on store visits,
the the grocery isn’t that expensive but grocery sales and e-commerce are a week’s worth of groceries it’s 60 to 120 items so that.
It is actually a lot higher per visit so some of these new categories becoming more important combined with inflation combined with the supply chain constraints I think off,
aspire to do that and that’s kind of our,
our last take away because it’s happen again if you go to the next slide we have used way more than our allotted time but there was no one that could put us off the stage and so.
Appreciate it and Scott any closing words.

[46:34] Did anyone have any questions.

[46:49] How do you think is going to impact and trends that we’re seeing right now.

[46:53] So to repeat the question really quick big Trend in buy now pay later Apple just announced that they were going to have their own flavor buy now pay later built in the Apple pay this week at their event.

[47:06] I’ve seen some interesting consumer behavior and I’m a little
little incredulous on it because it’s always sponsored when you dig into it it’s like sponsored by a firm and so but what it what it shows is Millennials and gen Z they don’t like to have as much open credit
they kind of view that negatively and I see this I have kids that are in their 20s and they are freaked out by credit cards but they like to attach that credit to a thing and then pay it off and be done with it,
so I think there’s an argument to be made that there will be a generational the way we interact with credit will change and then people will after certain
over a hundred dollars they’ll interact with it in that way so I think that’s a really fascinating thing and I want to see more data on that before 100% believe it but I was super incredulous that talk to my kids are like yeah that’s how I think I was like well I guess there may be something here.

[47:53] Yeah and as usual that’s a really thoughtful and wrong answer.

[47:58] For you yes.

[48:00] No so it.
Buy now pay later is huge right now it’s the fastest growing form of check out and / Scott’s point I would argue they’ve done an amazing job of branding right like oh it’s credits evil credits bad this is not credit right and I talked to our traditional,
um Financial customers and I talked to a family-run bank that’s a fourth-generation bank and the CEO is like Jason,
my family’s been in the money renting business which I think that’s an awesome way of calling the credit money money renting business for 100 years and that buy now pay later dog doesn’t hunt,
like it’s just a bad version of credit that’s been rebranded and.
At the moment it’s working like it’s more expensive to sell something with with a firm or with a buy now pay later service than it is with a credit card but retailers are all doing it because they’re selling more stuff because of it right so that’s the argument at a firm.
Best Buy you should pay more to use buy now pay later.

[48:59] Conversion rates go up.

[49:00] Because conversion rates go up.
The scary thing that’s starting to come up is guess what’s happening right now 42% of all those buy now pay later purchases are now in arrears right so so kids haven’t kept up with those purchases it’s a.

[49:15] What would a firm would say is that on the front end they can tighten the credit now so yeah that’s what they all say.

[49:20] The jury is out and I would say like this Amazon announcement is kind of an interesting nothing Burger because guess how you pay for the the Amazon the Apple buy now pay later service with a credit.
Right so you’re so it it’s kind of like.
If the buy now pay later services are rebranded credit and they kind of hide the fact that as credit that Apple buy now pay later is installment payments on a credit card.
So so the.
Is still out but there is a fear that that this whole bubble of buy now pay later is about to burst and whether it does or not I would say there’s too many of them there’s going to be a,
consolidation retailers are having a lot of pain about.
All the consumer requests they’re getting to support all of them and we call it NASCAR in the checkout when like you have to you know have 57 logos on the checkout for all these different different ways to pay so I think it’s kind of going away.
Any other questions before they kick us off the stage.
Awesome well thank you guys so much and until next time happy Commerceing!

[50:20] Thanks everybody.


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