Episode 77
August 1, 2018

"Zucchini in a Cucumber Pile"

Sucharita Kodali of Forrester Research joins us to talk about the unfortunate demise of Toys 'R Us and her new book, "Toys 'R Bust: Reasons One of the Country’s Most Revered Retailers Collapsed". Listen now!

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Sucharita Kodali of Forrester Research joins us to talk about the unfortunate demise of Toys 'R Us and her new book, "Toys 'R Bust: Reasons One of the Country’s Most Revered Retailers Collapsed".

Show Notes

About Sucharita Kodali

  • Sucharita is a retail analyst at Forrester Research with a focus on online retail and technology.
  • She once worked at Toys"R"Us and is writing a book called "Toys R Bust" chronicling the rise and fall of the retail giant.

Half the pay and a third of the productivity

  • The Container Store theorizes that one great employee is worth three good ones, so they choose to pay 50-100% higher wages for their salespeople.
  • Because of seasonal hiring and low pay at Toys"R"Us, there were low quality employees that were poorly trained and unmotivated.
  • In a grocery setting, this results in errors like zucchinis in the cucumber pile.
  • Many employees at Toys"R"Us were trained singularly and were unable to fill gaps and needs as challenges arose.

Rewriting the fall of Toys"R"Us

  • Sucharita counters the notion that private equity ruined Toys"R"Us. They had been in a tailspin for years before private equity entered the equation.
  • Toys"R"Us struggled to compete against a certain Seattle behemoth.
  • After their deal with Amazon severed, Toys"R"Us moved to GSI's platform.

Writing a more perfect Toys"R"Us

  • Could they have adopted a more customer-centric experience like Bonobos or Warby Parker?
  • Could a more boutique shopping experience integrated with ecommerce fulfillment have worked?
  • Despite a large array of interesting products in the toy market, Toys"R"Us received 50% of its inventory from just 20 vendors.

Amazon Prime Day

  • It was shocking to see an outage on Amazon's site, let alone on Prime Day.
  • There were more sign-ups on Prime than on any other day prior.
  • Amazon seems to play by its own rules. Despite a bad first impression, they still had a huge day of sales and signups. This says a lot about their brand trust.

Speaking of Trust...

  • Is Amazon at risk of being affected by anti-trust laws?
  • Europe is cracking down. Will this reach the US?
  • Marketplaces are incredibly easy to sell and there is not a lot of recourse or quality control right now. Many third-party sellers make false claims or deliver counterfeit product. Legislation could affect this soon.

Magento, an Adobe Company

  • Adobe is a major force in the digital world, but they lacked ecommerce presence.
  • Adobe's acquisition of Magento expands their reach much further.

Download MP3 (46 MB)


Brian: [00:01:05] Welcome to Future Commerce, the podcast about cutting edge and next generation commerce. I'm Brian.


Phillip: [00:01:10] And I'm Phillip. And today we have a very special guest, Ms. Sucharita Kodali, a well-known retail analyst and author of a new book coming out very shortly... "Toys 'R Bust: Reasons One of the Country's Most Revered Retailers Collapsed" is joining us here today. Welcome to Sucharita.


Sucharita: [00:01:33] Thank you so much. I'm excited to be here.


Phillip: [00:01:35] Thank you. Oh, man, I'm so excited. I'm tripping over my own words. And we hope you're excited, too. If you want to lend your voice, go ahead and head on over to FutureCommerce.fm and go ahead and hit us up in the discuss comment box below the episode. And you can always subscribe and never miss one beat of what's going on here in retail futurism. Well, we like to call our pragmatic retail futurism angle that we have here on futurist radio. What am I talking about? Future Commerce.


Brian: [00:02:03] Futurist radio? I like the sound of that.


Phillip: [00:02:05] I kinda like that too. I'm coming off vacation, so I'm teeming with ideas. I've got a lot of excitement built up here. But we want you to be part of that community that we're building and you can do that also at FutureCommerce.fm by signing up for FC insiders. All right. Sucharita what have you been up to you? You were on the show. You're part of our alumni. You're on the show a couple...about a year and a half ago or so...


Brian: [00:02:27] About a year ago. Yeah.


Phillip: [00:02:29] Yeah. What all has changed for you and what have you been up to over the last year?


Sucharita: [00:02:32] Yeah. Yes. So a couple of things. My day job is that is that I'm a retail analyst, and I work at Forrester Research covering online retail and retail technologies and things that are affecting and transforming the retail industry and the companies that support the retail industry, like vendors. The more recently within, you know, kind of a I guess a side project of mine, is that ever since Toys R US went out of business, I have been just basically taking some of the old notes that I had had when I had worked there many, many years ago and crafted it into, you know, sort of a little memoir that illustrates, I hope, the reasons that the company collapsed. And so that's been, you know, kind of my more recent initiative that I've been working on.


Brian: [00:03:35] It's amazing. Yeah. And this this new book "Toys 'R Bust" details, or chronicles your time there at Toys R US in great detail. I had the pleasure of pre reading it before the release. I'm of course, I'm getting all of the awesome comments that always get cut out before you actually take it to print. But it was an unbelievable read. Very excited that this is gonna be out in the world. I think it will be really helpful, helpful for a lot of retailers to help avoid some of the mistakes that Toys R US made and ultimately led to its demise. You know, I don't want to give away too much, but I think, I'd love to talk about some of the themes in the book. And I think one of the things that was just really interesting in the book is you really go into detail about it when you were in their leadership program, what it was like to be the assistant manager of a store. And the stories of of anecdotes that you've pulled from that experience to relate back to your points, and not just from the store, but like once you were done with being assistant manager, then heading into being a buyer or assistant buyer and continued into the corporate side of things and like how your time in the front end of the store related back to that next step. And so, I was really intrigued and enjoyed just the storytelling of this saga. And then, of course, the insights that come out are just classic Sucharita. I thought that you had some really great points. One of the things that I thought was a really interesting point was that you felt like the people management was really inefficient. And the hiring process was just very old school and didn't really take into account modern retail practices. Maybe go a little more detail about what you saw there, Sucharita.


Sucharita: [00:05:58] Yeah. And first, thank you for even reading the book, Brian. I very much appreciated it.


Brian: [00:06:07] It was great.


Sucharita: [00:06:07] At least one person has read it, so my task is done. But as far as you know, there were a lot of lessons for me from that experience. And one of the things that I think was fundamentally an area that challenged Toys R US in particular, and challenges much of the retail industry, because the truth is, I don't think that there is a sector of the U.S. economy that hires as many people as retail. It is an incredibly large employer of the economy. However, one of the challenges with that volume is that you end up with not always the best quality. And there's a very good reason for that. And that is that retailers typically pay at the low end of the pay spectrum. When I was at the store where I did work at, they were paying $6.50 an hour for their store associates.


Brian: [00:07:19] Wow.


Sucharita: [00:07:20] Which was, at that time, a little bit more than minimum wage in New Jersey, because the store happened to be in Paramus, New Jersey, but it was substantially lower than even other stores down the same road. Because I wanted to do a comparison I asked the barista at Starbucks, how much they were getting paid at the same time. They were like, you know, ten dollars an hour and they get health benefits.


Brian: [00:07:46] Right.


Sucharita: [00:07:46] So this was a company that chose to pay at the low end of the spectrum. And, you know, it's also a business that was highly seasonal. So what would happen is that during the regular course of the year, you may have chain wide I think there were like sixty thousand or so full time associates, and then that would spike up to one hundred and twenty thousand just during the few weeks around Q4 when there was the burst in traffic to the store. So there would be this massive hiring effort to just get as many bodies into the store as possible. And literally, that was one of my mandates is just go find bodies. You know, we don't care where they come from just get the bodies in here because we need to man as many cash registers at all times and just process transactions. And that begat a lot of issues related to shrink and loss prevention and just not even thoroughness in the hiring process. I mean, I recounted one anecdote where we were hiring people, and it would be weeks before they even finished the background checks on individuals, and there would be convicted felons, sex offenders, you know, all kinds of people who wouldn't have made it through kind of a bona fide, higher quality hiring process. And it was kind of the mentality of the organization to just get bodies in the door and literally anybody who would be willing to work for $6.50 an hour and, you know, and kind of show up for their shift. I mean, that was the bar. And it's unfortunate because I do believe that kind of in cases like this, you sort of get what you pay for, and you don't always get the most industrious store associates. You may not get the ones who are the most excited about their jobs. I mean, I certainly wouldn't be excited getting, you know, barely above minimum wage. And, you know, in it, it just seems completely different philosophies. And in hiring and retail, you know, on the one extreme, you do have companies like Starbucks or what if the quotes that just really just resonated with me was the CEO of the Container Store, Kip Tindall, who is famous for that phrase. You know, you can you can pay people twice as much and get three times as much productivity. And I truly believe that. I think companies like Trader Joe's actually live by that. But unfortunately, a lot of big box merchants, a lot of mass merchants don't.


[00:10:34] And it ends up getting demonstrated ultimately in some of the poor quality experiences you often have in these large mass merchants.


[00:10:44] Yeah. I think Trader Joe's is a good example. I mean, I always love the Costco example as well. I think that they have a really great retail culture.


[00:10:54] You know, and, you know, they're always, you know, X percent higher on pay than than other retailers are to ensure that they're getting, you know, the top end of the of the of of of that retail associate level worker ends, you know, and they have a really great promotion practice as well within the store and allows allows workers to really think, you know, embrace their jobs and feel good about the wage that they're learning earning. And yeah, I totally agree with that. I I I I tend to think that living wage jobs just produce a better life for us all around in general in America. And if, you know, we focus a little bit less on profit and more on sustainability, we're going to end up with a better overall experience and people are going to come to our store and buy more stuff.


[00:11:50] So, I mean, how could someone make the argument, though, that. I don't ever want to be like I don't want to be the person to say that. You know, I think it's it's fair or right to pay. At the very low end of the spectrum. Right. But I but I also might understand an argument that would say that there's a certain type of a product and in this case, maybe a certain type of a toy that doesn't need necessarily education or skill to sell other than more than just where it's located in the store that most of those products have already sold themselves. When people walk in the door and and people are more inclined to need less education about the product.


[00:12:40] And so therefore, like the demands of the type of.


[00:12:45] No worker and the. And the rigors of the job, you know, fall at the lower end of the spectrum anyway. What's your what's your take on that street?


[00:12:56] I think that a lot of what you just said is the defense for why you do have the lower wage jobs. But here's here's the flip side. There is a lot of intangible work that goes into an experience. And it you know, and that was another observation is that no matter how much automation, how much A.I., how much machine learning we ultimately get in retail, there are certain jobs that you're just going to need humans for. And, you know, it's like a little thing.


[00:13:27] It's things like who's gonna bring the shopping carts that are left in the middle of the parking lot? Back inside. You know, when somebody go decides that they don't want zucchini anymore and they're already at checkout, who's gonna put it back on the shelf? Those are things that, you know, maybe in 25, 30 years, robots may solve. But for now, it's people, it's humans. And what the difference between paying somebody, you know, minimum wage vs., you know, 30, 40, maybe even double that, is that you get somebody who's a little bit more vested in hustling, in getting it done faster, more efficiently. It's the difference between somebody throwing the zucchini back on the shelf or misplacing it with the cucumbers versus somebody who takes the time to put it back and place it nicely where it belongs.


[00:14:27] And that's what I think is the intangible of that. You know, that quote, I'm getting three times as much productivity for twice the cost. And and and I think that, you know, a lot of those little parts of the experience are over. Looked like one of the things that I think is great about Trader Joe's is that they end up cross training a lot of their sales associates so that they can flex them.


[00:14:51] Whereas one of the differences with the Toys R US or a mass merchant is that when you are hired, you are a cashier or you work in the back or you just work the sales force and you have one task. And if a cashier doesn't show up that day, if you happen to only be one of the back of the store workers, they can't just pull you up to the front of the store. Whereas in at Trader Joe's, they do have a flex model where they are essentially trained to do virtually every task in the store. So if you need somebody to unload a truck and put things on the shelf, because that's the task that's needed that day. You have a big bench to tap into to execute that. And it's shocking to me that more retailers don't employ that type of a of a method because it costs more.


[00:15:44] You know, I mean, it's it's you know, you've got to pay for health insurance for those people and you've got to pay a higher wage and you've got to spend more time, you know, interviewing them. And that's that's not something that retailers typically do well today.


[00:15:59] Yeah, it's really unfortunate. I much prefer that model because the efficiencies you gain, like you said, like even just scheduling, you have I mean, you can schedule instead of scheduling three people for four, you know, for checkout, you can schedule three people for, you know, back and then three people for restocking. You can schedule just nine people. And then, you know, if someone gets sick, you can use anyone from your badge. It's just it's a better way to look at how to to run a store. I totally agree with you. And I think that the the living wage and paying higher wages is going to make your workers happier. They're gonna get to learn more. They're gonna have more responsibility. All of the above creates a better experience for your shoppers that, you know, it's better for your shoppers, better for employees, and it's better and it's more efficient in the end. So it's just a better way to do business. And I think we I've seen this in other retailers, not just Toys R US and other businesses in general. They don't want to invest in things because they can get cheap labor to take over jobs that could actually be handled by machines or you know, it just is, you know, that they feel like they don't have to invest in training and things like that where it's like, oh, yeah, these are saving us money. But in the long run, you know, if you're taking a long term view of your business, if you're not investing in those, you know, in in in your people and in your technology, you're going to end up like Toys R US, then you're gonna bust.


[00:17:30] So one of the security I thought maybe you could you could expound on sort of the next step, sort of the piece there, which is, you know, a lot of people have have shifted the blame on to the private equity, you know, sort of mentality. And and really, I think what you're generally saying is that, you know, it's it's just not taking ownership there. People are trying to find ways to explain away the fact that a lot of the issues were sort of systemic and cultural and probably would have happened regardless.


[00:18:03] Exactly. And that was one of the reasons I even decided to write this, is that I wanted to recast the retail narrative. There are really there were a couple of things that that eat that I would argue in the last year have been sort of that the talk of the retail industry and and one in particular, with respect to Toys R US, there is that private equity piece, as you mentioned, this notion that private equity has just basically plundered retailers. And one of the elements that I want to remind everyone is that Toys R US was in a turnaround four years before private equity even decided to two to execute the leveraged buyout. It was a company that had already lost its position as the top retailer of toys to Wal-Mart and Target, you know, several years before. So it was it was struggling for a number of reasons, even before the LBO. And I think that, you know, kind of what was most shocking to me was that it even was able to last for a decade. Plus, after the private equity buyout.


[00:19:16] And the second kind of bad guy in the retail equation has been Internet pure plays.


[00:19:22] Specifically, you know, the company in Seattle who, you know, kind of that is that is the best Microsoft discussion I know. Who would that be?


[00:19:37] And you don't talk very much about Amazon at all in this book. And in fact, to the degree that I mentioned them, I actually say it was sort of a blessing to have the Amazon relationship and physical stores because that was the easiest way to look up. A SKU number was to go to the Web site because Toys R US is own system, didn't have an easy way to do a search of the physical product in the store.


[00:20:03] That's mind. That part that I was reading and I was like, oh, my gosh, like how?


[00:20:10] So I kind of unpack that for a second because I you know, and maybe this is deep in the weeds and inside baseball for some. But there's like three people out here who might find this interesting. But I know that you had a lot of the things that Toys R US was leveraging, especially in the end, its e-commerce play early. I want to say 2010, 2011, at least when I first became aware of it, was, you know, GSI. And I think, you know, sort of the my understanding of that sort of mentality around the way that the GSI platform and eventually eBay enterprise, the mentality of sort of outsourcing, the entirety of your experience of your digital commerce experience to another entity hasn't really worked out for all of the players that decided to go that route in that in that time in that era. And I'm curious to know what you think of that being sort of the differentiator of people that decided to invest heavily into owning their own e-commerce experience. You know, now 70 years ago versus the people that decided to outsource it and sort of throw everything, including fulfillment to someone, some other person, because their customers wanted it and they didn't want to invest in it and make it part of their actual customer experience with.


[00:21:30] Absolutely right. And I think that what you ended up with for a company like GSI Commerce, which is basically the third party outsourcing platform, that that would take a percent of sales and basically run your e-commerce business from end to end the kinds of clients that they had not not all of them, but that the vast majority of them were companies that just didn't feel passionately about digital commerce presence. They felt like they needed to have one that they didn't want to invest on their own. And that was, I think, one of that. The biggest issues on that day. That Toys R US faced was that it was a company that didn't really feel that passionately about e-commerce.


[00:22:17] And, you know, a little bit of history, it was it had its own e-commerce platform very, very early on when the Internet was supposed to kill all physical stores.


[00:22:27] And this was like a ninety eight ninety nine. And then that ended up being something that they then retrenched on because they it didn't it didn't yield great results and it ended up being a huge investment. And you know, e-commerce was was tiny at that time.


[00:22:45] So what they did was that they ran into Amazon's arms and Amazon at the time had an e-commerce platform business that, by the way, Target Borders, I think Tower Records was on. And Toys R US. So they. So Amazon basically ran the e-commerce Web sites for these large retailers back in like the year 2000.


[00:23:06] And then flash forward a few years. What had happened was that there were some issues where Amazon basically claimed that Toys R US was not giving the appropriate merchandise and was stocking out best sellers. So. So Amazon basically sourced its own product and that violated the terms of the Toys R US agreement. And there was a lawsuit that ensued and that was the grounds for severing the relationship between Toys R US and Amazon. It was a relationship that, by the way, should have lasted like 10 years. And that's another question is why is anyone signing these 10 year long contracts with with company when the world is complete?


[00:23:46] Because that's what they do in retail. Oh, my gosh. That's a hundred year leases. I mean, 10 years sounds like a bargain. You know, that's simply it's total. But, you know, kind of sad then.


[00:23:58] Toys R US, instead of deciding, oh, we're going to invest in our own business after the lawsuit, you know, kind of basically let them out of their their contract. They decided to go with GSI, which was basically an alternative to Amazon. And the way that I always described it is like somebody saying that, you know, kind of I am going on a diet. I am, you know, kind of no more McDonald's for me instead of only going to eat a Burger King.


[00:24:29] That's essentially what they did is like, you know, they they they made a change and they they stuck it to Amazon. Yes.


[00:24:36] But, you know, they didn't really you know, they didn't really make a change. And, you know, it was a change that that basically said that they don't care about digital.


[00:24:47] And, you know, and and if you don't care about digital, when the world is moving toward digital, if you're going to lose a percent of the consumers that that choose to transact in that channel.


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[00:26:49] What would be, you know, if you could paint a picture, which you've painted some amazing pictures just just in this short episode so far. I love the of Heaney and the cucumber pile is amazing.


[00:27:02] That's probably the show title right there.


[00:27:04] But if you can paint what is now of what sort of the antithesis of of Toys R US would be like, what's the what's the model that would sort of that that would negate all of the bad things that Toys R US that like. Can you show us what that store would look like?


[00:27:28] You know, just give us a picture that I think that some of the newer retailers that are getting first crack at creating brand new retail experiences. Now, I don't know how profitable they are. And that's my caveat to a lot of this. But, you know, I like that the retail experiences of bonobos and like the retail experience of the Warby Parker, I think that, you know, kind of it's everything from, you know, kind of trying to be a little bit more customer centric. It's trying to look at new ways of having inventory. I mean, one of the biggest challenges for any physical goods retailer is the amount of inventory that you have to own and the capacity that you have in the physical store to have that inventory. And one of the things that bonobos is known for is that they don't carry all of their inventory. They have basically items that you can try on and you can order your items from a central distribution center elsewhere to get it shipped to you. That's really, really smart. That's a great way to expand what you have in the physical store without being burdened by by this inventory. I think, you know, there are, you know, probably in the cosmetics space, you kind of have an existing merchant.


[00:28:57] I would say that probably Sephora is is a company that is is doing better than most. And they have employed a lot of these elements of experiential design and engaging shoppers in a really, really fun way and having a variety of vendors, too. I mean, that was another thing that that always baffled me about these big box retailers, is that there is a world of merchandise and vendors that are out there. If you go to the big trade shows that were that are most popular in the twin baby industry, it was JPM, PMA and the baby industry toy fair in the toy industry. There are thousands and thousands of purveyors of really interesting new merchandise. Yet half of the product that Toys R US purchased would come from 20 vendors, 20 vendors and to it. That never made any sense to me. And the more that you can diversify and showcase new vendors and showcase freshness, which is what companies now like Amazon do, that is really where I think the great future of retail is is in in discovery. It's no longer, you know, kind of stack them high, watch them fly and stuff, things, you know, kind of in the aisles and expect that people are going to buy from you because those are the only choices that they have. You know, retail is no longer like it was in nineteen eighty two. And I think that, you know, a lot of the practices that we still see in big box are very much from 1982.


[00:30:37] Yeah. It's interesting. I think you bring up a good point. I just walked through the mall the other day because I had to and I peeked into the. As I walked along. And, you know, a lot of them are still employing practices that I have, you know, I saw in the 90s and, you know, and the to thousands and it's in some stores are starting to do some really cool stuff.


[00:31:00] And we're seeing new types of sales happening in physical retail now, like there's a Tesla store in the Bellevue Mall. Like that was that was pretty cool. You know, you see a car in a mall. Right. And that's been there for a while. I mean. I mean, it's been there for probably now. Now like seven years. But, you know, I think, you know, a lot I think to your point, a lot of big box retailers and even smaller retailers are still just implying the exact same model that they employed for four years. Like it's the same as the same models, the same, you know, shopping experience. And that's why a lot of people are not going to those stores in the malls. And I know that malls are, you know, still have a lot of life left. I mean, I'm not saying that physical retail is. By any means, but there if you stick to old paradigms, you will die. And I think your book really illustrates this. Speak. Speaking of antithesis, I think you mentioned Amazon as synthesis. And I do want to kind of talk about an Amazon a little bit more here. There's just so much going on in prime. They just happen. I really wanted to take a few minutes to dive into that and, you know, talk about what what happened on prime day. You know, Amazon had a big side outage in our last episode. We sort of date a few quick snide comments about that. But, you know, what were you what were your thoughts on on on prime day this year on Amazon's outage?


[00:32:31] You know, they had a huge, huge day, biggest day ever, but it could have been so much bigger. And there were also, you know, lots of merchants who didn't get the you know, the the advertising meant that they paid for or paid promotions that, you know, that they paid for. Those were pretty much blocked for that period while they had that outage. So, you know, what do you what do you think of prime day this year? And of especially specifically regarding the this outage?


[00:33:01] Yeah, I was I was candidly I was shocked.


[00:33:04] I mean, I've never seen Amazon, basically, you know, kind of choke on a day like that. And I don't think in fact, I don't think I'd ever seen and heard on Amazon ever before, which which was, you know, most shocking to me.


[00:33:22] I mean, it seemed like it was out of the playbook of Sears or something, but that. But I you know, kind of. But I knew it. I knew that it couldn't be very long lived because, you know, even when outages happen at lesser companies, they get it together like everybody is, you know, all hands on deck. And people are very, very anxious about, you know, kind of losing their jobs and, you know, kind of the fallout that will happen subsequent to that moment. So there I knew that, you know, they would it wouldn't be long. And it ended up being, I think, an outage of an hour, a couple of hours. And there were some pages that, you know, kind of experience some persistent problems.


[00:34:04] The great irony is that there were certain pages that were absolutely fine, like the echo many and no one knew the value. TV was the biggest seller on the day. Exactly. So it kind of makes you wonder, was this a calculation? No.


[00:34:23] But did you go into the other piece of the irony from the other side, having been on sites that have worked at companies where the sites have crashed on Black Friday, is that you still see sales coming through. I mean, there is somebody that's able to access product and because things are on sale. So from the back end, you know, kind of sales are still coming in. It is just that it may not be as much as you would like. And it is it is strange because, you know, I think that this was the first time that they had basically launched a sale in the middle of an after noon on a workday when, you know, a lot of their shoppers are at work and have access to computers and, you know, phones and everyone's sort of online at the same time. And, you know, it's sort of what you know, it's the expression that I eat that we use that the big unveil and we talk about being very, very cautious about the big unveil.


[00:35:23] That often happens when companies will launch a new Web site or they'll launch a redesign.


[00:35:29] And they're like, did I it's you know, it's all open. And, you know, the site crashes. And, you know, kind of this was maybe this was a little bit of that is that they they just hadn't anticipated everybody coming on all at once. But, you know, I mean, they're they're the smartest people in the world. And I'm sure the mistake will never happen again. And, you know, to their credit, they did fix it within a few hours. The main prime date was on Tuesday anyway. And, you know, we knew that it was gonna be to a bigger audience with more deals for a longer period of time with, you know, even more prominent brands. So, of course. And you have the momentum of the company coming into a year with double digit growth, any. So, you know, I would have been shocked if it was anything but the biggest day of the year for them.


[00:36:16] Yeah, I totally agree with that. I wish it was not the biggest day of the year for them. That would've been a big problem. I think the other part that was just mind blowing to me was there were more sign ups, subprime on that day than any other day in the history of Amazon.


[00:36:29] And that, you know, I think that just goes to show how like how well they advertise that they spent a lot of time advertising on on radio and TV and and through ads and the Internet. And like they really promoted this and then made me think really clear. You know, if you wanted access to these deals, you had to sign up for prime and you know, I I think I think that that is almost more of a success story than any story than anything else. That's that that happened that day. Like a prime sign ups are Amazon's real, you know, silver bullet. And so if you know, if if anything, if Prime Day is just about getting prime sign ups, like that's a win for Amazon.


[00:37:17] Yeah.


[00:37:18] All right. Yeah, absolutely. Mike, my concern here is, is at what point.


[00:37:26] I mean, I don't know. I'm I'm probably the wrong person.


[00:37:32] I always hesitate to put myself as like the persona of the person who shot. I shop on Amazon for everything. Like everything. In fact, I was giving a talk a couple years ago about this brand new device called, you know, Alexa, that people probably will never use. But how it's this really cool device that I know is demand, you know, demand commerce on demand commerce where I you know, I basically order all of my toilet paper, even from from with my voice. It's amazing. And so I'm that guy. And I didn't shop on Prime Day. And I was really put off by by the flubs on day one. Now, do I have I shopped on on every other day of the year. But prime day. Yes. So I'm probably not the target, you know, but I think you make a really astute point there, Brian, in that. Yeah. If it's about winning net new customers to prime or bringing people back to prime who have lapsed off at some point, then then that is.


[00:38:32] I mean, that's a fantastic goal.


[00:38:34] But doesn't does it not put off a potential consumer who is not a member of Prime? To say how stable is this service when I want to put all of my dependents on it in other fashions, I'm supposed to use it for entertainment. I'm supposed to use it to watch TV now and listen to music and look up recipes in my kitchen and an end to have one. The first experience be that. Well, okay, maybe. So then the rules. The point I'm getting to a point. The point is that the rules then that we spew for every other retailer don't apply to Amazon. Period. Full stop because we would tell anyone else in the world that you're the first experience is an important one and you don't want to fall flat on your face on the on this experience that's supposed to, you know, get the foot in the door for, you know, the high CLTV that you're trying to get for that customer for the rest of their lives.


[00:39:27] I know that sometimes I think there's not a while.


[00:39:30] I think my point is that Amazon has a certain amount of like one trust in consumers minds that is so high that even something as bad as their side going down on their biggest day. I mean, if if you felt like a rookie mistake, like someone who didn't prepare for Shark Tank, we a whole like a retailer that is prepared to have their site flooded on Shark Tank when they're when they're upset. Right.


[00:39:58] You know.


[00:40:00] I think what you're getting at is there's too much there's too much brand equity and trust that's already built up. So, I mean, that kind of leads me to another question that I have for you. Considering that this in Amazon's continuing to raise the price of prime, they're continuing to innovate. And like one thing I saw that they're doing recently, they've just had to bring up this new Pathfinder image, image based search for four parts. And you can find like really random like oddly shaped parts, nuts and bolts and and washers and screws and such. I'm just blown away by their continued innovation. But with, you know, sort of the political climate being what it is and, you know, and being the size that they are, you know, what do you think about it? I think it's been on a lot of people's minds and in a lot of different media. And, you know, and and people that are in any industry, is antitrust coming for Amazon? Is there going to be some sort of a suit at some point? Where do you wait? What's your take on this?


[00:41:03] Yeah. Yeah. And I think that it's this is a question not just for Amazon. I mean, this is the big question about everybody from Google to to Facebook as well as, you know, kind of when these companies get so big and so much of our our lives and our data is intertwined with them, you know, who owns that data? And, you know, kind of Amazon is now making a lot of money on advertising in addition to Google and Facebook based on the data that they have about us. And, you know, they're doing it in a personalized way, which is very different than the way that media companies have made money before. So that it does beg a lot of big questions. And I can't see us moving forward without more regulation around this. And because these are global companies, it's already happening in Europe and we're certainly seeing pieces of it coming to the United States as well. I don't know if you guys followed that in California. Essentially, they basically put in their version of GDP are in place. And what that means is that companies are going to be much they are going to be mandated to be much more careful, at least with Californians on how they collect information and how they use it. And now what happened specifically from a regulation standpoint, I think remains to be seen.


[00:42:19] I don't know that Donald Trump is going to be able to do much with the postal service. Maybe he will. But I mean, the problem is, is that he's going to shoot the entire industry in the foot. If he raises prices on Amazon because everybody is dependent on the postal service. But what I do think is a place where I'm waiting to see if somebody actually takes up this cause is regulation around marketplaces. And right now, marketplaces are the source of the wild west of the Internet. There is no restriction on who's a marketplace seller. Marketplace sellers can state all sorts of claims without any type of enforcement or, you know, kind of truth in advertising, you know, kind of accountability that they're they're held to. And, you know, I always use the example of it is harder for me to have a garage sale at my home than it is for me to sell on Amazon or another marketplace. And that begs the question of should it be that easy just now on Amazon or some other marketplace? Maybe we need to have, you know, slightly higher standards and put these sellers through a few hoops so that there is a little bit more quality control as to what's there. And shoppers have have a recourse if, you know, if something goes awry or if a product is counterfeit or it doesn't kind of meet the expectations of what it promised.


[00:43:49] So I think that that could be a huge, you know, kind of wet blanket on on any marketplace if it's something like that were to happen, because so much of the growth of e-commerce is now dependent on marketplaces. So, you know, I think that there is there's a case to be made. I haven't heard anyone deciding to take that up. But but it sounds to me like it's I mean, and certainly from my own personal experience, where I've I've had some not great experiences with third party sellers that, you know, kind of that's that's in order. Just one other comment I just have to make regarding, you know, kind of earlier. Fill your comment about. SALES and you know what? What I do want to say is that we can never underestimate the American consumers love for a sale as as evidenced by the Build a Bear song to which we go ahead. But I think that it just goes to show that, you know, kind of no matter how badly you may mess up on a sale day, you know, people are still going to show up because their love for a sale, you know, can trump. They're you know, they're there. They're their willingness to eat or.


[00:45:02] Exactly. The rational thought. Yes.


[00:45:06] Oh, my gosh. Well, we're at the end of our time. There's so many other things that I want to talk to you about. I wish we could keep going. I think we're going to have to have you back on the show again soon. Want one last question before we go. And I know you.


[00:45:21] You keynote it. Imagine, along with Phillip, that Magento imagined conference and then shortly thereafter, Magento was purchased by Adobe. And I really wanted to hear you weigh in on that. I'd be really interested to hear your thoughts on on that purchase and and, you know, kind of what you saw to imagine and where you see Magento headed.


[00:45:39] Get Adobe, buddy. There had such poker faces like I didn't see it coming at all.


[00:45:44] But I think it makes it makes a ton of sense. I mean, Adobe is a player that is so strong in the retail ecosystem, that is so strong in the marketing ecosystem. And the one piece of the you know, of that ecosystem that they didn't have was commerce. And Magento is one of the few big players that could tuck into Adobe appropriately. And they're there probably. And, you know, look at maybe a Shopify potentially. But. But, you know, it was really Magento or, you know, there really it would have been a company that would have been much, much smaller without the client base. That Magento has. So and all of the other potential acquisitions have been acquired. And, you know, they've been acquired by S&P and Oracle and others. So it it makes complete sense. I think it was something that that that that people who follow the e-commerce ecosystem had been anticipating it. You know, I certainly didn't expect the timing of it tat to be what it was. But I think it's it's a it's a good fit for both companies.


[00:47:05] Great. Well, appreciate your time again today. It's a treat. And this has been a phenomenal article. I encourage everyone to go read your book when it comes out. Toys Our Bust. You're gonna be releasing that through Amazon. Where where can people you know, I think you mention this on the last time we we had you on the show. But where can people find you? What? What's where? You know, Forester, Twitter, all of the above.


[00:47:28] All of the above. And I actually my Twitter handle is still my maiden name, which is Mulpuru. But. But I am accessible. LinkedIn, Twitter now this Amazon e-book. So. Thank you so much for having me. It was so fun.


[00:47:45] Thank you. Future Commerce. We always would love to have your feedback about today's show, so please leave us some feedback on this guest comment box on our side or on LinkedIn or Twitter or wherever you can find us.


[00:47:55] And if you subscribe to us, we always loved to get reviews from you. So hop on, give us a five star. You can you can find us pretty much everywhere. And so don't forget, if you if you're in your house and you like, I want some Future Commerce.


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[00:48:19] Well, I think some retail tech is moving fast. Future Commerce is moving faster. Thanks again. Thanks for listening.


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