Navigating E-Commerce: Tips, Misconceptions, & The Future
This week, Joe is joined by Joe Scartz, Chief Digital Commerce Officer of Velocity Commerce Group. He talks about his start at an ad agency in Las Vegas, and his eventual shift to TPN, where he focused on digital marketing and e-commerce. Scartz shares tips and tricks on how to navigate the world of e-commerce. He also talks about common misconceptions regarding how people are doing sales in the e-comm world. They also dive into the future of e-commerce, as well as who should be selling on Amazon and whether or not it is a monopoly.
Dee GallegosSpeaker 1 (00:00):
Enter the world of Mind Your Own Marketing Business. Explore a variety of trends in the creative landscape, getting insider knowledge from the industry’s best, fjorge is proud to present Mind Your Own Marketing Business with host, Joe Barsness.
Joe Barsness (00:12):
Thanks for joining us on mind your own marketing business. I’m Joe Barsness of web and mobile development team fjorge. And today in our show, we’ll be talking to Joe Scartz about his digital commerce consultancy velocity commerce group. Welcome to the show, Joe. Hi Joe. Thanks for having me. Appreciate it. You are welcome. Thanks to you for taking the time. Um fun to have a couple Joes on the same podcast, I guess that’s not odd, but it’s still fun, right? So first I want to ask you about velocity commerce group. Can you tell me a little bit about your company from where you’re located, um, to what you guys focus on and kind of how it has become to be the powerhouse that it is?
Joe Scartz (00:57):
Um, yeah. And, and, um, thanks, Joe. I appreciate setup. Uh, it’s, uh, it’s been a wild time because we are in, um, digital marketing, uh, digital commerce consulting, um, and, uh, wow.
Joe Scartz (01:13):
It’s, um, it’s been busy lately, but, um, our value proposition is that we are a complete commerce agency. And what that means is, um, we are looking across the, the brand technology and commerce ecosystem, specifically, um, different commerce channels, like D2C, uh, Amazon, where we have a whole sub practice. Um, omnichannel, which, you know, means like Walmart target some of the, the bigger box, omnichannel retailers and then old-fashioned pure play e-tailers across those four areas. How is your brand positioned? How is your, um, subset of products rationalized? So what’s your sku rationalization and then what are you looking to accomplish? Is it to drive revenue, to increase margin or to, um, build your brand or protect your brand even? Um, we focus on all those areas and man, um, we’ve had a lot to do lately with the world, Kona going cattywampus over the past nine or 10 weeks or so.
Joe Scartz (02:09):
So I know you guys have experienced some of the same thing, but, um, that’s what VCG is meant to help brands navigate through. And, you know, we didn’t just start this, uh, at the beginning of March or, or whatever. We actually, um, are an outgrowth of a, uh, Omnicom owned, a retail marketing agency called TPN. Um, so about four years ago we launched TPN prime to tackle Amazon. Um, yeah. Um, and then the, the short version is, uh, you know, we wanted to grow outside of Amazon due to client asks and, um, there was a need to create a brand. Um, so we built velocity commerce group, uh, about a year ago actually. Um, and have expanded into all those areas I talked about earlier. So it’s been a, it’s been a wild ride. And how,
Joe Barsness (03:00):
How has your career grown to get to where you are today an d what do you do at velocity?
Joe Scartz (03:05):
I am, uh, chief digital commerce officer for, uh, velocity commerce group and, um, and TPN, uh, spent a lot of time on the VCG side of things lately. And my, my, my career has been, um, pretty focused on, on digital all the way back, uh, in the days when, uh, around 1999 or 2000, when, you know, you had to teach people what an animated gift was and, you know, the click through rates on banners were sky high. Everybody wanted to click on banners back then. Uh, but
Joe Barsness (03:41):
Were you part of the decision of GIF vs. JIF?
Joe Scartz (03:43):
I have always been a GIF. I don’t know about you. You’ve been doing as well for awhile too, but, uh, yeah. Okay, good. We got two Joes and two gifts where you go to a good start. Um, but a winding road since then, actually, because I actually had finished a, um, a master’s degree in 2000, it was marketing, but it was, um, focused on e-com. There was some certifications for econ, uh, that were early back then. And I graduated from graduate school in November of 2001, which for a variety of reasons was not a great time to be entering the job market and even worst time to be entering. Um, e-commerce because we had just come off of obviously nine 11, but more relative to that category, we had come off of the.com bust. Um, so, you know, ended up, uh, being kind of the digital guy, uh, and an ad agency out in Las Vegas that was, uh, building a new ad campaign called what happens in Vegas, stays in Vegas.
Joe Barsness (04:42):
Oh, I’ve never heard of it.
Joe Scartz (04:44):
Yeah. Yeah. So that was our, and our partners. And, um, you know, I used to spend my, uh, mid and late twenties kind of out on the Vegas strip on the weekends. So it wasn’t a bad gig.
Joe Barsness (04:55):
Oh, very nice.
Joe Scartz (04:55):
Out in Vegas, but you can’t, you can’t what happens in Vegas has gotta stay in Vegas. So you, unless you wanna stay there forever, you gotta, you gotta get out. So I, uh, made my way back to Chicago and I’ve been here ever since, and then been with TPN for the last, uh, five years.
Joe Barsness (05:13):
Got it. And is TPN is not located in Chicago as its main office. Do you have a hub there?
Joe Scartz (05:19):
We’ve got about a hundred people a year and it’s it’s, uh, 90 people may be, and then we’re only a company of about 300 and something. So Dallas is technically the headquarters, but big offices in New York and Chicago. And then most of our VCG team, uh, is located here in Chicago. So we’re pretty centrally located working with a lot of brands and manufacturers, uh, and then, um, have plenty of, uh, partner and, uh, media reps here as well. So I spend a lot of time here, but a lot of time in New York time on the West coast when we used to travel now, I guess I do it all on zoom. So there you go. Yeah. I’m actually at a client meeting today or a new client meeting today with a couple of guys. Um, one in Portland, one in Seattle, and we were talking about he’s like, so how are you guys gonna do, you know, we’ll often depending on the type of engagement, if it’s strategic in nature, we’ll do some in depth discovery and that’s always an airplane ride, right? You go out there, you immerse in the brand and meet with the client and figure out what you’re going to do from a scoping perspective. And, uh, he’s like, how do you do discovery? And I, I just told him, I said, just like we’re doing right now. You know, we do it on, I think that was a, uh, it wasn’t Skype, but it was one of the other platforms. It’s sure. So that’s how you do it. And I, you know, maybe you guys experienced the same thing, but we’re all learning how to do it differently. Luckily we’re digital natives, I guess. So we know that
Joe Barsness (06:48):
Yeah, digital is very easy to do remotely. I think much like you, we do some discovery and sometimes it’s great to see like the warehouse and some of the physical product that they’re doing just for those folks to understand the actual physical process of moving along. But otherwise you’re right. There isn’t much pain felt in the digital industry from being remote like us. I’ve actually had a positive experience in the sales world with, you know, rather than having two rooms in different places on one video screen and everybody kind of bringing their own device and looking up this screen and then looking back at their device. I think I now prefer everybody to be on a zoom call individually, so you can look at everybody’s faces right there. And so I think that’s something that might change for us. I think I prefer that more than, you know, maybe even a conference call without video and, or a, like for sure, a room with video in one video player playing on either side. Um, that’s one thing that I think will certainly change in my world
Joe Scartz (07:59):
Definitely better when you’re trying to make a connection with a, uh, person or contact for the first time, you know? Um, right. So, yeah.
Joe Barsness (08:09):
All right. So let’s jump in. I know you’ve been doing this for 20 plus years, um, and come a long way. And then, you know, our world changed, like you mentioned nine or 10 weeks ago that I think, and you, uh, we talked earlier, we think it’s going to only accelerate that change that we are already seeing. Um, but, uh, some general questions first before I get into a couple of fun ones, um, how can our listeners who are marketers and agency folks? How can they, uh, do e-commerce really well?
Joe Scartz (08:45):
Well, I mean, it, it, it is, um, that’s the big question, isn’t it? Uh, that’s what we get paid to do. Um, it’s going to depend on what type of marketer you are, what type of brand you are, um, how big of an organization that you are. Um, the great part is there are so many tools out there, um, just on the tactical side from years of product development and, um, learning, uh, you know, working with, um, smart people like your organization that, you know, build out, um, experiences for brands and their customers. Um, along with, you know, many, many others that, you know, touch all parts of the eCommerce business, everything from, uh, the strategic piece all the way down through fulfillment and then remarketing, I it’s, um, it’s an incredible time to set up things, uh, and test and learn and do things quickly. And that’s a lot of, even with large brands, which, you know, we work with Clorox and we work with smaller brands. You, you might not have heard of like, um, you know, or, or big companies with small brands that you’ve never heard of or startups. Like we worked for the company oars and Alps that just got by se Johnson, uh, last year and helped them build their, their econ business. Um, so throughout the entire process, um, you’ve got to determine what are your, obviously your goals and objectives, but how much are you willing to spend what’s the right return? And then what’s the payback period on that return. So we actually do a lot of that work to answer that question. You just asked on the upfront to get the right answer back based on any given, um, situation. Cool.
Joe Barsness (10:28):
And what, what do you feel like is a common misconception about how people are, uh, doing sales in the eCommerce world?
Joe Scartz (10:41):
Uh, well, I think it’s fascinating. Um, you know, um, a lot of people think that because there are so many tools and, um, ways to get started quickly out there that you’ll have instant success e-com is extremely competitive and you have to build a brand and you’ve got a market and you have to have a good product. You have to have a good product. I mean, there have been cases where sometimes the products just wrong, you know, it’s wrong for the marketplace. They try and take shortcuts. Um, there are not shortcuts right now, um, to understanding your customer and the product development side of things and marrying up those two, what’s the value proposition for your brand or product? Um, so the sales process, um, to get to the consumer is still much of the same way as band. You can just do a couple of things, uh, certainly faster and that you don’t have to get to a, a particular retail outlet like you might have, and the old days just going straight to bricks. Um, uh, so, you know, that’s, a lot of people want to come to us and are looking at one or two areas where they need to accelerate their econ business. Uh, and when they do, um, oftentimes just about level setting, uh, what can be done quickly, uh, what should be a test and learn, and then what takes a bit more diligence and, um, uh, methodical sort of approach. Got it.
Joe Barsness (12:03):
And I have this question that I know could go many different ways, and I think it probably changed recently, but what’s the future of e-commerce now what what’s going to happen. We were both seeing increased need for it, but beyond that, what do you think that it will drop back down? What are, what are you thinking?
Joe Scartz (12:24):
Um, well, it’s fascinating. I think that prior to this whole, uh, you know, situation that we’re in over the last nine or two weeks, it was about 10% Of, um, Total retail sales in the U S was e-commerce related. And that vary pretty dramatically by category, just depending on like grocery was somewhere around three or 4%. And obviously, um, electronics was much, much higher computers. Uh, obviously music has changed a long time ago, but, um, as we go forward, it’s about how are all of those different categories going to grow furniture was growing quickly, right. Um, so you had some of these lagger categories that were starting to catch up even pre COVID. And what I think is happening now is more and more people have, uh, tried, we’ll pick a category, have tried grocery, for example. Um, what we’ve seen is that, uh, those numbers have gone from three or 4% of penetration to be over 10%. Uh, if you look through the duration of the year, so what will get people to stay is if that becomes an experience that is as good or good enough to save them a couple hour trip on the weekend, if that’s what they value, some consumers are gonna always value going into the grocery store to make the right selections. But if you can get an experience that even, um, is adequate enough to take, um, 30% of those folks from an online shopper only to a hybrid shopper, you going to see a massive increase off of what was a smaller base relative to other categories that will stick. And so there were some articles out early in the pandemic where people were talking about, you know, this is a blip and it’s not going to stick as time has gone on, and we’re still at home. And even though some of those at home orders are slowly being lifted, people are not necessarily comfortable going to a grocery store. Um, I think we’re going to see a larger percentage than not of people that actually accept that migration and stay majority, uh, e-commerce customers, or at the very least buy online, pick up curbside or pick up in store such that you’re going to see that acceleration stick. And I think, you know, ultimately if we’re looking at groceries, a category, I think that 10% or upper single digit percent is here to stay as we go into, um, 20, 21.
Joe Barsness (14:52):
You got, you got one family that definitely, probably isn’t going to give up, uh, uh, shopping online after having an experience, we just were able to go to our cabin last weekend. And, um, instead of shopping days earlier and repacking and all of that, my wife, uh, got a grocery delivery, uh, you know, at early afternoon and everything was what we needed to go to the cabin. And we literally grabbed those bags and put them right in the cooler. So we didn’t have to, you know, do that extra shopping run. We didn’t have to worry about what goes in, what doesn’t. It was just that order was coming and it went straight somewhere. And that was a convenience we’ll probably never give up. Right.
Joe Scartz (15:38):
Well, those of us with small kids, right. Or with children, right. Who’s got two hours on the weekend to go to the grocery store.
Joe Barsness (15:45):
So now we do it at 10 o’clock at night with a delivery for the next morning. Right?
Joe Scartz (15:51):
Yeah. And they figured out, and this is a key point because a lot of the people that were saying, Hey, this isn’t going to work. They were looking at the current moment in time in April when you couldn’t get a delivery window. Well, I’m in Chicago. And I can tell you that Instacart has sorted that out. Even Amazon fresh, who for a certain period of time wasn’t taking new customers, they figured it out. They, I mean, these, these companies along with the grocers have hired hundreds of thousands of people across the country that is a massive shift in the labor force. And so with that shift has come a, um, an enhancement of the experience back to at least where it was almost pre COVID. The thing you run into now is less about delivery windows, and you still have some stock issues for certain products at certain times, but nothing like we saw, uh, even four weeks ago, I mean, it’s really come around as they’ve, as they staffed up. So, um, yeah, I mean, this is a real acceleration of trends that were happening across categories that I, that I think is here to stay. And you see, um, you know, I know, you know, in talking before this podcast, both of us have seen an increase of, let’s just say inquiries about, uh, new ways to reach the consumer through e-comm. So it’s it’s happening and I think it’s going to stay right.
Joe Barsness (17:07):
Right. Um, I have another fun question for you. Uh, and I’m curious about this. I don’t work in this world very much, but I have this curiosity and I have a feeling you might know, uh, is Amazon a monopoly. Yeah. And what’s going to change soon?
Joe Scartz (17:25):
Yeah. I don’t know. Who am I going to upset with my answer to this question, I guess? Um, I do not. Okay. So if we look at retail and this is their line on this, and I, and I think it’s fair. If you look at retail broadly and you isolate their retail business and the percentage of retail, they have relative to all retailers in the United States, North America and the world, they are not a monopoly. They’re not even close to meeting the threshold of being a monopoly. However, if you begin to l /eook at the way that they are approaching vertical integration across not just retail, but different services, um, and even some, you know, some, even some private label goods, some hardware based goods, you can probably look at certain categories and come to the, and surmise, I suppose, that they have the potential to ultimately be a monopoly. I do not believe based on the common definition of monopoly that, you know, you could take this to court and find out that, you know, in their current incarnation, they are a monopoly. I think when you start looking at monopolistic, Um, uh, tendencies that, that may evolve over time relative to a discussion about Amazon, you actually might have to look more at what they’re doing on the AWS side, um, more what’s happening on the, uh, Alexa side of things, and then start to determine, well, are they a monopoly? Are they just a big player? How are these things creating vertical integration? That’s crushing mid-sized players. And then, you know, you have to ask yourself, is that monopolistic, is that innovative? Is that some hybrid of the two? So it’s hard. And I think it’s hard because it’s hard to put them in a category today where you may be have a, um, case is in pure e-commerce in the U S um, because in that case, they do have a higher percentage than anybody else. And it’s gravitating towards 50% of total econ. The challenge with making that argument though is more and more retailers, Walmart target, Lowe’s home Depot. Those guys have all been in the news, cause they’ve all reported over the past week and their eCommerce sales are through the roof. They’re all growing faster, particularly I should say Walmart and target then Amazon and e-com sales. So they will chip away at that. And it’s, they’re doing that through, of course the power of their omni-channel offering. Whereas Amazon doesn’t have that with the exception of whole foods and, you know, some Amazon go stores and a four-star store in New York. Um, so it’s a complex nuanced question. Um, what I do think where you could pivot into a different conversation that we probably don’t have time for is just regulation of technology companies in general, you know, your Google privacy issues, Facebook, privacy issues, Amazon scale size scope, vertical, vertical integration, monopoly. Like what is that, uh, set of technology company, um, regulation that looks at all of them broadly and then determines where there’s some issues, but that’s, that’s a complex one too, and that’s got a different podcast. Of course we should do that one. Yeah, no, I haven’t irritated by that one. Actually leave me out. Okay.
Joe Barsness (20:54):
Uh, one, we have time for one more question and this may be a whole other podcast as well. Um, but maybe some high level points on who should sell on Amazon and who should not
Joe Scartz (21:06):
Great question. I think if you’re, um, you know, if you are a brand that, uh, is highly concerned about, um, clearly your brand image, I mean, you know, Apple still certain products can’t buy an Amazon. Uh, if you are concerned about pricing challenges, if you’re concerned about third party sellers, marketplace issues, counterfeits, uh, if you’re, um, any kind of, um, medicinal organization, it isn’t so much that you say carte blanche, we’re not going to sell on Amazon. It’s how and what are you going to sell on Amazon? Um, skew rationalization across your channels is critically important, uh, price points across your channels distribution agreements, which, um, may not be set up to protect you from price erosion by third party. Sellers are all important to look at. Um, so oftentimes we start to answer that question with clients, by looking at, uh, sort of a channel based strategy by skew and by a line product line, uh, to help them make sure that the right products on the right channel and that’s more important now than ever before. And, you know, I was listening to, I mean, was a bit of a, um, outspoken, I suppose, guy, but if you listen to Gary, Gary Vaynerchuk, he, uh, was talking the other day, uh, at a, a webinar. I had had 30 minutes to listen into and it was, it was refreshing, but it was, um, uh, his comment was if you’re a large brand and you’re not doing D to C in 10 years, you’ll be dead, you know, in a very, very Gary Vander Chuck way to put it. But he also said that he thinks that 50% of eCommerce sales could be DDC in the next, over the next decade. Uh, it’s a big number. It’s a big percentage. We do know it’s growing. Um, whether or not you’ll be dead if you don’t sell D to C, I don’t know. But the point he was making is that whether you’re a Coca Cola or a Kimberly Clark or name your CPG company, um, this is clearly a new, um, means of distribution for you that you need to consider to create a direct to consumer relationship and offer some product differentiation and to build your brand. And if you’re not, you’re, you’re missing out that the challenge for them of course, has been the, um, uh, the economics of it. How do you make it work? How do you go from, you know, shipping big, old pallets to out to some wholesaler, letting them distribute them and then, uh, kind of just cashing your checks now it’s Oh my gosh, we have to be marketing organizations, sales organizations that sell direct to the consumer. That’s, that’s a whole different ball of wax hand, uh, you know, a different, um, economic model. So yeah. Um, lots of different things to think about.
Joe Barsness (23:45):
Um, well, thanks for sharing. Um, yeah, no, that’s, that’s a question I’ve always wondered as, as I thought, why wouldn’t you a while back? I thought, why wouldn’t you sell on Amazon? And then I, as we start to hear some people that talk about why they’re not doing it, um, and what the downsides to selling on Amazon are. So it’s great to see that come into play. Um, so really cool to get your perspective on it. Um, unfortunately that would be a whole another podcast, Joe, of course. Yeah. Thank you for letting me drone on that question. That’s unfortunately all we have time for today. Um, thanks for joining us on mind, your own marketing business. You can find Joe firstname.lastname@example.org as well as Jascartz on Twitter. And then Joe, if you want to do a little plug on your podcast, I know you do one of your own as well. Oh, wow. Thanks, Joe. No, I didn’t. I didn’t know we were going to go there. Yes. We also do the, uh, Mo and Joe Epic talks with my friend, uh, and principal at Q division Manolo Almagro. So you can find Mo and Joe’s Epic talks at iTunes or Spotify and, uh, and, uh, appreciate it. Thank you for that. Awesome. And thank you to our listeners for joining us. Uh, you can download episodes of our program by going to fjorgedigital.com/mind your own marketing business, or subscribing to the show on iTunes, Stitcher, SoundCloud,
Dee GallegosSpeaker 1 (25:10):