Interview: The Liberated Consumer Has Roared to Life, with Andrea Leigh, Founder & CEO, Allume Group

Transcript:

Peter Crosby:
Welcome to unpacking the Digital Shelf where we explore brand manufacturing in the digital age.
Peter Crosby:
Hey everyone. Peter Crosby here from the Digital Shelf Institute. It's our favorite time of the quarter when Andrea Leigh from the Allume Group joins Lauren Livak and me to recap the consumer and industry data that you need to know to sharpen your strategies. In Q1, it was all about the liberated consumer and the imperative to drive profitability with retailers. Andrea brought all the data and insights for you to feast on. Andrea Leigh, welcome back to the podcast. We are always learning something from you when you come to talk about the latest trends in your quarterly reports. Can't wait to dig into Q1. So similar to your other trend reports, you're going to dive into shopper, retailer, manufacturer, Amazon trends, and this quarter it looks like most of these trends are based on the changing environment for the consumer and how they're reacting. What are you seeing out there from a shopper perspective?
Andrea Leigh:
Yeah, well, I mean, I just want to say we have so much fun putting this report together every quarter because it's a real opportunity to kind of connect with a lot of thought leaders and really dive into some of the research around the consumers and digital commerce and things like that. So yeah, really, really enjoy doing this.
Peter Crosby:
The passion comes out in the report. You can tell when you read it. It's like this stuff makes us happy. And so thank you for doing that.
Andrea Leigh:
Well, and I think there's so much that consumer brands can do with it, really understanding kind of what's happening and what's coming. There's a lot of opportunity. So from a shopper perspective, we're calling this quarter the Liberated Consumer. And the reason that we're calling it that is it's really about brand loyalty kind of being up for grabs. And so the big takeaway here is, well first payments release their consumer sentiment and spending report, which I think they do that once a year around this time. And so that's always very exciting moment for us because there's so much great research in there. And Lauren, I can send you a link to it. We have it actually at the end of our EIQ E-Commerce Insider quarterly report, as suggested extra reading.
Lauren Livak:
I took a look at that and I hadn't heard of it before Andrea shared it. It is super valuable. So we will put in the show notes and also put it on the DSI website as well for people to reference.
https://www.pymnts.com/study/consumer-inflation-sentiment-deals-shopping-grocery-retail-inflation/

Andrea Leigh:
Yeah, I mean I love free reports, so this is a great free one. So the Liberated Consumer, so in their report they show that nearly half of grocery and retail shoppers would leave their favorite brand right now for a less expensive competitor, so that's kind of the brand switching and the loyalty component. In addition, half of the shoppers are citing that they are reducing their spend in some way, shape, or form right now. And that's happening in maybe buying fewer kind of items, smaller basket sizes. I think we've been seeing some of that, but it really varies by category.
And they release some category data that shows kind of where consumers are cutting back spending the most. And where we're seeing spending cut back the most is in clothing and shoes, groceries and electronics. So those are kind of the categories where, are there any categories where you're spending lesson and these are the ones that consumers report. The ones that have kind of stayed the same are interesting, pet products, office supplies and health and wellness. And those are kind of ranked lowest in terms of consumer spending less. So my takeaway here was in the health and wellness-
Peter Crosby:
We all love our pets, first of all.
Andrea Leigh:
Right.
Lauren Livak:
As a new pet owner, I will spend a lot of money on my pet.
Andrea Leigh:
Right. Yeah. And also within groceries, you have some discretion, you can cut back on, you can spend less and you can still eat and you just might make different things, eat different things. Within pets, I feel like there's not a lot of wiggle room, you have to care for them. And then the health and wellness I thought was really interesting because I don't know if you guys have been following this Estee Lauder like lipstick index, I think we talked about this last quarter, but when times are tough, women buy lipstick. But just the idea that beauty care, beauty products and facial care and skincare and those categories are still performing really strongly for most of our clients. And it's because they're kind of more little splurges for consumers. So you might not buy the big electronics item or upgrade your iPhone right now or whatever, big purchase, big ticket purchase, but the small splurges, splurging $30 on a new skincare regimen or something is more attainable. So I think there's some interesting things there.
In choice of merchant, the report talks through some really interesting things, and this is actually consistent with non-inflationary times. They cite that when choosing where they're going to shop, the most important factor is ease and convenience, followed by price and discounts. That's up a little bit. And then down at the bottom, of lowest importance is pick up and delivery options and speed. And that's been true pre-pandemic, changed a little bit during the pandemic. It looks like that's coming back where the speed of delivery is not the most important factor for consumers. In fact, it's not even in the top three or four. It looks like it ranks like five in terms of choice of merchant.
And I think it's so interesting because the retailers are all racing to do the fastest delivery possible and retrofit their stores for pickup and make sure that they can compete with Amazon on same day delivery. And there's all these ultrafest delivery companies that have popped up in the last few years, but it's actually just not a top area for consumers. I think it's occasion driven. So there's certain occasions where speed is incredibly important. We want to have an offering there for the shopper, but everything doesn't need to ship one day 'cause it's not the most important factor.
Peter Crosby:
And I wonder because I think about that stuff a lot in this period because there's a snapback from the things that were required by COVID to exist for consumers and we're snapping back from that. And then we're also reaching this point where all of this stuff needs to get rationalized to drive towards ultimately omnichannel and all of this being a profitable business. So to me it's kind of a bright spot because it could give a lot of retailers and direct selling brands a little bit more wiggle room in terms of what they really need to promise. And that what we've been seeing is that it's most important that the consumer knows what they can expect and that delivery is transparent. Less than that oh, I need it by the time I blink my eyes. I think-
Andrea Leigh:
That's such a good point, Peter. The customer just wants to know what to expect. And the variability I think is what creates the dissatisfaction with the experience. It's like, well they said one day it didn't come in one day or they gave a really wide range and I don't know what to expect.
Peter Crosby:
And we all know that the infrastructure that's required enabled in order to be able to deliver that correct answer is really hard. And I think that's what people are struggling with, depends on where the customer is according to a distribution center, all those kinds of things that are really hard to figure out on the fly as a consumer is about to press buy. So I understand the difficulty of it, but I think if that stuff can be figured out over a period of time, then hopefully people can spend less on fulfillment, not more.
Lauren Livak:
And I also think it's important not to confuse convenience for speed, where I think that used to be what convenience was and now it's an experience or it's being where the consumer wants to shop. It's not necessarily Andrea to your point, getting it the next day. So I think that's also a shift in how we define what convenience means for the shopper.
Andrea Leigh:
It could have to do with payments and things like that as well. And speed is listed separately from... Well, they have pick up and delivery options. And then speed and speed is 1, 2, 3, 4, 5, 6, it's ranked seventh. So really telling in terms of what the... Or not necessarily telling, but seems like a mismatch between what the consumer wants and their stack ranking of these priorities and what the retailer is trying to deliver right now. And I think there's an interesting insight in there. But I get it. I mean if you're Walmart, you are not going to be outdone by Amazon. So at some point it's less about what the data's showing about the shopper and it's more about making sure you're competitive with the other players in the space. The other category that was holding strong from a suspend perspective was obviously they call them vice products, so alcohol, tobacco, et cetera. So consumers aren't cutting back as much on those. And I think we've all maybe heard there's some saying about alcohol being recession and inflation proof.
Peter Crosby:
I can attest to that in my household.
Andrea Leigh:
So a lot of interesting stuff in this report. I think for me the big takeaway for the brands is really focusing on that loyalty marketing and this if brand switching is high and half of consumers are saying that they're spending less and that they're trading down from a brand perspective, this is really the time that we need to focus on two things. We need to focus on retaining those existing customers. So it's much cheaper to retain an existing customer than it is to acquire a new one. So not to say we shouldn't focus on customer acquisition efforts, but making sure that we're really protecting that consumer base, that existing consumer base. And then if you are a product that's kind of more in a premium price point, really communicating what that value is about because it's not that the shopper isn't willing to spend it right now, they're just being a little more thoughtful about their purchases.
And so we need our messaging to line up with that. So for example, if you're selling the moisturizer that's $5 more than the competitor on the digital shelf than the next best competitor, you need to be able to really succinctly explain why that product is more expensive, what is different about the formulation, what's different about the regimen that you're supposed to follow. Maybe it's not a daily use moisturizer, so it's more expensive, but it stretches longer from a usage perspectives. But it's really hard to do that in a succinct way online. And so really leveraging the retail media that's at your disposal via more display type advertising where you can customize your message, making sure that that information is front and center in the image blocks where we know that the mobile shopper is getting a lot of their information. I think that's really important for brands right now.
Peter Crosby:
And Andrea, when you think of your customers that you work with, your clients who are coming to you for the education around a lot of this stuff that we're talking about, do you find that in the period where growth at all costs was sort of the priority, people really, really put the pedal to the metal on customer acquisition, do you feel like they were just keeping loyalty humming along but weren't being particularly innovative in it and that's sort of what needs to be re-energized? Because these themes aren't a surprise necessarily, but it must be sort of where are you going to put your attention and investments over the next year or 18 months or something?
Andrea Leigh:
Well, in addition to the consumer changing, so they're more likely to switch, loyalty's lower right now, I think the tech is better to do this. So a few years ago we didn't have as many targeting capabilities on Amazon advertising, for example. And Kroger didn't even have a demand side platform up until last year. And so if you look at the tools in our arsenal, they're expanding and they're changing and they really do allow us to focus on that. They allow us to focus on all types of marketing goals and objectives, but they really do allow us to focus on loyalty in a different way than we could a few years ago from a retail media and a demand side platform perspective. So you can take Kroger's audience data and you can market to them across a whole bunch of different demand side platform advertising.
And you can target consumers who've bought your product or similar products or heavy users in the category. I mean there's a lot you can do with their stratum interface now that didn't even exist a few years ago. And Kroger's just one example, I mean, Walmart has their own demand side platform. Amazon has their own demand side platform, but even on Amazon advertising a few years ago you couldn't target display ads to anything but search. Now you have all this audience data you can use. So the landscape's changing and I think we want to make sure we're taking advantage of all the available tools.
Lauren Livak:
And Andrea, if we think about the brand side, the manufacturer side who are trying to react to these changes from the consumer, you had mentioned where the consumer might be shifting where they're shopping, so instead of going to a ShopRite, they might be going to a Walmart because it's a better price and that's a shift in dollars for a brand that they need to figure out. So what are you seeing happening from the brand side and how are they really accounting for that?
Andrea Leigh:
Yeah, I mean at least as far as retail media goes, I think we're seeing them try to be more flexible about where they're spending their budgets. And that's hard because more often than not, brands are in a position where they've contractually obligated with the retailer to spend a certain amount on retail media, but that doesn't have to mean that week to week it's always the same. And so if we're starting to see a lot of our sales shift to, for example, from Walmart or from Amazon to Walmart in a given month, we may want to move some of our retail media dollars over there to better support that customer and make sure that we're messaging appropriately to them.
I also think that the competitors are really different across the different retailers, and so there may be more competitive threats on one platform than another, maybe more substitute products for your product. And so really understanding that competitive landscape and using some of the retailer's data if that's available in their platform or some third party data to understand that competitive set and make a strategy to remain competitive, I think is really important. But figuring out ways to have that flexibility with those dollars across the platforms I think is really key.
Lauren Livak:
And that requires a different planning process. It's not like set the budget one time per year and then that's the budget for the year. And I think that's a really big shift for how brands are thinking about it. Would you agree?
Andrea Leigh:
I totally agree, and we did a share group on this a few weeks ago and one of the things that came up, everyone was kind of sharing their hack, if you will, to create agility in that line item on their P&L. So can they work with their finance team to ensure that retail media budget can be a little bit more flexible across the retailers just within their own? Or what can they do within their own organizations to create some flexibility because we need to move with the shopper.
Lauren Livak:
A hundred percent. And to that point about P&L and profitability, is that the shift you're seeing from the manufacturer side that that's more of the focus right now because of the environment that we live in?
Andrea Leigh:
So for the manufacturer, yes, profit is a huge concern. We did our quarterly poll and the manufacturers reported, 45% said that was their top concern, profitability with retailers right now. And then that was the top concern and it was above everything from rising supply chain challenges to change management and layoffs and staffing and things like that. But profitability with retailers was the top concern. And they're experiencing everything from rising costs of raw materials for their products to increasing costs for labor. The contract negotiations between suppliers and retailers have been particularly brutal this year. Amazon is really asking for the moon. And we're hearing that it's the same with the other retailers as well. Everyone's profit pinched. The retailers are in a unique position where they've had to roll out in-store pickup and new e-commerce capabilities and everything and all that stuff's expensive. So there's a cost associated with it.
So anyway, the top concern was around profitability with retailers and the trend that we're observing from a manufacturer perspective is what we're calling or what we've seen called premiumization. And so it kind of goes contrary to what you would expect during an economic time like this. You would think that we'd be more focused on deals and couponing and really just trying to focus on our lower price point items. And the research we've done has shown that manufacturers have been doing that for the last year to try to drive as much demand as possible, but it's really hurting their bottom line. It's not a sustainable long-term strategy to be constantly discounting and focusing on low price point assortment. And so instead, a lot of them are starting to go the other direction and focus on the higher income consumer and focus on this idea of premiumization.
And there's this great quote from the WD40 CEO, Steve Brass from their recent earnings call. He says, "Premiumization creates opportunities for revenue growth, grows margin expansion, and most importantly it delights our end users." And they're doing things within WD40, adding features to the products like a spray nozzle that is inflexible or one that is flexible. So you can get into tougher spots with the WD40. And these are just small examples of premiumization, but adding features and benefits to our products that make them more user-friendly, that make them have more value to the consumer, and most importantly, allow the manufacturer to charge a slightly higher price for the products. And I mean obviously a great way to improve your profit position is to raise your prices and it can be sustainable if you're really offering more value to the consumers. And so this term premiumization was raised in nearly 60 earnings calls in investor meetings over the past month. So it's like a hot trend.
Lauren Livak:
Another buzzword.
Andrea Leigh:
Exactly, it's a new one to add to the list. And everyone from [inaudible 00:19:29] to WD40 to chocolate companies and beer, this has been a trend for a little while in the alcohol market, which is really thinking about how do we up level the offering and focus on the higher price point items and drive more value there. So I think a lot of these manufacturers are embracing some of the offerings that cater more to the higher income shoppers and people who are just willing to pay more for the products right now because discounting and focusing on low selling price assortment isn't a great long-term strategy.
Peter Crosby:
Yeah. Lauren, just note to the team, the team being you and me, that feels like another podcast topic.
Lauren Livak:
Agreed.
Peter Crosby:
Focusing on premiumization as long as I can get a customer to saying it. Very cool. Thank you so much for sharing that. Andrea, you are too shy to point this out, but I do want to remind our listeners that Allume Group has incredible training around contract negotiations with retailers. And so I would just encourage anybody that's thinking about that for the next season, there's great brain power to loom that you can tap into.
Andrea Leigh:
Thanks Peter. Yeah, our two most popular courses are mutual profitability, which is kind of diving into that profit equation between manufacturer and retailer and then Amazon annual vendor negotiations, which is really focused on Amazon specifically and that contract negotiation process and how to have mutual success.
Peter Crosby:
So retailers also need to be able to pivot quickly as more shoppers might be visiting their store and they need to provide experiences that they want where they want them. What are you seeing in terms of new experiences to make coming to the store almost required performance by consumers? How do you lift that interest?
Andrea Leigh:
Yeah, so we're calling this experiential e-commerce, this concept of experiential e-commerce or infotainment, e-commerce-
Lauren Livak:
New buzzword, two buzzwords on this podcast, just to call out.
Andrea Leigh:
We're loading y'all up today with all kinds of new-
Peter Crosby:
Brace yourselves.
Andrea Leigh:
New buzzwords, just going to throw them at you. And there's this great quote from the Walmart CFO, John David Rainey. He says, "The more eyeballs that are coming to your digital platforms, the more advertisers will want to spend money." And the common thread through all of them is a greater digital engagement with our consumer. And the term digital engagement, I think this is kind of a new KPI for retailers, and I mean to some degree for brand manufacturers. So with this idea of experiential commerce, it's about how do we give the shopper more value from an entertainment or infotainment perspective when they're shopping on our platforms? Because years and years ago when I was at Amazon, we used to look at this metric called time on site. And this was how long a shopper spent on the site before they made a purchase.
And more time on site was considered a bad thing because e-commerce used to be extremely transactional and if the shopper spent too much time on the site, it meant they weren't finding what they were looking for. And so we were doing a bad job. But I think that has completely flipped. And now the shopper, the GWI report that we shared last quarter shows that in terms of reasons that consumers go online to begin with, the one reason that has moved up the most places in the last two years is to be inspired. And so we're spending time on all of these social media apps consuming short form video because it is entertaining not for any other means to an end, it's just pure entertainment. And the more that we can capitalize on that intersection between entertainment and commerce, I think the better chance we have of engaging that shopper, of increasing that digital engagement.
And so that concept of e-commerce becoming less transactional, more experiential building content to tell that story. And it doesn't have to be content on that own retailer platform. It can be content through content creators and influencers. And I encourage everyone who's listening to go onto YouTube and search Amazon haul, H-A-U-L, and you'll find a million content creators who buy cheap clothes on Amazon and try them on for you. And it's very clear what they're doing. They're showing you stuff and what it looks like and unboxing it, and they're not trying to pretend that they're first, about their lifestyle. And then secondarily, oh, we also occasionally recommend products, like their whole job is to recommend products. And it's incredibly entertaining and has, I mean, at least for me has a pretty high conversion rate in the circles that I keep.
So I think finding ways to increase that digital engagement. Now brands don't have a lot of control over what the retailers are doing obviously, but ways that... First I think it's important to think about, it's a two-way communication. And so that digital engagement, we can just control what we can control so we can control our content, we can control the influencer content that we direct. We can also also control our interaction with those consumers. So if we do have a really successful social post or something that gets a lot of likes and comments, that's great, that's the inbound. But we also have to have outbound metrics where we're looking at are we responding to those? Are we engaging with those consumers? What are we doing to keep those conversations alive?
Peter Crosby:
And Andrea, was that list that you were just rattling off because I heard you say earlier, digital engagement is becoming a new KPI. Are some of those measure, because I'm imagining our listeners thinking, well, okay, but how are people measuring that in a way that's actionable?
Andrea Leigh:
I think it's a great question. I mean, I think the first is looking at what can you measure? Do you have the capabilities and is it possible to measure some of those input metrics, some of the outbound KPIs, like your interaction with some of those consumers. But I also would look at what is the retailer measuring? So what type of digital engagement metrics are they focused on and which are a priority so that you can think about what impact you can have on those.
Peter Crosby:
How you can influence that, yeah.
Andrea Leigh:
Yeah, how you can influence those. So I would start with the retailer. I think they're all a little bit different in what they're looking at. And a lot of those might be within the advertising metrics, retail media metrics, but looking at that. And so I think that's one part of the experiential e-commerce.
I think the other part is chatGPT, and this was interesting. There was a study or a survey that was done by Supermarket News and 82% of grocers are considering AI a necessity to remain competitive in the future. And 59% of grocers are testing an AI solution in 2023. And we already saw that Instacart is replacing their search with chatGPT functionality. And so now search is going to become, in addition to shopping becoming less transactional, online search is going to become less transactional. So we're going to be able to have a conversation with the search. You can run the search on the waterproof hiking boots. And then when they send you results, instead of trying to find the right refinement, you can say, "But only show me the ones in my size," or, "Actually, I only want black ones," or whatever your shopping preferences are on that particular shopper journey. And so that interactivity I think within the search is going to be really exciting and interesting, and I'm excited to see what some of these retailers do with that this year.
Peter Crosby:
Wow. It's amazing to me just how much that capability is rapidly transforming experiences. We're seeing it of course on the brand side of the people who are trying to generate content at scale for all the retailers and use cases they have to serve. And the idea of being able to automate that to some extent is incredibly exciting. And then you think about how it can make the consumers search so much more delightful and influenceable, if I can say that. It's a stunning sort of change for me seeing that happen.
Andrea Leigh:
More entertaining and engaging and it's also more efficient. So I was creating, we're working on a course about Kroger right now, Kroger retail media, and I wanted to make a graph that shows the online and in-store traffic comparisons for all the major retailers. And I did a bunch of Google searches and no one had a canned one that I could use. So I went to chatGPT and I'm like, tell me how many monthly users Kroger has on their website. And it gave me an answer, and then I was like, what about in store? And then it gave me an answer, and I'm just in Excel, like typing these down, typing these answers down. And I'm like, what about Amazon? Well, what about just US Amazon? And then I got it to give me within 30 seconds all of the data-
Peter Crosby:
The data-
Andrea Leigh:
... I was looking for. I mean, I'm not a scientist, so I don't have to have perfect data. So it worked for my purposes, but it's really easy.
Peter Crosby:
But also remember that it's probably data from 2021 at best because it stopped learning.
Andrea Leigh:
It's true.
Peter Crosby:
At least the current version, stopped learning,
Andrea Leigh:
It was 2021 data. But I was like, well, I don't know that we get something-
Peter Crosby:
Anything fresher.
Lauren Livak:
Directional.
Andrea Leigh:
[inaudible 00:29:19] fresher.
Peter Crosby:
It's directional.
Andrea Leigh:
It worked for my purposes because it was about relative comparison. But yeah, so interesting what's going to happen with that. And then the last data point I would share is around Kroger, because I've been immersed in the world of Kroger recently. They are actually in their last earnings report, recapping, they talked about digitally engaged households as a KPI. So they're looking at consumers that are engaged in both physical and digital, but using that term and having a metric around it that's talking about their digitally engaged households and tracking the growth of that segment specifically.
And so going back to what can the brands do, understanding what the retailers that they're working with are measuring and what's important to them, and then figuring out how you can influence that. Because if you think about how you might influence that metric as a consumer brand, if Kroger's looking at their digitally engaged households, well, we want to make sure that our shoppers are cross shopping. And so what are some ways that we can do that? How can we target them from a retail media perspective? How do we make sure from just a retail readiness perspective that our products that are available in store are also available online, that we have the right content so we're turning up for search all of these things, but how can we influence that metric as a brand manufacturer?
Lauren Livak:
So Andrea, last but not least, what's happening with Amazon? I know they've made some big moves around healthcare and they announced Amazon Today. So what are we seeing from the Amazon side?
Andrea Leigh:
Yeah, it was hard to choose for Amazon because there's so much to talk about this quarter, particularly with their big entry into healthcare and their acquisition of One Medical. But the Amazon trend that we're coining this quarter is called platforming. And if you look at what they're doing from a healthcare perspective as one example, they're really focused on becoming a platform for providers. So One Medical is a little bit of an anomaly relative to their other efforts. If you look at the clinics and some of the other things that they're working on, they're becoming a marketplace aggregator for different online clinics to schedule appointments, for example. So you can go online and you can say, "I need to see someone this afternoon," and the marketplace will serve you up all the local clinics in your area that have an appointment available for you.
And there's like a buy box. I mean, it looks a lot like their e-commerce platform. And then you can schedule the appointment right from the website and even pay, I think, right from the website. And a lot of their activity in the healthcare space, we just did a big healthcare deep dive on them for a client, has been around this idea of platforming. One stat that I was very surprised to learn was that Amazon already has a 24% market share in the healthcare cloud computing market. So I mean, we all know AWS is huge, I think because it isn't a part of our day-to-day as consumers in a way that we see, we don't spend a lot of time thinking about it, but it's an enormous business for them. It's highly profitable, and they've already made really good inroads in some these industries.
And so they're platforming creating capabilities for everything from lab workers in a lab environment to voice to text some of the records and some of the patient records, all sorts of things, big data to try to do more diagnoses and analysis of patient data, all the way to appointment scheduling. But it's all about their platforms that they're building in order to enable companies to be successful there. I think the one medical acquisition where they actually bought a real healthcare provider network is a little bit like their Whole Foods acquisition in that they bought just the right size of a company that they can test some of these platforms that they're building on that provider community.
I think they bought, I don't remember how many clinics they have off the top of my head, but they had something like 800,000 users. So that's a not too big, not too small, nice. It's just the right size for them to experiment on with some of the things that they're building. So I don't think that they plan to be the next healthcare provider for in-person services, but I do think that they're going to use that for a lot of experimentation. But healthcare is-
Lauren Livak:
Andrea, I was just going to mention when we were talking about this, the thing I love that stood out to me that I didn't necessarily think about is they have the information about the patients that they're able to, and they have the clinics and they can use that information to understand, hey, are you being treated for this type of disease and/or are you having these types of symptoms so then we can market these particular products to you?
Andrea Leigh:
Absolutely.
Lauren Livak:
You're not getting individual patient like Lauren's data, you're just getting broader subsets of data, and then you can use that to target additional products. So it opens a whole new realm and kind of connects all of those pieces together for Amazon.
Andrea Leigh:
A hundred percent. And if you look at the types of audience lookalike data that they could come up with based on knowing the care history for 800,000 patients, they know that if you're on this medication, you're probably going to have these side effects. These side effects have these OTC solutions. They can do a lot of lookalike audiences that protect the patient data, but still teach them about what prescriptions and conditions tie to what OTC medications. From a retail media advertising perspective, it's going to be huge, really excited about it from an advertising perspective, but the healthcare isn't the only foray they've made into platforming.
Peter Crosby:
And so I just wanted to be curmudgeonly on this for just a second before you move on. I totally acknowledge what Lauren said, which is that this is aggregated data. Nobody knows what you in particular have. Is Amazon a company that consumers are sort of willing to trust with their healthcare data in order to enable some of these options because they've not always proved themselves reliable in this area?
Lauren Livak:
That was my first reaction, Peter when we were talking about-
Andrea Leigh:
I think it's a great question, Peter. I think there's probably different profiles of consumers that are going to be more adopters of it versus-
Peter Crosby:
So I'm old is what you're telling me. It's my curmudgeon.
Andrea Leigh:
No, in my mind, I think it's going to come down to how much stress does your current healthcare path to purchase create for you? And in the phase of life that I'm in, personally, I have three children and a busy work life and operating within our traditional healthcare system is an enormous tax-
Peter Crosby:
It's a nightmare.
Andrea Leigh:
... on my time, and it's a huge pain point. And so if I don't have to make a call and make an appointment for the downtown Seattle doctor's office to get my kids seen for an ear infection, and I can just go online and do this thing and have an online visit, and I'll pay 30 bucks out of pocket for that happily. So I think it's more of a function of how much pain you're feeling in the current healthcare system relative to the risk of giving up your data.
I mean, it's a lot like Google, right? They know everywhere I've been, I'm willing to give up that level of my data in order to have the benefits of the convenience that Maps provides me and all these other things. So I think it'll be interesting to see what the adoption is for some of these things. The pharmacy stuff's really interesting. They went and they sourced 50 of the most commonly prescribed medications, and they offered them at a super deep discount for the Amazon Pharmacy customer and they can be shipped to you. So they went more on the kind of top sellers versus the breath probably just to test it and see how that works out. But again, kind of a platform for some of these drug providers to sell some of their products.
Peter Crosby:
Okay, I'm done being a curmudgeon for the moment, so please proceed.
Andrea Leigh:
I think it's a function of pain.
Peter Crosby:
Yes, definitely.
Andrea Leigh:
In my mind.
Peter Crosby:
I think that makes sense.
Andrea Leigh:
Okay.
Peter Crosby:
Literally and figuratively.
Andrea Leigh:
The other platforming examples are around their delivery network. So this is interesting. In their last earnings call, they announced that they had in the last two years built a transportation network roughly the size of UPS. That's pretty vague, but they're not just keeping it for themselves, they're renting that out to other providers. They'll do deliveries not just for themselves, but for other retailers and things like that. So some interesting things happening there as well as their launch of Amazon Today. So Amazon Today, it's allowing local stores to use their platform for shoppers to shop and get either same day delivery or arranged to pick up in store. So again, using their platform to work with some of these smaller retailers and capitalize on some of these consumer trends we're seeing around buy online, pickup in store, and Buy with Prime is another great example, using your Prime membership as kind of a platform across other retailers. So I think this is their quarter for platforming and thinking about how do they scale some of these things that they've built originally for themselves into other retailers, markets, consumers, et cetera.
Lauren Livak:
And Andrea, what's the big takeaway then from Amazon as we kind of close out thinking about them?
Andrea Leigh:
I think there's a couple. I think with more platforming comes more data for Amazon, which is going to open up new retail media opportunities. So we talked a little bit about healthcare. We'll also know a lot about your local shopping behavior, and so that's pretty interesting. We'll know what other retailer sites you shop on if you're using Buy With Prime. So there's some really interesting things from a media perspective, probably both onsite and offsite programmatic advertising through their own DSP. And then I think for some of these industries that are a little newer to them, I mean, healthcare's not new, but it's hard. These brands that play in these industries can help. They can partner with Amazon if they choose to help them understand the space, to help them figure out how to grow it or disrupt it, if there's value in that for the brand.
And as an example, many years ago I worked on the launch of a baby registry on Amazon, and we didn't know anything about baby registries. I mean, I didn't come from category management or brand marketing or anything like that, but my job was to revamp and relaunch our baby registry. And it was really the partnership with the vendor community that helped us build a successful registry. So they helped us understand what the first time parent really cares about, what sort of products we need to have in our portfolio. They helped us understand some of the perks that can make it a lot more successful, like completion discounts. So if you buy everything on the registry, you get a discount, better ways to share it, build it, user interface, all kinds of things. The vendor community stepped up and helped us with because it was in their best interest to make it successful because they knew they would sell a lot more products on the baby registry.
So I think there are opportunities to insert yourself as a brand, but the challenge is finding the right level and the right team to insert yourself with. And you have to be kind of usually a pretty sizable player to be heard. But I think particularly in healthcare, Amazon's going to need some help. I mean, it's a really difficult industry with a lot of regulations, and it's a much faster path, I think for them to work with some of the vendor community to understand it than to try to build that knowledge internally.
Peter Crosby:
Well, Andrea, as always, you arrive full of data, full of ideas for how to put that data to use for our listeners' advantage. And as always, Lauren and I are super grateful that you take the time to come by and share with our community.
Andrea Leigh:
Thanks for having me. It's always so much fun to talk to you guys and really appreciate the time.
Peter Crosby:
And normally we would be offering a great short URL so people could go find the report. But as we record this, you actually haven't published the report yet.
Andrea Leigh:
We'll have it published by the time you guys release. So we will be able to include the URL so everyone can go download the report and review some of the new buzzwords that we gave you to use in your day-to-day.
Peter Crosby:
And for those of you who consistently refuse to check the show notes, we know that you'll be able to find it on the partner section of the DSI website once you're hearing this podcast. And Andrea, is there any section on your site that they can easily find your quarterly reports that we can send them to?
Andrea Leigh:
Yes, they can go to allumegroup.com and click on library, and that's where we'll have all of our reports and past reports.
Peter Crosby:
Perfect. And I'm sure people can sign up for some sort of email communication that will tell them every quarter when this comes out.
Andrea Leigh:
Absolutely.
Peter Crosby:
Perfect. Loyalty marketing, Andrea. Thank you again, Andrea. Such a joy as always. We're really grateful.
Andrea Leigh:
Thanks for having me.
Peter Crosby:
Thanks again to Andrea for all her data and wisdom. Next episode, we begin profitability month on the podcast with some perfect timing, so be sure to tune in for some great topics and guests. I know for at least 45% of you, it's a top concern. Thanks for being part of our community.