Episode 225
October 8, 2021

Jingle All the Way

According to the Washington Post, being an informed consumer requires the same skills as recognizing disinformation on the web. PLUS: Supply chain issues, NFT Christmas, China flexes, and an Arnold impression. Listen now!

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this episode sponsored by

Being an Informed Consumer Requires Recognizing Disinformation 

  • Searching the web can be a bit confusing these days with the addition of third party sellers, in a recent Washington Post article, the author stated “These days navigating Amazon, Walmart and Google's maze of third party sellers or judging hip looking social media ads requires the same kind of skills as identifying misinformation and conspiracy theories.” Phillip thinks this is the quote of the year.
  • Mainstream media is coming to attack in spreading misinformation. With consumers not knowing how to determine a good product, it's creating bad commerce centered experiences. 
  • “When you get good at identifying what a good product is and what a bad product is, you're actually building a skill that's applicable for a lot of other things.” -Brian
  • Maybe things that are fun are actually just fear, uncertainty, and doubt. We fear that something will happen (i.e you fear the supply chain falling) which creates a lot of uncertainty, in the end creating a pit of doubt. But what if there’s a way to fix it? 
  • Shipping has been experiencing troubles on all ends for over a year now, and as we approach the holiday season it's going to get worse again. Our research for the same products at different places of the next brand up, could result in losing brand loyalty. 


Associated Links:


Phillip: [00:01:42] Hello and welcome to Future Commerce, a podcast about the next generation of commerce. I'm Phillip.

Brian: [00:01:47] I'm Brian.

Phillip: [00:01:48] And I am now a Washington Post subscriber, Brian.

Brian: [00:01:51] Really? This is take three on this.

Phillip: [00:01:55] This is literally our third time trying to record this episode, so it's no longer exciting anymore. This is just a slog. No, no, no. We do this for you, the listeners. I am now a seven day trial subscriber to The Washington Post because I needed to read this article, and I want us to talk about it.

Brian: [00:02:16] I feel like when we did take one of this, you were a seven day subscriber and I'm curious if now...

Phillip: [00:02:21] It's like four days left or three. Yeah.

Brian: [00:02:23] Three days left. Okay.

Phillip: [00:02:23] We tried this a couple of times.

Brian: [00:02:25] The countdown is pending. I'm curious if you will become a true subscriber.

Phillip: [00:02:29] This is the problem, right? We have a content pipeline. We have a content pipeline and sometimes that pipeline gets interrupted. And then you have to like, scramble and make stuff happen for the spice to keep flowing, you know?

Brian: [00:02:45] So that's the second time you've referenced Dune in the last...

Phillip: [00:02:48] Dune is coming out soon. All right. There's more Dune references to come. Washington Post... An article that was published on October 4th, and that was three days ago as of the time of this recording. It is an article called "A Flood of Unknown Products is Making Online Shopping Impossible." And this is an article by Heather Kelly. The sort of subtext here is "Mysterious brands..." I love that. "Mysterious brands are flooding shopping sites and social media ads, making it difficult to tell the real from the low quality." This is our ongoing coverage of the sort of Instagram brands and these beautiful brands that have maybe not such great products behind them, and maybe they portray themselves to be bigger or more sought after than brands of a prior era where you could probably tell that they were fairly new to the market and maybe not so great. The mom and pop brand is really hard to discern nowadays, and now this is just general cultural, this is culturally significant enough that The Washington Post now has to cover it.

Brian: [00:04:04] Yeah, they're catching on to the fact that it's hard to figure out what to buy on Amazon because it's flooded with different like just the mass of new brands...

Phillip: [00:04:12] Brian, democracy dies in darkness. Brian, The Washington Post is covering the sort of counterfeit, bland era, the blanding and sort of the millennialization of brands.

Brian: [00:04:27] Is this just blanding or is this all of the crazy...

Phillip: [00:04:31] They've lumped a bunch of things into this article.

Brian: [00:04:33] Yeah.

Phillip: [00:04:33] At one time. So the canonical example they give is you might have been in the market to buy a rower. Hydro would be considered to be like the Tesla type purchase of that market. There you go on Amazon and there's like a billion knockoffs of Hydro, and they're all of suspicious quality.

Brian: [00:04:52] Yeah, yeah, especially at that level. I mean, this has happened at a lower level four years on Amazon. Washington Post that's catching up. {laughter} Every like commoditized product out there, you get all of the crappiest, like first page results ever. I was just trying to buy light bulbs the other day, and it was like I did a generic like "LED light bulb" search. And like the first three pages, I didn't recognize any of the brands. And this is widespread. I feel like it's not new news, but it is interesting that it's happening at the high end of the market too. Like large purchases. Like that's maybe what's starting to draw even more attention to it.

Phillip: [00:05:51] In the example of your LED light bulb search, in a highly commoditized market, isn't the phenomenon there is like if you don't trust something, then that's where brand is superlative?

Brian: [00:06:07] Yeah.

Phillip: [00:06:07] Like if you were to buy GE or Sylvania like in your mind, then aren't you at ease that you're going to get a good product? Like you don't have a question whether or not it's good or would work for you or not burn out in 30 days.

Brian: [00:06:19] Yeah, this is where... Yeah, exactly. Like, I have no idea if the XYZ light bulb company is going to last me two years or seven years that it's purported to last.

Phillip: [00:06:34] The XYZ light bulb company?

Brian: [00:06:36] Yes.

Phillip: [00:06:36] I love that.

Brian: [00:06:37] But I mean, there's like the... You have the E7... {laughter]

Phillip: [00:06:42] Whatever. There is no brand around commodities, around batteries and light bulbs.

Brian: [00:06:46] But I think you're right. I think you're on to something.

Phillip: [00:06:47] Amazon Basics is that, isn't it? It's the trusted...

Brian: [00:06:52] Except for Amazon Basics, their offering was like a three bulb pack, and I needed four.

Phillip: [00:07:00] They do that on purpose, man. You got to buy six of those.

Brian: [00:07:02] I know. So actually, I went... I ended up going... So Sylvania made, I think the third page.

Phillip: [00:07:09] You made it to the third page of search results?

Brian: [00:07:12] I know.

Phillip: [00:07:12] I don't do that. I can't. I don't even understand people that go to page three and four. It's like, if it's not on page one two, it doesn't exist for me.

Brian: [00:07:19] Light bulbs are particularly difficult because it's really hard to know.

Phillip: [00:07:23] Isn't page one all...

Brian: [00:07:24] The thing is like when you do a generic LED light bulb search, you get all these different sizes. When you used to replace a light bulb, you had to like, take it in with you and be like, I have the E7D...

Phillip: [00:07:37] That is correct. This is giving me anxiety just thinking about this right now. You did. You used to take it in with you. I had a similar effect recently where Amazon... I hope this doesn't turn into loving on Amazon because I actually really want to talk about One Passage in this.

Brian: [00:07:57] In a previous verse, in a Metaverse,

Phillip: [00:08:00] In a Metaverse. In the Multiverse. In the Multiverse.

Brian: [00:08:02] In the Multiverse, not in the Metaverse.

Phillip: [00:08:04] You hate the Multiverse.

Brian: [00:08:04] I hate the Multiverse, but in the Multiverse, there is a world in which you hated on Amazon in this episode.

Phillip: [00:08:10] Yeah, I'm going to hate on. I'll get there.

Brian: [00:08:13] Ok.

Phillip: [00:08:13] No. But there is an experience that I had where this actually was quite good, where I needed to buy some screws for my rock climbing wall in my garage. And we had bought climbing holds, and we got all these new climbing holds and I put them up for the kids. And one of them is like, this big, like really wide sort of jug. And it requires not just one anchor, it's like you have to put in a couple of anchors. The problem with that is you really shouldn't use like a Phillips head like screw. You shouldn't just use a random screw. You need to use like a T25 screw or something that has like insane grips. You can drive it with an impact driver and get it in there. And I wanted to make sure I had all the right screws, and I had that exact experience you were talking about, which is in a prior era, I would have taken the screw into a Home Depot or Lowe's, and I would have gone down the aisle and done this thing where I'm like visually pairing it and matching it with the other things.

Brian: [00:09:18] {laughter} Yup.

Phillip: [00:09:19] Amazon actually had quite an amazing experience for a parts finder that actually showed the cross section and the diagram drawing of the screw. It showed the head it should the like thread count. It was like surprisingly good, but not good enough that I've actually bought screws yet. So there you go. Also, to your point, I could buy five screws for ten dollars or I could buy five thousand screws for 40, and there's somewhere in the middle that I want to be that is not ten dollars for five screws. Two dollars a piece or three cents a piece, like there's no in between. Ok, let's get back on track. Sorry. You were saying about the search results. Page one of those search results...

Brian: [00:10:00] Oh yeah, I ended up going with "Amazon's Choice" on my purchase, which was...

Phillip: [00:10:05] Isn't that paid placement, though? Typically?

Brian: [00:10:08] No. So I think that Amazon's Choice flag is not, but this is the best. Their paid placement was like three results down. The exact same listing.

Phillip: [00:10:22] The same product.

Brian: [00:10:23] Same product. Yeah.

Phillip: [00:10:24] So they're like harvesting it. Ok.

Brian: [00:10:27] It's actually quite interesting.

Phillip: [00:10:29] Did you get the bulbs, yet?

Brian: [00:10:30] Yeah, I did.

Phillip: [00:10:31] Ok.

Brian: [00:10:31] Yeah. And they fit.

Phillip: [00:10:33] Great.

Brian: [00:10:33] But I do think it's really interesting. Quick aside. There are so many duplicate listings on Amazon now and I have to like validate. When I was shopping recently on Amazon, and I have to validate, oh, is a thing that I saw in the paid list thing the same thing that I'm seeing over here? I do that all the time now when I'm shopping on Amazon.

Phillip: [00:10:53] You get really good at pattern recognition of...

Brian: [00:10:58] Yeah, which is actually what was talked about in the article.

Phillip: [00:11:01] That's the thing I wanted to quote. This blows my mind.

Brian: [00:11:04] Yes. That's why I brought that up.

Phillip: [00:11:04] Yeah, thank you. You brought it right back around. Wow, we take a lot of bunny trails on the third time trying to record this thing. The Washington Post. This piece, this is the quote of the decade.

Brian: [00:11:17] Yeah, this is good. This is really good.

Phillip: [00:11:18] I'm calling it in 2021.

Brian: [00:11:20] I love that we've already talked about this because I can hype this because it's that good.

Phillip: [00:11:23] So the quote is, "The burden falls on shoppers to tell the good from the bad, whether it's party dresses or handheld metal detectors or roasting sticks for marshmallows. Some of the brands are genuine as it gets. The rest are a mixed bag of hustles." Here it is. "These days navigating Amazon, Walmart and Google's maze of third party sellers or judging hip looking social media ads requires the same kind of skills as identifying misinformation and conspiracy theories." Boom.

Brian: [00:11:58] The article is worth it just for that quote.

Phillip: [00:12:01] But it's true. There's a a whole... We talked about this for years and years during the prior administration, and a lot of mainstream media is, you know, coming under attack as like who is spreading disinformation? Who is originating disinformation? How does misinformation and disinformation get disseminated? How specifically can we teach people the skills required to identify it? It's funny because I believe the skills are being organically created by having these bad experiences and commerce centered experiences.

Brian: [00:12:43] Yeah.

Phillip: [00:12:44] You're gaining the experience.

Brian: [00:12:45] Actually, I love that like both information in the news and for [00:12:51] products. When you get good at identifying what a good product is and what a bad product is, you're actually building a skill that's applicable for a lot of other things. And [00:13:03] the way that you go about verifying...

Phillip: [00:13:05] What's the skill? What are the other things?

Brian: [00:13:07] It's like you have to go look for additional sources. What other things are corroborating, your source of reviews or recommendations from other people or whatever it is. Like that almost exactly translates to news. How do you verify your information?

Phillip: [00:13:31] So maybe there's a thesis in here and one maybe we should explore more deeply in our next phase of research, maybe going into 2022 [00:13:44]. The thesis here could be: what if it's true that folks who are given to doing more research before making a purchase are also more prone to identifying misinformation when they encounter it in the public? [00:13:59]

Brian: [00:13:59] Whoa, that's cool. I do a lot of research, so maybe.

Phillip: [00:14:04] Yeah, I'm sure you think that you...

Brian: [00:14:05] I feel really validated right now. {laughter}

Phillip: [00:14:08] {laughter} Everybody feels that way, Brian Lange.

Brian: [00:14:09] Everybody feels that way.

Phillip: [00:14:12] Everybody feels that way.

Brian: [00:14:12] Everyone's like, "I do a lot of research."

Phillip: [00:14:15] That's not research. Show me your peer reviewed study.

Brian: [00:14:18] Yeah, exactly. No, no. That's interesting.

Phillip: [00:14:23] Do you own research Tik Tok is something.

Brian: [00:14:23] Maybe we need peer reviewed studies for products. In order to validate, we need new authenticators that are doing or providing a better level of authentication around...

Phillip: [00:14:38] What if there is a newsletter that all it did was it tried to out the bad actor brands, and it was called The Emperor's Clothes. {laughter} And you just you buy all of the new hype stuff that comes out and you just give it like a really fair shake. You give it a really honest review, no matter where the chips may fall.

Brian: [00:15:02] But maybe not even just the new hype stuff.

Phillip: [00:15:04] It wouldn't even be that much... Well, in our industry, there's definitely a skewed towards like the new and exciting and like everyone's talking about Cometeer right now.

Brian: [00:15:18] Sure, sure. But we talked about it in the previous episode, but actually the reason why I said what I just said was purchasing right now, and this gets to something else that we're going to talk about. But purchasing right now is like it's actually fully defined by supply.

Phillip: [00:15:36] God, that's so true.

Brian: [00:15:37] Yeah.

Phillip: [00:15:38] Yeah. For those uninitiated, something we've covered actually since April of 2021 when I think most people weren't talking about it, and then again, in a series that we did with Shippo on Step by Step is a lot of supply chain challenges that are causing knock on effects, or sorry the other way around. Logistics issues in supply chain and inventory shortages are caused by supply chain issues at ports where you have these boats docked off Long Beach. Eighty, one hundred, one hundred and fifty ships at anchor, which would never, ever be at anchor that are unable to unload goods to get them into the supply chain, which means that we're heading into a Q4 with nothing, with a lot less on the shelves than used to be.

Brian: [00:16:30] Well, and people are freaking out about it. There's a lot of like pontificating and a lot of noise and fear.

Phillip: [00:16:40] Oh. A lot of FUD.

Brian: [00:16:41] A lot of FUD.

Phillip: [00:16:41] And I got yelled at on Twitter for saying it was FUD. "Oh, you don't think this is real?" I'm like, "No, no, no. FUD stands for fear, uncertainty and doubt. You fear that the supply chain will cause a lot of Q4 uncertainty, and you doubt that there's a way to recover from it. So, no, it's definitely real. I think that you've overblown the like systemic issues that cannot be fixed. But they will be fixed."

Brian: [00:17:07] Right. And we talked about this last year. Like Shipagedon was a big thing, but...

Phillip: [00:17:13] It was.

Brian: [00:17:14] But as consumers, people were able to get a lot of what they wanted. They still spent a lot of money.

Phillip: [00:17:22] We had a monster Q4,

Brian: [00:17:23] We had a monster Q4. And people generally got what they wanted. How much did shipageddon affect you in your holiday purchasing?

Phillip: [00:17:32] Zero.

Brian: [00:17:33] Zero.

Phillip: [00:17:33] Well, part of that is we have learned our lesson in being primary eCommerce shoppers for a decade. Most of that being on Amazon, but in the past few years, being other brands as well. You don't wait until the last minute to do eCommerce shopping for Q4. Like if you're going to give gifts for holiday, you buy them early. Always.

Brian: [00:17:52] Yeah. Correct. Well, and I think retailers and brands did a really good job of messaging up front. Like, "You need to order this by this date if you want to get it." Great strategies.

Phillip: [00:18:00] And they're economically incentivizing people to do so on October 1st, sending out an email saying, "If you buy now, then you'll avoid a holiday shipping fee."

Brian: [00:18:10] Correct. That's correct.

Phillip: [00:18:11] They're giving economic incentives to people to front load their purchases.

Brian: [00:18:15] I remember Adidas charged that basically a holiday shipping fee.

Phillip: [00:18:17] Everybody's going to charge that this year. And carriers are already levying carrying holiday, what is it, surge pricing.

Brian: [00:18:25] Yes. However, I don't think that consumers are going to be affected by this in the way that it is being like squawked about in so many ways because...

Phillip: [00:18:35] Give some context to that. What is the squawking?

Brian: [00:18:37] The squawking is that like people are freaking out that people are not going to be able to get what they want for holiday shopping and people are going to run out. It's going to be a nightmare. There's going to be consumers are going to be affected and that they're not going to be able to purchase from you. I don't think consumers are going to be affected because this is my take right [00:18:55] now. Consumers are in the what I'm going to call "next brand up" mindset, which is basically there are enough brands, and we just talked about this with The Washington Post article. There are enough brands now and enough retailers and enough methods where consumers, if something's not available in one store, they're just going to go to the next one. And if something's not available in the original brand they want, they are just going to buy it from another one because there's literally replacements for everything. So consumers are not going to be affected. However, the people or the entities that are at risk right now are established brands [00:19:39] because if they run out of stock...

Phillip: [00:19:42] Nike, for instance, according to 2PM, ran out of the yarn that it uses to make Flyknit shoes.

Brian: [00:19:49] Right. Exactly. They're at risk because the if, let's say someone does pick a replacement product for that, let's say they go from Nike to let's say, I don't know, Adidas, although Nike's a tough one because there's such brand loyalty there. I mean, of all the brands to pick, that's probably the worst one.

Phillip: [00:20:08] Telfar, who featured on their Nine by Nine is doing an event they called Secure the Bag, which is a nice play on words, but Secure the Bag, meaning they did this once last year. It's pre order a bag and they're going to ship it to you on March 31. And they ran it for forty eight hours and it's like, "Do your holiday shopping now, give someone a picture of their bag," that junks coming in Q2.

Brian: [00:20:34] Super smart.

Phillip: [00:20:35] And they're selling out ahead. Dude, they've sold like hundreds of thousands of bags.

Brian: [00:20:38] Yeah, I mean, Telfar is also another bad example because it's such a thing.

Phillip: [00:20:43] It's a culture. It is. Like you want to Telfar bag, you don't just want a bag.

Brian: [00:20:48] Right. You're only...

Phillip: [00:20:51] But in this case, you're going to get it. You're going to get it.

Brian: [00:20:53] In March.

Phillip: [00:20:53] But you're going to get it at some point in the future. But at least you're guaranteed to get it now like that might be a valid, to your point about the squawking. Like one thing we might see this holiday season that we've never seen before, which I think will cause an incredible amount of strain on finance teams because these are liabilities on the book...

Brian: [00:21:15] Gift card purchasing and like future...

Phillip: [00:21:17] It's like three orders create this incredible strain on finance to try to take stock of liability and what is owed to whom and when.

Brian: [00:21:27] Yeah.

Phillip: [00:21:28] And that that creates this forward purchase, advanced purchase model, requires an incredible amount of cross organizational, cross functional collaboration that most companies really lack, especially large ones. And so the pre order thing, I think is going to be a real challenge for a lot of brands to be able to pull off. But you were saying something else?

Brian: [00:21:50] Oh no. I mean, this is actually... This is all on this, I think it's on the same point, which is for brands that...

Phillip: [00:21:57] You're just going to purchase up.

Brian: [00:21:58] Either you're going to purchase up or purchase down. Actually, it can be either way, depending on what your sort of economic status is. If you're going to go buy a toy for your child, that's a toy car or whatever, it's like, "Ok, he really wanted the official Disney Lightning McQueen one."

Phillip: [00:22:18] Wow. That's the reference,

Brian: [00:22:20] But you're like, "Oh, well, that's not available. Disney is out of supply chain of Lightning McQueen cars. I'm going to go get the Hot Wheels one as a replacement." Retail spending is going to happen.

Phillip: [00:22:37] Yeah, of course. Yeah, of course. But here's what I think a lot of people don't, a lot of people aren't thinking about. You never run out of stock of Animal Crossing on digital download.

Brian: [00:23:01] Yes. Yes.

Phillip: [00:23:03] There is an infinite supply of digital goods.

Brian: [00:23:05] Metaverse.

Phillip: [00:23:08] There's an infinite, infinite supply of digital goods. There's an infinite supply of meta currency to be spent in meta in the metaverse. And if you have children of a certain age, giving them games and spending cash to be able to spend time in those games is one way to offset this supply challenge. Maybe you won't get your hands on a PS5. That's probably not... That might not happen. Or you decide I'm going to buy a PS5 and only a PS5, but I'm going to buy it on resale on Stock X because you can buy it right now. This is the other thing. It's not like there isn't stuff to buy. It's just that there's not a lot of new stuff at retail pricing sitting on shelves ready to buy. It can be had. It can. You're going to pay more than you probably want to.

Brian: [00:23:58] Yes, refurb.

Phillip: [00:24:00] All of it.

Brian: [00:24:01] Yeah, all of it. Totally. It's really interesting actually, this does lead to something else, which is resale is so hot right now that it's driving prices of resale up.

Phillip: [00:24:16] Resale is driving its own pricing up because of demand in resale.

Brian: [00:24:22] Right. Correct.

Phillip: [00:24:23] Old is the new new.

Brian: [00:24:24] Old is the new new. Exactly. You got it. And so like especially within clothing and vintage clothing, it's like if something stood the test of time, it's a way cooler than buying some new, you know, disposable piece.

Phillip: [00:29:11] Nate Rosen on Twitter had mentioned a refurb marketplace, which I wasn't previously familiar with, I'm trying to source it right now, but Twitter is not working for me.

Brian: [00:29:23] But yeah, used holiday gifts.

Phillip: [00:29:26] I mean, if it's the thing that you want, you know, and it's the only way to get it and you pay more for it in some ways, like you went so far out of your way. You know, what was the Arnold Schwarzenegger movie? Was it Jingle All the Way?

Brian: [00:29:40] Jingle All the Way.

Phillip: [00:29:41] I mean, it'll be the new version of Jingle All the Way is like, you had to instead...

Brian: [00:29:47] But this year, that action figure that they're all chasing in that movie, there's going to be a digital certificate to get that in Q2.

Phillip: [00:29:55] It's an NFT. It's like, {Arnold Schwarzenegger impression} "Why won't it mint? The gas prices are too high."

Brian: [00:29:57] {laughter} What was that action figure called again?

Phillip: [00:30:04] I don't know. Someone is screaming at their podcast player right now. {More Arnold} "Why is Ethereum so expensive?"

Brian: [00:30:16] NFT Jingle All the Way {laughter}

Phillip: [00:30:16] Yeah. NFT Jingle All the Way. {laughter} {More Arnold} "I got into a gas war." By the way, this is the craziest thing I've ever done is try to do an Arnold Schwarzenegger impression on this podcast. That's never happened in history of this show.

Brian: [00:30:32] You know what? You know what? It's not as crazy as some of your other other impressions. It's pretty good. It's pretty good.

Phillip: [00:30:38] It's so bad.

Brian: [00:30:39] It's so bad.

Phillip: [00:30:40] Yeah. So you actually bring up a really great point is you're either going to wind up settling for something that you weren't seeking in the first place. So that's one mode of behavior. Or you're going to extend your budget.

Brian: [00:31:06] Yeah.

Phillip: [00:31:07] You are setting a new, you have now price elasticity in that you already had a range that you are willing to spend and you're likely to extend that range just a little more to sort of fulfill that need to be able to give the gift that you want. But none of these things... The supply chain will hurt a bunch of brands that weren't able to spend capital to be able to acquire stock early.

Brian: [00:31:36] Yes.

Phillip: [00:31:37] And so really, it's the nascent smaller brands who probably would have fared well in a pre iOS 14 pre iOS 15 world. Nowadays, they have more headwinds than ever before, and this is probably the sector that a lot of the eCom trade is focused on is that brand who is struggling. I mean, we talked about this. We had Emmett Shine on the show and he was talking about being out competed in homewares and trying to make a $500,000 purchase order and having these big brands come in behind them with a $15 million purchase order. If you're a manufacturer, who you're going to service?

Brian: [00:32:26] Right.

Phillip: [00:32:27] Where does that go?

Brian: [00:32:28] What's happening is like product innovation is being squeezed out on the upfront side. It's actually kind of genius for big brands to do that and sort of buy out all of that production because that's their biggest, there's been so much eating away.

Phillip: [00:32:47] It's a different means. They're not competing on the shelf, they're competing in the supply chain.

Brian: [00:32:52] Correct.

Phillip: [00:32:53] Yeah. And this whole... There's this entire ecosystem that has thrived on the idea that these manufacturers effectively will produce other products that similarly for, you know, basically like white label and create other products that compete in the marketplace for those Big Hero brand products because they have excess capacity in their manufacturing.

Brian: [00:33:26] You know what I hope happens as a result of this is that we see a new boom in manufacturing domestically. The brands that want that have just enough leverage to be able to go and put in a plant here will do it, that they're tired of dealing with all of the logistical nightmares of bringing stuff over from Asia and in other places.

Phillip: [00:34:01] I've lived this.

Brian: [00:34:02] Yeah.

Phillip: [00:34:03] I've lived this. So this is why I believe you're right about the effects of supply chain constraint is that I believe capitalism has a solve for all of these things. If there is excessive demand to bring manufacturing back to the United States and that demand will create a lot of opportunity at what would be a very small margin. We've got prices coming up anyway.

Brian: [00:34:30] Right.

Phillip: [00:34:30] So price, we have inflation and price increases. We're going to be able to meet the wage demand that typically onshore American workers would have to the premium that they would command. And so then what do we do? We're bringing domestic manufacturing back because it alleviates a whole bunch of other problems. Raw materials probably would still be a challenge.

Brian: [00:34:53] Yeah.

Phillip: [00:34:54] But I've lived this in the nutraceutical industry and we used to manufacture overseas. We used to manufacture in Germany and South Africa, in the last time I was brand side for five or six years. And when Obama took office in his second term, he in his second term, did a huge FDA crackdown on health claims and nutraceuticals, and he did a huge... The FDA started jamming up the ports and holding inventory and checking for compliance, label compliance, nutrition facts, supplement facts. All these things that just ensuring that manufacturers were abiding by FDA regulation and FDA policies. And that was just on supplements. You know, when we were faced with that and we had inventory that was sitting for six, 10, 12 months at a port and it's just hanging out there waiting to be inspected by the FDA. And then they tell us where we're out of compliance and we have to go and send a team and physically relabel one hundred and fifty thousand bottles... When you go through that pain, you never want to experience that again. We brought all of that manufacturing onshore, and we raised prices, and we cut margins, and we found new channels to be able to sell through. That's what created the FBA business for us is that we were pure play eCommerce prior to that. We started doing FBA. We started trying to find other ways where we could acquire customers that made our brand more resilient than having to spend money on Google AdWords and where we were spending upwards of I think at one point we were bidding for some keywords like "learning and concentration" and "focus" and "mood stabilization." These were keywords that were 40, 50, 60 dollars a click. And you change your strategy when you're faced with things that are existentially threatening to your business. And for us, it was bringing manufacturing to the US. That meant reformulating a lot of products, changing the flavor profile, having to communicate to customers, doing customer panels. It was a painful year, but we got through it.

Brian: [00:37:07] Yeah.

Phillip: [00:37:07] Capitalism has a solve.

Brian: [00:37:08] Yes.

Phillip: [00:37:09] We will fix that.

Brian: [00:37:10] And you know what's interesting is I believe that there are markets right now in the US that are like ripe for this. Cities that have opportunity to come in and the cost of living is significantly lower than the coastal cost of living. It's almost like going to a different country. That's how different it is.

Phillip: [00:37:35] In what way?

Brian: [00:37:36] In terms of like cost of living and wages.

Phillip: [00:37:40] But do you think that that's changing? Oh, I'm having like deja vu. Did we cover this on the prior version of this episode? Something, maybe a little.

Brian: [00:37:49] Maybe. I think we're converging. We're converging in the multiverse right now.

Phillip: [00:38:00] The meta and the physical, the convergence.

Brian: [00:38:04] The universes are getting too close together.

Phillip: [00:38:09] But I think that remote work democratizes that to some degree and brings coastal and city wages to more rural parts of America.

Brian: [00:38:24] Yes.

Phillip: [00:38:25] Doesn't that sort of up end that balance to some degree then?

Brian: [00:38:29] It's possible, but I think that actually allows for doing something like this because you can have better communication and like the right type of leadership in those places that you wouldn't have felt comfortable doing before if it wasn't close to your headquarters. So it actually opens up the door to run more offices and plants in those places because people are more comfortable being separated.

Phillip: [00:38:56] Hmm. Foxconn, I think, opened a domestic manufacturing in Michigan, I want to say, or Wisconsin.

Brian: [00:39:03] Did that actually happen? I know they were looking at doing that.

Phillip: [00:39:08] This is now we're totally riffing. Tesla, obviously, with the Gigafactory, you know, there's Tesla never shut down during the pandemic.

Brian: [00:39:17] Yeah.

Phillip: [00:39:19] And what we'll see is a lot this is going to also... By the way, supply chain independence is not just a thing that we need for goods and services for consumers. Supply chain independence is also part of the Department of Commerce's strategic commerce plan from 2018 to 2022 for defense. So I was reading this.

Brian: [00:39:48] Interesting.

Phillip: [00:39:49] Wilbur Ross, the former Commerce Secretary, had this whole strategic commerce plan that the Department of Commerce had put into place in 2018 and like Item three, which, by the way, Space Commerce was number one. It's a whole other story. We'll have to have a whole conversation about that. Space Commerce. Super here for it. But I think Item three...

Brian: [00:40:09] That's our next podcast. Space Commerce.

Phillip: [00:40:09] In the same way that energy independence is also national defense strategy and being energy independent, you know, that was something that happened. Strategic oil reserves and strategic petroleum, strategic natural gas reserves. Those are things that were part of national defense and security. We are seeing supply chain independents also become part of a national security concern in defense of the United States.

Brian: [00:40:40] Very curious if there was any economic incentive to businesses to kind of like help improve that plan because that to me...

Phillip: [00:40:50] I mean, there's three and a half trillion dollars of a budget bill sitting out there in limbo that I'm sure it covers that to some degree.

Brian: [00:40:56] I'd be curious. I want to know. I got to look this up afterwards.

Phillip: [00:40:59] I listen to the All In podcast with Jason Calacanis. And they had Balaji... I'm going to murder his last name, and I feel like I should know it by now. But Balaji Srinivasan. Maybe. Question mark. Balaji was on the show and he was making a point which, by the way, really skews towards decentralization and crypto because he, I think, was like the former Chief Technology Officer at Coinbase. I don't know. But he is a brilliant, brilliant thinker. His point was we have an ecosystem right now that is skewing very heavily towards decentralization. And this decentralization effort is basically undoing a lot of like social and cultural moors. And it's founded basically on distrust and not trust.

Brian: [00:42:07] Right.

Phillip: [00:42:07] And that is like sort of an existential inflection point. We need, to his point, like that may be the only way to overcome some of these other existential threats that we have in the world. In adversarial nations, for instance, China and the US have been engaged in war games for a decade, and the US has lost every single war game, save for one that we've ever played with China in these big, you know, global war games. And every single defense person in the Department of Defense knows what we're up against. Do you think that the answer here is to not have more high powered supercomputers and artificial intelligence to be able to overcome those existential threats? Do you think we're going to continue to rely on China for silicon and for rare Earth metals to be able to...? No, [00:42:56] we have to be independent for all of that stuff. And that's why I believe free markets. Forget the nutraceuticals on the shelf and the toys and the PS5s. The actual thing that needs to be solved here requires government intervention and to incentivize the things that will bring supply chain independence to the United States. [00:43:12]

Brian: [00:43:12] I agree with that 100 percent. Yeah, I think that there has to be government incentives to do this. And also like it's interesting... The playing field is not the same here as it is in China. Like obviously, we've got a lot more regulation for good reason, for the environment, for human rights, for a lot of things. And so businesses are going to continue to rely on China, who doesn't have those same things until they have an incentive to make a change. And so I think that in order for this to happen, we do need some level of government intervention because otherwise either we're going to have to penalize stuff coming out of China, which is going to inflame things...

Phillip: [00:44:00] Which we did in the last administration.

Brian: [00:44:02] Or we can do it by incentivizing.

Phillip: [00:44:05] American free market system has given rise to the largest corporations on Earth that have the, you know, arguably have the greatest grip on the future of how we all think and buy things. We're seeing that right now with the Facebook whistleblower, which, by the way, was it you who turned me on to the The Journal?

Brian: [00:44:28] Facebook Files? Yeah.

Phillip: [00:44:29] That's an incredible listen. Jaci and I have been tearing through that. And what an incredible listen. All of these companies, you know, the tech giants are shaping how we interact with everything in the world, even how we think. And those things are born out of the free market system, not out of faux democratic systems that you have...

Brian: [00:45:03] Faux free market.

Phillip: [00:45:05] Which is what we've written about specifically. In no way my China analyst, and I don't even want to try to pretend to be Ben Thompson for just one second. But I do think that the way that China is, we wrote about this in The Senses, the way that China is getting a grip on everything from education, to marketplaces, to just in every single area, there's even video games. The way that kids spend their free times is fundamentally different way of approaching and changing cultural and long term systemic cultural challenges than what we have. There's going to probably be a winner. So, yeah, ok, we went from this is overblown to I think I'm a little scared.

Brian: [00:46:01] FUD baby.

Phillip: [00:46:03] It is right. It's fear. It's uncertainty. It's doubt. But it's it's such an interesting time. This is the future.

Brian: [00:46:10] I think that the FUD is justified. If you're a brand right now and you're going to, I think this is one thing that I wanted to get back to like when we first started this conversation.

Phillip: [00:46:23] Identifying misinformation.

Brian: [00:46:24] Not identifying misinformation. Back to the beginning of the supply chain conversation. This idea of next brand up. If someone makes a purchase right now... I do want to get back from one second. [00:46:41] If someone makes a purchase right now, as a replacement purchase, and that product is at all decent, and it was cheaper or easier to get or it did something that the product they initially wanted to get didn't do or whatever it is, I see huge opportunity for brand loyalties to be undercut this coming holiday season. And that, to me, is the biggest scare of this coming holiday. It's not sales. You'll probably sell out of whatever you bring in. So that's not the issue. Your forecasting is probably fine. It's loyalty that you're going to lose. [00:47:29]

Phillip: [00:47:29] Oh, I think that that's also been a downward spiral for some time. The problem, Brian, there's no place to have these conversations that are outside that are not centralized. And this is where some companies have been able to build decentralized layers of trust on the existing Web 2 ecosystem. Yeah, Honey is a really good example.

Brian: [00:48:01] Right. Great example.

Phillip: [00:48:01] So Honey will do price tracking across multiple sites for a given product and give you alerts around that kind of thing, right? So you're shopping and you're browsing, you want to set a price alert. Wherever it happens to go on sale or wherever you happen to be browsing, like Honey lives outside of the website because it's in your browser. Honey is a PayPal product, of course. You have this. There are ways of creating sort of decentralized chains of trust. I don't know that they have to be Blockchains. They don't have to be crypto enabled to be able to exist. When we talk about decentralization today, that's what people tend to think about. I do think there's Web 2 and a half ways of doing that, which is who is building the modern incarnation of Consumer Reports, for modern brands that lives outside of an SEO engine or a content engine? Because that's the problem, right? Is the economic incentive to create a content engine out of it actually begins to thwart the original purpose of providing unbiased and objective product reviews.

Brian: [00:49:17] Well Thing Testing was sort of supposed to...

Phillip: [00:49:21] Heralded as that.

Brian: [00:49:22] Yeah.

Phillip: [00:49:22] It's actually a content. It's a content play.

Brian: [00:49:25] It's a content play.

Phillip: [00:49:26] It kind of was to begin with, but theoretically should be unbiased. What I see from Thing Testing, I don't know if you pay attention to it much these days.

Brian: [00:49:36] Not recently.

Phillip: [00:49:37] I see a lot of like it's more awareness that products and brands exist than it is deep in depth user reviews. And maybe I'm just missing it. I subscribe to the newsletter. I check it out every so often, but it's like they just did an issue on chocolate. And it was like, "Here's all the DTC chocolate brands." And I feel like that that's just a means of discovery. It's not necessarily Consumer Reports for which chocolate was good or bad.

Brian: [00:50:07] Right, right. No. And discovery is its own thing, so not knocking it like, I think that that's a big deal in this world, right?

Phillip: [00:50:16] Of for sure.

Brian: [00:50:17] But the authentication part or validation is the part that I think is challenging. It's funny. I wrote about this a while back on authentication and validation. Stock X and what they've done and, you know, creating a marketplace that sort of authenticate and validates at the same time. They validate through market pricing. And it's like, you know, the value of something goes up or down based off the market. So and the authentication is done by them. So it's all in one spot. I wonder if there's actually an opportunity to do this with other types of products that are not on Stock X. That's an interesting thought, such as resale, but like why not understand like what the market's willing to pay for something, especially when you're talking about things going out of stock? That's the perfect time to validate market pricing.

Phillip: [00:51:18] What would have been? We're super off base. We can wrap this up in a second, but the promise of Stock X never really paid out or never really came about and never really paid off. What I would have loved to have seen from Stock X when they had these indices that tracked, you know, Yeezy or Adidas or Nike or Jordan. It was generally, if you are a sneaker reseller, you're trying to figure out where to put your capital so that you can maximize return. And Stock X was a marketplace to be able to track that data and then also a place to be able to sell. They did a couple experiments early on that were effectively, they called them IPOs, but they were effectively you paying a premium for the option to buy.

Brian: [00:52:16] Yeah.

Phillip: [00:52:16] And that options trading for physical goods seems like a really interesting and novel approach to validate whether or not something is in demand or not. And if you're a retail investor, you probably used to trading options for financial gain. I do think that like that could be another thing that we see. Again, finance is going to hate this. This could be another model that is specifically something that is inherent in digital tokens that could be had for physical products to leverage, which would be the token intrinsically has value and may have some extrinsic value as well. It could be an option for a physical good.

Brian: [00:53:08] Right right, which then you could sell and resell.

Phillip: [00:53:12] Well, yeah, yeah, exactly.

Brian: [00:53:14] Yeah, yeah, yeah, totally. No, that's really interesting. And I think extending it past like just the resale but having brands engage in a marketplace like that, that's like it's almost like the stock market for products and you introduce a component where you can sell features of things, then it's based off supply and delivery. I mean, this is pretty fun.

Phillip: [00:53:42] Yeah. I mean, you can't say it's not interesting right now in commerce. Anyway. This was, I think, our actual first episode of Q4. Maybe.

Brian: [00:53:54] True.

Phillip: [00:53:55] Might have been. I think actually last week's episode, I don't think we actually said, welcome to Q4, but well, welcome to Q4. It's going to get interesting and keep an eye out. We will circle back around on this idea of whether or not we should be doing some research into identifying misinformation and that being highly correlated to product reviews and product research. If you have thoughts about that, drop us a line at Hello@FutureCommerce.fm. Brian, last word? Anything?

Brian: [00:54:26] No. Thanks for listening.

Phillip: [00:54:28] Yeah. Thanks for listening. If you want more of this. We actually go deep into all things that we covered here. Supply chain woes, private label, the new omnichannel customer, the future of direct to consumer brands that are growing up and a little bit about the Metaverse. It's all in our brand new report. It's called Nine by Nine. You can get the Nine by Nine report and find the nine ways that consumers are connecting with brands. You can get that at NinebyNine.Report. And yeah, we would love to hear back from you. Like I said, drop us a line. If you want to support this show, you can find other podcasts that we publish and go listen to them at FutureCommerce.fm. The other way you could do is go leave us a review on Apple Podcasts. We very rarely asked for that. Takes five seconds of your time, but we love a five star rating from you on Apple Podcasts. All right, that's it. We'll see you next time.

Brian: [00:55:19] Peace.

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