How to Get Your CEO’s Attention for the Big Swings of Commerce, with Jeriad Zoghby, Chief Commerce Strategy Officer at IPG

Transcript

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Peter Crosby (00:00):

Welcome to unpacking the Digital Shelf where we explore brand manufacturing in the digital age.

(00:16):

Hey everyone. Peter Crosby here from The Digital Shelf Institute driving Growth While Cutting Costs The Gordian Knot of Commerce. Today, our listeners know that achieving that over the longer term will require deep investments in systematic automation and data. Many of you have struggled with convincing the C-suite and board of why these investments are key to survival. Jeriad Zoghby, chief Commerce Strategy officer at IPG joins Lauren Livak Gilbert and me with insights from years of 15 minute CEO conversations that ignite change as well as a new set of research on where some of those opportunities lie. Jeriad z, welcome back to the podcast. We're so delighted to have you back.

Jeriad Zoghby (00:58):

Yeah, glad to be here too. It's always fun.

Peter Crosby (01:01):

Yeah, and it's particularly fun I think right now because you've been to Cannes recently had had a ton of experience and there and at other places talking with the C-suite about Y commerce is so freaking important to figure out in this current period. And based on those conversations, you also kicked off a piece of research about how to help bridge the conversation gap between the executives who are running commerce and their C-suite, their CEO and others to help them really understand the risks and opportunities that commerce is creating right now for the core business. And so I think we see that every day, that gap between what the people on the ground know who are in the mix, and of course all the pressures on the C-suite of everything else that needs attention and budget, et cetera, and how to make sure that the sort of the why of commerce to the CEO's KPIs are made clear. And it seems like you've really arrived at some helpful thinking around framing those conversations.

Jeriad Zoghby (02:12):

Yeah, I have to tell you too, I gave a talk at Cannes on creative and commerce and I got to say, as all of US Commerce folks, it was standing room only at a creative festival. I absolutely loved that. It was fantastic. People really loved the topic, but I just wanted to highlight that it's interesting to see commerce just continue to expand and people start to really understand its value. Even like a creative festival, everyone's very excited about it. To your point though, here's what I've seen, and it's been interesting. I've spent the last two to three years with half dozen CEOs and their C-suite, and often it starts with a very simple discussion and it's kind of highlighted something for me. And I've got a friend, he's a very senior guy, he's a c-suite guy, but when I first met him, I had spent 15 minutes with his CEO O and all of a sudden it became commerce became this hot topic and he was quite pissed at me in a fun way, in a friendly way when he said, he said, how in the hell did you get him to prioritize this after 15 minutes after I spent three years trying to get him to prioritize it.

(03:23):

And the truth was, it wasn't that I knew things that he didn't know. This person's actually quite brilliant doing some phenomenal stuff. It was simply because when we're often in the commerce operations of things, we're very focused on what we need because the truth is we haven't always got the investment. We all came out of the back end of covid, especially in certain industries with our hair on fire and doing, I mean, some of the commerce leadership we have across industries is incredible for what they pulled off. I still remember phone calls with people were crying, dealing with the how do I get my page up and if I don't get my page up, we don't get sales and legal's giving me a hard time and all these different retailer requirements. But the CEO lives in a world, to your point, who is constantly getting pulled by sustainability goals, supply chain challenges, inventory and stuff.

(04:15):

So they're dealing with so much noise. The question is why would commerce all of a sudden become the thing that stops 'em in their tracks? And I would argue not just the CEO o but the board, for many companies, it has now become a board level topic as it should. And it's because when you've reframe it not about what we need to do and the challenges, but instead what it means to them and their role, it gets their attention and not because we're just telling a good commerce story, it's because it legitimately is a risk to the enterprise. It's a risk to market share, it's a risk to margins, it's a risk to revenue, and they see it. So if you can reframe it in simple terms for a CEO, they very quickly get on board. And in fact with that, oh, go ahead. Sorry.

Peter Crosby (05:00):

No, sorry. I just wanted to ask, when you say commerce, are you referring because commerce is broad, it's brick and mortar, it's digital, it's all of that. When you were talking about commerce in this context of, because I would think the CEO would want to get at least omnichannel brick and mortar, what are you talking about in this moment when you talk about

Jeriad Zoghby (05:18):

Commerce? I love that you challenged me on that because it's a great question. Often when we think of commerce, we think of channels and capabilities as we should because that's what it's going to take to fix it. I'm talking about commerce as a disruption. What changed over the last five years? Five years ago, if I went to some of the clients and I remember having these conversations, they go, does it really matter? I don't sell that much on Amazon or I sell frozen pizzas. I don't shift frozen pizzas. And then the world shifted and then it became material for them that this was a risk to their business. And so yeah, it has had a material impact on the business as a disruptive force, and it is across physical and digital. But to your point, it's more about what changed. So that's what we'll kind of want to do.

(06:05):

There's three topics and then there's a special demographic that I always like to kind of talk about too because I think people oversee them. And I know we're going to cover that a little bit, but there's three topics, very simple ones there was hoping we could talk through that I think really kind of highlights both the framing. But to that question you just asked, what do you mean by commerce? Why is commerce? And it is, again, it's not about, oh, I got to fix this. It's about what? It's the risk to my businesses. And a lot of it is at an industry level, not at a channel level.

Peter Crosby (06:39):

Okay, kick us off. What's number one?

Jeriad Zoghby (06:42):

Alright, so the first one, and by the way, these three trends are part of our guidebook for the CEO of navigating commerce. We'll make sure that's successful to everyone so that everyone can tell this story on their own. The first one, and it sounds like a silly name, but it's the emergence of invisible commerce. And the easy way to think about this, I have been tracking commerce now for quite some time with global studies and one of the stats I see most people not pay attention to, which believe it or not, one of the CEO O meetings I had just this last fall stop the CEO in his tracks in five minutes, which is related to buy again. So buy again is a feature we all use. You use it when you're ordering groceries, at least most people, it's funny, we have it in the study that 65% of people in the US, for example, use it.

(07:30):

But the truth is every time I ask people in an audience, everyone's hands go up. I think mainly because no one wants to feel like the oddball who doesn't use these simple features. And to be honest, I find it hard to believe that people don't use it. But whether it's reordering groceries, reordering a pizza, because you don't want to ask your kids what they had on it last time, reordering light bulbs because God forbid you have to try to remember the exact size and everything else. It's a convenience factor. But what's interesting about buy again, one is that many of us use it in a format that is really new, which is I will walk through my house, for example, realize I need light bulbs and I order buy again right off the bat. I don't put it on a list, I don't put it on a digital list.

(08:13):

I literally just either put in a basket that moment or I buy at that instant. And that means commerce is now very much a transparent part of our life. We just shop all the time the moment we have a need. But what's interesting about that, when I order the light bulbs that way, I didn't drive to a store, I didn't walk down an aisle. I didn't try to remember preferences for toothpaste or light bulbs or diapers or anything. I didn't check out and I didn't drive home. I just pressed a button. That does not mean someone didn't shop an aisle for me. It doesn't mean that there wasn't a POS transaction, it doesn't mean someone didn't deliver it to my home. So the commerce steps still are there. They're just invisible to me. I clicked a button and it happened. Now the reason that becomes important is we lose a bit of intimacy when that happens, right?

(09:05):

It's still happening. I'm just not experiencing it myself. So when we say invisible commerce, just so we're clear, that's what we mean by press a button. It happens. It's just invisible to you as the consumer. So I don't see the competitor products that are on the shelf. I don't see new product launches, I don't see displays, I don't see promotions. And what's interesting about that, that's both in physical and digital, right? When I click that buy again button, I don't even go back to the PDP. So you may be wanting to let somebody know and go, well, we've enhanced our product and we've updated the copy and I clicked buy again. You didn't see it. So that's what we mean by invisible commerce. And the first risk with that is the fact that there's a bit of a loss in intimacy that's happening with brands and consumers. Not that people have stopped physical shopping, but as trips have been split across that with things like buy again, they're not engaging as much with the content or with the physical stores they want to work.

Lauren Livak Gilbert (10:06):

And what would that take then to switch their mind, right? If you're never seeing any other products and you're trying to be a competitive brand to break in and they're just buying again, what does that mean for brands?

Jeriad Zoghby (10:19):

So there's two sides of that equation, right? If you happen to be the product in the basket,

Lauren Livak Gilbert (10:24):

Amazing.

Jeriad Zoghby (10:25):

It's amazing, right? Your goal, you've got lifetime value lock, you're going cool, just keep doing buy again at that point it is don't go out of stock. And in fact, the reason I mentioned the previous CEO is we were five minutes into this discussion and he just froze the meeting. He had his C-suite in there and he said, wait a minute. When we did that skew changeover, did I lose all those buy again shoppers? And they all kind of sheepishly said, yeah, I think we did. That started to, he saw very quickly, I am always trying to get loyalty here is a systematic way of having loyalty. And I may have put it at risk because I didn't think about it this way. And again, if you're in personal care food, this is a very common use by shoppers. So first side of it is, if you're in the basket for goodness sake, don't lose it, right?

(11:22):

Don't have the risk of losing that bag. Again, if you're not in the basket. It's the flip side of it. You need to be able to act in real time. And what's so interesting, what's happened over the last five years is not only did commerce become a bit invisible to us, but the data is very visible. I can go check whether a product is in stock or if they have the assortment at the target around the corner for me right now, five years ago, that data would not have been trustworthy even if they had it. Now that data, because are relying and sitting on top of it, is much more reliable. And as a competitor, if I see that happening at a store level, at a market level, at a channel level, that's real powerful information as a competitor. So when you think about what's happening with invisible commerce and what gets the CEO o excited is first it is for goodness sakes, protect that basket.

(12:16):

That's why that freak out moment happened. And again, he just froze the meeting as soon as he heard that. But the flip side of it's true too, if I can become a more data-driven agile enterprise, which says that's a lot of words, a lot of, sorry, I used to be a consultant, right? A lot of consultative terms, but it's legitimate the idea that if I can see that data, I can act on that data, which is challenge one and two, I can look at my own supply chain and make sure I'm not going to lose my position and God forbid I go out of stock because I'm chasing out of stock for someone else. That doesn't do me any good either. If I can do that though, there's tremendous power. So when we talk about where the future is going, what the CEO often is looking for is, okay, that's what I need to be able to do.

(13:01):

And that's where they start to look for that investment. They're going and saying, if you can help me get there, that's a much easier thing for me to get approval from the board for because you're showing me how I can win share. So this first topic is about the fact that this invisible commerce is creating greater loyalty when you're in the basket, but it honestly creates greater opportunity even when you're not. It's just you have to change your strategy. It's no longer about putting up a sample in a physical store and relying solely on that. You still need to do those things in-store. Creative is going to become even more powerful as we digitize the storefronts, but simultaneously, I've got to look more systematically across the market and be able to act faster. So that's a big change. Let's be honest, for most companies, it's what most commerce leaders want to be able to do. It's telling the story to helps the CEO O understand why it's important to them,

Lauren Livak Gilbert (13:56):

Rather the jaw dropping moment. Sorry, go ahead, Peter. I'm just contemplating what

Peter Crosby (14:01):

I would be like. Well, exactly. I'm putting myself in sort of the shoes of our listeners who are probably the ones who have the operational strategies to act faster and to do those things, but those strategies are expensive. So they're coming to the board to say, Hey, we've got to be able to react faster in the marketplace, hopefully react in the marketplace, use data more effectively. Are those the kinds of conversations that commerce executives are trying to have with the csuite getting blocked on that? Yeah.

Jeriad Zoghby (14:36):

Every commerce leader I know understands the value of that real-time data is trying to conquest today. The question is, can you help the CEO understand it? Because if the CEO understands it, you go from trying to make this work within the budget constraints you have. And for that leader, I was mentioning at the beginning having a completely changed strategy in fact that CEO had him go lead a four day ELT meeting for how they solve commerce across the enterprise. Commerce became the priority. So did he not know that he should be using real-time data to try to win share? No. He knew that stuff all along. How he got a CEO to grasp that was different, and him being able to articulate that was the key.

Peter Crosby (15:20):

And part of it was putting it in the context of winning share or our share being at risk, right? And making it clear why that is. Am I That is

Jeriad Zoghby (15:32):

Exactly right. That is the key. And we're going to come back to Sharon in a bit. But yes, that is the key because the CEO EO gets that CEO EO understand. And what's really important too, if you notice, it's kind of funny. I always look for, and this is not to insult any CEO EO, but CEOs are not commerce experts. If I can't explain this to a family member, then I can't explain it to a CEO. But the truth is, is that every CEO uses curbside. I guarantee you they use curbside or local delivery or ship to home. So they all understand the convenience factor, and every one of 'em uses things like buy again. So the fact that they're using buy again and they're going, wait a minute, I do that. Well now I've anchored them to reality of their own life. And then they start going, oh, you know what I do?

(16:17):

I just keep reordering reordering until that stupid thing's out of stock, and then I'm frustrated. I got to go shop again. Then all of a sudden, there's a very practical side to it too, where they go and say, I get this. Now I can relate to this. Versus, let's be honest, when you try to explain the commerce operations of a modern branded manufacturer, it's really complex for CO to follow this is not very easy. And all of a sudden they start going, we need real time data for conquesting. We need our systems to run. And you're going, yeah, I've been telling you that for the last three years.

Lauren Livak Gilbert (16:51):

Tell a simple story, relate it to them. Make it easy to understand. I've heard a lot of brands use search. If we're not found in search, we're not found online. No one can buy your product, tell whatever that simple story is for them to relate to and then latch onto, and then you can go into the details from the lower level. But as long as you have the buy-in to your point, then you can do those things.

Jeriad Zoghby (17:11):

Absolutely. And that to me is the key is it's the trick of knowing your audience. We all know our audience is commerce leaders, but we don't always know our audience from A CEO and A CEO is a little bit different group. It's a unique group.

Lauren Livak Gilbert (17:27):

So let's dive into the next theme. Convenience. Consumers want what they want, when they want it, where they want it, how they want it. So let's talk about what that looks like.

Peter Crosby (17:36):

That shit is expensive.

Lauren Livak Gilbert (17:38):

Yes, absolutely. Stop watching things.

Jeriad Zoghby (17:42):

I kind of touched on it, but this is another one that I think we do the first, the buy again thing I don't think enough people pay attention to, which is always amazing to me. You don't see enough studies with that in there. It's one of the reasons I've been looking at it now for about five years, but curbside and local delivery, we've watched the adoption rates go up. In fact, in the US now, what we saw was across categories, about 70% of US consumers use either curbside or local delivery. And I'm talking about the Instacart kind of local delivery. Here's the part that to your point about convenience, consumer convenience versus the business as a consumer. And granted, my kids are too old to wear diapers, but if I just plated long, I used to work with a personal care company for a long time.

(18:26):

If I wanted to buy diapers, I could pick 'em up at Walmart, I could order 'em online and do curbside. I could order 'em online from Walmart or Instacart, have 'em locally delivered to my home. The first three of those are from a local store, or I could have walmart.com ship them to me. So I now have four different, and especially a modern parent, the convenience of having options for picking up diapers in whatever way I need is wonderful. But as I explained to that CEO of that personal care company I work with, just because Walmart had a curbside doesn't mean you sell more diapers, right? It doesn't create parents. It doesn't create babies. It doesn't create baby poop. Your market is what the market is. It's not going to change. And I know there's always a little bit of nuance in here. You could argue that maybe you get to sell more cookies because it's curbside, because it's kind of like going through the checkout.

(19:17):

I get that. But in general, your personal care products, most of your food and beverage products, consumer electric, you're not selling more because this channel opened up. What you've done is given your consumers more convenient. So as consumers, it's wonderful. We've all kind of gotten, we have that expectation now that no matter how much people use curbside, it doesn't go weighting. Now what happened though is the cost structure went up. So neither the retailer nor the brand is selling more diapers, but the retailer has to have someone go get those off the shelf. They have to have systems that they manage. So there's a lot of technical investment. We've seen them invest in automation and assortment because they understand the operational costs are not justified by the incremental price they're giving on having them pick the product for you. And in turn, we're seeing the brands also pick up costs.

(20:11):

And that's why we call it the cascading cost of convenience, right? As the shopper has more convenience and does less work, the retailer picks up the slack, and as the retailer picks up the slack, three of those options were digital order, even though they were fulfilled different ways, the brands are picking up costs. It's effectively what I would call a digital version of DSD direct store delivery. So they're managing the content on the pages, they're creating all the content for the pages, they're managing the storefronts, they're managing the retail media, they're responding to the ratings and reviews. If someone complained about a product they got from a grocery store, historically, they go back to the grocery store. Now they're writing a note in saying, Hey, that package showed up at my house and it was busted. And the retailer's like, okay, brand, you take this on.

(20:59):

It's your responsibility. So brands are picking up content costs, syndication costs, retail media costs, analytics costs. So the cost structure has gone up. So when you look at those two things in combination, one, your market really hasn't materially changed. I know beauty has really blown up, and that's wonderful, but it didn't blow up because of convenience. It blew up because of things like social, but the cost structure has changed. And just as importantly, the cost structure is not stable. So we always talk, and you see it in the news all the time, how retail media keeps growing and growing and growing. Well, that's just cost for brands. So this is a real, it was kind of interesting that the personal care, CEO, who's a different CEO than the previous one, that diaper thing really threw him for a loop. He was going, but I thought this was where my growth, I heard from my strategy firms that, oh, digital commerce is all about growth and I'm going, market's still your market, unless it materially changes.

(21:58):

You have to look at it from a cost structure standpoint. And that was a big io, and he was one of the ones that immediately said, let's go do a workshop. I need the rest of my c-suite to understand this because that affects their margins, dramatically affects their margins. And if you don't address it, the CEO is smart enough to see this. And again, if you notice, again, simple story, very relatable. We all use these features, but it's a death spiral for a brand because if you don't fix the cost structure issue, it's going to get worse. And what we find often is these division presidents will acknowledge in these meetings that they know about the problem and that they are okay with losing some digital commerce sales because the margins aren't good in it. And so you see this little thing of, I'm losing a little bit of share and my costs are still going up, and then I'll lose a little bit more share and my costs go up and it's just this horrible place. So sorry, I'm sometimes known as Mr. Doom and Gloom. You can see it.

Lauren Livak Gilbert (22:54):

It's realist. I like it.

Jeriad Zoghby (22:56):

But again, from a CEO perspective, we went from that first topic to this one, and they're looking and going, how do I get this under control? So I'll pause there, but that's a really simple concept of I have more channels to fulfill through more channels to order through. My market didn't change though. And that means I've got to do something as an enterprise to deal with this because it's not stable yet. We know the costs are going to continue to go up,

Lauren Livak Gilbert (23:25):

But what does that, how look like the way I kind of imagined

Jeriad Zoghby (23:29):

It? Or is that a different podcast?

Lauren Livak Gilbert (23:30):

Yeah. Or is it a different podcast? I mean, I think about it more as a loyalty play. How can I keep the customers that I already have? How can I maybe increase the basket size for the buy online pickup in store, curbside, whatever lingo we want to use for picking up and not growing additional customers. But what does that look like? Is it a loyalty play? Is it increased value? Because you can't necessarily change the cost to serve. They don't really have control of

Jeriad Zoghby (23:56):

That. You kind of can. No, that's a great note. So the two things that I have historically seen from the C-suite that respond to this, the first one is I need to automate way more. We see this a lot, especially in beauty, and I'm going to play favorites here. When I look across everyone from consumer electronics to health and beauty to cosmetics to food and beverage, whatever it might be, beauty is usually at the forefront. Consumer electronics isn't too far behind, but they've been in this space for a long time. They're very tech savvy, they're very aggressive, and they're the ones looking and going, I have to automate as much as I possibly can. And you have to think about this. If you're running a commerce team, this does not mean your team is going to shrink because the truth is you're not covering everything today as it is.

Lauren Livak Gilbert (24:42):

You can't. But

Jeriad Zoghby (24:43):

The idea that you have to automate significantly more is an investment plate because you look back to that first topic where you're going, I need data. I need to act in real time. And then you look and go, but if I'm just going to hire up people to make that work, this isn't going to work. And that's real quickly where the CEO sees these two things basically as oppositions to each other, they've got to address 'em. And so the first one is, I have to automate as much as I can, and very importantly, I have to do it in a systematic way because it's not just automating things like content generation, which I need to, it's automating the connection of things like supply chain, retail media and content production as a systematic thing and not as individual things. Because that's the beauty of having the CEO on your side.

(25:29):

When we're often doing things as commerce leaders, we're often having to pick our battles, but the CO wants to take big swings and they will appreciate it going, listen, if you're going to do a 10% improvement in your operational costs in your department, that's not going to move the needle for me. You start showing me how we can connect supply chain to your commerce operations to product, to retail media, to content production, and we're having a material impact on the operational costs of the business. Now you've got my attention. The second thing we see them do is they look and go, to be honest, these channels suck. I'm just being honest. The costs are going up for consumer digital commerce channels. You can't avoid 'em. How do I offset it? And many of 'em are realizing that B2B is a channel for them. So if you're in the consumer brand, say you're in food and beverage, you look and go, can I sell to more mom and pop shops?

(26:21):

Can I sell to more office parks, more corporations, more hospital networks? Because if I can, my margins are better in those channels. And historically I would've had a little bit of pushback from my sales teams. But the truth is we've also lost a lot of talent in the sales teams post covid as people picked up other jobs. So building B2B portals over the last two, three years has become a big focus. And part of it is to offset this margin dilution. So when you look at the C-suite, those are the two things. You see them lean into operational automation, but at systematic scale. And then two, how do I reallocate some of my p and l weight to B2B, which usually a little bit better margins.

Peter Crosby (27:07):

Fascinating.

Jeriad Zoghby (27:09):

These are great. Having been in these workshops with the C-suite, they take this stuff seriously. But to that earlier point you brought up here, you look at this and you go, this isn't about how I run commerce operations better. It's how I become more important at an enterprise level.

Peter Crosby (27:28):

How am I moving the needle? How am I increasing gaining competitive advantage? How am I showing up in those places of opportunity, whether it's at these invisible moments or someone else, my competitor has lost in these invisible moments, and I'm going to get in and snatch them up as quickly as possible. Building that just seems challenging, but also really exciting because you can have a significant impact on the growth trajectory of your company.

Jeriad Zoghby (28:01):

Absolutely. And you think about the big projects, when does the CEO lean in? It is often those large scale enterprise engagements. It is not that commerce is going to do this on their own. It's that commerce takes the lead. And that's what you see. I mean, I don't want to call out names, I'll be careful with kind of the ERP systems and stuff, but when they're playing a bigger role and you see the CEO and the CFO make major investments in this because they see a broader enterprise impact, I think commerce can have a bigger impact than many of those investments they're making. It's just no one's showing them why.

Peter Crosby (28:38):

And your point in this CEO guidebook is that the storytelling of it, how you sort of hook the CEO to have this broader conversation is incredibly important. And so

Jeriad Zoghby (28:55):

Exactly

Peter Crosby (28:55):

With that, let's go to that third. Where do you see another opportunity for commerce to make a big swing here?

Jeriad Zoghby (29:07):

Yeah, so the other one is related to, I have this term, we call it the product communities. So I want to explain what it is, and this is one, so I intentionally picking the three themes, and we put these in the reports. These aren't just the things where you see the massive disruption to the enterprise, but the ones that get the CEO's attention, that causes a little bit of a freak out. And that's what I'm looking for. Because the truth is the CEOs get, there's someone knocking on their door every day, all day lined up to tell them about their problems. So when you can get their attention, you know, got something, right? So when it comes to these communities, so here's the way to think about it. First of all, product communities are basically the people who, it's like a social community wrapped around a product and we find it in marketplace channels. A great example. There's a protein powder. I won't name the company even though I think they should be bragging about this. There's a protein powder company that sells on Amazon, very strong brand for this. And one of their products has 200,000 ratings and over 40,000 reviews.

Lauren Livak Gilbert (30:12):

I feel like I should use this protein powder.

Jeriad Zoghby (30:14):

We'll talk about, by the way, and I recently found collagen peptides and similar kind of stuff. It always blows me away. But thinking about that, 40,000 people took the time to write a note about this product sometimes, and by the way, we have some stats on that. I'll give me a second. But they're making product suggestions of enhancements. They like to see recipes for other users to use how best to use the product problems maybe with film. But you're going 40,000 people. Imagine that that's not even at a brand level. That is one product and one market and one channel who are sharing advice about a product. And you look at that and you go, we cannot look at that, which we've historically done. It's like, cool, I'm going to look at some of the data. This is a dialogue channel. They want to be heard.

(31:02):

They're giving you great advice. And then we always joke and go, if you're not paying attention to 'em, I can assure you there's a competitive board on Amazon today that takes advantage of that stuff. But statistically, one of the things we saw, and this is pretty consistent across the globe, but in the US this always blows me away this number, but 43% of consumers claim to have written a product review in the last 30 days. That is a massive number. So they're definitely paying attention to this stuff. And this isn't the part, by the way, I don't even share this to the ceo. I usually bring up the 40,000 reviews. It does blow 'em away that a product has that and it is real power for a brand that can get that kind of review, that kind of loyalty. Here's what I usually do with a co EO. I've got this little trick I do. It's like it's a thought exercise. I actually did this in my talk at camp too.

(31:53):

Let's say that 20 years ago, and by the way, usually everyone, by the way, we all know this, everyone discovers new products. And I did this again, I asked people to raise their hand, did you discover a new product from a social feed and influencer or just because you like range reviews? Have you ever done that before? Everyone's hands always go up. And I go, great. And 20 years ago I told you I found a product online brand I'd never heard of and I ate it. And immediately everybody's eyes go real big, right? I ate it, I put it on my skin, I plugged into my wall, or I gave it to my children, all because strangers told me it was a great product, would've sounded insane. It is always, I loved doing this to the CEOs because again, this is again very practical. They all know they've done it.

(32:35):

They're often thinking, holy shit. And I'll go, I don't often know the manufacturing standards of that company. I don't know where they source their ingredients or materials. I don't know their employee wellbeing. I don't know how they're sustained. So there's a little bit of a false equivalency. We hold big brands to high standards and then small brands, we're very trusting of what we see on the product page. And so that's the first part of it. And the idea is that brand trust now is democratized. It is both scary for a big brand, CEO. At the same time, we have to recognize that it's really valuable. A lot of small brands that now have an access to the market that they wouldn't have gotten before, which even a big brand has to recognize when they launch new brands, they're going, I need to learn from these small brands.

(33:20):

This is brilliant. I'm taking advantage of this democratization of brand trust. So that's the first part of it because that's a big eyeopener for them to go, oh my God, I do this. This is the new reality. Now where this gets interesting, and I'm not picking on any marketplace when I say this, it's going to sound like I'm making them out to be good or bad, and I'm not. But when you look at Amazon and now Walmart and especially marketplaces around the globe, they've created a new model for private label brands. They's more of a machine. They don't have to build a factory, they don't even have to contract with them. They're just like, Hey, you get to come in here and compete on equal footing with some of the biggest brands in the world. And often what I'll show a CEO o, so I'll go, here's your product, by the way, founded in 1930.

(34:11):

These other two products were founded in the last five to 10 years. They look equivalent because you're not putting your best creative in here and you're not bringing your best brand assets in here, and you're not talking about all the great investments you're making. And by the way, this is a thing. We've proven the studies time and time again, both running experiments and also consumer studies, people care what you put in those pages. It matters a ton. We put one, I don't want to give too much away here, but with a national diaper bank for a brand new sold diapers, and they're like, no one's going to watch that video because everybody already knows the diaper's going to watch and time on page just skyrocketed and conversions change. And you're going, really, people they do. They care about this stuff. So the reason I highlight that though is, and the big shocker for them is I remind them the studies show that Amazon makes about 50 cents million dollar on those smaller brands.

(35:01):

So you're now in a system that's built for those smaller brands to succeed. So if you're a big brand and you're not putting your best brand assets in that page, if you're not innovating in that commerce channel trying to show creatively why you're unique, you're not talking about the investments you make, this is a massive risk to you. If you go back to that first narrative, your market's not growing. So if these small brands succeed, you are guaranteed to lose share. So when you look at those three big narratives, it is you're losing brand intimacy, costs are going up, margins eroding shares at risk. And so when you look at those combinations, all of a sudden a CEO has all that stuff. And this is one of the reasons because I'm a big advocator of this. You cannot see Amazon as a place where you buy.

(35:56):

And sorry, this is a little bit of a sidetrack, but it's really important too. Many people see Amazon as a place to buy like cell phone chargers. And so they kind of take that mindset even as a commerce leader and a CEO, and you forget that Amazon has live tv, streaming, tv, podcasts, music gaming for God's sake. They own Twitch largest streaming platform in the world. IOT. We always joke if they were NBC, like the TV station, the network, it's like, cool, you watch the show that NBC created and then you watch the advertisement on NBC, and then you buy the product there from the N BBC website that's housed in the NBC warehouse that's shipped into NBC truck that's delivered and pushed the doorbell that NBC also owns. And you're like, if it was NBC, everybody like, okay, I can't think of 'em the way I'm thinking of, I have to think bigger.

(36:46):

So those would be my things is when you look at that, you go, and this is the one that again, it does freak the CEO out because it is a risk to share. You have to bring your best assets into this channel. You can no longer see commerce as a transactional channel. It is not. It is a dialogue channel. People are engaging those 40,000 people reviews. You can no longer dump leftover assets into this channel, which I would argue 80 to 90% of the market does. Let's just be honest. You also have to innovate in this channel. And most importantly, you have to leverage your scale. If you're a big brand, if you're a small brand, you better be doing what we're talking about here and taking advantage of it. But if you're a big brand, you better be loving your scale, all the investments you make, all your corporate social, it needs to show up here. And if it doesn't trust me, people are paying attention

Peter Crosby (37:32):

Because Jeriad, do you feel like the risk to market share is largely coming online because the upstart brands don't have access generally to brick and mortar, right?

Jeriad Zoghby (37:48):

Is that

(37:49):

True? So there's two separate things. It's a great question, Peter. I'm trying to be able to share this because one of the CEOs I got to know really well, he was in, if I say what this category was, you'll know exactly who it is. So I have to out of respect and don't worry about it. But to your question, what you find is online, it's a much longer tail. And now that longer tail is in power. And the reason you have to look at it is often we look at the long tail as a long tail and not as a private label machine. When we're talking brick and mortar, though, it depends on who you are. If you're a big brand, your risk is to regional brands. And that's where he was losing out to regional brands with curbside, because again, people you search to find their need, not to shop the category.

(38:37):

When we shop, this was a thing we talked about in my talk at can, but when we think about constructs today, physical had a construct that had aisles and a checkout, and those aisles were organized by product categories. And man, I would really want to be able to give this example. But the point was is that because he was so used to being on a shelf in one part of the store and not on another shelf, that actually had to do with pet products. This is why it's so weird, that's why I can't give away too much in the physical store. There would've been no confusion. But when things shifted to digital, and this was like in 2020, and he was still dealing with Covid and stuff, and I explained to him how people had to put the word human in the search terms and how seven of the nine auto fills on Amazon had the word human in there.

(39:20):

His initial reaction is he thought it was hilarious, and then it scared the hell out of him. He realized his regional competitors had figured this out. So his people were searching on curbside, they were finding unique, and he was like, I shouldn't have to say this as human food. And I'm like, of course not, but you do need to make sure your copy just has the word in there, so you're showing up in the search. And that's when it became a board level topic for them realizing, oh my God, we aren't ready for this world yet. So sorry for the world of the algorithm, but to your point, it's a different set of competitors in physical, but the competition model has changed because when I walk down the aisle and there's a physical shelf and the locations are driving it, it's one thing. But when we shop virtually with digital, we don't shop based on product categories.

(40:09):

Most people don't even know where navigation is in Amazon, right? Yes, we shop based on need. I have a hangover. What's a cure for it? Not where it's at. You can't find that in a physical aisle, but I can search for that digitally. So that's the thing is when we move from a physical construct or a digital construct, we move from product categories that are often defined by merchandising to digital categories that are by consumer needs. And that's where those regional players can make a big play. If you're a regional player, you lean into those trends hard. If you're a big player and you're not paying attention, this is where you lose your share.

Lauren Livak Gilbert (40:47):

Jeriad, I have a question, and I'm wondering if this has come up in any of the boardrooms. A lot of challenge, I think from the CEO perspective is it takes a lot more investment to make e-commerce work where the majority of most companies sales are still happening in store. Does anyone say that to you? And if they do, how do you combat that question?

Jeriad Zoghby (41:07):

Well, it used to be a much bigger topic. It went from, does this really matter to, does it actually make a difference? I don't care. It's too small to, if I do this, will it actually have an impact to, oh my goodness, I need this. Now what happened was, and we have to think about this, and this gets back to my point on curbside, even if it's a smaller portion, it's reached a material level where you're looking and go, I can't afford to it. It doesn't have to be 70%. Once it's hitting around 20%, everyone, and this is what we saw with retail media too, is once retail media costs got to a certain level, you start to see org changes going, we can't treat this as a sideline thing anymore. And in all honesty, one of the things that's so important to realize is how the retail model is changing in the process of this. So I think this is all fair game because it's public, but the Walmart CFO came out last summer, I think it was, and said, profitable growth for us is going to come from marketplace advertising and B2B type services like fulfillment. Well, none of that is money to be made off shoppers.

(42:17):

All that money is made off of a price. So when you look at it and you go, there's two dimensions to it. One is, I can't afford to lose a portion of my share, and I have seen the numbers on this. It is material. That was one of the meetings we had. We kicked it off going, I can't say the number, I'm not allowed to, but even without not naming the company, but it was massive how much share they had lost in a single year, and we had to kick it off with that. I didn't want people to do exactly what you're bringing up, Lauren, which is it big enough? You're like, no, it is material. No. That's what's key is it's material, not that it's the majority, it's material. And that has kind of changed the narrative on a lot of this.

Peter Crosby (42:59):

Well, Jeriad, I think thank you for walking us through those sort of three areas of this report. I know that when this podcast airs, people will be able to get the report on the DSI site. Lauren, tell them where

Lauren Livak Gilbert (43:13):

You go to resources and click partner content. You'll be able to see the report, digital sharp institute.org. Sorry,

Jeriad Zoghby (43:19):

Can I add one last thing? Do we have time for one last little, I'll keep it real

Peter Crosby (43:22):

Short. Yes. Yes. Go. Go.

Jeriad Zoghby (43:24):

Okay. Because Lauren and I talked about this, and it's just kind of funny because of the demographic thing that Lauren and I chatted about. We caught up at Cannon and hung out, and

Lauren Livak Gilbert (43:32):

We finally met in person. It was great,

Jeriad Zoghby (43:36):

And such a beautiful area too. It was really cool. Yes, millennials, no one's paying attention to millennials, and they need to, everyone pays attention to Gen Z. I'm not saying ignore Gen Z, but one is when we look at the studies consistently, millennials adopt new features at about 15 to 18% higher than everyone else, more so than Gen Z, and it's because they're in the pressure cooker of life. So I describe this as power report,

Lauren Livak Gilbert (44:03):

And I can relate because I'm in the pressure cooker.

Jeriad Zoghby (44:06):

Yeah, because Gen Z, I always describe Gen Z as like they're the pottery that's still being painted and shaped and they're experimenting and they're not set in their ways yet. And then you get to the millennials and they're at the stage of life where they're dealing with family dynamics, with often young children, newborns, career ambitions with housing, with car, and they're going and saying, if you can make things easier for me with buy again, curbside, even things that are more futuristic, like we asked in our recent study about augmented reality and ai, they were always 20 plus percent higher. And this is very common in the us. It's common in the uk. It's not every market, by the way, Spain, it's much more Gen Z, but whoever's sitting in that pressure cooker of life, you got to figure that out and pay attention to what they want because they're getting set in the ways.

(44:56):

And then the other generations, like myself, gen X Boomers, they're kind of like the pottery that's already on the shelf stacked up like plates. They're kind of set in their ways. They're going to be open to things, but it is those millennials who you really need to pay attention to at this stage. Eventually it will be Gen Z, but it's whoever's in the pressure cooker life. That's just my one piece of advice. When you're testing out new features, when you're trying to figure out what works, pay attention to who's in that. I think you're going to get a lot better clarity about what people want in the future.

Lauren Livak Gilbert (45:25):

Don't throw more stuff at us. Make our lives easier problem the pressure cooker.

Peter Crosby (45:30):

Yeah. Whereas I am in the crockpot of life. I'm just the slow cooker

Jeriad Zoghby (45:35):

At this

Peter Crosby (45:35):

Point. Alright. You heard it. The pressure cookers go after the people who are in the pressure cooker opportunities there, this figuring out where the sources of growth are going to come from and pursuing them with as much automation as possible, plus cost reduction, sounds like the key that's going to unlock it. And once again, it falls to our audience to be the storyteller that can grab the attention of the C-suite to get the big swings that are needed to be able to win that race. Did I call that?

Jeriad Zoghby (46:11):

Absolutely. And to think, I know this sounds crazy, but it allows you to play at a bigger level because commerce should be leading broader enterprise. Systematic approaches sound like a consultant again, but it's true. They should be taking the lead, and it's just the storytelling to help the CEO go and say, yeah, this is now one of our top priorities, versus them saying it's the top priority, but you're still fighting to just do within the constraints you're given, which is sometimes holding everyone back.

Peter Crosby (46:39):

Terrific. So check the report out on the Digital Shelf Institute site. And Jeriad, thank you so much for sharing this research and your experience from sitting in those rooms and changing some minds that's really, really generous of you to share.

Jeriad Zoghby (46:56):

Well, I always love hanging out with you, Lauren. Anytime.

Peter Crosby (46:59):

Thanks again to Jeriad for unlocking some of the storylines that just might get your CEO's attention for the next big swing. Again, the report will be in the partner section of digitalshelfinstitute.org. You might as well become a member while you're there. Right? Thanks for being part of our community.