EP347- The Amazon Briefing, Pt 1

Welcome to the Jason and Scott show, your source for the latest news and trends in the e-commerce industry featuring host Jason retail geek Goldberg, Chief Commerce Strategy Officer, a publicist, and Scott Wingo, co-founder and CEO of ReFi Buy. Here are Jason and Scott. Hey everybody, it is Scott from the Jason Scott podcast. One brief word before we jump in to this week's episode. Jason and I were invited to an on-site Amazon analyst meeting in Seattle live with a whole group of executives. We covered Amazon grocery, Amazon Prime, Alexa Plus, as well as what's going on with Amazon Prime Air. A lot to cover, the primary focus was grocery and how everything fit in there. Right after a two-day marathon, session with Amazon, we sat down to record a podcast where we did a deep dive on everything we learned. And really because the topic was grocery, it ends up being pretty much a deep dive on grocery with some ancillary things to them down there. All through the lens of Amazon. Because it is such a meaty topic and one of Jason's favorites, this ended up being a 90-minute plus recording session. So, what we decided to do is split it into two shorter episodes. This is going to be part one. And in this episode, we cover Amazon finally cracked the grocery code. The end of the weekly grocery trip. Walmart's 30-year gamble and why it matters today. And Amazon's new playbook for the value shopper. I hope you enjoyed the episode. We had a really great trip out to Seattle and learned a ton and get to meet a lot of interesting new folks. Welcome to the Jason and Scott Show. This episode is being recorded on Wednesday, August 19th. I'm your host, Jason Retail Geek Olver. And as usual, I'm literally here with your co-host, Scott Wingo. Hey, Jason and welcome back, Jason and Scott Show listeners. Jason, we haven't recorded the podcast, I think, for like, what are we on? We're in the 350s of our episodes. Maybe like 10,000. Yeah, maybe like 10 of them have been in person. And then we've been in person together so much kind of randomly, we were at NRF Nexus. And then we both got invited. We didn't realize it. So I think we were recording a podcast that we were both coming out here to Amazon. So we're out here. We had a briefing, an executive briefing that talked about, mostly grocery, which was very much a year of real house, but a lot of prime. And what we're here to do is share some of the things that we learned there, and some of the thoughts that we had from that while they were fresh in our mind. Yeah, yeah, really, those 10 shows we've done together are my favorite 10 shows. And you were saying they were your least favorite shows. Never said that. I will also apologize if this is a little echoey. We were coming to you live from a, it was hard to find a place to record, but we were able to find a we work, but we're in a relatively small room. So it's going to be a little echoey. We were briefly in Andy Jessie's office and then a security guard. Yeah, very quietly relocated us. And then there's a whole restraining order. But we'll talk about that later. So why is grocery so important to all these peer retailers? Yeah, well, grocery is a huge chunk of consumer spending. Depending on how you count, it's like 20% of discretionary spend. But it's also the most frequent spend that we do. So you may be in market for a TV every, you know, three to five years, you might find new clothes every season or every quarter. But traditionally, you went grocery shopping every week and at least in the U.S. and increasingly, where people are starting to grocery shop even much more frequently than weekly. So more than anything else, the grocery category for consumer spending in the U.S. drives frequency and frequency drives familiarity and loyalty. So every retailer wants to own as big a share of the consumer's stomach as possible because it's the most direct line we have to their heart. What is it working? So let's talk about Walmart first. Like let's set up with Walmart. So Walmart is the largest grocer now, right? Yeah. By a significant margin, Walmart sells more groceries in the U.S. than anyone else. There's a largely great untold story. But Sam Walton built a very large successful business as a discount retailer. His big insight was people wanted to pay lessons. So he did something revolutionary. He sold products at a lower price than the list price which was largely unheard of back then. And so he built a really successful, amazing business largely based on this idea of being a discounter. But he did not sell perishables. They only sold the subset of grocery that we would call the center of store, the paper towels, the cleaning products, the pet products. But you couldn't get your bananas or your cold beverages or your milk from Walmart. So one of Sam's successors at CEO David Glass made a huge strategic decision to have Walmart add grocery to their assortment. And at the time everyone thought that was incredibly stupid groceries are way better margin than most of the products Walmart sold and they're much more complicated. They have a much more complicated supply chain and they're perishable. They would really lose value and cease to be valuable while they're sitting on the shelf. And so for all these reasons people are like it's way harder. Why would you do that when you're doing so well on these other things? About when was a like, when did Walmart enter the grocery seriously with? Yeah, this would have been in the late 80s. Okay. So what we'll call the successful transition 1990-ish identity serves. And so Walmart sort of added grocery and they got the exact result that we're now talking about. Suddenly people were going to Walmart much more frequently because you may have done a monthly shop at Walmart when they were a discount general merchant but now you're doing a weekly shop at Walmart because they were the best place. If you get all your groceries to stretch your family budget further than any place else and they very quickly overtook all the big traditional and national groceries in the US. So you think of the today what today is mostly Kroger and Albertsons are the two big big nationals back then there were a few more like, you know, I think Safeway and Vongs were all separate entities back in that day. But so Walmart captured the frequency and they leverage that frequency to grow their entire business. And they became much larger than the largest specialty grocery in the US. So Kroger is the the largest pure grocery in the US but Walmart sells more than twice as much food as Kroger does. And so then when Walmart launched e-commerce they lost e-commerce without perishables. And in fact fun fact for those of you that have had the misfortune of buying me for a long time I used to talk I used to show the homepage for Walmart which was quite shocking because the home e-commerce page for Walmart would frequently promote their biggest in-store deal. So I would show a picture of steak and a huge rollback price on a surprisingly little price on a steak. And the reason that that was surprising was because Walmart didn't sell steak online. And so while the website was working as an e-commerce site Walmart knew it was also driving in-store visits. And so they would promote these groceries on the website but you had to go to the store and buy the steak. And so it took quite a while after they launched General merchandise and they launched a marketplace which you'd be more familiar with than a high and they started game traction on the marketplace. They're selling all this General merchandise and eventually they decided to add grocery. And they part of the inside was maybe people won't want us to deliver all the groceries because we're going to charge extra for that. That's going to be more expensive. It's not a habit in America but maybe people like the convenience of ordering the groceries from soccer practice and picking them up on my way home. So we've called that mostly of the US we call that click and collect or curbside pick up focus. I online pick up in-store more generally in food they for some reason they call it different because in the whole days for almost everything but food you went in the store to get it and for food they made you with the curve. So we're distinction fun fact in the UK we've called click and collect in Asia we call it online online. Walmart likes to invent their own words for everything. So at Walmart it was called online grocery pick up O.G.P. And O.G.P. you came very popular. Walmart launched a really popular series of ads from famous trucks where they showed all these like you know famous vehicles from movies like the Scooby-Doo Mobio and the Batmobio and the Back to the Future double-orean coming into Walmart it's parking lot and picking up groceries and that launching of grocery I would argue was a huge accelerator of the commerce of Walmart they built a a big durable business in general merchandise but their growth rate was not like out of the stratosphere once they started adding grocery they started suddenly became one of the fastest growing e-commerce sites in the US even though they were at the time the third or fourth largest e-commerce site in the US and so grocery was a huge accelerator of new new food for them and you know of course Amazon continues to sell a lot of those center of store items on their website and so I would say at the beginning of the pandemic even at the end of the pandemic. Waller and E Amazon were the two largest online grocers in the US. Huge disproportionate amount of sales. There's a third meaningful quayer, which is Instacard, but they're complicated because they're more of a marketplace for a bunch of other grocery stores. So Walmart and Amazon were the two direct grocers, and everyone's always talking about Walmart versus Amazon and who's bigger, and there was a lot of disagreement about who is growing faster, who is bigger. But the dirty secret was they almost weren't competing with each other. Because the overwhelming majority of stuff that Walmart was selling was perishables, and a big part of it was perishables that you came to the store and picked up via online grocery pickup. And the overwhelming majority of grocery items that Amazon was selling were ambient shelf stable items that mostly weren't edible, right? So we call those consumables. Yes, yes, one super confusing. Yes, although I think there's some debate about what they should call them. Yeah, but yeah. And so I would say they had this sort of, they each had their own strengths. And I think what's been super interesting to see play out in the last two years is they both have kind of maximized the growth they could get with their strength. And so they're both sort of attacking each other's strengths right now. So we've seen Walmart weaned into trying to get a much bigger share of the card, and not just the consumables and bundle more general merchandise. They used to have a grocery app that was gold if I remember right and the general merchandise app that was blue and you used to have to decide which app you were gonna run to go shopping. So there are two wall gardens. They merge those two apps and they like you start bundling things together on a card. And at the same time, about two and a half years ago, Amazon made a big investment in adding the temperature control environments into all of their fastest delivery fulfillment centers. So generally they call fulfillment centers FCs, but they call them ones that store items for same day deliveries. What they call SSD, sub-same day. They put refrigerators and freezers in every one of those. And they took a bunch of the inventory that used to only be available from Amazon fresh stores or from whole food stores. And they literally put it in the fulfillment center with all the other fast ship sub-same day items. And so suddenly for Walmart, that unlocked selling the entire grocery list. At the same time, Walmart was trying to sell the same grocery list, but they attacked it kind of from opposite strengths that even Amazon had the SSDs. - Yes, sorry. - I'm Dave. - Yeah. - What went back to Walmart? - What data is there that shows that there's a lot of attachments. So if people are going for the grocery, they get the gym, the general worshipers. - I'm not sure there's necessarily a super clean data source that I would point to. And obviously like everyone tries to read the TV so Walmart's not disclosing what their actual sales are, and Amazon. But Walmart has very reliably disclosed their e-commerce overall growth rates in all of the earnings calls. And in several of the earnings calls, they call out the individual growth rates of specific categories. And so what we always see as grocery was always that fastest growing category every time they called it out. But the other super fast growing category was third party general merchandise. It was the marketplace growing. And so these two businesses kind of together were the growth drivers. And there's, you know, an unreasonable assumption, but I don't know if this is where we have data to prove it, that the Walmart was successfully selling both items to those same shoppers. - The thing I've learned about grocery that's interesting compared to other categories generally is there's all these third party data sources. - So say a little bit about those and what you always have interesting opinions on these things. Like what do you trust in this stuff? Some of it is like there's this odd data sharing mechanism. - Yeah, it's super tricky. And it's one of these things where nothing paints a completely clear, reliable picture. They're all useful if you understand their limitations. And the most useful thing is to kind of look at them in the aggregate, like to look at them all as a pool of signals that are trying to tell you, trying to triangulate on the list. - So obviously I talk a lot about the US Department of Commerce data. And the US Department of Commerce reports data on sales every month. There's a huge fly and how they report it. Every retailer is classified as a category of retailer. And so all of their sales go in that category. So Walmart's a general merchant, whether they sell online or offline, it goes to the general merchant pricing. And grocery goes in there as well. And so there's a separate, they don't actually call it grocery, the NNC code is called food and beverage, but trovers of food and beverage retail. So their sales go in food and beverage. And Amazon is a non-store retail. So in this monthly data, although they all sell each other's products, they all get reported as having sales in separate categories. The same entity, the Census Bureau, tries to disaggregate that data specifically for e-commerce and say this percentage of Walmart sales or grocery, this percentage of Walmart sales where general merchant dies, this percentage of sales were apparel. They don't disclose individual retailers estimates, but they aggregate all those estimates. And so quarterly, they publish what we call the e-commerce report. And there they tell us a much more accurately what they think e-commerce sales were for the quarter, but also how the e-commerce sales broke down across all these categories. So that is one source. It has some significant flaws in it, but it's very consistent. They've been doing it for a long time. They have the extra force of law to compel people to try to provide accurate data. So that's helpful. And so it's a foundational data source I use as a starting point for all these things. Non-supergrade or non-supertime way has some well-known significant flaws in it. So then you have a bunch of for profit companies that have other pieces of the pie. We have what we call credit card panels. So today, I think four or five companies, there's a firm, there's earn rest, there's numerator, there's master card spending polls. And they all have panels of millions of users credit card receipts. And so they get varied accurate data about the amount of spend that happen on a credit card at an individual retail. Unfortunately, they don't get to see the items on that receipt. And so they don't know, did someone buy a parallel from Walmart or did they buy groceries from Walmart? And they don't see cash. And there's still a meaningful amount of spending that happens to be a cash, so they have to use math to try to estimate the cash portion and do all these things. So credit card panels are another useful source. Usually those aren't free. So you usually have to subscribe to them. And most big returns and brands are going to use them as part of the mix. There are companies that have done partnerships with the retailer and the retailer sells them anonymous data. So they're getting data from the actual cash registers. And so that data actually has item level data in it, right? And so that's credit card cash. Exactly, exactly. So it has a much more granular picture. At various times, different retailers are willing to sell their data in there. No retail wants to be so big that their data can be disaggregated when it's in there though, right? And so there have been times when Walmart has participated. There's been times when they don't. And when they don't, it's not a very accurate snapshot of all of the UX. But it's another good data source that tells us a piece of that story. And it can be used as a validation for some of these other data sources. And then more recently with e-commerce, there are companies that scan digital receipts. So these will be companies that you might, they might be above board and would get people to opt in for some exchange for some benefit. You share all your receipts with this company. And then they anonymize your data and sell it. More often than we would like, it's somewhat nefarious. They tell you some other benefit to have you give them the credentials to your email. And they make it somewhat secretive that they're also collecting all your spending data and selling that. So they're definitely great a black hat providers in the digital receipts base. But digital receipts can have a lot more granular data in them. If you look closely at your Amazon receipts, you'll find an Amazon to hide the data. Actually, it doesn't send you a digital receipt that is itemized based. And so there's a whole whole war. So those are the main data sources. There's also some might survey stuff and some things like that. But what you really like in, by the way, a few companies have aggregated a bunch of these data sources together. What are some real sentences for common word? Yeah, so they're flawed in the spectrum. So I was going to say today, they own three kinds of products. So they're going to own both a scanner database that's getting receipts from retailers. They're going to own a user panel that's getting reported spending from the panel or from the credit card companies that they've done a licensing deal with. And they probably are going to own a digital receipt panel. So they may take those as three separate products that you use on your own, or they may try to aggregate the data and model it to paint a broader picture. As I'm talking here, guys, there's one other kind of data source that's super useful in this, which is like e-commerce. traffic data. So most famously, that similar web, similar web doesn't really know what you spend, but they know how much traffic Crower gets versus Albert Simpson, so you can make some assumptions based on that. They use panel data. Yeah. And then there are a couple of companies that try to specifically estimate e-commerce for specific retailers and disaggregate it. So they literally will tell you, we think Walmart did X, we think Crower did Y, and so those are companies like Kong Score, the Internet Retail 1000 does that. I didn't know. Reprived by I did an interesting data partnership with them recently when people should check out. There's a European company called ECDB. It was started by the founders of Statistica, and I actually think they have a really good version of this, and unlike those other companies, they do it globally. And also your own owner has a product in this space. So again, if you're a customer insights person or strategy person for a big brand that sells to a lot of retailers or a retailer, you probably have access to this product range of data sources, and you're trying to understand the limitations of each and figure out what you can learn from each. Yeah. So a brand will say, I'm a paying person, I want to see how I do it across the spectrum of retailers, with freshest hobbies and all the other ways my share of diapers, and they look into all these data sources and try to appear across. Yes, and this will come as a huge shock to you, Scott, because I know you have this belief that all big companies are super efficient, but it would be super common that you might walk into a company and find out that they were, they had eight subscriptions to the same data source, and then they have all these data sources, and yet people that it should be making important decisions based on this data haven't no access to any of them. Yeah, because the pamper's people and the swifter people all have it, they don't pop each other. Exactly. Even with the pamper's, they're maybe like the pumpkins pice pamper people. Yeah, and the customer insights he might have rented it for one purpose, but the supply chain planning people don't get it, or the account planning people or whatever. That's really good back. That brings us up to today. Well, actually, that brings us up to August 2nd. So August 2nd, we did our very popular Q2 Amazon results, and you and I both perked up our years. Number one, during that call, Jesse was like a nine out of 10, and sometimes you would get up to an 11, especially with AWS AI. One of his nine out of 10 comments was he said, the trajectory, we have seen a trajectory change, and this is kind of language like they can never use, right? And this is the way it stood out to us. There was like three instances of this during the call that this is the ones we said to Grocery, and he was talking about Grocery. And he said, we've seen with Grocery, we've seen a trajectory change in the business, and he was very excited to then kind of talk about it. So one of the things I asked him today was like, what is causing that trajectory change now? And so that's one of the things I wanted to get into here and kind of go through some of that. So some of the data, and all this is publicly pre-release, this is nothing under the A or anything. So they've talked about monthly active and perishable customers are up 50% since the start of the year. So that's just 2026. It's like not even year over year, that's like in a six month, which you would assume if you trajectoryize that, it's like well over 100% or something. Same day orders are averaging three times more units per order. So the attack rate are the basket quantity size is kind of bigger. Fresh groceries are now six of the top 20 best sellers on Amazon. You used almost everything that I was always kind of devices. So now I don't know if it's bananas or avocados, whatever it is, but that's going. And grocery space bananas is almost always the number one thing. I don't mind game stores. Then you can tell their typical Amazon Playbook is basically from the 1997 shareholder where he basically said we believe people want more selection. They want stuff fast and they like low prices. So that's like the three pillars of Amazon. It has been since the family of the company. And it seems like they've bought the Amazon engine into bear. And they've tried a lot. So they're, when we decide the 15 years into this, maybe 20 into trying grocery. And in typical Amazon fashion, when they want to do something, and another thing I think about is Amazon can't go after small opportunities, right? So they couldn't go after like what's a, I don't know, a roofing house or some kind of niche category. When you were a multi trillion dollar market cat business, you have to take trillion dollar swings. You have to go find two hundred and has to be meaningful. Yeah, you have to go find two hundred billion dollars revenue. Yeah, well, there's only so much, if you start now you start looking at GDP. And you're like, well, what do we not have? What do we want? What do we not want? There's big sections of GDP. One of them's health care. They talk a little bit about that. That's outside of what we're doing. They're just going away at that. They've had a lot of fault starts. But they decided that grocery had to be one of those. And they've in very typical Amazon fashion, they've gotten in there and they've failed a lot. They've tried all the things. And now it seems you're working. What do you think is the unlock for that? Well, I think we know. I think they've kind of talked about it in a bunch of earnings calls. It's adding the perishable fulfillment to their SSDs so that they weren't just selling the ambient stuff, but they were selling the proteins and the melts. And that caused them to be a true competitor to all the other grocery alternatives for the first time. And they executed it scale. It's really an untold success story of the last two years. You and I have objective understanding of how big the Amazon fulfillment network is. Most people have no earthly idea. But it's even for us, I don't think we can fully appreciate how big it really is. It's mind-boggling. And so to say like, oh man, we're going to add two more climates to the vast majority of all our points of distribution. That would have been a non-starter in those companies. Someone would have proposed that and they would have gone like a rather invest in inventing rockets to go to Mars, because it's way more likely. But Amazon is known for taking swings at these big challenges and they essentially reinvented their whole distribution system to be multi-climate. And I would almost characterize their earnings call as them being a little giddy with how well it's worked out. They shared all those engagement stats about how much more important and central they are to customers' lives and how many occasional and frequent customers became super frequent core customers to Amazon because of perishables. And I think they shared a bunch of data in the earnings call about it being a new acquisition tool for them. So there's not that many people that weren't already Amazon customers, but that they were adding a bunch of new Amazon customers to file whose first order involved perishables. So I could say the big unlock was this perishable thing. They did also take, they sort of had three wall gardens of shopping, they had a whole foods experience, they had Amazon fresh experience and they had Amazon core experience and they've imperfectly merged those experiences. So it's probably worked in progress but they essentially eliminated one of those entirely Amazon fresh and they now have a pretty good joint experience. So I would I would somewhat say that Amazon's adding perishables online very much to me mirrors Walmart adding perishables to their store a number of decades ago. And Walmart closing their wall gardens and making a universal experience and Amazon doing the same. I think there's some parallels there. So you're seeing these two are successful retailers from started different places but end up with some similar playbooks and I should point out a bunch of other good operators have tried these same tactics and failed miserably. So you know Target's been trying to win grocery for a long time and really had limited success in grocery. So they do have a much poor frequency of visit then then either of these other two retailers were not talking about. Yeah, the other thing you know one of them talked about this kind of like pyramid of delivering where you've got your normal fulfillment center. So maybe that's your two-day base and it's got lots of selection at the base of the pyramid. Then you get into your SSDs, your selection goes down a lot. But now you're into like that one day kind of window. Then you've got what do they call like little ones that are like right in your neighborhood? So they have a newer service. So sub-same day they've been offering for a few years. They have a newer service they launched internationally. Like I want to say ETH was the first market but they've now brought to you guys called Amazon now. I'm slightly annoyed by the name because they've used that same name for four other products that didn't work. But Amazon now is 30-minute delivery. It's a much more constrained inventory. So do you think a full Amazon fulfillment center that offers you know hundreds of millions of items and is over a million square feet is one kind of fulfillment center. Sub-same day you know probably as an assortment that's closer to one or a ivy or something like that and it's going to be a little closer to your home and then these rush these now stores are going to have the smallest of sort of thousands of items and they're going to be really close to your home right so that might be the out of business pharmacy store or the nail salon, a 10,000 square foot retail store in a strip mall might you know get purchased by Amazon and become a this is to be clear this is dark like there's no like front door you can't go shop this correct yes and you the white we there be no signage to indicate it there'd be a suspicious amount of traffic out of the back parking lot yeah and for a lot of those everyone's familiar with the DSPs which is where you get the brand advance and then they supplement those with flex drivers which are like they're they're they're gig drivers I believe that those little now stations are all flex drivers yeah so a big difference that one of those big flex fulfillment centers when you're loading up that van you might have 30 customer orders or 100 customer orders in that van and you do a route that guy might go away for eight hours and and do 100 deliveries out of these smaller locations that flex driver that contractor probably has one to three orders in their talk right and so it's a much shorter trip that's actually like quite a bit faster right if you're the last delivery of those hundred deliveries it's going to be a while before you get your goods but everyone's going to get their goods pretty quickly after that that driver weeks that that Amazon Naviva yeah another time close by the way some 30 minute could be eight minutes I don't think I thought was interesting as they talk about changing consumer behavior and you probably know more about this I do number one there's geopies of teams the whole world yeah we used to be kind of like fringe articles about that now it's like everyone kind of realizes what's happening yeah and then number two they talked about how the consumer's grocery shop talk a little bit about some of the things there yeah well so do you think I feel like we really should do a deep dive into you'll be one's at some point it's a super interesting thing and it's only going to become more important in the years to come I've been saying for a long time just talking about digital commerce in general that we used to go shopping and now because of digital we always are shopping right and that was a you know kind of fun throw away line but think about how that impacts grocery in a very unique specific way over everything else right so if you go apparel shopping you're probably going to buy one of four skews like even if you go to the mall and you come home with bags of goods you you might have eight skews right and that might be a monthly trip or something like that so instead of if if that's what you did when you went shopping if you always are shopping for apparel you're just kind of mentally deciding what you're going to buy as your doom scrolling on tiktok or you might you know add those those things and so the the one visits the mall might get replaced with one e-commerce trip right but when you go grocery shopping you buy 60 to 100 items right and so traditionally in the US grocery was a weekly shop right because you can't you can't make it a monthly shop because you can't predict exactly what you're going to consume and there's perishables and things that expire and milk only has a 21-day shelf life and all these things um so it turned out to be about weekly that you go and you do a big shop every week and if you screwed up and forgot something you would do a filling shop between that that weekly shop when you always are shopping if you suddenly can add one item to a cart and have it show up in three hours in one hour in 30 minutes and you just fill in as you go like it literally replaces this big shop with all these ad hoc little shops and in our current environment if you're a busy time-started family and you maybe don't know how many times you're going to sit down for dinner this week it's more convenient to be able to buy the items you need for today and tomorrow today than it is to plan a week in advance and if you're have economic uncertainty in your life there's even more reason than you might want a shop in smaller bikes so that you have less waste you have less breakage and you have less out of pocket at a time you can manage your cash flow vendor so for all of these reasons the the advent of digital commerce and the speed of service has meant that we're fundamentally re-teaching people how to shop for groceries and that that that big stock up trip is largely going away for a lot of American families and it's being replaced by these these these ad hoc trips which interestingly was more common originally in for example Europe where you might have lived really close to a wealth market and you might have gone to that baker three times a week to get fresh bread or the butcher two times a week or whatever the case is yeah so inside of that we used to have kind of like your one grocery you would do your big stock at that and now industry research shows that that average consumer has three to four trips but more than half consumers don't really have a primary grocery they're kind of like oh I happen to be a soccer practice over by this Walmart I'll pick up yeah that would be my little my little fill up and then over here on you know maybe uh maybe your husband's on a business trip and you're just gonna hit the you don't have you can't just leave the kid so you're gonna do an online order or whatever yeah yeah that I think that's another ramification if you're doing a weekly trip you're gonna look at the 60 to 100 items you plan to buy and say what's the best compromise what's the one location that can best fulfill these 100 items right they don't have my favorite milk but they have a good enough milk they've got my favorite kid snacks they've got my favorite produce right and so you you did a bunch of like subconscious calculus in your math in crobert one or Walmart one or Amazon one right but now that you're buying items item by item meal by meal you don't have to sub optimize and pick the the best fit for all 100 items you can get each item from the best sorts right so if there's four you try to label Trader Joe's items that you really love you can get those things at Trader Joe's probably bad example to their like the one grocery in America that you can't get digitally but you you could go to Trader Joe's for those more items if you love the organic produce from from Whole Foods you could get the organic produce from Whole Foods if you love the convenience the Walmart will open your front door walk into your house and put your giant kegs of ice coffee that you need to restock every day in the refrigerator for you so that they they didn't go bad even though you weren't necessarily home when the delivery happened you might give that order to Walmart right and so you could the the the switch from big shops to a lot more frequent small shops is also expanding the the the breadth of providers that most consumers use and so for your point many fewer consumers than ever before even can articulate that they have a favorite or primary grocer because they do all this other shopping the other thing we haven't talked about yet which is changing with all this too is just our relationship with food and where we get our calories is also being disrupted right so I I think of this at this metaphor swim lanes they like hey as you're going to cook a meal at home you're going to grocery store that's one lane of the pool all the grocery stores you want to cook a meal at home but you're not very good at planning it you want to buy meal kit that's a tiny little swim lane with the meal kit guys in it right and you get your all your ingredients and you cook a meal at home there you want to eat a meal on your way home from soccer practice to just make your kids quiet and you're too tired to cook dinner you're going to stop at a QSR a quick serve restaurant like McDonald's and eat the fries in the car on your way home you want to special meal with your family you're going to go to Applebee's on a on a Friday night and sit down and and dying there right and they each had their own swim lane pizza delivery all in and so the pizza guys on compete with the pizza guys the QSR's with the QSR's the grossers with the grossers in the same way the digital is disrupted the big shop it's disrupted how we get all this food restaurants sales are way up but the dirty secret is more than 35% of all restaurant sales don't get eaten in the restaurant they get eaten in the at your home so it's what we call restaurant off-prem consumption right and so now that restaurant is competing for calories with the grocery store get the ready to eat meal from the restaurant and eat it at home instead of make a meal from the grocery store and the grocery stores are responded by saying we make a make amazing meals Sam's Club is a bunch is a big part of the America's favorite pizza place the Costco is of course America's favorite hot dog provider there's amazing you know prepared food you can get great sushi at a whole foods right this is like everyone's battling for a to street chicken and yes and the whole all of America wants to eat as much chicken as humanly possible and obscene amount of chicken we don't even want it I don't want to even give you a mental image for how much chicken but the the thing is that everyone's tame totally aggressive market has greatly expanded if your Walmart you used to just sell the 40% of calories people consumed at home now you can sell 100% of the calories but at the same time you were used to just be competing with three other grocers now you're competing with all the fast casual restaurants and QSRs and the restaurant delivery services and so it's it's become the wild west way everything is fragmented. You have to win each food occasion as opposed to winning that aggregate food opportunity. Let's put some numbers we've talked about perishable unlock and how that's been one of the big you know the the change into trajectory. So again these are some of the publicly available stats that they've already put out there. Monthly active perishable customers are up 50% since the start of the year we talked about that one. The same day orders containing perishables average 3% 3x more units away. Okay here's one. Same day grocery now reaches 2,300 US cities with 40 times the selection of a big box store. That's pretty interesting and that now has made Amazon the number two grocery. So but they're north of how relative is it? Well are like 400 billion? Yeah depending on how you count. Yeah that 115 just kind of it's not it's not close they're not like no but arguably Amazon is now a bigger grocery than trope. Right and so so the company that excursively focuses on groceries is only the third largest grocery in America which goes to this aggregation story. Right? The people want to get as much what are favoring the people that can solve multiple problems as opposed to only solve one problem. That being said two things are happening in Amazon. They're both favorable and super interesting but it's it's easy and somewhat convenient that they get conflated right? So Amazon has always been someone big in grocery but remember grocery is a amorphous category. Pet food is grocery. Paper towels are grocery. Cleaning products are grocery. Arguably replenishable apparel like socks and underwear are grocery for many people right? And so when you think about Amazon strengths they've had some real real strengths pet food in in that grocery sort. They've had some relative weaknesses like perishables. And so on one hand Amazon is legitimately rapidly scaling their perishables at an unmanageable rate and prompts them and congratulations to them for that. They're they get to quote huge growth over a tiny number. Yeah right? And so so on one hand if that's all they were talking about I would kind of call them out on it. The their overall grocery is growing meaningful and they've always been a meaningful sized grocery and they again they bought Whole Foods which is four or five percent of the grocery market by themselves right? So the fact that they're still rapidly growing grocery and they're as big as they are is a testament to have the winning the hearts and minds of consumers. Don't conflate the incredible speed of their perishable growth with the impressive speed of their overall grocery or as people aren't increasingly coming and calling their everyday essentials grow. This was your second year at this event my first. I thought they all seem pretty excited and energetic. Now we're talking to like to be top of the you know of the crew there. Yeah you have a year of your comparison. Do you think they were like more excited this year than last year but they're more like ditty? So I think they have I think they were very excited. I think they have more fruit points this year. I think they knew what they had last year but they didn't necessarily have the evidence that consumers were embracing what they had and I have no idea what private conversations they have with their big bosses like Andy Jessie and Doug Harrington but they those guys weren't necessarily spending a lot of ink publicly talking about these initiatives. Right now you hear every senior executive at Amazon talking about you know a top initiative and a top success is the incredible growth they're having in everyday essentials and perishables and so I think I'm really happy for all these guys that are in the grocery space and the everyday essential space at Amazon because they in some cases have been plugging away in this space quietly for 20 years and suddenly they're the most popular kid at the earnings call right and they have the the best success metrics and so totally rightfully so it probably feels good to do that. I do I get this up these are all really smart people it's annoying these big retailers like how sort of impressive their teams are and how deep their ventures are but I do think nobody's claiming victory yet I think they're super happy where they are they're super happy with the trajectory and the momentum but again they're taking a swing it's such a ginormous tan that I don't think any of them are going check we won that one let's move on in the next thing I think they're all saying how do we forecast on this and do it even better and and one of the things I particularly admire about Amazon is that they're a pretty self-critical fruit like and I've had candid conversations with them about things that I feel like are less than perfect in their operating or their experience they're more critical about those things than I so we've covered up to three pillars we've covered selection and delivery speed the third one is value so you know part of this is they're competing with with Walmart whose whole thing is every day low prices so that that's that's going to be you know a knife fight basically to to give any value out of them so to that point they there's a profiteiro study profiteiro I guess has a basket that they monitor over time and they basically say that they're the lowest price to retailer for nine years in a row averaging 14% below other retailers I don't think that's a grocery I don't know if that's a grocery basket yeah there's a lot of data though you have grocery that says they're they're very competitive at many times they're they're they're safe for sure are the a shout out to my good friends of profiteiro is as most listeners of I know they're they're part of my group is his family so I get to work with all those guys every day and they they certainly enjoy it every year when Andy mentions them in their new skulls the the art of measuring price is very difficult and specifically grocery because again the hundred items the window family buys are different hundred items the Goldberg family buys are different than that hundred items most of our viewers are buying right and and prices can be different in different parts of the country and through different fulfillment systems and all these things so there's no perfect apples to apples but there's a lot of third parties that do studies on a particular basket of groceries and Walmart does I'm sorry Amazon does well at all of them and they win a number of them right so they are for sure in the fight for low prices of course Walmart is always and you're at the top of those list there are other brochures that have come to the US all the weedle that are also very excellent low price operator so there's a lot of competition for low price I think one of the challenges and opportunities that Amazon uniquely has is they kind of have two brands Amazon is I would argue is an EDLP brand themselves largely because of the marketplace they've got 12 sellers all being each other's brings out to get to the lowest price and you get to see that fight in public and you get to see see the lowest price on that buy box I think most people are pretty confident I'm never going to get wildly screwed on Amazon sometimes I'm gonna get the lowest price but I'm always gonna get a pretty competitive good price from Amazon and so I would argue Amazon largely is in a strong EDLP brand Whole Foods historically was not Whole Foods is very overtly a premium experience quality provider most people that aren't deep in the grocery space will totally under appreciate all the quality standards that Whole Foods has and all the vendors that they can make a fortune on that they refuse to sell because they don't meet the 300 health rules that Whole Foods has for every product in the store so they're they're they're definitely a premium provider and they they hate this but they used to have a reputation for being an extremely expensive premium provider and so there are there are all these derogatory terms about whole paycheck and they've worked hard to reestablish themselves as a good value premium provider and I think they mostly have been pretty successful with that I think I hear a lot more narrative about them being overpriced but they're not where you'd go if you wanted to stretch your dollar to the absolute farthest right I actually think they might be more competitive on those everyday essentials and especially if you're focused on Whole Foods private brands on light delights they are definitely in the in the price on in the hunt on price but the problem is you can get a way better grade of beef there than you can in an all day and so if you walk there and you suddenly you know see the best beef and besides you want to have the best beef for your family you're gonna end up spending more in Whole Foods visit than you are in all day is it not because Whole Foods is unfairly priced but because they have more attractive expensive stuff and so so I would say Whole Foods is never going to be the rock bottom competitor to all day Amazon probably can be close to that right and so if Amazon can thread the needle with these grocery offerings they can keep the premium cash of Whole Foods as a a good value for premium product and they can position Amazon as a really competitive everyday well-priced provider but I think that's a hard it's a hard thing to do both of those under one roof yeah one little side bars that you bought up private label I thought was interesting was they did have one of the ladies that runs that and I thought she was excellent you know when she started they had this like massive portfolio of private brands and this is like not Amazon Prime this is like within the grocery segment the consumables they have consolidated that consolidated that into five so they've got 365 which is the one they inherited from Whole Foods they've got Whole Foods market Whole Foods market kitchens which maybe they can consolidate that one I guess one's prepared meals at one is Amazon grocery and Amazon Saber and so they kind of compress those into their lanes and are working on that they most of the most that Amazon grocery and Amazon Saber is this five dollar under type stuff let's see and then they also have a little accelerator fund where they try to get more entrepreneurs into the stores and and basically fund up to bring in interesting new things that the new taste co-piles they're going on that those countries I think one of the fun things about grocery and I think Whole Foods and predictors good at this you know so many categories I talk a lot in parallel about a sheen right and they kind of broke the traditional model instead of convincing the whole world what to wear and then making that they just listen to what people want to wear on TikTok and they make it super quick right so instead of creating demand for product they they detect the demand and and fulfill the demand really quickly and in most categories that's almost impossible to do because we all have these like super long supply chains right but one category where you kind of can do it is in consumables like you have to make the milk within 21 days of drinking the milk right so there's not an 18 month supply chain for milk and the the supply chain varies for different foods with like different level of processing all these things but there's the food chain the supply chains for food is a lot faster and more agile in most cases than many other product categories and the raw ingredients to make recipes are always available so one thing Whole Foods can do is they can detect all these new trends in food and how people are eating the biggest one right now this one's not going to seem like a micro trend but like larger because of the JLP ones and everyone's health consciousness a creatine and protein are huge trends right now Whole Foods is always sold great proteins and creatine but you can bet those products are moving to the front of the store right you can bet the merchandising strategies and the digital shelves are all prominently featuring these on-trend food items right and so I would say every grocery tries to do this Whole Foods is a particularly good practitioner of recognizing these niche trend food trends early and one of the things that's a legacy of Whole Foods even before Amazon captured them is Whole Foods although they were a national chain didn't try to respond to national trends they empowered every store manager to respond to the local trends and the the food trends in Seattle are very different than the food trends in Austin right and so I feel like a lot of that that legacy still exists in there it's been scaled and centralized a little bit more today but I think they're they're they're pretty good at the trend wanting it watching and the trend responded Hey everybody it is Scott again thanks for listening to part one of our two part deep dive into grocery through an Amazon list as a reminder this now concludes part one coming soon in part two we will cover the rest of the conversation where we go over how does prime impact Amazon grocery drums well what do you need to say Amazon versus chat to BT and which AI agent is gonna own your life context and why does that matter to going forward we hope you enjoyed part one part two is on the way shortly stated you've been listening to the Jason and Scott show for all the latest news and trends on ecommerce and shopper marketing subscribe to us in iTunes or visit Jason and Scott dot com