Andrew is a veteran in the Amazon world, who's been playing since 2013, and offers an array of different opinions on common topics, which I find incredibly interesting to listen to. He's hit many bumps in the road and shares some wild views on the Amazon ecosystem.
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In this episode we discuss:
[0:22:26] George Reid: I guess, in theory, playing along with this idea and I'm not disagreeing, but I think there's some logic in it. I think in theory, your Amazon ableto understand everything that people are clicking and liking off of Amazon, and that's gonna help dictate purchase behaviour on what they're putting in front of them on Amazon to credit better experience. So they've pinned all of these things in baby, so we know that we can deliver similar sorts of products essentially on Amazon. So you're fostering bat. I think there's benefits to it as well I think one of the thing you made a really good point about is understanding where your customer is. And I spoke to Destiny the day a better a mess about, you know, the different types. There's so many things available and she made a very interesting point about a lot of people get kind of headless chicken. They need to go do everything. Then they're just running around and they haven't necessarily got budgets to everything. I think you make a great point there of if your people hang out on Pinterest, double down and nail Pinterest. I know Facebook is incredibly well targeted. I've never done add some Pinterest. I've never even played with it at all. But if you know that, hang out there and perhaps even got budget to spread across Facebook, Amazon, Pinterest and all the other platinum warms do a very good job. But one third party platform as well as doing a little bit there. I think in an ideal world we'd all have a monster budget and be able to do and target everything and do something everywhere. Been something. The ad budget. You gotta think where I'm going to get the best r o y.
[0:24:00] Andrew Shields: I'll even go one stage further, George. I don't actually believe that it's credible for anybody to try out strategy in 2020. And the reason I don't think it's credible for anybody do that strategy in 2020 is an individual. Even there's a corporation. I think you're going to struggle to keep it going incredibly long and consistently. Long term is because the whole of platform is changing. Perhaps so fast. Every single media platform out their social media platform and ad platform for that matter out there is morphing at an incredible rate of evolution of velocity. That your ability to continuously learn and keep up is just tested to the limit, just to literally keep up on be focused on one platform. If you're trying to say defuse on, essentially spread that capability and that knowledge base and that focus and that skill set across multiple, I think it's just I'm saying it can't be done, but I've yet to meet of yet I've only met one or two people in my entire life who literally have the ability to go multiplatform and be rigorous. Detailed have ended, and I guess show a level of mastery and capability consistently over. Like, by the way, I'm gonna comment. I mean, over 1 to 2 year time frame, at least they've been able to generate 67 plus figures, consistently off off multiple of those platforms. So Ezra Firestone would be one. But Ezra has a team that doesn't do it, although it was not crazy as well as a team. Me what one guy on Instagram has another guy on Facebook has another guy on pink dress and so on and so forth year and is what drives those folks in specific directions. Here's the direct response. Copy. We're using this platform and so on and so forth. Yeah, so yeah, for sure. I don't believe that it's not just a matter of budget. I think the whole landscape is is rapidly to performing. Amazon itself has got the most some of the most advanced because you have to understand this is a very unique piece which most people don't don't kind of focus on, understand. Amazon has two things. They're going for their vastly important. Obviously this treasure trove of historical data they bring to the table, which means winning born then they've got some of the world's most advanced A machine learning experts working the platform. There's a kind of Gil I'll get his full name and other times you want anyway posted in the comments section on time. But there's there's a guy inside the organisation who is one of the world's leaders. And they and he helped build something called sage maker Sage, makers of pre built machine learning templates, which I used inside Anderson. So they go in and they essentially to save right. Give me the multi terabyte, they percent for fashion apparel, men's trousers. Okay, give me that multiple there bite data set from, say, 2012 to 2019. Give me all of that data and then set the sage maker. A machine learning programme will then crawl through that data and look for the matter patterns within that data set off. Who's buying What what sizes? When they purchased how many left reviews, what colour patterns where they were located, New York, Whatever. Whatever Whatever. New York L. A and so forth. All of this amazing treasure trove of data. This they're stable to be extrapolated from these from these data sets. And here's the interesting thing, which is why I was doing with a comment. Amazon has thie ability to do this at a capability that nobody in the world can manage to. It's not just hear the data set you feared me talk about they ws piece a ws is the biggest cloud provider on the planet. That means they can chunk up what I just talked to you about when I talked about the calling of the data and going through the metal batons. They can chunk that up and spread them across the the vast cloud of machines the biggest in the world, and develop and Dr Value from it that nobody else can match at appoints point nobody else can match, so the pricing compute. Nobody can match the price in storage nobody can match and the pricing data in terms of depth. Nobody can match. So when you've got that array of army behind you, it's It's Tze. It's just an incredible and for me, I don't see data is oil. Oil's just a ridiculous comparison for me. It's the toilet all its sunshine it meaning that as the sunshine comes down, it has an effect when it hits, something has an effect upon it on, got in it and usually enriches it. If you had too much of the one in a long time, it destroys it. If you talk about organics, the same thing applies with data for me. If you bring it down and you apply it to something, it can enrich it and help it grow, and it can become incredibly powerful. And of course, a lot of other things depend off various layers of data that's stacked together. You know, you and I, for example, this this microphone that we're speaking in. Obviously, that's a coalition of lots of different data pieces. Together, they dated to promote the plastic that dated to both the electronics and so on and so forth. I'm sure you get my point.
[0:28:53] George Reid: So I think given what you've said there, it really draws on something which I think fee adviser came out with a survey in 2019 with some of what I think is over 1000 cell. It's saying what was the biggest threat that they felt from Amazon business right now on a lot of them said it was was Amazon, and they said Amazon was one of the biggest threats. I'm intrigued to know what is Europe opinion on what the biggest threat is to Amazon business right now?
[0:29:22] Andrew Shields: Yeah, it is Amazon. And the reason is because they are because another people kind of take that comment that you just made a few advisers peace. Now remember seeing it on DFI Advisers Piece kind of focused in on one specific aspect, which was the Amazon launching their own private label brands Julie Mo in the supplements, basing their whole powerful of them. I'm not gonna go with more, but they launched their own. Also now now well over 100. I believe I have a private label brand stables within Amazon on Broadway. Every every retailer since the year dot has done that, by the way. So it's not an Amazon thing. Mistress Amazon happens to run a marketplace mogul as well as obviously being its own retailer, so there's a little bit of a certainly a contradiction and blowing their excuse me, but they're certainly not Uniqlo alone. But come back to your question for me. I suspect that it's really, really more important to take a step back in the stairs saying Right? How is Amazon a threat? Is it just from the perspective of them brought in their own products? I don't believe that. I think I think you need to take you far deeper and say Right What? What is Amazon Will? For example? It controls your payments. So there is a potential vector there. They can obviously squeeze you. They conceal of your money coming in and out there was capturing all that customer data. So we own it. And it's Amazon's customer, Remember, not yours. You have to take them on platform off platform or do some other exchange value with them in order to build that relationship. And even then, one could argue that they're still going to remain reliant and vague, connected and loyal. Tamsin simply because that fine bridge they're building on that other good stuff trust and so forth s O. And of course I haven't touched on the logistics. I haven't touched upon the marketing. So yes, you could say, OK, they're torturing of specific brands is kind of a threat. But for me, I think, you know, take it, take the lens out much higher, then say right, how much of my business. Do they see how much is it dependent on them? So, for example, FBI At the moment everybody's kind of I'm in an R in because they're launched. Put 200 skew. I'm sorry. 200 unit limit on New Skews on DH They did the same thing at the height of this evening. 19 pendant, when they put 50 50 units are new excuse. So the ability for FDA Taurasi ramp up and scale to this new reality, the new normal that's going on around us, where they're super normal levels of traffic, especially in the calm space. That's a That's a real concern because it's not just the Amazon. A threat to you from sending competing products is that they are operational capability. If it didn't degrade or diminishes, or someone decides to go in and take that personal knowledge and use it in in other ways in new directions that cannot see cause multiple levels of jeopardy for you, that kind of makes sense.
[0:32:05] George Reid: I think, Yeah, you're really blowing it up a whole new level, I think. Traditionally, people would be concerned about Amazon going with their own private label, and that was something watch. I was kind of leaning a little bit, given that feed by the survey, but you're absolutely right, given what we've seen with the covert 19 limitations, the 50 units now again, 200 units and even myself working with Brandon, the moment sending in like 30,000 units and they were delaying the the in bound shipment date by a month. Being like you can't come in here like the power they have because of logistical network is another factor. So it's not just we can create a brand based on the data we've got, and we know that the brand's going to do well, which is a big, big threat. But it's also the fact that they can go. We're not just gonna create something. We can also lean on you a little bit on DH. It could be like you said, squeezing payments. It could be We're not gonna let you two get in between as quickly as you would like, which just gives us another boost. So for me personally, I entirely agree. I think that is a massive, massive threat. But then there are things in spring to be kind of onto the next point we today. I believe that a little back and forth and linked in a post about this, about how good Amazon were on the branding perspective. Then bring out their own brands. Big thumbs up. But then how are they nailing that experiences? A brand. I mean, have you ever bought anything from Amazon for you thinking the Amazon basics? The whole thing's great everything about the experiences. Great, are they? I call them like proper brands in terms of you just love. Interacting with them is a brand that Indiana is brilliant, and I
[0:33:50] Andrew Shields: now know I have bought from them. George, I think that they're without question at the moment I get, I guess, And to be fair, they admitted themselves this way. It's very you. But I guess the most successful bands that have launched their far are called Amazon's basics for a reason from Amazon's essentials, whatever the very name calling now. So they changed the name around for whatever, but the point remains there very much entry level players in pretty much everything they're doing. I don't see them being able to drive up the pyramid and the stack right now, and I think That's mostly because George, eh? Even though they've got these huge head count now, it's like 108 150,000 plus staff means a monstrous company. Yeah, you gotta bear mind, right? This was essentially originally a software company. This is a group of software engineers who built a website. Then it. Then in the early two thousand's, Yeah, it was only 2000 and 4 2005 I was NCR at the time of 2000 2000 2001. They've just been sort flower floated out of 18 T 18 people or for some huge amount money and then blowing it up as a TNT love to do on. But the CIA at the time and I cannot talk about this was 20 odd years later, so I think it's no problem. Answer at the time had the world's largest terror data warehouse and that they tear a date. The wells was one of the most advanced analytics anywhere on the planet. It was at that time, a multi terabyte date away, which is vast when you consider this was 2000 on That was family woman. That's what That terror Daito. What warehouse did it powered Walmarts operations analytics on customers on stock needed on staffing, on whatever. Yeah, right across the piece. So Amazon, obviously when in looked at that, understood how valuable that what that piece was. And then they unplugged the US Marine Corpse Logistics Team, which was powering Walmarts operational store footprint, and they then went off and put those people to work. Building FDA, which is now the FBI, were there before Foreman Centre Network, please. That sits underneath Zambia and enables it. Yeah, so taking a step back for a second? Yes, Amazon have got incredible capability to build brands, but they've never really bean, eh? Brand creative, focused business. They've always been an incredibly talented Lou Taylor, which is then built platforms on top logistics capability, that FC network and then obviously the compute peace because they knew that they knew that they needed the analytics piece on that day, a warehouse my world class and dialled in and all of those things have then opportunistically then been able to be turned essentially round and into marketplace pieces. I have no doubt after one piece of sit on, and so I mimicked in a few times of Amazon is, I have no doubt whatsoever that they will want shortly if they haven't already. I'm surprised that already, but I'm sure it will come shortly in from infrastructure. So logistics is a service platform so that literally, you know, anybody can come in and purchase Amazon trucking. I was an air Amazon. Whatever. Yeah, I'm sure the branding peace will come, but it's not there yet. There's a strategic opportunity for people to come in and build their own brands, and you should should consistently be able to kick Amazons. But if your neighbour to kick their butt, that's I don't be controversial here, but I'll be bold. I suspect that smaller affection on your marketing prowess and most importantly, the product you chosen on whether they're relevant and resonant with the marketplace. Because if you're picking, for example, silicon spatula and you're looking to outsell Amazon on that product, your ability to differentiate against them with a customer who's probably gonna be looking to buy on price it's a price elastic purchase. They don't pay more than 10 bucks or 20 bucks for it. That's gonna be a hard sell if you're but it that as opposed to. For example, if you sell a most amazing vitamin C serum, which is gone, I claw 58 on board, and I grew a 58 year, some new breakthrough whatever. Which allows you to apply it. And it just blends in the skill into the skin and sit and gives that wonderful, nice, clear sheen to the skin. Your ability to sell that should be way out front ahead of Amazon. Because you go to those instagram influences, You can do things that they wouldn't even necessarily think off because they've got 50 different brands to look after. Yeah, their internal teams are not just one planned, one person that I think
[0:38:04] George Reid: I think that's it. You're your ability, says to two points, going to draw back in that your ability to be more nimble, like bacon, not to coin the podcast. They always you say It's always day Warner Amazon, right? And then logic behind that is we want to be nimble and act like about how you've like a startup, but ultimately there in 800,000 person company. So if you're managing 40 brands, you can't have the same nimbleness as two people sat in a bedroom somewhere, working on some serum on DH, spending 10 hours in one day contacting. You can't do that. But you know, I've also interested. Spoke Teo strategic seller in the U. K a couple of months ago when Dave actually partnered with Amazon to bring brands, too. The marketplace, which is interesting. So it looks like Amazon, or perhaps looking for people who are doing well, who have good networks and going right. Let's partner with them and bring the car the Amazon own brand to thing. And they're doing it that way. Could that be potentially a future play from them going? Listen, we can't do this on our own, but we want to say, if you look at launch pad people and go Okay, well, they're on launchpad, and these are the ones ramping up really well. We continuously speaking to them on understanding why the how are they doing this? What's different about them? And then we're working more closely with those nimble characters as well as those big people. I don't know.
[0:39:32] Andrew Shields: Yeah, or you could go the other direction, George. And you could say that if I was Amazon identity, you playing in both camps. Yes. Oh, I talked about privately with a few friends a couple of years back, and I actually tried to make it happen. But for various reasons, it didn't all come together on, but I talked about Tried to do is what I call the tycoon strategy on the tycoon strategies. Essentially, this it means you take the whole plethora of its of super fragmented Amazon brands and you do a Frasier Frasier, which is the fastest growing unicorn on the planet right now. Um, and the reason that you go off and do a physio is because you look at both sides, the Coast one is to partner with those brands to potentially got some DNA and got momentum on the platform and a proven themselves capability wise. The other is to take, go out and take a potential acquisition vehicle that's buying up those bands and bringing best practises to play to the table. And then you basically say, Right, I'll go out in a choir of crazy out because if I was AMAs and I'd certainly be looking very closely at crazy or insane, this's most interesting. There's VC capital coming in here being big in big numbers cause 260 million. The last funding man they did. That's a pretty serious cheque for change. And then these this French capital's coming in. This vehicle is delivering super normal growth and returns on the platform, and it's doing it consistently across a hope of Thor bands and hope of thought of verticals. So that means that they must have a set of deployable systems and practises internally that can then be replicated. So if I was the grand acquire a 30 and I was able to realistically duplicate and understand how their systems are turnkey now the words how they're moving the dial on each of these different pieces, listening, optimisation people see processes, logistics and so forth. And this can go on how I can move the needle on each of those pieces. If I can go out and bring that DNA into my business that I can then go out and really, really start to disrupt the marketplace with not only my own brands but also the people who choose to partner with because I could well pick the winners in each of those given categories. In fact, I could do it right now with the numbers and algorithms. But let's just say I allow the marketplace to do that because I'm obsessed with customers. I'm not my Miles Williams and the other systems. Just there just are there to interpret the marketplace, the customers and the customers, whims so fine customer driven there picking this company's for. That's in this custom in these brands. How kind. Learn from that and leverage that. That would be an interesting play.
[0:41:56] George Reid: I think. Yeah, you're right. They got a number of things there. I think these type. I've had two conversations recent in the last month of people looking to scoop up smaller brands where they see opportunity. I think it is much more prominent in the US and it is over in Europe. There's probably an opportunity in itself air, but if Amazon and go right, we can scoop him up. If you were an Amazon position, would you? You've got to fold. Do you classify as an Amazon brand because this, um, waiting behind that or do Ugo if we just continuously make these Amazon brands? Is there some other backlash where people like I personally? Even if it's buying that gym clothing at the moment, part of me doesn't want to buy Nike. I want to buy some small, unknown brand which has just got a good product. And I like them. If night happened to own that and said by night beneath it, I'd still be a little bit like I'm just still buy from night. So would it be made more sense for Amazon to G O. Okay, well, let's leave them. Is a badge out of it. Just acquire them, Follow the principles, um, and build him that way.
[0:43:06] Andrew Shields: I guess it just depends on what you see as Amazons. Final play. I mean, Amazon for me have been burnt a number of times when they tried to go off and do things themselves. Their biggest example of that was there. Fire exploit fire phone exploit, which was just an absolute massive flop. A complete train wreck. And one could argue, even now, To a degree, Alexa. Okay, you can say to me, Alexis still in that world Number one smart. Speak it. Yeah, I can't deny that whatsoever, But the amount of resources they've bought into that natural language processing NLP space on DH, the breakthroughs that they've currently been ever release have been pretty. I gotta be honest with you. Lacklustre. I mean, we should be. We should be much further along now. Appreciate. It's incremental innovation that's going on. I think we're Amazons. Take, in the view of which is look, we've got this incredible data set, which he sits around. That customer is constantly being enriched by this flywheel and ecosystem of platforms is built around it. Let's continue to build the depth of those platforms, for example, in health care in which the pill pack acquisition and other things support. Excuse me right across the peace in other domains, in terms of logistics, in terms of quote, fresh groceries. And then it's like a one. I wouldn't be a surprise. Too tall, for example, if they even went out import gym chain because it would make eminent sense rams into a choir, and it would be very cheap to acquire potentially some of those assets right now, eh? So there's some very interesting things they could do in that space. But But the point remains, I wouldn't block Amazon. I wouldn't stop in my mind purchasing something just because it was made by Amazon. I don't think many people would, but what? But I think the key thing to want your question is it just depends on how Amazon perceives themselves within a wider ecosystem. Because if you go down deep, yeah, it looks like it could be a complimentary or conflict competitive trade off. But if you take it up another level, they're not playing for that little piece there. They're playing for the whole chess sport. Makes sense.
[0:45:04] George Reid: Yeah. No, you're absolutely right. I do quite like the eyes and idea that buying a gym chain, I'm personally urging for them to create their own food brand on DH Healthy meal deliveries. I think that's gonna boom soon on. For a person perspective, I just don't want to cook. But I do what a nice, healthy meal delivered. And they're like, Well, you've got your prime delivery coming this week, enemy George, because you're like buying stuff. How about we lob in 10 meals and now as well. And we can make it very cheap because we're Amazon. You're buying from us. I mean, I think that would be particularly interesting on DH nudging away from that before we go in deeper into the rabbit hole but still thinking about operations but tying it backto. How can we provide some value for those listening? A simple methodology that I follow is something I call the mountain strategy on DH. The first layer of that strategy is operations. Then you go to brand, and then you go to advertising, and I simply working the premise off. You can't ascend to brand and to leave nail operations. You can't send too appetising until you've nailed your brand. Working the premise off. There's no pie driving traffic through ads. If your brand shit and you can't convert them so that being said, how much more important right now is your operational base becoming then? Perhaps it was in the past,
[0:46:28] Andrew Shields: very important because, like you said, it's the base of the pyramid, so you can't if you haven't got. For example, the biggest waited indicator in a nine without question is stock stock availability on DH in stock, obviously status. There's other stuff that you could take deeper than that which will go into another time, which you have Mara Sankoh's doing around Geo Bank, which is a really important point because Obviously there is no product across the U. S. Which has exactly the same cells. Of course, all the 52 or whatever 50 odd states across the US isn't just that it doesn't happen. They're clearly hot spots of demand within all of those states. And Amazons algorithm directs the stock toe where it sees your cape that those hot spots and spices tomorrow. So if you can predict and look at long term, what there am I go with them is doing because it's consistent gonna be picking certain locations within the FC network to distribute the stock. If you can start to then upstream that Andi, essentially get your stock in place, get closer to those fulfilment centres and a regular depth. You're gonna drive more cells because your ability your window to be out of stock is going to massively reduced and your prime status is gonna be elevated on DH. There'll be all sorts of juicy benefits that will come from that. So the operational bottom of the pyramid is absolutely critical. And if you don't get that right, it's there is no there is no game one like you said there was no brand if you haven't got any stop because they're not gonna put you at the top of the page organically. Otherwise, it going stock. And clearly, as you say, the advertising isn't gonna even if you're paying. I know 10 bucks a click, Whatever the number 50 bucks, It doesn't matter if you're going to stop. Hamas is not gonna not gonna show that at, so Yeah, just picking one piece of the operation is need wanted. Listen, this the peaceful hours, but that's example.
[0:48:13] George Reid: And I appreciate that creature entirely. Okay, so my final question I'm asking pretty much everybody this at the moment. It's a very simple one, starting with nothing but £10,000. Would you start of Amazon business today?
[0:48:29] Andrew Shields: Yes, on. I would do it with the way that I kind of explained to you earlier. I would look very carefully on DH, spend a disproportionate amount of time. I love the Abraham Lincoln conversation where he's asked, You know, you've got to chop down a tree. You've got two hours to do it. And I think he says I spend the first hour and 15 minutes sharpening the sword. So when when I cut that puppy. It just go straight there. I love that example, and I think that's very true. You heard me kind of taught talk a little bit that first principles thinking earlier in the conversation, when we talked about, you know, going go, go find that audience. They find that hungry crowd when she found that hungry crowd and obviously identified that niche. Then look at what products you, khun, Khun source to serve them because I promise you they are going to be buying for that's that support their passion and their interest in that niche. And in that in that subject matter, for example, picking a topic at the reptiles there is a big reptile community, Believe it or not, there is people who collect iguanas, collects lizard and whatever different persuasion. And I'm no expert you del. But there are hugely passionate audience, you know. They have the tanks, they have the air conditioning machines. They have the mice that feed them and not so on and so forth. Year on DH, they are massively into obviously supporting their pets and that particular passion interest so you could source those tanks. You could source those air conditioning machines you could get in the water, the water, the water droplets that obviously the lizard to using to drink out and so on and so forth. Yeah, definitely go that route while that with the 10-K suspend the time identified Nish and hopefully it's in each, by the way, George and I don't say to do this, but I do want this ideally, to be part of your thinking. Find the niche that you can connect with and enjoy and get engaged with them. Get a little bit buzzy about with because that's gonna help a lot in terms of sustaining you because you're gonna go into this with 24 to 36 months. If you're looking to anything less, you could potentially get very badly burnt because that's almost a pump and dump that model. And that is not where Amazon is. And that is not what Amazon is in 2020. So you're gonna take a 24 to 36 horizon. I have a month by month breakdown away. You want to be within that because it's moving so fast that you've gotta go that level of granularity, even to the week. But let's not get crazy and then be laser focused with that 10-K investment. As I said on that crowd, you do that. He will be successful on Amazon in 2020.
[0:51:06] George Reid: I like your honour. Just summarised from conserve your time as well. But I like because I say this to people all the time. All this We have lots of people in the academy and they always ask, Kind of like, What should I be doing in particular? Getting started? And I always say, Pick something you actually like, give a shit about if you is, sailor, I'm more a dog person. If I decide to go buy some cat toys and in three month's time, they're still sat there and something's gone a little bit wrong because I can't get stock into Amazon. I'm going.
[0:51:36] Andrew Shields: Todo monkey was about cats because your dog, man, you're much more engaged. Too much more turned on by dogs. So you know, Mom, if they're not setting and not even know what to do because I don't even know, okay? I don't even know much about cats.
[0:51:50] George Reid: Yeah, I'm not I'm not even bothered. And you they're looking at them every day going that's grinding May, because I've got my dog there and he's getting annoyed. But, like, I think that is a very good take right there. Always picking that Neech signing up for 24 36 really spending that time understanding your audience. Andi, thank you. Thank you so much for coming on. I think you've really a slight, different insight again. We've gone grand little on some things and I'm really forward to a turf war. Listen to this. When we launch some pre recording, this will be launching it about a week. So some people somehow discovering already. God knows how. I don't understand other world works. But thanks a lot for your time. And Texas look forward to speaking again. Probably in the future.
[0:52:34] Andrew Shields: A pleasure indeed. Take care, George. And good luck to everybody out there. Thank you. Can take
[0:52:38] George Reid: years on they childhood
[0:52:39] Andrew Shields: by
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