After working for some of the biggest tech companies in the world, Nate Bucholz was ready to leave his Google and Facebook roots behind for something smaller and an opportunity to experiment and move fast. He found that opportunity at Cardlytics, where he serves as the Vice President, eCommerce Partnerships. In this role, Nate and his team are working in new and exciting ways on a platform for an industry that isn?t typically considered new or exciting. Cardlytics works exclusively with banks to build their digital and eCommerce platforms, connect with customers and create rewards programs that lead to mutually beneficial relationships between customer and company. And to do all this, Nate and his team are analyzing troves of data and using technology in unique ways to truly perfect the digital experience for all involved. On this episode of Up Next in Commerce, Nate explains it all, including what data is the most telling and how to utilize said data in the best ways possible while also building and maintaining trust among all parties involved.

Key Takeaways: Forget metrics about who and how many people are on your platform and really hone in on where they are laying out their money. Then use that data to decide where your marketing dollars should be spent Using anonymized data, you should isolate data sets and analyze specific behaviors to predict who might leave your platform or service, then create an action that will make them stick around The ROI from purchase behavior insights comes when you change your targeting practices based on the data you collect For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.

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--- Transcript:

Stephanie:

Welcome back to another episode of Up Next In Commerce. This is your host Stephanie Postles, and today I'm joined by Nate Bucholz. Nate, thanks for coming on the show.

Nate:

I'm happy to be here. Thanks for having me.

Stephanie:

Yeah, and where are you in the world today?

Nate:

I am sitting in my office/guest bedroom in Alameda, California.

Stephanie:

Yeah, keeping all the kids out as best you can. Right?

Nate:

The door knob rattles, but it is locked so we should be safe, I hope.

Stephanie:

We'll see. Yeah, once all this is over, it'll be nice to be able to bring people back to our studio and not have to do bedroom meetings anymore, but for now we'll make it work.

Nate:

Sounds very scandalous, but yes.

Stephanie:

It is a little scandalous. So I'd love to hear a little bit about, actually, I want to go back, back background on you. I want to start in the early days because I saw where it led up to, of working at Google, and Facebook, and where you're at now at Cardlytics, and I actually was wondering, I'm like, what is Nate's first job he had because everything else looks amazing. Was he working out on a firm when he was little? What was your first job?

Nate:

I was a dishwasher at a local restaurant in Lake Oswego, Oregon where I grew up.

Stephanie:

Oh, that's awesome.

Nate:

Worked my way up to busboy and waiter at some point.

Stephanie:

Very cool. Yeah, I think a lot of us started out in those kind of, I was a silverware roller, and so I would just roll silverware for eight hours a day. And I asked to be a hostess and they were like, "No, you can't be a hostess yet. I mean, you're not that senior."

Nate:

You've got to earn that.

Stephanie:

Yeah. It was good times. So you went to University of Oregon, right?

Nate:

I did, yeah. I did my undergrad there and then went on to work in public relations for a little bit. I had the, not so enviable job of getting good press coverage about Windows in Millennium Edition which is quite old now, but it was pretty the bad operating system and that was my first time-

Stephanie:

Oh, man.

Nate:

... post college job.

Stephanie:

I'm sure you learned how to be pretty scrappy in that job though, don't you think?

Nate:

Yeah. I mean, there's always something good I think that you can find or an audience for a product if you can find the right one. After that I was in the Peace Corps for a couple of years in Ukraine doing business development and volunteer work. And then I came back for graduate school here in the Bay Area at the hospice and school at UC Berkeley.

Stephanie:

That's Cool. And then did you head right to Google after that or was there something between?

Nate:

I did, yeah, there was a brief internship, but after getting my MBA I went on to Google, in a travel vertical, or their travel vertical, I should say, up in the Seattle office.

Nate:

I was going to say that I was with Google for quite a long time, almost 11 years, and got to move around in a good way quite a bit. So I started out in Seattle and travel, then moved over to our London office for four years where I led a sales team there and so I oversaw the advertising sales for airlines and car rental. And then my wife and I had a son while we were in London and it kind of changed the lifestyle a little bit. We decided to get back to the US, moved back to the Bay Area, in retail-focused industry, mostly e-commerce, for about a year and a half, and then, actually, the last intake Google was in Malaysia where I was in the office in Kuala Lumpur looking after the branding and YouTube partnerships.

Stephanie:

Oh, wow. Very cool. What was that experience like?

Nate:

It was great overall, personally, it was amazing. We had this amazing expat lifestyle where our son was in this wonderful private school, we had lots of travel and so forth. Professionally, it was a real challenge, there were some of my, I'd say professional strengths that kind of turned into weaknesses in a different environment. Being quite loud and outspoken, and non deferential, didn't apply necessarily so well in some of the situations over there. But I mean, it was great. It was a good learning.

Nate:

At the same time my whole career had been and is now, once again, focused on more direct response marketing. And I had jumped not only into a new geography but also into the more brand forward environment working with Johnson & Johnson and Procter & Gamble and kind of the sort of traditional marketing that would have been on TV before, and online now is more about reach and frequency rather than getting people to buy things immediately. So that was also a new world.

Stephanie:

Got it. So then you quickly decided to head back to your e-commerce marketing type roots and go to Facebook afterwards?

Nate:

I did. So it was a finite assignment over in Malaysia and when I came back with Google I kind of felt like I was coming back to the same thing that I had left and I wanted to do something different. Facebook offered me a role, very similar but leading the team that that worked with one of their very largest advertisers. And that was more of a product heavy role in terms of working with the product teams to build things that would allow the largest, most sophisticated advertisers to grow their spend more.

Nate:

It was interesting, there were a couple of things that prompted me to leave. Which one was, it was very similar to Google, which is a wonderful thing, but you're part of a giant machine and it's hard to feel like you have a real big impact. And at the time, though they've changed this and allowed people to work from their San Francisco offices as well. I was commuting down to Silicon Valley from Alameda, which is about an hour and a half each way. So-

Stephanie:

Yeah. No, thank you.

Nate:

... it's kind of brutal. And actually a colleague at Facebook connected me to someone they knew at this company I had never heard of, Cardlytics. It's a ad platform, much like Google and Facebook, except it operates entirely on banking channels. So if you log into Bank of America or Chase, Wells Fargo, one of many, many banks, you'll see offers from different companies for some sort of incentive to purchase like a cashback rewards or something like this. And that's where we operate.

Nate:

And it's a much smaller company for one so I enjoy feeling like I have a bigger impact, but the common thread through these three companies that they all sit on an amazing trove of data. So Cardlytics can analyze the purchase behavior of about half of the credit and debit card swipes in the US and we're in the UK as well.

Stephanie:

Wow. That's a lot.

Nate:

It is. It's amazing. And so I've learned from Facebook and Google that when you've got an amazing first-party data set, then you can kind of get a seat at the big kind of table and so it's a lot of fun to analyze that and see how it can apply to marketing.

Stephanie:

That's cool. Were there any learnings that you had from Google and Facebook that you kind of brought with you or best practices when working with large brands or a large e-commerce like store owners that you saw where you're like, Oh, a lot of people were doing this and we noticed that was actually the wrong move, or here's some best practices we learned from the top brands that smaller brands could apply, that you maybe brought with you to Cardlytics?

Nate:

Yeah, I mean, the first thing that I tried to do with my team when I came into Cardlytics was change the mindset about what is big and the impact that we could have. So we'd gone from this really small company to now, there's about 400 employees, and we've been public for about a year and a half, but it's still pretty early, pretty young. And I think a lot of the Cardlytics employees had viewed the going public as, Hey, we've reached the big time and we've made it. And I kind of tried to share this viewpoint of the ad budgets, the marketing budgets that are out there, the potential for growth that I saw at Facebook and Google to really kind of pay them big I would say.

Nate:

And I also saw that because Cardlytics is a different sort of advertising platform, but a lot of the language was language that we spoke internally and we have kind of impressed that upon the marketing teams and so there was a lot lost in translation. So I think one thing, Facebook and Google have almost been able to use their own language because they're so large, but it's become industry standard and we need to conform to that to make it easy for marketers to make apples to apples comparisons when they're thinking about their budgets and how they spend it. But there's been an evolution. So I started Google in 2007 and at that time it was all about search and it was all about clicks and-

Stephanie:

And still is.

Nate:

Well, it is, it got more sophisticated though, you know what I mean?

Stephanie:

No, no. I mean, I just left, let's see, two years ago from Google and I still feel like they're so heavy on search.

Nate:

This is true but it was the greatest sales job in the world. I'd go in, I'd say, well, you got a hundred clicks, but your competitive group got 200 clicks so let's go ahead and double your clicks. Here's the budget that'll do that for you. But it evolved, it went to measuring the money that was spent off of each click for example, looking at your conversion rates and getting into the mobile experience, trying to get marketers to catch up to consumers in terms of the fact that everybody was shopping on their phones or a good enough amount of people to warrant some serious attention.

Nate:

And then moving on over to Facebook, because Google had that first mover advantage of everything being based off of what you see from the click, it was trying to open up people's eyes that there's more than just last click when you look at an attribution model, that there's a lot of influence that happens prior to that. And Facebook always, we always said internally they figured they were undervalued by like 30% because of all this view through attribution that they're losing.

Nate:

And then ironically getting people to stop targeting so granularly, even though it's possible to let the machine do its work and start doing machine learning, based targeting so that Facebook could open up its inventory more. And I think that the evolution, and I'm definitely biased obviously, these are the moves that I've made in my career, but part of the reason I've made these moves is I see the next stage of marketing getting more and more rigorous about what is actually bringing an impact. This is why it was so hard when I was doing branding work in Malaysia. It was not so much a return that was required, but a reach and frequency, and it didn't really matter how that was gained.

Nate:

It was just, let's hit a lot of eyeballs a lot of times, and Cardlytics is on a totally other end of the spectrum where it's not even about your interests online. It's just, where do you lay down the money, on what sort of categories, what have you done in the past, what's the basket size and the frequency, and these sorts of things. I think that's a natural evolution of marketing as you get better data, you're able to cut out the waste more and more and get more efficient. At least that's the idea.

Stephanie:

Yeah. How do you see marketing spend evolving over the next couple of years when it comes to measurement and ROI? Do you think it'll change how people think about things? Like you said, they used to just think about clicks and maybe impressions and then they started niching down a bit and wanting to actually target maybe who their customer is, and where do you see that heading over the next five years?

Nate:

Five years is a long time to make-

Stephanie:

I was going to say 10.

Nate:

Oh, my gosh but yeah. It'll be implanted in my retina somehow in my screen. I think, obviously I'm talking to you now from my guest bedroom and there's this whole pandemic going on. These kinds of catalyst events are what I think make large vector changes in things that would happen slowly over time anyway, right? There's a shift to digital over time. If all of a sudden everyone's TVs had exploded, there would have been a faster shift. And I think that the fact that a lot of marketers have either pulled back their spend or just paused all spend entirely, means that there's going to be a whole new shift when they go back to whatever the new normal is because you're going to look at every channel from a totally fresh perspective.

Nate:

And obviously things have shifted online more and I have some interesting stats that I can share about that as well. There's been this online shift of people who maybe had never purchased groceries online or maybe they were happy just with their broadband cable and now they're doing all sorts of streaming services, whatever it may be. So I think online is going to benefit a lot as people see that they didn't have such a huge downswing or maybe they didn't notice a big change when they canceled some channels and not others.

Nate:

But I also think over time, and we were really good selling with data at Facebook and Google to explain why more and more money should be shifted through those channels. And they weren't bad decisions but there are a lot of other marketing channels out there. Obviously, Cardlytics is one on my mind but there are several that have the scale and have the data to challenge some parts of the marketing budgets that have just almost, not mindlessly, but I don't know if they've followed the trends to shift to Facebook and Google.

Nate:

And so both of those channels have diminishing returns. Like your first audience that you target on Facebook will have amazing ROI and pretty soon you're going to get a look alike audience and pretty soon you're going to just kind of expand it out and the ROI falls as you do that because it's a less rich pool of potential consumers. And it's the same thing with Google, if you think about the keywords and for some reason I use running shoes as an analogy a lot, but that first keyword that says, I want to purchase running shoes today, will have an amazing return if you bid on that.

Nate:

But there's only so many and if you want to grow, pretty soon you're bidding on tips for healthy lifestyle or something like that. You're still trying to sell some shoes, but it takes a lot more clicks to get those shoes sold. And so one of two main points that we try to make when we speak to marketers is, Hey, listen, you'll be fired if you don't advertise this on Facebook and Google because they're amazing channels and you should use them. But there's a point where just because it's easy doesn't mean you pump more money into those. You need to take the lowest performing set of your marketing spend and see where else you can put it. So that's a lot of the conversations that I'm having these days.

Stephanie:

So you said you have access or, Cardlytics has access to lots of data and I think right now is a perfect time to wonder what kind of spending habits are happening in this COVID environment? What are the changes occurring? What are people spending on? What kind of info do you have to share around that if any?

Nate:

I have some interesting info. So we have a great marketing team but what I meant to say was, also we have a great analytics team and no more than a week into this stay at home lock down that most of us are experiencing, they built this dashboard where we're looking at quite granular categories and how the spend is changing year on year, updating every week, looking at all the different DMAs in the United States, and so we can see what happened. And right around the beginning of March, all spend everywhere just plummeted, as you'd expect, online as well. And if you look it's quite a depressing heat map. It's just a red United States with various shades of red.

Stephanie:

Yeah. As expected I guess, but still sad.

Nate:

It was sad, it was sad. However, we've seen some interesting shifts and there's some that are pretty obvious, like people shifted to online grocery for example. There are others that are coming in that I think are kind of interesting and you saw where it was quite depressed in the home improvement category for example. And now online for home improvement has gone up like 64% last I saw, and you'd see where there's this trough of people not doing anything and hunkering down and then all of a sudden they start spending on their homes. What happened-

Stephanie:

Oh yeah. Getting all handy at home. I can-

Nate:

Exactly.

Stephanie:

I started looking at things being like, could I fix that? No. But it's a good idea.

Nate:

Following home improvement was when parents I think started to lose it a little bit and so the online toy purchases and kids' products have gone up significantly. We just bought a small kitty pool to put in the backyard as we realized we can't go anywhere else.

Stephanie:

Yeah, I bought into that as well. I bought a, let's see, a scooter for my two year old, a lawn mower bubble machine. I'm like, anything that helps, here just take it.

Nate:

Absolutely. Exactly. So health and beauty has gone up a lot and pet goods up a hundred percent. A lot of that is shifting from offline to online, but that's one that happened almost right away. And so you see, and I guess these aren't surprising, it's following what you'd think of in human behavior, but make sure the kids are occupied and, Oh my God, what if we run out of pet food? And so that's gone up quite a lot.

Nate:

But I think the bit about online versus offline was a little bit surprising to me, but I suppose makes sense. And lends itself to how I think marketing is going to change, is how it's changed geographically over the United States. So if you look at online spend year on year, it's gone up across the United States, but on the coasts, especially if you think of DMAs like San Francisco and New York, it hasn't gone up as much because I would hypothesize there's not as much change in behavior that's really needed. People are already buying largely online.

Nate:

If you look at the smaller DMAs, especially the more in the middle of the United States and just smaller city areas, they've spiked a lot more. And so their year on year changes are more toward the high, not high, but mid double digits increases in online spend. So that's one of those catalysts like I mentioned where maybe people were just fine doing their brick and mortar shopping because that's what they were used to and their peers and people around them in their communities were kind of doing the same thing. This has really changed the behavior specifically in these smaller DMAs. And that's where I think after this whole thing is over, you'll see a level rise in e-commerce. Some people will go back to their old behaviors, but I think a lot of them will stick.

Nate:

And I was reading an article of some, there was a financial article and this guy was, I think he managed a hedge fund or something like this, and he was writing about how shocked he was at how easy online banking was, which is like, well, I've been doing that for a long time, but there's some people that were just stuck in their old ways. And once people realized that it's quite easy to get your groceries delivered online or to do whatever shopping it is online, online banking, we've seen an increase, which has obviously helped Cardlytics since that's our whole platform, is online banking.

Nate:

But I think those customers, some of them will stick around and the challenge for marketers that we're starting to talk about now is, Hey, if you are lucky enough to see an increase in your category, as soon as things start going back to normal and businesses start opening up in reality, like brick and mortar, how do you retain those customers? And I think that'll be a big challenge for marketers just to hold onto as much as they can of whatever they've gotten from this if they're online already.

Stephanie:

Is there any advice during that transition of like, here's some ideas of what you could do to kind of keep that clientele? Because I could see you're saying the more urban areas who maybe were not online before, having to use different messaging for them to convince them, this is still the way, which it probably is. Like online banking, whenever my parents were like, I'm headed to the bank to cash a check, I'm like, Duh, why? And they're like, I'm not doing that on the phone they might take my data. And I'm like, okay, go ahead. You drive 15 minutes to go cash your check mom. But is there any different advice that you would give for those kinds of communities who maybe weren't online for certain things before versus other ones that didn't really change as much?

Nate:

Yeah. I mean, it's going to be, a loyalty marketers are going to be in their sweet spot where that'd assist building that, but there's a lot of companies that we work with that are all focused on customer acquisition, and they're loath I think to spend advertising dollars on existing customers because they already have their access to these customers, whether it's a mailing list or whatever it might be. But the reality is a lot of those emails aren't opened or bounce or for whatever reason. I mean, even Amazon advertises quite a bit with us and just because you have people shopping in one business area doesn't mean that it's easy to get them to shift to another business area. Right?

Nate:

So what we've been saying is, before these people leave let's anticipate who's likely to leave and we're looking into models for propensity to churn, for example. So we can look at who stops using a certain service or stop subscribing, and then look back at six months and when I say who, this is all anonymized data. By no means do I know you and your bank account. I would know bank account, 5632 or whatever it might be and a whole group of them, but what is the change in purchase behavior that happens leading up to this and then who can we identify that hasn't yet churned but is starting to exemplify that sort of behavior. And so you can start isolating groups that maybe haven't reached this type of loyalty that means they're going to stick around.

Nate:

And it could be as simple as just analyzing your own data as a marketer and seeing what's the average frequency of purchasing or the spend amount of those who have stuck around for a long time. And then those who are, we call them one and done, right? They try the service because they have some offer and then they're gone. And the people that are still beneath that threshold, whatever it is that you designate, are the ones that you need to invest in and hit up with a message before they go away.

Stephanie:

Got it. What are your views on how e-commerce is going to change after all this is done? I know that certain people will be doing more things online, some of them might drift back to their old methods. Is there any other things that you see happening or changing for good or are new things coming about over the next year or two after this kind of calms down?

Nate:

Speaking as just a consumer one thing that's been convenient I would say is, I'd like the ability to go into a store of course, but those that are open, that do curbside pickup and things like this, they all want payment beforehand online, right? So there's no contact between two people. I think I could see a mesh of online and offline happening a lot more frequently where you've already selected whatever it is that you want, maybe you've already made your payments, whatever it is. So that when you go into the store, it's more like an Amazon store almost where you go in and you get your goods and you just leave. Right?

Nate:

So using technology even in the brick and mortar environment to make a more seamless process and it can allow for maybe fewer lines, better customer service, that sort of thing. I think on the marketing side, e-commerce is nothing new, but I think this shift is going to mean even those that had topical knowledge of things like measuring incrementality or looking at the analytics of their marketing programs, they're going to be forced to dig in even more because it's just going to have a shift in importance and you can no longer be on the surface and do your marketing. I think there's going to be a requirement to dig in a little bit deeper on the numbers and know the impact of your marketing. Which I guess is a natural trend anyway, but as I said I think this will accelerate that.

Stephanie:

Yeah, completely agree. So you said you have 50% of insight into the spend in the US with people moving to more banking online. Where do you guys project yourselves to be within a couple of months? Do you think you'll have 60%, 70%? What are you thinking?

Nate:

Well, the percentages is derived from the banks that we have partnerships with. I'd love to say they're nimble and quick to form these agreements, but it takes a long time. But Cardlytics, when I joined, or I guess for most of its history it was this long tail of credit unions, there is something around 2000 financial institutions in our network, but it's a really, really, really long tail. The anchor partnership that we had was Bank of America, and then early last year we brought Chase on as a partner, and then Wells Fargo and later this year will be US Bank. So it will grow but it happens slowly over time. The shift online just means that there's going to be more people who are, hopefully, interacting with these offers and looking a little more closely at their finances and hopefully, using our ad network kind of more regularly I suppose.

Stephanie:

Got it. How does that partnership work? Because I was reading through that you guys partner with the banks and you run their rewards programs, right? And in turn you have access to the data and all that. Can you explain that a little bit more because it's a super intriguing model, but it also sounds very complicated where I'm like, wait, who's doing what? And so you guys are running rewards programs, and you're doing marketing stuff. How well does all that work?

Nate:

Yes. So we kind of think of it as three groups that that can benefit. So you've got Cardlytics and we take in advertising revenue, which is wonderful and we like that. You've got the bank and the reason the banks are motivated to do this with us is because they get to offer something to their customers that's a value add. So we call them offers rather than ads, which they are. And so a logo that'll allow you to have say, 10% back if you go and purchase with a certain company.

Nate:

And from the bank's perspective, they're differentiating themselves from some of their peers who might not offer this. And a customer comes on and says, Oh, well, because I'm a customer of Chase, look what they're offering me, this 10% back or $5 back or whatever it may be. And in fact, when you do get your money placed back into your account, the money comes from the bank. So this is why the average consumer hasn't heard of Cardlytics, because Cardlytics is simply the, I guess the technology behind the platform and the Salesforce to bring on these brands.

Nate:

And so we will share some of the revenue that we bring in with the banks, but a large portion of what we share goes to the customers. So I think we've rewarded something more than $500 million in these rewards over the course of when the company's been doing this, which is great. And then we retain a portion as well.

Stephanie:

Okay. Got it. And then how do you take that data that you have access to? What do you do with that afterwards?

Nate:

Right, so the data, it all remains behind the bank firewall and when we analyze it at all, as I said, is anonymous as far as who it is. But we can look down to spend at a zip code level and we look at category spend and all this. The way we do it is in a couple of ways, primarily it's to target. So we might say, Hey, we know people that like to buy pet food but they've never bought pet food with your company, and we'll show an ad. We can get quite granular with that. We might say someone who did buy from your company six months ago but then hasn't bought since is a lapsed customer so let's target them.

Nate:

At the end of the campaign a big differentiator is that we'll actually look at the incremental impact of the ad.So we'll do a holdout group, and it's just a test versus control, which is not totally uncommon in marketing, but the difference is we know who's spending the money and who's not spending the money. And so we'll take this holdout group, we'll make sure that the way that they spend is the same as the test group by and large over the past year or so. And then we'll just look at the lift in spend between those who saw the ad and those who didn't, and the idea is that it would take into account anything you're doing on TV, on Facebook, on Google. So at the end of it you can actually say, well, what was the incremental gain that I got for the money that I spent?

Nate:

And incrementality is tossed around a little bit, but at an analytical level, at a 95% statistical confidence, you can actually see what the impact is of the ad spend, which is kind of the-

Stephanie:

The goal?

Nate:

The end goal. Right. And so that's quite interesting, and then I would say the targeting and the measurement are the primary ways that we use the data but we'll also work with some of our advertising partners to show a different business insights. And we can look at where the, if you shifted spend to you, where did it come from and how did that change over time or we can look even at, for brick and mortar companies, we've helped them decide where to open businesses based on where they have low market share and where there's increases in demand and things like that.

Nate:

I mean, it's almost endless, the possibilities, as long as we are careful about observing our, we don't want to give too much data that anyone would be able to make market decisions or certainly not reveal anything personal about a customer, which we don't have access to any way, the banks scrubbed that before we get that information.

Stephanie:

Yeah. They know better. So is there any themes that your partners come and ask you guys for help with, like you said some of them asking for where to open a brick and mortar location. Is there a couple of questions where you're like, Damn, we get this a lot, them coming and asking us for help around this or that?

Nate:

I think a lot of them are curious if their perceptions of market share are real and whether they really are strong or weak in certain areas and we can confirm that for them and help sustain it or change it depending on the situation. I think that's kind of the most common but I'd say also, as far as spend categories, people are curious about who their competition is. And by that I mean it might not be the same type of service.

Nate:

So if you think about audio streaming, is that a competition for book purchases or is it competition for music streaming? Is it books on audio or is it podcasts or is it music or is it something entirely different? Is it, I don't know, travel or sporting goods or something like that, and so we can actually look at, in a campaign, if you bring over customers, where does their spend decline in other areas?

Nate:

So for example, on podcasts and books, the competition is share of ear, if you will. So they might decline in how many books that they're purchasing, but actually they'll be more correlated to maybe fewer premium subscriptions for music, as an example. Which makes sense I guess, like there's only so much time you can put something in your ear and go about your business and listen to it whether it's a spoken word or it's music, really makes no difference to the customer.

Stephanie:

That's great. And how do you guys, you were talking about there's a lot of privacy efforts that you guys make sure when it comes to the bank data or your data, what are some big things you're doing to make sure that data is protected and similar there'll be one question everyone's like, Oh my gosh, Cardlytics has all this data. What are you guys doing to make sure it's protected and used and not abused?

Nate:

Sure. We take it very seriously obviously, it's something, I remember a same question would come up to me at Facebook and Google. It might be about the customer or it might even be, Hey, you're also working with my competitor. Right? And the first thing I would say then, and I'd say now as well is, look, if we messed up here and did anything wrong, the whole model comes falling down, nobody would trust you, nobody who does business with you. The bank certainly wouldn't partner with us if we weren't responsible. Right? And the banking industry is one of the most regulated that we have in the US, and so there are a lot of safeguards, for one, before we see any data from the banks, the banks are stripping out anything that we could see that would actually tie to us that person. Right? So we don't even get that.

Nate:

Second, we have to operate behind the firewall so any data that we see about market spend and so forth at a raw level doesn't leave our servers. So we don't actually give that to the marketers. So by the time it gets to the marketer we'll definitely share specific insights, but it'll be trends that are grouped together in terms of people or companies. And so we've got quite explicit guidelines on our data practices that we follow. There's a few different checks and balances I suppose.

Stephanie:

Got it. That makes everyone feel better I'm sure. But yeah, like you said, Google and the Facebook Store, when you see how much data they have, any other company's no match to that. How do you think about, when it comes to acquiring new customers in your, like to me all the customers you're working with sound much harder than some of the other guests we've had on the show. You know, acquiring normal consumers, you're having to acquire banks and big brands. How do you all go about creating those partnerships and keeping them and keeping those clients happy because I could see banks being hard to keep happy because they're just kind of, some of them anyways are in a different era it feels like, at least some of the banks I work with.

Nate:

There is a spectrum of the banks that are more or less progressive or more or less digitally savvy. I work on the advertiser side, but we have a great bank team which partners with these guys, our founders, our CEO, they came from the banking environment as well so we kind of speak that language. And I think what we offer is one, there's this reassurance that on the, for example, the privacy side and the data protection that we do well with it. We take it seriously and we haven't breached that trust with any partner before. And then every bank wants to please their customers and retain their customers and you might not always see that in practice, but that's what they want and they're all competing with each other.

Nate:

So if we can offer a great customer experience where the customer can get some cash back from some different brands and make some money from it. Some banks are more concerned with the revenue share and some would rather plow that revenue share back into the customer rewards, just kind of depends on their approach, but it's a way to help their customers and retain their customers. But it takes a long time to form those partnerships and it's a lot of technical integration as you can imagine. And so once they're formed they tend to stick with it for a while because there's a lot of investing on both sides.

Nate:

On the advertiser side, I mean, once we get to the point where we've really explained everything, typically they want to advertise with us, but the challenge is one, they've maybe never heard of us so we have to start from zero. Two, we have to explain how we're different than something else, like an affiliate marketing channel or something like that. And then to really figure out if we're worthwhile, you have to dig into the incremental return, which is why I touched on that because we are behind the bank firewall, we're not going to share all the impression data and who your campaign reached exactly on a one to one basis. And so if we don't plug nicely into whatever you formed when you're marketing with Facebook and Google, it's a bit of extra effort and there's a lot of work getting our data scientists together to kind of verify, what we say we do is what we actually do and so there's this rigor that's needed.

Nate:

Which is why, going back to what I said about the shift that e-commerce and marketing experts having to get more under the hood with what they're doing will benefit us because if you're willing to spend the time on looking at the numbers, we usually benefit. But people are busy and they don't always have the time to do that.

Stephanie:

Yeah. Do you spend a lot of time training them on, here's some metrics you maybe should look at or here's things that are important that you never considered before, and if so, what kind of things should they be looking at that maybe a lot of them aren't right now?

Nate:

Sure.

Stephanie:

Or what data do you give them where they're like, "Ooh, that's good I've never seen that." And you're like, "You should have seen this before."

Nate:

Yeah, we've kind of got two sets of advertising partners. There's those who don't really want to be bothered with those details, and it's a little frustrating because I feel like there's this wealth of data that they could analyze. They just want to know that they're getting a customer for 20 bucks a pop or whatever it is and they're good. And then there's others who dig in more and tend to eventually become our larger partners and they really want as much data as we'll give them.

Nate:

And the things that we educate them on, it might be like what their expectations should be on marketing incrementality, like how much bang do you really get for your buck? And when you do bring a customer on, like I said, where is that share coming from? Where are they declining in spend? Because it's rare that somebody just spends more money. Sometimes they do, but not on a frequent ongoing basis, and so where's the money coming from and is your competitive set what you actually thought it was or is it something a little bit different?

Nate:

And then looking at why people stopped using a product so I mentioned this propensity to churn, which is kind of predicting the future of what somebody is going to do, but you can statistically do this in a lot of cases by analyzing large groups of people who have had this behavioral change in the past and then seeing who else fits that model, has it quite reached the point of stopping their spend. That's something that I think is kind of surprising to some as well.

Nate:

And we've got a kind of an intro slide that we use where we say, you see these three data points from your customers, once they're on your platform you know what they're doing, but we know everywhere that they're spending their money. And that sheds a lot of light on to the type of person that they are. And the analogy I use in, University of Oregon wouldn't really like this, but I love Oregon Sports and Facebook would look at me and say that I'm a huge sporting fan, specifically Oregon Sports, but I almost never spend any money on it. Right? I do a lot-

Stephanie:

You're the worst kind of customer.

Nate:

I'm the worst kind of customer and so there's this discrepancy between kind of your behavior and so a marketer would say, Ooh, let's target him for a lot of jerseys or whatever. Cardlytics would say, no, this guy, he's a cheapskate. He's not going to go and buy-

Stephanie:

Stay away.

Nate:

... anything. Let's get the person who, whatever they do online, they're plunking down their credit card for certain products and so I think that's kind of a different mindset as well. Looking a little differently about how you form your ideal audiences for targeting.

Stephanie:

Yeah, that makes sense. Do you give them dashboards that they can actually play with or do you kind of give them customer reports based on what they want, and if so, how do you manage those different types of clients. It sounds like a lot of different clients to manage how do you keep track of it all?

Nate:

Yeah, so it kind of depends on how big the partnership is with us. Right? We haven't really built out our long tail so most of it is pretty white glove service, but by and large, a smaller advertiser will get certainly access to their ad spend, how many clicks, impressions, conversions and all that. And then we'll make agreements as part of a partnership. Certainly if someone makes a commitment to be with us for a year and to be advertising over time, we'll agree to it. Certain analytical, custom analytics is what we call them, and that's jointly determined by our, was really designated by the client themselves, but our analyst team will come in and talk about what we can do and we'll figure out what the problem statement is and what they want to figure out and we'll deliver a customer report.

Nate:

And then we're starting to develop a dashboard as well which some advertisers have access to. And there you can look at the competitors and the competitor category that you'd like your information on, geographic areas. And then that data is updated periodically and it's limited set of data but it kind of answers on an ongoing basis what the customer analytics might do on a one off basis. So we're moving in that direction, providing more and more insights into the business or we're trying to. There's always a challenge of you've got a lot of data, but making sense of that is another matter altogether so we really try to figure out what the business problem is rather than, it would be interesting to see, and then throwing out a lot of requests.

Stephanie:

Yeah. Got it. But therefore the other-

Nate:

But it is pretty interesting.

Stephanie:

That sounds really insightful to be able to provide that information to them and see how they actually utilize it to change their marketing strategies or product strategy or any of that so yeah, that sounds really cool. All right, so we only have a couple minutes left. At the end of each interview we do something called the Lightning Round, brought to you by Salesforce Commerce Cloud. It's where you quickly answer a question, whatever answer comes top of mind, and you have one minute to provide an answer.

Nate:

Okay.

Stephanie:

Let me know if you're ready, and I'll start with the easy ones first.

Nate:

I'm worried but ready.

Stephanie:

All right. What's up next on your reading list or audible or podcast?

Nate:

Yeah. I want to sound a lot more intellectual here, but I've been into C.J. Box as an author and it's like this super fictional reading about this game warden in Wyoming and it's kind of an escapist.

Stephanie:

Hey, I like those kind of books I feel like I have to read it right now. All right, what's up next on Netflix or Hulu queue?

Nate:

Netflix. I would like to watch Extraction.

Stephanie:

Okay.

Nate:

Yeah. But typically we're watching a lot of cooking shows, we've gotten into that a lot.

Stephanie:

Any good recipes recommended, [inaudible 00:45:02]?

Nate:

Mostly they've been focused on restaurants that I can't go to, which is really frustrating.

Stephanie:

Oh man. Yeah, that's sad. All right, what's up next on your shopping list? Doesn't have to be groceries, it can be anything that you want to buy next.

Nate:

I've heard about the therapeutic values of pressure washing. I want a pressure washer. We'd go out there and just clean the house. It's part of that home improvement upswing.

Stephanie:

Yeah. You're that person. We're going to walk by and be like, Nate, take it away from him. He's been doing it for eight hours. All right. The next hard question. So your job is to stay ahead of expectations and your competition. What do you think is up next for e-commerce pros?

Nate:

I think within the marketing budgets that you're spending, up next is slicing those more and more granularly, and by slicing, I mean looking at the impact of each portion of your marketing, even within the same channel, and figuring out if that can be better employed elsewhere.

Stephanie:

Great answer. All right, well, this has been a really fun interview. Thanks for coming on the show and see you next time.

Nate:

It was a pleasure. Thank you very much.

 

 

They say that a goldfish grows to the size of its tank. But what if that small fish is ready to launch into a bigger pond? That is the situation Sea Bags has found itself in recently. With a rabid following and millions in revenue, the Portland, Maine-based retail store has outgrown its initial eCommerce setup and is ready to grow into a major totes and accessories brand thanks to growth fueled by personalization, storytelling and an incredible social media presence. On this episode of Up Next in Commerce, Laura Hnatow, the Vice President, Marketing & Ecommerce at Sea Bags, explains how she is helping to expand the eCommerce platform using a cross-platform social media strategy, and she digs into the re-platforming experience she is leading to help Sea Bags utilize tools like A.I. and M.L. to grow their business both online and as they expand to brick and mortar locations.

Key Takeaways: Content, social media and UGC utilization are critical in building and maintaining an active and engaged customer base Re-platforming offers an opportunity to utilize new tools such as A.I. and machine learning to introduce new forms of personalization in product offerings as well as marketing strategies The power of storytelling is the most important tool in your toolkit to differentiate yourself from the competition For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.

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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible eCommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we?re ready for what?s next in commerce. Learn more at salesforce.com/commerce

--- Transcript:

Stephanie:

Welcome to the show.

Laura:

Hi, thanks for having me.

Stephanie:

I'm really excited about you joining me today. I just was browsing through your website, Sea Bags, and I wanted to buy like about five things.

Laura:

Oh, that's flattering.

Stephanie:

Yeah. It's awesome. An awesome product. I'd love to hear a little bit about what Sea Bags, in your own words, and why you joined it.

Laura:

Yeah. Sea Bags is a company based in Portland, Maine, that manufacturers bags, totes and accessories from recycled sails from sailboats. We gather those sails one at time from the boating community all around the country, and bring them back to Portland, where we cut them down one-by-one. Each sail is a little bit different, therefore each bag is a little bit different from the next. People come to visit us in Portland, where they can actually see the bags being made on the waterfront, at our building that actually overhangs the water, with the hum of lobster boats outside, along with the sewing machines and the seagulls. It's really a great experience in quintessential Maine.

Laura:

The reason why I joined Sea Bags... It was almost seven years ago at this point. The opportunity was presented to be by the current CEO. It was the story effectively. The whole story about the brand. It was so compelling. I've worked for a number of brand manufacturers before, L.L. Bean and Cuddledown. They all had great manufacturing stories to tell, but this story was so much more authentic and rich. It was that authenticity that made the story so easy to tell. They also had built the brand up on these three core tenets, that drive the business every day. It was this very defined mission behind the company, of being made in the U.S.A., sustainable in product and practice, and also committed to giving back to the community generously. Those three things guide all of our decision-making in everything that we do. With such a clear mission and mandate, in terms of how we were going to grow the business forward, to me it seemed like a no-brainer to join that team.

Stephanie:

Yeah. That's very cool. What is the story behind Sea Bags? I think it started with the Founder's dad. Right?

Laura:

Yeah. Many years ago, the original founder, Hannah, her dad, he was in the sail bag-making industry, for the actual bags that hold sails in between seasons. He made a recommendation to his daughter, "You should try to figure out what to do with these old sails. They're just going to landfills." She crafted the first ones. It's our current COO, Beth, who actually grew the business from there. She partnered with her and then grew the business to where we're at now, with the help of our current leadership and CEO. Yeah. It started as a hobby business, and now has really ground to be a lifestyle brand.

Stephanie:

That's amazing.The one thing I really liked, which I didn't know before, was I didn't realize that sailboat sails actually can't break down. So when you guys say you're focused on sustainability, you really mean it. Nothing would happen with those sails, if you didn't transform them and give them a second life. Is that correct?

Laura:

You're absolute right. Yeah. Predominantly sailboat sails are made out a material called Dacron. Dacron has an element of plastic fiber in it. It's that resilience that lets the sail hold up to the strength of the wind and actually propel a sailboat forward. But it is that strength in the fiber and how it's made that makes our bags so durable as well. Because of that inability to break down in the landfill, we knew that that material, itself, would be perfect for a bag. They wear like steel. People have gone into our store to show off, "Here's my bag. I brought it 15 years ago." They wash it regularly in the washing machine. They look great. Yeah. They do wear really well.

Stephanie:

That's so cool. How do you convey that uniqueness to your customers, especially through an online experience? I saw some really great videos that you all had on your website, which I thought were amazing. Is that part of the way that you convey that?

Laura:

Yeah, absolutely. Storytelling is one of the things that we do best. Like I said, that's why I joined the brand, is this rich story. We do a lot of content creation on our team. It's easy to do content creation when you have a lot to work with. Building really great video content... We have a new line of products all the time. We have new partners that we're collaborating with regularly. So being able to stitch together different videos, content pages on the website. We integrate a lot of user-generated content into the website and our marketing.

Laura:

So things like customer testimonials, but also customer images. We have a very rich user-generated content campaign, called our Sea Bag Citing campaign. It's a hashtag. And customers in that campaign will tag us and show us all the places they take their Sea Bag. It's really a great opportunity for us, because when we see a great picture, instead of us having to go out and stage a photo shoot, we've got a really authentic image of somebody vacationing using their bag in the environment that it was intended for.

Stephanie:

Yeah. I was very impressed when I saw your social media following and how engaged people were and the really great photos they were tagging you all in. I definitely see the world of online sales seems to be moving to social media and building a community. How do you think about building that up, and creating relevant content, and keeping those followers engaged?

Laura:

Yeah. I'd say it's one of the things we're really good at, but it's also probably one of the things that's the most challenging in what we do. Because people spend a lot of time on social media, but everybody's competing for their attention. I have a social media team with multiple partners on it. I've tasked them with making sure, across all the platforms, that, number one, we're showing different content, to keep different types of people engaged. And the other thing is that we're hitting the breadth of content that I'd like us to do.

Laura:

They have a filter that they put all of our content through, to make sure that we're showing the right variety of, and frequency of, things like behind the scenes images, testimonials, new product launches, PR news that we're doing. We're trying to make sure that we hit the breadth. And also, we're tailoring it to the specific types of platforms. Obviously Facebook and LinkedIn are not a synonymous platform so we make sure that some of the content goes on one location and we speak to those audiences a little bit differently.

Laura:

I think customers want to be invited to participate and we do a lot of that with either surprise and delight opportunities, where we ask people to come and bid on something for a chance a win to a wristlet. A wristlet is a small item. It's not like a vacation getaway. But that alone... people love the gesture. They love to participate. It's really interesting. When somebody does win a prize, it's funny how authentically and genuinely thrilled for the winner the other customers are. It does become very communal. They're like, "Oh, my God. I'm so happy for you. Great job. You're going to love it."

Laura:

Then we also find that customers... Getting back to this idea of engagement. This is delightful for us. Customers sometimes answer on our behalf. We'll get comments that say, "Do you have this bag in this color? Are you ever going to offer this again?" Before we can even comment, we'll have other customers saying, "Yes, they have it. You can go to this page." It's almost like we've got these brand ambassadors stalking us right within our social media. That is so flattering. It really does speak to a highly-engaged social media following.

Stephanie:

Yeah. That's amazing. Having people who are working for you and your brand without even asking.

Laura:

Yeah. Yeah.

Stephanie:

It's a key strategy, if you can figure it out.

Laura:

It is. It's great.

Stephanie:

Are there any new emerging digital channels that you are excited about or focused on right now?

Laura:

I think in terms of new channels, I don't think there is one. Social media really is where we're spending a lot of our time as a channel, in terms of trying to grow audience and engagement. We are playing around with some things like influencer marketing, which is important. I think some people might not call it new and emerging either. We're doing quite a bit in just dabbling in lots of different spaces. There is a lot of overlap. I think video is probably where we found the most success, in terms of developing content and distributing. Video specifically for Facebook has been fantastic for us. We're repurposing a lot of that video content again. We like to recycle. We put it in a lot of places. We're trying to incorporate it into the site. We use it for things like Instagram Stories. It's been really fruitful, so that's been really fun.

Stephanie:

Very cool. Any key strategy that you have when it comes to guiding a customer through that buying journey while utilizing social?

Laura:

It's interesting. We have a really defined and fine-tuned digital marketing strategy. We work with a great partner that helps us distribute all of our paid advertising. That would include paid social. One of the things about paid social that I think is challenging for people... I do chat with folks who say, "Facebook doesn't really work for us." I am always surprised to hear that. I think part of it is, it's the type of content that you're putting out in terms of advertising on Facebook advertising. Making sure you have the right mix of video, and static ads and then dynamic remarketing ads are really important.

Laura:

I think the other thing, too, is how you measure it. Of course, there's different attribution models. Last click attribution and first click attribution. Of course, Facebook measures the performance differently than some other folks might measure it. We base it on Facebook's measurement. When you base it that way, you'll see that the programs themselves actually perform much better than if you base it on the other attrition models out there using Google Analytics.

Stephanie:

That's interesting. I definitely see Facebook stepping their game up with the launch of I think it's Facebook Shops just yesterday or the day before.

Laura:

Yeah. It's so interesting. The landscape is changing quite a bit. I was actually talking about this recently with the CEO, because we see organic shifting quite a bit. We're doing a lot, in terms of SEO on the website and building organic content. We have a blog that we try to regularly publish. It's made a big impact on our SEO, but then all of a sudden when you have the search results pages changing to favor, again, more ad space? You do immediately see a falloff in your organic search results. Paid search all of a sudden is also doing much better, but you're also spending a lot more money perhaps than you had intended to.

Stephanie:

Are you guys doing any quick pivots to try and bring back the organic searches? How do you think about that when things change so quickly?

Laura:

Yeah. I don't think there is a quick pivot with organic. Organic is a long game, as always. The pivot that we're doing right now, and I wouldn't even call it that. We are looking at our digital strategy on a daily basis and really refining things. So if we see something taking off, we are chasing it. A great example is shopping at one point was doing very poorly. We didn't know why and watched it for about a week or two. It was right when things were headed down to a flat line period at the end of March. Everybody was in kind of a lull. Then all of sudden things turned around and a lot of e-commerce folks were seeing a spike. As soon as we saw that spike, we chased it. I think that's the thing. You really have to be on top of it and know when to chase it and keep increasing your budget.

Laura:

We've increased our budgets in area like shopping more than we've typically been comfortable. I would say the same goes for Facebook Prospecting. We found that Facebook Prospecting is performing incredibly well for us. We do a lot of prospecting with video ads for Facebook as well, and those are very productive too.

Stephanie:

Very cool. Did you have to adjust any messaging when it came to acting fast on that? With everything going on with the pandemic, did you kind of change how you target people and market to them? How do you think about that?

Laura:

We changed the messaging. Yeah. We definitely wanted to make sure we weren't being tone deaf to what was going on. We definitely pulled down any ads that had anything to do with travel-related products. We have a great travel collection. We pulled down all of those because nobody was going to be traveling. I think the thing that we did more so than the actual ad strategy was our product strategy changed a little bit. We wanted to look at our product from the viewpoint of how we could add more value to it, to help solve problems for people who were now stuck at home and still had life to conduct.

Laura:

The example I'll give is Easter came around and people were kind of caUght off guard by the idea that, "Oh, our Easter family celebration is not going to happen. The Easter egg hunt is not going to happen. I have a grandchild. How are we going to commemorate this holiday that is very important to a good portion of the population?" We quickly partnered with a local chocolate company that had just laid off most of its workforce. They were able to bring back five of their employees to help produce chocolate to put in our Easter buckets.

Stephanie:

That's great.

Laura:

Within a very short period of time... We thought, "We might sell 50 of these over the next three or four days." We sold over 700. It was one of those things that every day, we said, "How many more do we need?" It was really a matter of how much chocolate could the chocolate maker make in that short period of time? It was a real success story, in being able to reach out, help a fellow business in the community, but also solve some problems for customers. The comments we got from customers were unbelievable. Just saying how appreciative they were because they weren't going to be able to see their family and bring them something. This is how they were able to do that.

Laura:

So that was really rewarding. That afforded us a lot of opportunity in our digital advertising to reach new customers, to convert customers who were prospects and who were already looking into the brand. It was more about just being relevant with a message that solved a problem for customers. So then we took that same product strategy and same digital strategy and expanded it onto Mother's Day, and Father's Day, and Graduation. Even though a lot of the stay-at-home orders have been loosened a bit? I think a lot of people are still looking for some convenience to eliminate any unnecessary visits to stores that they don't want to make.

Stephanie:

Yeah. I completely agree. That's such a good strategy, to find partnerships like that. I could see that lasting into the future, where a lot of brands start thinking about who they can partner with. That seems like it would help future-proof both brands, if they figure out ways to work together and send business to each other. I think we'll see more of that over the coming years.

Laura:

Yeah. I hope so. I know for our brand, we're not going to stop doing it. It was a pilot that was a success. Now we've realized there is an opportunity here and the customers see the value in it. We've always been very collaborative as a brand. We typically do reach out and collaborate with a handful of companies that are like-minded in their business practices and approach. What we often bring to the table is that we're a sustainable product and they might not have that same messaging in their product that they can offer. Or the fact that we're a Made in the U.S.A. product, which again is really valuable to a lot of brands to partner with us. So we have similar mindsets and very much focused the Coastal lifestyles perhaps.

Laura:

A more recent relevant example, we're partnering right now with Life Is Good. If you're not familiar with that brand, they are an apparel and accessory company that basically delivers the message of optimism in all of their designs. Really quirky designs that we are now able to add to a Sea Bag, and then with these really important optimistic messages during this time that we're all going through. It resonates really broadly with customers. That's another example of ways that we reach out and collaborate. It's given Life Is Good an opportunity to have a Bag story that they sell to their audience, and it gives us a different story in terms of different designs and messaging for our audience as well.

Stephanie:

That's great. When it comes to messaging, does the consumer know the background of the flag, where it came from and the journeys that sailboat went on? Do they have any insights into that, so they can find of feel connected to their bag even more?

Laura:

Yeah. It's interesting. We would love to be able to pedigree every bag, but when you start talking about 700 tons of sails that we've saved from landfills, it's really, really challenging to figure out how we could actually catalog that many sails. On a one-to-one basis, no. But what we do is when we take a sail in, our customers are so great about wanting to share the stories. So we've had many cases where a Sail Trade, is what we call it. The customer will bring a sail into our store, for example. Just show up and unfold the sail right in the middle of the retail store and start talking about, "Oh, this is the sail that was on my grandfather's boat. As a kid, we sailed." They just go into this long elaborate story. What we try to do is get somebody from the marketing team downstairs to take notes, and talk to them about it and basically interview them a little bit about what the story behind the sail is. Because that stuff is so meaningful.

Laura:

We have a really great one on our website called The Santana Sail Trade Story. The gentlemen, Ben, tells the story about how this boat meant everything to him. He had this boat since he was 15. At this point, he was in his late 40s, maybe early 50s. He still has the boat but was retiring the sails. He talked about the different moments that that boat was present for his life and every smudge and stain on that sail means something. He hoped that everybody who buys a bag really understands how meaningful the heart of the sails are.

Stephanie:

That's great. Feeling like you're connected to a community like that, and another person, without even knowing them, I think it's super important. What people are going to want after all this. Now we're all getting in the state where we're connecting with people that we don't even know online.

Laura:

Right.

Stephanie:

We're getting used to that now. I think moving in that direction is really smart and also just fun. Knowing that you have something that has experienced things that you could never even think of.

Laura:

Yeah. Yeah. We like to say that carrying a Sea Bag is like carrying a story on your shoulder.

Stephanie:

Yeah. That's great. Have you ever had a sail come through where you're like, "This is from a pirate ship?"

Laura:

I don't know about that. There is a type of sail called tanbark. It's like a dyed tan-colored sail. The lure of tanbark, it's not often used in sail manufacturing today. It's definitely not as common. The lure is that the pirates, they used to use tanbark sails so that they wouldn't be seen on the horizon with the sunset. It was the way that they were able to sneak about in the ocean and not be spotted in the distance with a bright white sail.

Stephanie:

That's cool. So if you see one of those come through, you'll know. You'll know where it came from.

Laura:

Yeah, exactly. I do think we have some tanbark on the site right now. It is definitely a little bit more rare and we tend not to offer it all the time. But I think we have a handful of tanbark designs right now. They're just so cool because they are really uncommon and we don't always offer it.

Stephanie:

I'd also be giving the side eye to whoever brought that in, like, "What did you do to get this sail?"

Laura:

Exactly! I could be looking for their medallion. "Are you actually a pirate?"

Stephanie:

Yeah. I know. "Tell me." Obviously retail is on hold right now, but I saw you guys were expanding. Expanding actually one place that is close to my heart, Rehoboth Beach, in Delaware.

Laura:

Yeah. Yeah.

Stephanie:

We used to go there every single summer. I'm from Maryland. Such a cute beach town. How are you thinking about utilizing brick and mortar stores? How are they lifting each other up and accelerating your e-commerce as well?

Laura:

That's a great question. By the end of this year, we'll have 33 stores, spanning 12 states. That's really exciting for us because when I joined the company, we had two stores. That's a lot of growth. We open four to six stores a year. We're opening eight this year, alone, which is really, really exciting. I think that one of the important things with meshing the retail business and the online business is just a general omnichannel approach. Right?

Laura:

Our CEO likes to say that the e-commerce site is our biggest retail store. It carries all the products for the brand and you can see them all there at any time. And you go to our stores, and the stores may have most of those products but some different selections that might be regionally appropriate. For example, you mentioned Rehoboth Beach. There might be some coastal nautical chart bags down in the Rehoboth Beach store relevant to that regional area. So there's some things like that. But we try to do...

Stephanie:

Crabs all over the bags and whatnot?

Laura:

Right. Yeah. To customize and be relevant to that local region. If you were to go to a store and they didn't have a product, the great thing is that you can log onto the iPad at the store. They can get the bag for you that you were looking for and ship for free. We're using an endless aisle concept that leverages the flexibility that we have as a just-in-time manufacturer. We make our bags on demand for customers. It's great to have that flexibility, where we don't have lead times to worry about. We're sourcing everything locally here in the United States. Most everything we source is within New England. That's really criticaL, in terms of being able to take an order and turn it around in a matter of days.

Stephanie:

Yeah. That's huge. With all this expansion that you guys are experiencing, how have you had to adjust your technology, your platforms you're using. What does that process look like with such a large amount of change that you guys have been experiencing?

Laura:

Yeah. It's great. I'm actually really excited about this. It's very timely. We decided right in the beginning of this year to move forward with replatforming our website. It's a huge endeavor. We realize that over the last six years, we've been on this very exciting ride of growth and expansion. Quite simply, we've outgrown the website platform that we're using. I do find it really rewarding to think that we have squeezed every ounce that we could get out of the current platform we're on. There's nothing that we have left unturned.

Laura:

Embarking onto this new platform, we're working with Salesforce Commerce Cloud. There are so many new opportunities for us to improve the customer experience and to refine our practices, in terms of how we approach selling to customers. Using new technology like artificial intelligence and machine learning, personalization, I think we're going to be as a team much more efficient and much more sophisticated in how we are able to speak to our customers and give them what they want. It's going to take us a lot less time to manage that. I'm really excited about being able to grow the business utilizing those types of tools specifically for the e-commerce website. But the great thing is that it really does trickle into the other channels as well that we sell in retail, for example, too.

Stephanie:

Yeah. That's very cool. Tell me a little bit more details around how you plan on using AI. When you think of using that with Commerce Cloud, what are your ideas around how that's going to improve the consumer experience? What does that look like?

Laura:

Yeah. We have some personalization currently on the site that we do. Not too much. It's mostly personalized recommendations. I'm really looking forward to using that, in terms of... One of the most exciting things for me is the merchandising of the site and making sure that the predictive sort of the categories. When a customer lands on a page with 150 different wristlets, that the ones that are most relevant to them are actually rising to the top. It's not based on a static presentation of what we think is the most important things to put at the top.

Laura:

I think that's really important. One of the things on our roadmap after the site is launched, is to actually take a look at the marketing opportunities in terms of email marketing and how we can pull some of the artificial intelligence into the journey map of the customer and how we message to the customer in their lifecycle. I think a lot of those components as well will be really exciting to start to create not just a series. I think in the past, people have created a welcome series, or a trigger series after they buy X product.

Laura:

I think instead what I want this to be is a more dynamic opportunity to generate emails to customers that are, again, pulling in predictive content. So the customers have performed certain activities, and then the machine learning decides, "Okay, great. Because they did these five things, the most relevant thing to put here is this item and a message about this." That's what I'm excited about. And then being able to look at that data. I think the data is so exciting too, and knowing what works and what's not working. And being able to do site tweaks and adjustments to it will be really helpful.

Stephanie:

Yeah. I completely agree. I was just going to ask, were there any metrics that you paid attention to in the past that you think it will be way easier to get to? Or that you weren't able to access easily because it was too hard to maybe compile all the data and see it easily. What are some of those metrics if so, that are now going to be accessible to you that'll really help?

Laura:

I'm not sure if this definitely going to make it easier. But what I'm really more excited about is seeing... The measurements are customer lifetime value and customer acquisition costs. Starting to really understand the customer lifecycle better. So that once we see customers logging onto the website. Also, we just launched a Customer Loyalty program. Getting customers more engaged and in the habit of, "To get your reward points, logging in and making sure." We're keeping track of what customers are doing and delivering them relevant content, as opposed to just sending them too many emails.

Laura:

I think I was telling you, I'm in the process right now of cleaning out my email and unsubscribing from everything possible. I don't want people to have that experience with our brand. Saying, "You guys just email me too much." I want the contact that we're sending them to be interesting. The one thing I will tell you, and again this goes back to how we engaged our audience is. The open rates on our emails are really high. The click through rates are high. Our customers, like when we do these auctions periodically on the website.

Laura:

After the auction is complete, we usually take a look at who won the auction. We'll just see who the customer is. What's their lifecycle like? Almost every time when we do this, the customers email open rate is over 80%. They're highly-engaged people. Of course, they're participating in an auction. You would assume that. But it is so interesting to see somebody opening that emails from us. That to me, is a real testament to the strength of the brand and how engaged people are.

Stephanie:

That means you're definitely doing something right. For sure. How are you assembling the team for this digital transformation that you guys are about to undergo? How are you thinking about aligning your organization and your team members so everyone can help make this transition quick and easy?

Laura:

Yeah. That is critical. So what we did, it's probably not so different than what a lot of other folks might do. I assembled a core team. A Project Manager whose in charge of managing the project with our Systems Integrator. Then I have a Lead Developer in-house. His job is really to get into the technical details behind the development and transition. Because he has been primarily responsible for all of the development on our current website. I'm on the team, more from a strategic guidance standpoint and decision-making. Then our CEO has been really involved as well, which I really appreciate.

Laura:

This is the biggest project that our company has undertaken in the last six years, to do this type of major replatforming. It's a totally new platform. We've done some previous site launches and relaunches, but this one's pretty huge. I still have a number of other people on my marketing team who will participate and we'll start pulling them in one-by-one. We'll also embarking on a training curriculum, that we're developing in-house for our team. That's going to be going on while we're doing the developing, so that we're ready to go when the site's ready to launch.

Laura:

We're also looking at peripheral technology that is impacted by this transition. So an example I might give you is, our shipping platform and how we ship products. That was impacted. We needed to make a decision to shift to another provider. We assembled pilot team to get together and review the technology available and the vendor. We got all our decision-makers in one room and everybody agreed said, "Yes, let's do it." We've been making these decisions quickly. Kind of in that agile methodology of those sprints.

Laura:

Part of that is a function of how the Systems Integrator has outlined and structured the project. We have a very tight timeline, too. We're looking to have the website launched by October 1st. We started it in mid-March. We're definitely on an accelerated scheduled and we don't want to miss any milestones. Knock on wood, we are currently on target. So I'm excited about that.

Stephanie:

That's so fun. I can't wait to see the new site and try it out. Are there any digital commerce trends that you guys are preparing for, as you're launching this new platform and putting out a V2 of the brand? Are you preparing anything in the e-commerce space that you think is coming down the pike, that you're thinking, "We better get ready for this, or this trend?"

Laura:

No. I can't say that we're focused on anything like that right now. We're definitely mostly looking at the capabilities of the new platform. Like I said, the AI and machine learning component is so rich, that we see that as foundation to changing how we approach, how we do our marketing strategies and communicate with customers. So I think that's really the biggest opportunity for us.

Stephanie:

Very cool. One side question I had was, when you have your customers tagging all these photos and they're flowing into your website, are people able to buy from those photos right now?

Laura:

Yeah. On a limited basis right now. When we launch the new site, it'll much more prolific. You'll be able to buy from almost all of them.

Stephanie:

Yeah. That's great.

Laura:

I think that's really critical and it's important.

Stephanie:

Yeah. I know. When I was looking at all the different photos that you guys were getting tagged in, I'm like, "Oh, I want this Bag." There was this one alignment. It was like a tan orangeish bag but it had a duffle bag, and a bigger bag and there was like three of them together. I'm like, "If I could just click in and get this set, it would be so much easier than going into the website and trying to find out what this is called, or trying to figure out which one it was."

Laura:

Yeah. It's really interesting. The thing about user-generated content is that the customers put the product in context that we wouldn't necessarily be able to in our marketing because it wouldn't make sense. I'll give you an example. Just this week, we received a review from a customer, that was a picture of what they were calling a COVID Survival Pack that they were sending out their friends. It was a Sea Bag's beverage bucket bag. A beverage bucket is kind of a like a tall 14-inch high bucket that has handles, and the interior has six pockets for six beers. Then in the very middle is like a cavity that you can put ice and it has a grommet in the bottom, so that the ice can melt and escape out of the bottom of the bag. So it's a collapsible cooler.

Laura:

While they were filling the buckets with six Corona beers, and then put a roll of toilet paper in the center. They were mailing these out to their friends as COVID Survival Packs. It got such a laugh for us. It also is great, in terms of giving other customers ideas on ways to use our product in a way that is memorable and fun. Yeah. There's a lot of that. But like I said, that whole idea of content creation... While a lot of stuff can come from us and we can push it out, when it comes our audience, it's even more relevant.

Stephanie:

Yeah. That's such a fun idea. I want one of those Survival Packs right now. Person whoever made that, please send one my way. I want lime as well.

Laura:

Yeah. The lime would be great.

Stephanie:

Yeah. That's a necessity. That's a good point, too, for larger brands. We work with a lot of larger brands developing podcasts for them and whatnot. When you have your customers, where they can actually interact how they want. They don't have to go through the brand policy team and all these approvals and things like this, where maybe 80% of it would never get past the company's PR team. But when the customers are able to engage the way that they want to, it seems like it allows for more organic conversations to start and just things that maybe wouldn't normally get past the actual internal policies. It makes it more fun to have those customers who can do that stuff.

Laura:

Yeah. Absolutely. I agree.

Stephanie:

So to shift a little bit. Are you the founder of Women in Retail Leadership Circle?

Laura:

No, not the founder.

Stephanie:

Tell me about that.

Laura:

I'm very flattered. No. Women in Retail Leadership Circle is a national organization that basically connects senior women in leadership, C level and director level, in retail organizations. They were started about seven years ago. They're backed by NATCO Media. I was a founding advisory board member, on the team there. So I've been involved over the last almost seven years. They've grown significantly in size over that time. It's one of the most energized and engaged leadership groups I've ever participated in. They have an Annual Conference that I can say is nothing short of transformational. It has been rescheduled this year for October. I'm hoping that I'll be traveling, to be able to go to it.

Laura:

Even so, during COVID. The conference is usually in April. They were very quick to figure out how they could be of service to their audience. They set up peer groups that leaders could participate in on a biweekly basis with opportunities to share advice and experience with other senior female leadership. During more normal times, they do regular what they call On The Road Events, where you can connect in a major city, like Boston or New York, over an evening of cocktails or something like that with leaders like Rebecca Minkoff talking about her leadership struggles perhaps. It's a great way to collaborate with other companies.

Laura:

I've been able to uncover new tactics and strategies for growth. I also use it as a tool to refine my leadership style, because there's a lot of inspirational leadership that we share in those, like I said, events that they sponsor. They're doing a lot of stuff virtually right now. The thing I like the most about it, is it's noncompetitive. It's just great personal development at the senior leadership level, which I think there doesn't happen to be a lot of that typically. A lot of the personal development that happens in organizations usually is more at a junior level.

Stephanie:

That's really cool. Is there anyone in the industry that you look to for not only leadership, but maybe different tactics or strategies that they're trying out or doing? Do you keep an eye on anyone to incorporate at Sea Bags? Like incorporate what they're doing?

Laura:

Yeah. I look at a lot of brands, which is the reason why I need to pair down my emails so much. I do. I track a lot of folks. I also follow a lot of people on LinkedIn, because I feel like it's just a great opportunity to see what everyone's doing. As a brand, we try to spend time benchmarking and keeping our eye on brands, again, that are very, very correlated with our DNA. Coastal lifestyle brands, like Sperry Top-Sider, Life is Good, a very inspirational brand. We have a lot of partnerships like that. We also try to keep an eye towards some more local name brands too that we partner with, and just benchmarking what they're doing.

Laura:

And we also share a lot of information too. An example of that would be Stonewall Kitchen, which is a gourmet food brand. They also are on Sales Commerce Cloud. While we were going through this whole replatforming project, being able to reach out to people within our network and benchmark around what their experiences were on their websites platforms and technologies that they're using is really important.

Stephanie:

That's great. Having that little network that you can tap into and be like, "Hey, how did you guys do this?" Or, "Does this work better, or this strategy?" That's really fun. And all about, once again, tying it back to having that community that you can tap into to get answers from and learn from people who've already gone through that.

Laura:

Yeah, absolutely. Over the years, that's one thing that I learned very early in my career. Some of my leaders, actually one that I'm still working with today, who is on our Board at Sea Bags, taught me how important that skill of networking was and that networking is a two-way street. It's really important to make sure that you're not only asking things of people and keeping in touch with them, but you're also being a value to them as well, in terms of that networking relationship.

Stephanie:

Yeah. That's such a great point. Coming up next we have the Lightning Round, which I can tell you a little bit more about in a second. But do you have thoughts or ideas that you want to share before we move onto that?

Laura:

Geez, thoughts that I want to share.

Stephanie:

Anything that we missed?

Laura:

I'm sure there's something we missed. But I think we covered a lot, too. I'm excited to hear what the Lightning Round is all about.

Stephanie:

All right. Cool. So the Lightning Round, bought to you by our friends at Salesforce Commerce Cloud. It's where I ask a question and you have one minute or less to answer. Are you ready?

Laura:

I guess so.

Stephanie:

All right. What's up next on your reading list?

Laura:

Oh, on my reading list. I am about to start... I'm like one chapter in. A book by the founder of IDEO. I think his name is Dave Kelly, if remember correctly. It's a book all about innovation and idea generation and how to approach innovation a little bit differently. I'm really excited about that. I'm definitely one of those people that reads multiple books at once, too.

Stephanie:

Yeah. Me, too. I think they did have a space here in Palo Alto, right down the street from us.

Laura:

Yeah. I think you're right. I think you're right. The name of the book is The Art of Innovation.

Stephanie:

Okay. Cool.

Laura:

It's Tom Kelly. I got his name wrong.

Stephanie:

Tom Kelly. Got it. For everyone, Tom Kelly. Yeah. That's really funny. We went and we were touring office spaces. We toured through their building. It was very forward-thinking and innovative. I mean, just like what you were talking about. It was all about R&D and trying new things. It was cool to see the inner workings of their space.

Laura:

Very cool.

Stephanie:

What's up next on your Netflix or Hulu Video?

Laura:

Oh, I am watching Ozark. I know I'm a little painfully behind. Yeah. I'm trying to make my way through into, I think, season three of Ozark. I am really enjoying that and it's a problem I will sometimes stay up way to late trying to fit in just one more episode.

Stephanie:

Yeah. Me, too. I love that show. What's the next conference you're excited about attending?

Laura:

I am really excited about the Women in Retail Leadership Conference. Like I said, I hope it's happening in October. This is, as I mentioned, it's a transformational opportunity for me to go talk with other senior female leaders about their challenges and opportunities and where they're seeing growth within their companies. I've walked away from this conference before getting lots of new ideas, new business opportunities and third-party partners to work with and collaboration opportunities. So that to me is what I'm most looking forward to and I hope that it still happens, especially because it's in Miami in October, which will be a really nice time of year to be there.

Stephanie:

That's very cool. I'll have to check that out. What are you doing for fun these days? Any passions that you have?

Laura:

I am actually, after this podcast, going to jump on my boat with my husband and two kids for the first time this season. That is actually our big passion. This is the kickoff to boating season in Maine, Memorial Day weekend. Usually while I'm on the boat, the things that I do is knit. I've been knitting a sweater for four years now, that I am committed to finishing this year. That's my goal.

Stephanie:

You have to post a picture when it's done, so we can all see it.

Laura:

I will. I hope it actually fits. I'm kind of laughing at it going, "I don't even know if this is going to fit." I end up probably giving it as a gift.

Stephanie:

Yeah. My mom got into sewing and knitting and all that. She was trying to make us outfits, just for fun. Sweaters and things like that. She ended making one that ended up having to go towards our Shih Tzu dog because it... She was like, "Oh, this went really wrong."

Laura:

Yeah. It can go wrong quickly. That's what I'm worried about. I've ripped out a few rows of this a few times and I'm not sure I recounted correctly. So we'll see. I post a picture regardless of what it looks like.

Stephanie:

Great. It's a journey.

Laura:

Yeah.

Stephanie:

The next hard question. You guys at Sea Bags are moving quick. You're having to transition platforms. It's your job to stay ahead on the expectations and your competition and all that. What do you think is up next for e-commerce pros?

Laura:

Up next for e-commerce pros. I think that we really are going to have to focus on is how to take omnichannel retailing to the next level. I think that that term, omnichannel, is really broadly thrown around. I think that people don't really understand what it is. I think that we need to be able to deliver a seamless customer experience regardless of where they're shopping and figure out, also, how to do it without inconveniencing customers with asking for their information repeatedly.

Laura:

I think that's one of the challenges in retail, is being able to know when somebody places an order in one of your retail stores, and being able to translate that into their customer profile so that you have, again, that really full 360-degree picture of that journey of that customer and really knowing what their full lifetime value is. Again, so that you can come back and customize and personalize their shopping experience and make it more rich. They feel valued because they know that you're speaking to them in a way that is informed and caring about what value they play for your brand.

Stephanie:

That's a great answer. Laura, it's been blast. Thank you for coming on the show. For all our listeners, go check out Sea Bags and don't forget to subscribe, rate and review this podcast. Let's help spread the word and spread stories like the one Laura shared today. Laura, thanks. I hope to have you back.

Laura:

Thank you so much for having me. It was an absolute joy.

Stephanie:

It really was. Yeah.

 

?What will my customers like and buy?? The timeless retail question today is answered with enterprise-grade purchasing, inventory, and sell-through analytics for big box sellers, but not SMBs. SMBs have long made these decisions with their guts and intuition. But what if a marketplace powered with those same analytics could enable small shops to purchase with the same information? Faire has discovered this opportunity is worth $1 million in sales per day, and growing. 

Faire is a wholesale marketplace that helps retailers find and buy wholesale, while also connecting makers with physical stores or businesses. and it was built using a data-first model that evens the playing field for those small shops. On this episode of Up Next in Commerce, Marcelo Cortes, the Co-founder and CTO of Faire, joined us to explain how the company got started and the steps it took to reach the billion-dollar valuation it boasts today. Much of the success is thanks to Faire?s ability to analyze data and iterate based on what that data tells them, but it is also built on a sense of community between makers and buyers, who have been able to find each other in a world filled with outside noise.

Key Takeaways: Implementing personalization throughout the buyer & seller journey is key when setting up a two-sided marketplace You need to have a message people understand quickly that really resonates with them Being able to iterate quickly and build on the go allows you to be more nimble and capitalize on data you are collecting to create a better business and experience For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.

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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible eCommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we?re ready for what?s next in commerce. Learn more at salesforce.com/commerce

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Transcript:

Stephanie:

Hey everyone, and welcome to Up Next in Commerce. This is your host, Stephanie Postles. Today, we have Marcelo Cortes joining the show, the co-founder and CTO of Faire. Marcelo, how's it going?

Marcelo:

It's great. It's great to be here, thanks for inviting me.

Stephanie:

Yeah, thanks. It's fun having someone, you said you were in Toronto, or a little bit north, right?

Marcelo:

Yeah, that's right. Our office in Canada is in Kitchener-Waterloo, which is about an hour from Toronto.

Stephanie:

Cool. Do you ever make it out to the San Francisco area?

Marcelo:

I do in normal times, I go very often. I usually go there once a month.

Stephanie:

Next time you're around, you'll have to stop by our studio and we can do an in person interview.

Marcelo:

Yeah, that would be great. I hope that can happen soon.

Stephanie:

Yeah, I hope so too. Fingers crossed. I would love to hear a little bit about Faire, and your background and role at Faire.

Marcelo:

Yes, of course. Faire was founded in 2017. Me, Max and Daniele are the co-founders, the original co-founders. Jeff also started the company with us, but he left and came back after a few years. Faire is a wholesale marketplace. We help retailers, basically mostly physical stores, brick and mortar, find products to buy wholesale. Then on the other side of our marketplace, we have all the brands or makers on our platform that are selling products, and we help connect those makers with the physical stores.

Stephanie:

Very cool. The makers reminded me, in a way, of the Etsy makers that normally would never be able to have their products in a large retailer, like a Nordstrom. Is that accurate?

Marcelo:

Yeah. We are somewhere in between Etsy ... I would like to say there is a little bit of intersection with Etsy, but a little bit a level above as well, where we do have smaller manufacturers or makers that have a small operation, but we also have some more sophisticated ones that have warehouses and things like that.

Stephanie:

Cool. How did you think about creating Faire? How did that idea come about?

Marcelo:

Yeah, it's an interesting story. Max, who is our CEO, back in the day after he graduated from school, he was working on bank consulting. He was always an entrepreneur by heart, so he was always trying to do businesses on the side. A friend of his asked him if he was willing to try to build a business of selling a product or distributing a product in the United States. The product was actually a physical umbrella, a rain umbrella that was manufactured in New Zealand, called Blunt Umbrellas. It's a very cool umbrella. It has cool shapes, cool colors, doesn't break with wind. He was like, "Yes, let's do this on the side."

Marcelo:

That's when he learned how the wholesale industry works, especially in North America. He searched on Google, how do I start selling products, or how do I distribute products wholesale like everybody else does? Basically, there were a few ways. You can go find sales reps or hire sales agencies to have all the sales reps trying to sell your products. You have to go to trade shows. He did all of those things. Eventually, he got this company to be successful distributing the product in North America. But at the same time, throughout all this process, he couldn't stop thinking that there's a lot of areas here that could be improved with technology. This whole market is really in the dark of technology.

Marcelo:

Years later, we met at Square. We all worked at Square together for four or five years each. Combining the expertise we had there with dealing with small businesses with this idea of, how can we really add technology to wholesale distribution, make it better? We finally came to the conclusion that ... we found the data that's available online as well on products, and on makers and on retailers, we could put it all together and build this idea that could add a lot of value to everybody in the industry.

Stephanie:

That's awesome. Were there any technologies or insights that you gained while you guys were at Square that you took into the business when creating Faire?

Marcelo:

Basically, there isn't anything .... technology that's advanced. There were combinations of many smaller things. For example, the fact that if you think of a small store, a brick and mortar store that might have one to five locations, which is usually our target audience, they're trying to compete with much larger brick and mortar stores, big buck stores, or with eCommerce. They have no data. If you think of Walmart, they have data on all their products. They know what sells well where, what time of the year. The little store, they're buying products basically all by intuition. They see a few products, they look at it and they have to make a decision whether they're customers are going to like it or not.

Marcelo:

We realized that we can actually build something that will give them the ability of having the same type of tools that much larger businesses, or big buck stores, or eCommerce platforms have, to make much more well informed decisions on what products are going to work well in their stores. On top of that, another thing that we learned a lot of course at Square is how to deal with underwriting the small businesses. We helped Square do Square Capital, which is the landing program that they have at Square. Part of that process, we learned a lot about how do you decide how much credit to give to a store like this? That's also part of what we do.

Marcelo:

As a store comes into our platform, we give them the ability to buy products that they can pay 60 days in the future. We give them credit to buy products, and we allow them to return any of those products if it doesn't work. So, basically-

Stephanie:

Yeah, that's huge. When I saw that you all did that, I'm like, wow, I don't know how you make that work. But not only giving store owners credit and saying you don't have to pay me right away, and you can return products? I haven't heard of anyone else doing that.

Marcelo:

Yeah, that's how we are combining and adding technology to this ecosystem to make those things possible. We have to do our job well to be able to offer these value propositions. We have to make sure that we are recommending the right products to the stores, and guiding them into buying the right amounts as well. We can't just let them buy way more than they would be able to sell. We should be steering them away from products that we don't think are going to perform well in their store. If we do that part of the job well, the other part is also making sure that the makers or brands that we're onboarding on the platform are also very high quality and good, so that, again, the products that we are selling have a much higher chance of performing well in stores.

Stephanie:

How did you build that platform to cater to different types of clients? I can see the one person in Arizona making bracelets versus the larger person who's used to fulfilling large quantities, because maybe they've sold on other platforms before, and then different sized retailers. How did you build a platform that caters to all of them?

Marcelo:

Yeah, it's a very hard problem. That's another place where technology is used to our own advantage. We need to be very good at serving customers differently, and providing a completely customized experience to different types of stores. That's what we do. That's why data science is so important for us, and we have a very strong data science team tackling this problem of ranking and personalization. The reality is, we really treat each customer differently. Every different store that comes to our platform, they have a completely different experience. If you are a store that sells gifts, you're going to see a lot of gifts. The more we learn about you, the things that you like to see, the search that you make, the products that you sell and you buy from us, the more accurate we get at serving you products that will connect well with your store.

Marcelo:

But what we can't have, for example, in our platform is that you are a store that sells apparel mostly. You come to our website and all you see is candles, or back products or things that are completely disconnected from your business. From day zero, we have spent a lot of time and effort making sure that we have data, and we are very data driven, and we are building a very custom experience for every different person that comes to our website.

Stephanie:

Yeah, that seems super important because it can be really easy to get lost when there's tons of products, and you're automatically seeing the wrong one to start with. How do you gather that data on, especially a new customer who's never bought from you before and they're coming on for the first time, how do you have any data to even know what to show them?

Marcelo:

Yeah. Sometimes it's hard. Sometimes we can't do it and we have to start with products in different categories, and then start to learn as they navigate the website. But there are things you can do in advance as well. Even a brand new customer ... they usually have a reason why they came to your website. A lot of those reasons are they were recommended by somebody, they clicked on a link somewhere. If they come from an ad, it's very easy to know what's the ad that they clicked on, and we at least have some idea of what caught their interest. Obviously we have too this mark into serving things or products that are related to what are where they came from. If they clicked on an ad for a candle, we're going to show them similar types of candles, or of course that same candle that they clicked on. But we are also trying to show, oh, here's some apparel categories as well, or here's some best sellers in a different category.

Marcelo:

Again, we have to show relevant data, and then show enough of other types of data that we can give them a chance to tell us more about who they are and what they are interested in.

Stephanie:

Got it. Then most likely, I'm guessing you encourage that sign up process, so then you can learn more and more about them. Then you can recommend products even further after that?

Marcelo:

Exactly. As they sign up, we have some quizzes. We ask them for more information. We keep adding and changing how we do that, of course. But we will try to do a Netflix style, like, what are the types of products that you're interested in, or categories? How big is your store? Things like that. The reality is, we are in 2020. Every little store, brick and mortar store, they have a presence. Once we learn who they are, what store they are, we will find if they have a website, and we will learn more about them by looking at data that we can see online. Publicly available data that's on the internet as well.

Stephanie:

Got it. Yeah, that's so cool. I saw that you leveraged machine learning and AI to recommend and show these retailers what's going to do well in their store. How do you know what would do well in San Francisco versus Washington DC? What do you utilize to help teach the retailers what they should and shouldn't buy?

Marcelo:

Yeah. That's obviously part of our secret sauce. There isn't-

Stephanie:

You don't want to share that with me? Come on, Marcelo.

Marcelo:

No, I can share it for sure. It's just ... there isn't a very easy answer. It's not like, oh, if you're in San Francisco it's for sure that you're going to sell candles very well. But there is a lot of input and a lot of signals that we gather. I can give you some examples that make a lot of sense and they're very obvious. For example, we have so many stores on our platform today. There's a lot of correlation. Remember I told you Max was selling those umbrellas, Blunt Umbrellas?

Stephanie:

Mm-hmm (affirmative), yup.

Marcelo:

Even from his time selling those umbrellas, he realized and he learned very quickly that there are correlations between products as well. If there is a store that sells well the umbrella, there are some products that will also sell well in that store. They could be completely different categories of products. It could be a watch. It could be a sunglass. But the customers that are usually interested in this Blunt Umbrella, which is a high end umbrella, are also going to like and very likely buy products that are in a similar style, or similar type of high level upper cost product.

Marcelo:

Imagine now instead of one umbrella, we have millions of products that we sell, and we get data back from these stores. We know what's selling in each one of these cuts because they're buying it again from us. So we start to be able to correlate things. You can have a gift shop in New York, and you're selling three products that are very similar to a store in San Francisco. Now you add the fourth product, and that product performs very well in your store in New York as well. It's very likely that that store in San Francisco will also have that fourth product performing well.

Stephanie:

Got it. That's really cool. Have you ever thought about running on the side a point of sale system that you can put in the store, so then you don't only have access to the stuff that's sold from Faire, but then you have access to their entire inventory and catalog? Then you really have full insights into what's happening in that store, what sells together. Then you can even recommend things at, I guess, a better pace?

Marcelo:

Yeah, 100%, we have thought about that.

Stephanie:

Are you doing it? Did I already uncover more secret sauce?

Marcelo:

Maybe. What we do today, of course we don't have our own point of sale system today. But what we do is, we integrate with their point of sale systems.

Stephanie:

Got it.

Marcelo:

We add value to them if they connect their point of sales with us as well. For example, imagine that you are a small store and you just placed an order for 20 products. Then next week, you're going to receive all those products in your store. You need to start selling them right away, but you restore all of them in your point of sale. So it takes time and effort. You need to type in the prices, the descriptions. You need to upload photos to the point of sale system. If you were a store that gave us access to your point of sale system, we do that completely automated for you. As you place an order, as soon as the order arrives in your store, all the products automatically show up in your point of sale system.

Stephanie:

Got it. Yeah, that's definitely-

Marcelo:

Of course with that, we get some more data from the point of sale that we can help with recommendations as well, and learning more about what performs well in your store.

Stephanie:

Cool. Yeah, that's awesome. When you started out, did you build your eCommerce platform from scratch? Or did you buy and eventually move everything over to custom? What did that transition look like?

Marcelo:

Yeah, that's a good question. We actually built everything from scratch, and we built it on the go. On the early days, we started ... and we went to Y Combinator in San Francisco. When we were accepted at Y Combinator, it was end of 2016, I was still working at Square. Max had left already. Daniele was still working at Square. We basically quit our jobs at Square, and we started Faire in January, 2017 at Y Combinator. We had nothing built. We had this pressure that three months later, we would need to do a Y Combinator demo day presentation to thousands of investors, and we needed something to show. Usually the companies that join Y Combinator, they have been doing something already for a year or two, and they get there to try to scale their business. We started from scratch.

Stephanie:

I was going to say, that's ... well, maybe it's not unheard of now because I think they do accept a lot more people now. But back in 2016, if you didn't have an actual product, you probably weren't going to get accepted if they couldn't see something. So that's awesome.

Marcelo:

Yeah. But then what we had to do is build it on the go. That's also a lot of how ... it dictates a lot of how we operate today and through the history of the company. We have always been very data driven. When we started, of course we knew this idea of let's let people try the products before they buy. We told Max, we're like, "We really believe in your idea, but let's prove that people really want this."

Marcelo:

Again, without any technology or any website, we went into stores that Max had contacts with because he used to sell the umbrella. We told them, "Listen, we are going to give you products that we think are going to do well in your store. You don't need to pay us. If you sell the products, you pay us. If you don't sell them, we will come back and pick the products up." The stores were like, "You just want to give me free products to try to sell? We're going to do it, for sure."

Stephanie:

Yeah, no brainer.

Marcelo:

That's how we validated the idea. We also got lucky because we had no idea what we were doing when it came to picking products, so we just bought random products. Turns out that one of the products we bought, it's called Pyropets. It's this candle in the shape of animals. When they burn, the skeleton of the animal shows up.

Stephanie:

Oh, that's awesome.

Marcelo:

Yeah, it's pretty cool.

Stephanie:

I need to look that up.

Marcelo:

It's very cool. They have many different animals. That was one of the products that we gave to the store in San Francisco. The feedback we got from the store right after was that, "Listen, I would never have bought this candle to sell in my store. But since you gave it to me for free and I could try it, I put it on the shelves," and the candle happened to become one of their best sellers.

Stephanie:

Wow.

Marcelo:

That's when we saw, okay, there is definitely something here, especially if we can use data to find actual good products, not just random products that we picked on the internet. From that point on, we started to build the experience on the go. Very quickly, we built a website where people could place orders. They would see products and place orders. Everything in the background happened manually. An order would be placed on the website. Basically, people would be able to add products to cart and check out. We didn't even collect payment information. We weren't even charging people. We would deal with payments later over the phone.

Stephanie:

Oh man, that's great.

Marcelo:

Yeah. We would get an order. We had one contractor that we hired in the early days, he would be in charge of calling the manufacturer and placing the order over the phone. He would call the maker and be like, "Hey, just got an order. Five Pyropets to be shipped to this store in San Francisco. Here are the details. Here's our company credit card, we're going to pay for this order." There was no automation, nothing else built behind the scenes. Again, we kept building it on the go behind the scenes very quickly.

Marcelo:

Fortunately, there are a few good things that happened with our company. Very quickly, we found product market fit in the summer of 2017. We started to grow a lot. But by that time, we had automated all of this process. We financial managed to build all the technology so that all this order placement with the makers, and the fulfillment and everything, was fully automated. But it was really like building the train as the train's going forward.

Stephanie:

Yeah. But a lot of people ... some of the best advice is do things that don't scale in the beginning. That's how you learn what you actually need to build on the backend, instead of doing it all upfront and realizing, oh, that's actually not even how the seller or buyer interact with our platform and now we need to redo it. Now you guys are valued at over a billion, right? A billion dollar valuation, or higher, probably.

Marcelo:

That's right.

Stephanie:

That's insane. Congrats, that's awesome.

Marcelo:

Thank you. Yeah.

Stephanie:

When you were setting up your website in the beginning, is their any best practices, either setting up the buyer side or the seller side where you're like, we've seen this work really well on the buyer side of the platform? Or these types of ... setting up the eCommerce like this, or having certain pop ups or anything? Anything that you would recommend to someone who's looking at starting a marketplace, or improving the marketplace that they're already running?

Marcelo:

it's very hard to learn without doing it. We didn't have any facts. We never built a marketplace or an eCommerce platform before. What we did do is, we moved very fast and we built very simple things. We spent a lot of time scoping things down. We thought we had very good intuition that something is going to work. Of course, eCommerce is a problem that's figured out today. There is many very successful eCommerce platforms that you can see how they do things. We always looked at the successful examples when we built our things, and then we tried to build our own version of it. We built the simplest thing possible. We all talk about building the simplest possible thing, but we really tried to do it. We spend time removing anything that would be essential, but we managed to build things that would add value.

Marcelo:

We built things very fast. We launched things very fast. We gathered information on how people are using it very fast. Then we integrated a lot, improving the experience with our learnings. Many times, our intuition was wrong, and things that we built were not the right things, and we shut it down. But at least we didn't spend a lot of time doing those things.

Stephanie:

Was there anything that you shut down that you see a lot of other store owners using right now where you're like, oh, we saw that didn't work well, you might want to look into that on your store?

Marcelo:

Well, it's hard to know what is not working for other people. It might not have worked for us. There is one very interesting thing. It's not really, I think, we'd do it. But when we were in the early days trying to finding product market fit, our very first idea for Faire, as I told you, we walked into these stores and we told them, "Just keep this product. If you sell them, you pay us. If you don't, we are going to take them back." This is pretty much a consignment system. That's what we wanted to build. That was our very first big mistake, I think. We were very sure that we could build a successful consignment eCommerce platform where we would connect to the point of sale systems in the stores, and we would know when they sell something, and they would pay us when they sell. They would keep things, I don't know, until they don't want them anymore.

Marcelo:

Turns out that the word consignment, the term consignment is really ... people really dislike it in our market. They think of consignment as products that nobody can sell, and they are willing to give it to you for free to try to sell it for them.

Stephanie:

Yeah. That's what first comes to mind when I hear that word. It's like when you go and you can sell your clothes to a company, and they're like, "Well, we can either do consignment or we'll just give you money upfront." You're like, oh, I'd rather just have money because I don't want to take that risk of you not being able to sell it because you bury it down in a bin somewhere.

Marcelo:

Exactly. It turned out that whenever we told people consignment, they ran away from us. We couldn't understand it. We're like, it's a good thing, we're giving you very good products. We've built this machine that finds good products, and we'll let you carry them for free. Then we changed our message. We started to call it try before you buy. We're like, listen ... we completely erased the word consignment from our vocabulary. We were like, "This is try before you buy."

Stephanie:

That's great.

Marcelo:

You get the products, you have 60 days to pay. Within those 60 days, you can return anything. If you sell, great. Basically, we didn't change much of the consignment idea, but it completely changed how customers understood our business.

Stephanie:

Yeah, that's great. Such a good lesson too of how little things like that can go a long way, and how just doing those simple tests could really help your business completely transform into a way bigger one if you stop using certain words that maybe are throwing someone off, that you're so deep in the weeds you didn't even realize it.

Marcelo:

100%. There is this, of course, concept that people talk a lot of, product market fit. But in this case, there's this other concept that people don't talk much about, which is the message product fit. You need to have a message that people really understand quickly what you're trying to do, and it resonates with them.

Stephanie:

Yeah. You guys would have to have two different messages, one for the buyer, one for the seller, and not try and make them both be the same, I'm guessing.

Marcelo:

100%. The way of selling Faire to a maker or a seller is much different than the way we sell to the stores or buyers.

Stephanie:

Do you have different teams focused on that messaging? Because it seems like it'd be hard to where different hats where it's like, one second I'm trying to think how the buyer things, and then I'm going to shift over and think how the seller thinks. Is it different teams, or the same one working on all of that?

Marcelo:

Yeah. Today, it's completely separate teams. Sales teams, ops teams, everything is completely separate. The market team is the same. The messaging is one team that creates both. But how we deal with them internally in operations and sales is completely separate teams, and also product. There is teams building products for the makers, and there is teams building products for the retailers.

Stephanie:

Cool. That's awesome. I saw you guys had a podcast that you just launched, and it made me want to ask a little bit about your content strategy. What was the thought behind launching that podcast and the goals behind it? And what kind of ROI you're looking at for that project, if any? If you want to talk a little bit about that, that'd be great.

Marcelo:

Yes. The podcast was also part of a thing that we wanted to do for a while. But our customers, even though we are online, our customers are not online. We are dealing with offline local retailers, and they love community. That's one of the initiatives that we're trying to build, to help them with community, to listen to each other's stories, to learn from each other's mistakes and connect them more. It was especially important to launch it now with this whole COVID-19 era. People need more information-

Stephanie:

Yes. Yeah, perfect timing.

Marcelo:

We rushed it out at this point to really get more data and get more information. And really, to support more of the retailers and makers in this time that they really need it.

Stephanie:

That's great.

Marcelo:

Yes, thank you. For me, I love listening to it. It's so ... I am motivated to listen to our customers stories, and how they are struggling or how they are being creative to deal with these issues. The feedback I have seen so far has been amazing as well. People really love listening to each other's stories and hints. Again, they see that other people are also struggling, they're not alone in this. They feel more connected. So far, the feedback has been amazing. I personally love to listen to these stories.

Stephanie:

Yeah. No, that's really fun. I love anything like that that shows I'm not the only one in the struggle right now, and then that you can bypass any future struggles that maybe you don't have to go through if you hear someone else detailing it. You can skip right over it, if possible.

Marcelo:

It's called Brick and Order.

Stephanie:

Brick and Order?

Marcelo:

Yes.

Stephanie:

Is it on Apple, Google, everywhere?

Marcelo:

Yes, it is.

Stephanie:

Cool. Yeah, we will also link that up in our show notes so people can find it.

Marcelo:

Thank you.

Stephanie:

Because it sounds like it's a good one. With the pandemic right now, and putting out different types of content and all that, how have you had to shift, if at all, your business model? Because I'm assuming what people were coming to buy before COVID-19 is very different than what they're coming to your site to buy now. How did you have to think about shifting not only what you were maybe recommending, but also what you were suggesting to stores who are probably, a lot of them closing down right now? How did you make that transition or shift?

Marcelo:

Yeah. COVID has been very big for our company. It hit our customers really hard. Our customers, of course, are small stores. Most of them are still shut down at this point. It was a big transition for us as a company, as well as for our customers. We are this high growth startup that has been adding more customers on both sides of our marketplace very quickly, and a lot of our focus is on growth and adding value to these stores. Suddenly this happened, and we had to shift focus very quickly.

Marcelo:

The first thing we did when this whole thing started to happen is, of course, to take care of the employees and making sure that everybody's safe. We started working from home very quickly, I think seven weeks ago. Then very quickly, we shifted focus to, okay, now how about the business? Very fast, we had to change from this high growth mindset, sell, sell, sell, to how do we help our customers get through this pandemic? For us, we are a well funded company. We have a lot of money in the bank. It's easier to, again, slow down and survive for whatever it takes, a few years, a few months. But we were really worried about our customers. We're like, what's going to happen with these small brick and mortar stores or the small makers around?

Marcelo:

We started collecting data. That was the first thing we did. We ran surveys with thousands of makers and retailers on our platform to understand their financial situation. We were asking things like, do you have money in the bank to be shut down for two, three months? How is it going to affect your business? We collected all of this data. We of course shared the aggregate of the data with the community, with everybody on our marketplace. Then we changed focus very quickly to try to help makers and retailers do the right things for them to survive. There was so much confusion on what's going to happen, so much information all over the place that they had a hard time, and they were all overwhelmed with it.

Marcelo:

We tried to inform them. We tried to guide them on what are the right things to do right now. We changed our focus from growth to helping our customers survive this pandemic. We built tools to help them apply for the government relief funds.

Stephanie:

That's great, much needed. Applying for that was crazy.

Marcelo:

Yeah. We tried to help guide them through it and help them understand all these programs. It's a lot of legislation, a lot of language. We tried to spend hours ourselves learning about everything, and writing it in a very simple way that they will understand it, and they know what applies to them and what don't apply to them. We built financial calculators so that they can understand what are the things they need to do? Do they need to renegotiate rent? How can they reduce expenses so that they can basically survive longer with the funds that they have?

Marcelo:

Then the next thing that we did is really, okay, now another way of helping stores survive this is helping them adapt to this new world. First thing we did is help stores and makers, makers that could sell essentials, they could make different things, or they were already making those different things that were essentials. We started to help them focus on that. For stores, the same. We're like, listen, you might not be selling gifts right now, but you could be selling masks, you could be selling hand sanitizers. You could be selling other categories, like food, that's still in high demand. We definitely changed recommendations. We guided people into adapting their business into this new world.

Stephanie:

Wow, that's great. Did you see the makers be be able to shift and adapt quickly, or what did that look like when you were recommending maybe tangential things, but also maybe something that hey hadn't focused on before that.

Marcelo:

Honestly, it really impressed us at how resilient our community is, our customers are. Most stores, especially small business owners, they have survived for so long against brick and mortar stores. They survived Amazon, giant online eCommerce, to keep their business operating. So they are also surviving. They're being super creative on how they change their business to survive this pandemic. Stores, of course, struggled more than makers because, again, they were completely shut down, and some of them didn't even have access to go to their store. Makers adapted much faster. Some of them already had wide presences, and they just had to switch more of their traffic to online. But the stores also were very resourceful. They are really trying very hard to survive. They are doing a lot of the things and following a lot of our recommendations as well.

Stephanie:

That's awesome. Yeah, that's so great hearing how you shifted everything you were doing to focus on how to help them, give them the tools that they needed that didn't exist in the marketplace, because who knew that this was coming down the pike? What were some of the top learnings from the survey that you sent out that you heard? Because something that comes to mind I just heard about was that apparel retailers, smaller ones don't have more than two month often times of cash on hand to keep them going. What were maybe some overall themes that you got from your survey that maybe you were surprised by?

Marcelo:

Yes. At the time, and remember that the survey was done over a month ago now when this whole pandemic really stared, but I'll tell you some of the numbers and the things that we learned here.

Stephanie:

Yeah, I would love that.

Marcelo:

76% of the retailers only had enough capital available for up to three months of operating expenses.

Stephanie:

Wow. Yeah, that's crazy.

Marcelo:

At the time, and I'm pretty sure this has shifted a lot since then, but at the time only 30% of the retailers had anything with regards to selling online.

Stephanie:

Some of that seems hard to believe. It makes you realize the importance of surveying someone and not just going forward with assumptions that you have about them, because I would've never thought the numbers were that high.

Marcelo:

Yes. We keep trying to survey them more often as well to see how it's changing. Other things that we learned was that 45% of retailers, they were already connecting with other businesses. Again, trying to build more community, learning more from each other and sharing information. 41% of the makers at that time had already started changing or reprioritizing their product assortment.

Stephanie:

That's good, being scrappy entrepreneurs.

Marcelo:

Yeah. Of course, we adapted. We started launching and selling a lot more face masks. Today, we have already over 200 brands that are selling face masks on our platform. The masks that we sell, they are produced in the United States by local makers. Most of the products that we sell are actually today still made or partially made in the United States. With the results of the survey, we tried to also create a lot of educational content to help everybody else learn about what's happening and how people are shifting their focus to try to help more of our customers to do it as well.

Stephanie:

How are you getting the word out about that educational content? How do you bring traffic to the content you're making?

Marcelo:

Yeah, there is a few ways to do it. Of course, we very often email all this information directly to the customers on our platform. We have two blogs. We have a blog for makers, we have a blog for retailers. We have community forums for retailers and we have a community forum for makers as well, both on Facebook at this time. We also have hosted a few webinars that had almost thousands of people attending at the same time.

Stephanie:

Oh, very cool. How do you see the webinars paying off? Do you see people enjoying that? Do you think that's a good use of time? What have you seen perform the best?

Marcelo:

We got amazing feedback from the webinar. People oversubscribed. We actually had a hard time dealing with all the subscriptions because ... the platform we were using was not ready for the amount of people that showed up.

Stephanie:

That's a good problem to have.

Marcelo:

Yes, always a good problem to have. But me, being the CTO and having to deal with the technology makes my life harder.

Stephanie:

What did you do to have to try and quickly ...

Marcelo:

We used to platforms at the same time, and that accommodated all the traffic. But yeah, people came back and they watched again and re-watched it. They shared it a lot. Webinar is not a thing that we have done a lot, but we are definitely going to be doing more of it.

Stephanie:

Yeah, that's very interesting. With everything that's happening now, what kind of digital commerce trends or patterns do you see coming down the road? Especially because you're so close to retailers and makers, it seems like you guys would have a good idea on what the future could look like if you had a crystal ball. How are you maybe thinking about what the future looks like, and how to adjust Faire based on where you think it's headed?

Marcelo:

I really wish I could ...

Stephanie:

Come on, Marcelo. Just tell me the future.

Marcelo:

I had a crystal ball. Of course, we can't tell the future, but we can pay attention to how fast and what direction things are going. It's obvious that everybody's trying to do things differently online and remote. How that's going to affect makers and retailers too, yet to be seen. I think honestly, from my own personal experience and from the platform, there will be a lot of behaviors that will change, that we do expect to change, but they are for the better. For example, curbside pickup is a thing. I don't think it was nearly as popular as it has become. I think it is going to be a thing that will stick with us. People do enjoy the ability of buying something, and whenever they have a chance, they go and grab it.

Marcelo:

I think for our platform specifically, that's going to become a very powerful thing. Because now, as I said, we launched this shop neighborhood. We can get consumers to find cool products online that they would never have found otherwise. They will find all these stores around them where they can go and find those products, they can buy it online and go pick it up. Not only go pick up the product that they bought, but they can also see all the other products in the stores, and actually meet the people that are selling this in person. That's one thing that people already loved in local shopping. They like the experience of walking into a shop, and talking to the owner and listening to the stories of the makers or the products.

Stephanie:

Yeah, that's how eCommerce started. I think back to, I don't know if you watched this, Marcelo, but Little House on the Prairie, huh? Any fans of that? They would basically, the shoppers would go into the store, and they would talk to the store owner and say their problem. He would go in the back and figure out exactly what they needed, and then would check back in with them to make sure it solved the problem. It's getting back to the roots of Little House on the Prairie days.

Marcelo:

Yeah. My prediction if I had a crystal ball here, if I were to make a prediction for the future is that, what this is going to change is that it's going to make the relationship between online and offline stronger. There will be more intersections. There is a world in which you are both online and offline at the same time, and that's the wold we're living in. We have been getting to this world slowly by having only online interactions and only offline interactions. I think what this is really accelerating is the merge of the two where you have both online and offline experiences with the same companies at the same time.

Stephanie:

Yeah, I definitely can see that happening. Are there any digital transformations or tech transformations you see necessary to make that happen?

Marcelo:

I think the technology, a lot of the technology already exists. Of course we have all this video technology, video chatting, video broadcasting. They have been available for a while now. But the applications of these technologies are going to change a lot. Again, another thing that we are working on, I feel like I'm here just marketing the things that we have been doing, but-

Stephanie:

Hey, that's all right. I'm sure people can learn from it.

Marcelo:

Another thing that we are working on is a product that will allow people to connect virtually, the same way that they have been doing offline. Think about it as the experience of a local market where makers are going to just be able to show videos, or have a live experience where they connect directly with many or very few of their customers at once, in a private or public type of meeting set up.

Stephanie:

Got it. To deepen the relationship that maybe all was virtual, or through just emails or just ordering, and you never know who's on the other side. You're trying to enable that relationship more kind of in person, but virtually? Is that how to think about it?

Marcelo:

Exactly. It's hard to give you more details yet, but we are going to be launching it this summer.

Stephanie:

That's great. When it comes to thinking about digital transformation, I know earlier you said that you would look to successful examples of other companies, of how they set up their eCommerce stores or strategies they were utilizing. That was the early days. Is there anyone now that you look towards as a leader when it comes to digital eCommerce, or someone that you're following closely where they have best practices that you guys like to keep tabs on?

Marcelo:

I don't think there is one company. I think, of course, coming from Square, we look a lot at Square and what they have been doing. But I think our platform is special in the way that we combine these local stores, these local relationships into an online global marketplace. I think of our platform as being or having some intersection with Pinterest, for example, which creates a very nice experience for people to navigate through things that they are interested in. We as a platform, I want our customers to enjoy this experience of finding products. Our customers, if you think about it, they start at a small store because they love to find products to show people, to sell, to show their friends. To be able to get these type of people to shop online, we need to create an enjoyable experience for them as well. They need to come to a website where they enjoy navigating, they enjoy looking at products. We're going to show products that are always relevant. They can keep diving deeper into a category and finding new, cool products that they like.

Marcelo:

Again, it's not just looking at eCommerce, but looking at what are the platforms that are offering the best possible experience that really get people to be hooked onto them? And trying to merge it all into our own platform.

Stephanie:

Yeah, I love that. I think that's such a good reminder that just because maybe you sell clothing, you shouldn't just look at other clothing companies. You should maybe look at how food companies are doing it, or like you said, looking at Pinterest and how they display images. Trying to just tap into completely different verticals to then pull those best practices up into your company, I think is super smart. All right. We have a couple minutes left. We always do a lightening round at the end where you answer a question in a minute or less. I was thinking about starting with the harder one first, and then doing the fun ones afterwards. How does that sound?

Marcelo:

Sounds good. Let's try.

Stephanie:

All right. All right, Marcelo. It's your job to stay ahead of tech and expectations and competition in the industry. In your expert opinion, what's up next for eCommerce pros?

Marcelo:

Oh, I need to think. This is a hard one.

Stephanie:

Yeah, got to start with the hard one first. Then we get to the fun ones.

Marcelo:

Yeah. Answering from experience, of course, that's very important. That's Faire. eCommerce is not just about showing products anymore, or letting people navigate through categories of products. The future of eCommerce is really a very customized, personalized experience. Data science is mandatory for successful eCommerce today.

Stephanie:

Yup, completely agree on that. All right. What's up next on your reading list or podcast list? It can be your own podcast, if you want, the Brick and Order.

Marcelo:

It's definitely our own podcast, talking about podcasts. I have enjoyed it so much. It inspires me to keep doing my work. The next book that I'm reading, I have just started, is Finding Genius, which is VC related. It's not really eCommerce, but it's pretty interesting.

Stephanie:

That's great. Yeah, exploring different industries and verticals. That's what it's all about. What's up next on your Netflix or Hulu cue?

Marcelo:

I have just been watching random things. I haven't had much time to watch TV lately with all the things we have been doing. I finished watching The Vikings on Netflix. That was the last series I watched.

Stephanie:

Very cool.

Marcelo:

After that, only random movies that I just find. They might even be old movies. There's nothing exciting. Usually I fall asleep if I start watching it.

Stephanie:

Hey, that can be a good way to slowly drift off to sleep.

Marcelo:

Yes.

Stephanie:

Once you can leave your cottage in Toronto, what's up next for travel destinations for you?

Marcelo:

Oh, that's an easy one. I was just about to grow on a cruise.

Stephanie:

Oh, where to?

Marcelo:

Actually, I was considering going on the cruise when this whole thing started. Max and Daniele were telling me, "There is no way you're getting to a cruise ship right now." We were going from New York all the way to the Caribbean and back.

Stephanie:

Oh, fun. Well, hopefully-

Marcelo:

I'm hoping to do that at some point in the future. I was really excited about it.

Stephanie:

Yeah, I hope so too. All right. Then the last one, what's up next on your shopping list? It can be tech stuff, it can be something you saw on Faire that you're like, I want to try and order that. Groceries, anything.

Marcelo:

On Faire, I have been ordering a lot of things. The next thing that I want to buy is a drone.

Stephanie:

A drone? Okay. What kind of drone are you thinking?

Marcelo:

As I am at the cottage, that's why I want to buy a drone. As I have stayed at the cottage since this social distance has started, I would love to have a drone that I could use to explore the forest around us here, and maybe find some of the animals that are around. Deer, and rabbits and things like that. That's next on my shopping list.

Stephanie:

That's fun. Well, maybe all the COVID stuff has a little plus that is making you explore different hobbies that you didn't have before.

Marcelo:

Exactly.

Stephanie:

All right. Well, this has been a really fun interview. Everyone go check out Brick and Order after this. I know I'm going to do that. Marcelo, thank you for coming on the show.

Marcelo:

It's my pleasure. Thank you very much for having me.

 

For those not in the know, The Mars Agency is an independent agency that combines the best of technology with the best human intelligence to provide solutions to businesses throughout the world of retail and eCommerce. And one of the Martians who leads the charge at Mars is Amy Andrews, the SVP Business Development & eCommerce. On this episode of Up Next in Commerce, Amy walked us through all the trends she?s been seeing in the eCommerce industry, including the changing consumer behavior, the rise of omnichannel experiences, and why companies that can crack the code of using voice plus video technology could see a huge payoff.

Key Takeaways: There is an opportunity to merge eCommerce and influencer content in order to make a more relevant and personalized shopping experience The amount of data in the eCommerce world is overwhelming and can lead to losing the humanity of the work, which Mars tries to avoid by having a blend of the best technology and the smartest humanity Voice shopping still hasn?t reached its tipping point, but there is data that shows that voice technology is growing in the world of eCommerce

For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.

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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible eCommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we?re ready for what?s next in commerce. Learn more at salesforce.com/commerce

--- Transcript:

Stephanie:

Welcome back to Up Next in Commerce, this is Stephanie Postles, co-founder of Mission.org and your host of this lovely podcast. Today we're joined by Amy Andrews, SEP of business development and eCommerce at the Mars Agency. Amy, how are you?

Amy:

I'm doing well Stephanie, how are you doing?

Stephanie:

Doing great, yeah as great as can be. So, when I heard of the Mars Agency, I saw that you called your, was it your customers or your employees Martians?

Amy:

We call our employees Martians, very lovingly.

Stephanie:

Oh man, I love that. I was trying to think of a name I wanted to give our employees, but nothing comes close to that. Tell me a little bit about the Mars Agency and how all that came about.

Amy:

Sure. So the Mars Agency has been around for over 45 years, started by an amazing woman, Marilyn Barnett, and really our focus has been on marketing to shoppers over that last, almost half a century. And Marilyn was really a pioneer in this space, she used to be when she started kind of the grocery model who would hold the box of laundry detergent as people walked by. And really just, yeah, and talk about women in business. She was just such an interesting leader and saw that as a marketing opportunity for brands at retail, and started the Mars Agency. And we have a long history in shopper marketing, and shopper marketing is really just marketing to shoppers so, as that has evolved and how people shop has evolved, we followed them and led them to all those different places.

Stephanie:

Got it. So are you working with large brands to kind of teach them the trends in the industry and how to market to, like you said, the shoppers, is that how to think about the Mars Agency?

Amy:

Yep. We work with a lot of large consumer package good clients so, like Campbell Soup, Nestle Waters, several others across top retailers. So Walmart, Target, and for me in the eCommerce space, Amazon is definitely a huge player.

Stephanie:

Okay, cool. And what is your day to day look like there, what is your role look like?

Amy:

So I lead our eCommerce team, which I mentioned some of the retailers but we really work across all eCommerce retailers and digital platforms. If you think about things that some of you probably use more recently than others like Instacart and other delivery services. We help brands market to their shoppers in those spaces, and really anywhere that you can buy a product online. Which used to be physical stores would convert it online, or your kind of Amazon, Pure Play retailers, and now as I'm sure you've experienced definitely, there's a lot of different options to buy online as you're scrolling through. Instagram you can shop now and kind of always be almost we're moving towards one click away from a purchase in any environment so, that's really what my team focuses on, for our clients, how do we help them market and ultimately sell more online?

Stephanie:

Got it. Has everything with COVID-19 kind of adjusted your strategy of what you're advising your clients to do? Or what kind of shifts have you made when it comes to that advisory role?

Amy:

Yeah that's a great question. I think we have seen a lot of data as this, sadly continues for us. But it has definitely had a huge impact on the eCommerce space, particularly for grocery, since a lot of our clients are the CPG packaged clients. We've seen online grocery projections in the last couple of weeks reach what we thought they would be in 2025. So there's been, yeah huge growth in this space, and a lot of new users to this space so, we know that's out of necessity, but again as this kind of continues, we think that a lot of these people, like 60% of people tried a delivery service for the first time in the last six weeks. That's a ton of new people who are buying new groceries online and, yeah there's been a lot of experience as I'm sure you've heard with, not being able to find what you want, or having slow delivery time-

Stephanie:

Yeah. Being out of stock of my favorite matcha tea, very disappointing.

Amy:

Out of stock, yes. Which is a little bit easier to deal with than toilet paper but-

Stephanie:

Yeah, I guess.

Amy:

I guess it depends on where you are on both with your supply but, no we've had ... Yeah, a lot of people are having to make different choices and having to try things but as this continues, I think people are forming new habits, and even new preferences, so it's definitely influencing how we're advising our clients and where they should invest. I think what's also interesting is because of a lot of those issues, a lot of our clients and a lot of retailers have just put their marketing on pause, to make sure that they can get things in stock, and for retailers to make sure that they're not price scourging or kind of promoting things in the wrong way that would send the wrong message.

Amy:

So I think what will be interesting long term is, some retailers and brands kind of catch that, and once they have products in stock, once, even Amazon this week has fixed some of their Amazon Fresh delivery issues. As those things start getting worked out, I think they'll be a lot more interesting marketing opportunities, especially as you think about all those new users, either to a retailer or to a brand. I don't know if you bought a different tea brand when you couldn't find yours.

Stephanie:

I did, I did.

Amy:

Yeah, a lot of people are having that experience right, so then it's like how does that new brand try and keep you and then how does your old brand try and get you back? So we're definitely working with our clients on all those types of questions.

Stephanie:

Got it. Do you think clients should be turning off their marketing budgets? As you mentioned, a lot of them are doing that right now, do you think that's a good strategy, or should they till be maybe thinking of ways to experiment because this is a whole new world, it might be actually a good opportunity to kind of experiment a bit without offending people if possible?

Amy:

Yeah, no, I think ... Yeah, I think it is a bit of both. I think initially, not just marketing but a lot of businesses and industries, just kind of paused to figure out and make sense of what was going on and determine what they should do next. And I think that was, probably a smart move at the time, just to not make any rash decisions. But we're definitely partnering with our clients now on, what is the right way to market. I think one of the trends that we'll see is probably a lot more regional and geographic differences. Like we in the Bay Area are still sheltering in place for another month. So, online shopping here will be very different than other states that are opening up.

Amy:

And, marketing to those people might be very appropriate now, and I would definitely recommend testing and trying things in that space.

Stephanie:

Got it.

Amy:

So I think it's going to have to be a combination.

Stephanie:

Yeah, completely agree. Do you see the companies you work with coming to you with similar struggles? Like other themes that you're hearing and any advice around some of those struggles that they're experiencing?

Amy:

Yeah. I think a lot of the marketing struggles, or just some of the struggles on a more macro level of just the unknown, especially in terms of timing and how long it will continue. And then we kind of have some of the same issues in terms of data, you know there's so much out there, like when you turn on the news, you see so many different stories and different points, sometimes it's kind of hard to determine what are the right guidelines, or what's the right data that you should follow. So, we're really treating this as an ongoing conversation with our clients. And it does differ by geography, it does differ by category or industry. So, I think taking a really custom approach and being able to adapt now, and have a strategy where you're also able to easily adapt moving forward, is going to be really important.

Amy:

We typically do annual planning with our brands, and we've already been talking, you know we're already in the stages of re-planning but, I think re-planning will be something we do all year now, I don't think it's kind of the pre COVID plan and the post COVID plan, I think it's going to be continuing to adapt. And the brands and retailers that are able to evolve in that way are probably going to be the most successful.

Stephanie:

Yeah, completely agree. It seems like a good time to kind of pivot in certain areas, cut projects that aren't, maybe as necessary, and thinking in a completely new light based on everything that's happening. What kind of things do you see being cut or changes be made in these re-planning sessions at these companies?

Amy:

I mean, the big question now, which the Mars Agency is tackling with our clients is, what might come back in-store and what might not, in terms of marketing and planning around that? There's the kind of legal or even not legal, but kind of the official guidelines or restrictions side of things, in terms of how people shop and how many people can enter the store at what time. But then I think there's also a very real consumer behavior piece of it. So, one thing that has happened in stores and that a lot of our brands being food brands, we've done is, things around sampling and trying new products. And whether that's a cooked piece of food outside of a wrapper, or a sealed up new product, I think in both of those cases, I don't know if for myself, and if I think about other shoppers, I don't know how eager we're going to be to take either one of those samples now.

Amy:

So, we're trying to rethink things like that that have been really traditional vehicles to encourage trial, how do we think about that in a new way? Either if that's a re-plan in terms of, what do we do with those dollars and invest them in something else? Or what I think is maybe more creative and exciting is, how do we think about sampling in a new way? Or how do we think about demos in a new way? And that's where we really see the in-store and the eComm world kind of colliding, and really creating some of these omnichannel is the word that we use a lot.

Stephanie:

Yeah.

Amy:

Omnichannel experiences, so that we're moving towards that anyway, and I think COVID has been an interesting tipping point to, as you said, kind of pivot and think about these things, and push ourselves to think about them even more differently now, to deliver the best shopper experience.

Stephanie:

Yeah, it seems like it could be with everything bad that happened, maybe a good forcing function to kind of push some brands into the eCommerce world who maybe weren't fully utilizing it before, or not at all. Do you see them being able to adapt to some of these changes that you're recommending them or being able to shift something that they've always been focused on selling in-store, always focused on someone having that in-person experience, like you said, whether it's a sample, a demo, have you seen them be able to pivot on to eCommerce, or being open to that, or even having the technology to do it?

Amy:

Yeah. I mean I'm pretty optimistic, so I think yes, I think all brands can do this and adapt and pivot and do so relatively easily. I think that was a big question before all of this, and the crisis was just how quickly should each, brand based on their category, be moving into this space? And a lot of brands were over-invested in eCommerce because they felt that that was going to be the future so they're a bit of a step ahead. And that doesn't mean that other brands can't catch up but, I think COVID has just been a kind of internal tipping point for a lot of organizations to think about how they're treating eCommerce and maybe prioritizing it a little bit differently.

Amy:

So, yeah for brands or companies who weren't thinking about it before, I would definitely say, now's the time. And, because the whole industry and the whole world is really shaken up, it's a great time to think about how you're treating eCommerce differently, and then within the eCommerce space, what we can be doing differently there as well.

Stephanie:

Got it. Is there anyone that you ever looked to in the industry, where you maybe point your clients in that direction of being like, hey, here's an industry leader when it comes to the checkout experience, or the shopping experience, or the unboxing, or anything like that? Anyone that you guys kind of look to as like a leader in the space?

Amy:

Yeah, that's a great question. I think there are a lot of examples of brands or retailers doing, I would say pieces of the puzzle really well. The one that comes to mind for me as someone who is creating a really holistic, best in class experience, is actually a retailer. I think IKEA does a phenomenal job in this space, in terms of just digital experiences. They have different digital technologies, and apps and platforms, and AI, and all of that, that is really just helping recreate the experience of going to an enormous, huge physical retail destination, I mean, I can't think of a more traditional shopping experience than kind of browsing through those huge displays in IKEA.

Stephanie:

So many levels, at least here in Palo Alto.

Amy:

Yes, definitely. I think of like a huge retail footprint that they've had to translate into a digital experience. There's one now where instead of IKEA saying, what's the best .com site or digital catalog? They are thinking what's the best shopping experience? And now you can as a shopper, walk through an IKEA store, through virtual reality, and pick different products, and then also using AI to see them in your own bedroom. So I think they've just done a great-

Stephanie:

Oh wow, that's awesome.

Amy:

... Job. Yeah, I think I've just done a great job of thinking about it a little bit differently, and kind of doing it in a fun way that that's the biggest piece for myself as a shopper as well, that's sometimes missing from the online shopping experience. It's so convenient, and there are so many wonderful, wonderful benefits that come along with that. But you do lose kind of the fun of shopping, and browsing around, and I think IKEA has done a nice job of bringing some of that physical experience in a fun, very branded IKEA way, to their shoppers digitally.

Stephanie:

Yeah, completely agree. I think sometimes people forget that it's not just shopping and trying to buy the thing, but really, like when I go to IKEA, it's my day. It's a whole experience, I'm ready, I'm prepared, I've had my snack, and I'm ready to go through every single setup area to like look at their bedroom, and see how they set it up, and look at this living room setup and incorporating VR into that shows that they know exactly why their customers, at least customers like me come there, is to be able to experience it like I'm actually there. So yeah, that's great. Are you advising other companies to kind of, not only think that way but maybe moving into technologies like that, that they weren't utilizing before? Whether it's VR, or AR, or any of that kind of stuff?

Amy:

Yes. And I would say just even more broadly, we're advising our clients, and working with a lot of our clients right now on, how do we create the best digital content that's going to be relevant for an eCommerce shopping experience? So, yes that could be an amazing VR IKEA type experience, or that could be a six-second video on a product page, that tells you exactly what you need to know about the benefits of this new water that you're drinking. So I think it's about, what's right for those different brands and, then having that content strategy that then dictates what technology you might need to use to deliver it.

Stephanie:

Got it. Yeah, I definitely see that shift of a lot of companies, brands, turning into kind of their own media companies when it comes to producing their content, and focusing heavier on that, and not just on a paid strategy where maybe that's been, how it's been for a couple of years.

Amy:

Yeah, I think I've also seen brands, hopefully, using technology to deliver experience instead of just kind of using or testing, technology for technology's sake, or to have something new. So, it used to be QR codes, and then maybe some AR that just, is just kind of there for the fun, cool factor, that's interesting. In some cases, it's kind of fun, but I think if you're just doing it for the tech's sake, and it doesn't deliver a consumer, or a shopper benefit, it's really a fad and kind of dies quickly. So, we're always trying to think about, what's the need first, and then what can we use to deliver against that?

Stephanie:

Yeah, it's good to flip that mindset when it comes to that, because yeah I can think of, especially QR code, that's a good example. I've seen random places it's on there, like a cereal box or something that delivers no value, and I don't actually want to even see what's behind that QR code, it seems like it was just placed there because everyone was doing it. So-

Amy:

Right someone told that-

Stephanie:

... You definitely-

Amy:

... Told that marketer, "You need a QR code." And they checked that box.

Stephanie:

They did it.

Amy:

Yeah.

Stephanie:

Have you, when it comes to content, I know a lot of brands right now like you said, are focused on that and trying to make sure they get, of course, new customers in that vertical, and also make sure they put out great content. Have you seen any best practices with their clients around like you said, short product videos seem to really increase conversions where you know, like something on YouTube, if you've never been on YouTube maybe isn't the best way to go? Is there any themes around that?

Amy:

Yeah. I would say generally we always start with what's going to be the right message for the type of media, or for the type of tactics. So, you mentioned YouTube, that's obviously a very different format than say Pinterest, who's also having quite a moment with everyone at home looking for inspiration and recipes, and all of that. Obviously, that type of content you would develop for that would be very relevant to our brands, but also relevant to that platform and what we know people are looking for there. Yeah, I think we're definitely moving towards kind of more bite-size, or smaller content formats, in general. So definitely short format, we always give the example of, you don't want to have your 30 second or 67, 60 second, excuse me, TV spot and just use that everywhere, on your eCommerce sites or on your digital media more broadly, we want to be tailoring it for the environment.

Amy:

I think another thing that we're trying to do a lot more of now, in terms of a trend, is how are we leveraging influencer and user-generated content in a new way? So, if we talk about relevancy, especially in the eComm world where reviews are so important, and the new mom, you might go on and you're testing the reviews of a stroller, or a really important product for your baby more than you trust advice from your own parent, or from your mom peer group even right? So, people play a ton of influence on that, especially in the eComm space. So, thinking about how we merge eCommerce and influencers, has been really interesting and we've been working with our clients on taking influencer content from a particular shopper since we're in that space.

Amy:

So, how do you leverage Walmart influencer content on walmart.com, and Amazon influencer content on their site? And in doing so, you create an even more relevant experience for the shopper, because not only do they have those product details and reviews, but you've kind of put all that influencer content in one place, so they can have more ideas on how to use your products, or just more relevant images and messages based on people like them.

Stephanie:

Yeah, that completely makes sense. I wonder if right now, with how the market is, if it'll kind of give the wrong signals to companies. Like maybe, you have all these people at home so, if you see content is very easy to get right now, you have people maybe at home who actually want the longer podcast and the longer clips. Whereas after all this starts to calm down, I wonder if it'll be hard for brands to kind of pivot again, if all that reverses. And, all of a sudden there's not many consumers who want to create content for free anymore, and long reviews and, people want those shorter clips, like you talked about. Do you see any problems coming up by brands acting too quickly right now, to kind of pivot to what the environment is now? To then it reversing maybe again in a month or six months.

Amy:

Yeah, I think that's a good question, and that's why I think, as I kind of mentioned earlier, we're taking a proactive but kind of cautious approach. So, one thing we did for one of our brands was, we just went out immediately and pulled out content that, I don't want to say offensive, because that's almost too strong of a word, but pulled out content that wasn't culturally sensitive. For example, a group of people in a home that was more than 10 people.

Stephanie:

Got it.

Amy:

We went in and took all of that content down, you know, just to make sure we were being sensitive, and we were also being relevant. Even if someone wasn't particularly upset about it, and maybe they had no thought on it, but we want to make sure we're giving them the most relevant message of how our brand can be used in their lives. So I think that it is going to be an evolution, it's going to be really interesting to see kind of what behaviors stick. I think bread makers was one of the top terms searched on Amazon, the last several weeks. So, I wonder if we're going to get burnt out on making bread anytime soon.

Stephanie:

That does sound delightful but I'm like, yeah, I don't know how long that trend will last because, my mother-in-law makes bread, and man is it a process.

Amy:

Well, maybe she needs a bread maker.

Stephanie:

I know, she does.

Amy:

But yeah, I think it'll be interesting to see how much of those are kind of the COVID trends that then people get sick of it, or people want to, I'm not sure, maybe people will want to race back to the stores like you said, it'll be maybe really exciting when an IKEA opens, and you can go back in, and browse around and get your meatballs and all that. And I'm thinking people are going to do that in a different way. And I think that we're going to have to continue to evolve. So, that's what I mentioned about the kind of planning, I think annual planning is dead. I think we're going to be planning over and over again, if that's monthly if we can get kind of more on a routine, or maybe that's just continuous as things change, and as the news changes.

Stephanie:

Yep, completely agree. So, the Mars Agency has been around for almost 50 years I think, how does the company and the Martians of the company, recognize trends and then act on it quick enough to help your clients?

Amy:

Yeah, I think, I honestly think that's why we have been able to be around so long. In the marketing and advertising world, we're one of the few independents who's left, we're still family-run, the company is now run by Marilyn's son and Ken Barnett. And I think that having that independence, and having really just a lot of still that entrepreneurial spirit, has allowed us to really adapt as the industry has adapted and, in most cases kind of stay one step ahead. We talk a lot about our Martians, as you said, and really think that there's a balance between, our people and our technology. So, over the years we've, of course, as most industries have invested more in technology and data, and all of that, we've also really balanced that with our Martians and having, what we say is the latest technology and the smartest humanity.

Amy:

I think some companies, especially in the eCommerce space, because there's so much data there, and so many different tech platforms, I think if you go too far in that direction, well one, there can just be kind of data overload, and you're not able to find the insights and all the data. But two, I think you just lose a lot of that humanity, and kind of that person who we like to be who's saying, "Well, why is that the case? And, what does that data point mean?" And kind of taking it that step deeper, so that we can really understand what the human behavior is because I think that's where you have the best marketing ideas that really resonate with people, instead of just kind of trying to attack a data point.

Stephanie:

Yeah, completely agree. Are there certain metrics or data points that you've seen many brands use that you're like, you guys are all using this, but it actually doesn't really tell you much. Instead, maybe you should look at this instead.

Amy:

Well, because we're focused on shopper marketing and conversion, I mean, our ultimate data point is always sales. So we're always looking at, how many products were we able to sell as a result. Along with that though, you obviously want to understand what other impact you might have had on engagement. Or, in some cases, there are other circumstances that are affecting sales that are out of our control. We, of course, want to measure all the other media metrics as well. I think to answer your question on, are there certain metrics that brands are looking at that they shouldn't? I don't know if I would say you shouldn't look at this, but I think a lot of brands are placing a disproportionate kind of weight in the eCommerce based on their ROAS or their return on ad spend.

Amy:

And there's just some interesting ... There are some ways that you can get a very high ROAS, and that a lot of media companies or retailers will say, you had a very high ROAS and it's typically because you are reaching people who would have purchased anyway. So I think that's one where, it does beg the question of sometimes having a person or maybe a smarter data set that's kind of suggesting, why is that the case? And digging a little bit deeper to understand the why behind that metric.

Stephanie:

Yeah, that seems like an easy way for someone to be like, hey, look how great those ads doing when you're like, all those people were already previous customers so.

Amy:

Right if you're ... Yes, if you're targeting past purchasers, you can typically get a pretty high ROAS so.

Stephanie:

Yeah, that's pretty funny. Are there any new emerging technologies that you're advising marketers to look at or other like eCommerce platforms that you're telling people to check out?

Amy:

I don't know if I would say this is an emerging technology, but just in light of all of the changes around COVID, I would say looking more at new delivery platforms or channels. And this is something that, we're just having early conversations with our clients on now. But, there are a lot of what used to be in the world of retail, relatively niche players You see a lot of those platforms having really explosive growth now, kind of during this COVID period. So it'll be interesting to see how that behavior might change over time.

Amy:

I think we're also seeing some really interesting partnerships, so you can have your 7-Eleven order delivered by DoorDash. Or you can make a reservation to shop at a local store on OpenTable. Again, those aren't new technologies, but I think it's kind of new platforms and new channels that will be really interesting to test and learn as we go, as you're suggesting, and then also as things, hopefully at some point, kind of start to normalize.

Stephanie:

Yeah, cool. And then how do you think about, I saw on your website that you were talking about getting the most out of voice technology and how to conquer Amazon? Do you think, I know voice technology, it feels like it's been trying to ... It's been like that up and up for a while and no one's really cracked it. Even when I was at Google, it still felt like they couldn't crack it. How do you think about incorporating that into what your clients are doing? And same with Amazon as well?

Amy:

Yeah, that's a great question and you nailed it. I think it has been growing, we have on my eCommerce team, a dedicated voice specialist has a background in user experience. And, similarly, I think we've had tons of great conversations around voice, we've seen tons of great data in terms of how it's growing, but I don't think we've reached the tipping point yet of voice shopping. I think it's still, some of the data and it'll be interesting again, to see kind of how this being at home more might change that. But, there are definitely different behaviors that have grown with voice more than shopping has. We're still actively pursuing and exploring that with our clients. Mars is the preferred Alexa developer, we also work with Google Voice as you mentioned.

Amy:

But I think it just comes back to, really the foundation of what we do which is, how can we create better shopper experiences, and voice definitely has the technology to do that. I think it's just about the adoption, especially in the shopping space. So to date, we've worked with our clients on, creating skills that can be useful to shoppers based on their different categories. But I think it'll be interesting to maybe see how COVID changes the voice space as well.

Stephanie:

Yeah, I could see that becoming useful, especially as the catalogs get bigger of what the brands are putting on their eCommerce sites. It'll be easier if you're able just to tell the website like, I want to find this, instead of having to go through the whole catalog and try and find exactly what you want, and it probably growing by 50% from the time you were there maybe two months ago if they can crack, getting the voice technology to actually work and be seamless, and not an extra step.

Amy:

Yeah. And then I think another thing that'll be interesting now is just, I even have to remind myself as we're talking because typically we think voice and we think, speaking into the speaker, but with the combination of voice and video. Plus people being at home and maybe wanting more, we know there's been a huge surge in recipe searches for example. I think having the voice plus visual is a different way that brands should be thinking about voice now, and something that we're working with some of our clients on.

Stephanie:

Yeah, completely agree. And what about the conquering Amazon piece? I'm only thinking about how that maybe has shifted a lot, especially lately because of everything Amazon is doing of like, only surfacing maybe essential things, and changing shipping times, and maybe kind of burying certain retailers if they didn't view them as essential. I could see a lot of people kind of getting scared about relying on Amazon as their platform to sell from, and maybe moving away from that and trying to build their own eCommerce store on their own, and just do their own thing. Do you see that kind of happening? Or what are your thoughts around Amazon?

Amy:

Yeah I mean, Amazon could probably be a whole nother topic or hour.

Stephanie:

A whole podcast one.

Amy:

Exactly, I'm sure there are millions. But, I think in terms of, we've been really digging into what has this last six or so weeks meant? And where have we seen new growth? Walmart.com in March was the number one downloaded app in the grocery space and surpassed Amazon for the first time. So, it's interesting to kind of see all these stats and you think, oh, maybe Amazon isn't as important. Amazon just still dominates the eCommerce space. Which is why you mentioned, we have it on our website. I would say even as of two months ago, people were using Amazon and eComm interchangeably, almost.

Amy:

So, it's great and it's exciting to see that, and as we have always advised our clients, we should think about this holistically across this space and across all different retailer dot-coms and delivery platforms like your eCommerce strategy should be comprehensive. But I don't see Amazon ever not being a component of that, at least not in the near future. There are a lot of issues now from a user experience, from a shopping experience, also as you mentioned with brands and maybe being deprioritized for essentials or not being able to market in the way that they have been able to before. But it still really is the lion's share, it's still seeing the most growth during this time period.

Amy:

So it's not, I don't think it's a place that brands can afford not to be, with the exception of maybe a couple of the really big ones. But I think the idea of trying to tackle eCommerce without Amazon, or without having a strategy around Amazon, and there's by the way, a bunch of different ways that you can do that, it definitely doesn't have to be every brand's number one eCommerce retailer. But I think it probably has to be part of the strategy, just because of the number of shoppers that are using that as their primary eCommerce destination.

Stephanie:

Yeah, agree. So earlier we were talking about brands creating content, how do you think about the intersection, or what do you advise your clients when it comes to the intersection of content management system, their commerce platform, and their CRM? How do you see that working in their space are any best practices around that or advice?

Amy:

Yeah, I think, I mean one is to be thinking about the total experiences we've been talking about, and making sure that, no matter what agencies or, in our case, we're oftentimes working with a lot of other agencies either at different parts of the funnel or that the brand is working with for different pieces of their advertising. A lot of our clients are large enough that they're hiring multiple agencies. So I think it's, having IT as planning processes that are very integrated, and making sure you're connecting all the different partners so that you can leverage all of the different content and all of the different wonderful assets.

Amy:

In terms of, what should the content strategy be, I think it comes back to, what's going to be best and what's going to be needed and relevant for the shopper in that environment. So, we're really working with our brands in the eCommerce space on, how are you creating eComm content that typically doesn't always exist in other brand channels? So, how are you creating content for your product pages with information that people need to know when they're at that point of buying you versus buying a competitor. If you don't have that right content, let's create it, we help our clients map that out on what's needed in terms of assets, and videos, and enhanced content, and all of that.

Amy:

And then really track that over time to make sure that we're constantly optimizing it. We have a new technology, an eShelf maximizer tool that uses data to look across different websites, and identify across thousands of skews for a lot of our brands, what product pages might have some issues or some areas of opportunity, and then we can fix those right away. And with the retailer's constantly changing their algorithms and limitations, and all of that. This is kind of a huge pain point for our brands so, even though we'll optimize content as brands change their packaging, or new products launch, there's kind of continual issues and continued opportunities to optimize. So we're using technology to make sure that we can stay ahead of that and be really proactive for our brands.

Stephanie:

Got it. Do you see them being able to kind of manage that in a way that stays organized? Because, I kind of view a lot of brands having their content management as one silo, and their CRMs another one, and their commerce platforms another one, it doesn't seem like they've been able to integrate like, well, here's how our content is affecting our customers and actual conversions. Do you see that kind of shifting now? Or are a lot of your brands already ahead and they're already kind of all intertwined, and they got it?

Amy:

Oh, I wish that was the case. No, I think, I mean, I think we have silos within the Mars Agency, I think most companies have silos, I think most of our clients would say that they have silos within their companies as well. Unfortunately, I think that is a reality so I don't want to gloss over that picture too much. I think it's about, how do you look for ways to work and collaborate across those silos, for more of a common goal? So, I think eComm has been a silo for a lot of brands today. We've kind of siloed it off and said, let's deal with that separately because we don't quite know what to do with it, or maybe it's still a little bit too new for our brand or company.

Amy:

And this is really a moment when I think we can be integrating it in, we certainly have done that at Mars. Our team is now integrated with our customer development team. So when we're working on a Walmart plan, it's not the Walmart in-store plan and the walmart.com plan, we're all one team. So I think hopefully, that would be an outcome of this time period is kind of breaking down some of the eCommerce silos. But I think as you pointed out, there's definitely still an opportunity for, I would say most brands, to kind of better connect. I think content and eComm are coming together much more naturally. I think CRM is still a piece that we could, as an industry, probably better connect to some of the other pieces.

Stephanie:

Yep, completely agree. Have you seen, like what do you think the first step is to that digital transformation? Or have you seen a company really do it well? Is it like start from scratch, throw everything away and start over? Or, how have you seen that work?

Amy:

I think that actually, most companies have kind of, that we've worked with, have kind of taken eComm out and brought it back in, or taking the digital team out and brought it back in. And I think that's actually an okay approach in terms of, especially where you are with your company's growth in this space, some kind of half joking that eComm has been a silo. But, in a way that's been necessary for some companies because, as eCommerce has grown, it typically starts off as an add on within a current team, and then as it grows, it kind of gets its own silo, or its own little team on the side, and then as they get big enough, they come back into the integrated team, typically the marketing team, or in some cases, the sales team.

Amy:

And I think that that makes sense because, as the space grows for different clients, it needs different resources. I think a lot of companies are going to be fast tracking that now, so they might skip that step of having the separate eCommerce team and just automatically integrate it. I don't think that's a bad thing, I think that could be beneficial to, instead of kind of separating it or starting from scratch, just integrating in from the team from the beginning.

Stephanie:

Yeah, that makes sense. That sounds like good advice. So, do you see any disruptions coming to eCommerce? Like one thing I've been paying close attention to, or reading up a bit is about these pop up retail stores. And I think maybe that could be a trend that a lot of retail stores are closing down right now, and people might be scared to actually set up locations for 10 year leases, after all this dies down. So I'm wondering how maybe that could influence the future of retail and eCommerce. Do you see any disruptions like that that is on the horizon that you guys are looking into when it comes to eCommerce?

Amy:

Yeah. I mean I think there's going to continue to be a lot of disruptions, and probably a fast tracking of what would have happened anyway. So, some, as we've seen in the last several years, some really established big box retailers have closed down, or shut several of their locations, because that huge size of space didn't make sense anymore, and to your point that frees up space for other types of retailer formats. I think coming out of this that, one of the disruptions will be, what we go to a physical store for, versus what we continue to buy online. So I think there's going to be a lot of differences in those categories, and even in in subcategories within that. I think what's going to be interesting about the physical stores is just, how do we deliver an experience in those stores that is worth kind of leaving your house for?

Amy:

And I think some of the best retailers, and some of the best brands have been talking about that for years, right? How do we create a physical experience of our brand? If you think of like the flagship stores, that's meant to be bringing the brand to life and delivering on that experience, and then you think of retailers who have been improving their in store experience, to get people to browse other categories, or browse other sections. I think a lot of that was a trend that will now really be pushed and challenged, and fast tracked as we rethink about what that physical space means to a shopper. So, pop ups, as you mentioned, were great because they were delivering a different experience and that was a reason to go, see something new, or maybe see something that you could only buy there.

Amy:

I think exclusives will probably continue and be played around with in a new way in terms of what's exclusive online versus in store. But I think it's a little early to tell what disruptions are going to continue, and how people are going to use those physical spaces. I mentioned it earlier, but I could also see there being a big difference in geographies. The coasts have always been a little different anyway, but I could see the the retail experience on the coasts being a little bit slower to change at first, and then probably having more disruptions in the end.

Stephanie:

Yeah, completely agree. I can see also when they start streamlining the return process, I've already started see that at least with Amazon, where it's like, you don't even have to bring a box now or anything, just bring the good back there. Once that starts feeling easier, it seems like a lot of things could shift because, to me that's been the biggest hang up of ordering things online and, not knowing how to really return it, and not knowing if I'm going to feel like doing it, and keeping the box, and printing out the label and all that stuff. It seems like that could be a big shift too, and it's kind of already been forced that way over the past couple months.

Amy:

Yeah, no, that's a great example of now people are having to get creative in how they do things, both retailers and shoppers. And also, just as you try things and get used to it, you might realize that the return process wasn't as bad as you thought. Or the delivery window that your groceries came was actually more convenient than what you'd wanted before. So, I think some of those habits are going to change, which is always interesting to see, because now we're still in kind of the survey phase of, what do you predict that you're going to do? Or will you use this service again? And it's always interesting of course, to see what people say versus what they actually do.

Stephanie:

Yeah.

Amy:

And I think just over time as we all keep doing this, we could say, we hate it and it's a pain. But some of that we're going to be adopting those new habits that will stick with us in the longer term.

Stephanie:

Yeah that'll be really interesting to see what actually comes from that. So before we move into our lightning round, is there any other thoughts you have for eCommerce leaders or trends or anything else you want to highlight?

Amy:

No, I think you've covered it. I mean, I think this is just such an interesting time for the eCommerce space that, if you talk to someone else next week, they might say something different, and that's what's kind of exciting about it is watching how quickly it's changing, and just really being able to adapt quickly to stay relevant.

Stephanie:

Yeah, that's why this podcast is so fun. All right. So the lightning round brought to you by Salesforce Commerce Cloud. This is where you answer each question in a minute or less. So you have a minute, you don't have to rush too much, but it's kind of whatever comes top of mind. Sound good?

Amy:

Great.

Stephanie:

All right, I'll start with the easier ones first, and then move to the harder one towards the end. What's Up next on your Netflix queue?

Amy:

Oh, this is the lightning round. Let's see.

Stephanie:

When your eight month old and three year old aren't hanging on you.

Amy:

Exactly. I have to move into my adult entertainment mode which also doesn't sound like the right phrase to use, so that shows that I've been watching a lot of cartoons lately.

Stephanie:

No more Daniel Tiger for you.

Amy:

I know I'm just glad that I can get off Disney Plus and over to Netflix. We are big fans of Nailed It, and with the at home baking, I know I'm a season behind on nailed it, so I need to get caught up on that.

Stephanie:

Cool. What's up next in your travel destinations after the pandemic is over?

Amy:

Oh, we were supposed to go to Vienna for my husband's 40th, so hopefully we can get that back on the agenda. But, next week I'm going to be driving from the Bay Area to Aspen to see my new niece so-

Stephanie:

Oh fun.

Amy:

It will be a road trip.

Stephanie:

Sounds awesome. What is the best shopping experience that comes to mind that you've had lately? Other than being in a store?

Amy:

Yes, I have not been in a store lately, nor had a good experience in a store lately. Well, just this week was the first time that I could get an Amazon Fresh order, and I am a pretty heavy user. So they had a lot of issues, so I was really excited this morning at 7:00 AM when my Amazon Fresh order arrived.

Stephanie:

Yeah, that's game changing. I love seeing them come up and deliver it. I'm like, this is nice. Not having to do it.

Amy:

Yes.

Stephanie:

What was the last thing you bought from an ad? If you remember?

Amy:

The last thing I bought from an ad. That wasn't one of my clients products?

Stephanie:

Yes, yep, that wasn't one of your clients [inaudible 00:51:31].

Amy:

Yes, that I was actually buying as a consumer, let's see. I bought some Hannah Andersen Star Wars pajamas recently for my three year old. They're very cute and available now and actually they did arrive quite quickly so.

Stephanie:

Awesome-

Amy:

I'd recommend that for the-

Stephanie:

... For PJ's.

Amy:

Yes for the toddler PJ's, they are great.

Stephanie:

Yep, I know all about that. All right, and the hard one, what's up next for eCommerce pros?

Amy:

Oh, that's a big switch from PJ.

Stephanie:

I know, that's why I saved it for last.

Amy:

Yeah, I think eCommerce pros are going to be ... Have much higher regard in their own industries, and have a lot more influence. So, hopefully what's next for them is being able to kind of take a greater role in that brand and marketing experience across retailers. I know we've talked a lot about Amazon, but I think it's, how do we integrate eCommerce and into everything that we're doing, and that should be really exciting for the eComm pros.

Stephanie:

Cool. Love it. All right thanks so much for coming on the show Amy, this has been fun.

Amy:

Thank you so much. Appreciate you having me.

How do you build a successful eCommerce business that has attracted nearly 5 million visitors in a month? For Jerry Hum, it took a few failures and a couple of stumbles out of the gate with his cofounders before finding the winning combination of users, demand, and products all in one. Jerry is a co-founder and the Executive Chairman of Touch of Modern, a members-only e-commerce website and app focused on selling lifestyle products, fashion, and accessories to men. On this episode of Up Next in Commerce, Jerry takes us through his early struggles and how he found the secret sauce to making his eCommerce platform one of the most popular among male shoppers. Plus he explains what metrics other eCommerce pros should be looking at, and gives some advice to other entrepreneurs.

Key Takeaways: For a multi-brand company, customer retention and lifetime value is the critical metric to look at Build the primary platform where your primary customer prefers to buy Combine marketing engagement and transactional data to prevent high engagement high cost marketing yielding low sales volume

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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible eCommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we?re ready for what?s next in commerce. Learn more at salesforce.com/commerce

--- Transcript:

Stephanie:

Hey everyone. This is Stephanie, your host of Up Next In Commerce. Today we have Jerry Hum. The co-founder and executive chairman of Touch Of Modern. Jerry, how's it going?

Jerry:

Pretty good. How are you? Thanks for-

Stephanie:

[crosstalk] good. Yeah, how's it going? So you're in a loft right now, right? In SF, living the quarantine life.

Jerry:

Yeah, in San Francisco.

Stephanie:

Yeah.

Jerry:

Yep.

Stephanie:

How-

Jerry:

[crosstalk] for a little longer than most other folks.

Stephanie:

Yeah. So what's your day look like with being sheltered in place and... I think San Francisco is even stricter than Palo Alto where you guys [inaudible] allowed to do even more than we are.

Jerry:

Yeah. Well, we actually started preparing for it a little bit earlier actually, just as it was making news headlines and most companies were still up and running. We were planning kind of contingencies and all that planning and seeing how work from home would be like if we had to do it. Luckily we came up with a plan just in time. We actually went into it before even California started making statements about it. So I think we are kind of in a pretty decent groove in terms of keeping the business running smoothly and all that. In terms of a day to day, I'm actually surprised as to maybe how engaged people have remained.

Stephanie:

Mm-hmm (affirmative).

Jerry:

Being that we have to do it all through technology. I actually started thinking about it, why is it that work from home is almost a little bit easier now than it was in the past. And I think it's because when it's the only option then you just do it. Right?

Stephanie:

You have to make it work.

Jerry:

Yeah. It's not like if half the office is doing one thing and then... Or not like half the office. If most of the office is at work and a few people are work from home then it's actually more difficult because the people in the office are like, "Oh, I'll just wait for that person to get in or something." But if this is the only way that every one is communicating then it's actually fairly smooth. Obviously everything takes a little bit more time and all that.

Stephanie:

Yeah.

Jerry:

[inaudible] day is actually longer than usual.

Stephanie:

Yeah.

Jerry:

All things considered, I think it's working pretty well.

Stephanie:

Good. Yeah. Hopefully it will all come to a close soon. How have you all handled... I mean has there been any struggles, I'm imagining taking photos of your products and things like that? That's probably a very in-person type of thing that [inaudible] people have perspectives on and all want to help. How are you handling things like that with your business that seem pretty hard to do virtually?

Jerry:

Yeah. So luckily, some of our folks have set-ups at home.

Stephanie:

Good.

Jerry:

Yeah. Because usually, photographers, this is not just a job. It's also a passion and a hobby. Right.

Stephanie:

Yeah.

Jerry:

So we've been able to make due... Obviously at a reduced capacity. Yeah.

Stephanie:

Yeah. Well, good. So maybe that's a good point to dive into what is Touch of Modern. If you were to explain it to the listeners and give us some background.

Jerry:

Touch of Modern is the only shopping destination that men visit daily. And we offer a [inaudible] mix of remarkable products across all categories and that you can use everyday.This could be anything from a flame thrower you can strap to your wrist, or the newest exercise gadget, or anything in between.

Stephanie:

Are women allowed? Because I was on there and I was like, "I want to buy some of this stuff." I would buy... Maybe not a flame thrower but there was some good stuff on there that I'm like, "I want this."

Jerry:

Of course, women are allowed. It's just kind of more... A little bit more of our differentiator. Because most E-commerce sights out there are catered toward women.

Stephanie:

Yeah.

Jerry:

[inaudible] we're not the only one but one of a few that really cater to men.

Stephanie:

Got it. Yeah. It looks awesome. A lot of the products. I was afraid to hit buys right away. How did you come to create the idea of Touch of Modern? And I think I read it was the third... The third times a charm. That you had done three other things, or two other things before that until you got to Touch of Modern. What was that like? What was that journey like?

Jerry:

Yeah. I'll give you the long story here, maybe.

Stephanie:

Good.

Jerry:

[Four] founders, guys from New York. The business actually was a peer-to-peer experienced market place. And this is kind of similar to what Airbnb has now. Obviously they built that on top of their existing business but we were trying to start from scratch at the time. That was extremely difficult because you're telling folks to change their lifestyle. Right? If you need to suddenly offer a cooking class, that's not a easy thing to do if you don't have the customers for it. Right?

Stephanie:

Mm-hmm (affirmative).

Jerry:

Or the time for it. And then we're telling customers to come on this platform and book stuff. But if you don't have the activities, what is there to book?

Stephanie:

Yeah.

Jerry:

So it becomes this chicken and egg problem.

Stephanie:

Yeah.

Jerry:

It came out of our own need because we were guys from New York, you're kind of looking for interesting things to do all the time, just in the city. Right? The second business was called Raven. Well, the first one was called [Scarra 00:05:24]. I don't know if I mentioned that. Second one was called Raven. That was a slight variation on the first. And that was we took out half of the equation because we realized, double sided marketplace, super hard. Right?

Stephanie:

Yep.

Jerry:

We started offering activities that already existed. This could be like hang gliding. This could be sky diving. This could also be day at the spa. Right.

Stephanie:

Mm-hmm (affirmative).

Jerry:

We also layered on a recommendation algorithm where you could like stuff. And based on your activity, we would offer you a daily feed of different activities and things that were new to discover in your area. We got a lot of engagement out of that. People found really cool things. If you look at my feed versus somebody else's, it would be really different based on what we like. When we looked at it, it was like, oh this is a pretty accurate description of things I'm interested in and my hobbies and such. Right?

Jerry:

And that was difficult because people would then discover stuff but they wouldn't actually book it with us. They would just call directly [crosstalk 00:06:29].

Stephanie:

Wow.

Jerry:

What we learned from that was, well, we need reason for people to transact. Right? And we need maybe something to make us relevant for right now. So the second generation of that business was actually arranging events where we built a mobile app as the early days of... Not the iPhone but when apps started getting the more complicated... Better than just the kind of beer pouring app.

Stephanie:

Yep.

Jerry:

Those simple things. Right? So we used Geofencing to create this thing where if you went within a certain perimeter of something going on, we would tell you about it. We'll alert you and be like, "Hey, like... Street fair over here or something over there." And that was really cool because there wasn't another app like that. At least that we know of... That we knew of at the time that was doing that. Also at the time, a lot of folks were moving to San Francisco.

Stephanie:

Yep.

Jerry:

Probably even more so than they are today. A ton of messages from people saying, "Wow, you're really helping me discover the city. Every weekend we pull this out and, you know, see what's going on." Especially because San Francisco is the type of city that always has something going on.

Stephanie:

Yeah. Like on the side streets, you're like, "There's a whole festival going on right now."

Jerry:

Yeah. So that was really cool but again, a lot of these things were free. So it wasn't there wasn't a real business model there. There's just a ton of engagement.

Stephanie:

Mm-hmm (affirmative). It seems like you guys are kind of ahead of your time with that. Because even when I'm hearing about that now, I'm like, oh, if you would have kept going with that one, Airbnb probably would have acquired you.

Jerry:

Yeah. Right.

Stephanie:

Oh, if you kept going with the Geofencing thing, Google would acquired you because I worked for Google Maps before this.

Jerry:

Oh, yeah.

Stephanie:

They're still trying to figure out how to show you where the festivals are, where the farmers markets are based on your location. So maybe you guys are just ahead of your time with everything.

Jerry:

Maybe. That would be the positive view of it. So I think the lesson we learned from that was... Incredibly hard to scale location based things. because you could sell out all the tickets to this one show or a certain percentage of it but there's unlimited margin and you're constricted by the location and therefore we couldn't justify the kind of business mechanics that were necessary to actually make that sustainable. I mean, it raised a ton of money. Right? And so this isn't going to get like... Where it wasn't like, hey, we're going to get to a billion people and then it's going to work. It's not like that.

Stephanie:

Yeah.

Jerry:

So we were like, what were we good at and what were we not good at? We were really good at getting people engaged. Really good at discovery aspect of things. We just needed something more scalable to be the thing that we featured. And realized that, hey, products... You get scale with products. Right? Mass distribution and all that. There's real margin there because that's kind of built into the modal that [inaudible] already exists.

Jerry:

We had always kind of liked products, just as the people that we were. But we didn't want to touch it because we didn't want to deal with real world problems of moving things around, shipping, [crosstalk 00:09:46]-

Stephanie:

Yeah. Logistics.

Jerry:

Yeah. Logistics. Right? After going through the struggles of the first two business, we realized that things are not really... It's not rocket science. Right? This has been done. We started thinking about what kind of unique angle we could take at it. I remember we were in the living room and we're talking about speakers for some reason and who made the best speakers. Dennis had his idea. Jon had his idea. And then Steven, who's real audio files, was like, no, these are the best speakers. He knew all these brands that we didn't even know about. We knew the mass market brands but not the kind of stuff that he was into.

Stephanie:

Mm-hmm (affirmative).

Jerry:

He had all this knowledge. Okay, you win that debate. Right? And we realized that we have this thing that we geek out on. Right? Jon was really into cooking and he had these really expensive knives that he would keep in this [inaudible] that he would have to take out and show us. Dennis was really into outdoor activities and all the gear that's associated with that. I use to be an architect when I was in New York so I spent way too much money on furniture. So that was my thing. Right? And so everyone had our own thing. No one out there was catering to this desire or whatever it was that ties all these things together. Right?

Jerry:

So we just started sourcing things that we thought were cool. Hey, if we think it's cool, other people are going to think it's cool too. Right? It wasn't like a men thing. It wasn't even necessarily a discovery thing. It was just these were the things that we thought were cool.

Stephanie:

Mm-hmm (affirmative).

Jerry:

Through that process, right away it kind of hit in a way that the other two businesses did not hit at all in two years. Right? Where day one we started getting real transactions and kind of buying activity. Right?

Stephanie:

How? How did you get buying on day one? How did people even find your website or know where to go?

Jerry:

We did not even have a website on the very first day. We actually... What happened was Dennis, who ran marketing, would just start running ads and would go to a landing-

Stephanie:

Okay. Facebook?

Jerry:

Yeah.

Stephanie:

Or what kind of ads? Okay.

Jerry:

Facebook. Earlier in the days of Facebook too. I think a lot of what we did, now, can't be exactly replicated but there's probably some learnings to take from it.

Stephanie:

Mm-hmm (affirmative).

Jerry:

So we basically just collected emails and say, "Hey, there's this thing that's coming soon." Right? I think [inaudible] probably remember years ago there was tons of these types of things that are just coming soon and you're like wow [crosstalk 00:12:39].

Stephanie:

Yeah. That was the strategy back then of just like just put up a landing page and see if people want that fake product that you could create. I remember books where they would suggest that and I'm like, that's a good idea.

Jerry:

[crosstalk] that is more less of a pit. I mean, we were creating it.

Stephanie:

Yeah.

Jerry:

I'm not talking about like, let's just run ads and see if people like it. We were just building it at the time, that same time we were running ads against it. And basically we had an idea of what that metrics needed to look like in order for a business to work. Right? We just made assumptions down the whole funnel. Right? If we acquire an email for this much, and if this percent of folks convert, and assume a certain order value, and certain repeat rate then this is what our business would look like. Right?

Stephanie:

Mm-hmm (affirmative).

Jerry:

And no data for anything outside of what it would cost to acquire an email. Basically, we knew the cost of that. Then we started sourcing products and building the website behind it. Then we just went down the funnel and firmed our assumptions. Sometimes they were better and sometimes they were just different. We kind of just proved it out from the top down.

Stephanie:

Got it. That's really cool. Has it always been a member's only platform? Has there ever been a time where people could just go to the website, the app, and just see the products without inputting their email?

Jerry:

Yeah. So, we require folks to input the email for the upfront reason that we are talking to... And this is also maybe one of our differentiators, is that we are not a clearance channel per se. We talk to vendors who have products that are new to market. Right? So they may have endeavors to go to traditional retail or something else, and they may not want their prices shown necessarily to everybody.

Stephanie:

Mm-hmm (affirmative).

Jerry:

So that's one [inaudible] been the case.

Stephanie:

Got it. Okay. Cool. So when I was looking at your catalog and just seeing everything that you have, how do you go about curating something like that? I mean, it sounds easy in the early days of, oh, so and so likes knives so he pulled in his favorite knives. But I saw how many products you have on that page. Maybe it's like... How many a day do you release?

Jerry:

It's about 300 a day. It's quite a bit.

Stephanie:

How do you find 300, even a month, cool products that are so unique like that and keep up the level of quality that's on there?

Jerry:

We have a team of about 30 or so folks on the sources and buying team and they're out just looking for what's cool and unique. And obviously we have our standards and things that we look for and they just go out and try to find things that meet those standards. And they also try to find things that are... that we've just never seen or heard of before. Right? Then we bring it back, it goes through an approval process, and then we put it up and run it. It's fairly simple.

Stephanie:

Does it still go through you to approve of every single product?

Jerry:

Not every single product.

Stephanie:

No.

Jerry:

In the early days it was and now we have a team of folks that can do it.

Stephanie:

Got it. And you also have an app that people can buy from. Is it the same functionality? Does the website mimic the app or how did you think about expanding to mobile?

Jerry:

It's mostly the same functionality. We expanded to mobile fairly early on. Like I said, our previous companies were... We were already experimenting with mobile back then. I don't think we had one on Scarra but Raven, we definitely did.

Stephanie:

Mm-hmm (affirmative).

Jerry:

That was a core part of it. So we went to mobile pretty early on and I don't think we knew this per se, but it was interesting because men tend to be more comfortable buying on mobile too.

Stephanie:

Mm-hmm (affirmative).

Jerry:

And maybe that influenced part of our strategy or vice versa. It seems to actually be the more popular platform for us. Both in terms of actual use engagement and revenue as well.

Stephanie:

Okay. And do you see different customer profiles when it comes to the mobile user versus the website users? And do you cater to them differently based on that? Or personalize things different?

Jerry:

No. The experiences are pretty congruent on both sides. The mobile users tend to have a little bit of a higher value. But that could also be because you kind of have to self select into mobile.

Stephanie:

Mm-hmm (affirmative).

Jerry:

You go on to the website and then you're all, hey, we're really into it. And then you go on the app. Right?

Stephanie:

Yep.

Jerry:

It's kind of hard to say what's [inaudible 00:17:21].

Stephanie:

Go it. Very cool. So in the early days you were doing Facebook ads. And I think I read that you were doing TV ads as well at a certain point. How has your marketing strategy evolved over... since you started?

Jerry:

Yeah. So in the early days of Facebook it was like a wild, wild west. Right. Big brands weren't really on it. So it was a great time for companies like us. And this is why I say a lot of it can't really be replicated today exactly the same way we did it back then. So when a lot of competition started moving in, in order to compete, we kept broadening our category just... I mean, just becoming a stronger business. Right?

Stephanie:

Mm-hmm (affirmative).

Jerry:

So it would be a lot harder to start with just a handful of products the same way we did. When we started, I think we launched with 12 products and that was it. It was like 12 individual products, not twelve vendors, just 12 [inaudible] things you could buy. Right?

Stephanie:

Yep.

Jerry:

That was enough to make it work. Probably impossible now to do that. As the business grew we could support more channels. We went into Google and then eventually got to the size where we can actually start experimenting with TV. I think also, TV has evolved over time as well because of visual advertising. Because so many brands see the benefits of digital advertising. You can track things and kind of go after a more specific audiences. That TV now kind of has changed to have some of those properties as well. So we use them both kind of together and they enhance each other. You can tell when, if you're spending too much on TV and not enough on digital, then TV starts to suffer. If you spend too much on digital and not enough on TV then the opposite happens.

Stephanie:

Got it. How do you find that ROI of the campaigns? Then decide, okay let's scale back on TV and increase mobile ads or something. What metrics are you looking for?

Jerry:

We actually have the exact same metrics on TV as we do on digital. Right? And this is just... cost acquired customer and lifetime value and all that. The way we track it is now you can know exactly when your spot airs and basically we have a baseline of traffic that we know that, hey, if nothing is airing, this is what are organic traffic looks like. Right. So when we air a spot, we can see that spike. We do a [inaudible] analysis to say this much of the traffic following that airing is probably through the TV.

Stephanie:

Got it. Okay. Very cool. So when it comes to metrics, when you think about E-commerce, what metrics do you think are most important to keep track of? Or how do you define success when it comes to E-commerce?

Jerry:

Yeah. There's a ton of stuff. I mean, it really depends... It depends a lot on what kind of product you're selling. Right? I'll give you two extremes. One extreme is like us, and for us we are a multi-brand retailer. Right? You can buy a number of things and also we change our selection everyday. So you can keep coming back to keep buying different things. Right?

Jerry:

So what's important to us is lifetime value and retention. Right? How fast do you break even on the cost to acquire a customer? At the end of the day, that's kind of like the most basic thing for any kind of company in our space. But the products that you're selling may influence how you look at it. Right? If you're selling cars or mattresses or something that you just don't buy very often, then you may think about it very differently because it's just not feasible to thing that the retention rate is going to be nearly what ours is. Right. Or at least not be frequent enough for you to be able to plan your marketing spin around.

Stephanie:

Mm-hmm (affirmative). Go it. How do you keep your customers... How do you retain them and keep them coming back? Versus acquiring new customers. How do you think about that mix?

Jerry:

I mean, you always have to acquire new customers.

Stephanie:

Yeah.

Jerry:

I think [inaudible] is just like a natural part of business. You can't deny that it's there.

Stephanie:

Yep.

Jerry:

[inaudible] you can be great but there's going to be some folks that it's not for. Right? It's not like 100 percent of your folks are going to stay with you forever. Even the folks that do eventually they may change taste or things like that may happen. So in terms of splits, I think that also varies on performance for us. For us we care about kind of a payback on the spend that we're doing and pending on where we see better performances kind of where we'll weight it. And also kind of seasonally because I would say for retail there's holiday season and all that, you may want to do one thing versus another. But that's going to be really specific to the kind of company that you're running.

Stephanie:

Yeah. So when it comes to changes in spending pattern, what have you seen with everything from COVID-19 going on? Like what kind of differences? I saw you have a... I think a stay-at-home section or something similar like that. Shelter in place, on your website. How have you seen things change since that started?

Jerry:

People's priorities definitely change very quickly. Luckily for us because we can change our assortment everyday, we were actually able to adapt really quickly. We got that store up from... From when we said we were going to do it to when it was up was a matter of... Like the morning to that afternoon.

Stephanie:

That's impressive. How did you line up all the vendors? I mean, to me that's like a long process of picking the vendors and picking out the product and making sure they can ship enough, depending on demand. How did you get all that lined up so quickly?

Jerry:

The thing is... I mean, when this first started happening especially. And we need to agree now still, it seemed as if time had just sped up suddenly.

Stephanie:

Yeah.

Jerry:

Things that would take an entire quarter could happen now in like a day. Right?

Stephanie:

Yeah. It has to.

Jerry:

Everyone was wondering what would be different? All of our vendors, suddenly their retail channels dried up. Right? And they had to move things around. So we just called them up and said, "Hey, this is what we're doing." Obviously most of the folks that were on there, day one, were folks we've worked with already in the past.

Stephanie:

Mm-hmm (affirmative).

Jerry:

Or coincidentally we were talking to and hey, this fits, kind of thing. Right? It was tapping existing relationships. And parallel, the design and engineering teams were building up the store. We were using some existing infrastructure that we could repurpose and re-skin for the store. It was an amazing feeling. I didn't think we were going to do it in a day but it happened.

Stephanie:

Yeah. And are you changing that catalog? Like each day or week or...

Jerry:

[crosstalk] as well. Mm-hmm (affirmative).

Stephanie:

Got it. Does it... How do you think now your company is going to change based on now you know how quick things can move if it has to?

Jerry:

Yeah.

Stephanie:

Do you think that your internal policies and all that stuff could change going forward based on how quickly you can see thing go through? And maybe seeing things aren't a priority or approval for certain things might not be as high priority as you thought they were or... What's your view on that?

Jerry:

Yeah. I mean, in terms of policies first... I think in more so than anything it was like validation of a lot of policies that we had in place.

Stephanie:

Mm-hmm (affirmative).

Jerry:

It was confirmation that we could move quickly. Because we always thought we could. I think that's always been our thing. One of the questions people always ask is how does a company that sells premium products, how does that respond in a recession? Right? This isn't a recession but it's a time when people's priorities are going to shift maybe away from things that were... seems more frivolous to things that are now more essential. Right? For us, we always said, well you know, we can respond quickly but it's never been proven. And now it's been proven to an extent that we can respond quickly. And we can move to things that are more essential. It's still essential with a twist. Right?

Stephanie:

Yeah.

Jerry:

It's still within our brand. And it's going to bring a bit of uniqueness and delight into people's lives that are staying at home.

Stephanie:

Mm-hmm (affirmative).

Jerry:

I think it's validation that the modal can move quickly. The way we thought. And that our brand can extend to the different categories. And address people's needs as they change.

Stephanie:

Mm-hmm (affirmative). Do you think these buying behaviors are going to last for a while? And if so, are you shifting maybe your thoughts on what Touch of Modern looks like in 2025, 2030? Is it kind of having you re-think things a bit?

Jerry:

I think that people's buying behaviors will change because I don't think it's going to go back to exactly the way it was. You know.

Stephanie:

Mm-hmm (affirmative). I agree.

Jerry:

Yeah. People are going to be much more... And I hope they're going to be much more health conscience. I hope that this introduces some good habits. Right? I think people take a bit of time to reflect and think about things like self improvement. Maybe they didn't have the time to do before because I think some people staying home are going to realize like, "Hey, there's this new hobby that I've always been wanting to do that I can do now." Or, "Maybe I should drink less." Whatever it is that they discover when they change their lifestyle, that there's actually parts of this that are good, that they can take away and keep with them.

Stephanie:

Mm-hmm (affirmative). Except for the drinking lessening. I think that one's going the wrong way.

Jerry:

Wait. I don't know. I don't know how some people are-

Stephanie:

Happy hour time keeps getting earlier and earlier. I'm like, I need to set up rules around this house. Oh my gosh. It's only like two o'clock, what am I doing?

Jerry:

Well, I mean, another silver lining here is that I think people now have actually seen how quickly the environment can actually improve just with... And in a short period of time. Right? Because in the past I think it always seemed like this insurmountable thing to certain folks where it's like, "Yeah, you know, we can recycle and do this, but we've been doing that for a long time and nothing has really changed. It's actually been getting worse." Right?

Jerry:

And then suddenly you take a step back and it's like, hey, things change quickly. Right?

Stephanie:

Yeah.

Jerry:

So maybe it's not as impossible as we thought. We just have to be deliberate about habits that we have and maybe where we spend our energy.

Stephanie:

Yeah. Yeah, I think sometimes a little shake up like that can be good for people and the economy. And good things could come from it. Even though there's a lot of bad going on as well. I think, yeah, it depends where you're looking, I guess. So when... Oh, go ahead.

Jerry:

Yeah, I mean, [inaudible] other wise it's just all bad. Right?

Stephanie:

Yeah. No, everything can't be all bad. There has to be something good out there. That's what I'm hoping for anyways. So when it comes to outside of Touch of Modern, and more of the E-commerce industry as a whole, what destructions do you see are coming? Especially with COVID-19 now. We're seeing some of that already happening. But what are you betting on in the future... Yeah, coming?

Jerry:

Well, I'm going to bet probably more on E-commerce. Right? I think people are going to build habits from shopping at home that are not going to go away. Right? I think certain things that maybe people use to only buy in person are like, hey, I can buy this at home. It's actually a pretty decent experience, probably going to keep that habit even after this. And I think people are going to maybe focus a little more on preparedness for things than they have in the past. I think human nature is that you never think that these kind of outlier type of situations can happen, but they do. Be that once... Once in a century, I'd never think about it. But a person lives a long time. Right?

Jerry:

You may see a once in a century thing in your life. That's probably going to happen for a lot of people. Right? And this is that thing for us.

Stephanie:

Yeah. Agree. It seems like there's going to be a lot of new people coming online who never were online before. And it brings me to a point I saw on your website that I liked a lot is kind of meeting a consumer where they're at. There's two things I saw on your website that I thought would be perfect for a new consumer who doesn't normally buy online. The first one was you have a toggle button on your homepage that says, "View as." And you're about to actually change how you view products on the page, depending on what you prefer.

Stephanie:

So I thought that was genius. Any insight behind that? Or any thoughts when you were creating that? Because I haven't seen many websites allow you to toggle that view to what you prefer.

Jerry:

Yeah. It's just like a preference thing. Right? Our experience on the landing page is we just drop you right into our offering. Right? It's not like a landing page where you then click in and search and do all this other stuff. Mostly E-commerce is catered to search. Right? You just go on the page and automatically thing is you type in what you're looking for. Right? That's not really our experience. It's there but it's kind of secondary. It's mostly a browse and kind of meander your way through our offering.

Stephanie:

Mm-hmm (affirmative).

Jerry:

We let people maybe pick the way they want to meander. Right?

Stephanie:

Mm-hmm (affirmative). How do people meander through 300 hundred things? Because I was going through and I wanted to look at all of them but after a little I'm like, oh, this is too many. And I kind of wished maybe like... What did I see? There was this screen that extended your screen. So you have your MacBook or something and you plug in a little cord and you have an extension of your screen, which is awesome.

Jerry:

Yeah.

Stephanie:

I'm like, that should have been shown to me first because I want to buy that right now. Whereas, what was the second thing? It was showing maybe like an expensive bottle of wine, which I'm like, oh, push that down some because I'm not fancy like that. How do you think about helping people get through these products each day?

Jerry:

Well, I think your first time experience is going to ne a little bit different than your second and your third time. About almost half of our users, and I'm not talking about customers but just people that visit, will actually come back at least once a week. And so-

Stephanie:

Wow.

Jerry:

Yeah. And so if you're doing that and then our most frequent visitors are coming back every single day, then it's not as hard to browse through everything. Because then you can browse through it and then you'll hit a point where, okay, now I'm looking at yesterday's stuff. Right? And so, if you keep up with it everyday then it's not actually a ton of stuff.

Stephanie:

Mm-hmm (affirmative).

Jerry:

But for your first time, you're looking at all the days that have accumulated in the past five days. And certain events will also extend beyond that. I think the first time experience is like, wow, this is a ton of stuff. And also because you probably want to click through every single thing. Right?

Stephanie:

Yep.

Jerry:

But after awhile you're probably just looking for the things that catch your eyes. Or you're just going to scan and be like, okay, that's really cool. That's really cool. But you're not necessarily going to check out every single thing. Right?

Stephanie:

Yeah. [inaudible]

Jerry:

Also, on the mobile app, the scrolling screen is just much slicker and smoother too.

Stephanie:

Mm-hmm (affirmative).

Jerry:

I think you might just browse there. A lot of folks also will tell us that it's just something that they peruse through when they're waiting for something or commercial break or something like that.

Stephanie:

Mm-hmm (affirmative). The second thing I saw that I really liked, which I also haven't seen... Maybe I'm just not on enough websites. I don't know. But I was looking through... It was an about shipping section. And it showed a visual of what does your shipping status mean.

Jerry:

Yeah. Yeah.

Stephanie:

And it just... It showed everything from like, we place our PO, and than it goes to the supplier, and here's what it means if you see... I don't know the whole... I can't remember the whole layout. But I thought that was genius showing it in a visual format. And I'm sure that probably brings down a lot of customer support emails. But tell me how you all are thinking about giving that transparency to the customer.

Jerry:

Yeah.

Stephanie:

And hopefully prevent a million a emails of, hey, where's my product.

Jerry:

This is another product of our business modal. Or kind of what differentiates us a bit. We sell across all categories. Right? Meaning that we have to be able to accommodate all the categories. So it's not like, a company that just sells furniture ships one way. A company that just sells clothing ships another way. Right? And so their customers go there expecting a certain experience. A company that sells everything needs to ship all the different ways. Right? So a customer might not know exactly what this shipping process is going to look like when you buy something because they may not realize... I mean it's obvious now when I talk about it but if your company goes on a site, you're going to expect shipping experience to be generally consistent. But for us it's like, we're going to ship furniture differently, then we're going to ship clothing differently, and then we're going to ship, you know, this cup, right?

Stephanie:

Yep.

Jerry:

And so for us it's just more like informing the customer, this is what's going to happen. This is what it's going to look like. And this is what the different steps mean. For us, we found that more so than anything, they just want to know what's going on. That it's moving and... like internal. Yeah.

 

Stephanie:

How about when it comes to relaying the value of the product? How do you convince someone that something is really good? Because I don't think I saw reviews on the website. Unless I missed them.

 

How do you... That's usually the first thing I look for. Is it five stars? You know, I want to see if someone has the same kind of experience that I'm looking for. How do you tell someone something's valuable without that?

Jerry:

Yeah. I mean, a lot of what we do is educating the customer. Right? Because a lot of these things they never heard of, they didn't know it exist. I wish we could say we do an awesome job at it and we provide all these reviewed stuff but... And we vet the product. We'll go and look at the reviews and we'll test the product and all that. But it does take a leap of faith in the first purchase and maybe you get a learned trust after some time, that like we've done the research.

Jerry:

Because if you go and research these products you're going to find that they're pretty highly regarded.

Stephanie:

Yep. Which I think actually might be the modal that it's headed is just show me one or two people at your company that I trust to review product, and I trust them. Because a lot of reviews, I mean, at least on other places... Marketplaces and things like that. They're paid reviews. And so you go through and you're like, well, I can't trust 90 percent of these anyways. So I think it is kind of shifting towards just give me the one person that I can trust. Or the one company that I can trust to curate something for me. And I know if it's coming from them, it's going to be quality and good.

Stephanie:

Are there any big transformations that are going to be on your plate after the environment kind calms down? Or any big projects that you plan on starting or changing within your strategy?

Jerry:

Yeah. We're working on shipping things a lot quicker. The reason being that a lot of our products do take a little bit longer because we have these various modals that we work with. And we found that when we can ship things more quickly people are generally way more happy and more likely to come back and purchase.

Stephanie:

Got it. How can you speed up the shipping for... when it's a bunch of different, I'm guessing, retailers who all their own different practices? How can you kind of know that you can speed that up and make it all pretty uniform?

Jerry:

Consign the product. Right? So they will house it in our warehouse and we essentially act as their distribution center.

Stephanie:

Oh. Okay, cool. Tell me a little bit about that. Do you have to buy warehouses in different parts of California? Or how is that modal set up?

Jerry:

Right now our warehouse actually has a good amount of space. And we've actually developed our distribution system to fit with our model, right, which is that we run things in these short spurts. Right? And what's cool about that is that things come in and they go out really quickly so we're not sitting on mountains of inventory. I mean, we're nearly inventory-less. We're very inventory light. We don't actually require that much space to run a lot of products.

Stephanie:

Mm-hmm (affirmative).

Jerry:

So right now, for the foreseeable future, it's to keep it within our distribution center. It's a long winded way of saying...

Stephanie:

Okay. Got it. How did you learn to do that? When I even think about shipping products to a warehouse and making sure everything goes well, how did you learn best practices around... Yeah, around all that?

Jerry:

Yeah. This is interesting because when we first started we were shipping our own products from day one. And so-

Stephanie:

From your house? Or from where?

Jerry:

From the house. [inaudible 00:41:45].

Stephanie:

That's awesome.

Jerry:

... of just tons of boxes in the living room. And then when the FedEx guy came we would... The first day we just piled it in the lobby and our neighbors got really pissed at us for doing that.

Stephanie:

I can imagine.

Jerry:

So the second day, we knew when the person was coming and we just did like bucket brigade style where we just passed packages from our living room down to the... Basically we had our four founders there. And we would just pass it down, bucket brigade style, down the stairs as quickly as the guy could load it into the truck.

Stephanie:

Oh my gosh.

Jerry:

And then the first day we finally opened the office, we set aside half of it for fulfillment. And the reason why we did that was because we realized our model is just very different than a traditional pick and pack modal, which is what most 3PLs... What's called a third party logistics provider. At least back then, they were mostly doing pick and pack type operations. And it didn't really fit our modal and we realized that at a certain scale we'd have to bring it in house. It's better to learn it now than to try to take it in when it's already at scale and have huge disruptions in customer experience. So basically, we just started doing it at a really small scale and built our operations all custom to that. So our, kind of, back office technology is all custom. Right? So everything ties together and it suits us in a way that... If you went with a just a third party provider, it probably wouldn't work as well.

Stephanie:

Very cool. Well, definitely have to get that picture from you so you can post it somewhere to show people because that's... Yeah, a really fun story of starting out.

Jerry:

Yeah.

Stephanie:

What do you see for new people starting out, building their stores and all that? What is some advise that you give them? Or best practices or things that you did that you're like, don't do that, that actually worked out really bad.

Jerry:

So this probably goes back to your first question about the two businesses that we had before. We made some classic mistakes. Right? Which is, I think the big one is you build the whole thing and you spend like a year building it and then you think that one day you're going to open and people are just going to come in. Right?

Stephanie:

Yep.

Jerry:

Then you start thinking, hey, maybe we just keep tweaking the product and eventually people will come. Right? Really all you're doing is staying busy.

Stephanie:

Mm-hmm (affirmative).

Jerry:

Because if the demand is not there, it's not going to suddenly show up, almost like the world changes, right? And you would be at the right place at the right time. So it's prove out the demand first. And then when the demand is there, you can take your time with the product. Right? It's like, you don't want to be in a place where you're convincing yourself that the reason you're not succeeding is because the product is not quite right.

Stephanie:

Mm-hmm (affirmative).

Jerry:

If there's a real need for it you can come out with something that's pretty minimal and just addresses the core need. And it doesn't even have to run perfectly and be totally ironed out. And that will give you enough signal that there's something there that people want. And then you can find it down the road and keep expanding your market to... [inaudible] but this is now more mass market. And so on and so forth. Right? Because the early folks, they want your service, whatever it is, so much that they're going to put up a little bit with you in the early days of like not having it all totally together.

Stephanie:

Mm-hmm (affirmative). [crosstalk]

Jerry:

And so... Yeah. Yeah. You got to prove out the demand first before you totally refine the product.

Stephanie:

Cool. And what about when it comes to technology? How do you think about... It sounds like you guys did a lot of just in-house... everything. In-house logistics. In-house website stuff. What would you tell someone right now? Should they try and build things in-house? Or... Yeah, what are your thoughts on that?

Jerry:

It's easier now to build anything in-house than it use to be. Right? Back then it was actually a little more difficult because a lot of the frameworks that are being used today were really fresh back then. Right? So people weren't learning it in school. They had to teach themselves. There weren't the coding bootcamps back then either. So engineers were still a little bit hard to come by. Now, resources are there and everything.

Jerry:

We were lucky because we did our own coding in the first versions of the site. It was me and Steven, our CTO. More him than me but we built the early versions of that and didn't hire engineers for a long time. Maybe longer than... we probably should have hired engineers a little bit earlier than we did. But we got by with just two folks building stuff. Right? But you also learn a lot. You are kind of like more intimate with the product, even today, just because we have that history with it.

Stephanie:

Yep.

Jerry:

And I think one of the things that's really important to us early on was the data ownership. Right? We don't want to have all these different things talking to each other and not have a clear picture of what's going on. Right?

Stephanie:

Mm-hmm (affirmative).

Jerry:

We don't want any black boxes. There's things that if we don't have access to all the data then we're just going to cut that service and we're going to build it ourselves.

Stephanie:

Got it. Very cool. Yeah. Great advice. So with a couple minutes left, we're going to move on to... it's called the lightning round. Brought to you by [Sales Force Commerce Cloud 00:47:37]. Sales Force Commerce Cloud. This is when I shoot a question over your way and you have a minute or less to say the first answer that comes to mind.

Jerry:

Mm-hmm (affirmative).

Stephanie:

Are you ready?

Jerry:

Okay.

Stephanie:

Dun, dun, dun, dun. We'll start with the easy ones first and then we'll end with the harder one. Sound good?

Jerry:

Yeah.

Stephanie:

All right. What's up next for dinner?

Jerry:

Left-over Chinese food. Some more.

Stephanie:

Yep. What's up next that you're buying from Touch of Modern?

Jerry:

What am I buying next? Well, I'll have to see what comes up next. It changes everyday so I don't know yet.

Stephanie:

All right. Well, what did you just buy recently? Or what's your most recent purchase?

Jerry:

My most recent purchase was, funny enough, it is a cast-iron rice pot from [Le Creuset 00:48:22].

Stephanie:

Okay. Have you tried it out yet?

Jerry:

No, it hasn't gotten here yet. It was very recent. This was probably... couple days ago.

Stephanie:

Cool. What's up next on Netflix or Hulu queue?

Jerry:

I actually don't have either. I don't even own [inaudible] TV. I don't watch a whole lot of stuff, actually.

Stephanie:

Okay. Hey, that's an answer. What's up next in your travel destinations after the environment calms down a bit?

Jerry:

I think an easy one from California would be Hawaii. I like to go there to relax and it's a relatively short trip. So I like to go there [inaudible 00:49:05]. Yeah.

Stephanie:

What's your favorite island there? Have you been?

Jerry:

Yeah. I go to Oahu fairly frequently. I really like Kauai, I've been there once to do a hike.

Stephanie:

Yeah. That's my favorite island with all the waterfalls there and the crazy hikes that-

Jerry:

[crosstalk] been to the weeping walls?

Stephanie:

Yeah. Yeah.

Jerry:

Yeah.

Stephanie:

Yep. Oh, yeah. I want to go back though. We were only there for a couple days and I feel like there's so many different hikes and waterfalls and just things to see there. I mean, it's... Yeah, like a jungle. It's awesome. On to the hard question. What's up next for E-commerce pros?

Jerry:

E-commerce pros. Hmm. Man. What's next for the pros? I think, I mean, it's going to be adapting to the changes in customer behavior that are coming out of this. Whatever that is. I don't have a crystal ball for that one.

Stephanie:

Got it. Hey, that's an answer. All right, Jerry. Well, this has been a fun interview. For everyone who hasn't gone and checked out Touch of Modern, you should. It has really fun products on there. And yeah, thanks for coming on the show.

Jerry:

Thanks for having me.

 

 

In the world of eCommerce, one of the biggest challenges the pros come across is selling something to a customer who physically cannot experience the product at the time of purchase. For Dmitri Siegel, that was one of the hurdles he has had to overcome as the Vice President of Global Brand at Sonos. Dmitri cut his teeth in the world of eCommerce at Urban Outfitters and then moved on to work for Patagonia. And while the number of products he was selling was reduced with each move, the challenge of building a platform that could connect with target buyers remained. On this episode of Up Next in Commerce, Dmitri explains all of the lessons he?s learned in facing those challenges, including the importance of culture, what a successful brand and website redesign looks like, and what some of the most important metrics are when you?re judging the success of your eCommerce platforms.

3 Takeaways: On any project, culture and collaboration is important ? you have to be able to personalize and succinctly summarize your goal on paper so everyone knows what they are working toward Optimizing for margins per session can guide you on what to focus on when adding to your site In times of crisis, brands are given a clean slate to reinvent themselves, accelerate projects, and scrap things that haven?t been working

For a more in-depth look at this episode, check out the full transcript below.

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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible eCommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we?re ready for what?s next in commerce. Learn more at salesforce.com/commerce

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Transcript:

Stephanie:

Dmitri, how's it going?

Dmitri:

It's going as well as it can. I'm enduring. How about yourself?

Stephanie:

It's going well. It's bright and sunny, and even though we can't go anywhere, at least we get to hang out here, right?

Dmitri:

Yeah.

Stephanie:

So I'd love to hear a little bit, Dmitri, about your role at Sonos. What is your title, and if you can give me a little bit of background on what you do at Sonos.

Dmitri:

Sure. I'm the vice president of global brand for Sonos. It means I oversee all of our brand creative and marketing, product marketing. I oversee all of our digital experience and physical retail experience, so our web site and our physical store displays as well, and marketing operations. So kind of all the touch points that you have with our brand except for the product itself.

Stephanie:

Got it. And how did you get into that role, because it seems very wide ranging whereas a lot of people are like, I only control the web site or I just have this one vertical. It seems like you have a lot under your purview. How did you move into that role?

Dmitri:

I had kind of a crazy pivot in my career early on. I was at Urban Outfitters and I was the digital creative director, and this was about 15 years ago. It was very early days for e-commerce. And my boss left, and we were interviewing people to run DTC, and there just was nobody really that had much more experience than I did. And so I kind of made the dumb youthful move of being like, hey, I think I could do this job. And my boss at the time, Ted Marlow, was like, all right, well, we'll give it a shot. And so I went from really running creative and the web site product to running the whole business, and they were so good at operations and merchandising and finance and all these things that they felt like they could teach that to me. And so I just had this opportunity to run a P&L and run operations, and that gave me the sort of balanced background between those two things.

Dmitri:

And everywhere I've been, I've sort of since then, I've just sort of had that balance of the e-commerce business and creative side, and it just came out of basically someone taking a risk on me early on in my career. So yeah, it's been an interesting, interesting journey.

Stephanie:

That's awesome, really fun to hear about someone betting big on you like that. Was there anything where when you jumped into that role, you're like, I actually don't know anything about this-

Dmitri:

Oh yeah, so much.

Stephanie:

And what did you do in those moments if so?

Dmitri:

So much.

Stephanie:

And what are some examples of that?

Dmitri:

I mean, at that time, merchandising, I looked at everything as what would be beautiful, and so understanding this one might be beautiful, but it's low margin and nobody's buying it. That was an important thing to learn. And I also, I remember really early on in sight merchandising saying, oh look, we should put this in the upper left hand corner because it will sell more, or I think we should put this in the upper left hand corner, it's my favorite product or whatever. And I remember the merchandiser at the time going, you know what? I could sell a lot of old flip flops if we put them in the upper left hand corner too. You're not some merchandising genius. So understanding that, just learning the way that shopping actually happens in that medium and the mechanics of it, very humbling from that point of view.

Dmitri:

But I think having a learner's mentality is important at any stage in your career, I still have that feeling. There's so much that I don't understand, there's so much to learn, and most often honestly from the people who report to you or who are in your own organization. I think being promoted young into that role, I had to very quickly get comfortable with the fact that people who worked in my team knew more than I did and just being humble about that and learning from them, so that's part of what makes it fun to go to work, so.

Stephanie:

That's great. Have you seen your role at Sonos change since when you started because of the environment or consumer buying behaviors to where it is now? And if so, what are the biggest changes that you've seen?

Dmitri:

I think that I came in early on to really get the digital side of the business going faster, and we did a lot of the sort of fundamental blocking and tackling of re-platforming, redesigning the web site, but I think quickly realized that this is really a holistic business and a multi-channel business, and what's happening in the product marketing, for example, has just a huge impact on all the channels, including e-commerce. And I think some of the stuff in this field is very optimization oriented, and it's actually not as impactful sometimes as what your naming a product or defining the core benefits of that product that would actually help it in every channel. So my role has definitely gravitated more to the general brand and product messaging overall, and how that comes to life in e-comm is the harshest test of it, the best place to test that. But it's not the sole focus any more.

Stephanie:

Got it. Yeah, how do you think about bringing a product that's ... You really need experience. Nice speakers or great food or something like that, how do you bring that experience to life on a web site?

Dmitri:

It is challenging. I mean, the core benefit of Sonos, sound, is invisible, so you can't see it. And if you're listening on a laptop or on a phone, you're not going to experience the quality of sound that we go for and that we create. But really, I think every product has that challenge. I mean, I like to think that Sonos is more complicated and more difficult, but I think you always have to just be really, really rigorous and relentless about what the value is for the customer and then illustrate that in words and pictures in a very slavish way. And I think it has to be like a pop song. There's no guitar solo, there's no 15 part middle part. It's got to be really to the point and verse chorus, verse chorus. And I think that rigor is really, it's true for us probably more so because it is an invisible, ethereal, emotional kind of thing. But I think it applies to just about any product.

Stephanie:

Yep. Yeah, I agree. One thing I saw on your web site that, I don't know if it just hit home with me, but I thought it really made me think about the experience was when I was scrolling, I saw the speaker on the page and it had little sound bars bounce off the speaker, and it made me be like, oh, cool. And it gets you kind of in that music mode and just thinking about, I wonder how that sounds now. I'm assuming that was intentional, and if so, was that your project?

Dmitri:

Yeah, so we actually have an entire style guide of how to show sound and how to talk about sound. What are the words that you use? What are the circles that emanate from the speaker, and is this stereo sound or are we showing the tuning of the speaker? And our brand design team, I think in some of the ways that ... Oh, God, this is a random story, but I remember going to a creative summit for McDonald's, and they had an entire session on the Coke and how to make the Coke look delicious and thirst-quenching. And then there was the burger session, and that sound is that for us. We have to be really consistent and relentless again about how do you make this thing look like it sounds great?

Dmitri:

And there's actually different ways we do that. So in above the line media, for example, we use this very bold waves of sound coming out of the speaker that really grab your attention. When we're doing an education piece like what you saw on the web site, we want to me more articulated about what the sound's actually doing in that moment, so ... And then we have to package that up as a tool kit so that marketers all over the world and partners can show it in the same consistent way. And it's true that repetition and that consistency that I think you actually build a sound brand.

Stephanie:

Yeah, very cool. And how did you come up with that style guide? Was it a huge project that took a lot of buy-in and everyone had a different idea, and then did you have to train your retail partners or other people of how to interpret it?

Dmitri:

I think everything always starts with listening and listening to your partners and understanding what they're actually going to use basically and what they really need. And so the style guide was sort of a culmination of a lot of projects where we would have conversations about, God, I can't see the speaker in this shot. I wish there was some way to call attention to it, or the sound of the speaker is so ... You have five speakers in the sound bar, but I can't really tell that from what you're showing me. So hearing a lot of that, and then trying different things and saying, well, this really worked, or this didn't work, and then compiling it ultimately into a style guide. But we didn't set out with a white sheet of paper. It's more listening to the needs and solving the problems of the marketing organization and the go to market organization overall.

Stephanie:

Got it. Very cool. And I think I saw y'all just did a whole brand redesign with the colors and all that. Do you want to talk a little bit about that, because I don't see many brands doing that. It's usually like, I pick my corporate palette, and it's blue, and it has to be blue for the next 100 years. How did you think about changing that?

Dmitri:

Yeah, this redesign, it was the coolest one I've ever been a part of because we were able to do the site and the brand redesign at the same time. So often those are two separate projects and maybe even two separate teams where you have the brand design team that goes and comes up with this really cool, hip, exciting brand identity, and then you have this web design team that's like, I can't use any of that. I don't know how I'm supposed to get that to work on the web site. Because we're all one team, we were able to really work on it simultaneously. So we would do some brand exploration, and then we'd be like, okay, maybe the product detail page with that, okay, settle on some core messaging, does that work on the home page, and go back and forth between web design and brand design simultaneously.

Dmitri:

And we just have a really good team that is really collaborative, and we all had that mission in the end, we want you to see an advertisement, go to the web site, and have it be totally consistent. We don't want these disconnects where the ad sells you something and then you get to the web site and you're like, what kind of ... I thought this was that kind of company, but it's this kind of company. And so that process was really digitally driven. But a lot of times, if you just approach a ... Like we just redesigned the web site, you don't get that sort of high-level brand thinking and strategy to it and communication hierarchy and stuff. And also, you just don't get the sizzle of brand to it. You sort of can get a very functional thing, and we're a premium brand and we command a premium price point.

Dmitri:

And I think if people show up at your site and it looks like an out of the box thing, then they're like, I don't know if they're really going to deliver on the experience side, so ... It was really cool to balance all of those. And then as far as the question related to color and our brand identity, our product is really black and white. That's the design philosophy of the product itself is that it's really bold, high contrast black and white. And our brand identity was the same way. It was very bold black and white. And what ended up happening with that is you couldn't really see the product because everything was black and white.

Dmitri:

And then also our category, all of a sudden everybody was just really severe black and white. And so we just, we didn't have a great context to show the product. We weren't standing out in the market. And so our brand is more about the lifestyle of the experience of your home, having high-quality experiences with music and content. And so once we started bring the color in, it just, the product could really pop out, and also just our brand looked really different in the category, so ... We didn't choose a brand color. These colors will keep changing over time, and they're more in a digital, kind of almost a seasonal fashion kind of usage. But this definitely feels right for our company and our product.

Stephanie:

Yeah, no, that's a great way of thinking. Are there any best practices you learned when trying to work with multiple teams to update the brand and update the web site? Any dos and do nots or places where you're like, oh, this went wrong, but this went really well, and ... Yeah, any guidance for other companies who are listening right now, like maybe that's a good idea to do both?

Dmitri:

I mean, you really have to build trust in your team, and it's about culture I think first. We couldn't have done that kind of project four years ago. I think our culture is at a place where we trust each other, we're collaborative, we have a shared goal in mind. We're willing to be honest with each other about what's working and what's not working. So I think you have to have the right culture to do that. I think also, when I very first got out of college, I taught school, public school. I was-

Stephanie:

How cool.

Dmitri:

An art teacher for a couple of years, and-

Stephanie:

What grade?

Dmitri:

It was junior high and high school, so-

Stephanie:

Okay, that's kind of a hard age to teach.

Dmitri:

It's very-

Stephanie:

They can little meanies. I was, anyways. I was a meanie.

Dmitri:

I mean, when you have 30 kids in a New York City public school, and you have no carrots and no sticks, I think what I learned from that experience is just like, you have to externalize the goal. It can't be personal, and it has to actually be written down and be agreed to as, this is what we're going to do, what's on this piece of paper. It's not about me and it's not about you. It's about what's on this piece of paper. And I think that was helpful with this redesign. We just had a really shared sense of purpose that wasn't the brand team's agenda or the product marketing team's agenda. It was like an external third thing that everybody was working towards-

Stephanie:

I like that.

Dmitri:

And I think that's really important.

Stephanie:

Yeah, no, that's great, because then if not, you've definitely got teams kind of battling it out and competing and trying to push agendas, and it's nice to ... It's kind of like putting it on a higher authority of, well, this is what we all agreed to, and this is where we're headed, not towards either one way. That's great.

Dmitri:

Yeah.

Stephanie:

Were there any tools or technologies that you utilized or implemented that really helped with updating the web site and updating the brand?

Dmitri:

I don't think that technology played a huge role in it. I mean, Google Slides. We use Google Slides a lot.

Stephanie:

Tried and true, yep.

Dmitri:

But I think that the tools of the trade are pretty consistent. I think that the ... I mean, when you ask it that way broadly speaking, Zoom, Google Slides, and Slack have really enabled us to collaborate with different agencies and with different teams, often in different locations. And because we were already working that way, this current disruption is pretty seamless for us in terms of how we work. It definitely posed a challenge in terms of our typography. That's a huge thing obviously that drives design and it drives my point of view on design, and when you're working in a digital medium, it's just, it's really different. That's actually one of the places that I think brand design and digital design kind of get crisscrossed is brand design is generally this print-driven medium where you can be pixel perfect on every single bit of typography, and digital is just, it's just much more dynamic and you have less control over every application. So I think that's one where we had to carve out enough time for the digital team to solve those problems.

Dmitri:

Often you throw over this PDF and you're like, this is how I want it to look. I want it to look exactly like this. And they're like, well, that's going to take some custom work, because type doesn't really set up like that in a browser. So we were I think good about leaving enough time to actually do that work.

Stephanie:

Very cool. Yeah, that's great, and how did you think about measuring success of the redesign, or what's the impact been since you launched it?

Dmitri:

Our business is doing great. I think in my experience with redesigns or re-platforms, there's usually a dip when you first launch, and then it normalizes. I actually see that a lot in product reviews and app updates, and it's something I wish someone had told me when I was younger, because I used to freak out in the first couple weeks when you launch something new. But what we've seen is a lot of people understand the product better. That was our big goal is, people still were saying they didn't understand how the system worked or how the products worked. And so the customer understanding was a big goal of ours. And there were things where design choices really helped that, and then there were things where design choices didn't help that. So for example, one of the ways we did image galleries when we first launched didn't make it really super-duper clear how to click to the next image. And so we found that ... We did user testing all through before launch and after launch, and that single change, for example, had a huge impact on customers' understanding-

Dmitri:

The product, clicking through the whole gallery of images or finding the support link on the site for example. We kind of buried that in the original design and then found, no, that's really important, because if someone needs support, they really want to find it and they don't want to have a hard time finding it. It's been a while obviously since we launched it, but all the product launches have gone really well. The cognition and understanding of how the products work together is way up, so it's going well.

Stephanie:

That's cool. How do you find out what the customers are struggling with? When you're saying the support link was too low, how did you know that was a problem?

Dmitri:

I mean, it's a mix of quantitative and qualitative. So you're looking at behaviors, and wow, people are stuck on this page or they're clicking on this part of the page more. And then qualitative of just asking them what their experience is as they go through. So saying all right, we want you to go to the site and buy Sonos One, and then kind of narrate your experience as you're going through it. And that's where you kind of get some of the specific things that you wouldn't see in behavioral, which is why someone is doing what they're doing. It's just as important as what's happening.

Stephanie:

Got it. Very cool. And have you updated the technology behind your web site in the past couple years, or have you stuck with one thing? If someone was coming in and building a big e-commerce store now, is there anything you would recommend to keep up with customer demand and inventory and, yeah, everything that it takes to run an e-commerce store?

Dmitri:

I mean, I think that is one of the things that's changed so much in my time in e-commerce. I think 15 years ago, 12 years ago, it was really a life or death decision about what's your e-comm platform? You're going to be stuck with this. It's going to take millions of dollars and years to implement, so a lot of your success or failure was based on decisions about technology. I think that the tech has gotten a lot better. It's gotten a lot more accessible from a price point perspective. Implementation's gone a ton easier. It's still painful to switch, so switching costs are real.

Dmitri:

But I would say you're so much better off starting today than even two years ago. The platforms are super accessible, and in a way, I mean, I think a lot of the skillset has actually become automated and commoditized too. Search optimization or even a lot of the sort of marketing tactics that drive e-commerce, that used to be a real differentiator. If you were an analytically driven marketer, you could get an edge. But a lot of times now, you're better off just going with the platform automation on these things. So I think my advice would be, the thing that always you forget is the content management piece. You can launch with a great web site, but every day, you're going to want to update it and launch new products and launch new features, so really understanding how you're going to make new templates and how you're going to add new content is the thing that generally people overlook.

Stephanie:

Got it. Yeah, how do you think about that intersection of your content management system, your CRM, your underlying commerce platform? How do you think about those three together? Do they work together in sync, or are they kind of separate entities?

Dmitri:

I'm going to be very unpopular probably for this opinion, but I mean-

Stephanie:

Good.

Dmitri:

I think you can spend so much time and money trying to create this temple to technology, everything seamlessly integrated on the platform side. But what I've learned is that, or I feel like this has changed since I got into this business, but is that if your message is consistent, then you can actually let the tools do what they do, and your customer journey will be consistent. And the more that you focus on consistency of your message and your customer journey basically, your customer communications, you can allow the different technologies to do what they do best and be less obsessive about connecting every single point of customer data. Now I mean, that's also relevant to our business. We have 10 products. If you're Amazon or Wayfair and you have just infinite complexity in your assortment ... That was more the Urban Outfitters experience. We had 20,000 styles and we launched 7,000 styles a week, and so there was this huge how do I connect the right product to the right person challenge.

Dmitri:

But for a lot of businesses, you're dealing with a finite product set, and as long as you're consistent in how you're showing those products and what you're saying about them, you can let your re-targeting vendor go crazy. You can let your CRM program go crazy, because it's all going to add up to the same story in the end. So I think that I often feel like people spend more money trying to back of house stuff than they do on the customer, and I always try to look at that split of, are we spending money on the things that the customer can see, or are we spending money on ourselves to make ourselves feel cool about the systems that we have, and just balancing those things.

Stephanie:

Got it. Is it very different with a platform that has, like you said, a huge catalog versus only 10 products, and is there a different way you would handle an Urban Outfitters model when you were there versus at Sonos?

Dmitri:

Yeah, I mean, it is really different. The three big brands I worked with are Urban Outfitters, Patagonia, and Sonos, and each time I've gone to a smaller and smaller assortment because it's such a pain in the ass to have a big assortment that I was like, I just want to get to a smaller assortment. But-

Stephanie:

You're going to be down to just one product soon, just that's all Dmitri sells-

Dmitri:

That's my dream.

Stephanie:

Just one thing.

Dmitri:

Live the dream. No, it's really different because all the tricks of merchandising ... I think of like, people have been shopping since the Roman forum, right? It's a very human experience to wander around and find the thing that reflects your sense of self and choose it over the other thing and buy the middle price point because it's not too expensive. All that stuff is super innate to people. And so I think when you have a big assortment, you have a lot of products to play those games with, like this is something new, so you should look over here because it's new, or this is going fast, so you should look over here. With Sonos, it's very much about getting people to understand the experience, and get it that it's like, you can mix and match all these speakers. You can buy one or you can buy three, and you can move them around the house. And they need to understand that gestalt much more than ... That's more important than them picking one speaker and having a box shipped to their house. Do you know what I mean?

Stephanie:

Yeah.

Dmitri:

They might get that idea, and they might buy something at Amazon or at Best Buy, but if they get that concept, they're a super high-value customer, for us that's more margin to better business for us to be in. So a lot of what high product count sites are about getting you to a decision and to put something in your basket and check out, and for us I think, and for a lot of businesses and a lot of DTC businesses that have these narrow assortments, it's much more about communicating the gestalt and the value of the product.

Stephanie:

Mm-hmm (affirmative), yeah, because I'm sure once someone buys one, two, three, then it's like you've got ... That lifetime value of that customer is bigger because they're going to come back. And now I'm looking right now, we have our Sonos speaker, hey, right next-

Dmitri:

All right.

Stephanie:

To me, but I don't know ... I mean, we have a couple in our house and all around the studio, but I don't know if I'm getting the full value of it because the only songs that seem to play on our speaker are Old MacDonald and Happy and You Know It, for my two-year-old, all day long. So I think there's a bug. I need to send it back and get that updated hopefully soon. I'm sure you have the same problem.

Dmitri:

It is fun, though, singing to your kids though isn't it?

Stephanie:

Yeah.

Dmitri:

I love that aspect of it, just sharing music with them and dance parties and ... We're so often with our headphones on in our little phone world, but having it be something that you can share with the kids is really fun.

Stephanie:

Yeah, but I also enjoy that you can ... I'll turn off the kitchen, just leave the living room running and be like, you go have your dance party out there. I can't listen to that song another time.

Dmitri:

Totally.

Stephanie:

So if you're thinking about defining success for an e-commerce platform, what do you consider successful? What metrics do you look at? Yeah, how do you think about that?

Dmitri:

Well, if I have to pick one-

Stephanie:

Yep, only one. Or you can pick two, but stack rank them.

Dmitri:

Oh man. I mean, the ultimate one to me is margin per session.

Stephanie:

Okay.

Dmitri:

It's not the easiest one to get at, but I think traffic is really a tough one because it's driven often by an e-mail or it can be driven by bad things or you can have a bunch of crappy traffic that's unqualified. So like, great, you've done this marketing campaign that's not converting. I think conversion, you can have people again, like you could be converting on a sale product that doesn't generate a lot of revenue profit for the company. And so I like per session because it just, it corrects for traffic basically. And then I like margin because it's like, it motivates you to sell the high margin stuff and sell the high-quality stuff, and those are generally your best products and the things that bring people back and make them more high-value customers, so that one's really, when you're really in the weeds of it, that's something that I look at.

Dmitri:

And then usually, you're designing a specific part of the site and so step conversion is really helpful to look at, did I get them to go from here to here? Because if I didn't, then I know they're not going to get to the final steps of the process, but ... I think that, in my role, one of the things that's important is just a very high-level business understanding of margins are basically what you can charge for the product. It's based on people's perceptions and perceptions of your brand, and you have to dedicate a certain amount of time to just faith in that. And that's a pretty high-level thing. I don't expect someone at a junior level or somebody who's responsible for the day-to-day revenue of a particular category to get, but if you don't invest some of your development time and reinforcing premium, then you just, you're not going to be able to charge the margins. And so that's one that's a little more high level, but ... I think of the brand comes through in the margin.

Stephanie:

Got it. I think I just heard that Amazon's switching their algorithm to showcase higher-margin items, where before it was always based off of what they thought the customer would want to see first. How do you strike that balance between maybe showcasing higher-margin products higher up ... I mean, I know there's not many, but how do you think about that versus making sure the customer experience is what they want?

Dmitri:

Yeah, so it is less of a challenge with Sonos because our product philosophy is to make the fewest number of products possible for the most number of applications. So we only have a couple home theater products. We only have a couple of music products. And it's really about the size of the room, but I think it's like, that's all merchandising stuff. We sell 80% black, but you always show the color because it's going to excite someone and make them feel like the experience of wearing a great new jacket. And I think with sound, it's the same thing. I kind of want to get people emotionally invested in the experience of music, which is awesome, and just remind them, listening to music is great.

Dmitri:

And so that's kind of the first thing that we try to lead with is just what a great experience this is and reminding people that they have ears and it's one of the only five senses they have and it can be really transporting. And so that generally is going to be more of our premium products that do that, but then they're going to ... Most people will buy the middle price point. That's just the rules.

Stephanie:

Yeah, got it. Very cool. So to shift a little bit to the present day, the current environment, everything with COVID-19. Do you guys see a lot of changes in your business right now with what's happening?

Dmitri:

Our business obviously is ... We do a lot of business in physical retail, and physical retail is closed. And so that has really been disruptive to a lot of our partners and the people that we work with. And so on a personal level, it's just, it's hugely impactful. And obviously, we are really invested in our partners and the people that we work with. And so we're doing everything we can to work with them. A lot of that volume has shifted to online channels, so most of our partners have a web site and they're seeing that too, so their business is shifting online. Our direct to consumer business is way up.

Dmitri:

And so I mean, I think that is a circumstantial behavior. People can't go to the stores. Stores are closed. That's a behavior, and I think what people expect ... I feel like everybody is re-evaluating everything 100%, and you have a complete clean slate as a brand, which kind of sucks if you have a great brand like ours. You're like, wait, remember yesterday you thought we were awesome. I think every brand has to kind of start over, and every action you take as a brand is going to be evaluated in this new reality, like do I need Sonos now? Do I need to travel now? What do I actually care about now? And I think that's an incredible, almost once-in-a-lifetime experience.

Dmitri:

And anybody who's, especially young marketers and brand people going through this right now, this is going to be the proving ground for the future. The greatest brands of the last century were defined in the world wars, and the brands that figured out how to endure the Great Depression and those disruptions, and they didn't do it by disappearing. They weren't created by going off radar. They figured out how to stay in the public consciousness and to be relevant, even when people felt so horrible. So that's what I'm thinking about a lot right now and observing in the marketplace.

Stephanie:

Yeah, no, I agree, definitely the clean slate idea of everything can change from this point forward is, yeah, good to remember. Is there anything that you're, like any big strategic projects or things that you're shifting either off your plate or a new thing that you're starting to work towards based off of consumer buying behavior over the past couple months?

Dmitri:

Yeah, we really had to take a look at how our brand shows up, as all companies and brands do. And we really, we tend to be a very aspirational brand, and I think in this moment, it's really important to be personal and to be helpful and to just kind of tone it down a little bit and be real with people. And that's a big effort when you have a global marketing offense that spans channels and geographies, and the team just did an incredible job of realizing, accepting, and taking action and is continuing to learn and adjust as we go through it. But I think we couldn't just show up the way we did two months ago. Everything you do has to in some way be relevant to what's happening right now. And so it's touching everything.

Dmitri:

We're fortunate in that our product roadmap hasn't changed. We haven't had to take major programs off the board in terms of not being able to fund them or whatever. And we're at an incredible busy time right now. We have these two major launches coming up. So we were in the final mile of that work, and so we've just been proceeding, but then also, yeah, got to look at it through the lens of what's happening today. Is this going to seem off, or is this going to seem weird to be doing this right now? And you have to pull the plug on it if it's going to not look good for the brand.

Stephanie:

Yep, yeah, completely agree. It seems like it's also a good forcing function to make larger brands be more agile and make decisions quicker and be able to adjust to the market, whereas before this, I don't think there was that forcing function.

Dmitri:

It's true, and I think it accelerates changes that were already happening. So I think that's a situation like this, anything you were thinking of doing, you're going to probably, you're going to have the opportunity to do. It's also just a giant dumpster fire that you can throw almost anything on. If you want to get rid of something, some old behavior or if you wanted to ... I mean, I see brands that were really struggling with their perceptions, again, they have this fresh moment. They can throw their old identity on the fire and re-introduce themselves, and it's almost like a once-in-a-lifetime opportunity to do that. So definitely looking to take advantage of that as well, like what do we want to shed? What do we want to get rid of? Because that's also part of the opportunity right now.

Stephanie:

Yep, yeah, I think the brands that'll experiment a bit with that as well and try something new like you said are going to be the ones that come out on top, because I've seen quite a few come through my inbox that just have the same messaging. And I'm like, did you all just hire the same PR company to just be like, title, addressing COVID-19 challenges. It's like, here's what we're doing, and it's so cookie-cutter. I'm like, I don't connect with that. But the brands who send unique messaging and you can tell they care, like you're talking about Sonos really showing that you want to be there for them and the retail partners and the customers, that's very different. And yeah, you can start from scratch and have a whole different journey from here on out depending on how you choose to handle it right now.

Dmitri:

Yeah, and I mean, some of that is luck of the draw. When we went into that process of self-examination, we're like, okay, our mission is to give people a really deep, immersive experience of music and content in their home. It's like, that's still pretty relevant. Our goal is to connect people to music and as a way of making their lives richer and escape. That's still pretty relevant. I mean, it's not luck, but we're very lucky that that's what our product and what we stand for as a brand is still really relevant, and then it's more about like, okay, how do we talk about this in a way that's relevant? But I mean, look at Zoom, look at Portal, products that you were sort of vaguely maybe aware of all of a sudden are completely relevant and useful in your day-to-day life. So you've got to kind of be grateful if you happen to fall into one of those categories.

Stephanie:

Yeah, and the fact that there's so many new customers who are sitting on the sideline that are now coming on board. I mean, I'm thinking about for Zoom, it's my grandmother sent a link and was like, family Zoom call? I'm like, Grandma, how did you know about Zoom? And then my mom's like, oh yeah, I've been using that for teaching. I'm like, you guys ... I mean, we just got on Zoom not too long ago. But it seems like a very good time to be able to bring people into your product that you never had access to before and you might never have had access to them, unless something like this happened maybe.

Dmitri:

I know, and I do think this is one of the things that you won't go back from. I think it'll go back to some extent, like you won't have every school in the world doing school through Zoom, but it works really well, and you can be more remote. I think about the follow-up doctor's appointment. You go to a doctor and then you're supposed to come back a month later for a check-up, and you drive an hour and you sit in the waiting room, and then you go in for five minutes for them to be like, yeah, you're fine. It's like, you're not going to do that any more. You're just going to get on Zoom and be like, I'm fine, and they'll be like, cool, you're fine. Everybody's going to save a couple hours. And so I think there will be lasting effects on our behaviors and we're not going to want to go back in every way to the way things were.

Stephanie:

Yeah, no, that's actually a good point about doctor's office visits. I have two twins, they're seven weeks old now. And we went to their doctor's appointment, and one of them had a little baby acne or something. And they're like, well, don't come back for a follow-up. Just snap a picture of it and upload it into a Google Doc, because we can't access pictures but we can upload Google Docs and just do that. And I'm like, oh, from now on, then I'd rather just always do that. I don't want to come in here and expose my kids to maybe get sick from coming here. I'll just send you pictures and let me know.

Dmitri:

Yeah.

Stephanie:

So, yeah.

Dmitri:

But I mean, we're in the orbit of Los Angeles, and we have our own traffic situations, and there's so many trips that are just a total waste.

Stephanie:

Yep.

Dmitri:

My wife's a therapist, and you couldn't really do psychotherapy or therapy via Zoom. It's not secure, but there's so much innovation happening in that space right now with HIPAA compliance. And so yeah, I think less time in transit isn't a bad thing. More time at home listening to Sonos. Sounds good.

Stephanie:

I know. Hey, I'm all about that. I'm definitely all about that. So when it comes to leadership, whether it's in times of change or just in general e-commerce leaders, who do you brands do you look for, what brands do you look to or people in the field that you kind of keep tabs on what they're doing?

Dmitri:

In terms of leadership, I mean, I think we have an amazing CEO. My boss is amazing, so I feel really fortunate that I don't have to look too far for leadership inspiration.

Stephanie:

Yeah, that's good.

Dmitri:

That would suck if you were like, I don't know, I can't find it in my company so I have to go read a book-

Stephanie:

No one here. Yep.

Dmitri:

But man, leadership is one of those topics that the longer I work, the less I really feel like I understand it, or ... It's such a human one-to-one thing, and I think that what I like about our company and our CEO's approach is that you really focus on the culture overall and not this meeting practice or this latest book or whatever. It's just this consistency of how we treat each other is really the focus. And every time you go back to that, it actually helps you through a management challenge. And I think right now, the thing is just to be really, really patient with people and really understand how hard it is to do this. You've got kids crying in the next room, you've got elderly parents that you can't go be with. It's emotionally really stressful and really hard, and the best thing you can do as a co-worker, forget being a leader but just as a co-worker and a human, is to just be patient with people and to understand that it's going to ... Their first reaction, they might be coming in hot to a meeting because of something else entirely. So I think that's really important, and then ... Yeah, I think as far as brands and companies that I look to, there isn't a single company. It's interesting, we have these sort of index fund companies, like Apple, Amazon, Google. They do everything. They do every single kind of marketing, they do every single kind of branding.

Dmitri:

So you can always find an example there of, well, if you had unlimited money, this is what you would do. So I feel like that's kind of an interesting resource that you can always ... Or if you have contacts there or whatever, asking them questions, and we do a lot of partnerships with them. So that's always a good test I think of whatever you're thinking about. I do tend to look at smaller brands as far as just what's happening and how you want to look as a brand. It's been really interesting, again, to see how fast everybody's adapted from a branding perspective. Every single ad right now is people on Zoom or healthcare workers. I think a month ago, I was like, I don't think people are going to be able to advertise. What will be in the ad? And then it's just so fast. Everything's moving so fast. You just have to-

Stephanie:

Oh yeah. Every ad's that's catered to me right now is sweatpants and work from home outfits, which are basically sweatpants that look like jeans. And I'm like, man, I mean, that's what I want to buy right now. This is great.

Dmitri:

This is one of the challenges I think for consumers and for brands is that because everything is so automated, algorithm-driven, you kind of get into these wormholes, and you get into this, I call it a coffin of your own preferences. You can't see a way out of sweatpants, like, how am I going to get these sweatpants off my Instagram feed? And brands, that's a challenge for us too, like how do we break through that just self-reinforcing? Yeah, you probably are interested in sweatpants right now, but getting you to see something else is challenging I think, so-

Stephanie:

Yeah, I agree.

Dmitri:

Have you pulled the trigger on sweatpants at all?

Stephanie:

Well, before ... I mean, I own many sweatpants. Thankfully, our company is work from here a lot, so I don't have to always wear nice jeans. But I did pull the trigger on one pair of jegging pants-

Dmitri:

Nice.

Stephanie:

That look like jeans, so at least when I go on a walk, people think I'm fancy. So, I did.

Dmitri:

I am in the sweatshirt business right now. I get in these shopping sort of really focused trapping things, but it's almost more as a way to work through some of what's happening in the market? What's the customer's mindset? But I do it through my own experimenting on myself kind of thing. Yeah, and it's pretty extreme what's happening, whole businesses that are 70% off. And at the same time, the options are totally unlimited and it's a really, it's a time when I think you have to stay incredibly alert in the moment, because it is moving so fast. You can't sort of ... People want there to be a new normal, like, oh, we did it, the new normal of marketing and e-commerce is this. But I don't think we're going to get there for a while.

Dmitri:

I think people, we're going to have to be on our toes adapting for months. And that's going to be a challenge for the teams, because the teams are like, we just did all this work and now we have to change it, or what do you mean we don't want to show Zoom in any of our coms any more or something. But I think the fall into the Great Depression took four years. This took like four weeks. This is just a hyper-accelerated world we're living in, and you've got to stay alert.

Stephanie:

Mm-hmm (affirmative), yeah, completely agree. So if we zoom out a little bit and have a conversation on higher level e-commerce trends, are there any e-commerce trends coming that you're most excited about or that you're looking forward to?

Dmitri:

I think the trends that I've noticed recently is really the commodification of digital marketing and that, again, there used to be able to be a differentiator. You could pretty much get a business going by raising some money and then using these platforms to grow, and the platforms were willing to kind of subsidize your growth because it was their own growth of market share. And then about a year or so ago, that really flipped, and the platforms are like, no, we're going to take the profits now. We're going to be profitable. And so you saw these DTC brands I think really struggling that their customer acquisition engine wasn't as profitable as it used to be. So I think what I'm really excited about is I do think that there's a rejuvenation of the social channels. I think the sort of toxicness of them, at least my experience over the last month, is that they've gotten way less toxic. Even Walt Mossberg is back on Facebook.

Stephanie:

All right.

Dmitri:

That's a big deal.

Stephanie:

Yep, that's a good sign.

Dmitri:

So I think that the potential of those channels never got fully realized of as far as really being able to connect with people and brands in an authentic way and have that follow through to your business, and I kind of feel like that might be what we're going to actually experience now, where the targeting is so good, the relevancy is so high, and the community aspect is getting less toxic because of just, people are not wanting to be assholes right now I think-

Stephanie:

Yeah, which is a plus-

Dmitri:

As much, yeah, as much, and I think the platforms, I hope they'll take a little more responsibility too in this moment and go, okay, this isn't just about an election. This is life or death now. We can't allow such misinformation and just toxic behavior, because it's costing lives. So anyway, I see this sort of perfect storm there of social actually becoming the commercial channel that it never really realized in the past. And so that's one that I'm pretty excited about. It's obviously the only way we can reach people right now. And the ability to pull it through to your actual business is getting really, really good. So that's probably one that I'm excited about.

Dmitri:

And then I think also for us, the integration with our app and just that part of the digital experience and connecting the online to the in-app. I just had a great experience buying a printer and using the app to set the printer up and having-

Stephanie:

Really? Which printer?

Dmitri:

Yeah. I mean, I don't want to shill for another company, but I bought an HP printer, and they forced me to set it up with the app, which I was super annoyed by at first. But then I was like, wait, this is actually really cool. It's just going to measure the ink and send me the new ink when I want it? Yes, please do that. I hate-

Stephanie:

Oh, that's great.

Dmitri:

Finding out that I need to order ink. So I think this integration of IOT devices and the app component with the commerce component, I'm super excited about that for us. I think we've taken a lot of steps in that direction, but I think people are going to get more and more comfortable with it because it's actually going to be a good experience. So those are two that I see.

Stephanie:

Completely agree. Yeah, and especially the first one. I've seen a slow shift to brands kind of turning into media companies and not relying as heavily on certain platforms, because yeah, I know a lot of brands that had been relying on Amazon so heavily. Well, now that Amazon's shifting to, okay, well, here's what we view as essential and here's what's going to get shipped out, and I think a lot of brands are going to rethink relying on those platforms and instead maybe think about how they can rely on themselves more and promote their content on their own a little bit more. So yeah, two really good points. All right, so let's ... I think we only have a couple minutes, so I don't want to ask you too many things. Let's see. And actually, maybe we should just shift right over to the lightning round, just to respect your time. So the lightning round is when I ask quick questions, and you have to just say whatever's top of mind, and you only get one minute or less to answer the question.

Dmitri:

Oh my God, I was not aware of the lightning round. Okay.

Stephanie:

Dun dun dun.

Dmitri:

I want to do a couple push ups. All right, I'm ready.

Stephanie:

Yeah, do some push ups, do some deep breaths, just shake it out a bit. It's just for fun. But yeah, whatever just first comes top of mind.

Dmitri:

Okay.

Stephanie:

So we'll do some easy ones first, and then we'll do a hard one last. All right, so, what's up next on your reading list?

Dmitri:

The Last Kid Left by Rosecrans Baldwin.

Stephanie:

Okay. What's up next on your podcast or Audible queue?

Dmitri:

Stay Free: The Story of the Clash and Music Exists. That's a podcast I'm listening to that's really, it's just ... It's Chuck Klosterman and one of the guys from The Ringer, and they don't talk about specific music. It's like music concepts in general. I like it.

Stephanie:

Oh, cool. And you have a art background, so does that ... Do you think everyone would like that podcast, or is that more Dmitri specific?

Dmitri:

If you like music, I think you'll like it, yeah. I mean, they talk about like why do bands change? Why do bands change their style?

Stephanie:

Got it.

Dmitri:

That will be a topic they'll talk about, and they'll be like, okay, ACDC never changes, but this band did ... So it's that kind of thing. It's just like hanging out with your friends talking about music, but your friends are really smart.

Stephanie:

That sounds cool. I like that. All right, what's up next on your Netflix or Hulu queue?

Dmitri:

Oh man. I started watching Black AF, which is the new show from the guy who created Black-ish, and it is-

Stephanie:

Me too, yeah.

Dmitri:

It is so funny, oh my God.

Stephanie:

Yep.

Dmitri:

I basically can't wait-

Stephanie:

I just saw it last night.

Dmitri:

To ... Yeah, I can't wait to just go binge that thing. Insecure just started again, which I love that show, and My Brilliant Friend, which is on HBO, which is the Elena Ferrante books. I just, every episode I'm dying when that comes out. So those are my picks.

Stephanie:

Cool, I'll have to check out that last one. I haven't heard of it. What's up next on your travel destinations after we're allowed to go out into the world again?

Dmitri:

I want to see my parents. That's definitely-

Stephanie:

Where are they?

Dmitri:

They're in D.C.

Stephanie:

Okay.

Dmitri:

That's mostly my friends. It's like it's less destinational for me, but ... I lived in New York for a long time. I want to go back to New York. I love that city, I love so many people there. It's been through such a hard time. I want to go there. We had dreamed of going to Japan before this, so that's definitely going to happen at some point. I love going there.

Stephanie:

Awesome.

Dmitri:

My kids have never been there, so those are a couple spots.

Stephanie:

Yeah, Japan's great. That's definitely one of my favorite places I've been. It's so fun. The people are so nice there. Yeah, just a good, very different environment. Did you do the hot spring baths? What are they called again?

Dmitri:

Onsen?

Stephanie:

Yeah-

Dmitri:

Yeah.

Stephanie:

Did you do those?

Dmitri:

Yeah, I would go. When I worked at Patagonia, I would go a bunch, and it was a cool way to go there because we actually didn't spend any time in Tokyo. We would go up to Hokkaido and go skiing and go down [inaudible] and go surfing. And so yeah, it was ... The culture, even outside of Tokyo, is just so cool. Just everything is so considered, and every experience is thought through, and yeah.

Stephanie:

And everything's so clean, and it just feels so safe. We were in I think Hakone area, and there's a bus system that goes around, and there was kids, and I swear they were only like five or four, getting on the bus by themselves, going to school. And I'm like, oh my gosh, in America, no parent would ever let you just walk all the way down the street, get on the bus by yourself. I mean, these kids are small. But then, there, it actually did feel right for some reason.

Dmitri:

Yeah. So I hope you get back there.

Stephanie:

Yeah, very cool. All right, the last one. So it's your job to stay ahead of expectations, your competition, all that. In your opinion, what's up next for e-commerce pros?

Dmitri:

I think that you can't just be shipping boxes to people. I think that your site experience and your commercial experience, you've got to break the mold of, pick a box on our web site and this box will show up at your doorstep. I just think that's not a competitive advantage, and it's just not a customer advantage. And you've got to figure out some other way of engaging your customers that isn't about shipping and getting a box delivered to their doorstep. So it'll be different for every business, but I mean, I think obviously subscriptions are interesting, but also just the way that you decide what you want, it's not navigating a bunch of little squares on a page, but really learning about me and understanding and what I need and offering me a solution versus a box that's going to get shipped to my house.

Dmitri:

So I think the site experience and how that connects to either if you have an app or your CRM programs, all that stuff, it's ... The paradigm is just dead right now, and I think if you're not disrupting that, then you're going to just be perceived as, why am I bothered? Why would I bother shopping here? I can get a box shipped to my house by a lot of other companies.

Stephanie:

Yeah, completely agree. Wow, you were very good at the lightning round. You really had answers right away, so yeah, nice job there. But yeah, it's been a blast, Dmitri. Thanks so much for coming on the show. I know after this, I'm going to go and play all my Sonos speakers and put on a little surround sound techno music going on to pump me up a bit for the rest of the day. So yeah, thanks for-

Dmitri:

Oh, that sounds good.

Stephanie:

Hopping on. Yeah, it'll be a good rest of the day. So thanks so much.

Dmitri:

All right, bye bye.

 

For more than 15 years, Dylan Valade was working at his own company designing some of the coolest eCommerce and technological projects in the world. One of his world-class clients? PUMA. So when the sports brand approached Dylan to join their team full-time to lead their global eCommerce division in Germany, it was a tough choice. But ultimately Dylan was excited about the opportunity to completely revamp the eCommerce platform at PUMA and turn it into a leader in the industry. 

Today, Dylan is the Head of Global E-Commerce Technology, PUMA. On this episode of Up Next In Commerce, Dylan explains what he was focused on during those initial steps of the transformation process and how being a change manager is like being a time traveler. Plus, he discusses how eCommerce is changing and what he thinks is up next in the industry. (Hint: Get ready to see even more automation.) 

3 Takeaways:

Your data needs to be useful and accurate measures of what is real, otherwise you will not be able to effectively grow or change in the ways that best suit the business ECommerce is about meeting the customer where they are at, and in today's world, that means providing a platform optimized for a world safe-at-home Digital eCommerce disruption will come from countries where the population is more comfortable with change 

 

For a more in-depth look at this episode, check out the full transcript below.

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Up Next in Commerce is brought to you by Salesforce Commerce Cloud. Respond quickly to changing customer needs with flexible ecommerce connected to marketing, sales, and service. Deliver intelligent commerce experiences your customers can trust, across every channel. Together, we?re ready for what?s next in commerce. Learn more at salesforce.com/commerce

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Transcript:

Stephanie:

Dylan, welcome to the show.

Dylan:

Thank you. Thanks for having me.

Stephanie:

Yeah, we were just saying you're in Germany right now. How long have you been there and what brought you out there?

Dylan:

Moved to Germany a little over three years ago and Puma brought me out here. Puma had been a client of my digital company in the US and asked if I would switch teams and go internal, so that's what I did.

Stephanie:

Very cool. So was it your own company that you were running in the US?

Dylan:

Yes. Yeah.

Stephanie:

Can you tell us a little bit about that and how you started that?

Dylan:

That started out of just an interest in computers and the web and I began picking up clients in Colorado when I was there mostly for skiing, and snowboarding, but I did a little computing on the side and just sort of picking up clients and business. And I ended up doing that for 15 years. So it was a long period of my life and was really good opportunity because I got to work on all the most interesting projects that we could come up with.

Dylan:

And Puma came along in that time and doing to do some work for them for their global eCommerce team, which was based in Boston at the time. And then they did a reorg and shuffled the group back to Europe where corporate headquarters are. And in that time I moved to help rearchitect the way we do the technology.

Stephanie:

Okay, cool. And have you been there for a couple of years or how long has it been now?

Dylan:

Yeah, since 2016.

Stephanie:

Okay. And what's that change been like moving to year out from ... you said Michigan, right?

Dylan:

From Michigan. It's drastic.

Stephanie:

Yeah. What's the biggest change?

Dylan:

They are many. But first when you make the decision to move, it's a big choice. And so I actually had kind of dismissed the opportunity, but it was my wife who said, well if I woke up 20 years from now and we didn't do anything differently, I would regret it.

Stephanie:

Yeah, that's great.

Dylan:

Let's try it. So-

Stephanie:

And did you have kids at the time?

Dylan:

We had two kids and then we've had a third since we got here.

Stephanie:

Oh, great. Congrats.

Dylan:

And then after that ... Yeah. The change is pretty consistent as you talk to other ex-pats that the first six months are awful.

Stephanie:

Like I want to go home.

Dylan:

It's just, yeah, you've appended your whole life and then you've got all of the different government documents that need to be signed and notarized and you've got all these different appointments and you don't know how to get your haircut. You don't know where to go grocery shopping, you don't know how to pay your taxes. Like just all of the little things that you just know don't work anymore. And then you also don't have family and friends to talk to in your time zone, which is tough.

Stephanie:

Yeah, that's hard. So you went out there for Puma. What is your role look like now? Has it changed since you've gotten out there?

Dylan:

It has. So I arrived as a one person team, focused specifically on the eCommerce technology and then as a specialist for that. And the role was ... they said come in, figure out what we can improve and then begin the change, start improving what you can. And in that time a lot of the changes have been pretty successful. And so now we are at a point that would just keep expanding the scope and just adding more and more tools to what we do and more people to the process. So it's just grown in scale.

 

Stephanie:

Dylan, what's your philosophy or idea around change management?

Dylan:

That's a good question. Actually, I've got a couple of notes here as I look back over it. So my philosophy with change management is that you're really focused on mentality and time. So the mindset that the person who's bringing the change has his ... Is at a completely different point in time than the person who needs to adopt a change.

Dylan:

And so I got this input from Puma's change management program where we were taught that if you're the change agent, you're traveling from the future and you need to come back in time and, help everyone else realize that that something important is. And then based on that, you've got to be persuasive enough to say within the timeframe you've got to make a change or else.

Dylan:

And then that's where you get into how much time. And so if you look at what's happening in the public right now, we have a current crisis, which is, it was months, weeks, and days. The previous big effort is climate crisis, which it doesn't have people perishing every day. So it takes a lot of effort to keep the focus on it and pollution is part of that, but that's not something that's sensational.

Dylan:

So you have to be able to show visually that there's progress and what the steps are. So I like to give people the first step, and then show that progress over time, make it very visual and then that's how we report whether it's working or not. Time is really important. And another good advice that I got from a business consultant about 10 years ago was that about 50% of small businesses fail before we get to the five or 10 years.

Dylan:

And in that time, you only have 260 weeks to make whatever you are going to make happen to be successful. So you can't just say, I'm going to start this new initiative or shut this business and it's going to be successful. You have a bunch of changes in between. And then when you start breaking that down, then you're in weeks and if you're already 18 months in, you only got 185 weeks left to close. Okay. It's really ... this is coming fast.

Dylan:

But starting to think like that, makes it always urgent, which is kind of important if you really want to change anything. So getting that mindset and mentality of time in sync with the two parties is important.

Stephanie:

Yeah. I like the idea of having it visual as well. I think I saw this, I don't know where it was trending maybe probably on Instagram or something. Where it showed how many days left you have with your parents or like with your kids or something up until they're 18 and it put it in maybe like, I don't know, hamburger emoji or something like that.

Stephanie:

And then here's how many, days you have left until they go to high school or something. That was this whole thing and when it put it visually it's like, "Oh man, I don't have that much time and I've got to hurry." So, I like that idea a lot.

Dylan:

And the visual part is why the Kanban approach has been so popular. And then when you have a Kanban board, you actually see the work, whether it's posted or it's digital. To be able to really see it, you can focus on it and you can focus on it over time. That's the hard part, is how do you keep focused for enough time to make the change happen?

Dylan:

And the other thing that you would need is a coalition of the willing, you've got to have a partner in crime. You can't do it alone. And so that change has to be something that gives you joy personally, even if it's some sort of sick joy that you actually like web servers and making them faster and that type of stuff. But you have to care about it enough that everyday you're willing to get up and do it and you don't need to be talked into doing it.

Dylan:

And that when you come into contact with anyone who might be able to help you, you can quickly explain it in terms they understand so they can get behind you, and that's a big part of what's required and what I do.

 

Stephanie:

Got it. And what are some of the biggest changes that you made while you're in your role right now at Puma?

Dylan:

The biggest focus for me was getting to a modern software development approach. The way most companies in general but eCommerce and retailers seem to emerge is that there will be someone who has an interest in technology and they get control of the website and then control of the sales online. And then that either lives in kind of a marketing team or IT or some sort of a external party completely some vendor.

Dylan:

And what Puma had done was basically built up a whole bunch of those all around the world. And even if you have a common and starting technology stack, you end up changing that pretty drastically over the years as you move from country to country.

Dylan:

So that was where we began. Just with Commerce Cloud being the first major item and so focused on how to make Commerce Cloud fast, how to get the people working around it working together, especially across the national borders. And then you have the one piece which is just the actual technology, like make commerce cloud fast. And then there's, how do you bring all of the people involved together who are external, internal, so they're working on the same projects and that they have the same understanding. It was clarity around what's being built, the timing's understood and that the budget is properly tracked and when you see something's not working, stop doing it instead of just continuing on.

Stephanie:

Got it. That sounds like a huge challenge, especially if you're doing things globally. What kind of problems did you encounter when you were trying to bring all those teams together and people together, especially if you're trying to align marketing and sales and IT to all come together and work on the same project together? How did you decide what systems and tools to implement and how did you decide what was the priority?

Dylan:

The focus was, where's the money and the money's coming from ... or the future money is coming from digital. And so what's going to be needed in the future isn't what we need for right now. And so the approach that I took was, okay, what's working right now, I don't want to break, but the things that I know have symptoms of bigger process problems will be the ones that I'd want to focus on first.

Dylan:

And the time it was taking to get a new enhancement or a bug fix or something live on puma.com was longer than I thought was possible. So I said okay, this is where we should start, and in order to do that, what would make sense is also bringing the websites to a more modern technology set of technologies.

Dylan:

And at the time, Salesforce was working on this new architecture for their commerce system, so we offered to take the beta pilot route with them and build it together. And that basically extended what we were doing to a much wider scope than I had originally anticipated. So we basically rebuilt puma.com using Commerce Cloud, their new reference architecture. And that meant a full redesign of the site and new integrations though the tools, analytics, everything. It was a lot.

Stephanie:

Wow. Very cool.

Dylan:

In hindsight ... I would say in hindsight, the analytics piece was the one that I underestimated. People are very reliant on the data and the reports that they have. And when you start screwing around with the tools that they're using and the interfaces that they're using to collect that information, the reports will change. And even if the reports were wrong before they trusted them. And so when we made these changes, everybody's report is no longer accurate. And what we learned again later was that the reports weren't right the first time.

Dylan:

So there was a whole lot of discussion around who's got the true source of data, who's responsible for maintaining that. So then now as the new features introduced in one country and it might impact another, whose job is it to make everyone else aware? So a lot of the questions became, I'm focused around the communication when you start to really centralize services. And that was a big step for us.

Stephanie:

That hits home for me. Back in the day I worked at Google and there was a lot of issues around data and a BI team would come in and give people all these fancy dashboards and things like that. And people would be quoting numbers to find out that maybe those numbers weren't right. And people had weird filters on, or the source data wasn't even correct. And it turned into a whole thing where every time a new analytics project was being launched, they started figuring out how many people they need to staff to even keep that running, and if it was worth it and ... Yeah, that's a challenge. So was there any-

Dylan:

I wish you-

Stephanie:

Go ahead, I'm sorry.

Dylan:

I was saying I wish that you would have been there then on day one to help me, know that that was coming.

Stephanie:

I don't know if I'd signed myself up for that project. I saw too many engineers struggling and too many marketing people upset. No, it wasn't the happiest environment. Using metrics and data is a tricky thing, one thing I can think of is like when people would go off of impressions and everyone starts quoting impressions as being the best thing to find out. Maybe you actually don't want to use that number. Or another funny thing I heard was, I think there's this one company that goes around and they're saying that they serve up like a million custom landing pages every single day. So they're like the best company when it comes to personalization to find out that really they're just changing the name on the landing page and they're calling that personalization. Is there any metrics that you've seen maybe not Puma, but previous companies use or other competitor companies using, where do you think those metrics might be leading them down the wrong path? or they're quoting it in reports and they're using it as their north star and they shouldn't be.

Dylan:

Impressions is a perfect one. Anything that is, I guess what I would put in the vanity metric category, all the metrics that we focused on in the 90s and early 2000s because that's just what was available, since it was just a step up from server logs, and you ended up with just raw counts of things that have almost no value and that you didn't validate but it's real traffic at all.

Dylan:

So one of the biggest changes we made that ended up being really helpful was basically identifying that in your report at a country level if you're unable to deliver product outside of that country or that economic region, don't really consider that traffic in your actual conversion reporting because it's impossible for the person to convert if you don't even ship to where they live.

Dylan:

So when you start looking at it in a more like what's possible, where reality comes into this, I find that you get something you can make use out of. So now if we have decisions being made about the success of the campaign, but 20% of the traffic was people just coming in from other countries, it isn't realistic to say that this campaign was a failure or success?

Stephanie:

Got it. Yeah, that's a really key thing to know is what's going to be in the denominator of that equation. We talked about a metric maybe that you shouldn't use. What is your definition of success for eCommerce? Is it conversion or speed or design, scalability? And you can't say everything. You have to pick one or two if possible.

Dylan:

Yeah. It's not everything. For me, it's very simple. It's growth and net sales year to year and doing that without sacrificing profitability. You have to maintain your margin over time. You can't just continue to discount and run promotions. And if you're not growing, you're dying, so that's it. And then you use all of those other levers to control those two numbers.

Stephanie:

Got it. So if you dive into the profitability piece or the growing piece, what kind of initiatives are you working on right now when it comes to growing over the next couple of years or even decades to focus on them?

Dylan:

Good question. The disadvantage of the current pandemic is that we're hyper-focused on just those topics. The way we've done it is broken up our teams into temporary program teams, one focus on performance marketing, another focused on data quality and product data availability. And then the third focused on core technology projects. So those three pillars make up all of the work that our department is focused on delivering for headquarters and for all the regions.

Dylan:

And so within that we're really trying to make the absolute most out of every performance marketing dollar and euro spent. And in that, a lot of it is education for people who have been doing traditional brand marketing.

Dylan:

That's just getting Puma out in front of the whole world to what can we do to support Puma's direct to consumer path right now, especially when the retailers aren't open in all markets. So there's a lot of learning that's just new for the organization, which is a 70-year-old wholesale distributor model, product design and distribution, not direct to consumer. So it's a lot about education.

Stephanie:

Yeah. I was just browsing through Pumas website. What part of those campaigns be the live workouts that film was doing and like the engagement you guys are starting to do with consumers more real time. And did that just come up due to the COVID-19 and the environment that we're in right now? Or have you all been doing that for a while?

Dylan:

That's a perfect example, I'm glad you asked about that one. So the working out at home is certainly a focus right now that hadn't been in the past except that we had built this awesome app called Pumatrac that was incubated in the EMEA market in Europe and has a hundred plus video workouts in it from our celebrity athletes and tracks your runs. This has just been available for free for years from Puma

Dylan:

And so now we have all these tools and with all of a sudden we have these people working out at home and we see traffic going through the roof on the staff, we immediately pivoted and turned out a web-based version so people could use it on their computer and not need an app to download and then they'd be able to do it from anywhere and put it on any device.

Dylan:

So that was quick pivot to get brand marketing, local performance marketing and the technology teams all working together.

Stephanie:

Yeah, that's great. I need to hop on some of those workouts. It always seems like people in EMEA are the ones that spearhead. The best workouts and then we have the best looking clothes that's who I follow on Instagram. Everyone who's in Europe.

Stephanie:

So how did you get that app and the web page? Was it just organic people just started coming to it or how did you get it found? Because you can make great things and then if no one finds it or no one knows it's there.

Dylan:

That's the trick. And so the EMEA market and their regional marketing effort kept investing in campaigns to promote the app and they would do it at a country level. So roll it out in India you get a lot of excitement in a country and kind of do it that way. So you'd find a local celebrity athlete ambassador who would want to make videos and do workouts and has a following. And work with each one, and then which just grew organically that way and was also then given a big push from our innovations team at headquarters. And then the next place it when it was to globally commerce and turned it into, this is something that's working and great, so now let's improve the technology behind it and the process for maintaining it.

Dylan:

So now we've got it in the next evolution of all of these tools that had companies once they've been successful now you have to take care of it. And that seems to be the big difference between where there's a handover from kind of like a marketing or agency startup concept to know who's going to foster this and support it. So, it's our team.

 

Stephanie:

Got it. And people coming from all over, did you start testing things, doing AB tests, serving them, and directing different offers to different types of people based on this new traffic in the app? Did you change anything or just kind of keep it how it was and just keep adding more content?

Dylan:

The app we've been just improving, most of the traffic is, is coming directly to the eCommerce sites in each country. And so the big pivots there are making landing pages and categories that speak to being at home and spending a whole day in your pajamas or leisure wear while you're on your Zoom calls.

Stephanie:

That's me.

Dylan:

Exactly. So that was really where the change happened. It was reorganized the entire merchandising calendar to get the price people need right now in front of them.

Stephanie:

Got it. And how quickly can you make those changes? Because one thing I can kind of see coming out of this environment we're in right now is that a lot of things have been sped up, whether it's ... you see things that the government agencies being sped up or I'm wondering about internal processes. I can just think about, like you mentioned before, Google bug fixes and website changes sometimes could take like quarters. Everyone had a debate, it had to go through so many different levels. Do you think you guys are seeing different internal practices changing now with the current environment we're in?

Dylan:

Absolutely. That's one of the most exciting things for me about this whole quarter is that all of these traditional walls and barriers that have been up completely busted through everything is everyone's just able to talk openly and honestly about where things are, what's worth doing right now. What was a good idea six months ago, but isn't a good idea anymore. It's just not appropriate anymore and let's just stop doing those and let's put the focus on the ones that either weren't even on the list yet or were on the list, but we just haven't had time to finish them or focus.

Dylan:

That's where the conversation has moved to and then a lot of the hurt feelings or stepping on toes type conversations have gone away. There's just get it done and get it done as fast as we can. It's great.

Stephanie:

Yeah, no, I agree. It definitely feels like a time where you can kind of start from scratch and just say, "Hey, what are your priorities right now?" And everything else just can go to the second half of the year. It could be a great thing for a lot of companies. So what things-

Dylan:

One thing that-

Stephanie:

Go ahead.

Dylan:

So something that had changed in the last couple of years was that we centralized the communication and made the work in progress visual. That was really two of our primary focus areas. And by doing that, we had already built up, all of the places where we needed people to collaborate and we already had it internal and external. So we already had lists of the ideas, all the roadmaps from every country, all their top priorities. And when this all happened the last two months, we just said, okay, let's take the priorities that you've already documented and let's put a number to each one. Let's figure out how much you would make on this. How much would it cost, how much time, and just reshuffled the priorities and then do a quick overlap of who's doing what, so we don't duplicate effort.

Dylan:

And these were things we just couldn't do a few years ago because there was no place to have the conversation.

Stephanie:

Yup. No urgency.

Dylan:

There was no urgency and nobody even knew each other's name.

Stephanie:

Yeah. Yeah. That's great. And what if you were thinking about everyone coming together, did you deprioritize a lot of similar things and what things did you prioritize going forward and what things did you kind of shelf right now?

Dylan:

So just from our own list, we went from about a little over 100 parallel projects to 40. And so in that, say 67% we just stopped even looking at, and then the focus became what is going to drive business in the next four to eight weeks. So that's where ... time to change, it's about mindset and timeframe. And so when you're on a global team, you usually expect to look out quarters and advance, years in advance, while the market teams are trying to move product that's in a warehouse today, out of that warehouse as fast as possible. And do it in a way that's still exciting and valuable to the consumers.

Dylan:

So when you start moving all the global people towards that daily mindset, you get a whole lot of new ideas and different perspectives on what the other people have been looking at all the time. And then you also started to say, geez, the ideas I had, were flawed because this is how they actually work. And so we've also learned where we've made mistakes or were planning to make mistakes. So that's been kind of a nice benefit on the side of all this.

Stephanie:

Yeah. And are you using data to make those decisions for you when you're coming up with how to actually meet people where they are right now over the next four to eight weeks? How are you then coming up with what that shopping behavior looks like? What are you looking at to determine that? Or is it a gut feeling? Where you're like, "I think people are probably going to do this. Let's try that."

Dylan:

There's a bit of a gut feeling, which is people are at home, they probably need things that they would want to wear at home. And that's been correct. The other ones that are maybe a more subtle would be things like realizing that a bunch of products that we thought were available online because there's thousands and thousands of different sizes and articles online weren't. And it's taking the time to figure out what system along the chain did they get stuck at. And then going back and figuring out why were they stuck.

Dylan:

And so this would be then getting them into different marketplaces, not just under puma.com and the people that are there, we know they're there, we just didn't know that they couldn't get all of our products. So there's a bunch of work like that that's really low level and highly detailed. And we finally are by freeing up those other 70 projects that needed daily status reports or constant updates or whatever the people are free to look at the things they are looking at in a lot more depth. And so we're just getting more quality out of the things we're doing.

Stephanie:

Got it. Yeah. That's great. When it comes to determining those projects globally, is everyone kind of working on the same thing right now or is it region specific? Because I could see some areas experiencing different issues then ... maybe the US is experiencing one thing where Asia is experiencing a whole different buying behavior. How do you address those different markets, especially when something has to move so quickly like the environment we're in right now?

Dylan:

So this is where the centralized communication is so important that we didn't have before. So each of the regions there's separate subsidiaries for Puma. There are different trading companies and they have their own inventories, their own stores. And so it's like in the United States, those stores are closed right now. In China, they're almost all open right now, including Wuhan. So they have very different problems right now. And these are also focused on different things.

Dylan:

So these are the topics that they would focus on locally. And then we would say, okay, what is it that's on your top list? And my team actually flew into Boston to meet with our team there at our Westford office and Massachusetts and we did it couple day workshop just to go through this process. How will we figure out what we're going to work on and let's do it together. Fortunately we did that right before COVID, so we could still fly.

Stephanie:

That's good.

Dylan:

But that's how we do it. So we do actually in-person visits into the market and then that keeps a relationship kind of going and you get things face to face, you don't get over the phone.

Dylan:

And then coming back to headquarters, we've got our roadmap that we share with everyone. Everything's wide open, kind of operate as an open source software development community inside the company and with our vendors. So outside of financial information, everybody can see everything and that makes it really easy to see what each other's doing and avoid the duplication of effort.

Stephanie:

All right. To move on to a little bit higher level questions, what disruption do you see coming to commerce over the next couple of years? And I can even talk about maybe a consumer shopping behavior might continue how it is now, if that's going to disrupt the future or anything else you see coming down the road. You just need to take out your crystal ball. That's all.

Dylan:

Yeah. I'm thinking about my crystal ball. There is a big gap in what is considered foundational education for the type of work that we're doing today and the type of work that was needed when the current education systems were designed. In Germany-

Stephanie:

Please explain that a bit more.

Dylan:

Yeah. So in January for example, there is a large shortage of people that have IT knowledge and experience. So they are more willing to accept people like me in as resident because they want people with these skills in their workforce. And what I see coming is a digital disruption or eCommerce digital disruption where the groups and countries or cultures that have more comfort with change or risk are going to be more successful at transitioning to a lot of these ways of working and buying.

Dylan:

So in Asia, the mobile device is everything. And so everywhere you walk, people are on their phone consuming everything. And you'll see two or three phones out in someone's lap and it's just amazing how connected they are. And then I'll going to somewhere in the US and everyone's really comfortable with computers and they're also pretty comfortable with what's changing to using the devices their privacy's in between.

Dylan:

And then come to Germany and people like to pay by invoice. So you're buying a pair of shoes, for ?50 or ?100 and you're not going to pay for 30 days. It's not like they swipe your credit card, they're really going to check your credit history and send you a bill in the mail and you're going to transfer money later to them hopefully, or send the shoes back. So it's just a totally different way of working.

Dylan:

And when you've got then people who want to work with paper and pencil trying to build eCommerce digital into their manufacturing, their supply chain and their sales process like they just are going to struggle and continue to struggle to make that adoption. And so what I see being the big disruption or the communities that train their younger people to use the technology for good and for commerce and for manufacturing and logistics versus those who are just gaming with it or are just going to ignore it because they don't like it or understand it. I think that's what we're seeing.

Dylan:

And then either way the artificial intelligence and those things are coming. So if education starts to be built around that, whether it's primary or secondary, I think that's where you're going to see the most disruption. And all of a sudden you're going to see just different ways of working, people eliminating plastics or whatever it would be problems from their supply chain because it's not necessary anymore, and that they'll find solutions. And then it's going to be what companies operate like Google, where it's a software company, Microsoft, these companies are led by software developers founded by software developers. They completely embraced that way of working in and living and seeing things. And that seems to be the biggest difference for me.

Dylan:

So then the brands that have people in charge of their digital experience who also really have a strong foundation databases, networking systems thinking they're going to be the ones that just outperform.

Dylan:

So then regardless of what the disruption is, they'll be able to adopt it or assess that it's valuable or not. And that's a big part of what I'm asked to do at Puma is, is this a good idea?

Stephanie:

Yeah, that's great. Education is definitely key. I kind of am wondering if it's ... I don't know if it's the right term, is the leapfrog effect where certain regions or countries or industries that never had access to something, they kind of just skip over it. So I think Asia and maybe even India might be a good model of this where I think they never really had point of sale systems. And so they just skipped over that completely because they never had access to it and they just went right to mobile.

Stephanie:

And that was something when we were at Google, we always watched is that a lot of them ... like we were so focused on desktop and mobile, for the Americas, but when looking at India with the next billion users and China, it's like, well they don't really care about that, they really all just want right to mobile and we need to focus just on that.

Stephanie:

Do you think that's like something to consider as well when looking at different markets and education and all that? Is that there might just be a big portion if people just skip right over there like, "Oh, we don't need that. We already saw that it's happening in other countries and we never had access to that. So we'll just go on to the next thing." That might be how they actually get ahead?

Dylan:

That's perfect. Perfect explanation of how things are working and that's it.

Stephanie:

Are there certain markets that you look to learn from and then do you try and push that behavior on maybe the Germanys of the world, which because my family's from Germany, I'm allowed to say they're behind. But are you trying to push that on that consumer buying behavior and be like, "Hey, this is what's good for you? [inaudible] easier come on?"

Dylan:

I guess not so much a push it on to the other markets, but it's to identify what worked somewhere where you would see the trend going that direction culturally for the other groups. And so then what's popular with the Chinese market or in Japan and how they might be purchasing ... One example would be the PO box equivalent in Japan. It would be that the people would want to have their product delivered to the train station that they're gonna be at seven 30 in the morning instead of to their apartment, which there almost never at. So then do you need this whole logistics system for figuring out where people are going to want to be and make sure you deliver at that time, instead of saying, what's a five-day window to have it at your doorstep? They'd rather see it, like, "I want it tomorrow and I can be here tomorrow, can you get it to me?"

Dylan:

And then now you moved to the US years later. And then you have these career lockers that are being set up in different places where they're kind of doing the same thing, but you still have the PO box, but you have this reluctance of different carriers to deliver to a PO box. And even some brands won't do it.

Dylan:

And so it's just those are the things I'm looking at. Like okay, if you skip this idea that you have to deliver to someone's home and do it while they're there, what have you just unlocked? And that's the opportunity that I look for. This is what we could ... we're not going to push it on you but this is what's possible. Then you have the alternate payment methods as well like [inaudible] AfterPay. Like these are things that don't come out of the US but the US market's adopting.

Dylan:

And then what we're expected to do is make a flexible templated technology stack where you can substitute those different third parties and vendors and solutions in without compromising the whole of Puma security and technology approach, the enterprise architecture.

Stephanie:

Got it. That makes sense. Are there certain companies that you look towards who are either leading the change or you kind of keep close tabs on because they're always ahead. Just like looking at the different markets and stuff to see what they're doing? Are there people that you pay attention to in the industry or companies?

Dylan:

One company that really impressed me was Vail Resorts. They managed to take the idea of just moving somewhere from the bottom of a Hill to the top of a Hill with sticks on their feet to using the ticket that was [inaudible 00:41:33]is hanging up their jacket to turn it into RFID card that allowed you access to such a national park forest land. And to buy food and to get lodging deals and to do these transactions internationally all from ... Just to play loyalty card.

Dylan:

And that idea of just hyper consumer value and allowing the person to self service to me is exactly where we'd want to be. Any opportunity to let the person interact with the brand on their own terms to me is the right approach. I got to go on a digital retail tour of Chicago and a ran the runway had an awesome experience. So their ability to let people subscribe to have a certain number of articles of clothing in their wardrobe and then be able to go in and just scan and return or buy them or whatever, all by themselves in these boutique shops is amazing. And then backing that up, they've got the largest dry cleaning service in the United States.

Stephanie:

Wow, I didn't know that.

Stephanie:

I guess that makes sense.

Dylan:

Those are the types of things that then I just think, wow, like you said, you just skipping all of these steps that we thought we had to do. You don't have to have a sales associate talk to everybody. When they're needed, it's great. But if they're not needed and people still want the in store experience, we can give them that. Those are things that I would expect or the kind of disruptions that will be in the near term. And it's not for everybody. You wouldn't do that necessarily at Walmart, but you might for some things.

Dylan:

And that I think becomes more of the opportunity. Like how do you let your brands data flow into other physical stores or their digital environments as well. And if they have a marketplace, how do you make sure your data is available to them in the format they would need it and when they need it to take action. Like you said, three quarters later after we've had time to evaluate it and do a vendor tendering and figure out if it's feasible.

Stephanie:

Yep. How do you go about sharing that data with retail partners but also keeping it safe, so you're doing everything by the books? That's one thing I'm even thinking about now is that the rules on data and data privacy are probably only going to get stricter over the next couple of years. And I can see a lot of people right now who are collecting data. They might not be able to actually use it in the next couple of years because maybe they weren't collecting it the right way, telling the users how they are going to use it, following all the rules. How do you, it's all about striking that balance?

Dylan:

That's the question, isn't it?

Stephanie:

Yeah. Let me know. I'm trying to learn.

Dylan:

There is a first approach to the data governance is often segregating the data sources, so that you make it highly unlikely inappropriate data shared somewhere. And some of that might be antitrust data that the direct to consumer people can't see what the B to B people or doing or working on or their order volume, whatever it would be.

Dylan:

And then in trying to get Puma content or data to the retailers. We have a number of tools for that and a lot of effort just spending that even from my team that were direct consumer. But we're really trying to support the B2B business so they can be successful too because we need the same information.

Dylan:

So Puma does take the approach of anything that we have or willing to give to our retailers. So that we're not going to hoard product data to try to use for our own benefit more. And so that for me it helps because then we don't have to worry about trying to do something different. For search engine optimization, we end up competing with them directly with that exact same data.

Stephanie:

That's not good.

Dylan:

But that's just the way it works, so that's okay. But then the consumer data, you said that you're just collecting these massive amounts of it, and what's going to happen with it or what do you do with it? You're not going to take action right now. And I'm happy to see that it's being deleted. If it's not being used, and it's just sitting there, it's going to be removed.

Dylan:

There is a kind of an interesting proposal going on in the EU to create a data market. I guess like this current market is 27 countries that they would collaborate and share data with the citizens and with each other and then companies so that you've got government, private citizen data that everyone's able to benefit from. And that is really exciting to me that you have the handful of different pillars, but things like environmental data sets, manufacturing data sets, things that will help, where everyone could benefit, if this was out in the open.

Dylan:

And then there I believe there's going to be a a requirement to reduce the fear of companies or sharing what they have. Because in the past years it's been how do you just make sure it's kept us tightly under wraps as possible or not collected at all to an idea of actually there's a value in doing this, and if we do it together and safely we can unlock a lot of value and actually make life better for a lot of people. And so I think that the same thing is happening with these brands that Google and others have a ton of information and they'll continue to hoard that. But the brands are able to have information I think is just more useful for a person to have a good experience and a better life.

Dylan:

And so where you find the brands that you like and they're able to give you something back, you're happy to share more. Like with the Pumatrac, I work out with this app, I'm healthier because of the app. I don't mind Puma knowing that about me. And I actually would appreciate if they would be proactive about helping me even get further or convincing me to somehow convince my family and my friends to do more to be healthier.

Dylan:

So those are the opportunities that you get when you start sharing this data.

Stephanie:

Yeah, I can also see it being interesting when brands start partnering with that data, especially if it's combining location based data with the fact that you're using the app and it may be Puma partners with someone else to where someone's walking around a mall when they can go back to malls again, and they're getting different offers based on where they're at. But you're doing it in partnership with other brands because you have access to the same type of data about that person. I could see that being really helpful.

Dylan:

I agree with you, which is why I think we need more people with the technology understanding to know how to do that safely and when that's a good decision and then when they're ready to do it that it doesn't take years and they can get it done in weeks or months.

Stephanie:

Got it. So one last question before we go to a lightning round, which I'll tell you about in a bit. Dun dun dun! My final question is, I was on your guys' website and I saw this awesome idea where people were uploading images to your guys' website where they were in your guys' apparel and shoes and things like that. So you're started ... I don't know if you're just starting this, but UGC or user generated content was a huge thing. That's some of the companies I've been at a very hard thing to crack though. So did you all just implement this with the whole, the environment we're in and the Stronger Together campaign and all that, is that when you just started having people upload pictures in the apparel or how did you guys think about that campaign?

Dylan:

UGC has been a popular topic for a while. We started this maybe two years ago in earnest. And it's great because it lets people, sure how they use the brand of the products and what their personality is like. So it's just nice to see. And the integration was ... technically it's not very difficult. The problems are around moderation-

Stephanie:

I was just going to ask that.

Dylan:

... of the images.

Stephanie:

And quality.

Dylan:

The big hurdle is so nice when you've got a brand as big as Puma because there's plenty of people posting about it already. And so then it's like no one currently had the role of UGC moderator who was going to spend time doing it. So, there's a group within our department that just takes turns moderating the images that are coming through. And then there's some ... but then need to assign which products are actually in each one if there is a product. And so it becomes a lot of process around keeping that in compliance and doing it well. So that actually is where all the effort is. That tech part's easy.

Stephanie:

Got it. Yeah, that's there's this app LiketoKNOW.it app where you can screenshot apparel and then you can instantly buy from it. And that's right when I saw that on the Puma website I'm like, "Ooh, that makes it easy because that girl looks like my body shape and I really liked that tee shirt and now I can buy it and I know what size she's in." It just seems like a much easier conversion when it's organic like that.

Dylan:

That's the key. I give a lot ... like we have all of these requirements for photography models, stand a certain way and we take the pictures in these certain angles and the marketplaces have their own rules. But the reality for you and me, we're not sample size. We don't fit what a certain model ever was. So we were like, "Well this person looks like me. Okay, I'll buy it."

Stephanie:

"I look good like that, oh wait, now." Yeah. That's great. All right. Are you ready for the lightning round? Which is-

Dylan:

I think so.

Stephanie:

... I ask you a question and you have to answer it in under a minute. That's whatever comes top of mind is your first answer to that question.

Dylan:

Okay.

Stephanie:

All right. So I'll start with the hard one first and then I'll be fun ones after that. It's your job to stay ahead of expectations and whatever comes next in eCommerce. What's up next for eCommerce pros?

Dylan:

I would say getting the data moving through your systems as quickly as possible and using as much automation as possible. So everywhere that there is a repeated task, there's likely an opportunity. If it's in eCommerce specifically, it was probably a good opportunity to automate it. And then it might be just a simple automation or maybe it's machine learning that becomes smart and chatbots, things like that. But that there will be more and more opportunities for affordable automation and artificial intelligence that will just make all of these tasks that we've had hundreds of thousands of people working on basically eliminated. And then those people can start to do the work of making it a really great experience to be part of the brand. It's going from currently being more about transactional based experience where you're like, okay, I need to find product, buy product, wait for product. That that whole chain can be something enjoyable and surprising. And I think that's what the future is going to hold and what I hope to see more people doing.

Stephanie:

Got it. All right. What's up next on your podcast list or audible other than this episode when it comes out of course?

Dylan:

The often check on Radiolab, but there is a surfing podcasts that I'm now listening to, so, and I'll find out what happened with Quicksilver.

Stephanie:

Oh, fun. All right. What's up next for dinner? Is your wife making anything tasty?

Dylan:

She always makes something tasty. She's vegetarian and an incredible cook. So tonight I believe was a sensor to tacos, but she's an excellent cook.

Stephanie:

Yum. What's up next on your Netflix queue or Hulu if you prefer?

Dylan:

I just finished Tiger, so right now-

Stephanie:

Me too.

Dylan:

... I'm taking a break.

Stephanie:

Guilty pleasures. Oh it's so good. I judged it so hard when people kept telling me to watch it. I don't know if you were the same and then I watched, I'm like, "Oh, this is good." It's okay. You don't have to be embarrassed.

Dylan:

So now I am taking a little bit of a[inaudible 00:55:45].

Stephanie:

Taking a brain break. I think that ... yeah, I'm doing the same. And the last one. Once we can get out into the world again. What's up next on your travel destinations?

Dylan:

We wanted to go to Portugal and do some surfing in Portugal.

Stephanie:

Very cool. Well, I hope you can do that soon. All right, well this has been a blast. So much fun talking to you Dylan and I hope we can have you back in the near future. Thanks for coming on the show.

Dylan:

All right, thank you.

 

You hear it all the time ? brick and mortar stores are on the decline. And we all know why ? the internet. Digital and eCommerce have become the go-to shopping method for millions of people around the world and it might soon the method of choice for the majority of the population. But how are we going to get there? And what kind of innovations will we see along the way?

Join host Stephanie Postles as she interviews leaders in the industry who are on the front lines of this digital innovation. From Puma to Sonos to Touch of Modern and everyone in between, start-ups and enterprise companies are focusing on eCommerce more and more, and we have the inside scoop. New episodes come out every Tuesday and Thursday. 

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