TRANSCRIPT
Peter (00:00):
Welcome to unpacking the digital shelf where we explore brand manufacturing in the digital age.
Speaker 2 (00:16):
[Inaudible]
Peter (00:16):
Hey everyone, Peter Crosby here from the digital shelf Institute, anyone in on the early days of e-commerce knows the name one-click retail, they created the Seminole platform for e-commerce measurement sales, analytics, and search optimization. When that was acquired by edge by essential in 2016, Nathan Rigby, and this founding partner have teamed up again to raise the bar on e-commerce analytics and data-driven decision-making with their new company analytic index. Nathan joined Robin me to talk private brands, retailer ad platforms, the new science of search optimization and surprisingly almond flour. So Nathan, first of all, thank you so much for joining us on the podcast to to talk about all the things, you know, from your amazing experience. We're really, really excited about it.
Nathan Rigby (01:08):
It's a pleasure to be here. And I got to tell you, I have just the utmost respect and off or what, you know, you are both doing two thought leadership in the space and creating a true dialogue of data and insights for the e-commerce environments. So well done and thanks for having me on,
Peter (01:30):
Oh my gosh. Well, I'm going to like clip that and play it to everybody that thank you. That was very kind of you. No money changed hands. So, all right now, Nathan you know, beyond your co-founding and growth at one-click retail, amazing achievement so early in the market for that extending that success at edge by essential. And now you've, co-founded analytic in index. I'm also obsessed with the data you share on your LinkedIn feed listeners, go and follow Nathan Rigby on LinkedIn because he's awesome. We are total fanboys. And so recently I shot, I saw you share some comparative data between Walmart and Amazon in terms of their ad investment in their own private brands and its implications for their suppliers and sellers, which I thought was fascinating. Now you may have refresh the data since I saw it last. So I'd love it. If you'd mind sharing that latest data and, and what those tea leaves tell you
Nathan Rigby (02:27):
Totally well, I am equally fascinated by all things e-commerce and how the data can tell, you know, the truth. And so as you look at what's going on, I think two of the most dynamic and interesting things that are going on from, you know, retail and e-commerce in particular has been retail media, which has caught the world by storm, but also private brands. And then this has all come to a head recently with the most recently obvious legislation that is being put forward as government officials are looking at how competitive, you know, e-commerce platforms need to be. And so it's really dating more and more, you know, media credibility to what's going on within retail media, as well as private brands. But the real insight that I have having looked at the data over the past year is that Amazon is embracing the power of private brands from the e-commerce landscape.
Nathan Rigby (03:30):
They are fully understanding that this is not only a powerful tool for negotiation with brand manufacturers, their own, you know, product opportunity for profitability and assortment expansion ways to control price across the environment, through a competitive offering that has a like the like time of similarity. But then the thing that really fascinated me from the Amazon point of view is then they're leveraging of it through retail media, both sponsored products, as well as other sponsored search mechanisms, to be able to drive their presence across, you know, the consumer landscape, as well as the, you know corresponding impact that has for brands and their retail media spend and vice versa, looking@walmart.com and how their private brand initiative is still coming from a very brick and mortar personality sets. I worked for Walmart for a number of years and actually worked in private brands.
Nathan Rigby (04:35):
And, you know, it doesn't seem like much has changed besides now the opportunity of presenting the private brands in the walmart.com or Walmart OPD platforms for, you know, consumers to purchase. They are not at all leveraging that. So the data point that I have for you we look at month to month retail media activity. And in July, Amazon had of the, of the 20 primary categories that we were tracking for this report. Amazon had its private brands in the top 24 16 of those, and it's several of them like clothing or health and household essentials. They had multiple private brands across the top 20. And then in about 10 of those, they were the number one most active retail media advertiser within those different departments, vice versa on, on Walmart. You know, they they just, they, they don't, they are not actively investing in retail media from their department plays. They have a couple that, you know, they have their, their wireless play in the cell phone space and they have better homes and gardens in the home space, but for all intents and purposes, we don't see great value populated on Walmart, retail media spend. We don't see old Roy having any impact in terms of pats. So it's, it's one of those things that I think is really shaping the conversation both for the opportunity for the retailer, as well as for the frustration potentially of bread manufacturers.
Peter (06:20):
So I'd love to follow up on that. Like what do you, how do you think you know, our listeners who are thinking a lot about how they both are Amazon, is their customer and also their competitor, as well as Walmart and any of the other retailers, I mean, private brands have been around forever, but as they think about sort of this interpretation of the data, kind of, what, what would you, what do you, what would your takeaways be if you were sitting in that seat of having to make you know, retail investment decisions or negotiations with Amazon, you know, whatever it might be, what,
Nathan Rigby (06:56):
Yeah. So, I mean, first of all I always think back on, you know, my youth growing up with the NBC logo coming across the more, you know, right. So
Nathan Rigby (07:10):
Party with that category management teams, strategy teams, shopper marketing teams need to be able to, first of all, understand what's going on and what truly are the levers that are being pulled and then the consequences of those retailer level levers, because for far too long, it's been that brick and mortar of play of like, okay, the brand manufacturer is going to leverage this from the point of view of price, as well as negotiable power in the conversations of, you know, threatening that we're gonna launch our own version of your diaper. If you don't, you know, correspondingly, you know, provide the right type of advantageous terms to to succeed across that brick and mortar landscape. Now it's come, it's not completely changed, but it's very much pivoted into a new type of environment wherein, you know, being able to leverage the, the, the private brands to potentially set floors for retail minimum bids, or to be able to generate more activity in key word, search functions drives up that retail media costs that retail media revenue, I, we all are seeing what's going on in the Amazon ecosystem and all of us see the, the tread line that they are, you know, in the next couple of years, going to be an advertising first platform and a retailer second.
Nathan Rigby (08:39):
And so private brands is at the very heart of this ad is, you know, also being addressed from both the brand manufacturer view from, you know, government legislation from, you know, competitive response in ways that I don't necessarily think all of us know where the end from the beginning, the beginning of the end is going to go, but where I would start is knowing what's actually going on and how private brands are now being shaped in that. Now the second part of that is understanding with that data, being able to know how those negotiations should go. I mean, we all appreciate that you can't shake a hand with an algorithm, but for many of the world's largest brands, they are still shaking hands with Amazon. It's not necessarily an algorithm, a third party sellers might still that algorithm kind of the algorithm mentality and digitally native brands, but they're the ones that don't seem to be struggling with how to dance the dance of e-commerce. So from that conglomerate brand manufacturer, I believe that this data is foundational to be able to help them with their negotiating strategy, both in terms of how they are spending their money in retail, media dollars, as well as those one-on-ones with Amazon and, and Walmart of saying, okay, you want us to spend, well, then these are, this is how, what we're seeing, we acknowledge what you're doing. And you know, how those consequences play out for our capital investments and the effectiveness that we get from those returns that we spent.
Rob (10:19):
And Nathan, on the private label front, I'm curious how you respond to this. I consider Amazon to be pretty bad at private label if they care about it. Because if you look at percentage of top-line revenue that comes from owned brands at Amazon, it's substantially less than at Costco or Kroger. I mean, Kroger's has an initiative where their goal stated on their 10 Ks is to have own brands account for 30% of gross. And Amazon is low single digit percentages of that and not, not accelerating faster than its overall retail. So if private label were something where I guess Matt, bayzos not pays us anymore, but Amazon senior executives were twisting their mustache out in a corner saying I'm going to use private label as a club against all of my brands and try a price and drive up ad prices and drive down margin. And not you, you would expect them to be better at it. And it appears that they are. So how do you square the absolute gross percentage revenue Amazon is getting from private label and, and how, how bad it is relative to other retailers with, you know, your argument that it's at the heart of the way that a lot of this is working out.
Nathan Rigby (11:48):
I there's a lot of truth to what you said, Rob. And think we all acknowledged that Amazon is the most innovative company in the world. And with that, they are very comfortable, you know, succeeding and failing in real time. And there's been plenty of failures with across the private label front for Amazon, but there have been a tremendous amount of successes. I would argue that Amazon's position as the world's number one apparel, retailer is foundationally off the back of their private brand initiative. You look at their Amazon basics, Amazon essentials, Amazon collections good threads and five or 10 other private label initiatives there that has foundationally provided them the assortment that then has invited other of the more traditional brand manufacturers and apparel manufacturers into the space. So in that regard, I very much see them as having been successful. The other true success without a doubt has been their electronics, right?
Nathan Rigby (12:53):
You look at, you know, Alexa as well as, you know, their continued investment in Firestick as ways that they are truly trying to drive that conversation in ways that is shaping, you know, the smart technologies in ways that we've never seen before and, and foundationally they are succeeding in those regards now they totally failed on their cell phone, right? And so I don't necessarily see them that failure for Amazon is actually a good thing. It means that they're getting better, that they're trying to learn more. One of the things that kind of stuck out to me, Rob, in preparation for this call, I just went on to LinkedIn and I looked at Amazon private brands and there are 22,000 individuals with records, either past present, or, you know, connecting connections to Amazon, private, private brands. You look at AWG, there's 90,000 people.
Nathan Rigby (13:54):
So I truly believe that while they're failing now, it doesn't mean that they're going to fail consistently across certain areas. And they do have a tremendous amount of business cases. Like I said, in clothing, electronics, I think they're starting to pick up their speed with happy belly and getting some more traction going there. So yes, I, I acknowledge that they probably have plenty of, of, of you know, one pizza sessions talking about how this didn't work and how to go, you know, the other direction. But I don't necessarily know if I totally buy into their total failure as a percentage of revenue. It's about 2% right now, but it's growing incredibly quickly. And then they're going back into the idea of retail media. You look at Amazon basics alone. In the last 30 days, they had 25,844 sponsored keyword terms that they were bidding on in the last 30 days for just Amazon basics of which there were 7,313 items that were being sponsored now on those keyword terms, those are just high volume keyword terms that we're tracking right now. It does not get into the long tail. So the amount of investment that they're putting into that has got to have a meaningful and meaningful impact in terms of, of the, their bid strategy across that brand manufacturing universe. So anyway, couple of thoughts back in terms of your, your, your, your thoughts there up,
Rob (15:25):
I mean, I, I think of Alexa as a totally different beast that's category defining, but I had always understood Amazon's private label as a combination of filling in assortment gaps and looking to lower prices when they felt prices were too high. So if there was a category like batteries, where they thought that the major battery manufacturers were had, you know, getting too much margin effectively, right? It's in the same way that, that Casper attacked margins in the mattress distribution chain, by going direct. And there was a ton of margin that they could take out there at Amazon will say, look, you guys, you guys are used to these really fat margins. Let's, let's try that. Let's try to lower prices. They wouldn't lower prices that they would, you know, they went with their own to enter to as almost like a consumer price control.
Rob (16:15):
And the reason that I think it makes sense is that if you're Amazon, you'd rather have a third-party seller selling on your platform and bidding up keywords, then you doing it yourself. There's just more, there's just more and more and more efficiency. If there's a third-party seller selling on Amazon for the exact same product, compare it to Amazon selling something privately. And so strategically, it always felt to me like there was going to be a natural given their business model and natural cap to the way that they went. Now, if you go to target though, I think target has created what six individual billion dollar brands in the last few years, and target also has a retail media program. And I, I don't know if you've got the data, but it would not surprise me at all. If you saw Target's private label online, performing exceptionally well as compared to a non private label products
Nathan Rigby (17:11):
30 days from now, we'll have that conversation. And I can tell you that we are just finalizing our w our target.com platform to be able to tell those stories. But I think that you're right, like it's not without acknowledgement that the targets and Costco's initiatives for private brands is very distinctly different from Walmart and distinctly different than from Amazon. They play those as, as a brand reputation play like that. As you think about Costco, you think Kirkland's is you think about a target. You understand the way that they curate their brands in a way that quality and brand reputation are equally a part of their assortment price and negotiable leverage that they can create. And it's, and it's a much more balanced attack to them. I do agree with you that I think that Amazon started with the idea of, okay, this is about assortment. This is about price. I think that they're falling into an added benefit of how this potentially drives retail media engagement. Like I said, they're effectively, they can set some floors, not through bid technology, but through their own bids of private brands at certain levels across certain keyword terms that you know, naturally rises the ocean of their advertising sells.
Peter (18:40):
So, Nathan, I think this is a good place, cause we're talking about sort of all this data that you've got that is, that can drive a lot of these insights and decisions. It's, it's all coming from your new company analytic index. So why did you start it? What was the, what was the Greenfield that you saw and how is it different than what you've done before at one click retail or essential,
Nathan Rigby (19:03):
That's kind of you to ask? Yeah, so my co-founder Mike Carlson and I have a shared past, have we both worked at Walmart for a number of years, we then became co-founders at one-click retail was Spencer Millersburg, who was our visionary, and we caught a tiger by the tails. And it was one of the most exciting moments of my life to be able to help brand manufacturers solve big problems through data because data tells, you know, stories that, you know, qualitative and kind of a supposition can never fully do. And so that being able to do that through edge by essential and a great partners we have there it's still going to be a passion for problem solving. So when we had a wife Carlson and I left after our earnouts it was still fundamentally baked in us that we wanted to go and solve big problems across the e-commerce landscape.
Nathan Rigby (19:55):
And one of the larger problems we felt still needed to be kind of solved for was the total e-commerce view of being able to understand at the aggregate level, as the, as well as being able to dive into each individual marketplace and last but not least being able to cross retailer analysis across all of the foundational data for sales search. And then, you know, some of the shelf elements that are so important to agencies, brand manufacturers, retailers. So our, our, our vision for analytics index really founded off of this ability of being the most complete, comprehensive and actual platform on the planet complete. And the idea that we also liked the idea of being able to provide a data set for category management, shopper marketing and e-commerce teams that was not limited by budgets or by the ability of tracking certain items, keywords, or categories.
Nathan Rigby (20:56):
So we've delivered a product that provides the complete data set for walmart.com, which includes OPD and being able to understand, you know, as I was talking to a great friend in the in the kind of food space, he has all been flour and being able to look at how bread makers are growing comparative to Allmand flour really shapes his strategy and his insights in ways that he was never able to do before because of the way that you know, we had done it previously at other locations. So that was the, the idea of completing this comprehensive of looking across all e-commerce. So right now we're live on walmart.com, Walmart OPD, amazon.com target.com is coming to the cup in the coming days. We will expand that out by the end of this year to have home Depot Lowe's chewy Wayfair. And there's a number of others that are on our current roadmap and then actionable, it's all about being able to drive true superior growth for our partners. And that is done not through superior data, but superior data that can be data told like data storytelling, right. And being able to help identify the insights and actions in ways that really drives the real-time nature of how to optimize organic search or how to, you know, truly understand what keyword terms you are relevant for based off of the reverse engineering of the Amazon search algorithm or the Walmart search algorithm. And so those are the capabilities that are kind of the foundation of what we're delivering on a day in day out basis.
Peter (22:43):
All right. So Nathan, I'm going to put you on the spot cause I want to I'm fascinated by almond flour and you mentioned it. So if, if I were the category manager who was dealing with, who wanted to drive sales of almond flour on, on Amazon or Walmart or wherever you want to dig in, what w what could I see on analytic index that would help shape that strategy? Like, can you call
Nathan Rigby (23:11):
Great question? I love Allman flower because it's right in this space of like you know, product development and, and the trends that are starting to really develop grocery in ways that, you know, five, 10 years ago, this would have been non-existent too. And so, as you look at Allmand flour across Walmart and Amazon and target, and any other, they're all gonna have different plays at different assortments and different kind of levels of effectiveness of the levers that you can pull as well as the impact that those that those levels will have on your business. And so going get more of the holistic level for all mud flower. Let me kind of pull this up in real time on our platform. I'll start here at LA at more of a category analysis. And so I'll start on Walmart, on Walmart here, you've got Allman flower that really kind of resides in two primary categories.
Nathan Rigby (24:10):
It resides in the baking ingredients, flour, and meals, and you also have some in tortillas for, for flour tortillas that have some almond flour specific call-outs within that. And so the first step start of, of any company, that's looking at a trend like this, and whether or not they need to optimize the assortment they already have, or looking at product development, and then investment in this type of a space is learning. Who's winning, who's learning. And what are the market dynamics for that? So on walmart.com, you have two different categories. Like I mentioned earlier, there's 23 keyword terms that are really driving the growth on Walmart. And so, you know, those range in terms of branded keyword terms and non-branded keyword terms within the platform it's an area that is somewhat being competitive. You've got eight different brands right now on walmart.com bidding for these keyword terms.
Nathan Rigby (25:08):
The, the most aggressive being makers eat, and then Bob's red mill. So the two of those right now are yo-yoing back and forth with about 40 to 60% of the marketing activity across all of the Albany flour keyword terms that are being bid on. Interestingly enough, that does identify for you that you have about 15 keyword terms that are right now wide open blue ocean space for a brand to be able to go with leverage both from a paid media perspective, but also identified those same keyword terms for organic opportunities. And organic, in my opinion, is the true flywheel. That's the one that really does keep paying long-term. If you can keep that in your, your, your ongoing content updates and management average price point $15 and 99 cents, right? And there are currently 11 items on the walmart.com platform. If we switch this over quickly, and now go look at Walmart OPD, and that's really where Walmart is pivoting, as we all are understanding the changes that are going on within their platform, OPD is going to become the primary vehicle of for many, for inventory purposes, for retail media purposes.
Nathan Rigby (26:25):
There's some really exciting developments that obviously Walmart has spent a lot of time and, and, and efforts to be able to understand and drive that. So let me, let me compare and contrast walmart.com, all that flower category landscape to that to then Amazon and you're looking down on Amazon. Amazon is also has two different categories. Their categories are identified as flowers and meals and flowers and bills and their, their pantry staples kind of subcategory within the business. They have 115 keyword terms of which 18 brands are currently sponsoring those so much higher saturation of the number of keyword terms that you have available at your organic and paid discretion, but you have a lot more competition that's now going on within that. There's 19 items that right now we're competing in this Allmand flower space and from a retail media spend, you've now got blue almonds, blue diamond almonds, simple mills Anthony's Wellby's baked goods. All of them are now very competitive for the retail media spent on those almond flour keyword terms. So she can start to compare and contrast how competitive these different spaces are. Go ahead, Peter.
Peter (27:43):
No, I should. I find it interesting that, that the, the brands are completely different from retail to retail.
Nathan Rigby (27:49):
I find that very interesting as well, right? That you see you know, completely different brands that are playing on these different platforms. I find that interesting too.
Peter (28:00):
I was wondering if earlier, you mentioned that Walmart was sort of under investing in their private brands potentially, or at least not investing at the in terms of retail ad spend. Do you feel like that means that there's an opportunity at Walmart to grow market share if you invest more in retail media at Walmart, or is that too simplistic?
Nathan Rigby (28:22):
I think long-term, yes. Short-Term right now I'm figuring there's, there's a lot of a lot of growth that Walmart paid media has got to go through to truly start to drive the incremental impact that brands need. I mean, there are plenty of brands that are having tremendous success on Walmart, but holistically as to be expected, it's, it's a little bit more cumbersome of how you can then, you know, we oftentimes see brands that are using their Amazon advertising on the Walmart platform and without fail, they are overspending on keyword terms that organically, they already have a hundred percent saturation on and are then just, you know, spending their money. And there's a lot of reasons why for auto campaigns that require that, but there's just, there's still an inefficiency right now to Walmart connect that doesn't make it the most natural way to just go put a lot of money. And that's why the data becomes so fundamental to understand what's working, what's not working so that you can do more of what works and less of what doesn't.
Peter (29:36):
So in this data storytelling, you just walk us through what is analytic indexes mode? Like? What is that secret sauce that you feel like really is changing the capabilities that you're able to provide to folks who are making these kinds of diseases?
Nathan Rigby (29:53):
Yeah, that's a great question. Our found fundamental delivery is being able to provide you that comprehensive view of comparing and contrasting all of the different players in a like to like scenario. So being able to look at keywords across these different things in real time and understanding what organic and paid saturation and ad types are, and then being able to lever on to that the the analytic index search accelerator. And it's one of the big differentiators of what we do is this keyword relevancy view. You know, everyone has always been talking about reverse engineering the, the algorithms, and for all intents and purposes, when you get to a scale with the data, you can understand maybe not every dynamic that goes into that, but then the output of, of, of when you search for a keyword term, like almond flour, who was winning and what those dynamics, what those characteristics of those winners are doing such that you can start to understand what keyword terms, not only have high volume traffic to them, but also more importantly, what keyword terms you are relevant for and whether or not you're relevancy based off of conversion metrics and organic saturation allow you to then be able to build off of that momentum and invest in those in a prioritized way, rather than just going and shooting at traffic targets rather than shooting at traffic estimates.
Nathan Rigby (31:30):
You can now combine those traffic estimates with relevancy insights, so that you truly have a prioritized view of the keyword terms that you should be optimizing organically and on a page a paid situation. So
Peter (31:45):
For, for data geeks, this must be like a, a playground.
Nathan Rigby (31:49):
Yeah. I mean, it's, it's nonstop. I mean, we, we, on a day to day, day out basis are releasing new reports. We just developed a trademark infringement tool that identifies for you on Walmart and Amazon, you know, the brands that are infringing upon your trademark and who are those third-party sellers, and what's the impact to your business through both search as well as sales because of that the pricing tool. It's not anything that's new, but it's new in the fact that you have a way to look at this from a brand category item, cross retailer view. That's never necessarily, that's never been done to my knowledge and my experience in the space. So there's a lot of what people are already very comfortable for. And then with a next generation analytics capability at a two that with a data set that's you know, never been approached before from that cross retailer perspective.
Peter (32:48):
Well, I mean, we're so grateful that you came on to share both the data that you have. And once again, I encourage our listeners to, to follow you on LinkedIn because you're spewing this stuff out on a regular basis there. And and, and just to start hearing how the storytelling that you can provide through the data really can drive people to make better business decisions. I think it's, it's, it's awesome to see you taking on a new idea, Nathan. So thank you for sharing with it. W
Nathan Rigby (33:21):
Well, it's always great to be inquisitive minds and those that are truly passionate about the space. And so once again, thanks for having me on, and I appreciate the kind words as well as the encouragement that you've provided. And once again, like I said, like that thought leadership is instrumental in our space. And so my kudos to the digital shelf Institute and to Salsify it to everyone else, that's a part of this initiative to make this such a, a remarkable place to, you know, share ideas and push back on ideas and really seek after data in ways that will ultimately drive success. So thank you.
Peter (33:59):
Great. Thanks, Nathan. Thanks to Nathan for joining us. Please share this deep dive into almond flour and search optimization with your colleagues. Thanks for being part of our community.
