In the wild world of ecommerce, the status quo is always changing. New companies enter the market to disrupt the norms. Legacy brands pivot to get a piece of the pie. Successful niche businesses get acquired left and right. With so much happening all at once, it takes a lot of work for brands to not only keep up but to get out ahead and win.
Andrea Leigh and Melissa Burdick have made it their mission to stay on top of everything that’s happening and use their knowledge to help companies large and small make an impact in the market. Andrea, who you may remember from a previous episode where she discussed how to win on Amazon and the death of the category, is the VP of Strategy and Insights for Ideoclick, and Melissa is the Co-founder and CEO of Pacvue, a company that helps advertisers scale on big ecommerce platforms like Amazon, Walmart, and Instacart. A few customers of theirs include Unilever, Duracell, and Johnson & Johnson.
These ladies each spent 10 years at Amazon “back when ecommerce wasn’t cool,” as Melissa says. Today, at their current companies, they work with disruptors and major brands alike as they come to realize that ecommerce is not just a fad, but the way of the future. And that’s why I was so thrilled to invite them on this roundtable episode to talk about all the trends they’ve been seeing recently, and to get their take on where things are headed. How are major brands moving to digital? Why are companies investing more in shorter product life cycles? What is the future of dropshipping and ad platforms? I wanted to know, and they delivered the goods. So sit back and enjoy!
Main Takeaways:
- David vs. Goliath: In the world of ecommerce, it often boils down to small, niche brands competing against the bigger companies with a long history and much bigger budgets. In order to compete, small brands are forced to think differently, be more hyper-focused on product and customer feedback, and be intensely in tune with the ROI of any ad spend.
- Shorten That Lifecycle: Brands today are finding out the importance of being nimble and developing shorter product life cycles. When the unexpected happens, markets shift, or industry standards change, having a product already in process of a nine-month cycle puts you at a disadvantage to other brands that can pivot and change course quicker. Having a pulse on what consumers want, gathering data, and digging into feedback can help with the acceleration process.
- Show Me The Money!: In the past, measuring the ROI of advertising was a bit more challenging. Now, with the amount of data that you get from digital campaigns, measuring the return on investment of an ad campaign is much easier to track because you can correlate clicks and track customer journeys from ads. And with the number of new platforms that are constantly popping up, there is a bit of a new retail explosion that brands can take advantage of and track in unique ways. And today, regardless of the platform — new or old — brands will not advertise at all unless they can get a full view of the data and metrics from the ad platforms they work with.
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
Key Quotes:
“I tell brands, it takes a village to do ecommerce because it’s so complex.” –Melissa
“The moat is so much smaller now. The ability to create a brand is much easier….20 years ago, when ecommerce didn’t really exist, it was, you’re a big brand, you get into the shelves of a Walmart because you’re Tide or something like that. But with ecommerce and with more platforms and marketplaces, there’s this ability to create a brand and a loyal following and base through things like social media, TikTok, or viral ways that you can build communities and brands.” –Melissa
“Another thing that has really changed is the ambitions of brands. So I think brands were built by large organizations and [with] this enormous supply chain and distribution and then a marketing engine on top of that in that order. And the two things that stand out to me as being different now with marketplaces is that first, a brand can aspire to be smaller than that. A brand can aspire to just address a certain niche for a certain customer segment and do it really well. And maybe a brand wants to only be a 100 million dollar brand versus a billion-dollar brand, and I think that’s posing some really stiff competition to some of the more established brands in the space, particularly in CPG. So those brand ambitions are changing for sure.” –Andrea
“[Smaller ecommerce brands] are extremely savvy and even savvier than these big brands to grow their brands. So they’re actually able to do more with less because they’re forced to. And so they have amazing product content or they figured out how to get to number one slot for their most frequently searched term because they understand the algorithms, they figure it out faster and they’re more nimble and they have less of a portfolio to worry about. They just focus on a few products. So they have a lot of benefits in that regard because they don’t have that cushion and fluffy ad budgets and things like that to rely on. So they have to rely on having an amazing product, this iterative process of being able to mind keywords and understand, ‘Oh, this is the flavor that people are asking for. I need to go create this product.’ Product development takes a lot faster for them as well.” –Melissa
“Nimbleness is something that’s really important. In these product cycle times you need to get faster. And just the data like with this whole year of COVID when we’re working with brands the question is, is this year I throw out your, because the behavior is just like totally off the chart. We know it’s totally different. So how are you making decisions knowing that last year was not a good year to look at because things will return back to normal. How are you looking at it? And so getting faster at being able to look at data, to understand what’s happening, knowing the trends of what’s happening.” –Melissa
“The other thing that these disruptive brands do… is they incorporate that user-generated content into their product development. So it’s getting the cycle time down, but it’s also figuring out how do you take all the stuff that people are saying about your brand in social media and in reviews and all these other places and incorporate that into your product development and your advertising and your content and all of that. I think the reason that some of the more scrappy upstart brands are better able to do that is because there aren’t a lot of scalable ways to do that yet..” –Andrea
“The A.I. models need data to work and they aren’t very good with anomalies like COVID or like Prime Day … But the modeling needs a lot of data for it to run. It doesn’t do well with spikiness or anomalies and so that’s where the art comes into play and the creativity you know, as well. So you have to think forward-looking in terms of what are these trends.” –Melissa
“In the short term, you know where the ad dollars are coming from — they’re coming from other ad options, like the theatrical releases or out of home advertising and TV and billboards and all that stuff. But when people start leaving their houses again, how much of those ad budgets go back to some of those more, non-retailer ad platform ad types and how much stays with retailer ad platforms? And I predict that a lot of it is going to stay with the retailer ad platforms. I think the reason is the metrics and ROI that you can get from that is like crack for marketers. I don’t even know how you would go back to spending on advertising where you don’t get ROI metrics.” –Andrea
Mentions:
- DUDE Wipes
- Wyze
- Glossier
- Beautycounter
- Stitch Fix episode of Up Next in Commerce
- Andrea Leigh’s episode of Up Next in Commerce
Bio:
Andrea Leigh is the VP, Strategy & Insights at Ideoclick. She is a nationally known thinker, writer, and speaker on retail transformation, digital marketing, and ecommerce strategy, Amazon and beyond. She comes to Ideoclick from Andrea K. Leigh Consulting, a firm she founded to advise brands on Amazon.com strategies. Previously, Andrea spent 10 years at Amazon as a senior executive where she led 15+ product categories, helped launch Amazon’s automated pricing system and CRaP programs, and ran Amazon Prime for Amazon Canada.
Melissa Burdick is the co-founder and CEO of Pacvue. She previously spent 10 years at Amazon, where she helped launch the CPG Health & Beauty retail business. Pacvue’s other Co-Founder Zhaohui Tang helped build Microsoft Ad Center and AdSage, and he has industry-leading experience developing AI-based advertising solutions.
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Transcript:
Stephanie:
Hey, everyone and welcome back to Up Next In Commerce. This is your host, Stephanie Postles, CEO at Mission.org. Today is a very special episode because it’s our second ever round table and our guests are going to blow your mind or at least going to blow mine for sure. First up, we have Andrea Leigh who you probably remember. I think she was on episode 81 or so. She currently serves as the VP of Strategy and Insights for Ideoclick. Andrea, welcome.
Andrea:
Hi Stephanie, thanks for having me back.
Stephanie:
So glad to have you back. Your episode really was one of my favorites, which is why it’s very clear we need to have Andrea back on the show. I think we even said that in our episode, so probably no surprise that you’re here. All right. And joining Andrea and I is Melissa Burdick who serves as the president and co-founder of PacVue. Melissa, welcome to the show.
Melissa:
Thanks so much for having me.
Stephanie:
Yeah. We are excited for you to join our party. So you guys seem like you have some history. You seem like you’re friends, you’re in club house together. I was hoping to start there just so the audience knows who are you and how do you guys know each other. Andrea, you want to kick it off?
Andrea:
Well, I would love to tell the story of how I remember first meeting Melissa. We worked at Amazon together. I think this was in maybe 2006. She was the buyer for the health and personal care side of the business and I was the buyer for the grocery side. And we both negotiated with the same vendor, same brand that span both categories in the same day. We met in the kitchen afterwards and she had gotten such a better deal on her negotiation. Such better terms than me and I couldn’t believe it because I was a total newbie and she was a really experienced negotiator. And so I made her teach me all of her tips and tricks. That’s my memory of my first time meeting Melissa.
Stephanie:
Wow. Melissa, do you remember that day?
Melissa:
I didn’t really remember it until Andrea told me and I didn’t remember it that way. So it’s funny the perception that she had versus what I had, but she and I both spent 10 years at Amazon. We were early pioneers of the consumables category back when ecommerce wasn’t cool. And so we really got to do a lot of great stuff. I call it the cheapest MBA I didn’t have to pay for working at Amazon, because we learned how to ship tubes of toothpaste probably. Well, I don’t know if we’ve ever figured that out or will across the internet, but it really was Wild Wild West of ecommerce times and Andrea and I were there at the beginning and that’s how we met each other.
Melissa:
We actually had a consulting practice together. We’ve been friends in the industry. Now we’re competitors in some ways, but that’s the beauty about our community and industry is that we’re still friends. I tell brands, it takes a village to do ecommerce because it’s so complex. And so having thought leadership and experts is what we like to do. So Andrea and I have a Clubhouse show that we do together and still keep in touch.
Stephanie:
Yeah, I remember when Andrea, we were like, who should we have on for a round table? And she brought you up and then when she was explaining, she was like, “Kind of a competitor to our firm, but we’re friends and we work together.” And I was like, “Whatever you want, girl. We’ll bring her on if you love her.” I’m sure I will too. So yeah, that’s awesome. So, okay. I want to get into the topic. I know you all have a Clubhouse later on today that you’re going to be hosting, which I think the topic that we’re going to be covering there is perfect for this show.
Stephanie:
And like I said earlier, it’d be perfect practice all around how brands are going to market and how the world of ecommerce and commerce in general is so different now. So maybe Melissa, if you want to start with how do you even view the world now versus a couple of years ago? Like what’s different? What are brands struggling with that maybe they never had to think about before?
Melissa:
Yeah, I mean, to the earlier point of your question, the moat is so much smaller now. The ability to create a brand is much easier. So years and years, 20 years ago, when ecommerce didn’t really exist, it was, you’re a big brand, you get into the shelves of a Walmart because you’re tied or something like that. But with ecommerce and with more platforms and marketplaces, there’s this ability to create a brand and a loyal following and base through things like social media, TikTok, or viral ways that you can build communities and brands.
Melissa:
And so today we’re talking about a couple brands, DUDE Wipes, and Wyze camera or I guess Wyze actually they started with a camera. They both are emerging brands. They weren’t the big P&Gs and Samsungs of the world. They built emerging disruptive brands and they’ve been very, very successful. And so that’s a little bit about today’s show. What about you, Andrea, what do you think about these emerging brands?
Andrea:
Yeah, I mean, I think another thing that has really changed is the ambitions of brands. So I think brands were to your point Melissa, they were built by large organizations and they were, you layer on this enormous supply chain and distribution and then a marketing engine on top of that in that order. And I think the two things that stand out to me as being different now with marketplaces is that first a brand can aspire to be smaller than that. A brand can aspire to just address a certain niche for a certain customer segment and do it really well. And maybe a brand wants to only be 100 million dollar brand versus a billion dollar brand and think that’s posing some really stiff competition to some of the more established brands in the space, particularly in CPG.
Andrea:
So I think those brand ambitions are changing for sure. We did an internal panel with some clients and thought leaders and this was like a big topic there too, was these ambitions of brands and how they’re different than they used to be. So I think that’s a big one and then I think what those smaller brands can do better. And I think we’ve seen this with both DUDE Wipes and DUDE Wipes is that iterative approach to product development that incorporates the customer and their feedback. And so really thinking about why is this such a great example? They entered a super highly competitive market.
Andrea:
The category was already highly competitive with a lot of players and they just went in there and they did it better. And they did that because they were able to really listen to customer feedback, not just through reviews, but through all the social media channels and approach brand building in an iterative way. And so those are a couple of things that I’ve seen with some of our more upstart clients that have been really successful. That iterative approach and that really laser focused on a specific segment.
Stephanie:
Cool. So talk a bit about the ambitions of the brands. Do you think the brands that… like you said, maybe they don’t need to IPO, they don’t need to get acquired, they’re looking to stay more niche and they’re okay with that. Do you think they can sustain longterm because it feels like if you don’t have goals to really make a mark, you’re just going to get beat out by people who can spend a lot of money on ads and who just has a lot of other channels to create content and create content platforms. It’s like they can do so much because of how much capital they have access to. What do you think about the brands who don’t have those ambitions right now?
Andrea:
Well, I think for a handful of our clients, it’s just a lifestyle business, right? We have a couple of brands who are a family owned and they’ve been family owned for generations and that’s a lifestyle brand. They’re running it because they have a lot of passion for the product or the category and they’re product people. But I think in the other cases, they’re mostly getting acquired. I mean, I think that’s what we’re seeing across the industry. They’re getting acquired by a larger CPG. They get acquired by one of these newer FBA roll-ups or FBA aggregator companies that goes in and buys up all these small sellers on Amazon. But I think they get acquired. I think the challenge with that is that what I see is these CPGs either acquire them really early and then they try to scale it because most larger CPGs are in the business of scaling brands.
Andrea:
And so they try to scale it too fast, which kills what made the brand so special or they buy too late and they overpay. And so I don’t think there’s a super win-win there, but I mean, I guess it’s a win for the brand because they walked away with a bunch of money. But I think that in terms of aspirations, maybe it still is to get acquired later or have investments or whatever, but still they’re really focused on that segment that they’re addressing.
Melissa:
The other kind of an offshoot of your question when you say, these brands don’t have as much money to do these big TV ads. The other piece of that is they are extremely savvy and even savvier than these big brands to grow their brands. So they’re actually able to do more with less because they’re forced to. And so they have amazing product content or they figured out how to get to number one slot for their most frequently searched term because they understand the algorithms, they figure it out faster and they’re more nimble and they have less of a portfolio to worry about. They just focus on a few products.
Melissa:
So they have a lot of benefits in that regard because they don’t have that cushion and fluffy ad budgets and things like that to rely on. So they have to rely on having an amazing product, this iterative process of being able to mind keywords and understand, “Oh, this is the flavor that people are asking for. I need to go create this product.” Product development takes a lot faster for them as well. And we’ve seen that with the Wyze. They’re able to create more and more portfolio pretty quickly.
Andrea:
Melissa, do you think it’s fair to say that some of these more disruptive brands are maybe more likely to channel their ad dollars towards the retailer ad platforms because they really need an ROI. For them to spend in some of the more sort of upper funnel activities might be harder.
Melissa:
Yeah. I mean, we see that especially with the seller marketplace. They are so ROI driven. It’s all about if I pay a dollar, I better get a huge return for that dollar and ad advertising whereas these bigger brands are more focused on marketing their portfolio. And so they’re much more focused on ROI of their advertising, whether it’s anything from Google AdWords, Facebook advertising, whatever it is. They want real time data, real-time understanding of what’s happening to their brand and it has to be profitable. And it’s quite a bifurcation in how they look at advertising and marketing their products versus these bigger brands, which is more of a marketing play.
Stephanie:
Yeah. I think that agility to adjust and move quick is so key. I was just talking with a guest yesterday from a company Avocados From Mexico. Y’all ever heard about them? Wow. Their content strategy, like what they’re doing. I mean, they’ve been winning the number two slot in the Super Bowl ads and her whole thing was like, you just have to be able to move quick. You need to be able to work with agencies who can try it on their own, run with creativity and just act quickly. And even when you don’t have a budget, you can get scrappy and use organic growth hacky tactics to at least get up there in the beginning until you do have access to that budget. That was her number one thing though, move fast, try things out, fail quickly, and then iterate.
Melissa:
Exactly.
Andrea:
I just Googled them as we’re talking and yeah, I can’t wait to watch some of these videos. They look hilarious.
Stephanie:
Oh, her Super Bowl ad was so funny. I mean, all their stuff is funny. It was funny at first I was like, “Wait, why did Hillary schedule an avocado company for the show?” Americans super confused by this and I instantly got hungry, went out and started eating avocados. Once she came on I was like, “Oh, wow. They’re a whole different level.” Like you think about produce and a whole different way. I mean, they’re doing AR stuff with their avocados. They’re doing let’s see, NFTs. They have been ahead, like years ahead trying stuff.
Stephanie:
I mean, they were trying NFTS and 2020 before it even became popular and they were trying to put ad campaigns on the blockchain. She was telling me a story about how they had an avocado Macy’s day. What is it? Float. The only way the float would get there from Mexico to New York as if users would tweet about it. And so when you would tweet, enough tweets would happen and it would move the float to the next city. That’s the only way it would ever reach New York is if they had enough engagement.
Andrea:
Oh, that’s so fun.
Stephanie:
I know. It’s so genius, but her whole thing was like, that’s why you just try things and have that permission to experiment and a brand that can move quickly and not have to worry about competing top of funnel. Like you’d get it on that engagement level and scrap your tactics and you can win, which I think is awesome.
Melissa:
And I think that’s harder for some of the larger companies to do, because I mean, even just that example you gave about like tweeting to get the avocado from city to city, which I think is hilarious and super fun. If that flopped, no one’s going to say, “Oh, that dumb avocado company.” It’s just a memorable thing, but if it flopped and like, I don’t know L’Oréal was doing that or something, I think it makes bigger, bigger news in not a good way.
Stephanie:
Yeah. Which always makes me think about the integration process of all these big brands are of course acquiring these hot D2C companies and it feels like there’s so many out there right now. I mean, so many people come on our show and I always think like, “You’re going to get acquired. You’re going to get acquired.” I mean, it just seems like that’s the world we’re in, but then figuring out how to integrate them into a culture, but not in a way that ruins it. I mean, have you guys seen good examples of that of companies who are acquired and then keep them in their own little startup hub of like, keep doing what you’re doing. We don’t want to ruin you.
Andrea:
I mean, we’ve seen it go both ways. So we have one client and I unfortunately can’t share their name, but they were acquired by a really large CPG and they were allowed to operate separately because they’re performing really well, but they’re taxed so heavily by the rest of the organization because everyone wants to know how they’re doing it. And so the amount of reach outs and coffee chats and all of that stuff and presentations and stuff that they have to give. I mean, it’s an enormous burden on the small brand to try to teach a huge CPG how to be like them, you know? And I think that’s hard. That’s really hard for them.
Andrea:
I’ve heard that happens a lot of the time or they get folded in a little too quickly, but something that I was thinking about is what happens to the customer? Because a lot of times we buy these products from these smaller upstart brands. I mean, I think about like in beauty, two of my favorite brands are Glossier and Beautycounter and I love them. I love them partly because I feel like I’m supporting a company, well, at least in the case of Beautycounter, a company that stands for something which is like low chemicals and things like that.
Andrea:
I’m supporting their sales associate network and I’m supporting the smaller brand, but if they were to be purchased by like P&G tomorrow, I don’t know at what my relationship with them feels like anymore. I’m not sure. I don’t know. And so I wonder for some of these disruptive brands. What happens to that sort of authenticity and integrity when they’re acquired? I don’t know the answer to that.
Melissa:
The other thing that I’ve seen also is a lot of these bigger companies will siphon off people into a team of incubators and they just let them go. So they take them out of their company organization structure. Like you need all this approval process to go do your stuff. They then go create a direct to consumer brand or they’re able to operate in that name nimble way. And they’ve been pretty successful getting learnings and trying to teach their organization some more nimble habits. So one route is buying the brand and then trying to keep them operating the same way and not to integrate it into that more bureaucratic process. And there’s some successes and failures there. And then there’s the big companies actually taking internal team to go do and not be subject to all the bureaucracy.
Melissa:
I’ve seen that as well, but I think the key that we all agree on is just this ability to be nimble, speed and if we’ve seen anything from ecommerce that’s, what is the push.
Melissa:
So this nimbleness is something that’s really important. In these product cycle times you need to get faster. And just the data like with this whole year of COVID when we’re working with brands the question is, is this year I throw out your, because the behavior is just like totally off the chart. We know it’s totally different. So how are you making decisions knowing that last year was not a good year to look at because things will return back to normal. How are you looking at it? And so getting faster at being able to look at data, to understand what’s happening, knowing the trends of what’s happening.
Melissa:
So the best example is like, MMM, Market Mix Models, where it’s like, oh, from six months or a year ago, and you’re making decisions on your media based on that. You can’t do that. You can’t look at six months ago because nobody’s doing TV advertising because they didn’t have any inventory. So you need to get much faster and that’s what’s really propelling more of this in this ecosystem. So I think we will see brands being faster because they’ve been given that inertia because of COVID.
Andrea:
Yeah, I totally agree with that. I mean, I read some study. I can’t remember who put it out. I think it was McKinsey and they said something about, it was more than 70% of brand leadership said that they make decisions faster now than they did previously. I think you’re totally right. You have to speak and COVID taught all these companies how to reduce their cycle times and be faster and be more diversified and all of those things. And I think those are the good things that we get to hopefully walk away from the pandemic with which are some changes to how decisions are made and things like that. And I would add to, Melissa, you talked about how these companies need to reduce their cycle times for everything, from budgeting to product development and I totally agree with that.
Andrea:
I think the other thing that these disruptive brands and particularly, Wyze and DUDE Wipes, is they incorporate that user generated content into their product development. So it’s getting the cycle time down, but it’s also figuring out how do you take all the stuff that people are saying about your brand in social media and in reviews and all these other places and incorporate that into your product development and your advertising and your content and all of that. I think the reason maybe that’s some of the more scrappy upstart brands are better able to do that is because there aren’t a lot of scalable ways to do that yet.
Andrea:
There are some tools that you can subscribe to and you can look across these channels and you can track your mentions and all that stuff but it’s really a manual effort to be tracking a lot of that. And I think it’s qualitative more than it is quantitative. And so I think some of those smaller brands that are still owner operator run just are more in tune with some of the sentiment of the customers and what needs to happen in the company versus maybe a brand conglomerate that has like 60 brands.
Stephanie:
Yeah. It also seems like bigger brands… I mean, I was talking with Stitch Fix a while back about how models can start running so quickly with training based off of how the consumers are feeling now, what they want right now and it seems like a lot of bigger brands do have access to crazy ML technologies and things like that to train these models to maybe make new product decisions, change their website every second based off how people are interacting with it. But I do also wonder, will we enter a year next year or the year after where it’s like, whoa, what the people want now is not what they wanted two years ago and now all of our models have been falsely trained based off a two year craziness. I don’t know.
Melissa:
Exactly. Yeah.
Andrea:
It’s hard to look at anything. So much has changed in the world, I think in the last year that it’s hard to look back at anything.
Stephanie:
What’s real?
Andrea:
It’s hard to go back and look at anything as a data point that’s a predictor of the future. I mean, I think it’s just really tricky.
Stephanie:
Yeah. I think about forecasting then that’s my thought is like, I mean, that was exactly what I’m the VP of data science at Stitch Fix was talking about is like thinking about forecasting what clothes people are going to want and thinking about your inventory. And it seems like now you have to be able to shift so quickly, but then also you could be left flat-footed where you were planning for something that didn’t end up playing out and people, all of a sudden want to be looking nice again, going out into the world, wearing high heels. I don’t know. It seems like there will be a point when brands are like, oh shoot, I got to pivot again and get back to maybe our roots of where we started three or four years ago.
Melissa:
Yeah. And that’s why it’s all about-
Andrea:
… it’s funny I would…
Melissa:
Yeah. I mean, it’s art and science because the science, the AI models, they need data to work and they aren’t very good with anomalies like COVID or like Prime Day or Sun Care member being like the sun care buyer and every single year at Amazon, we never bought enough Sun Care because it was like, couldn’t predict that spike in the summer because the models were for the full year. But the modeling needs a lot of data for it to run. It doesn’t do well with spikiness or anomalies and so that’s where the art comes into play and the creativity you know, as well. So you have to think forward looking in terms of what are these trends, what are they going to be and Marriott together.
Andrea:
Well, Stephanie, you’d asked this in the beginning of what are some of the big challenges we’re seeing across our clients and this one’s not very sexy, but it’s forecasting. It’s so hard right now and they’re all trying to figure out how do they forecast? Well, there’s a lot of things you have to forecast. It’s like, what are your year over your comps don’t make any sense right now. I mean, it’s like you can’t even look at that. And so how do you forecast just demand on one platform because you don’t know how much that platform is going to get, and then you don’t even know how much of your business is going to be commerce, because that’s all up in the air.
Andrea:
There used to be a pretty steady track of that getting a point a year or something like that. And now that’s all over the place. Depending on the category you’re in, you may be gain 20 points or something in ecommerce and then it’s like, which retailer? It feels a little bit like a gambling exercise right now for these manufacturers trying to figure all that out. And then to Melissa’s point, you have to line up an ad budget around that for these different retailer ad platforms and I think the forecasting is just so hard for them right now.
Stephanie:
Yeah. So let’s talk a bit about the ad platforms and I know most of this right up your alley. So maybe you can speak a bit about how are companies thinking about ad platforms and approaching that? I mean, it seems like there’s so much to pay attention to, so much to track, so much data. Like you’re getting hit in the face all different ways of stuff now. What are you seeing behind the scenes when it comes to ads and platforms and how to go about that world?
Melissa:
Yeah. I mean, we’ve really seen an explosion of retail media. So it really started with Amazon, I think at this point, like five, six years ago when their app platform really started getting going, and Amazon makes a lot of profit from AWS and ads. And retailers can’t really replicate AWS, but they can replicate advertising, which is great margin for them. And so just last year, we saw a launch of Walmart self-service ad platform, Instacart came out of nowhere. So to Andrea’s earlier point, literally brands didn’t have a budget allocated to Instacart and then off a planning cycle during COVID, this explosive new platform launches. Luckily a lot of brands had money because they weren’t investing in TV advertising or other places. So they’re able to allocate some dollars to it. But one of the big issues is nobody knows who owns the Instacart budget or platform, who’s running that.
Melissa:
And then since then, there’s just Criteo, what Target has launched, which is a slew of other retailers. So if you’re not creating your own self-service ad platform like Amazon, Walmart Instacart you can leverage the network of Criteo who has Target and a bunch of other ones, CitrusAds is coming online as well. We went from not having a lot of retail media opportunities to advertise to now lots of opportunities to advertise with all kinds of different formats. And so it’s a whole new brave world of trying to figure out where to advertise, but what I think brands believe is they want to be where their customers are. And so that’s where it’s really having a test and learn mentality of being able to get some of these test and learn budgets to see what’s working well and get some data points and proof points and go from there.
Melissa:
And so that’s where like tech stacks, like Pacvue or agencies who also have technology, like Ideoclick can help brands because they can help them figure it all out. And our value prop is really around unifying retail media so that you can see everything in one place, which is really important for these brands. So I think at the end of the day, you need savvy partners to help you, you need technology to help you, and then you need the strategist at your own company thinking through how to do these things.
Andrea:
Yep. I feel like right now all the money… and I also read that Dollar General recently launched an ad platform. That really surprised me.
Stephanie:
What? How [crosstalk] around really.
Andrea:
No, they did ecommerce. Sorry, Dollar General. [crosstalk]
Melissa:
How do you make money on that? Is that profitable?
Andrea:
I know, right?
Stephanie:
What are they doing?
Andrea:
It’s pretty much like their value proposition is that everything cost less than $10 pretty much. So I don’t know how they ship that online very economically. But in any case-
Stephanie:
$10. What? That cost will be less than a dollar. What happened? They really lost sight of [crosstalk].
Andrea:
Inflation. I think in the short term where the ad dollars are coming from. They’re coming from the other ad options, like the theatrical releases or out of home advertising and TV and billboards and all that stuff. But when people start leaving their houses again, how much of those ad budgets go back to some of those more, I don’t know, non retailer ad platform ad types and how much stays with retailer ad platforms. And I predict that a lot of it is going to stay with the retailer ad platforms. I think the reason is the metrics and ROI that you can get from that is like crack for marketers.
Andrea:
I mean, I don’t even know how you would go back to spending on advertising where you don’t get ROI metrics. I mean, I remember when Amazon advertising first launched, and that was one of the first performance marketing retailer ad platforms that you could work with and the reaction of the manufacturers just being like, “Oh my gosh, I can directly see a correlation between what I spent, who clicked on it, how many people saw it and then how many people bought it.” And so I just don’t..
Stephanie:
Wow. What does the ROI look like because I’m not deep in the ad world. So I don’t know how to think about what retailer ad platforms looks like versus traditional. So how do I envision what you’re getting in that world that you wouldn’t be getting otherwise? What is that ROI look like or what are brands getting used to now where they’re like, this is the only way I would do it going forward.
Andrea:
You want to take that one, Melissa?
Melissa:
Yeah. Well, I mean, I think traditionally if you’re doing normal advertising, you’re more focused on impression focus, right? You’re really trying to get impressions. You’re not tying back to sales of a product. And so in ecommerce, there’s a direct tie back to, I spent a dollar, I got $5 of sales and there’s like a brand halo associated with that. And so that tie back where I put an ad, if you leverage Amazon DSP, which is their programmatic display advertising, that’s retargeting. So you can target to people who are looking for men’s shoes within this certain zip code who shop Nike, but didn’t buy it in the last 90 days.
Melissa:
You can get very, very specific targeting. You can show them an ad, drive them back to Amazon, to your product and then you actually know if they bought that product or not. And the actual sales attribution and return that you got from that versus just an impression buy like a Super Bowl buy, right? Where you’ve no data to say, “When I do a Super Bowl ad, you can try but there’s no actual ROAS, return on ad spend that you get that correlates directly to an ecommerce sale. But I do think that media… people are doing all of these things, because some is upper funnel where you’re more branding dollars and some as much lower funnel, direct marketing, that’s conversion to a sale.
Melissa:
And so that’s where these bigger brands are like, if there’s a new product launch, you’ve got to get people to know about this product. So you might do like during the Super Bowl, the Super Bowl ads are like everybody’s watching the Super Bowl and this year they had some weird like caveman soap. I can’t remember the name of it, but on their Superbowl ad and so that was really to get attention and drive traffic to awareness of their brand. But not tied to specific ecommerce metrics.
Stephanie:
So how have you seen brands changing the way they’re thinking about ads in a way that’s focused on first party data collection, really trying to create that relationship from the start where maybe they weren’t always thinking about this before. Have you seen brands shifting their mindset around creating an ad that maybe has the focus on that now?
Melissa:
Well, I mean, with all of the things happening within the privacy world where third-party cookies are going away. First party data becomes more important and so I think that this benefits platforms like Amazon who have a significant amount of first party data and hurts platforms like Facebook that rely on more cookies. But I think brands in general are really trying to build their own databases. So a lot of them have publicly talked about building direct to consumer businesses so they can own their customer. And so I think that they view first party data, building their own CRM and their own databases pretty highly. I don’t know what have you seen Andrea in terms of brands that you work?
Andrea:
Yeah, I’ve seen the same thing. I think a lot of them are building their own CRMs, trying to figure out how to access more direct customer data. We talked about how it encouraged a lot more speed of decision making. I think it also encouraged a need for diversification in all ways like manufacturing and the ecommerce platforms that you sell on and how you source the product and I think diversification is really important. And I think there are a lot of manufacturers who’ve been feeling a bit squeezed by Amazon and it’s nice to have options to have a D2C site. I mean, the D2C thing, I think is like a whole other topic, but I do think it’s a lot more expensive to drive traffic to those sites. You’re going to get a lot.
Andrea:
It’s not going to be a hugely accretive to the business in the short term, but I do think it gives you access to your own customer data, which is, it can be a really important point of experimentation in a sandbox for manufacturers to really see what kind of marketing is working for them. So I’ve certainly seen that and then I think just looking across the retailer ad platforms, I mean, we’ve seen a push onto all platforms for a lot of our major manufacturers and wanting to access… If the customer’s cross shopping, maybe it’s the same customer, but also access different customers that are shopping across different ad platforms to Melissa’s point earlier about wanting to be where your customers are.
Stephanie:
Yeah. I love that. So the other day, Andrea, I was creeping on your Instagram, I think I was. And you were talking about omni-channel strategies and drop shipping as a catalyst for growth. I thought that was interesting because I feel like when I think about drop shipping, it’s had this like crazy heyday drop ship, white label, everything. No one has to know who you are. You don’t really need a brand. And then no one was really doing that anymore. It didn’t seem like there was margins there to do that anymore or people really want to connect with a brand.
Stephanie:
Like, especially now everyone wants to know who’s behind that brand, the story, they want to feel some connection with them. And when I saw you mentioned drop shipping, I was wondering, how are you guys viewing that? Maybe it’s always been around and that’s just my personal narrative I’ve written around it or how do you see brands maybe leveraging that right now?
Andrea:
Well, I think of drop shipping a little bit differently. It’s still the brand. They’re just bypassing the retailer and they’re shipping directly to the consumer. You can do that as a seller in your own right on the marketplace platforms or you can also just do that behind the scenes. And there are a number of categories that are high percentage drop-ship and always have been. It’s never going away. It’s just not obvious to you as a customer. So shoes is a great example.
Andrea:
Those are often coming directly from the manufacturer. That’s an industry that’s been pretty heavy drop-ship for a long time and mainly because so much inventory, you have to carry. There’s one style and then there’s five size color combinations. And so it doesn’t make sense to ship all that to a retailer and then have them re-ship it to a customer and try to keep the inventory levels right.
Andrea:
So shoes has always been a really big drop-ship business. If you pay attention to the stuff you get from Nordstrom and others, you’ll notice that it’s often coming directly from the manufacturer. Sporting goods is another one. Some of the bigger bulky categories have been traditionally drop-ship because you don’t want to ship like a treadmill to a retailer district warehouse or whatever. It does expose the retailer to a degree of risk because you’re not packaging the product. So you lose a little bit of control over the quality, the consistency of the customer experience. I think what I posted was that Nordstrom was going to try to open up more assortment through ship.
Andrea:
It’s a little risky. I mean, I don’t think it’s highly risky, but I do think it presents some risk in losing control over the customer experience, depending on if the retailer is still deciding the assortment, you could lose a little bit of your credibility as a retailer. I mean, I think part of why customers are starting to shop a lot of places besides Amazon is for the curation. Is because it’s a little bit of an easier shopping experience.
Andrea:
I would much rather shop for shoes on Nordstrom where I know that someone actually made a decision to carry each of those products versus on Amazon where it’s the wild west and it’s just overwhelming. So I think a lot of these retailers that are competing with Amazon and doing well with it right now, I think are doing it well because of the curation. And if you open up those retailers to just unlimited drop shipping with the brands, I think you just lose a lot of that value proposition.
Stephanie:
Yeah. I agree. I mean, it seems like the AMSEC could just come in and just have a curated collection and maybe they’re already doing this. This is the Radan collection, this is the [inaudible] and like, you go there knowing what you’re going to get, because I thought the same thing. The other day I was trying to find, I don’t know, some piece of yard furniture and it was so overwhelming. I was like, “Oh my gosh, there’s so many egg chairs. I know the egg chair I want, but there’s so many.” 90% of them are not egg chairs [inaudible] is and I just went to Walmart and they had the exact what I wanted, which I found through an influencer, or I would just go to West Elm. I just feel like they have the exact selection that I want. I’m not going to mess around, but it seems like they could come in really quick and change that if they wanted to.
Andrea:
They can’t. it’s so hard. I mean, they have a one size fits all platform and it’s heavily search-based. And I remember, how do you say her last name Melissa, Kathy who used to lead soft lines at Amazon? Kathy Boudin. Well in any case, sorry, if I’m mispronouncing your name, but I remember hearing her say, in all hands one time, she was like… They came in and I think Amazon fashion had its best a couple of year run. They really created some curated lists and some storefronts and they started the Amazon Delivers for fashion and I thought it actually was really good stuff. But she said, “It’s a thin veneer that we’ve put over the site.” I remember her saying that. It’s a thin veneer.
Andrea:
And once you scratch it, you see just all the assortment and everything that’s there and it’s overwhelming. I keep a little like goofy quote lists that people on my team say and this guy in my team, Jamal the other day. I can’t remember the context, but he said, “If you’re going to go shopping on Amazon for a Teddy bear sweatshirt, I’ll see you in a week.”
Stephanie:
That’s so true.
Andrea:
I don’t remember why someone was shopping for a Teddy bear sweatshirt or what the context was, but it cracks me up because it’s so true. I mean, you could spend a week just combing through, even for something super specific like that, a Teddy bear sweatshirt. You could spend a week just coming through this.
Andrea:
There’s this S&L sketch about Netflix, but I highly recommend that you watch because it’s like a fake ad for Netflix, but it says, it’s the endless scroll. “By the time you get to the end of the scroll, we’ve added and created new content and so it’s the infinite loop.” They call it an infinite loop. And Amazon is like that. By the time you get to page 10, they’ve probably added more assortments. So it’s never…
Stephanie:
Yeah, people are working in the background. “She needs 10 more of these, keep going.” Oh my gosh. All right. So I know you guys have a hard stop in a couple of minutes on Clubhouse and maybe I’ll even try and join you over there, but I do want to get one last question. Usually I do a quick lightning round. Lightning round is brought to you by Salesforce commerce cloud. But for this one, each only get one question because we’re on a time crunch. So Melissa, we’ll start with you and it’ll be the same question. What one thing will have the biggest impact on ecommerce in the next year?
Melissa:
Oh, man. That’s a hard one.
Andrea:
Yeah. I’m glad I get to go second.
Stephanie:
Andrea already had to do it once on her last episode and it can’t be the same answer, Andrea.
Melissa:
What’s going to be the biggest impact to ecommerce in the next year?
Stephanie:
In the next year. Yeah.
Melissa:
I mean, we already had COVID so that’s what had the biggest impact on ecommerce? I guess, I mean, maybe it’s a ripple effective. I’m going to have to say COVID because that has had the biggest impact on ecommerce because it’s accelerated it so much with new people especially at different age brackets. The older age bracket is shopping online and so we know the baseline is never going to return back to where it was and it has changed behaviors and it will be accelerated. The other interesting thing, I just notice this when I walk into a beauty store, like in Ulta is that beauty used to be a way better experience in store than it was online. Now it’s the opposite. It’s way better online.
Stephanie:
I order from target all the time, just directly from Target because I’m like way better than going in store.
Melissa:
Because you can have virtual reality, but what’s this color going to look like? When I walk into an Ulta, everything’s taped down, you can’t try on anything. You can’t see the format of anything. I don’t know how much of that’s going to return. I don’t think people are going to be very comfortable trying, like picking things up that other people have touched for a very long time. I don’t want to.
Stephanie:
I never wanted to. I never wanted to try lip gloss. I’m like, how many… thank you.
Melissa:
I think the interesting, and then Amazon announced opening a hair salon where a lot of it is going to be tech focused around what’s this color going to look like. Virtual reality of hair color. So I think that Cover Desk has accelerated this complete change in behavior lifestyle. And the other thing is, I don’t know if I’m ever going to wear jeans again. I might just wear my VRA joggers to work if I ever go back to an office.
Andrea:
There’s a great YouTube video on how to dress up joggers, that I’ll send you.
Stephanie:
All right. Andrea, you’re on the hot seat.
Andrea:
Okay. I’m going to go with social shopping and live streaming and I don’t know if it will be in the next year, but I think it is going to be the biggest disruption to ecommerce because it is going to start taking the transaction or at least the beginning of the transaction off of the ecommerce site and onto social media. I know that I don’t have a lot of agreement on this in the industry. A lot of people are like, “Oh, it’s going to take longer or like people aren’t going to shop on social media,” but I’m feeling super bullish on this. And I think it’s primarily due to my own behavior, which is that I am almost exclusively buying things that influencers have recommended to me and it’s a super clunky experience. You have to go down to the bottom of the YouTube show notes and find the top she had on and it’s annoying and I’m still doing it because it’s preferable to the endless scroll of Amazon.
Andrea:
So I really think that that is going to be a huge disruptor to ecommerce and have a big impact on it. Although I was wrong about this once before, I helped start a company, I guess it was like 15 years ago now. It was about social shopping. It would like loud allow it. It was kind of an old version of a screen share before we had screen shares, but it allowed you to shop reseller websites with your friends.
Stephanie:
That was awesome [crosstalk].
Andrea:
It took a long time to get it off the ground and we eventually sold it to Nordstrom for their style boards, which is a very different application than what we originally went into the idea with, but I still feel super bullish on this. People prefer to shop together or they prefer to feel like they’re shopping with someone in the case of like the curation from influencers or whatever. I’m feeling bullish on social shopping and live streaming.
Stephanie:
I will 1000% back you up on that because yeah, almost all my shopping behavior comes from influencers and I will go through all the hoops and hurdles to try and find something even through that, dang, like to know it app, which is horrible to work through. You’re like, “I’m just trying to find my shirt.” And then you’re like bouncing around like 10 different apps and it throws you over back to Nordstrom and then you’re back again. It’s not fun. So I hope that process gets easier.
Andrea:
I’m a huge fan of taking the screenshot and using Google lens. I don’t know if you ever do that.
Stephanie:
I don’t do that.
Andrea:
If you can’t find it, Google lens is… I don’t know that that’s their intended application, but it’s really, useful.
Stephanie:
It is today. That’s great. All right. Well, I really think we need to have a quarterly round table. This is super fun having you both join us and yeah. Where can we find out more about you, Andrea, Melissa? Where can we find about Ideoclick and Pacvue?
Andrea:
Yeah. Well, you can follow me on LinkedIn. I post and write a lot about ecommerce there or on my website, andreakleighconsulting.com and you can learn more about Ideoclick at ideoclick.com.
Stephanie:
Melissa.
Melissa:
Ditto. LinkedIn, you can find me Melissa Burdick there. And then pacvue.com. P-A-C-V-U-E dotcom. Yeah. We’d love to hear from folks or you can find Andrea and I in Clubhouse later this afternoon.
Andrea:
Yes, four o’clock. After this’ll air, after that.
Stephanie:
Yeah. You guys are giving a preview of this, so, yeah. All right. Thanks so much y’all.
Andrea:
Okay. Thanks for having us, Stephanie.
