EP378 - The Amazon Briefing, Pt 2

0:01 Welcome to the Jason and scot Show, your source for the latest news and trends in the e-commerce industry. Featuring host Jason Retail Geek Goldberg, Chief Commerce Strategy Officer of Publicis, and scot Wingo, co-founder and CEO of ReFiBuy. Here are Jason and scot. Hey everybody, it is scot from the Jason and scot Show. So we split this deep dive into Amazon Grocery into two parts. Hopefully, if you haven't heard part one, you may want to go back and check that out because this part is going to be part two and we pick up the conversation. This was recorded live in Seattle after a multi-day session with Amazon top executives talking about grocery, Amazon Prime, Alexa Plus, and their new drone program through Amazon Primeware.

0:52 Continuing on from part one, here in part two, we're going to cover why is Prime Amazon's ultimate moat? Why are drones not only cool, but the real story is the AI behind the drone? Amazon versus ChatVT, which is the new commerce war. And who owns your live context wins the grocery shelf. Hope you enjoyed part two. We'll be back to you in our next episodes. We're going to be coming to you from the retail club show in Huntington Beach, September 22nd to 24th. We're going to be recording a lot of podcasts there. So there will be a little bit of a gap between now and then.

1:33 But don't panic. more awesome Jason and scot content is coming your way. And we're going to be doing some live streaming. More on that at the Jason and scot website as we get that all planned out. Thanks for listening to this two-parter. Hope you enjoyed it. Great time to leave us a five-star review. Yeah, so in my mind, there's this graphic where you've got your three columns and that's selection, value, and speed of delivery. And that's like the core. And then the little icing on top of that cake, maybe we'll use a Jensen Wong. That's the three-layer cake. The layer on top of that cake, the icing, is the customer experience. So I got to have dinner next to the lady that does customer experience, and she was amazing. So they went through, when she came on the job.

2:16 She went through thousands of customer anecdotes. And this reminded me of a a bezos quote where he said you know. He would famously people could email jeff right and they would they would you know and he got a lot of emails with them yeah yeah and jeff and him but there was an assistant and all but he would go through a lot of that he wouldn't answer all of them his assistants would but he would read most of them and what he found was, in something the scale of Amazon, most of these anecdotes are not anecdotal. So the conventional wisdom is if one customer has a weird situation, just ignore it. It's not a big deal. But what we find is when you're at the scale of hundreds of millions, hundreds of billions, and Lord knows how many transactions, someone, Jason has a bad experience in Chicago. Well, that could be 500 people or a thousand people.

3:09 And a lot of people just don't complain. So in that spirit, she's gone through these very anecdotal things and looked at all of them, tried to categorize them and then started to beat them back. One of the biggest ones, and this came up with a lot of the folks we know, is there was this massive confusion of you had your Whole Foods over here, which is kind of like pretty easy to understand. It's like its own store, but frequently this would always get me, you'd be buying your like dog treats and you'd say, Oh, I want to get my cart size over 25 or whatever it is to get the, you know, not pay the 299 to get the free, the faster delivery. And then you throw, you know, something in there, like some granola, and suddenly it starts another cart.

3:52 So now you've got three carts, you get your whole foods, your general merchandise, and then some grocery things and some others. So they've actually done a really good job of solving that two ways. They've, they've kind of put more selection across. And to your point, perishables is one of the things that would trigger that. But even non-perishable things for me would. And then they've created a new customer UI, a part of the customer experience, which is a very green, so it's color-coded Amazon version. And whenever you, it's very easy to find an app. The search experience highlights these things. Whenever you throw one of those things in, they kind of put you into that. You know, like, let's say I started with my granola first or a banana first, or even something cold chain.

4:35 It's going to now put me into that, you know, that set of inventory, basically that's in that SSD facility or closer type thing. Yeah what do you any other customer experience things you want to yeah i do think customer experience is super important and remember the scope of customer experience is super broad here right like because customer experience is both, how the mobile app works right and i think most of the examples you were talking about are the the website and the mobile app super important the customer experience of how the delivery happens yeah the whole thing is super important and the packaging, and is your bread crushed? And so I absolutely think user experience.

5:18 Can win or lose an individual shopping occasion for a consumer here. So I get your metaphor of it's on top of the cake, but I would argue it is. I just want to point out it's super important. I think the woman you had dinner with was Ling, right? Was that the Ling saying? And I think one of the interesting things is often you go, oh, we're going to either take this approach or this approach. And I think what Amazon has actually gone with is a choose your own adventure, right? So you can either say, hey, I want to shop in everything store with the complete assortment of all the perishables and the everything things all in one cart. And I just want to mash it all together, right? And there's reasons that's convenient and helpful.

6:03 And it's an easier model to understand. It's an easier paradigm. The downside is when you type chicken in the search engine, you're going to get fried chicken and you're going to get chicken coops, right? And so if that's the best use case for you, Amazon lets you do that. But this new experience is if you know you're really just focused on food right now and just want to solve your food problem, you can drill down to a scoped shopping experience, a constrained shopping experience that's just focused on grocery, right? So the interface changes from orange to green. And now when you type chicken in the search engine, you're only going to see edible chicken options, right?

6:46 And so there's a bunch of UX things that can be more tailored to you because they know you're grocery shopping. And so you may, you know, sometimes be shopping for apparel and just want to throw in one food item that you know you need. And you might use the everything UI. And other times you might be building a list for a dinner party and want to really be constrained to food. And you might use the grocery UI. And so it's kind of cool that they've tried to let you seamlessly go back and forth and have a shared cart between those two different UI's. Yeah i'm gonna keep going my metaphor in a bit even though you're not i mean add more deliciousness to the cake what are we doing before i go on anything you want to miss want to say about grocery, i think that again you we you touched on private label i think that's, super important i think economic circumstances right now and changing customer preferences are making it super important private label used to just mean cheaper versions of the same stuff you're used to buying and trading down, today all these grocers make their own versions of products and they all have a huge brand love and loyalty for their own unique versions and a lot of them are using data to fill holes in the selection yeah and again if i have way more customer intimacy than the traditional man national manufacturers did so they get to, like formulate these these products based on customer insight and data and so i think amazon whole foods are leaning in into that as much as everyone, and there's no stigma attached to it, right?

8:16 Like there's, there are own brands now that are premium. They're not the opening price points always. Right. And so, so I think that's a. Another interesting part of the GLP one. And then again, the fact that such a large percentage of the population is experimenting with or on GLP ones. And it just causes a wholesale reconsideration. So whatever your old food choices might have been and your old providers might have been, you're going to reconsider them. So it's kind of like these retailers get a new bite at all the customers they couldn't win before. Great. They have to defend all their existing customers that everyone else is trying to poach. Not so great. It's another disruption. Yeah.

8:58 This is a good time to, as we transition to another topic, to talk about the Doug Harrington podcast. Yeah. So Doug is on the S team at Walmart. He reports to Andy Jassy. He has an overall responsibility for the retail business. So the best, coolest, most important business at Amazon. I'm sure the AWS guys would agree. I may have some personal thoughts. So Doug has started a podcast. so far he's only interviewed other amazonians on his podcast which i think is the main intent it's called think and be curious is that right learn and be curious learn and be curious which is, amazon tenant tenant to always be curious and so he's interviewing these amazonians and talking about their backstory and what they've done and, i'd say they've all been interesting i'll give you these cool insights into into the amazon culture and.

9:51 Matriculation so we highly I recommend that we'll put it in the show notes. Yeah. Check out that podcast, it's really well done. We zoom out a little bit. So grocery is a big wedge in the pie of Amazon. Now I'm moving from cakes to pies. This podcast is making me hungry. The circle that surrounds all that is Prime. Yeah. So this briefing was called Amazon Prime and Grocery. So we spent a lot, almost a whole day talking about Prime. So just to kind of tee that up, Prime is now 21 years old and it's live in 27 countries. It can drink. Yep, it can drink. It can now have a beer. They've, you know, they're really driving a lot of, it's a membership type program.

10:34 And they're, you know, they've always been the everything store and it's kind of like the everything membership. You can kind of sense that they're kind of, I think they've got so many Prime users now that there's kind of like a, at some point everyone on the planet is Prime. That's not where they are. But, you know, I think they're thinking a lot more. This is in the quarterly data they release about the frequency of use and the value people get from Prime. Another famous Bezos quotes is you should be it should add so much value. It'd be you'd be fiscally irresponsible not to take Prime. Like how do we make it that that much of a value? The you know, this this kind of cuts into the success of grocery, because if you're on Prime, the whole grocery experience just as you know amazingly elevated, there a lot of their health offerings which is like another wedge on this thing is you know also part of that, we're going to talk a minute about both Alexa plus the devices it's good we're in a room that doesn't have any of our usual devices yeah we can save this and create a spot don't listen to this on your speakers put on put on their pods from this point where because we're going to say that you were allowed, another Another handy thing is I always, you know, I prefer Rufus because Amazon for shopping is such a long phrase, but they call it AFS.

11:47 So I'm going to start using that now. So that's actually a lot less words, especially typing was. So we did have a section on that. So the, you know. There is an analyst, he's a friend of the show, Doug Anmuth at JPMorgan. And he does this exercise where he picks apart Prime and he looks at every one of the little pieces offered in there. So, for example, a lot of people don't realize it, but with Prime, you get obviously the video and he comps that to like maybe a Netflix. Then you get DoorDash Plus, right? So that's a known value and so on. So he adds all this up and he basically says, look, Amazon Prime has a, it would cost you $1,430 to go buy this. And the current price is $139.

12:37 Another thing, speaking of value, is Amazon launched at $99 a year and now it's $139. Now there's a monthly that's more, but if you get the annual, you get the, what's it, 10%? Yeah, exactly. It's $14.99 a month if you go monthly. Yeah. So that's pretty amazing too that they've held the line on that. It's not quite the Costco hot dog, but they're, they're, they're holding it. Yeah. I think they've only changed the price twice in the 21 years. Now, Doug, he has, I think he's every time he does this analysis, I think it's every six months he does it. He then says they should raise the price and he does like a big calculation of how much money would fall out of the sky if they did that. But I get the sense that, you know, they didn't announce anything to us.

13:17 There aren't any open price increases or anything I'm aware of. Yeah. I think, I think they've made a lot of moves. the monthly was introduced, I believe, so they could go down market because I think if you look at the bucket of people that aren't in Prime, it is the lower income folks. So I think that's the opposite. I almost counter it would look the Lord if they could. I don't think they want Prime to be more profitable as a subscription. So I got, I've no inside information, but I don't think they want the success story to be, look at all this prime revenue we're generating. Right. Prime is very annoying to me because I feel like at this point, it's inarguably the most successful customer affinity program in the history of the world, right?

13:59 Everyone thought they were crazy when they were doing it. They're like, you're going to be killed on shipping. People are going to eat so much shipping. You iterated all the benefits. You didn't even iterate the marquee benefit, free fashion thing. Yeah, free fashion. Which, by the way, the definition of fast, the price has only changed twice in 21 years. The definition of fast has changed a lot in 21 years. I mean, we've gone from two days being a service promise that no one in the industry can match to now they're at 30 minutes, right? So it's just crazy. Yeah, I think such a large swath of America is members. I think a lot of people with very constrained budgets are still prime members.

14:42 I think what Amazon wants to do is make that program so important to your life that you just give them way more of your wallet share. I think that's how they measure the benefit of prime. I don't think they want to talk about the revenue from prime subscriptions, particularly being important. Like it's a data collection tool. Like all the prime shoppers are known. And so then they get to sell better, more targeted ads that are more effective and more appreciated by customers. And they get better data to help you with returning orders and top-up. There's so many synergies to you being in the prime ecosystem. I think what they want more than anyone is everyone to be in a prime ecosystem and everyone to use more of their benefits.

15:28 Right? And so I bet you, I don't know, I'll bet you most of the executives there are a lot more focused on how do I jump them from benefit to benefit than how do I raise the price? I think they like that there's skin in the game. I think one of the strengths is that it's not a free membership. And like people, when they pay that money, they feel like I want to get maximum benefit out of that. So I want to use them for everything. And so I do think the one place where price gets tricky is new customer acquisition. That all the easy customers they've already signed up. And so now the customers that haven't signed up have some rational or irrational resistance to signing up.

16:09 And I think they feel like there's so many benefits that if you signed up and tried it, you'd like it, right? So I suspect they'd like to figure out a lot of clever ways to make it really affordable in their tribe prime. If you're not, but I, I don't think like I all deference to the, the analysts. I don't think they want to make that the new popular revenue stream at Amazon. I think they have, they've put so much in there that the average consumer doesn't realize when all is available. This is a trick. It's funny. There's this economist in Chicago that, I love John West, and he did this study called the less is more where like, sometimes you can put so much in a bundle that people undervalued the bundle, that like when you add more to it, they make it less valuable.

16:53 I don't know that that's necessarily the case with Prime at this point, but I would say it is crazy. Like if I sat down 21 years ago and said, Hey, here's what we're thinking. Free fast shipping and our own unique Lord of the Rings movie and a free telemedicine with a doctor. You would have said I was high and you, you'd have likely been right. Right. And yet they somehow have bundled all these things into an offering and made people love it with, so props to them. The reason I hate it is because I feel like it's, it's unquestionably their most intringent competitive advantage versus every other merchant in the world.

17:36 Yeah. Yeah. So we, we had, you know, we, we had some sessions about prime video, which was interesting, not really kind of quarter audience. I asked some very important questions about some editorial decisions in a specific booth. Yeah. In Lord of the Rings. We've got a couple eye rolls on them. Yeah, I did not get satisfactory answers, if we're being honest. So one of the most exciting things is we got to go on a bus, and we'll put some pictures in the show notes here on social media. And we went to an Amazon Prime Air facility. If you're not familiar with the Amazon Prime Air, this was not airplanes. This was drones.

18:16 Jason and I famously, NRF 2014, 2015, got a drone into the big show. We could not fly it, but we had a drone there. Oh, and then we had the guys that did that early, early delivery drone. They actually had a big one. We had our little ones, but he had a big one too. So we were showing people. We had our 3D thing. I think we had our AR VR, we had our drones, and then I think we talked about, I think you had an Alexa speaker too. So I think what you're gonna say is we were early drone-thin boys. We were always ahead of the curve. That's what you get here at the Jason The Sky Show. You get to look 10 years into the future. So this was really fast. So number one, they had a museum.

18:59 That's where we were able to take pictures. But number two, we got to tour the manufacturing facility that we were not able to take pictures of. They're making the drums there. They invented their own drum. This is not an off-the-shelf thing or a commercial thing. Yeah. Yeah. And there's been four or five versions. Everyone remembers the 60 Minutes big reveal where they, you know, the nice little poor Black Friday. I think coincidentally it was on April Fool's. Yes. Jeff shows up on 60 minutes and he's like, we're going to unveil our next. I actually remember it being Black Friday. No. I thought it was like the night before Black Friday. I'm pretty sure it was on April 1st. I usually have a better memory. And we're all curious what this big announcement is going to be and what new service or product they're offering.

19:40 And he announced that we're going to start delivering products via drone, which at the time sounded utterly absurd. Yeah. And I remember there was like a big thing covered and he revealed it. And we all thought, we're like, what is it, a new Alexa? And it was like a drone and no one had guessed a drone. Yeah. So, yeah, not on anybody's bingo card. Super fanboy moment. When we go to the Prime Air factory in the museum, they have that V1 drone that Jeff unveiled. An OG. Yeah. Quite a bit smaller than the actual in-service drones. It was in glass. So Jason couldn't hug it. He tried. No touching the drone. Yeah. That one, he touched a lot of those. Until security. Yeah. It's a Q1.

20:21 If you get a delivery by drone, there's a good chance I touch the drone that touched your skin. You're welcome. So today's drone is big. It's probably what? Like six feet circular? Yeah, about that five to six feet. And it has very big props. You do not want to get around this fucking... And six of them, not four. Yes, it's a... I defer to your geometry. It is big. It can carry. It drops the payload, which I thought was interesting. Some of them will land and spit it out. Some of them will drop it a safe distance and then others will do a tether.

21:05 So they're currently in a drop kind of mode. And yeah, so that was really interesting. Let's see, I had some more stats. It was very timely because the day we were there, they actually announced a bunch of things. So let's talk a little bit about that. So on August 19th, which was today, they announced that they're expanding air from, let's see, it was in how many cities? We know it's going to 500 cities. How long ago it was in 11? 11 cities. That's right. 11 cities and 10 metros. 11 sites, 10 metros. Now it's going to 500 cities by the end of 2026. By my math, that's a 50X increase. That's a lot. Yeah, that is a lot.

21:48 This is another area where they're in a bit of a race with Walmart. Yeah. So Walmart's are called wing does that's Google's. Yeah. Go to Amazon Air, Walmart. Walmart has a couple paths to drone. They have some partnerships for drones, and then they also have their own drone program. And it's pretty proudly deployed now as well. Yeah. And I think a lot of theirs, I've seen demos of theirs, and they're at a store, right? Most of the ones that I'm aware of, the paddocks they call them, are in the back of a store. So they take inventory from that store. I'm not completely privy to all of Walmart's drone plans, So it's totally possible they have, some kind of dedicated FC attached to one, but then they have essentially a drone airport operating behind this door and they go grab the Advil from the shelf, and launch it to your backyard. Yeah, that's pretty well.

22:42 Today, there's 11 sites are, the 10 metros are Phoenix, Tampa, Kansas City, Omaha, Baton Rouge, Detroit, Houston, Dallas, San Antonio, and Waco. A lot of Texas because anything goes in Texas. Yeah. I think one of the many factors that influences where they do these drug things is where they can get regulatory approval and I'm assuming that nobody's easy, but I'm assuming Texas is somewhat more, more friendly than some other states. Some of the ones coming up. Are you sitting down Jason? I am. Syracuse, Cleveland, Boise, Atlanta. And Chicago, you could be receiving a drone package soon. I got to be honest. I'm trying not to get very excited about that because I would love to get some drone deliveries to my home.

23:28 I have spoofed them. I have big videos of me getting drone deliveries. But I kind of suspect that they're going to be focused on more suburban parts of Chicago. You need a little bit of most of the way these drone services work is you designate a place where you want the drone to deliver your packages. And you need a certain amount of open space. And in downtown Chicago, where I live, you don't have a two acre lot there. Well, you don't need that much space, but you, I think it's likely too tight. I think that the main use case for these drones, they're quite fast. They're as fast or faster than cars. And they, you know, get to go direct and don't have to fly around traffic.

24:09 So I think it's a fast, efficient way to get to a slightly less dense home. So I have a feeling the trucks are going to be more efficient in the super dense neighborhoods where I live. So I think you're going to likely get some drone delivery equipment. If they figure out how to navigate your various pools. Yes. Before I get thrown. Don't want it to go in the side pools and up from the lower. No, no. Or the plunge tub or the ice bath or whatever. Yeah. So some more facts about these. It's free if you spend over $50. It's usually on average 30 minutes, but it can't be as long as 60 minutes from when you check out. It has to be five pounds or under and fit in a shoebox type size.

24:52 It is a very specific package that the Payload Bay is designed for that we get to see. This covers 60% of your most frequently purchased items, groceries, electronics, cosmetics, medications. In the little museum, they had a list of a table full of things people have ordered from Drone. My favorite was a giant bag of nerds. I thought that was like... That would be high on my list. Someone was having a nerd crisis and they got them. They airdropped in some nerds right there. Right, yeah. That kid might have flunked out of school if he had taken time off and gone to the store and bought the Nerds. But he may be in Harvard right now because he kept studying while the Nerds came to him. They're targeting a million deliveries for this year as part of the scale up.

25:34 And this was interesting. So this is another one of these things that they've been chilling away at for a long time and are starting to scale. They started drones 13 years ago. So I guess it was 2013 was the 60 minutes. And you know now they are they seem to be getting pretty serious we were in the manufacturing facility and there were lots of drones being made it was not a i could tell that there was not a this was not a casual let's let's build one at a time kind of a situation yeah intellectually that was super cool like i think you and i just enjoy the idea of drones and i have to say i've had the privilege of being at a both a walmart and an amazon paddock when they were, functioning so we were at the place where they're making the drums. I've been to places where they're launching the drums. We get to see one kind of go through a test. Yeah. Which was neat. I think it.

26:22 Struck me more than I expected, right? Because we always, we've been talking about this in the abstract and it was the silly idea that, oh yeah, it's going to fly a package over your house and drop it and ha ha ha. But when you actually see these things running at scale, which they are now, and delivering like meaningful amount of packages and people just using them as part of their everyday life, like it's like, oh my God, all this stuff we're talking about is real. Like it was weird. That being said, I don't think drone delivery is going to be a game changer for anyone. I think it adds to the scope of delivery options that Amazon has available. And now you put something in that cart and you go, what service level do you want? Do you want 30 minute now? Do you want one hour drone?

27:08 Do you want one hour rush? Do you want three hour rush? All these choices are going to be the right choice for certain customers and certain use cases. And so I can see the value. I don't necessarily think drones are going to unlock like giant at scale sales opportunity that none of the other delivery mechanisms that Amazon has don't also attack. So to me, unlike some of these other things, which I do think Everyday Essentials and the Perishables is game changing and the lock-in of Prime is game changing, I don't think. The drones is cooler technology, but I suspect when we look back from our retirement, we're not going to talk about how that completely changed how everyone shopped.

27:56 Yeah, so that was my favorite session. My second favorite. Any more on the drones? No. My second favorite section. You probably put grocery in aggregate as yours. Just because I like to eat? Yeah, yeah, absolutely. It did make us hungry, hearing all these delicious grocery tales. And I've got this strange craving for rotisserie chicken milk. My second favorite was, it was combined, it was Alexa Plus and AFS, which is previously known as Rufus. So, as listeners know, we've talked about this, but just to recap, in May, they took Rufus and Alexa Plus, which is the device operating system or system. They merged them into one.

28:43 That's still kind of an ongoing thing, but they're getting there. And, you know, it was really interesting. So we got to, it was a joint session, which is probably, as your AI agenda conference for Maximalist, I wish we'd talk a lot more. But I had talked to Rajiv previously, so I've gotten a fair amount of that. But it would be good to talk more about that. But it was sprinkled in. Everyone talks about it because it, like, cuts across the customer experience. But this was mostly about the device kind of stuff. And we talked a lot about Alexa plus and we've previously in the Q2 results, we talked about how, what was it like 20% if you used Alexa plus you were 20% more likely to sign up for prime or something. I think there's a bigger number than that. Yeah, 25, 30, something like that.

29:26 So that was interesting. They've had over 350 million consumers use Alexa for shopping in the AFS in the last 12 months. So that was a metric that's been up to 5x. So that's actually, you could argue big growth off a small number, but 350 million is not a small number. Oh, here it is. Alexa Plus users sign up for Prime at a 25% higher rate. That was the metric I could remember. There's 600 million active Alexa endpoints. That's the devices out there. I imagine not all of them are on prime. They probably got the cool speaker. So that's an opportunity as they get smarter, you can see people saying, oh wow, I really wish I had prime because I want to do the music piece or order from it. Or there's a lot of things kind of tied in there.

30:17 Let's see what else was there. They've moved a lot of the integrations. It seemed like they were all bespoke. Like, you know, how you can have like, Spotify door. There's a lot of things that you can integrate onto your Alexa. It seemed like those were all kind of a hot mess before, like very individually done is private ways hit. It was a pretty long in the tooth platform. So some of those integrations are, yeah, sure. Like I see tech debt. Yeah. And for better and worse, I feel like they've tried not to break any of the old things that people already had. Yeah. So all that's based on MCP now, which is pretty cool. So that maybe someday you'll be able to kind of like make it easier to add your own skills to Alexa. I've never tried that. It seems like- Or at least you should be able to buy a kit with your own Alexa skills.

31:01 Yeah. They talked a little bit about auto buy and some of the trends are seeing that that's where you can kind of tell Alexa, either the speaker or AFS, and you can say, Hey, if this Nintendo comes back in stock and the price is under that, I want you to go ahead and buy that for me. That's pretty cool. And then they talked about some of the new personalities are really engaging with people that you can put onto your Alexa plus device. Yeah. I actually use that because I have made my Alexa devices more curt. Do you go, so you're brief, you don't do laid back or sassy. I had you as a sassy guy. Yeah. I think sassy is fun once and this wasn't personality, but it used to be a lot of celebrity voices. So I had like Samuel L. Jackson cursing at me for a little while. Yeah, I just go for Kurt because it's, it's an important part of my home ecosystem.

31:45 We use them for quite a bit of home automation and turning on and off lights. And yet you just want that to be as snappy and short as possible. You don't want it to cuss at you every single time. No, I don't want to have a long sentence. I just want the lights to turn on. What did you have a takeaway wise from the Alexa conversation? Yeah. There's a bunch of people working on it. It's a tricky conversation on Amazon because I feel like AFS is both a horizontal thing. It wasn't like, oh, the only time we talked about AFS is when the AFS guy was there. Like it came up in every other conversation, right? And so it very clearly, they're all thinking about how AFS makes their thing better, how it's going to make grocery better.

32:26 The UX person talked a lot about AFS's role in grocery. Yeah, it's a benefit of Prime, right? You get this premium version of the experience of your Prime member. And it's this vertical thing, it's this new capability that unlocks things at Amazon. So it's kind of tricky to talk about as a thing in my, I do have a little bit of a love hate relationship with it at the moment, because I think it's gotten better. I think the vertical agent on the shopping pages is getting incrementally better, and adding more capabilities.

33:06 I see what's possible and I'm eager for them to get to what's possible. And so I'm a little impatient with the progress versus what's possible. But my big takeaway for AFS is AFS this year is what talking about Everyday Essentials was last year. It was something they had done a bunch of foundational work on, but it hadn't really changed the world at Amazon yet. And Andy Jesse wasn't talking about it in the earnings calls. So fast forward a year, they delivered on all that hard work. And now it's a super important thing on the earnings calls. And it won't surprise me in the slightest if a year from now, Andy's talking about how AFS is the most important customer experience thing, they've added at Amazon and all these cool new proof points.

34:00 Yeah. But it seems like the risk to Amazon is so, so, you know, we've spent several days, we kind of had our quarterly thing and then we've had several days steeped in it and then you come away and you're like, they're going to rule the world, right? But obviously they're not, they're the number two grocer, right? They're not number one. They've, yeah, they're constantly battling it out on all fronts. I think it's interesting from my attempt to commerce world, you know, I think, I think Gemini, Google has had their eye on what Amazon is doing for a while. And I'd worry a lot about Amazon if I was Google, because there's a whole thing about ads we haven't talked about that was not part of our program. But, you know, that, that is either TAM reduction for Google or, you know, pure taking of share from their, their, their ad business.

34:48 And so, so I think they have kind of have this approach. This is me. This is not them saying this. This is just me speculating. And then I think Chet Petit has seen this opportunity to kind of come in out of, Sam Altman's actually said it pretty bluntly, that, you know, he's kind of like, he kind of joked and said, your margin's my opportunity. I'm kind of like back at, you know, two can play that game kind of thing. I think they see themselves, the AI folks see themselves being super horizontal. So if I can become, and I see this with my kids, especially my 19-year-old, she spends so much time talking to Chad, it gets the entry point at the shopping. Piece before Amazon does. Right. And that could almost like jump prime in a weird way, because it's like, well, I was just talking to chat to you about my, my skin thing that's going on. And it really recommended this.

35:40 It's so convenient just to order it right that second and not even checking it was on. So I think by having these conversations about non shopping related things, non grocery related things, you know, even, even meals and recipes is getting in front of grocery, which I think is a little risk to Amazon, because if you, yeah, you, you, you can't really. I haven't tried in like the last 30 days, but last time I've tried Rufus is not really helping you with much on, on recipes. It's just kind of, it'll send you over to like some other site and then that's kind of it. Whereas the other guys are like doing really good jobs of building the whole cart for you and trying to get you like, again, so what do you, what do you think about that? Is there a real attack vector there?

36:21 I do. I think there's, there's more spotless. You anticipate Amazon. They're, they're very smart. They must see it. If you and I see it, they see it. Are they going to do it too? and try to like go wide with AFS? Yeah. I, mean, so A, I don't know. I feel like this is so early. Like I don't even care who's winning right now, right? Because I feel like the race is going to change positions multiple times. It's not an indicator of future success. No, before it all settles down. I will just remind everyone, challengers come up and do disrupt like seemingly. Undisruptible incumbents all the time right and just in our commerce space i go instacart wasn't relevant they became pretty relevant in digital grocery timu wasn't relevant they became super relevant sheen you know has had way more apparel progress than anyone ever thought and tiktok shop is like arguably the most disruptive thing out there in our whole space.

37:23 What not over here doing video collectibles just raised some of the money. Their GMOs off to the rest of TikTok shops. So often they're AMs, by the way. They don't, like Walmart and Amazon are still doing pretty good in spite of all those things. But nobody's entitled to their position forever, right? And so it won't, I am very convinced that all of this agentic is going to create some new Google-sized players in the space. Like, will Google be one of them? I think they have every opportunity. I don't know who wins or loses, but I do think there's going to be major reconsiderations. Right. And I, today, like a simple thing, but like. The company that has most of your purchase history has a huge advantage for personalization, right?

38:08 And so, like, one of the advantages of Prime is you spend more of your wallet there because you want to get benefit out of Prime, and then they get more purchase history, and then they can do suggestive selling better than everyone else. I'm pretty convinced, in the long run, the company that has the most of my life context is going to be even more valuable than just my purchase history, right? So I want to buy some, I want to see some recipes and then buy the food for those recipes that meet my exact health goals. And I don't want to have to restate all my health goals. So if you already know my health goals and you can do all this other stuff well enough, you're going to win. And so we, we talk a lot about horizontal agents like Google and ChatGVT having a lot of broad context for users and that's going to be their competitive advantage.

38:58 And the onsite retail owned agents that we call vertical agents, like AFS and Sparky. They're going to have different advantages. They know more of our commerce purchase. They know all, you know, and so it's really going to be which one can overcome their deficiencies the best. Right. And I do think one possible play if you're Amazon is I don't just want to be a vertical agent. I do want to be a horizontal agent. And how many devices did you say Amazon has out there? And by the way, 600 million. It could be more active because what if it's also all the fire TVs and all of the, what are they? But you could imagine them having a big surface for a horizontal agent and at the very least competing in that space. So it won't surprise me to see them run that kind of a play.

39:52 Oh, and since we last recorded the quarterly results, information leaked from Bloomberg about this device that OpenAI has worked with. I was going to say, and we all thought it was going to be some kind of wearable, and it's now sounding more like... A donut. It's a donut. It's a home or substance but a donut that essentially is a direct competitor to an echo yeah and it's battery powered so it doesn't have to be plugged in and it has some kind of movement to it so a lot of people think it's going to have a little face or some kind of expressions yeah so it's going to be interesting to see when the device comes out what's happening there yeah and apple's taking it seriously because they're suing the dude that left and yeah this kind of stuff and there are lots of interesting things that are happening in the glasses but i i think there's like so much opportunity for innovation and stuff here.

40:38 I'm excited to see where all this goes. I'm definitely not going to embarrass myself by picking any, any definitive winners and losers. Cause I think this is a, the very early innings of a race that a lot of people are going to invest a lot of resources and unimaginable resources in, in winning, but I think the consumer is going to win. I think like. That I'm going to be getting how much less friction there is in a lot of these commerce experiences down the road as a result of all these new technologies. There's lots of silly hoops. We have all mindlessly accepted jumping through, that are going to go away.

41:18 Anything else before we call it a day? No, no. I think this might've been a record for our longest podcast. We're going to split this into two episodes. Tomorrow. Yep. And. We're actually going to be together again at Retail Club. So make sure you come to Retail Club. I believe you can now, bookings are open for our session. There's a very limited number of seats in our quote-unquote tent, which I think is actually a tent. So Jason and I are going to be talking about really whatever you want to talk about. Yeah, so bring your sleeping bags. Yeah, it's going to be, I think we signed up for a six-hour session. So that's going to be great. But we'll be doing lots of little sessions. We're going to do some live pods. If anyone out there is at a retailer and wants to come on the pod, reach out. We would love to either Jason and I through LinkedIn is probably the easiest or email contact. Or our fancy new podcast website.

42:06 Yeah, yeah. Go to the Jason and scot show, jasonscott.com and you can submit to there and reach out through the form on that site. So we look forward to seeing everyone at Retail Club. Yeah, I'm going to throw one other plea in there though. If you're enjoying all this new content and maybe you're enjoying the new video format, that's a perfect reason to leave us this review. Because more than ever, I need reviews. I need the podcast to feel like a success. Because now that scot and I are traveling together a lot, I'm desperate to move beyond our room sharing policy. So I'm hoping if we get enough good reviews, we'll be able to start having our own rooms, which I have. Jason stores like a chainsaw.

42:48 I wasn't going to go there. But trust me, it's in everyone's best interest that scot and I have in our rooms. So hopefully that's an impetus for leaving a review. And until next time, happy commercing. You've been listening to The Jason and scot Show. For all the latest news and trends on e-commerce and shopper marketing, subscribe to us on iTunes or visit jasonandscot.com.