"Shopify LA" = Apple Genius Bar?

Phillip: [00:01:42] Welcome to Future Commerce, the podcast about cutting edge and next generation commerce. I'm Phillip.

Brian: [00:01:48] And I'm Brian.

Phillip: [00:01:49] And we have Internet connectivity problems today.

Brian: [00:01:52] Do we? Do we now?

Phillip: [00:01:54] Do we ever? But it's also Brian's day off. So today is gonna be a quick one. But we couldn't let the week go by without giving you our ruminations about today's... Well the biggest news of this week in, what in digital commerce at least. So we'll get right into that in just a second. But we want to remind you that you can get Future Commerce pretty much anywhere that you get podcasts these days from Stitcher Premium and Spotify to Apple podcasts and Google podcasts. All right at your fingertips. And on any smart speaker device by saying "Play the Future Commerce podcast." And by the way, I got it to work the other day. I don't know if the algorithms are changing.

Brian: [00:02:36] It's weird.

Phillip: [00:02:37] But it seems like it works.

Brian: [00:02:38] Sometimes it works. Sometimes it doesn't. I know it's annoying.

Phillip: [00:02:41] Stop trying to figure me out, Alexa. I don't want you to figure me out.

Brian: [00:02:45] Yeah, Apple's having issues with podcast rankings, as well. I don't know if you saw that. But there was some big kerfuffle about how podcasts that ended up in the top rankings are not in the top rankings. In short, people don't trust those rankings anymore. Podcasters don't.

Phillip: [00:03:04] Interesting. Oh, I also saw a really interesting bar graph.

Brian: [00:03:09] A bar graph?

Phillip: [00:03:09] A bar graph. You know, I haven't seen a bar graph in a long time, but I saw an interesting bar graph about the top podcasts categories recently. And they're not the ones that you might think. The top podcast categories are actually religion and spirituality...

Brian: [00:03:25] Oh yeah. That makes sense.

Phillip: [00:03:27] Comedy. Comedy is huge.

Brian: [00:03:31] Crime.

Phillip: [00:03:31] Yeah, it's not even. It's all like lighthearted entertainment or self-improvement.

Brian: [00:03:38] Really? Interesting.

Phillip: [00:03:39] It's very interesting.

Brian: [00:03:40] I wonder what classifies as a podcast. Like just any audio content at all?

Phillip: [00:03:46] No. Audio that's published with an RSS feed. That's...

Brian: [00:03:51] Okay.

Phillip: [00:03:53] Also...

Brian: [00:03:53] Yeah, I guess that makes sense. Churches just do that all the time. And so I imagine like lots of churches.

Phillip: [00:04:00] I assume. What's interesting is it's not just about... I don't know if this study went into consumption or publication. I think that's the other side of the equation is, you know, we may have a dearth of a certain type of content, but who's the consumer? Is the consumer engaging in that? But it's interesting. We want you as a consumer to engage with us, and you can do that at FutureCommerce.fm. So please go over and like and subscribe. Okay. Let's... Should we jump in?

Brian: [00:04:38] Let's jump in. You said this is the biggest news this week. I don't know about that.

Phillip: [00:04:44] Ok, so there are five stories that are bigger than this. What are those? Just rapid fire.

Brian: [00:04:50] Oh, I don't know. DSW bought out Vince Camuto brands, which I thought was interesting. This gets back to our prediction earlier. This was in episode 55 about what was going to happen this year. Consolidation in retail was definitely one of those predictions. It was kind of obvious. I think we both were like how do you even call this a prediction? But yeah, lots of consolidation happening in retail right now. I think this is a pretty big one that includes Lucky Brand and another brand...I forget...were all under the Vince Camuto brands.

Phillip: [00:05:30] And there're other big stories.

Brian: [00:05:31] Yeah, definitely.

Phillip: [00:05:32] Toys R US is coming back from the dead..

Brian: [00:05:34] Maybe.

Phillip: [00:05:35] That was a big story. Sears is dying again. Maybe. Potentially. Declaring bankruptcy. But, you know, if you were to ask the normy on the streets, they might tell you that that's happened five times already.

Brian: [00:05:48] Yeah, I feel like that's been happening for like 20 years.

Phillip: [00:05:51] Perpetual news. But and then another big retail story which caught my eye was a bunch of fanfare being made about Levi's. Levi Strauss Company and the family of brands involved with Levi Strauss, including Docker, posting massive gains and the growth of their brand. And so there was a big story about it.

Brian: [00:06:19] Didn't somebody argue with you on Twitter about Levi's product assortment and how it was really lame?

Phillip: [00:06:24] Yeah, I don't think they understand. And then I said, "Well, what's a brand that resonates with you?" And they said, "Diesel." And I immediately wrote them off.

Brian: [00:06:31] Yeah.

Phillip: [00:06:32] I was like, you're stuck in 2003.

Brian: [00:06:36] I'm sure diesel is doing cool things, but it's just really not apples to apples in any way, shape, or form. So...

Phillip: [00:06:41] Yeah, not at all. Not even close.

Brian: [00:06:43] Yeah.

Phillip: [00:06:44] But yeah there was a whole conversation that was had. In particular, I think I read about it on WWD, but there was a lot... Especially at the SAP. There was an SAP conference in Spain this past week, and they touted them as a big success story about growth in digital. But you know, a storied brand that seems to be having a Cinderella story at the moment. So that's kind of cool. Not my experience with Levi's. I think they're digital is a mess, but that's neither here nor there. So those might be bigger stories...

Brian: [00:07:19] Yeah. Those are...

Phillip: [00:07:19] ...than the story we're going to cover.

Brian: [00:07:20] And also the Amazon... And we talked about this, I think, last episode. But there's just been constant analysis and turmoil over the Amazon minimum wage.

Phillip: [00:07:33] Oh, yeah, yeah.

Brian: [00:07:34] A lot of chatter about that. I think Sucharita Kodali from Forrester was when the first people really criticize it and call it out as not really a raise. And then there have been a lot of employees who've been unhappy and now Bezos is coming out and saying, "Well, you know, it's like Amazon's...we try to do our best. And then people come out and see it as our worst."

Phillip: [00:07:59] Yeah

Brian: [00:08:00] I think that's a little...

Phillip: [00:08:03] Aww, let's all feel sorry for Jeff Bezos. {laughter} You want him... Like he comes out. He's like Charlie Brown.

Brian: [00:08:14] Yeah.

Phillip: [00:08:14] He just can't get a win, that guy.

Brian: [00:08:17] "We just try our best.".

Phillip: [00:08:19] We try our best. Okay.

Brian: [00:08:23] All right. Let's talk about what we were actually going to talk about.

Phillip: [00:08:25] Yes. Those might be bigger stories, but this one caught our eye. So go right ahead.

Brian: [00:08:30] Yeah. So this is interesting. Shopify opened its first physical store as a way to kind of showcase its hardware products and in-store software products. Pretty interesting. Sleek little store. Phillip, where are they opening up?

Phillip: [00:08:50] L.A. Los Angeles.

Brian: [00:08:51] And they are, I think this is more of proof of concept than anything else. It's not like they're really trying to, you know, sell something. But it's it's I think this is reflective of a theme we've been talking about for the past couple of weeks, which is moving from digital to physical. And digital native brands recognizing the absolute essential nature of having a physical presence and the opportunity of having a physical presence. And I think Shopify has done a good job identifying that that's like a good play. They continue to offer innovative solutions. And I mean, really what it looks like is kind of an Apple Genius Bar, but I don't know if it's like particularly innovative, but it's an offering of what is a pretty... Now going from, you know, digitally native brands to having a brick and mortar, sort of more omni channel view of the customer. And this will affect hundreds of thousands of merchants throughout the world. So and it's a pretty interesting and important moment. I think there's going to be a lot of fits and starts with this has as Shopify rolls it out. You know, some fanfare now. It's a bit of a marketing move. But I think there will... We will eventually start to see that, you know, this become a little bit more pervasive. I wonder how other e-commerce platforms will sort of... If they'll respond in suit or if they will kind of continue to partner with other companies that are doing in-store already. So think about SAP Hybris and Magento and Salesforce Commerce Cloud and what they have to offer in that range. Phillip, what are your thoughts?

Phillip: [00:10:51] So if you read the TechCrunch article that I read, the way that they explained the purpose of the story, because the first question is why? Right? So if Shopify created a retail space in Santa Monica that highlighted products that were on the Shopify platform I think it would make a lot of sense, right? We would get that. It's a it would be a market place in the way that, you know, we're seeing...

Brian: [00:11:31] Shopify 4-star. That's what you're saying.

Phillip: [00:11:36] Right. It's Shopify 4-star. {laughter} But at the same time, there are lots of these physical marketplaces that exist. Like in Atlanta, there's a Citizen Supply. There is the... What is it...Westwood One? What? Or no. I'm sorry, no, not Westwood.

Brian: [00:11:55] You're getting radio mixed up here now.

Phillip: [00:11:58] What's the West... Westfield? What's what's the one...

Brian: [00:12:02] Yeah. Westfield

Phillip: [00:12:04] No, there was an outdoor... There was a marketplace that we discussed some time ago that was a... See, I feel terribly unprepared. We should just trim the section. Help me out. It was part of our predictions.

Brian: [00:12:25] Are you thinking about One Market?

Phillip: [00:12:27] That's the one I'm trying to think of.

Brian: [00:12:28] Yes. That spun out of Westfield. So you're point.

Phillip: [00:12:32] Yeah, Westfield One Market. Westfield One. That's what I was trying to...

Brian: [00:12:35] But that's spun out into its own company now. I don't think that Westfield is involved.

Phillip: [00:12:40] But the idea is there that we're gonna sort of take, you know, the cream of the crop and put it...we're going to mash it up in stores within stores. And this idea is not new. And it would make a lot of sense of Shopify positioned themselves as such. What this actually is, is not that at all. And it's not even in Santa Monica. It's in downtown L.A.

Brian: [00:13:01] Which downtown L.A... Like, who even goes there?

Phillip: [00:13:03] It's just a weird place to put it. But that's probably because this is not shopping, and it's not lifestyle. This is the Genius Bar. So what Shopify is doing is they are giving themselves... They're repositioning themselves. And so that's how I see this. It's a completely different understanding of who Shopify is. The TechCrunch article opens by saying "Shopify, the provider of payment and logistics management software and services for retailers" That's how they describe themselves. This article, by the way, feels very pay-to-play.

Brian: [00:13:39] Yeah, definitely. The only reason that anyone would ever write that sentence is if it was pay to play. Yeah.

Phillip: [00:13:46] The thing that... It's not e-commerce software. It's not small to medium sized business, you know, enabling SMB.

Brian: [00:13:54] It's not even digital commerce.

Phillip: [00:13:56] It is not even digital commerce. It's payment and logistics management software. Right? And so it tells me that they see a bigger market opportunity in going after Square and Point of Sale and iPad Point of Sale. They see, you know, that those merchants probably need one to one support. Like you would get at the Genius Bar. They want to be able to show those off without people having to go to retail conferences to do so. And so having a storefront where local businesses can come and get their tech, you know, get some tech support with their iPad or IOS app with their existing digital commerce store on Shopify...

Brian: [00:14:42] Do you think it's support? This is basically a support...

Phillip: [00:14:44] It's support. This is Genius Bar. This is the Genius Bar.

Brian: [00:14:47] Yeah... I agree with you...

Phillip: [00:14:49] It's a sales channel. But I cannot see Shopify opening a storefront like this that isn't inundated and have a line out the door of people looking for tech support. It's not a place for shopping. It's effectively an Apple store for demonstration and tutorial and basically support.

Brian: [00:18:04] Interesting. Yeah, I think you're right. The way they're positioning it is going to end up like that because, for instance, Amazon 4-star is not going have the same problem.

Phillip: [00:18:12] No.

Brian: [00:18:12] You're not going to have people that sell on the Amazon marketplace come in there looking for support, which I'm sure they would all love to have a physical store they could come into and talk to somebody about support for their store on the marketplace.

Phillip: [00:18:27] Right.

Brian: [00:18:28] But you're not you're never going to see that at a 4-star. This isn't Amazon support or like B2B sales people sitting in a store. This is... That's what Shopify is doing. Amazon has retail employees. So.

Phillip: [00:18:47] So, again, in the article, there's two things that I want to point out. The first is why L.A.? Well, they put it there because apparently 10,000 merchants in the greater Los Angeles area use Shopify. 400 of those retailers have over a million dollars in GMV moved through the platform. And basically, if you take the two... So the VP of product at Shopify, Satish Kanwar, and the COO of Shopify, Harley Finkelstein, are both quoted as saying things like, "We're thrilled to be able to take our proven educational support and community initiatives and put them into an always on capacity." Or "With Shopify, L.A., we want to create a hub where business owners can find support, inspiration and community." This is... It's the Genius Bar. And that's really what it is. And I think it's it's a low effort way to grab some headlines. This is a great way to bump up the stock.

Brian: [00:19:40] Yes, that's how I feel, as well. Yeah, it's a bit of...it's a great start. And, you know, it's a great way to show off where they're headed. And I completely agree with you on repositioning. I think that Shopify doesn't want to sit in the category of just digital commerce. They want expand. And actually, the idea you mentioned earlier about doing a Shopify 4-star physical store. I don't think that they'll do that until they introduce some sort of a Shopify marketplace, which I don't know if they ever will, because they don't want to compete with Amazon. Right? If they basically introduced a site, let's just call it the Shopify shopping experience... Shopify Marketplace... And people went on there, and they could browse around to all the products that were on Shopify stores, or like whatever Shopify store owners wanted to push to the marketplace, and then that would put them in direct competition with Amazon Marketplace.

Phillip: [00:20:47] I don't know, I think it puts them more in competition with Etsy, because I think the thing that probably they could bring that would be missing is that people aren't looking to buy. What are the types of stores that are on Shopify? I think it would be more that they'd have to solve product discovery. And solving product discovery could be really valuable. And that's the thing that makes Etsy really valuable. It's not that I can buy from this person on their Etsy store. It's that I can find lots of products that I like that are sort of in a similar vein. Right?

Brian: [00:21:22] You could be right. I think that they would compete with both because there's a lot of stuff you can sell on Shopify. Yes. Yes. The types of products are downmarket, but there's also a lot of upmarket products, too. I mean, Kylie Cosmetics is on there. Like it's not just Etsy stuff. There's some really big powerful brands that use Shopify and Shopify plus to power their commerce experiences. And so I see it cutting into both lunches, really both Amazon and Etsy. And actually, I think you're right, though, it could absolutely cannibalize Etsy. And that might be a good move because I think there's a lot of opportunity to go take away Etsy's business. I think a lot of Etsy store owners would be happy to introduce something that was both on a marketplace and that they'd have their own store. That would be really compelling.

Phillip: [00:22:28] I think that's how you grow up into a brand with an experience that you actually control. Because Etsy's brand is the experience. And the products that you carry are the products. But you can't escape the Etsy brand, right?

Brian: [00:22:48] Right. Yep. No, I totally agree. So, yeah, I mean, I think you're right. This implementation in L.A... This this move in L.A. is not true that. The question will be, does Shopify ever attempt something like that? And I don't know. I don't know. I think that if they did, Amazon would not be happy, and there would be some more aggressive moves towards competing with Shopify and and kind of coming down on them.

Phillip: [00:23:24] And it could be that putting themselves in the position to have to compete with the expanse of Etsy or the ubiquity of Amazon without being a technology, without being a broad technology company, and I certainly think that, you know, if you look at Shopify, they're no slouches. But right now, they truly are payments and logistics software. So if you listen to the way they've described themselves or at least the way that they've paid TechCrunch to describe them...

Brian: [00:24:00] That's an assumption. That's a guess.

Phillip: [00:24:06] We don't know that for sure. It sounds correct. But if you look at the way that they're being described. Yeah, they have a long way to go. They're a long way to go to compete in that area. But if there's anyone in this world that is poised to compete to make that leap over to compete with Etsy, there's Instagram on one side, and there is Shopify on the other. And I think that both of them have very unique audiences and very unique looks into capturing a retail channel that otherwise doesn't exist for Etsy. Etsy has to create that themselves.

Brian: [00:24:47] Yeah, it's true. Yeah. Even if the Shopify Marketplace was just like a product discovery tool. That was it. That would be enough to go compete with with Instagram. I totally agree with you. Interesting. Speaking of positioning and competing in this space, you were just at MagentoLive EU.  How was that?

Phillip: [00:25:13] It was pretty good. You know, speaking of another company that, you know, everybody's... There's sort of an eventuality of all of these types of platforms. And they announced a new payments product there. And, you know, there's Adobe is incorporating a lot of A.I. capability into future product offering. I think it's just interesting that they all tend to gravitate towards probably the ecosystem that Shopify has already developed, quite honestly. For a certain type of a merchant they want, you know, easy one hand to shake. So Shopify gives that to them. I don't want to have to go contract with PayPal and Authorize.net and Signifyd. I want an all in one payments and fraud solution, you know, and I want to sign up for that without having to haggle with enterprise salespeople. And Magento is going that way, too. So it's interesting how it sort of coalesces in those ecosystems, but very, very interesting. Also got to hear from Shantanu Narayen, who's the CEO for Adobe and just a really brilliant thinker and great speaker. So really interested to hear Adobe's perspective on how, you know, they've created a company that competes with SAP, Oracle and Salesforce by acquiring technology. Whereas all those other companies, yeah, they've acquired some technology, but they built the core products themselves. Adobe will compete, but they've got a long uphill battle to truly compete. And I think it all has to do with can they make those separate ecosystems and acquisitions be seamless and talk to each other and not separate products with fragmented markets...

Brian: [00:27:12] Yeah, I don't think we talked about the Marketo acquisition by Adobe, as well. Yeah.

Phillip: [00:27:18] No, no. But I find that interesting too, that again, if you look at all the acquisition in the space, the only reason Adobe is an enterprise apps company is, you know, Omniture on one side, the experienced manager, which was another product... The name is escaping my mind at the moment. I'll think of it in a second. But experience manager and on the CMS side. And now Magento on the commerce side. It's really, it's one of those things where each one of these were discrete acquisitions. And the only way that you'll really be able to get them to be differential in the space is to have that whole ecosystem actually feel as if it was, you know, built that way.

Brian: [00:28:12] Yeah, I mean, I think what's really interesting is... Obviously, Adobe's most pervasive product out there is their Creative Cloud. Right? It's everywhere. And so it'll be interesting to see how they incorporate that into this whole thing, as well. I feel like that kind of gives them an edge in a different way. I feel like they could where SAP Hybris is coming in from a backend perspective, and Salesforce Commerce Cloud is coming in from kind of a customer management perspective. I think that Adobe has got a really unique thing for marketers. The tools that they've acquired and the positioning is all sort of centered around being able to properly and best be adaptive and flexible for the marketer more than anyone else.

Phillip: [00:29:18] Yeah. Actually I remembered it was CQ or CRX. That was the product that was from a company called Day Software.

Brian: [00:29:26] Yeah. That's right.

Phillip: [00:29:27] So that particular software is the basis of their CRM, it's probably the thing that they sell the most of on the enterprise side. And then, you know, analytics probably on the business capability side, or the business analytics side, but they do all sorts of stuff. They have a DAM, digital asset management tool. They've got all kinds of stuff that people are probably using elsewhere in enterprise. Yeah, it would be really interesting to see what they do from here. Now to your point, they are extremely successful and probably the biggest mindshare in the world. You associate Adobe to Photoshop to the Creative Cloud. And that's what Shantanu talked about the most was the transformation of the business from a deployed software model to a cloud company that is able to iterate faster and deliver software on a perpetual, monthly license. And if they could do that for enterprise, that would be interesting. But they're not doing that in enterprise right now. That's not how the enterprise sales is moving forward. But he did talk about that being transformational. They've done a lot of transformation already in their business. Very cool, though, and a worthwhile event to attend. At the same time, the SAP conference was happening. I think also in Barcelona. In the same city. Little strategic positioning...

Brian: [00:31:17] Was that planned?

Phillip: [00:31:17] I don't know.

Brian: [00:31:17] I kind of doubt it, actually, but that's weird they both ended up in Barcelona.

Phillip: [00:31:21] Very interesting.

Brian: [00:31:23] Yeah.

Phillip: [00:31:23] But yeah. Great. Coming up soon, we've got a few things. I think we're gonna be at Grocery Shop.

Brian: [00:31:32] Yep. Grocery Shop.

Phillip: [00:31:34] We'll have some of our team at Grocery Shop. Look for us there.

Brian: [00:31:37] We'll be at NRF.

Phillip: [00:31:39] We'll also be at NRF. I also want to tease out. We have something big coming, and you'll know it when you see it.

Brian: [00:31:45] You will know it when you see it.

Phillip: [00:31:45] And that's all I can say.

Brian: [00:31:48] I like that tease. It's really exciting.

Phillip: [00:31:53] Very exciting. Yeah. All right...

Brian: [00:31:57] Well we'll keep it short. It's my day off. We're going to have a wrap here.

Phillip: [00:32:01] Retail tech is moving fast...

Brian: [00:32:02] But Future Commerce is moving faster.

Phillip: [00:32:05] Thanks for listening.