Show Notes:
Reality Is Broken: Why Games Make Us Better and How They Can Change the World
https://www.amazon.com/Reality-Broken-Games-Better-Change/dp/0143120611
Allume Group Q1 EIQ Report:
https://allumegroup.com/allume-group-releases-the-q1-2022-ecommerce-insider-quarterly-eiq-report/
GWI Report:
https://www.gwi.com/connecting-the-dots
Transcript:
Peter Crosby:
Welcome to Unpacking the Digital Shelf, where we explore brand manufacturing in the digital age.
Peter Crosby:
Hi everyone, Peter Crosby here from the Digital Shelf Institute. As we all know, the ground of commerce and consumer behavior continue to shift under our feet as we near the end of the 1st half of 2022. What do we know, and how should we shift to stay nimble and drive performance and profitability? Andrea Leigh, formerly of IdeoClick and now Founder and CEO of ecommerce education consultancy Allume Group, rejoins the podcast to put the recent earnings reports and shareholder meetings in perspective as we gird our digital loins for the next six months of adventure in a digital first world.
Peter Crosby:
Andrea, thank you so much for returning to the podcast. At the Allume Group, you've come out with one of your eCommerce insider quarterlies, and we have been dying to pick your brain about it. Why don't you just dive right in? What's going on?
Andrea Leigh:
Yeah, so we put together an eCommerce insider quarterly report at the Allume Group where we do kind of scour the industry and interviewed various thought leaders to get a clear read on what happened during the previous quarter. We have some things we'll talk about today that kind of have prevailed across Q1 and Q2, and then we'll do a little bit more talking about Q2 especially as we've lapped the earnings releases now for a lot of the major retailers for Q1. But some of the big highlights kind of early read are on the shopper side, we're starting to see some inflationary behaviors, some trip consolidation, a little bit more of a sustained focus on some of the retailers that provide more of a value message and some cost saving initiatives.
Andrea Leigh:
Another shopper trend is this concept of the attention economy, where the advertisers, retailers, and social media, kind of all of the ways that we've increased our digital engagement over the pandemic are competing for our minutes. Maybe even more so than they're competing for our dollars, which has been an interesting trend. On the shopper side, we're starting... Or on the manufacturer's side, we're starting to see kind of the realization of some of the sustained increased costs throughout the pandemic and due to inflation and the recognizing of that, where obviously and the shoppers starting to see some of those being passed on to us in the form of inflation.
Andrea Leigh:
And then now that so much of the shopper journey has become digitally oriented or even digital first with anywhere between 50 and 85% of shoppers reporting that they're engaging with brands digitally before they make a purchase, that digital first kind of mindset is working its way, I think, through a lot of the consumer brand organizations. It's affecting how they're hiring, how they're organizing teams, how they're allocating their budgets to different channels. We're certainly starting to see that. And then on the eCommerce side, really starting to see some slowing of the year over year growth rates looking across the earnings reports for the big three retailers. The eCom growth has really slowed down.
Andrea Leigh:
Maybe even one might say come to a grinding halt. We can talk more about that today. Most of them looking to open new revenue streams or increase the ones that they already have to help offset some of the cost of eCommerce delivery, which is a really expensive value proposition for some of the more grocery specific retailers really beefing up their ad platforms, again, to try to offset some of that ship to home cost, which has become much more expensive as more business shifts to online. And then on the ultra fast delivery space, starting to see a little bit more of a... I don't know. Maybe like a reckoning or a more governance happening in that space as a lot of the ultra fast delivery providers are now focused on ways to do it more economically.
Andrea Leigh:
Those are kind of the main shopper, manufacturer, and eCommerce trends that we have been seeing. We can talk about all those.
Peter Crosby:
Yeah. I'd love to dig into the attention economy one got my attention. I just wonder if you'd talk a little bit more about that and how brands should be responding to that deluge and the noise. I'd love to know more about that whole trend.
Andrea Leigh:
It was actually from this really great GWI report and I think that there's... A great example of it is when I was listening to the... I don't know if anyone's listened to the Land of the Giants Podcast by Vox Media, but they did a whole series on Netflix. Netflix's one of the main metrics inside the organization is like hours and minutes watched. When you think about our digital engagement has now increased by on average about an hour and a half per day, pre-pandemic versus post pandemic, we're spending so much more time doing everything digitally. Our meetings are happening digitally. We're consuming media and entertainment digitally, and we're engaging socially with peers digitally.
Andrea Leigh:
We're certainly shopping more digitally and that's replacing a lot of in-person activities. When you think about all the ways that we're doing that, whether it's through different meeting technologies or eCommerce websites or social media platforms, those are all competing for our minutes. Those technologies are, again, replacing some of those in-person activities. I think that the attention economy is kind of a... GWI said the attention recession is already here. I thought that was a really great, great quote from them because we are in an attention recession. We have a lot of different places where we could be spending our attention digitally.
Lauren Livak:
I also think the number of channels are proliferating, right? Think about the metaverse, TikTok. I mean, I could go on forever. I'd be interested to see if in the report or what you've seen, the attention economy is leaning more towards one type of channel versus the other, or we're still trying to get the pendulum to settle.
Andrea Leigh:
They showed a chart that I thought was really telling. It kind of shows where the minutes are coming from and where they're going. The minutes are obviously coming from things like broadcast television and in-person theatrical movie releases, and they're moving to namely streaming television and gaming. Those were kind of the two categories, and gaming was the one that was just showing the fastest rise. It kind of depends on how you're defining gaming, but playing little mindless games on our phones is gaming. Those are all gaming activities. There's this great book that I read recently called Reality Is Broken that talks about the gaming industry.
Andrea Leigh:
I've been really interested in the gaming industry for the last few months probably partly because I have children that are at that age, but also because Amazon has launched Luna, which is a subscription gaming service, and subscription gaming is becoming more popular. There are fewer barriers to gaming. You can play games on your phone now. You don't need a console. The subscription platforms mean that you don't have to have... You don't have to have a system. The barriers are really coming down. But the book talks about how... I mean, they gave some crazy stats about how it was something like 60% of the population is spending time every day gaming. That really spoke to me.
Andrea Leigh:
The book also talks about how there are things that we can learn about what is so attractive about being in a gaming world that we could apply to real life situations like school and work. I thought that was really interesting. There were some great takeaways there.
Lauren Livak:
That's really interesting to hear. I think the changes are on the consumer side, right? Like where they're buying, where they're spending their attention. We've seen a lot of focus on being more efficient as a brand and a manufacturer, being more profitable. That's really, really important now, as you said, as things are changing, going back to "normal" and what that looks like. What are you seeing from brands, from manufacturers, and with your work in the Allume Group and thinking about education? How does that kind of factor into it as well?
Andrea Leigh:
Well, I think what it means for brands is that if you're... Well, first, I think the biggest thing it means for brands is knowing how much more time consumers are spending in digital environments. We have to be thinking digital first. Rather than creating a supply chain or a marketing plan or product innovation for brick and mortar and then retrofitting it for the online world, we have to be focused on the digital first mindset. That needs to exist across all of the functional areas of our organizations.
Andrea Leigh:
What that might mean from a marketing perspective is instead of coming up with the retailer specific promotional plan and media and all of those things, and then at the end saying, "Okay, and then what do we do about retail media," we need to be thinking about what's first going to resonate with retail media, because even if... The metric that I keep hearing, and I just came back from NACDS and did those really fast meetings with like 20 or 30 15 minute meetings with companies, and all of them wanted to tell me what percentage of their sales were eCommerce. Many of them were proud of the gains they had seen in that space, and I think that's great.
Andrea Leigh:
But I don't think that's the right metric for us to be looking at to decide how much of our investment as consumer brands we should be allocating towards digital, because that is an attribution metric. That's telling us where the shopper transacted. That has nothing to do with whether they engaged with your brand digitally. That doesn't tell us that. I mean, in a really altruistic world, we want the shopper to transact where the shopper is most comfortable transacting, where it's most convenient for them to transact at that moment. But we do need to have a digital first approach because we know that 50 to 85% of them are engaging with the brand digitally before they shop.
Andrea Leigh:
That means everything from having great PDPs to having really succinct and efficient and nuanced retail media advertising strategies, making... And kind of going back to some of those basics around content, you have to give the shopper all the information they need to make a purchase decision, so images and bullets and all that. Both traffic and conversion driving content is so critical to win that shopper's time.
Peter Crosby:
Andrea, you were talking about gaming. I don't know whether this is expertise that's in your head, but if brands want to show up in the gaming environment because that's where all of this growth is happening, are there yet... And forgive my ignorance because I don't... I mean, I've talked a little bit about it with some guests, but not really dug into what the opportunities are to tap into that environment in a really effective way.
Andrea Leigh:
It's really early.
Peter Crosby:
Yeah, that's what I thought.
Andrea Leigh:
Yeah. I went to Shoptalk earlier this year and a lot of the sessions were focused on the metaverse and how brands can have a presence and sort of get ahead of this next movement that we're entering. The big takeaway I had there after coming out of all those sessions was that it's just so far away still. There's still no physical goods transactions in any meaningful way happening in the metaverse or in any virtual worlds, but there's lots of digital goods. But also when you look at some of the worlds that are really popular, like for example Roblox, the population that's in there is so young, right? They're not shoppers yet. They probably will be later. They're certainly buying digital goods in there, things for their avatars and things like that.
Andrea Leigh:
But there are really only a couple of brands who've done anything kind of meaningful in there. There's like a great Vans World you can go into. You can win all these accolades for completing these skateboarding tasks, and then you can buy virtual goods for your virtual avatar there. There isn't advertising happening across these platforms yet, not in the way that we see in retail media and even like the subscription gaming, like Luna, doesn't have ads in it yet. Amazon's going to be the first one to put ads in front of the game.
Peter Crosby:
Of course.
Andrea Leigh:
Where we are seeing opportunities are on things like Twitch or gaming live streaming. Now, that's a little bit something we can wrap our heads around a little bit more, and you can put ads in front of some of those placements in order to access a new ecosystem of consumers, and then direct them to your goods and services. But within like metaverse, I think we're still like, I don't know, maybe 10 years away, five, 10 years away from being able to like say, "I need to make a Target run," and doing it in a virtual world and like actually having all this stuff show up at your house. I think we're still a little ways away, but that's where it's headed for sure.
Peter Crosby:
Fascinating. If you take that back, if we now sort of come a little closer down to earth with your line of thinking around being digital first, what do you see happening at brands to build those capabilities, to make sure that they're ready? Part of that is attraction and retention of employees that either could potentially be your digital first employees or those that you want to hang onto. What are you seeing happening at Allume Group or your clients?
Andrea Leigh:
Actually I just did a poll... Well, it's probably like a month or two ago now. I did a poll on LinkedIn asking a lot of my consumer brand connections to weigh in, but I'm also hearing just in talking with them that there are a few things they're doing to kind of move their organizations to a digital first mindset. Now, when I conducted the poll, I honestly thought it was a little bit self-serving. I was hoping they would all say education, because I just built and launched an education company for professionals to teach them about eCommerce and being digital first. And that certainly came up, but it was by far not the largest voted response. The biggest responses were putting digital talent in senior leader leadership roles.
Andrea Leigh:
That was like... I think it was something like 70 or 80% of people said that that had been most effective to their organizations. What that means is not necessarily having a VP of eCommerce, but having someone on the senior leadership team who has some background in digital. That's because you want someone in the decision making room when you're making really strategic plans across the organization that can speak to, "Well, that's not going to work in a digital world, or how could we pivot this plan so that it's more digitally focused," or sort of advocating for the digital consumer experience. That was rated sort of the top thing. Obviously education was a component as well.
Andrea Leigh:
We need to figure out how to upskill and attract and retain the talent that we have. That was the main reason, the impetus for our organization was that when I was at Ideoclick and working with a lot of brands, they were starting to hire their own teams, figure out how to have their own centers of excellence around eCommerce. I think that's growing not just even necessarily a trend, but a necessity for brands. I think it pairs well with more business shifting to eCommerce, so it's more important for brands. But also brands are really looking to figure out how to do more with less right now in an inflationary environment. How do we instead of like paying...
Andrea Leigh:
Maybe even overpaying for a lot of the digital talent that is scarcely available right now, how do we train our own teams to be able to function well and be successful in a digital organization? Those were two things that came up. Another was having like... I mean, it's boring but important, but like having metrics that leadership's held responsible for around the digital experience and whatever that means for that brand, whatever they're trying to focus on, whether that's looking at some of the impressions across the different forms of digital media, creating their own attribution models for retail media in particular, whatever it is, looking at Commerce penetration rates, like whatever that is for them, but building that into the reward systems within the organizations.
Peter Crosby:
Right. Yeah. I mean, the way people are incentivized naturally that drives behavior. It's just natural.
Lauren Livak:
Andrea, I'm curious when you're talking about talent and doing more with less, are you seeing that a lot of companies are trying to source and maybe move away from an agency model to be able to have it in house as things pivot or change? Is that a trend as well that you're seeing?
Andrea Leigh:
I think for the most strategic functions yes. And by strategic functions I mean... I think the way they're working with agencies is changing also. Maybe the function of the agency used to be to create the strategy and execute the strategy. And now I think more and more brands are feeling that this is too much of our business to hand the strategy over to someone else. We want to play an active role in the strategy, and then we still need an agency for execution. And then on the sum of the execution pieces, if it's really core to the brand, maybe they aren't outsourcing it anymore. Maybe they have found or are finding that it's necessary to source it and have more control over the timelines and the output and those things.
Peter Crosby:
And then it also seems... Coming along with that and you were talking about it earlier, speaking of inflation and things like that, that people need to get to profitability. I think you were also talking about the ultra fast delivery. Proving these business models can survive in an environment that's not fed by venture money anymore, as those spigots start to get turned off. What are you seeing out there in terms of how... What do you think is going to survive this shift in terms of the things that we've introduced in a very sort of cheap money environment? Do you have any thoughts on-
Andrea Leigh:
It's like two things. It's like a cheap money environment, and then it's all these COVID darling companies, right? There's two things going on. There's like a lot of companies that saw a really big boom because of people staying home more for safety issues. There's that. I think even before that, there was already a movement toward ultra fast delivery. But as it turns out, we all need to make money in this business and profit matters. Surprise, surprise. Companies need to make money. This is just going to be really interesting... I mean, I'm particularly interested in the Instacart IPO. I've read some really crazy stuff. Well, first, they're slowing hiring, most of the tech companies are.
Andrea Leigh:
As the earnings reports are starting to come out, we're seeing all these stocks that were COVID darlings kind of start to suffer a little bit. Even Netflix is suffering a little bit. But I think Instacart's really interesting because they create some value in the delivery experience, but everyone pays more. The shopper pays more, the retailer pays more, and then the brand even pays more because they have another ad platform that they need to participate in. I have never really seen that as a super sustainable model, unless they can become like a marketplace in and of their own regard and create value by driving incrementality. I don't know if that's always necessarily true.
Andrea Leigh:
They have beefed up their leadership team with a lot of advertising, a lot of people with a lot of advertising backgrounds. They're clearly seeing themselves as an ad platform. But the repeat shopper rate, I mean, heard it quoted as like... I mean, less than 30% of shoppers are super loyal to that service. One thing I learned working on Amazon Fresh at Amazon was that if you've done anything in the experience, whether it's pricing or delivery fees or anything really that makes the shopper feel like they're not being as responsible as they could be with their dollars and their grocery expenditures, you have lost the loyalty. If you're going to do grocery delivery, you have to figure out how to not make the shopper feel irresponsible for using the service.
Andrea Leigh:
I just don't think Instacart has nailed that from a shopper perspective and kind of what I know about how all of the parties have to pay more for the service like the grocers. I can't imagine they're wanting to lean into them too much if they're using Instacart. I do think that there's going to be some reckoning among these ultra fast delivery providers. The other thing is, I don't think it's as important to shoppers as we all believe it to be. You don't need everything in 10 minutes. You just don't. I mean, people have planned grocery trips for many years before ultra fast delivery existed. It serves a very important function.
Andrea Leigh:
But there was this report by Coresight Research where they surveyed online grocery shoppers in terms of what was most important to them in choosing to shop online for groceries and delivery speed was like the fifth most important thing. It was not number one, two, or three. It was number five. The things that made the top of the list were things that are consistent with a brick and mortar experience, like it has the selection I want, it's priced appropriately. Some of them cited not wanting to have delivery fees and that being kind of a deal breaker. I think we just got on the ultra fast bandwagon a little too quickly. I don't think it's as important to shoppers as everyone thinks it is.
Andrea Leigh:
I think for other retailers, it may often be their attempt to try to compete with Amazon. But I think there are lots of other ways to compete with Amazon, areas that are not strong that would be much more beneficial to those retailers to focus on.
Lauren Livak:
The other interesting element I think about, like an Instacart or quick delivery is the shopper, like the person who's shopping for you, right? That is different from... At least I personally know that, like Instacart versus Whole Foods, Amazon delivery is totally different, like the way you interact with the shopper who's purchasing for you. That's like an added element too, because those shoppers that are working for Instacart have different needs, kind of like an Uber driver. That's kind of how I think about it, right? I think that is going to change as the dynamic of Instacart changes as well.
Andrea Leigh:
I couldn't agree more with that, Lauren. It's an added tax for the shopper as well to be working with like facilitating your grocery shopping through another person.
Lauren Livak:
It's not seamless. You have to answer questions.
Andrea Leigh:
There's no free lunch. There's never any free lunch. You use Instacart. You don't have to leave your house, but you might get 20 texts from the shopper asking about substitutions. I mean, I know you can control all these things in settings, but you're either not going to get what you thought you were going to get, or you're going to have to be actively communicating with the shopper the entire time. I think the Instacart model or the third-party picker model works really well in a perfect environment where we have stocks and we don't have supply chain shortages and disruptions and pricing is a little bit more normalized, but we're not in that environment anymore.
Peter Crosby:
No, it's not. It's become much more uncertain. When you organize your, well, all right, my Instacart shopping around a meal that involves a central core piece of meat or something like that and then you get everything, but the piece of meat.
Andrea Leigh:
Or you get the wrong one.
Peter Crosby:
Exactly.
Lauren Livak:
Or you get something else.
Peter Crosby:
Yes. It's not helpful. I have to get over myself and actually go shopping, I guess, myself. That's just a side note. As always, we end up needing to talk about Amazon as the elephant in the eCommerce room. You spend a lot of your time looking at what's happening over there. What should our listeners be aware of as you were coming out of... As you said, the earnings reports have come out. I believe they had their shareholder meeting recently. What's top of mind for you there?
Andrea Leigh:
Yeah. It was such an interesting quarter, it's hard to decide what to talk about. But yes, they did release their Q1 earnings. I'm happy to share some thoughts on that. And then it was last week that they had their annual shareholder call. The shareholder call was super interesting. I think one of the big takeaways for me was they don't really care... They don't make decisions as a company thinking about how they're going to explain them to Wall Street later. I think there's something admirable about that that we could all take back into our organizations and think about how we can think about what's right for the shopper and maybe not always, and then how we're going to explain it, second.
Andrea Leigh:
But they doubled their capacity in the last two years from what they had built in the first 25 years. They built that capacity because they knew that the shoppers were going to need it. but obviously that had a huge impact on their cost structure. It had a huge impact on their bottom line. That was interesting to me. I think there's a little bit of a risk that we're going to see slightly less innovation from them in the next six to 18 months just based on their free cash flow. It went negative for the first time in like four years. That was really interesting. They'd been pretty cash rich for a number of years. They've never been a highly profitable company until advertising in AWS, but they've always been really strong on free cash flow.
Andrea Leigh:
But they're starting to look... The online and physical stores business is starting to look a little bit more like a kind of a traditional retailer. They talked a lot about workplace safety. In fact, a lot of the initiatives on the ballot were about worker safety and none of them passed. But what I thought was most interesting was how they talked about it. Andy Jassy spoke a lot to the science of safety and how they're trying to algorithmically solve and get to the root cause of safety issues. First of all, depending on how you look at the data, the safety issues are maybe on par with other organizations in terms of warehouse and transportation safety rates, but they did hire 300,000 more workers this last year and injury rates are always higher in the first six months on the job.
Andrea Leigh:
I'm definitely not defending Amazon. I mean, if you're one of the nation's largest employers, even having a below average safety rating means a lot of people are getting hurt. I mean, it's not meant to be in their defense, but I do think it's interesting that they're approaching it from the science of safety perspective and thinking about how can they collect more biometric data, how can they alert a warehouse worker that they're doing to a repetitive task for too long and move them to a different workstation or a different task, how can they predict when someone is about to make the type of movement that's going to cause an injury.
Andrea Leigh:
The scale in technology that they're planning to use and that they are already using was incredible, but it totally flew in the face of the advocacy groups who want less monitoring and less surveillance and more kind of hands-on approach, as opposed to this longer term find the scalable solution to the problem. That was very interesting to me. I don't see how those two viewpoints are going to marry very well ever. That was an interesting takeaway. They talked a lot about AWS. AWS is the clear darling, and it is what is funding the online and physical stores business. It grew 37% year over year compared to if you look at the online and physical stores business was even slightly negative year over year.
Andrea Leigh:
They gave a stat that just blew me away. They said that 95% of IT spend in companies is still happening on site versus in the cloud. I mean, probably a lot of that's hardware and stuff, but that just shows the capacity that these cloud providers have to grow. I mean, that was an incredible detail. It's been a huge focus of investment. That was interesting. They had Dilip Kumar from Physical Retail speak, and they talked a lot about physical retail, which seemed odd since they just closed a bunch of their stores. I mean, they really just have the grocery stores kind of still open and the Amazon Fresh stores, but it suddenly occurred to me that it isn't about them having a big physical footprint.
Andrea Leigh:
They're trying to nail the payment piece. They've now got the Dash Carts, the Just Walk Out technology, they're able to offer that in larger and larger stores. They're totally going to license that to other retailers. What retailer would want to be the one that you still have to stand in line, right? No one's going to be that retailer. It's about the payments. It's not about them having... In my opinion, it's about this payment technology and that they have the hand payments palm... I forget what that's called, the palm payments in some of the stores. That was pretty interesting, but the online and physical stores component of the business was underwhelming.
Andrea Leigh:
I mean, if you just look at Q1 and you look at kind of where all of the sales are coming from, now more than half of their net revenue is coming from services. It's like subscription services, AWS, advertising, and less than half are coming from online and physical stores. They're definitely starting to look more like a tech company than a retailer.
Peter Crosby:
And also a real estate company, as you said. They've leased a tremendous amount of space that now they're going to be subleasing a fair amount of it. I think up to a quarter of what they got in order to manage the growth that they were expecting. It's such a complex business. You talk about them spending less on innovation, but I'm pretty sure the amount they continue to spend on innovation will still outpace most companies combined in the market. It's always a good bet to keep your eye on them.
Andrea Leigh:
Yeah, they don't own a lot of those... They own very little of the warehouse space. Most of it's leased. It's a metric they actually report on, which is like the owned versus leased space. It was a very small percentage that they actually own, but you know it's weird. But those leases can be like 10 year leases. I mean, it's still a big commitment, but it was weird, and I don't know what to make of it, since they own most of the AWS physical locations. I don't know what to make of that.
Peter Crosby:
Maybe because it needs to be such a custom.
Andrea Leigh:
Yeah. It's a higher risk to have it leased...
Lauren Livak:
Well, because it's servers.
Andrea Leigh:
Yeah.
Peter Crosby:
It's the blind leading the semi-sighted in this conversation.
Andrea Leigh:
I know. Maybe someone more knowledgeable than us could comment on this at some point.
Peter Crosby:
We'll look into that.
Lauren Livak:
Well, I mean, Andrea, this is all super interesting. Loving all the stats that you're sharing. I mean, as we look to kind of look out the conversation, what are other predictions, observations? What is top of mind for you as you think about the end of the year here?
Andrea Leigh:
Well, I think Amazon is for a lot of our clients no longer like the big growth channel. We're starting to see them really shift their focus to other retailers. If there are brands out there that are still doing the lion's share of their eCom business on Amazon, it's not to say that's a bad thing, but we may want to think about how to start investing in some of the other retailers to kind of, I think, gain some leverage as a consumer brand.
Peter Crosby:
Andrea, is part of that that Amazon has just become a very expensive channel to do business on with the advertising costs, et cetera, or is it just don't have all your eggs in one basket? Or is it some mix of both?
Andrea Leigh:
I think it's both. I think it's both. For most of the brands that I work with, they are the most expensive retailers. Because of that, I'm seeing a lot of brands really try to get more nuanced about the retail media strategy and the annual vendor negotiation with them. It's like you have to figure out how to lower the cost somehow if that's a large portion of your eCommerce business. I think that for advertising that has meant we were all really anxious to get on the automation train a few years ago with paid search and you absolutely still have to use software and automation. There's no scalable way to run retail media paid search without it.
Andrea Leigh:
But we are starting to see brands take a little bit more of a nuanced and strategic and hands-on approach for winning certain keyword terms, allocating budgets. Just I think getting a little bit more granular to try to get the most out of that spend possible. And then likewise on the cost side, really trying to lower their cost to serve the retailers, so that could be things like chargebacks and shortages and negotiated terms and those types of things, better design packaging, like all kinds of things to help improve the mutual profitability of the relationship. But I think it's also that we don't want all of our eggs in one basket, because there are a lot of CPGs that a couple years ago we're doing like 80, 90% of their eCom business on Amazon.
Andrea Leigh:
And when Amazon comes to you with vendor negotiations, you don't have a lot of leverage, right? You don't have another retailer that is as developed in eCommerce. Now I think we do have other retailers that are more developed in eCommerce than they were before. We're really seeing brands kind of start to shift. The way it comes up for us is we're getting asked for less Amazon specific training and more general eCom training and getting asked for training on other retailers and things. That's what it looks like for us, and that's kind of one of the indicators.
Andrea Leigh:
And then going back to something that we talked about earlier in the conversation about digital first, finding ways to reorient the organization to a digital first mindset is another kind of closing thought I would have for the year based on what we saw in Q1, in Q2, in the attention economy, and the amount of time that shoppers are spending online and how they're engaging with brands digitally before making a purchase. Just making sure that you have a strong presence there, that it's succinct, that it's consistent, that it gives the shopper the information that they need to make purchase decisions is highly critical.
Peter Crosby:
Andrea, thank you so much for kind of just this fresh and incisive look on what's going on right now to help shape our strategies. As we head into the back half of the year, it will be exciting times and exciting holiday season, I'm sure. I hate to say it, but we're there. Thank you as always for bringing your knowledge and wisdom to us. We really appreciate it.
Andrea Leigh:
Thanks for having me. It was great to see all of you.
Lauren Livak:
Thanks, Andrea.
Peter Crosby:
Thanks again to Andrea for bringing both the news and the expert commentary in one package. Links to her EIQ report and the GWI report she referenced are in the show notes. If you want to keep up with all things DSI, head on over to digital shelf institute.org and click become a member in the upper right hand corner. Thanks for being part of our community.
