Jason & Scot Show Episode 288 – News and Q4 Earnings Report’s

A weekly podcast with the latest e-commerce news and events. In episode 288 we cover some industry news and review retailers Q4 earnings reports.

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News

• eTail West Tradshow
• Amazon Stock Split
• Shopify Fulfillment Network
• eBay “The Vault”
• Twitter E-Commerce Pilot
• Retail Media Networks are on fire
• Inflation continues to rise

Q4 Earnings Reports

Winners

• Dicks Sporting Goods
• Walmart
• Target

Neutral

• Best Buy
• Ulta
• Kohls
• Gap
• Nordstrom
• Ralph Lauren

Losers

• Dollar Tree
• Abercrombie & Fitch
• Macy’s

Episode 288 of the Jason & Scot show was recorded on Thursday March 10, 2022.

Transcript

Jason:

[0:23] Welcome to the Jason and Scot show this is episode 288 being recorded on Thursday March 10th 2022,

I’m your host Jason retailgeek Goldberg and as usual I’m here with your co-host Scott Wingo.

Scot:

[0:39] Hey Jason and welcome back Jason Scott showed listeners Jason covid is defrosting and you are getting yourself back on a plane and I saw that you went out to eat tail.

Jason:

[0:50] It is true I don’t know if listeners can see me knocking on wood when you say that but yeah I yes went to my first post covid trade show that felt like trade show from before covid which is cool.

Scot:

[1:04] Sprinkle what was what was the buzz in the like the first time and well I guess in RFC some folks got together did you end up you didn’t go to.

Jason:

[1:15] I did not go to in our app and an attendee and sit in our F was I think there are people that went in and found a good but attendance was significantly down from a normal and RF show.

Scot:

[1:28] Was kind of the first normal.

Jason:

[1:29] Yeah and the interrupt timing was just rough because that was kind of In the Heat of the Omicron variant like re-emerging and.

Um but so e-tail is in Palm Springs in February you know.

People are like turning off Mass mandates and it felt pretty good and so the show was sold out the hotel was fully booked and if you if I just popped you on at the trade show for.

It wouldn’t have felt any different than e-tail 2019 felt to me so I think people were like frankly pretty excited about getting back together.

And took full advantage of the you know typical trade show activities that cocktail parties and and all the frivolity.

So I did a couple of sessions I did a keynote interview with the chief marketing officer from Signet Jewelers and they have a pretty interesting story during the pandemic the,

you know they even have an interesting story in the metaverse that like I didn’t realize this but millions of people have gotten married on the metaverse and are buying jewelry for it.

Scot:

[2:39] Nice can you buy a is your diamond and ft.

Jason:

[2:43] In some cases yeah.

Scot:

[2:46] I’d like to see picture I found it.

Jason:

[2:49] Yeah

I don’t want to actually bring up the topic of buying jewelry and then tell her it’s digital jewelry because that won’t that won’t go where I was wanting it to go.

But so so that was good I did a panel on on sort of growth tactics with a bunch of kind of younger digital native Brands and so that’s fun to get

you know some some different perspectives and some novel stuff and I did record a couple podcast there so listeners have that to look forward to will drop those over the next few weeks and so some good

good conversations with with real people in the industry.

Scot:

[3:26] What was the back of the hall conversations the you and I have talked a lot about the impact that the Apple and Google privacy changes have had was that kind of one of those

yeah you’re on the stage everything is Rosy but behind the scenes I was like oh no what are we going to do with this this whole thing that’s crashing down around us.

Jason:

[3:44] Yeah it depends I because I feel like there’s a couple of different cohorts at Eddie tell like there is a cohort of them

kind of smaller direct to Consumer Brands and I think those guys are right in the Wheelhouse of those impact so that absolutely was coming up

you know it there is a pretty big like e-commerce vendor community in the show and so there you know weaning into the

the super high P Trend so everyone’s talking about metaverse and,

in ftes and trying to convince you why they’re the world needs 107th personalization engine,

so you know there’s a fair amount of that stuff and then you know there’s some of the big wholesale retailers and there they were like more interest like the trends that are impacting them the most right now are things like retail media networks and stuff like that.

Scot:

[4:38] Brickell all right so anything else I need to run jump in the news.

Jason:

[4:45] No not yet let’s we got a lot of news to cover so let’s get to it.

Scot:

[4:50] Cool well it wouldn’t be a Jason Scott show if we didn’t talk about a little bit of Amazon news.

Jason:

[4:56] Amazon news new your margin is there opportunity.

Scot:

[5:08] Yes so one of the things it’s been a busy week for Amazon so

just yesterday they filed one of their SEC documents their annual report effectively and surprised Wall Street with two little good nuggets so one of them is they’ve they’ve expanded their stock buyback

over time as you issue stock options and restricted stock units to employees as incentives your stock count grows and EPS is calculated by earnings

/ your Share account so when your chair count goes up it puts a natural pressure downward pressure on your EPS number.

[5:44] So Wall Street loves the buyback so they increase the available by back to something like 20 billion which is pretty big number,

but then more and more interestingly Amazon’s been one of those stocks that has kind of refused to split and then just recently alphabet,

I think ask is the after microphones off that announced a split and Amazon did that to this is this is one of those

kind of fascinating psychological things so when you do a stock split does it change the economics at all right so you just say hey we had 500 shares in there worth a dollar and now we have

to let’s see if they usually do a reverse split so you have there were.

So 500 shares the dollar and we’re going to get down to 50 cents we have a thousand and fifty cents so the economics are the same but

what happens is in many brokerage accounts you can’t buy a fractional shares so

it makes the retail investor Amazon stocks kind of around over a thousand dollars so when you do a split it does make it so more people can buy and then there’s a psychological thing that’s irrational where people just feel like it’s cheaper.

[6:55] Even though it mathematically is so so all that was really well received and then and it’s been interesting because,

they also signaled that.

They’re not going to be doing as much capital expenditure this year as prior year so so Amazon goes to these invest in Harvest phases and on the call the you and I covered it they were,

they were pretty cagey about it and I think Wall Street didn’t like that they were going to be an investment especially after covid it didn’t kind of make sense they built so much fulfillment centers,

so there were some elements of this where they clarified some things and it gave Wall Street a really nice kind of vibe that they’re not going to be investing a ton on capex

and then I thought it was interesting they announced they’ve announced a lot of these little kind of Acquisitions and they did one recently this company called Vico if I’m saying that right veq oh

it’s kind of like a multi-channel shipping solution so they’ve you and I have long.

Posited that Amazon is not a fan of Shopify and all the gmv that they’ve grown in that’s going through there and in Amazon’s eyes they view them as a competitor and so you know.

[8:09] There’s a lot of speculation that they’re going to come out with some kind of a Shopify killer or some kind of competitive offering to Shopify so this gives them a pretty interesting shipping kind of non Amazon shipping solution

kind of like a ship station they acquired point of sale system

that was based out of India then this goes back like 18 months ago they acquired a little e-commerce player out of Australia so it kind of feels like they’re assembling some pieces to something so it’s either

little local groups doing random things or there’s a big plan and they’re assembling things I’ve said this before I’m still think.

[8:48] I think the best strategy here is to take all these Services create microservices out of them,

and then sell them and compete with like the fabrics and the Commerce tools is that the other one always forget it yeah you kind of so have a headless option

and put it in aw that’s because you already have so many developers using AWS that would be a great entry point into people that are like pay I need I need a cloud-based point-of-sale functionality of some kind or I need any of these little pieces

that’s my guess who what’s going on and then and then some people

that talk to you said all right if they do that then cows an SMB how are they going to compete with Amazon with Shopify do smbs going to use these micro services and,

I think then they also build a little kind of Shopify killer on top of those microservices almost like a,

demo that basically says look what you can build with these micro Services of a Shopify like platform that’s what I think is going on but I’m curious to hear what you think.

Jason:

[9:49] Yeah so I kind of think you’re wrong we’ll see the I could easily see them

like they’re they’re releasing a ton of microservices on AWS all the time right and so I will not be surprised at all if they release a stack of Commerce oriented microservices for AWS that.

Could compete with Shopify I just don’t think they would do that by acquiring these companies that are on like a whole disparate set of Technology stacks and you know don’t have significant scale and aren’t necessarily like,

have some competitive IP like I’d like Amazon could buy all these could build all these capabilities that these companies have.

With very little effort so I look at each one of those companies and I’m like it kind of solves a practical problem for a particular.

[10:42] Stakeholder in a particular Market I mean you know Amazon’s trying to expand their into Australia and they bought a Marketplace that had a bunch of sellers in Australia right

Amazon’s trying to capture more share in India and in India a bunch of the orders don’t get shipped to the consumers home they get shipped to a retailer

the Aggregates the orders and then customers go to that retail and pick it up so now they bought a POS system that a bunch of those retailers run in these small villages in India and I do think Amazon is,

interested in is certainly going to make a bigger move in shipping and.

You know I think if you’re trying to get people to use Amazon Freight and Amazon shipping for non Amazon packages one of the things you need is a is a shipping manager software package to give to all of those,

those companies so I think that’s what the qos so I think I don’t see these Acquisitions as some sort of super strategic set of Mike rolling up of microservices.

But we shall see.

Scot:

[11:48] Yeah we should go back in the hot tub time machine and we record our annual predictions but next time.

Jason:

[11:56] And side note I will one other prediction I’m glad we’re not going to go back and visit is.

Um Whole Foods did open their first just walk out store in Washington d.c. this month.

And I will readily admit a year ago in this show when we talked about the significance of just walk out I said.

Probably be a long time before we see this in a Whole Foods because there’s all these logistical challenges that like are not an Amazon go store but are in the much bigger grocery format like you know.

Each has of fruit and stuff you know bulk items that have to be weighed and you know retrofitting this technology into an existing store that wasn’t designed for it is a lot harder than building a purpose-built.

Environment and you know there’s there’s challenges with things like bathrooms I listed all these things and very smugly said so don’t expect to see.

Just walk out in a Whole Foods anytime soon and then less than a year.

Scot:

[12:53] I remember you saying it was pretty much impossible.

Jason:

[12:55] Yeah clearly I thought it was impossible and I feel like that that created a moonshot team at Amazon which then did it.

Scot:

[13:06] Because Jeff is just like oh Jason’s challenge me now the gauntlet is down.

Jason:

[13:12] Exactly so so congratulations to team Amazon I have not gotten a chance to shop that I have shop the the Amazon Fresh stores with just walk out so which is kind of an intermediate step so so I’m excited to see how that plays out.

Scot:

[13:27] Yeah kind of a a

tangential Amazon news story we talked about this on our last episode which shut out the listeners we had really,

your kind of strong engagement from from you guys about the Amazon

Logistics deep dive we appreciate everyone not only listening to that at you know we were concerned it would be a little boring kind of going through all these counts of what they’re doing but at least

I find it riveting and but we got really good feedback on that and we appreciate when listening to that buried in that at the time we did talk about

shopify’s earnings where they basically came out and said their previous iteration on partnering with 3p else to do chipping hadn’t worked,

and this was actually predicted by by facile over it fabric I think he mentioned on the show he’s been pretty vocal on Twitter about it too I’m not revealing some secret and,

um Wall Street was then they said they’re going to spend

what was it a billion dollars on fulfillment centers which seemed laughably small especially in the context of the.

[14:30] 260 ish large fulfillment centers Amazon house and that would get them two day shipping which just doesn’t logically make sense to me and then Jason you pointed out that’s not

not even where the market is now but the update on that is Wall Street was not amused and what happens is.

When you’re high-flying stock with a big multiple and your your your model.

[14:56] Becomes part of the story and your Shopify has these really high both gross and net margins and relatively high growth and so their growth has slowed down and then Wall Street kind of it was kind of a

doomsday scenario so all streets like all right you’re slowing down your growth you’ve got the shipping problem you always talk about how you’re not worried about Amazon but something’s going on here and then on top of that you know they basically,

said to Wall Street we’re going to change our margin structure because we’re going to take all our ibadah and plugged it into this

spying warehouses so Wall Street hates it when you make a change like that and you kind of say I’m a 80% gross margin business and now

I’m going to be a 60% right whatever it is so the stock has like been in a world of hurt so it’s basically gone down by half I think

depending on whatever timeframe you look at and then there’s been a lot of stories about folks leaving and it’s kind of create a little bit of chaos so it’s going to be interesting to see

can Shopify executed on this can they do it and not

I’m really freaked out there investor base what happens with employee turn so so it’s kind of the first time they’ve had a bit of a misstep or or a resetting of their valuation so it’ll be interesting to see how that plays out.

Jason:

[16:12] Yeah yeah I I’ve been following closely I side note on facile dazzles the CEO of

fabric which is a headless Commerce company that in some ways competes with Shopify and

I actually ran into him in detail and side note he just raised they just raised like two hundred million dollars at a billion dollar valuation.

Scot:

[16:33] Yeah I’m a super jealous of his ability to raise capital.

He seems to preemptively do it he was always like I know we just raised a hundred but these guys really want end so we’re letting him in for like 200 at a you know a bazillion dollar valuation so high class problem.

Jason:

[16:49] You would know better than I but I have heard the advice frequently repeated that the best time to raise money is when you don’t need it.

Scot:

[17:01] It is true yes I always raise money when I’m down to my last dime which is the worst.

Jason:

[17:06] Yeah I did tell him I was expecting like fancier suits in a bigger Booth a detail and he seems like he’s not spending the money on that stuff it’s.

Scot:

[17:17] Now he’s hiring Engineers like crazy.

Some other news and I know Jason you have some to run through Saga through this quick the still follow eBay because it’s kind of an interesting story and you know they’ve even been to the pandemic they.

Jason:

[17:34] Sorry for our younger listeners eBay is a website that sells stuff like Amazon but before Amazon.

Scot:

[17:41] Yeah it’s this auction format where you like you takes a week to figure out if you bought the product or not it’s not not great in today’s instant,

instant feedback but to be fair most of their products are sold with buy it now so they’re auctions is not the majority but they’re still kind of always called the auction company so they’ve had that.

There’s all these startups that are nibbling away at eBay in different categories because for the longest time I felt like eBay should have vertical buying experiences because if you’re a comic book collector you want,

to search for certain things that matter to you versus a shoe collector versus a,

electronic Gadget buyer versus whatever but they stubbornly would never vertical eyes that experience and so now they are very closing the experience so they’re finally kind of waking up to this there’s

let’s see they’re going to have some some different experiences for what was it,

it was couple luxury goods shoes sports cards then this interesting there’s this kind of one interesting Trend in Collectibles that I think is going to go into other areas is.

[18:50] Different ownership models so taking a physical good and putting a digital ownership on top of it so there’s a site called dibs and

this actually came up Greg Bertinelli we had on the show two years ago he’s a VC that really kind of execs eBay guy and he’s

focuses on these kinds of models but what dibs does is let’s say you have some really cool rare baseball card and you could certainly sell it and then extract all the value but what if you could.

[19:19] You put it in a digital Vault a vault somewhere and then you could sell 40% of it so you could get some liquidity from your baseball card but you still own it and then you you could you don’t have to sell the whole card,

um

and then you know some of those fractional rights could be shared and and whatnot or if someone wanted to buy the whole card they could and then you could transfer to them and it would stay in the ball so there’s all these companies that are doing really Innovative things around this

all this this side of digital marketplaces

is within the purview of the SEC so all this is this is not crypto which is kind of over on its side the side kind of going rogue outside the SEC for the most part these are all blessed by the SEC and

and then there’s two that are very popular ones called Rally Road in the other ones called Otis and they do more

they actually go out and buy various Collectibles and things and then you can have fractional ownership

so for example in the comic book world one of the most famous comic books in my generation is called Amazing Fantasy 15 and that’s the first Spider-Man.

I don’t have that comic book because it’s like 300 thousand dollars or something like that and that’s that’s crazy and but you know.

[20:31] But it’s actually an interesting investment because I’ve watched it for 30 years and it’s gone from five thousand dollars when I was a kid to three hundred thousand dollars now so.

You can invest in that by buying a fraction so eBay announced their starting this thing called the eBay vault which is going to be this 31,000 square feet secured facility we’re going to be able to store all these assets

they say it’s going to the largest one in the world which didn’t make a hundred percent since me because that just doesn’t I guess we just had you know Mark on,

talking about million square foot fulfillment center so 31,000 square feet just doesn’t seem huge but I guess it’s full of vaults.

Then that also enable them the whole eBay model and this is kind of like the Shopify story we’re for the longest time they refused to touch a product because you know they’re their margins are super high because they never touch the product,

so it’s a zero asset business well all these companies have come along that touch the product so there’s.

I mentioned some of them but then there’s like goat and the shoe company’s stock X where they’ll actually get the sneakers in and they’ll thumbs up and say we’ve looked at these These are really you know Michael Jordan error.

Sneakers and they we’ve authenticated them there’s a lot of companies that do this in handbags who’s the one that does it for apparel.

We could put all your apparel you want to sell in a bag and they’ll take it and.

Jason:

[21:57] Rio Rio our thread upper.

Scot:

[21:59] Thredup thredup that’s what I’m looking for so it’s interesting if you look at it every eBay category someone has kind of come in and added a high-touch experience and chewed up a fair amount of the GMB that used to be on eBay so they’re finally kind of reacting to them,

and then I thought you would find this interesting they are going to launch a,

they’re gonna let you put videos on your listings and then they’re going to have a live video streaming pilot for sellers so that could be kind of interesting.

I’m kind of excited to see you like what your average eBay sellers live stream looks like it’s going to be it’s going to be kind of a.

You know a menagerie of things to look at there that’ll be funny

and then I thought you being a payments guy you’d be really excited about this Innovation that call it the digital wallet and

lets you store balance from your eBay sales and then you can use those let’s say Jason you sold one of your widgets for $100

you can use that hundred dollars to now go buy stuff.

Jason:

[22:52] Wow that’s an amazing idea.

Scot:

[22:54] Yeah it’s also known as PayPal 1997 so so so let’s.

Jason:

[23:00] For our younger listeners as Scott’s not being sarcastic PayPal did start out as a eBay digital wallet and they spun it off so this is kind of a redo.

Scot:

[23:10] Yeah yes they’re basically having to you know.

They’ve got divorced from PayPal they had this they got separated from PayPal and then they went their separate ways and now they’re basically having to just reinvent PayPal instead of eBay it’s kind of.

Kinda weird but they you know being eBay they didn’t just say well let’s do it everyone else doesn’t just license stripe they’ve got all this features they had to kind of like go do it all themselves so

they’re now just finally getting a digital wallet so there’s been this period of time where if you sold on eBay there was no way to take this fund and then put them back on eBay you just you know and I’ve been doing some eBay selling and it’s like super painful it’s like constantly

emailing me and it’s like it feels like literally like,

the first version of PayPal so so doing some Innovative things there and then other areas they’re just kind of like they’ve been hobbled because of some of the corporate structure things that have gone on.

Jason:

[24:01] Yeah and we are teasing eBay a little bit but In fairness they still are like the second or third largest e-commerce site in the u.s. so.

Scot:

[24:09] Yeah I love eBay and I wish I still feel like there’s this big kind of nugget of goodness in there that needs to be unlocked they just needed to kind of do it faster and kind of more aggressive with.

Jason:

[24:21] That now did you talk about the vault already.

Scot:

[24:24] I did.

Jason:

[24:25] Yeah so prediction for next year that I’m going to put on my list is there’s going to be a Nicolas Cage movie where he has to break into the Vault and steal something you heard it here first exactly in Ft.

[24:45] Yeah there’s nothing Scott likes better than than talking about like Amazon antitrust and inflation has his two favorite topics but I should note while we’re covering all the news that the,

the monthly inflation numbers came out and there’s there’s a ton of different numbers but one that gets talked about the most is this Consumer Price Index which is kind of a random basket of goods that were selected in the 1950s,

and based on that index over the last 12 months that index has gone up by 7.9% so that’s the.

The highest it has gone up in the last I don’t know more than 30 years,

so that’s pretty significant and that was one of the big talking points at e-tail is.

You know what what are the impacts of inflation going to be on the market and in Howard consumers going to react so,

there is significant inflation out there right now and it is like factoring into a lot of retail and e-commerce players plans are you worried about inflation at all Scott you think it’s overhyped what’s the.

Scot:

[25:53] Now I’m very very worried about its going to hit that.

I don’t think it’s in control at all and it’s in this kind of spiral I think we’ll hit the this stagflation thing so you know imagine your retailer your labor is going up

imagine you’re an e-commerce gas prices are

you know hitting between four and seven dollars depending where you are in the country so now you have all these yeah I’m shocked we haven’t seen fuel surcharges for everyone maybe they have and I just missed them so now it’s going to be,

more expensive to ship stuff and then you have to raise your prices and then that causes more inflation and then you know

and then people need more wages to afford the stuff you just raise the prices on it that there’s a vert there’s kind of a worry there’s a bit of a flywheel there that I don’t know how you break out.

Jason:

[26:43] Yeah no and even before all of this fuel unrest like fuel was already the,

the category with the highest inflation and now it’s you know likely to go even much higher so that that’s in very unfortunate and it does I’ve seen some studies,

and this is may be counterintuitive but when you think about it it makes sense.

Inflation is impacting the the low price sellers the most right so if you if you have a little extra margin in your product you can act as a shock absorber a little bit and absorb some of this inflation but if you are,

are selling at razor-thin margins so think dollar stores like they’re getting hit the hardest by inflation and.

Scot:

[27:30] The other three dollar stores now.

Jason:

[27:31] Exactly and the consumers that shop lower-priced retailers which you know tend to skew younger consumers so Jen’s ears.

[27:42] They’re feeling inflation much more than older cohort so it’s.

It is in unfortunate and definitely has a potential to be stifling on on a lot of the growth we’ve been talking about over the last couple of years.

So awkward transition off of that.

Ring in a piece of news from from last week Nordstrom became the the latest retailer to launch a retail media Network.

And I will talk more about.

What I think the prospects are for a Nordstrom retail MIT media Network on another show but I just wanted to use that to sort of highlight.

It’s one of the topics that’s coming up most in my conversation with retailers and Brands is.

Every retailer is leaning into launching these advertising networks like we talked on our Amazon Deep dive about Amazon disclosing,

the revenue from from their Network and it’s huge so every retailer and their brother is trying to launch one and they’re trying to collect dollars from every brand and the brands don’t really know how where and why they should be investing in them so there’s a,

a lot of discussion and test and learn.

And debate at the moment about retail media Network so I did knock out my position on them on Forbes article that I’ll link to but I was going to propose to you that we should,

finder there I guessed and do a deep dive in retail media networks in an upcoming show.

Scot:

[29:12] Yeah I don’t think anyone knows more about it than you are so maybe it’ll just be a jacen solo deep death.

Jason:

[29:17] Yeah I think 10 of my co-workers and pupusas just rolled over in their grave when they’re just say that they’re like dude that dude doesn’t need his head to be any bigger and we all know more about it than he does.

Scot:

[29:27] Well we get a lot of listener feedback that’s essentially more Jason so can never have too much Jason.

Jason:

[29:34] That may have something to do with I have the direct email to the feedback account.

Scot:

[29:38] Me

Jason:

[29:39] And then one last piece of news that happened yesterday is our friends at Twitter,

um expanded in e-commerce pilot that they’ve been running so they have had this this limited pilot where you could essentially on your Twitter account.

Sell three items so you kind of you had a carousel that could show up in your Twitter account for these three items and the expansion is

that they now let you upload a product feed with 50 or 10,000 items in it so you can you can send

Twitter 10,000 items you sell and at any given time you can,

activate up to 50 of them so you kind of have a little mini store with kind of like a,

you know a category page with a bunch of product tiles in it and you can you can shop through any of these these 50 items,

and it’s it’s what we would call a non-endemic check out so if you decide you want to buy one of these items you don’t buy it.

From Twitter and give Twitter your payment information you click on that product tile and it takes you to.

The that Brands e-commerce site on their on their store and you check out there so it’s kind of a.

[30:59] Twitter cause it e-commerce but it’s really a referral site to these Brands and it’s interesting that there.

They’ve tried a lot of different Commerce experiences none of them have been a home run,

this is a new one and I have to say and I know you have had similar feelings about this I’m kind of skeptical that the referral is a very good customer experience because what tends to happen is.

You upload this product fee that you know was probably accurate when you uploaded it but this is all Dynamic data something that you upload goes out of stock or the price changes or

you you fix an error in your CMS on the URL and so that now the product listing on your website,

doesn’t perfectly match the product listing.

On Twitter and that you know customers really don’t like that when they click a product at One Price or in one color or you know that that you say is available and then you get to the website and it’s,

a different price or a different color or not available and on launch day they had five.

Different vendors that could sell stuff and I click through all of them and three of them you know,

had we’re selling five products that were already wrong on day one so it looks a little problematic.

Scot:

[32:17] You have literally had this like conversation with five iterations of the Scituate ER and it goes like this is super.

They tend to be this isn’t just one of al-ahly Silicon Valley companies they’re like super arrogant where insert

company name and we know all about software

okay and hey we’re going to do this Marketplace and it’s gonna be great and here’s how it’s going to work we’re going to sell stuff and we’re going to run people through this check out and then at the end we want to figure out how much inventory there’s and I was like

well you could do that but that’s exactly wrong right because you want to

before someone dies something you want to make sure you have it in stock or else it’s a consumer is going to get really frustrated and leave and they’re always like well it’s a beta we can fix that later why invest in real time inventory now and then they never got a beta because us so then they’re always like I’m like how’d the test go and like well consumers hated it

and I’m like so we’re not moving forward and I’ll say will you realize you set yourself up to fail,

like no our data indicates that they wouldn’t have engage with it even if the inventory thing worked you’re just like.

[33:23] I don’t understand so we’ll see if yeah they don’t don’t understand the importance of this stuff and that the customer Journey they want you know people want,

colors to be the same variance the all the all the blocking and tackling of e-commerce is actually

pretty hard if you don’t think it through and most of these companies this kind of say oh my God third party cookies are going away we need an e-commerce solution and then it travels down to an engineer that that has no idea how to how to get it done.

Jason:

[33:55] Yeah and I guess In fairness I don’t there’s no easy answer like one of the five beta

clients is Verizon and I don’t know this to be the case but highly likely the Verizon told Twitter we don’t want you to take the customers money because then you’re the seller of record we want you to send customers to our website right so like the.

You’ve got this conundrum that that like the brands that want to sell stuff want want to own the customer they don’t want to rent the customer from Twitter but then you know when you do have this kind of two step

experience it totally breaks and it’s got as you know we have these kind of consistency problems,

just on our own website so when you add Twitter to the mix like it gets much worse and it’s it never works for customer experience.

Scot:

[34:42] Yet built a whole company to solve this and it has like 120 Engineers working on it all the time it’s a hard problem it’s not it’s not going to be something you can like put like a five-person engineering team on and have this great integrated e-commerce experiences just like not going to happen.

Jason:

[34:56] Yeah but that company you just mentioned sound like such a good idea though that sounds cool.

Scot:

[35:00] Thanks thanks it’s been a good run.

Jason:

[35:03] Especially after you turned over the keys to competent leadership I feel like that was been a.

Scot:

[35:08] Finally hit its stride after I got out of the scene.

Jason:

[35:11] Exactly so I thought we would try something new we just covered a bunch of interesting to us but random news over the last two weeks it also kind of is,

quarterly earnings season and so a bunch of retailers over the last couple weeks since our last show have had their their Q4 earnings which of course also gives us their their 2021 earnings

and we could do it a tower show on all these earnings but what I thought we would just try to do is a earnings rapid fire.

Because we are known for for being able to summarize things really briskly and and concisely what do you what do you say to that.

Scot:

[35:54] Plus rapid fire this puppy lightning room.

Jason:

[35:56] Awesome so what I’ve done is I’ve taken all the companies that I thought would be relevant to our listeners

and I’ve bundled them into three buckets what I’m calling the winners which are companies that had a really good year what I’m calling the neutrals which kind of you know tread water and when I’m calling the losers,

um which are you know the folks that lost ground so in my winners category the first earnings is Dick’s Sporting Goods they actually had a mediocre Q4 they were up 5.9% versus,

20:21 there in 2021 was up 28% versus 2019 so so decent growth,

um the their digital was actually down Q4 of this year so you’d go Jason why are there winner well,

the if we look at their full year their sales in 2021 were up forty percent from their sales in 2019 so the so,

huge growth throughout the pandemic and they were such a big winner in the first year of the pandemic that they still had growth in the second year but it was on top of these huge comps so,

um so you know forty percent growth on a two-year stack you know for a retailer of their size,

is a huge win and just a fun stat I’m trying to track for a bunch of these guys that now puts them at 27 percent digital sales so one out of every four dollars that dick stakes in,

is from their e-commerce site.

Scot:

[37:24] Does that purpose.

Jason:

[37:27] It would include both of us are curbside pickup.

Scot:

[37:32] Okay that’s Jean.

Jason:

[37:34] Um so then my second winner is Walmart.

The their Q4 was up 5.6% you know again they’re the largest retailer in the world so they have the hardest number to move,

and 5.6% is considerably up from there they’re sort of historical average and that’s on a big comp because they were up 8.6 percent this quarter,

last year but the real reason they’re a big winner is e-commerce.

On a two-year stack was up is up 70% so this was.

The third largest e-commerce site in the United States two years ago just behind Amazon and eBay there now the second largest e-commerce site in the US and they’ve grown 70% in the last two years so that’s astronomical and again.

They’re their full year sales were pretty good up 6.4% last year up 15% on a two-year stack and this is a company that normally goes up two or three percent a year so.

So I another big winner and then my biggest winner for the year is Target so.

[38:47] They had great numbers across the board they were up eight point nine percent for the quarter they were up 20% this quarter last year so too.

You know big numbers on top of big numbers again on the full year they’re up 20% versus 20 versus two years ago and their digital is a standout in all of this there there.

Two years ago their digital was up 145 percent and then they grew another 21 percent last year on top of that.

So monster numbers and I like how they break out their sales so so just a couple of things to know they’re the only company I’ve seen that report two.

Segments they report store originally needed sales versus digitally originated so where did the order get placed,

and they also separately report store fulfilled sales versus fulfillment center fulfilled sales so.

[39:46] Eighty percent of their orders comes from a store 20% of their stores,

of their orders come from digital but 96 percent of all their sales are fulfilled from a store so virtually all their e-commerce has fulfilled from the store what’s interesting about that is what that means is they are selling.

The 60,000 items that fit in a store are all of their sales versus if you look at,

Amazon eBay Walmart a huge chunk of their e-commerce sales are this super long tail of millions of skews so it,

Target had big numbers and they’re doing it differently than everyone else and then the the number I talked about the most is.

[40:30] You know they’ve been really successful with their own Brands and to kind of put that in perspective about 26 percent of all of their sales

where sales of of exclusive stuff you can only buy at Target so those own Brands were 30 billion of their 106 billion in sales,

so that’s phenomenal and then you you were talking about curbside pickup the curbside pickup numbers are also silly in 2020 during the pandemic curbside pickup went up six hundred percent at Target and then last year,

you know that six hundred percent is crazy but you go oh yeah because all the stores closed and people had to drive up

but then last year when stores reopened you’d expect that to dip way down and they

curbside pickup went up another 70% on top of the six hundred percent from the previous year so so curbside pickup is a huge growth they,

you know they bought a curbside company right before the pandemic and so I like they’re kind of clicking on all cylinders right now.

Scot:

[41:33] The 96% number 95.

That’s so I’d go to a lot of targets and I’ve never seen like,

most stores that have shift from Storer there’s like some corner where it’s like a total poop show of people trying to,

package stuff in the middle of the store and things Target is that true I never see that and it’s kind of fascinating to me it seems like the stores would have this huge shipping piece that I’m not seeing somewhere,

and it’s not like they have a ton of storage in the stores.

Jason:

[42:04] So they did a really.

Scot:

[42:06] Just a shipped is it shipped that’s doing it is that kind of what they’re coming in there.

Jason:

[42:09] No it like they did a remodel for most of the Target stores where they actually Shrunk The Selling space so they used to have no back-of-house like they’d have all the live inventory on the floor and they actually Shrunk The Selling Space by like 10 or 15 percent

and built a shipping center in the back of the stores that you can’t see right,

and so they now have dedicated shipping they like they literally had to go like negotiate with other carriers because carriers are used to delivering stuff to these stores but not picking stuff up from these stores

so they had to work all that and they’re there

doing so much volume now that you know what they’re big players got they have their own sortation centers and they work differently than Amazon the search the stores instead of shipping to the customer.

Like do multiple shipments a day

via private trucks to the sortation center and then all the items are shipped from the sortation center and so that lets them use this like hub-and-spoke and have super stores that have extra inventory for these orders but all the inventory is sitting in a store until a customer orders it

and then it goes through this this multifaceted distribution system to either go to the front of the store for curbside pickup via shipped or to the back of the store

out to a sortation center and then via USPS to a customer nearby.

Scot:

[43:31] You want ship from store came out everyone in e-commerce kind of laughed because you’re taking the most expensive commercial real estate,

and using it as a shipping and warehouses are dirt cheap well it’s inverted so.

Jason:

[43:46] I say that used to be true.

Scot:

[43:47] So now it’s actually probably more economical to ship from the store than anywhere else from open Pure commercial real estate angle because covid is killed so much retail space and then at you know at some point like office parks.

That that that used to be the highest and then you so you should be Office Park retail and warehouse and now it’s Warehouse retail and Office Park so so it’s totally

all all mixed up and creating a whole nother economic model that we’ll have to kind of see what happens there’s you know a lot of people are taking these malls and converting them into fulfillment centers

I was in one I was in a Sam’s the other day and I was like.

Billy I’m in feels like a Sam’s that I guess it was a Sam’s and it was one of those sounds that he commissioned and they turned it into this weird kind of open Office Space and it was it was very strange because it felt like.

Literally having an office in a Sam’s.

Jason:

[44:41] Yeah yeah that doesn’t sound appealing when you describe it like that.

Scot:

[44:44] And they had that whole what do you.

Jason:

[44:46] Do they still have like like samples necks.

Scot:

[44:48] Well they were saying they were saying.

They had a hard time putting some like 3D printers in it they had a hard time because the floor was angled and it was because it was like where some freezers were and they dangled the floor to act as drainage and I guess they had to come in and re-engineer like a whole big section of it.

And I shopped in this house before too so it’s kind of weird like a new kind of where all the stuff was in her but they also do that what is that we some of your buildings do it where you check in and you don’t have a spot every day as a fan.

Jason:

[45:21] Like hoteling.

Scot:

[45:22] Yeah hoteling so they like the couldn’t they couldn’t understand like why no one wanted to come to work so like make it so you know Dad like all these impediments for people to come to work and they’re like we don’t know why more people aren’t coming in it’s like well.

You’ve made them feel like you know kind of fourth class citizens they kind of they don’t have a place to sit every day they can’t bring any personal items it was kind of funny and they’re basically sitting in a Sims.

Jason:

[45:48] All right yeah I think there’s going to be an interesting question about like reuse of all this the the brick and mortar space then closes so but it doesn’t sound like you’re you’re going to be investing in the we work 2.0.

Scot:

[46:02] Pregnant.

Jason:

[46:04] Side note and I

I miss the most by far important and Brilliant move in that whole Target Whitney the major feature they announced is that you can now order Starbucks to be included in your curbside pickup order.

Scot:

[46:20] Game changer.

Jason:

[46:22] That that does feel like a game changer.

Scot:

[46:25] I was picturing you being first alone.

Jason:

[46:27] It feels like they’re targeting a couple people than I know.

Scot:

[46:30] Well as fellow Starbucks kind of Sword the target ones I have found out you’re not as good or know that you like the.

Jason:

[46:39] Controversy.

Scot:

[46:40] Some of it the taste is not the same.

Jason:

[46:43] Their franchisees.

Scot:

[46:45] Yeah and you can’t mobile order which is government I guess this is mobile ordering.

Jason:

[46:49] Yeah

yeah so I think it is a clever move to like so these impulse and consumed on the way home items at curbside I bet we’re going to see a lot more of that but I am with you if I have the option I usually like to go to a Starbucks Company Store over a franchisee because the

the experience is more consistent at the company store but I’m saying that to someone that’s selling a bunch of franchises so we should maybe be careful about that.

So neutrals I have my first neutral is Best Buy they had a slightly negative quarter they were down 2.3 percent they were up 12 percent this quarter last year.

You know they actually did decent their kind of,

two-year stack they’ve grown about ten percent which is you know above what what a lot of retailers grow,

but they they are in a category that in my mind like seems like should have really benefited from the pandemic and you just don’t see.

Like this huge huge benefit in their full year numbers so I put them in my neutral.

They are now at 39 percent of all their their sales are digital and at the peak of the pandemic it was over 50 by the way.

[48:10] So certainly increasingly their most important store Ulta beauty you know they’re their company that was probably pretty negatively affected by the the pandemic and they had you know a decent year their full year comps.

Um we’re.

[48:27] Pretty significantly this year but it was because they were so awful last year so they were down 20 percent last year they’re up 30% this year so they’re up on the two-year stack but not amazingly,

and then all the apparel guys like in my mind there’s two kinds of apparel guys there’s apparel guys that had a horrible Court year last year and or two years ago and did better last year and ones that,

had a horrible year two years ago and are still really struggling right so Kohl’s Gap and Nordstrom and Ralph Lauren are all in that kind of.

Had an atrocious year two years ago and are having a decent little recovery this year.

Um and then like Abercrombie and Macy’s I would put in that category of had an atrocious what your.

Two years ago and you know so far pretty weak recovery this year.

So those are my first two losers are Abercrombie and Macy’s and then someone who you would think would be really poised to benefit from,

the kind of economic downturn but have really struggled over the last two years are the dollar stores and and especially Dollar Tree,

their Q4 was decent it was up.

2.5% but they’re they’re basically up 1.1 percent for the year.

Which is you know pretty slow growth when the industry grew like 20%.

[49:53] So that that is my super rapid fire earnings recap are you impressed.

Scot:

[50:00] Nice I am I like how you segment it do the dollar guys.

But I didn’t listen to the reports are they signing inflation is kind of basically or is it like so it’s their own pricing but I imagine going after that value or any consumer unfortunately they’re they’re the ones that get hit the hardest with inflation is that was that kind of what’s happened in there.

Jason:

[50:23] Yeah so that that is happening now like most of their negative performance over the last two years is kind of

dollar stores are the least digital so in the pandemic when people are going to the stores last they they became a less viable option right like if you didn’t want to go to a Target you could shop from Target online like pretty seamlessly but dollar stores

very often don’t offer e-commerce they were disproportionately impacted by supply chain disruptions right so

you know if you’re a big General Merchant you could make all these plays to try to line up merchandise but you know the dollar stores are trying to buy.

Distressed inventory in remaindered remainer remaindered inventory so they like didn’t really have the option to be as proactive as some of the the,

the discount General merchants and so so they had a lot of supply chain disruption so that those were there,

they’re bad news the last two years there’s a school of thought that they’ll,

have a they’ll be decently positioned in an economic downturn but but we shall see.

Scot:

[51:29] Coble thanks for doing that.

Jason:

[51:31] If that was helpful for you we will remind you that the way you can repay us as you can jump on iTunes and leave us that five-star review.

Scot:

[51:40] Thanks everyone we appreciate it and until next time.

Jason:

[51:44] Happy commercing.