Brian: [00:01:38] Welcome to Future Commerce, the podcast about cutting edge and next generation commerce. I'm Brian.

Phillip: [00:01:43] I'm Phillip.

Brian: [00:01:44] We've got another great show for you today, as always. Don't forget to subscribe to Future Commerce. You can do it on Google Play or Google podcast now. Apple podcasts. Or, you know, anywhere that you listen to podcasts. And as always, you can listen to Future Commerce just by saying Smart assistant that I have...

Phillip: [00:02:03] On any smart speaker device.

Brian: [00:02:04] Play Future Commerce podcast.

Phillip: [00:02:06] There you go.

Brian: [00:02:08] Awesome.

Phillip: [00:02:08] All right. We have a limited amount of time and way too much stuff to talk about. But can I get a personal vendetta out of the way first?

Brian: [00:02:15] Yeah. Start with that because it's kind of a sad story a little bit.

Phillip: [00:02:18] So you know that we've been pretty bullish on these ideas of personalized products. We've talked about this like ad nauseum. And one of the ones that we've mentioned in the past Care/of is a company that actually I tried out and actually really, really liked over the past few months where you sort of take a personalized quiz and then they recommend all kinds of supplements and other snake oil that might make your life better, quote unquote. And they personalize it to you. So the message that comes to you through the questionnaire, which asks you about your health goals and things like that, they sort of make recommendations to you. But all of the content is personalized. So I self-identify as like a skeptic around, you know, vitamins and supplements. I think fish oil and multi-vitamins are absolutely a thing that most people should probably be taking. That being said, there's a whole bunch of other stuff that I'm not so sold on. And they do a really good job of providing education and research and yadda yadda. Go back and listen a few episodes ago. I think four or five episodes ago, somewhere in the early 70s. I've probably talked about this quite a bit. And they personalize, you know, the packages and everything. Anyway. So actually, I turned someone else onto this product. And lo and behold, the first shipment that they received... Actually, you know, I said it on Twitter. It's my wife. I'm sorry. I was trying to, like, protect the identity of... I am like, I don't know why I do that. Here's the weird thing. The first package, the first opportunity that you have to sell a customer on something, they absolutely screwed up. So we found in her package that there were someone else's products or someone else's supplements packaged in with hers. Now, it was a similar name. Some of them said Jackie. Her name is Jaclyn. They're spelled similarly. So it seems on the face of it, sort of like an honest screw up, but there's sort of interleaved in to her thing. Anyway...

Brian: [00:04:11] This is like pills, though, right?

Phillip: [00:04:15] They're pills.

Brian: [00:04:16] This is not a very... Let's just say the consequences for this kind of mistake are high.

Phillip: [00:04:24] What blows my mind is we were trying to figure out actually what the supplements were in the package that we received. It's not like they sent us a whole sleeve of someone else's, like they shipped the wrong thing to her. It's her stuff mixed in with someone else's. So if you weren't paying attention and you opened up today's packet, you could accidentally take someone else's supplements. It wouldn't be that big of a deal, especially if you just believe all the stuff to be snake oil that you're you pooping out anyway. But it happens to be that one of the supplements in there is a product called Kanna. And there is a warning on Care/of own web site that says if you take SSRIs. Which is a serotonin uptake or reuptake inhibitors, like if you take antidepressants of any kind, do not take this product. Whatever you do, do not take this product. And I've started to think of myself like, oh, my gosh, this could be like life threatening. This is a problem. So the one thing they should not do is a company that personalizes health care products to people is screw up which package or which products go in which box and then sort of weave them into... I don't know. They just screwed up in a huge way. And it automatically made me think, like, what kind of safeguards are there on an industry like this that are even just beyond just FDA regulations of make sure that the label on the bottle says what it's supposed to be. How do know that these, like VC backed companies are doing and protecting you in that way if they can't even protect what goes into the box? Who knows what else they're doing? Who else knows what they're capable of screwing up? How do I know that the actual products themselves that they supposedly manufacturer to the highest quality are also, as they say they are. Very scary when you think about the ramifications here. And it kind of goes to show you like, wow, this retail model or this you know, this model of customer engagement and personalization has some serious dark sides to it. Some potential downsides, you know.

Brian: [00:06:35] Well, I mean, I don't know if it's personalization that has the downside. I think it's the...

Phillip: [00:06:39] Well it's hard to do, obviously.

Brian: [00:06:44] I mean, I would see this more as like manufacturing, well not manufacturing, but like the production issue. It's interesting. Like, I think the downside of a company that's dealing with stuff that's this dangerous or it has potential side effects, that's kind of scary, like if they made a mistake putting stuff in a box. What about what they put in the pills? It definitely doesn't inspire confidence. Well, that's true for a lot of things, though. I mean, like how things are manufactured. What kinds of materials are used in them? I think this definitely like... Well we'll see how Care/of response to this.

Phillip: [00:07:28] Well they've already responded. So here's kind of where it stands. They've offered a $10 credit for our trouble. And I think you've got to do a lot better than that. Like, we're not going to take this product again. It's kind of soured me and this idea of what this model, especially in like personalized health care. It's just crazy. The only reason I bring it up and we're wasting a whole five minutes of our very short show today about it is because I have personally, you know, somewhat endorsed this product in that I was impressed with their model, and in the way that they're engaging customers. I feel like it's my duty to, you know, be honest about the experience that we've had and how, you know, potentially scary that could be. So we can move on.

Brian: [00:08:16] When you're a startup, I think there's more opportunities to make mistakes. So the lesson to take away here is make sure that, whether or not it's something potentially harmful or not, make a good first impression. That's always a good way to start.

Phillip: [00:08:35] I mean, I just... Yeah. And I think an ongoing impression... I'd really love to see them address this in a public way to say, here's how it happened. Here's why. You know, when Twitter goes down, they do a post-mortem. Now, Twitter is probably the wrong company to bring out here, especially with a lot of things happening around free speech right now. But, you know, when there are when there are widespread issues like on various public services, there's usually a post-mortem of how it happened, how they're going to address it, and how it's never going to happen again. That's really what I'd be looking for here, not a $10 credit. For me, don't even give me the credit. You can have your products back. I don't really care. What I don't want is... I want to know how you're going to prevent this from happening to your customers ever again. And, you know, I don't wish them any ill will or harm. I would be remiss to not have mentioned it on the show. So, OK, I'm done.

Brian: [00:09:36] Cool. Well...

Phillip: [00:09:39] Today. Holy cow. OK.

Brian: [00:09:40] Today, lots to talk about. Lots to talk about.

Phillip: [00:09:44] Voice is dead. That's the first thing.

Brian: [00:09:47] Voice is dead.

Phillip: [00:09:48] Voice commerce is dead.

Brian: [00:09:50] Voice is dead.

Phillip: [00:09:50] Well it was dead on arrival if you ask Tom Goodwin over on Twitter. He's heralding the death of voice, and that voice was never meant to be a communication medium to begin with. So interesting. Tell me a little bit about this story.

Brian: [00:10:09] Yeah. So I mean, I think this is a story from the information that he's quoting, basically 2% of Echo users have made purchases. And 90% of those 2% won't ever use it again for purchasing. Now, the source behind this is obscured. They didn't release where they got these numbers or who told them these numbers.

Phillip: [00:10:41] Well, it's saying that they did an interview with people that are familiar with Amazon's numbers and those people are unnamed sources.

Brian: [00:10:48] Yes. But, which is interesting. I mean, I've seen other stories come out about Amazon with similar unnamed sources, and they were like blatant, blatant twisting of the story.

Phillip: [00:11:08] You would know because you spent some time at big A.

Brian: [00:11:11] Yep, yep. I'm not saying that's true about this, I have no idea if that's true or not.

Phillip: [00:11:18] Let's go on the basis that it is based on the fact that theinformation.com is supposedly a journalistic organization and the author of this article is Priya Anand, and she seems to be a dedicated Amazon reporter.

Brian: [00:11:33] So my question to her...

Phillip: [00:11:33] The point is, is that let's say that these sources are correct. What do you think that a. This means for all of the supposed voice strategy that retailers are cooking right now and b. Where do you think voice actually heads then if it's not going to look the way that we all thought it would?

Brian: [00:11:59] I don't know if anyone ever really thought I would be an interesting mechanism.

Phillip: [00:12:01] Amazon, sure, seemed to think so.

Brian: [00:12:03] Maybe, maybe they do. Maybe, maybe they're you know, they wanted to start with that, and it was just a little way to get things going. What I'm getting at here is the voice end to end for purchasing is tricky for a lot of things, especially when it comes to discovery. Yeah, sure like reorder makes sense. I guess the end to end reorder is pretty easy with voice, and I think that that's definitely going to be something that continues definitely grow. But where I see voice playing is at different places. It was something that kind of hit me the other day as how easy it is to, when you're listening to something, how easy would it be to just use your voice to respond to it? So like if you're listening to a podcast, for instance, and there was an ad or a commercial or an endorsement, how easy would it be to throw in something along voice where it's like, you know, if you're interested in this product, just say "buy now" or "add to my card" or...

Phillip: [00:13:19] Wait, wait, wait. Hold on. You glazed over that. What you're saying. Hold on. That blows my mind. So what you're saying is that there are opportunities where some sort of contextual interaction can take place with a command of our voice, and based on the context of what's happening at the moment, the voice assistant of your preference would be able to take an action like a purchase action. Or any... I'm watching an obvious commercial. And I'm like, "add that to my queue" right?

Brian: [00:13:59] Right. Exactly, exactly, yeah. In context, voice interactions that result in purchasing or other actions, whatever the conversion funnel looks like...

Phillip: [00:14:09] I mean, that would be so dangerous in my household because my kids put on Nickelodeon, which never happens. But when they do, every three seconds I hear, I want that. I want that. I want that. Can I have that? And I can see like that. I definitely see some really like bold opportunities from a... I would do that myself. I would absolutely do that.

Brian: [00:14:31] Or I mean, think about this with image recognition, how easy would it be to have everything that's in a scene of a show that's before being worn or used or whatever... You pause the show, you say, "What's that mug in John Smith's hand." And it brings up information on the screen about that mug. Who it's made by, and then you can purchase it in context.

Phillip: [00:15:08] Are you talking about Pocahontas John Smith? Which John Smith are we talking about here. No, I like that. That's impressive. Well, you know, we've actually mentioned this and referenced it a couple of times now recently, which is we've seen this technology debuted in a couple of ways, like at the royal wedding recently. But can you imagine?

Brian: [00:15:30] Yup.

Phillip: [00:15:30] I was listening to a film podcast recently talking about sort of the evolution of the de-aging visual effect that premiered in X-Men 3 and has gotten better over time to where very long extended scenes are happening now with aged down, younger actors, like Kurt Russell in Guardians of the Galaxy 2. It's almost at the point of uncanny and flawless. It could be a 10 or 15 year arc before we get to the point where you have that sort of infinite contextual image recognition. But there are services that exist that are pushing the boundaries right now. But I would even just I would kill just to have it in voice.

Brian: [00:16:19] Right. Just in voice. Exactly. I mean, without jumping to far reaching conclusions here. But I think my point is voice is going to have a place in the purchasing cycle.

Phillip: [00:16:30] Right.

Brian: [00:16:31] And for a lot of stuff it doesn't make sense, of course, if people don't go reuse it. Doesn't make any sense at all. Now, voice end to end with screens makes a lot more sense, which is why I think Amazon's come out with things like the fire TV Cube. So what's the most common screen in a household? It's a TV, of course. So what if you could get people using voice with their TV more? And actually finally people start to browse the Internet with their TV or use, you know, use their TV to access apps, which is absolutely happening now. Finally. What was it? Last year, I think was like 77% of voice searches happened on a TV through five TV and other sources, or something along those lines. Obviously, a lot of that was like searching for shows and things like that, but or music or whatever.

Phillip: [00:17:24] I mean, in my household, it's possible to type with the Xfinity commercial... I like going ABC. Like just typing on the television in whatever way, shape, or form is just absolutely infuriating. It's the worst. Like even with an Xbox controller of any kind.

Brian: [00:17:43] It's the worst.

Phillip: [00:17:44] It's terrible. It is absolutely terrible. So you need the voice recognition. You have to.

Brian: [00:17:50] You need voice. You absolutely need voice. And so the more things that happen on the TV, more browsing, the more in context shopping that happens, the more in context shopping on games, TV shows, music, all of that. Voice has a place in all of that. It's just not going to be end to end on a screenless echo device.

Phillip: [00:18:16] So that okay. Coming back to the reason why we're even talking about this, so that the article kind of goes into a little bit of depth about, you know, the reality behind voice shopping, how it's not taking off the way everybody thinks it is. You know, some cynics might say that Prime day was created specifically just to move Amazon's, you know, voice capable products to try to proliferate some of the consumer uptake in voice shopping. And if that's not happening, then why do we even have a prime day? But let's come back to what his takeaway is, which is voice will always supplement a screen because people hate talking. Which I think it's the wrong takeaway because.

Brian: [00:18:57] Yeah. I agree.

Phillip: [00:19:00] There was a study earlier this year, or at least a check in, earlier this year about, and I had actually responded back to Tom sort of highlighting this, that 40% of adults initiate Google searches as Google Voice searches. It happens on mobile, and it happens through the keyboard app. People are actually typing with their voice. And so while it may not look the way that we all thought it would with, you know, just an always listening speaker, we are using voice in a very large way every day. But to his point, it is screen assistive. So it's an interesting phenomenon that's coming.

Brian: [00:19:56] Well, I don't think his point is that big of a deal. The reason I say that is like of course completely screenless devices aren't going to be what you use for everything. Like, it's almost silly. We can have screens everywhere. Why wouldn't you use a screen? That's I think, that's the question. Like when we can do voice searches with a screen, why would we do them over something without a screen?

Phillip: [00:20:27] Yeah, maybe. Perhaps. Yeah. There are complex things you have to weed through. We've all experienced it. If you've tried to search for any products or tried to purchase any products on Amazon with your voice, it can be painful, especially because of the way that people try to game Amazon's SEO by shoving a bunch of keywords into product names. So, yeah, I agree with you.

Brian: [00:20:55] Yeah, so I think the takeaway here isn't that you shouldn't have a voice commerce strategy. I think that it's going to be look different than end to end purchasing in general.

Phillip: [00:21:09] I wonder what to bring down is. I know in particular, the Amazon ecosystem, you know, with Prime is not the right data to be looking at. But let's say that if there was a propensity of an existing customer to reorder a product that they frequently purchase with a single command, that seems like a higher likelihood of having a single spoken intent that doesn't require a lot of intensive back and forth. It's not about discovery. It's just about give me that thing again.

Brian: [00:21:48] Right. Even then, I still see a screen as being useful. It'd be nice if it... I think the Echo Show makes way more sense than just straight Echo does for sort of your main voice device.

Phillip: [00:22:01] For commerce.

Brian: [00:22:02] Right, for commerce. The one that you have in your kitchen should have a screen on it.

Phillip: [00:22:07] And it does. Mine does.

Brian: [00:22:08] The one that you have in your bedroom or bathroom or whatever.

Phillip: [00:22:09] Yeah. For home automation. That doesn't need it.

Brian: [00:22:16] Exactly. It doesn't need it. And I think we're also kind of thinking about things... If we think about voice as a channel unto itself, that's just it's silly. Why would we ever do that? I guess that's sort of my... I think that Tom's takeaway is actually just common sense is what I'm getting at.

Phillip: [00:22:39] Why are you constraining yourself to a limited channel when you... Right. I see what you're saying.

Brian: [00:22:50] So, yeah, this is not a surprising stat to me, like if you're just measuring end to end purchasing. It's kind of obvious actually.

Phillip: [00:23:01] But this is the problem. OK, let's go back to the reason why I think this is newsworthy and means something. We've all been buying a particular voice assistant from a particular company that is particularly positioned in commerce. And no one wants to use it for that purpose. So why the heck do we have these things?

Brian: [00:23:24] {laughter} Well, I think the initial just absolute benefit was, you know, playing music hands free.

Phillip: [00:23:34] Ok, fine. Let me just distill the ecosystem that we have today. OK. Amazon is first in the market. They have a 22 month lead over everybody else. And a lot of consumers, early adopters, jump on to that bandwagon. Then they buy Whole Foods, then they tout all this commerce opportunity. And you kind of think to yourself, man, this is the ecosystem to get into. They already have a skill store. This is the one that's going to hit. Right? You're not thinking about it because they have the best music library. That's all sort of... I mean, I'm not thinking about it that way. That all kind of comes along for the ride. That's nice. That's the nice to have. But they actually have, you know, a really good microphone system that picks up stuff even when music's playing, and when there's background noise. They have arguably a better technology. But, you know, you can't use it for web search because it's terrible. So the web search thing that actually answers questions that you would want to ask all day long, that comes out from another company and they put some cute little fabric on it and you're like, wow, well, why would I want that? Because it doesn't do commerce. What can I possibly do? They're gonna have to forge like a hundred commerce partnerships, which then they go do over the next year. And then the company that comes out, that is the best music position company that has had a music app store. I'm talking about Apple for 20 years. They come along, and they have the worst product on the market with the worst voice assistant. And even the speaker itself is kind of lackluster. And basically, we have a fragmented three party market where nobody is giving you the things that you want and need in one device. You kind of wind up with both, or you don't use them at all for a singular purpose. You wind up fragmenting your search in the same way that you do today on the web. If you want to purchase something, you go to the Amazon.com. And if you want to search for something that you don't know the answer to, you starting google.com and nobody's going to Apple because who cares?

Brian: [00:25:42] Yup.

Phillip: [00:25:42] That's where we are.

Brian: [00:25:44] That's 100 percent the case. That's exactly where we are with voice, exactly where we are. I have an Android device. I use Google assist on it all the time. It's fantastic for my phone. And I just wish that Samsung would allow me to use my dedicated Bixby button to access... {laughter} But no, no, but but still, Google is great on Samsung, and so I use that all the time, but when I'm in my home, I actually don't use Google assistant at all because I have Echo devices.

Phillip: [00:26:25] Because also your own in your hand. That's the other thing, right? We always have our phone in our back pocket. I've been so bullish on this for so long. I'm starting to wonder if we're all going to look back in five years and say, remember when we all had those FBI listening devices in our house? That was a really bad idea. I don't know.

Brian: [00:26:51] Yeah, maybe.

Phillip: [00:26:52] Now we just carry them with us in the car, and we put them in our back pockets.

Brian: [00:26:55] Yeah. Exactly.

Phillip: [00:26:55] They're not going to stop listening. I'm just I'm being grumpy.

Brian: [00:26:59] They're not going to stop listening. I think having standalone devices with with like voice command ability is another level. That's fantastic, actually. Because why would you want to reach in your pocket? {laughter}

Phillip: [00:27:15] Well, I personally still want a future where I can just speak out into the ether and try to purchase something. And I think maybe I'm just gonna be the only old dude who's doing it. I'm just going to start yelling at my speaker and telling it to buy Burt's bees, you know, baby balm. I don't know. And that's the best I'm gonna have. Maybe I will be the change that I seek in the world. While everybody else just moves on to different forms of commerce. Actually, speaking of different forms of commerce, let's keep moving. China continues to innovate. This time in grocery.

Brian: [00:27:57] Yeah, it's been out for a little while now, but I thought it would be good to go back and talk about the Hema grocery store. One of my friends alerted me to this recently and I hadn't really like actually looked at it. It looks amazing. Did you get a chance to kind of look around and see what was out there?

Phillip: [00:28:15] Yes, but it struck me as a... It says that it's a cashless story. It does that mean... Is it the same as Amazon Go but better? Better selection? Better layout?

Brian: [00:28:31] Yeah, I think it is, actually.

Phillip: [00:28:33] It seems like it is. Right? Kind of seems...

Brian: [00:28:37] Yeah. It's actually so crazy. If you haven't seen it before, go look at some like video of it or some picture walkthrough of it. But you can do so many crazy things in the store. Everything's got barcodes on it. When we went to the Amazon Go store, we saw those barcodes on all the items.

Phillip: [00:28:59] Yeah.

Brian: [00:28:59] Well, we didn't really know what they did. And I mean, this might be true for the Amazon Go store, but in the Hema store, you can take your phone, hold it over any item, and it will scan it and trace the product's origin, delivery, and nutritional information. And it's all right there on your phone. Kind of like what? I mean, we talked about doing this augmented reality, but they're just using a bar code to pull up all the information. It makes a ton of sense.

Phillip: [00:29:28] Yeah. I really believe that, especially on the... It was this like weird bar code with circles and triangles on it that we saw on the Amazon Go store, and it was on certain types of packaging. So yeah, I can definitely see how, you know, that strategy would not be hard to replicate, especially if you're in, you know, somewhere that likes to replicate strategies, like China.

Brian: [00:32:28] I was actually just talking with my friend Greg Bilsland, who we had on Episode 56, and he was like, "Man, wouldn't it be awesome to have an app that just used OCR to like pick up brand names or product names or things like that, and it would just pull up information about those things?" So like we were ordering drinks, and he's a fan of scotch and he was like, "It be so cool if I could just hold my phone over this menu, zoom in on the name of the scotch, and it would just pull it up for me," or they would just digitize all of the text and it would allow me to link through to things. OCR is like 20 year old technology. Older. It's older. It wouldn't be hard to do this.

Phillip: [00:33:21] I mean, I feel like seven, eight years ago that Google Goggles had an app that sort of did this. Google Translate does this today where you can hold your phone over text and it will translate it in line into the the language of your choice. It is sort of an AR-ish experience.

Brian: [00:33:44] Yeah.

Phillip: [00:33:45] So, yeah. What I would love to see is the sort of that ecosystem experience where it would sort of overlay like here's all the photos that you've ever taken the last time that you had the scotch. I would like to see sort of contextually...

Brian: [00:34:04] Yeah totally.

Phillip: [00:34:05] Right.

Brian: [00:34:05] Bring it back to social.

Phillip: [00:34:07] Right. Bring it back to... Exactly. Exactly. On this day in... Right.

Brian: [00:34:13] Well, and then not only not only does it like bring up information on it, but then the app can also suggest recipes or similar products based on the scan.

Phillip: [00:34:23] Right. Other people who scanned this in and liked it also liked whatever that happens to be.

Brian: [00:34:31] Exactly. It's actually mixing physical and digital, which it seems so obvious. And we've had the technology to do it for a while. So maybe it just takes new retailers to come out with this stuff, and old, old retailers are still being successful without it. And I don't know. It's going to take a new wave of new blood to bring this about. And I think Alibaba's doing a great job with that. It's also got endless aisles. The store serves as the warehouse. There's all these like crazy conveyor belt stuff to get your things packed up for you, and it's really crazy. It just looks amazing. There's also... So at the end there's like a face scanner, and it will link you to your Alipay account, and then you pay with that on your way out the door.

Phillip: [00:35:39] Yeah, that's I mean that yeah. Coming back to what this particular technology is, I love this idea of sort of the high end experience, which Amazon Go is not. There are some decidedly high end products in there. A) It's small, and B) You can't go in and just put lobsters yourself into a bag or have a chef prepare a meal right there on the spot.

Brian: [00:36:07] Actually Whole Foods allows you... Whole Foods does allow... A lot of people know this. If your Whole Foods has a grill in it, you can take any of the seafood and have them cook it for you on the spot.

Phillip: [00:36:18] I did not know that.

Brian: [00:36:20] Yep.

Phillip: [00:36:20] That's pretty cool.

Brian: [00:36:22] At least it used to be that way. I've done it before. It's pretty cool.

Phillip: [00:36:25] So what I what I find interesting here is that, you know. We continue to see Asian markets push the limit, especially in like South Korea and in China and Hong Kong. We see the continued pushing the limit of commerce and especially in payment technology, because that's effectively what this is. The shopping itself isn't fundamentally different. It's really the payment experience and the sort of the frictionless I just get what I need, and I can walk out sort of the experience.

Brian: [00:37:04] Well, comparison.

Phillip: [00:37:06] Self-service. Self-service.

Brian: [00:37:08] Yeah, I think the shop experience is pretty different. I don't think it's just payment. I think it's you know, how you're thinking about walking around the store and like picking out your products. I'd say it's vastly different.

Phillip: [00:37:23] In Amazon Go?

Brian: [00:37:23] No, not in Go. I'm sorry. Oh you're saying in Go. In American concepts. Oh, you're right. That's true.

Phillip: [00:37:32] Yes. OK.

Brian: [00:37:33] Sorry. I missed your point there.

Phillip: [00:37:34] No, we're on the same page now. My frustration with the Amazon Go experience was A) I didn't have the microphone on when we were doing our whole in-store review. I will never forgive myself for that. B) We ate pretty crappy breakfast sandwiches that we had to microwave and, you know, had a pretty... It was fun. I've got a nice coffee mug out of it, but it's gonna have to grow and mature into something much bigger and much more, a much greater choice. And if we could roll that into a concept Whole Foods, where we do have sort of that insane amount of choice, and if we can have that experience, I'd love to see Amazon evolve it, but I really don't care who it's from. I want that sort of frictionless just walk out shopping from more places rather than one small concept in Seattle. And if Hema's gonna do it, great.

Brian: [00:38:34] Well, what I would have to say is I'd love to see Alibaba bring that over here and have a concept store here and just see how it does, because...

Phillip: [00:38:43] Do you think that that's going to happen?

Brian: [00:38:45] Maybe the American consumers aren't ready for it yet? I know I am. But maybe American super consumers will be like, "Oh, I'm having my face scanned? I'm not into that. I'm out. I'm not doing this."

Phillip: [00:38:57] Yeah, I thought I had said it just a second ago, but I don't know in this political climate that we're open to that coming specifically from like Alibaba here to United States. I'd love to see a US company innovate in that way. But, you know, it would be a tough sell. I think politically or even for whoever they would partner with, for basically a Chinese company to come and make massive tech innovation and investment in tech innovation here in the United States.

Brian: [00:39:34] So who's going to do this then? That like if you had to pick an American company. We've got Amazon...

Phillip: [00:39:36] Walmart.

Brian: [00:39:37] Oh Walmart. Oh, I like that.

Phillip: [00:39:41] I see Walmart doing this.

Brian: [00:39:43] That would be insane. I would love to see Walmart do this.

Phillip: [00:39:46] Yeah.

Brian: [00:39:47] Dear Walmart. Please do this.

Phillip: [00:39:47] It would happen in a very gradual way, in the same way that Amazon Go is sort of obviously a pilot for something larger. Not that it will ever...it may never blossom into something larger, but the obvious goal there would be for Go to transition that technology into a Whole Foods one day. I don't know when that would happen. Probably a long term goal. But I think Walmart is uniquely positioned. Walmart has grocery chains. Their Neighborhood Market stores are much smaller stores than the very large big box monolithic Walmart stores. Maybe that's a good place to start there, too. But I think the innovation around self-service needs to evolve because they've pretty much perfected the self scan and pay. And I think this is a natural evolution of that. So.

Brian: [00:40:49] Yeah. It's true.

Phillip: [00:40:50] All right. There's so much other stuff I want to talk to. How are we on time? How are we on time, Brian?

Brian: [00:40:58] We've got a few more minutes. Let's go for a little while longer. How's that?

Phillip: [00:41:01] Yeah. So we just finished our sales tax holiday for back to school here in Florida. There're 13, 13 states in the United States that give a sales tax break during back to school. And there're certain categories...

Brian: [00:41:18] Which, by the way is a bigger and bigger deal because got a whole SD versus Wayfair thing.

Phillip: [00:41:24] It is. It's a very big deal. And I think that smart retailers and certain states in the United States should use that to their advantage for, you know, trying to attract business. But it turns out an article over on ABC News, there's a a new category of product that's actually really that's really hot, or a new sort of innovative area of product category that's starting make a rise or raise the stakes during back to school. This has nothing to do with sales tax holiday, but it's top of mind. So if you're shopping for school supplies, what you're going to see is a lot of innovation around things like creative journals, like specifically journals that aren't just blank pages, but, you know, are actually focused and themed around things like self-assurance and goal orientation or GTD, get things done. So you'll see some of that. You're also going to see a lot of things like Washi tape. And also like scented pencils. So what's really interesting...

Brian: [00:42:41] The old classic.

Phillip: [00:42:41] The old classic. Pickle flavored pencils. Here's what's interesting, though, is that customers will spend a tremendous amount of money on this product differentiation. So, again, so an industry adviser at the NPD Group, Marshall Cohen, actually points this out in the article and says something as basic as like a number two pencil typically go for about 21 cents apiece. But kids are opting in droves to buy five scented pencils and $1.60 apiece. So what we're seeing is this expenditure of back to school. People are choosing not just basic categories of the sort of rudimentary products, but they're choosing effectively, you know, what are luxury goods or differentiated products that will either replace or supplement the purchase of those necessities. So it's not just in writing and stationery either. It's sort of across the board. So we have sort of relied on things like technology to carry back to school sales. But what I think is the real story here is that a widening of a product category and innovation and otherwise stale product category is driving massive profit and profit margin for retailers.

Brian: [00:44:02] Yeah, I think I mean, I don't have any data to back this up, but I can't help but think that this is a good indication that people are willing to buy up on the low end of the market. So for things that are less expensive, like a pencil, people are willing to spend significantly more. Think about the price difference. So you said 21 cents for a regular number two pencil. A dollar sixty something for a scented pencil. And there's a real drive to buy that scented pencil. I think that there's definitely a case to be made that actually premium products that are less expensive are actually easier, it's easier to mark them up and not see as deep of a drop off in sales.

Phillip: [00:44:57] Right. Because they're not. It's not. There is no apples to apples there. I can have this plain old boring yellow pencil, or I can have this one that smells like pickles.

Brian: [00:45:07] Right.

Phillip: [00:45:10] It's not an apples to apples comparison, you know? Now, if you had to, you know, scented pencils that are sitting right next to each other, then you can sort of do the price differentiation amongst them. But this is a completely different product. So people don't have an expectation of what they should be spending there.

Brian: [00:45:27] It's different, but it completely replaces the other ones. So it is the same product, but there's really not a good comparison. I think.

Phillip: [00:45:38] It's experience. Right.

Brian: [00:45:40] Yeah.

Phillip: [00:45:41] Like that's the thing. It's experience and engagement and creativity. If you just buy a blank journal, you know those composition notebooks that are black and white, you just buy that and a plain old pencil. You are required to fill it with your own creativity. But a preprinted journal that has, you know, guided meditations or quotes of the day or paste your yogurt lid here on the left, write down your top 10 favorite movies... All these sort of little guided pieces sort of kick start your creativity. They don't have an analog. It's not the same as a composition journal. So I wouldn't even call it a luxury good or an upmarket offer. It's a completely different product. It's the experience.

Brian: [00:46:29] It's a completely different product, but it replaces the sale of the other product. They're absolutely related. It's a replaceable.

Phillip: [00:46:37] Well they're related. But you can't only buy these preprinted guided journals and scented pencils. You're probably supplementing the volume purchase with a few of these.

Brian: [00:46:50] Interesting.

Phillip: [00:46:51] You're not going to buy 300 scented pencils. You're probably going to buy, you know, 40 normal pencils and a pack of scented pencils. I think they're opting for an experience that supplements the otherwise mundane purchase you have to make anyway.

Brian: [00:47:10] Mm hmm. That's may be true. That may be true. That's not true for everything, though, in that same category.

Phillip: [00:47:17] No, probably not. Right. Like tape. Or Washi tape.

Brian: [00:47:23] Yeah. Exactly like. I mean, this is kind of a silly example, but like licensed character tape. Like Batman tape is going to replace regular tape all the way.

Phillip: [00:47:38] That's probably true. Yeah. Yeah, you're probably right, but I also think that the decoration, like those types of tape get used in different ways. Plain tape, you would probably not line a page with as a decoration, and so maybe it even has a higher consumption.

Brian: [00:47:57] True.

Phillip: [00:47:59] You probably get it in less quantity than you would a regular roll of Scotch tape or sellotape. And you probably use it is at a higher frequency. So maybe it is even more massive. It's not a utilitarian. I'm affixing this piece of paper to another. It's an experience.

Brian: [00:48:18] Yeah. But let's bring this out a little bit further. I think that people are willing to buy up on a lower end products in general. If it's affordable for them to buy up, they're going to. For instance

Phillip: [00:48:30] That's the reason Target exists, right?

Brian: [00:48:32] Yes, exactly. There you go. Yes. Over Walmart purchasing. Totally. Yeah. Exactly. Or like even like bread. Like someone's go to buy organic bread made with whole grains up and above the store label brand.

Phillip: [00:48:57] So what I what I find interesting, though, is... I'd love to hear you brainstorm because you're really good at this. I'd love to hear you brainstorming about how retailers could do this in existing product categories that aren't just back to school supplies. Where else could this be applicable? You kind of went to grocery a little bit.

Brian: [00:49:20] I think it's applicable in a lot of things. Anywhere, like under a certain price threshold, I think there's actually a lot of opportunity for this. Especially with growing wages, and wages are finally starting to see a bump. I think that if something is under a certain price point, I don't know what that is. I don't have any data to back that up. But I think it's going to be a lot easier to get someone to make a premium purchase. And so, you know, I think that's true in clothing. I think that's true in grocery. I think that's true in dining experiences. I think that's true in school supplies like we talked about, or even in the outdoor category. I think that is true across the board right now. People are starting to like even, I think on the low end, we're starting to see the brakes of the recession a little bit potentially.

Phillip: [00:50:23] I don't think you have to be guarded about that. We're almost 100% employment.

Brian: [00:50:27] Exactly. And there are still issues...

Phillip: [00:50:30] Is this is why we have the death of aspirational luxury brands? I mean, we didn't cover a story... Death is probably a strong word. We didn't cover a story in the last couple of weeks, which I wanted to cover, which is... Who is the luxury brand that effectively just burned all their inventory rather than dilute their...who was it that did that? Someone screaming at the radio right now. I'm sure. There was a...

Brian: [00:50:59] The radio.

Phillip: [00:51:01] Yeah. Whatever. You're smart speaker. We scream at those anyway. I can't remember. It wasn't Gucci. It's someone in that echelon. They basically burned... Was it Dolce and Gabbana? I don't know. It doesn't matter. At the end of the day, it's like there are plenty of these luxury brands, or aspirational luxury brands, or have aspirational products in an otherwise luxury category, that did very well in the recession, because we need some sort of happiness in our life. And this was one way to get that. Now, I think with consumer confidence and wages where they are, and economic factors where they are, at least here in the United States, we don't need those things as much anymore because we can afford scented pencils. And that's... I think you're right. We don't have to skim by on every little purchase just to make it through. We have a little bit more to play with. And so we're playing with it a lot more across the board.

Brian: [00:52:10] Yeah, I agree. Now, we did have a whole episode on inflation recently. And actually, I want to call out something. I think what we said that rising wages were going to be kind of the last indicator of inflation this time around. I think that might be true. Finally, we're seeing wages rising. I think we're going to recognize inflation very quickly here. And that will come with rising prices, in general. I think that retailers have been very scared to raise prices because everyone has been so price sensitive for so long. But my prediction ahead is that in the next few years, over the next few years, we're going to start to see base prices rise.

Phillip: [00:53:02] Should we call this like the Netflix Inflation Index? There has to be one indicator that says like the cost of a Netflix subscription has been fairly steady over the last 10 years. At some point there has to be one economic indicator that says whether or not... That is the indicator, the bellwether of that...

Brian: [00:53:30] I don't think it's Netflix.

Phillip: [00:53:32] It may not be Netflix. Fine. But it could be something else. I feel like that exists. And we'll have to give that to think.

Brian: [00:53:42] Yes, definitely. Let's think about that. We'll come back. We're going to come back with our, what was it, the Big Mac Index?

Phillip: [00:53:47] Yeah. Exactly.

Brian: [00:53:48] We're going to come back with our own index.

Phillip: [00:53:48] Exactly. 100 percent. That's exactly. It's the Big Mac Index. But, you know, for a cleaner eating, you know, non GMO sustainable, responsibly farmed, locally owned, you know, bespoke brands.

Brian: [00:54:04] The Chipotle Index?

Phillip: [00:54:04] The Chipotle Index.

Brian: [00:54:07] Or should we call it the Salmonella Index.

Phillip: [00:54:10] Domino Index. Show title. I love it. I love it. Can you pick one more story? Can we hit one more?

Brian: [00:54:21] Let's talk about Casper real quick.

Phillip: [00:54:24] Oh, my gosh. I gag. I just... It makes me sick. This story. Well, go ahead.

Brian: [00:54:33] Casper is going to open 200 stores, 200 physical stores, which. You know, might be a mistake, it might not. Don't forget, we didn't get to talk about this beforehand. But don't forget, Target is heavily invested in Casper. I believe it was Target. Yeah, if I recall correctly, they put some heavy investment into it, or they were looking to buy it, or they spent... I don't know, maybe... I don't know if they actually acquired it, but I think that they did invest in it.

Phillip: [00:55:13] I remember not even a month ago we had a story on the show about Casper opening the Dreamery, selling naps in like New York City for 25 bucks. There is no way. There is no way that that proves successful to the point that they said let's open 200 stores over the next three years. This is crazy. Meanwhile, lots of mattress stores are basically going out of business. What makes Casper better than the others other than a great online brand that hit at a price point that was attractive during a certain economic downturn?

Brian: [00:56:15] Well, actually. So Casper actually just just launched 15 pop up shops throughout Nordstrom stores. Interestingly enough. So I guess I could be wrong about that Target/Casper thing. I looked it up, and I don't know if that actually ever happened or not. It was strongly being considered.

Phillip: [00:56:40] It sounded good though.

Brian: [00:56:41] It did sound good. They're definitely partners. I can tell you that. There's a very strong partnership between Target and Casper. But. Yeah. No, I mean, it is interesting. I think a lot of mattress stores have been absolutely failing. Mattress Firm has been really struggling with their physical stores. What makes Casper think that they're going to be able to pull off what other established mattress companies struggled with for the past few years? One, I think Caspar mattresses, compared to sort of like traditional mattresses, are a lot more affordable for after what you get.

Phillip: [00:57:27] Yeah.

Brian: [00:57:27] That might be one of the factors. Second, I wonder. And I don't know this. I didn't see this in the article. I wonder if they'll help use those physical retail stores as distribution centers for shipping, because they know right now they're shipping all their mattresses, or distributing them through Target and Nordstrom and others. But wouldn't it be a lot easier to go direct to consumer if you had those kinds of centers all over?

Phillip: [00:58:00] Oh, for sure. And they've had. Listen, they've had stores for some time. There are two that I know of at least in South Florida. One in particular is like right next to me. It's, you know, four miles from my office downtown West Palm Beach. And the thing that blew my mind going in there for the first time, about a month ago maybe, was that I didn't know that Casper even had more than one mattress at this point. They do. And I think that they've...Iin your world of scented pencils being able to displace the cheap everyday pencil, Casper has provided its own product differentiation and sort of an up-market in a down market offering so you can get, where it used to be five or six hundred bucks for a mattress from Casper, they've got a 350 intro now. So these are all very interesting. And, you know, maybe they're poised. But I feel like if I'm looking for... If I want to go into a store to buy a mattress. It's probably not Casper. I wanna go to a store that has like 30 mattresses for me to choose from. Like a lot of choice that can attract a lot of different types of customers.

Brian: [00:59:14] Maybe. Most stores don't have a $350 starting point.

Phillip: [00:59:22] IKEA does. IKEA sells mattresses, and I feel like they do.

Brian: [00:59:27] Dude, have you ever? I mean, I don't want to knock IKEA too much, but I don't know if he's ever laid on an IKEA mattress. It's the most uncomfortable thing I've ever laid on.

Phillip: [00:59:39] That's a great place to wrap it up.

Brian: [00:59:43] Sleep Number. Actually, you mentioned Sleep Number. We should come back and talk about Sleep Number some day. They are such a great early example of personalization. I love their model.

Phillip: [00:59:55] Yeah. And they did exactly what Casper is doing. And I feel like give them enough time and they'll fizzle out, too. Casper. So it's just interesting. This whole thing is just crazy. I don't think that we need Casper stores, physical Casper stores, in the United States.

Brian: [01:00:11] I agree.

Phillip: [01:00:11] I think this is what happens....

Brian: [01:00:15] I will probably never visit a Casper store.

Phillip: [01:00:15] Right. VC backed companies need to grow exponentially. They have to. And what is the path for a company like Casper other than like IPO? Or I don't even know, like what is their strategy here? It makes no sense. This is crazy. It's ludicrous. I'm done. OK.

Brian: [01:00:42] Yes, that's a good way to end.

Phillip: [01:00:44] Clicks to bricks.

Brian: [01:00:44] Yeah, clicks to bricks.

Phillip: [01:00:47] Unbelievable. OK. Well, we want to hear what you think about Casper stores and pickle flavored pencils, and all of the other things we talked about here today.

Brian: [01:00:57] Oh man.

Phillip: [01:00:57] Do you voice is going away? Have you ever used voice commerce? If you're one of the 90% that would never use it again after the 2% that bought, we want to hear from you. And you can do that at FutureCommerce.fm. Make sure that while you're there, you subscribe, like and subscribe. You can get us anywhere where you get podcasts these days, including some really obscure places that, you know, you wouldn't even expect us like Stitcher o what's the one that just popped up recently? Spotify. We're everywhere. And if you do have a smart speaker device, you can always get us with the phrase...

Brian: [01:01:34] Spotify. We are on Spotify.

Phillip: [01:01:36] We are. We're on iHeartRadio, for crying out loud. That's the one I was trying to think of.

Brian: [01:01:40] Oh, there you go.

Phillip: [01:01:41] Why are we on iHeartRadio? It's crazy, crazy town. All Future Commerce all the time. You can always get us with the phrase "Play Future Commerce podcast." Anyway...

Brian: [01:01:50] And if you want to connect with any of our sponsors, just say "Vertex. I'd like to talk to an associate." I'm just kidding. Some day. Some day.

Phillip: [01:01:59] I imagine a future.

Brian: [01:02:01] Someday that will happen. That will be fantastic. Direct from our heads to our smart phones.

Phillip: [01:02:06] That's what I want. That's what I've always wanted. It'll happen eventually. Anyway. Retail tech is moving fast...

Brian: [01:02:15] But Future Commerce is moving faster.

Phillip: [01:02:17] Thanks for listening.

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