How to Lead in the Effortless Economy

Julia Raymond Hare:
Hello everyone. Today we’re kicking off another episode of RETHINK Retail with my guest, Jason Stuckey.

Julia Raymond Hare:
Jason is an authority in advertising and e-commerce, he has over 10 years of experience in digital marketing, e-commerce strategy, and back office operations, operations. He’s launched many successful D2C endeavors for celebrities, including Rihanna, Kate Hudson, Kim Kardashian, and Michael B. Jordan. And has been an integral part of building over a dozen online brick and mortar businesses.

Julia Raymond Hare:
So a lot in your quill, Jason. You have a deep understanding of e-commerce, and in your role as a General Manager at Linnworks, you use your experience to implement what you call total commerce strategies, for thousands of global sellers and brands. Welcome to the show.

Jason Stuckey:
Thanks. Thanks for having me, Julia.

Julia Raymond Hare:
It’s great to have you here. I wanted to dive right in, usually, especially on this show, we talk a lot about the in-store shopping experience, how much it’s changed the consumer expectation, but we don’t talk as much, about the e-commerce experience and the nitty gritty, everything that goes into that. It’s very complex, but it sometimes feels like an afterthought. So Jason, how important is experience for today’s e-commerce shopper?

Jason Stuckey:
It’s huge. Look, I think we’ve kind of looked at things in silos. You’ve got in-store e-commerce wholesale, and these have been distinct channels and they’ve been treated as silos today.

Jason Stuckey:
But that’s mainly because e-commerce, even at its best for an established brand, is only driving about 20% of their sales. So 80% being retail, it’s no wonder that a lot of focus has gone into that. And that’s why e-commerce strategy has generally been an afterthought. But now, it really doesn’t make sense to think of digital channels as an afterthought.

Jason Stuckey:
In fact, it’s really leading to an identity crisis for a lot of brands who don’t know how to make that leap because they have to transition. Just in the last 18 months over COVID, we’ve seen a 5% increase in e-commerce, as a percentage of retail sales. And that’s the same amount that we’ve seen in the past seven years.

Jason Stuckey:
So it’s a tremendous amount of growth and it really is an indicator. It’s kind of like Napster was for the recording industry. This is retail’s what I would call Napster indicator. And it’s signaling that digital-first is an inevitability, and now it’s time to make the shift. Over the next 10 years you’ll see the difference between those who decided to make a shift now, and those who waited it out, hoping that things would get better.

Jason Stuckey:
So we’re starting to see and hear on the lips of retailers, this acronym, OMO, Online Merge Offline. It’s things like, “Buy online, pickup in store,” “Buying online and returning in store,” accessing the company website and digital assets in the store for online purchase, merged with last mile delivery, like really rapid last mile delivery services.

Jason Stuckey:
And then the last thing is really digitizing those touchpoints in stores. So taking the consumer insights from the online environment, and bringing that into the retail experience, to help consumers make better choices. So the promise of digital-first, is that it will deliver a much better experience for consumers.

Jason Stuckey:
And the big win all around, will be centered on convenience. So 76% of consumers say that convenience is their number one priority when making a purchase, and that’s ticking up. Cost is important, but convenience is king now. So this is what consumers are demanding, and what consumers demand, sellers will have to work very, very hard to meet those demands.

Jason Stuckey:
And we’re really at a critical inflection point in this 20-year evolution and re-imagination of what commerce is to be moving forward.

Julia Raymond Hare:
A lot to unpack your Jason. You said cost is important, but convenience is king, now. That is so true. I really like how you said that in such a succinct way, because it does reflect the changes that we’ve seen over the past couple of years with the pandemic.

Julia Raymond Hare:
And just for emphasis, I want to make sure I got this right for our listeners. You said there was a 5% increase in e-commerce over the past one year, and that same increase took seven years prior?

Jason Stuckey:
Correct. E-commerce is kind of waffling between 13 to 16% of overall retail sales. It’s kind of funny to even think that because it’s so pervasive in our world today, to think that it’s only that small percentage. But as we think about where it’s headed, there’s a statistic out there that says by 2040, it will be 95% of retail transactions.

Jason Stuckey:
So even though it’s a small percentage, it’s no longer something to be taken lightly, and sellers really need to be focused on what their strategy is, moving forward, in order to meet those needs.

Julia Raymond Hare:
Mm-hmm (affirmative). I don’t think I have said the words BOPIS, curbside, all of the different acronyms related to delivery or pickup models than I have in this past year, so when I heard you bring out a brand new shiny acronym, usually, I’m like, “Oh my God, another acronym,” but that one, I actually, I’m going to start using that. The OMO, Online Merge Offline. Finally, there’s a way we can say all those things with one acronym. I like that a lot.

Julia Raymond Hare:
That brings me to my next question because things have changed so much the past two years, both online and in-store. The merging of all of that. What are some trends you’re seeing for e-commerce sellers as we approach the holiday season?

Jason Stuckey:
That’s a great question. We’re seeing a lot of work on strategy. So really across four main topics; one is marketplace strategy. Marketplaces have grown their Gross Merchandise Volume or GMV by more than 80% over the last 18 months, and they control transactions in terms of overall share of e-commerce transactions, marketplaces are above 50%.

Jason Stuckey:
So these marketplaces are masters of engagement and trying to compete against them as a brand, is a fool’s errand. So a lot of brands are really thinking about how do they work with these marketplaces where consumers are spending their time? Where do they sell, and how do they do this successfully?

Jason Stuckey:
The second thing is really around the inventory and fulfillment strategy. More channels mean more complexity. So how do you deploy your inventory everywhere simultaneously? And how do you get it to your customers quickly and conveniently in a method that they expect? The next thing, the third one is about personalization.

Jason Stuckey:
It’s really getting a holistic view of the customer, and that’s all like personalization and data. This is what a lot of major brands are talking about, is how do we get our data in one place to get that holistic view of our customer? And then from that, how do we use that data to make better product decisions, and drive a better customer experience?

Jason Stuckey:
And then the last thing which is really fascinating is, how do we make money from e-commerce? Companies focus on a single sale mentality. How much margin are we making on a single sale? But when you’re trying to sell online, you’re competing for eyeballs and you’re competing not only against millions of websites, but you’re also competing against marketplaces that are spending billions of dollars creating movie studios, creating engaging methods to keep your audience, and keep those eyeballs in their environment.

Jason Stuckey:
And so it’s a very difficult place to be, where you’re having to spend a lot of money just to drive traffic to your website, often to the point where you’re no longer making money or you’re losing money on a transaction.

Jason Stuckey:
And so though consumers are demanding products be sold online, sellers are really struggling to make money off of this. So it’s about shifting the mindset away from a single Cost Per Acquisition or CPA or CAC perspective, and focusing more on LTV, Life-Time Value of a customer. How do you really engage with a customer to keep them as a loyal customer and have a long-term relationship with them?

Jason Stuckey:
That’s truly how you make money in e-commerce, but it’s very difficult for these big companies that, “Hey, we’re going to spend billions or millions of dollars, retooling our stack to deliver this expectation to consumers, and meet our customers, and delight them. But we’re not making money off this.”

Jason Stuckey:
So these are really the four things that we’re seeing as trends emerging and brands are thinking more strategically, less tactically now, about how they shift their strategies.

Julia Raymond Hare:
Absolutely. And it’s been a difficult thing to do because I’ve heard through podcasting over the past year, especially, it’s hard to focus on strategy when it feels like you have to constantly be reacting to new things every day. And so to get into that mindset is really important as we go into a holiday season.

Julia Raymond Hare:
And I like what you said about the fourth thing. How do we make money on e-commerce? I want to throw not necessarily a curve ball question at you, but just out of my own curiosity, I mean, you’ve built some D2C brands for big celebrities, which is really intriguing for me, especially as an American, you know we’re obsessed with our celebrities here, but how do you feel about advertising them? Because you said you should move more to the LTV mindset versus the CAC?

Julia Raymond Hare:
Is advertising something you think consumers or brands and retailers should go big on, because it’s getting so much more expensive.

Jason Stuckey:
It is getting more expensive. In the brands that I was a part of creating, if we did not have a subscription model and a membership model, we would not have been successful, because the cost per acquisition of a customer exceeded the cost or the money, that we made from that customer on the first sale. So it was really the third or fourth sale, where we would break even. And that was our benchmark was, “How do we bring these customers in? And then how do we keep them in? And how do we delight them so that they stay customers for the long haul?”

Jason Stuckey:
I think in terms of advertising, what you’re seeing is traditional advertising channels turn into commerce channels. So you’re seeing the likes of Google, which has repealed a little bit because commerce is hard, but they put their foot forward into changing their platform from just an advertising-only platform, to a commerce platform.

Jason Stuckey:
And then if you listened to the earnings call from Q2, with Sheryl Sandberg and Mark Zuckerberg, all they’re talking about is how they take their social channels, which are advertising channels right now, and turn them into commerce channels. And so this presents opportunities for sellers and brands to partner with these channels that they’ve been giving a lot of money to, from an advertising perspective, to start working on how do we take it from advertising to transaction.

Jason Stuckey:
And you’ll see more of this popping up. There’s a delicate balance because at certain point, something’s got to give. You can’t have brands losing money and continuing to push forward.

Jason Stuckey:
So these channels will start to migrate their strategies, to allow brands to still make money, and want to transact on their platforms. But it’s about rethinking how they do that.

Julia Raymond Hare:
Sure is. I like the word rethinking. Jason, what is your take on total commerce? Because I’ve heard this talked about a little bit, and I want for our retailers who are listening, how does total commerce help create a differentiated customer experience?

Jason Stuckey:
First, it’s probably helpful to explain what we mean by total commerce. Total commerce is kind of looking at where things are heading. As I talked about earlier, channels have been seen as silos or been treated as silos, but as the number of channels increases, and the need for sellers to be on these channels, increases, it starts to commoditize these channels.

Jason Stuckey:
We can only come up with so many acronyms or so many names, at a certain point it will blend all together and just become commerce or what we call total commerce. And so that is where the market is heading. And ultimately, what sellers need to be prepared for in a total commerce environment, is how do we make that experience for us, seamless?

Jason Stuckey:
So just as they are focused on driving a seamless experience for their customers across all of these channels, as a technology provider, at Linnworks, we try and provide that same experience for our customers, which are businesses. So for a brand or seller, consumers are demanding that they meet them where they are, which is like I said, increasing at an accelerating rate.

Jason Stuckey:
So the charge for us is to unlock this capability for brands via our platform, without increasing overhead or complexity for them. So if your technology and processes dialed in, the process from click to ship should be the same, no matter what channels you’re selling on.

Jason Stuckey:
If we get this unlock right, and that’s what we’re working on with brands is, is providing them with a technology platform that allows them to do this, they can focus on driving more energy, into delivering a better consumer experience across these channels, and engaging with customers across these channels, and making more strategic decisions, rather than reactionary, tactical decisions that come from the chaos of having to manage and be everywhere at once.

Julia Raymond Hare:
You said, I think channels are starting to become commoditized?

Jason Stuckey:
In a sense, from an operational perspective. There are all these new channels, and when you think about it, it’s like you’ve got your website, you’ve got Amazon. All of a sudden you’ve got Etsy, Howl’s, Wayfair. You’ve got FARFETCH. And now you’ve got these social channels that are rising up.

Jason Stuckey:
And so Facebook, it’s Instagram, Facebook, WhatsApp, and now you’ve got TikTok. So you’re going to be seeing more and more of these channels are coming faster and faster to sellers. And that presents a real challenge, because, imagine if you’re a big brand, and it’s really important to make sure that you are seen in the world. And now all of a sudden, there’s this new channel that you need to spin up. And if you don’t, your competitors are going to nudge you out of it. It’s a very difficult world to be in. But as more and more channels arise from an operations perspective, it should be commoditized.

Jason Stuckey:
It doesn’t matter what channel you’re on, the operational internal back office operation should all be the same, and treated the same. And that comes down to your technology stack, and working with that technology stack to ensure that that process is homogenized, so that you can deliver on the expectations that consumers expect across these channels.

Jason Stuckey:
And a key thing to point out is, these channels are driving the expectations as well as consumers, like Amazon has all conditioned us to believe that I click on a button, it’s very easy to check out, and then ultimately, I get that product in two days or less. That’s your benchmark across all of your channels.

Jason Stuckey:
So you build the technology or you bring in the technology, and then you drive it towards ultimately, the marketplace that is setting those consumer expectations for delivery or consumption.

Julia Raymond Hare:
Mm-hmm (affirmative), and to your point of, customers are demanding that sellers meet them where they are, and it seems like every day there’s a new TikTok about this product you didn’t know you needed on Amazon, and you’ll see those become really viral, and the sales just shoot up.

Julia Raymond Hare:
And it’s not just for the small one-off products or a small outfit. It’s becoming more and more relevant, like you said, for bigger brands and retailers, in someways, fortunately, and in other ways, unfortunately, to be on these marketplaces, and just to be super accessible to consumers. But it’s easier said than done, which brings me into my next question for you, Jason, which is your take on social commerce, and where that’s headed, because it’s hard to keep up with. There’s a lot of growth.

Jason Stuckey:
Social commerce is going be huge. I saw a stat today that said that 4% of e-commerce is occurring on social channels. That actually makes sense, but that number will grow very, very quickly. You look at the generations, Gen Z is spending 20% more time on social media; that’s four and a half hours a day on social media.

Jason Stuckey:
So the idea is, you have to meet your consumers, or your customers where they’re spending most of their time. It’s on social channels. And 43% of Gen Z-ers, have already made a purchase on social commerce. So as they gain more discretionary income, that will grow and it will grow exponentially. You can look at the data and you can see it kind of moving linearly.

Jason Stuckey:
But I actually believe it’s going to grow quite exponentially, especially as these social platforms start to build more robust tools for enabling commerce across their channel. You have to remember Facebook is still early doors on where they are with their commerce strategy.

Jason Stuckey:
It’s very difficult to do commerce super well. So they’re getting those tools together. And guess what? TikTok is doing it. TikTok’s parent company is already doing it in China, and they’re doing it quite well. So they’re hell bent on getting that over to the US market as quickly as possible.

Jason Stuckey:
And so as these channels start to add more tools for sellers. I expect a rapid adoption and increase to meet the demand, and start to transact on these platforms. The other bit to really pay attention to is, I mean, we’ll talk about Facebook. I’ve been in a meeting with Facebook where I walked out and I was shocked.

Julia Raymond Hare:
Wait, scared or shocked?

Jason Stuckey:
Little column A, little column B. It was eye-opening just how much data they have on consumers, and how good they are at leveraging that data to target consumers. It was impressive. But I’m thankful in a way that Facebook wasn’t around pre-college for me.

Jason Stuckey:
So they don’t really know my whole journey in life, and they’re not able to kind of use that to help target and drive more targeted ads or products my way. But Gen Z, it’s the generation that grew up in a digital world. And they have very much grown up in a social world. And so Facebook knows a tremendous amount of information about this generation, and it goes from them being infants, to where they are today. So that makes their capabilities much, much stronger, and very bullish on social commerce and their ability to target consumers.

Jason Stuckey:
But I will say this, it’s not all doom and gloom. It’s actually a good thing. And the reason it’s a good thing is because of what the permutation of commerce has done to the psyche of individuals.

Jason Stuckey:
There are 353 million listings on Amazon. If you were to spend a second on each listing, it would take you over 10 years, to just look at the entire catalog of Amazon products. And that creates a lot of unhappiness. It’s difficult for consumers to make choices on what products are going to suit them best.

Jason Stuckey:
So if you look at it from a positive light, the more information these platforms know about you, the more they’re able to help you solve that problem by introducing you to products that you actually like. There are all these conspiracy theories; “Is Facebook listening to me?” When you’re talking about cat food, and all of a sudden five hours later, you’re getting served an ad for cat food.

Jason Stuckey:
They’re not, but they’re that good. It will only get better, but that’s a thing. I think it makes the journey for consumers much, much easier, and it gives rise to what we’re calling the effortless economy. Consumers always trend towards the path of least resistance. And this effortless economy, the effortless consumption, of products meeting you where you’re spending time, and products you actually like, and want to buy, that’s the next iteration of commerce. And social channels are going to do this incredibly well.

Julia Raymond Hare:
Wow. That was a lot of really good info. And the Gen Z stuff, very interesting, path of least resistance, totally makes sense. It’s human nature. It’s funny when I hear you say, I think you said 4% of commerce is driven by social right now, or are made on social channels.

Jason Stuckey:
Yeah. I was in a conference this morning with a lot of really big brands and that came up, and I said, “Yup, that makes sense,” but it will grow.

Julia Raymond Hare:
Like you said, it will grow exponentially. I mean, it reminds me and I will definitely come off as a millennial here, but it reminds me of many years ago when the debate was, mobile.

Julia Raymond Hare:
“Okay, all the sales on e-commerce are taking place on desktop, when will the switch happen to mobile?” And now it’s like mobile is king, for almost everything. When it comes to e-commerce, we’re always on the phones doing our buying and it blows my mind how in just a few years, this conversation will be very different.

Julia Raymond Hare:
And you said like 350 million listings on Amazon, that’s only going to continue to grow. What are some other channels that you think will be key for retailers to be competitive, moving forward?

Jason Stuckey:
I think that, obviously, like we talked about, social channels will continue to grow. I think TikTok is where we’re getting the most interest, or our sellers are asking us, “What is TikTok strategy? How do we prepare for that?”

Jason Stuckey:
So I think it’s very clear that social channels are a leading channel. I think the second one is it goes back to retail. And what is retail’s role in building a really strong, direct-to-consumer brand experience? I know I’ve used the word re-imagined, but it really is a re-imagination of retail and how it can add value to that digital experience.

Jason Stuckey:
We’ve heard for a decade, now, “Retail is dead. Retail is dead.” It’s absolutely not dead. It’s just in the process of a transformation. And that transformation is more about delivering a really good boutique experience, where you get to step into the brand. This was Apple’s genius move. People were laughing at them when they said, “We’re going into retail, and we’re spending a lot of money on our stores.”

Jason Stuckey:
It wasn’t necessarily to turn those stores into profit centers. It was to allow consumers to experience the brand, and have a place to go, to have a better experience than what Apple was doing, which was predominantly online. And so I think the next frontier as these digital-first brands really start to grow up, is, what do we do for retail?

Jason Stuckey:
And that’s what we did at Textile. We were digital-first, and then at a certain point in time, we couldn’t ignore the need for retail. And so we went into retail with a totally different concept of how we were going to do it. And that was taking the membership model, the membership data that we had, and utilizing that to drive a much better experience. So when you walked into our store, the associate in the store would say, “Hey, are you a member?” Get the name of the customer, and then pull up their profile, and have things like iPads in stores for the customer to be able to look at what they purchased, and learn more about the products that they had in hand.

Jason Stuckey:
So before you walked into the changing room, being able to look on a screen and interact with a screen to learn more about the fabrics of the product, why they were designed the way they were, why it might be beneficial, how it can compliment the products that you already have in your closet, that we know that you purchased.

Jason Stuckey:
So I really think it’s a re-imagination of retail. And I know I’m probably going to be an outlier on that, but I think like, again, looking at the channels that sellers need to pay attention to, now, of course, you’ve got the digital channels and that’s very present, but retail is something that you shouldn’t forget.

Julia Raymond Hare:
Mm-hmm (affirmative). And you said retail is not dead, Jason. It’s interesting because just the other day, this week I spoke with Rosemary Coates. She’s a supply chain expert, and she said, “We have imported more than we have, in previous years, from China over the last year.” So it’s actually growing, and retail continues to come back in a big way.

Julia Raymond Hare:
And those were some good examples you gave. I know that I’ve heard from retailers who are hesitant about really embracing or going big with marketplaces where D2C channels is the issues of brand management, and making that be really consistent. So what are some key factors, when you’re talking with your clients about managing a brand across many channels or new channels?

Jason Stuckey:
The first thing I tell brands is, “Your brand is your power, and that is your leverage against these marketplaces, and against the threat of these marketplaces, homogenizing your brand.”

Jason Stuckey:
It’s the Achilles heel of Amazon, the everything store. It’s not a great place to really step in and experience a brand. And so owning your brand, owning your power, is how you combat that desire for marketplaces to make everyone look the same. And ultimately, what we tell sellers is, “They’re not your customers, they’re Amazon’s customers.”

Jason Stuckey:
So you really have to lean into building a strong brand. What we did at Savage X Fenty, for example, with Rihanna, was we went into the conversation with Amazon saying, “Look, you want our brand. What can you do for us?” And what we did is created our own branded experience within Amazon store that gave us more control and then we leveraged their channel like Prime Video and they sponsored and now pay for that Savage X Fenty, New York Fashion Week fashion show. And that’s really good synergy across that channel. And it’s only possible, of course, we had Rihanna, which is a big draw, but it’s only possible because of what Rihanna stands for, which is brand. Nike did the same thing.

Julia Raymond Hare:
That’s amazing. I love that story, Jason.

Jason Stuckey:
Nike did the same thing. I mean, they explored Amazon. And I’ve talked with them and they explored, Amazon said, “Hey, it’s a great revenue channel for us.” In fact, it actually drove more sales back to their website and their direct owned channel when they had Amazon, but the sad part was Nike cares about their brand and Amazon was not providing them with data that would allow them to drive a better brand experience for their customers, for their members. So what did Nike do? They said, “Thank you very much. Appreciate it but we’re going to take our business elsewhere.”

Jason Stuckey:
So then they partnered with Zalando and Zalando was more than willing to give them more control over the branded experience and more information on the consumers so that Nike could take that back and say, “Look, let’s build this into our strategy. Marketplaces are really important but we want to do it in a way that doesn’t destroy our brand.” So brand power and focusing on what your brand value is, is really important as you approach marketplaces.

Julia Raymond Hare:
Absolutely. And it must have felt good rocking into Amazon and saying, “What can you do for us?”

Jason Stuckey:
The rare opportunity. It’s important to point out though, for a small seller though, what can they do? How can they participate in marketplaces without destroying their brands? And there are a couple of strategies you can deploy. One, don’t give the marketplace your entire assortment. If customers want your assortment, they want everything that you have to offer, keep it on your own channels.

Jason Stuckey:
Keep it on channels where you have more control. Utilize your best products on those channels, so that it’s kind of you’re fishing bait to attract people to your brand, but ultimately don’t put your full assortment onto the marketplace because ultimately you are giving up control over your brand if you’re doing that. So that’s kind of a strategy for smaller brands that they can utilize in order to make sure that they’re not just throwing their brand out the way.

Jason Stuckey:
And then the second thing is, focus on sharing your message on as many channels as possible. Consumers really care about what a brand stands for. Gen Z, Millennials, are all now very focused on brand message and the impact that the brand has on the environment.

Jason Stuckey:
I mean, these are the challenges of our generation. These are the challenges of our time, so of course it’s important to us to understand what a brand stands for. If they’re, “Hey, buy, buy, buy,” and they’re not focused on sustainability, or they’re not focused on best practices in their supply chain and treating their workers fairly, these are things that consumers care about.

Jason Stuckey:
And so sharing that message and what you’re doing to focus on that on your own channels is an important part to owning your brand and ultimately succeeding in the world as it moves forward.

Julia Raymond Hare:
Mm-hmm (affirmative). And it’s so true. I mean, I don’t usually like to share personal antidotes too much as an example of something, but I have noticed recently a lot of the reels on Instagram or some of the TikToks, I guess they know I follow retail, are people calling out brands, like fast fashion brands for some of their mishaps and saying, “If you buy this, think twice.” The customers do find out and they spread the message, so it’s more important than. Yeah.

Jason Stuckey:
Oh, completely. Absolutely.

Julia Raymond Hare:
Well, I wanted to round out, sometimes I think of other questions actually, but from a logistics perspective, what would you say is essential in order to manage scaling up across selling from different channels and international market?

Jason Stuckey:
I’m biased on this one, but I would say focusing on your technology. I’ve sat with a lot of really big brands this past week, actually and the discussion that they were talking about was this legacy technology that they have in their stack and trying to make that bend and flex to a very rapidly changing environment. And a lot of them are coming to the conclusion that we need to throw it all out and start from scratch. But that starts with really choosing technologies that unlock the ability to run your logistics in a more efficient manner.

Jason Stuckey:
I think that logistics, if you have really strong technology and again, I’m biased, but if you have really strong technology, that should make the logistics much easier and much less of a worry or concern. You should be able to easily spin up a 3PL if you need to in a new territory.

Jason Stuckey:
Plug that into your tech stack and ultimately that doesn’t slow you down at all. And then as that market grows, switch that 3PL out with your own warehouse in the back end to drive down your cost and increase your efficiency. So it comes down to making some very difficult choices about what technology partner you’re going to pick moving forward in order to be successful, but you want one that A, has an international presence.

Jason Stuckey:
Can’t stress that enough. There are plenty of technology providers out there, but most of them are focused on a single market, so choose a provider that is international and does that well. And then the second thing is, choose one that allows you to be as flexible as possible without customization.

Jason Stuckey:
That’s where you really get into problems is businesses are very hesitant to change their process. Change management is difficult but the more you change your technology to fit your business, the more inflexible that technology becomes.

Jason Stuckey:
We were laughing in a session earlier this week with a brand where he said, “If an associate sneezes in Germany it affects a store in California. It’s because we’ve customized everything to fit our needs rather than addressing the real difficult process of having to change how we operate first.”

Julia Raymond Hare:
So are you saying it’s like a double-edged sword, the customization aspect?

Jason Stuckey:
Yeah. So choosing a technology provider is about making a decision between, oh, sorry. One more time. The decision to customize or not to customize or to build versus buy, always comes down to a decision between changing internal process or changing the technology. And it’s harder to change your internal process because what we call them… People are hard to move and we call this change antibodies.

Jason Stuckey:
As soon as you start saying, “Hey, we’re going to change how we do something,” there are always those change antibodies that pop up in your business. So that makes it very difficult to get people on board with that change, but that is what leads retailers to start to customize things.

Jason Stuckey:
And that has a consequence. That’s a short-term fix, but it also has a consequence over time. And so what we’re telling brands is, “Look, in this time of change. COVID is a massive time of change. Now is the time to have those difficult discussions.” It’s difficult discussions about process and how you’re doing things, because everybody’s open now to the idea that, “Look, we’ve got to change how we’re doing something if we’re going to be successful.”

Jason Stuckey:
Having those difficult conversations with your suppliers, your distributors and saying, “Look, we’ve got to go direct to consumer. We’re either going to do this with you, or we’re going to do it without you, but we have to do this,” it really comes down to leveraging the COVID catalyst as an opportunity to have these discussions and do it the right way, rather than a band-aid, customize, and stitch fix everything along the way to placate those change antibodies within your organization.

Julia Raymond Hare:
Mm-hmm (affirmative). Well said, and I think it’s a good message because it comes back directly to the question about scaling. And so if changing the process is hard, but in the long run, it allows you to scale and adapt faster, totally understanding your point. And then Jason I wanted to ask you a little bit about your perspective on D2C.

Julia Raymond Hare:
It’s such a popular topic right now in retail. Do you think that established incumbents should be definitely having a D2C strategy or do you think it’s not for everyone?

Jason Stuckey:
100% D2C all the way. There will be two types of companies that are successful in the future of e-commerce. Companies that provide technology to make e-commerce easier, or platforms that allow you to conduct e-commerce on them like marketplaces, and the second one is direct to consumer brands. You really need to have control over your supply chain. That will drive your success in a world where products become commoditized.

Jason Stuckey:
So if you’re a retailer, so for example, Bed Bath & Beyond, they’re a retailer that sells other people’s products. They have a very high expense of very large real estate in very expensive areas and what consumers have been doing is walking into those stores, trying those products, and then going and buying them somewhere else online for cheaper.

Jason Stuckey:
So ultimately in order to be successful, you have to adopt the D2C strategy. And that’s what the private equity company behind Bed Bath & Beyond is starting to do. We’re creating white label brands that you cannot get anywhere else other than our stores and that is their position of how they fortify against what’s happened in retail in general.

Jason Stuckey:
So that’s why D2C brands have been so successful is because you can’t get the products anywhere else other than them, other than where they decide to sell them. And so that gives them complete control over price, complete control over their supply chain and it keeps them defended against other people undercutting them on price.

Jason Stuckey:
Price has always been a big driver for commerce. Think about Walmart, always rolling back prices. It’s the place to get everything you want for the cheapest price possible. And then over the last 10 years it’s been, “Hey, come to Best Buy. If you find it cheaper online, just buy it from us, please,” but ultimately the way to fully defend against this strategy is to be direct to consumer and control the products and where you distribute them completely, rather than giving them in the hands of other distributors that will do that for you.

Julia Raymond Hare:
Jason, we are now heading into holiday season and there are still some issues in supply chain going on. There are a lot of challenges retailers are going to face. What are some that you’re expecting for this holiday season?

Jason Stuckey:
The number one thing is inventory. In a session today, a big brand said, “I’m not sure we’ll be able to run a Black Friday promotion because the inventory is so challenged.”

Jason Stuckey:
Look, up until Q2, consumers have not felt the pain that that sellers have felt in the supply chain, but going forward into Q4, they can’t hold that off any longer. We’re seeing shipping costs rise by 7-8X. We’re seeing pileups in ports and we’re seeing major supply chain constraints across the board going into the holiday season.

Jason Stuckey:
Products are just simply not available, so it will be hard on sellers, but it will now start to be really hard on consumers. And we’re not trained that way. We’re trained to click a button and it shows up on our doorstep in two days, but consumers are going to be shocked to find that a lot of products are not going to be available and the deals that they’ve seen in past years in certain categories, they’re just going to be non-existent.

Jason Stuckey:
And so there’s a lot of question marks about what Black Friday, Cyber Monday is going to bring, especially to your point about the constraints in the chip market and silicon chips and what that’s going to do for Cyber Monday, Cyber Week. How many discounts are we going to see? What types of products we’re going to see those discounts on?

Jason Stuckey:
I think it’s going to be really interesting story to watch, and what we’re seeing sellers do is pivot to, “Hey, we don’t want to give up revenue. We don’t want to give up sales,” because the discretionary income and spending desire from consumers is there. That was proven on Prime Day, sending records. There’s money there, and people want to buy products, but without inventory to meet that demand, there’s a real risk of a drop in revenues.

Jason Stuckey:
So we see sellers starting to think about, “Okay, what are we doing for gift cards? What are we doing for pre-orders? How do we still transact with consumers when we don’t have inventory.” And so there is there aren’t a lot of good answers to that question, but I would expect consumers to see, “Hey, spend $80, get $100 gift card with us,” and I think that’s going to pop up more often than people think.

Julia Raymond Hare:
Mm-hmm (affirmative). And for any retailers or brands listening, that might be something they should start exploring sooner than later, because as you said, it might not make sense to run the Black Friday, Cyber Monday sales and promotions that historically consumers are used to.

Jason Stuckey:
Yeah, I would say, take a look at your category and talk to other sellers in your category, and if you’re having inventory challenges, find out if they are. And if they are, expect less discounting to drive sales and prepare accordingly because we have great visibility across thousands of different sellers and what we’re starting to see…

Jason Stuckey:
We saw two strategies in Q2. One, a hoarding strategy, so I think that speaks to your import metric about imports picking up, so you saw a lot of brands are starting to hoard stuff because they knew that Q3, Q4 was going to be really tough, but then we’ve seen, sorry for the pun, but we’ve seen other brands really missed the boat and not bring that inventory in and are really struggling to think about or figure out how they’re going to be successful in Q4.

Jason Stuckey:
So it’s going to be a difficult year and brands are adjusting as quickly as possible. The Chief Merchandising Officer of Footlocker this week was talking about their strategy and they’re very focused on internal communication strategy to ensure that they can be as flexible as possible.

Jason Stuckey:
They don’t have strong control over their strategy going into Q4 because they just don’t know what it’s going to bring. So what they’re doing is fortifying internally to be flexible and adaptable as the market changes in real-time so that they don’t miss their targets and they don’t disappoint a lot of consumers.

Julia Raymond Hare:
Mm-hmm (affirmative). And when you say the internal communication strategy, you’re saying all the way through to the front line, in terms of the flexibility?

Jason Stuckey:
Yeah. I mean, your customer support is going to be bombarded with, “Where’s my order?” or, “What happened to my order?” and they’re going to want to try and save that revenue especially if they’ve oversold things or have sold things that they can’t deliver on, they need to find ways to delight customers and deliver a good experience as quickly as possible.

Jason Stuckey:
And of course, they sell thousands of different skews, so it’s going to be a very fast-moving time for them and they need to make sure that those making the strategic decisions about what to do are very well connected with the ground level people who are dealing with customers and customer inquiries as they come in.

Julia Raymond Hare:
And do you expect e-commerce to take an even bigger jump this year than it did maybe last year?

Jason Stuckey:
That’s going to be hard to tell. Last year was a record year. It was just an absolute anomaly in terms of how much e-commerce grew And so we have seen numbers start to normalize over the last two quarters, but I think it’s difficult to predict what will happen because of what’s happened in the supply chain.

Jason Stuckey:
So if consumers are going to stores and the shelves are bare, you may see an uptick in e-commerce, but it’s hard to be honest with you. I can’t quite answer that because I just don’t know how bad the supply chain stuff is going to permeate into the consumer layer and what effect that’s going to have on consumers, looking around across the online environment to try and find alternates or find the product that they’re actually looking for. It’s going to be really interesting to see what happens over the next couple of months.

Julia Raymond Hare:
Mm-hmm (affirmative). And we’re so spoiled as consumers, that will definitely be happening. If a store does not have what we want, we’re going online. If their online store doesn’t, we’re looking everywhere.

Jason Stuckey:
Exactly.

Julia Raymond Hare:
Well, Jason Stuckey, it was great to have you on the show, and of course, I hope to have you back again. Where can our listeners get in touch?

Jason Stuckey:
Yeah, it was great, Julia. Thanks for the time today and I hope that the listeners found that valuable. You can find me on LinkedIn, best place to reach out to me. It’s Jason Stuckey. Type in Jason Stuckey Linnworks, you’ll find me, send me a message, connect with me. I love speaking with retailers, brands, sellers, technology, providers, learning a lot about what they’re seeing, sharing insights with one another, because we’re all in this together, and we’re all trying to drive this trend towards a digital-first economy forward as much as possible. So the more that we collaborate and share the better off we’ll be.