Mo Money Mo Problems

The retail space is seeing a ton of capital comes it's way, with ecommerce being the predominate sector getting the largest influx. Why is this happening? What are VC firms seeing that the regular consumer doesn't? Are they winning? Listen in to find out more.

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Michael Maher  00:00

Hey, everybody, welcome to The Longer Game. I am Michael Maher, your host, and I am here with my buddy Jake Barnett from and I said, buddy, I've never actually met him in person, but I have a good feeling that we would be buddies. And anyway, he's the VP of business development at Fortunet. And from my understanding, Fortunet is a company that is helping brands who are getting acquired, I think get the best deal. And we're talking a lot about eCommerce businesses. But I'll let Jake maybe do a better job of explaining that. So yeah, thanks for coming on, Jake. I appreciate it. 

Jake Barnett  00:36

Yeah, Michael, thanks for having me. Good to see you again. Yeah, so I'm on Fortunet in a nutshell. We help, it's primarily Amazon native as well as eCommerce brands. We help them get the best exit possible. So, you know, Amazon acquisitions have really blown up in the last couple of years, I used to be on the buy-side with two aggregators that are buying up all these Amazon businesses. Started doing that two years ago, when it was really a nascent industry and it's, you know, grown so quickly. So I've been on the buy-side doing something like 15 acquisitions of primarily Amazon brands. And I switched over to Fortunet about six months ago. So we sit with the seller and walk them through the whole process of strategy and planning all the way through completing the transaction of being acquired by these aggregators or private equity or whoever it is, and, you know, really just giving kind of professional advice, anticipating buyers moves and making sure they get the highest price and the best deal structure. So I love the job. I get to travel around the world and meet like really impressive entrepreneurs doing super cool stuff on Amazon, top, and front.

Michael Maher  01:44

Yeah, we last part, you're at Romania.

Jake Barnett  01:45

Yeah, I was in Romania. 

Michael Maher  01:48

So like a quarter of my team is from

Jake Barnett  01:50

Yeah, it's, Romania's super cool, and really nice people and some really cool businesses there. And I was in Ukraine after that. 

Michael Maher  01:59

Wow.

Jake Barnett  02:00

Awesome, some awesome folks in that part of the world and in our industry. And now I'm in New York City today. You know, doing similar stuff. So I get exposure to a ton of brands and kind of really intimate exposure. You know,

Michael Maher  02:13

Maybe also exposure to germs to since you're going off places. I hope I hope you've been staying well. Every time I travel recently, on my own for business, and it's only been like, twice in the past two years. I've got a terrible stomach bug. 

Jake Barnett  02:27

Oh, really? No, I've never,

Michael Maher  02:28

Never personally, nope. 

Jake Barnett  02:29

I'm pretty tough with that. I guess I was in Mexico for like six months this year and survived that the only place it really gets me at

Michael Maher  02:36

Get bottled waters

Jake Barnett  02:37

Yeah, I you know, I drink bottled water. Morocco is the place that I always, you know, always hits me but,

Michael Maher  02:45

Oh, wow. 

Jake Barnett  02:45

Otherwise, the stomach's pretty strong. I think.

Michael Maher  02:49

Maybe we should just change this into like a travel podcast. Let's talk about all the places you've been.

Jake Barnett  02:53

Yeah, let's do it. Yeah, yeah.

Michael Maher  02:54

 Is there a big eCommerce industry in Morocco? What is that?

Jake Barnett  02:59

That was just a random spent a couple trips there. It's just a really cool place. But that's just places where I've only one regular,

Michael Maher  02:59

You went to Spain then just went over to Morocco. 

Jake Barnett  03:08

Yeah, exactly. Take the ferry over. And super cool. 

Michael Maher  03:12

Okay. There's a, how long is the ferry? Like an hour? Or is it? 

Jake Barnett  03:15

Like an hour? Yeah, it's pretty quick. I actually know a guy with a with an eCommerce business selling Moroccan rugs, though. So, we want to go there we can. 

Michael Maher  03:27

Okay, we can. So for everyone who may not know, since we're talking about retail in general, in the future of retail people, it's serious business aggregators. It's kind of a new term. I don't know, it's not a new term, maybe in general, but it's definitely new in the Amazon space. Last year, there was a very large aggregator which basically is almost like a venture capital company that's coming in and buying up a bunch of Amazon businesses and trying to grow them, I think, find efficiency at scale. And there was one last year that got a very big evaluation. I believe the valuation, the valuation was 1 billion. That was through SEO. And I think they were doing 500 million in revenue. I probably should have looked this up beforehand.

Jake Barnett  04:14

You know, the numbers change really quickly, right? So like, yeah, THRASS has really paved the way when I got into it a couple years ago, I you know, nobody had actually heard of THRASS here there was maybe two or three aggregators, so I may not 

Michael Maher  04:27

I had not heard until someone mentioned it here. 

Jake Barnett  04:29

It's, it's big news like THRASS has really paved the way but they're one of something like 70 of these aggregators that are out there now. Collectively, they've raised something like 7 billion in capital, just devising mostly Amazon businesses. It's really kind of like a classic like private equity roll up type of play. But I think really, the bet is that the future of retail is going to be eCommerce, of course, and then yeah, within eCommerce, it's going to be mostly Amazon. So that's really what it's all about. I think, the folks are trying to kind of draw the battle lines and say, hey, let's snap up these really cool,

Michael Maher  05:05

I like that you said that.

Jake Barnett  05:06

right now. Yeah. And like that's going to be the future. And, you know, they're going to try to defend the high performing, highly reviewed and ranked brands now, rather than try to launch new 

Michael Maher  05:07

Yeah, 

Jake Barnett  05:17

so I think that's kind of like, 

Michael Maher  05:19

okay, 

Jake Barnett  05:19

We see the future of retail, 

Michael Maher  05:21

That's a good perspective.

Jake Barnett  05:22

Yeah, kind of unfolding right now.

Michael Maher  05:25

So, every, every aggregator that's out there is buying up companies, buying up Amazon, mostly specific companies. I think there's some that probably are doing maybe e-commerce in general. But yeah, they're going on buying these businesses and trying to grow them. And I like what you said about how they're trying to defend them and secure placement now. It's definitely, I know, it's been getting tougher over the past really, even just within the past year, not tougher to grow a business, but to really, I think be the highest and trying to find profitability when some of the advertising costs seem like they're, they're going up on the Amazon side. But in general, I'm gonna make a prediction. And if I'm wrong, doesn't matter, I'll be dead, probably, maybe not. *inaudible* I feel like THRASS is making a, or THRASS is just the main name. But the aggregators are going for these brands that are doing well on Amazon doing well on eCommerce. And once they've rolled all those up, maybe some end up getting consolidated. And that leaves more market share for you know, the other brands that they have that are in that category, and there's going to be a push to then eventually get them into retail, because I don't believe, I believe everything for brands in order to be successful, I believe the thing for brands to be successful is being omnichannel. So even though I run an agency that helps brands to grow on Amazon, like he said, 40% of the market,  40% of the ecommerce market, ecommerce, last time I checked was like 16% of total retail sales. And what's crazy is that I checked this, because all of the branding I had wasn't really speaking to what was going on. And so like marketing for my company. And so I did research into what's changed since the pandemic, what what is applicable, and not just sending LinkedIn messages like, hey, hope you're doing well out there in the pandemic, it's like, yeah, it's six months in like I could have died, you don't. You didn't reach out to me soon enough, like, don't give me the fake hope. I'm getting, I'm getting some now, I hope, hope you're doing well and troubling times anything that's going wrong with your business and like you're little late, I could use those last year, I really needed a shoulder to cry on. So I feel like there's going to be pushed to retail because the brick and mortar because I feel that humans when I was talking about this on the last podcast, I believe humans want a tactile experience. So they want to be connected to the product. One of the things that has helped ecommerce to grow and by the way, ecommerce sales are 16% of total retail sales. So like a $5 trillion industry. I don't know what that amounts to, but significant and growing the first quarter of 2020, it was 12%. So it jumped up to 16 fluctuated a little bit and his level back out now at 16 or stayed at 16. And that's a pretty significant jump. It was only that that sector of business ecommerce of all retail sales, it was only growing by like less than half a percent each year. So maybe eight to 10 years with the growth in a very, very quick time. So that's significant. Strain, a lot of logistics. I mean, we saw Amazon pushback delivery times we've seen UPS, FedEx all of them struggle, especially around the holiday season and Q4. For everyone that doesn't know that's quarter four, they struggled with logistics and just getting stuff out on time. Now, there's been inventory limitations. I mean, there's so many ripple effects that are out there. But I remember a company that I think they were called snap 36. And they had a case study they were doing 360 photos for 360-degree photos for Amazon specific brands. Well, I mean, you could do it on Walmart and Home Depot and whatever. But they took a can of bug spray. Like no reason why you should need a 360 budget bug spray like know what it does kills the right bugs or maybe it was a repellent,  I don't know. And they did a 360 image put it on the product detail page on Amazon. And their conversion rate increased 10%. That's correct. And that to me is crazy. So people, eCommerce has made it easier for stuff to be tactile. They've also made it really, really easy to return stuff. But I do believe that people will maybe, maybe there it turns into an experience where you go into a store. You try and an outfit or you look at something and then they shipped to your home same day or next day or something like that. But you're dealing predominantly with ecommerce brands. 

Jake Barnett  07:35

Yeah. Yeah.

Michael Maher  09:57

Mostly on Amazon. What do you think the biggest, and I was thinking about this, you were on the buy side, moving to the sell-side. So you have really great insight on what buyers are looking for. And so you're like, you seem like the perfect person to be able to go to the buy side and say, Excuse me the sell side and say, they don't care about that. They want to see this, this, let's make that look good. I imagine you're working long-term with people too. 

Jake Barnett  10:26

Yeah, 

Michael Maher  10:26

Like over a course of years.

Jake Barnett  10:28

Yeah. I mean, we do on Fortunet with our clients, but I've just been in here two years, it's, it's so crazy thinking about it, that somehow two years is a long time. But so much has happened in two years. And so much has changed that. And it was such a nascent industry then that, you know, it's I got in early, I've built relationships, I've seen brands go from zero to, you know, now bringing them to market at 5, 10 $15 million evaluation. So it's really cool getting being able to track that. And, you know, I've seen buying deals and bringing deals to the committee and having them evaluated, really learning, you know, what makes them *inaudible*

Michael Maher  11:04

It sounds very official to the committee.

Jake Barnett  11:06

You have to deal with it. It's the deal team that, you know, you bring the deal committee, you bring the brands to them and, you know, they basically chew you out on every aspect of a deal. Even the good ones. You know, it's really,

Michael Maher  11:20

Is it that, isn't that detailed? And that like, like, thorough? It feels like they're chewing you out?

Jake Barnett  11:27

Yeah, I mean, it's definitely this like, like, what is it like the Socratic or Socratic method of like, you know, even if it's perfect, let's poke as many holes in it as you can to try and, you know, just 

Michael Maher  11:39

Yeah let's see where the props are. 

Jake Barnett  11:41

Yeah, exactly. So fair enough. And I've learned a ton on that. So, you know, really understand what like the aggregators look for specifically, you know, whether that aligns with, you know, the future of eCommerce, we'll see that because I think the aggregators have a really specific thesis around Amazon being the future and just wanting to conquer Amazon, that I think sometimes the other channels are neglected. So, you know, they're, they're kind of going all in on Amazon. And fair enough, that's, that's what calls out. 

Michael Maher  12:10

What channels do you think are actually competitive against Amazon?

Jake Barnett  12:15

Well, you see, a lot of people have been very successful with direct to consumer, Shopify, or whatever it might be.  So you know, and there's, I think, parts of that business that are much more attractive than Amazon, you know, owning your customer building your email list, building a real brand, rather than just a search based Amazon purchase. You know, those are, those are different things. 

Michael Maher  12:20

Okay.  And I see that as the future of Amazon is, because they provided so many more features for brands, but telling that brand story, I think those are the products that are going to last, the ones that have a strong brand and a brand story behind it.

Jake Barnett  12:50

Yeah, it's an interesting point. Because two years ago, I used to think what is brand matter on Amazon, like, if you're, you're just searching for bug spray, like, you're going to go with maybe the top reviewed one if it has good pictures, greats, like conversion rate matters, but I didn't think brand really mattered that much. But now, especially the last six, nine months, some of the most attractive brands that I see, both from a valuation perspective, as well as just from a sales and profitability perspective, are ones that have very nice brands, and really emphasize that that might just mean great photos, great A plus content and you know, a story behind it. You know, I don't know what else you would say is makes up a brand. But some of those elements are pushing higher valuations of buyers seem to like it. The business buyers seem to like it as well as the customers seem to like it. So I've kind of changed my tune on that. And brand does seem to matter more on Amazon, you'll never see Amazon, you know, giving up customer lists. So how do you really build brand loyalty on Amazon is I think another question.

Michael Maher  13:57

Two other teams inside of Amazon. Yeah. 

Jake Barnett  14:00

Yeah. So that they, 

Michael Maher  14:02

Say hey, this, this team, we work with them. This is helpful. Here you go. Let's just be product. *inaudible*

Jake Barnett  14:07

Yeah, that's what they're sharing. Exactly. But it's interesting seeing kind of brand develop, like I think Amazon's giving more features there for their sellers. But yeah, I see like Shopify, you know, I have a great business now that's just about to get sold. That's like 15% Shopify, that's growing faster than Amazon. More purchases, things like that. It's really,

Michael Maher  14:32

*inaudible* what industry it's in. 

Jake Barnett  14:34

That's like home improvement.

Michael Maher  14:36

Okay, yeah, that my neighbor's. I'm not going to name the names because maybe I could get in trouble for that. I don't know. But they have said that they're gonna die in this house. And they've got four kids. One kid, one single kid and then some triplets, which was very interesting for them. Like, I can't imagine I went I know from going zero to one going from one to four. Seems like, now you've got two to one on two, I don't know how you do that, but they like 

Jake Barnett  15:06

Single new.

Michael Maher  15:08

They've redone their basement, they got a trampoline, they've really like, I mean, their houses is like a wonderland. So they say that they're gonna die there. But that, that makes sense that the Home Improvement category would or just home in general would be really growing well.

Jake Barnett  15:23

Yeah, people are, you know, especially after COVID I think people are invested into their homes more. And, you know, I think we saw in a lot of categories, some weakness in the last two, three months, you know, with the world opening back up, especially things like home and maybe children toys, but Delta is coming back people are kind of it's in, it's bouncing back with that. So I think people are changing their tune, like long-term investing more in their homes, home offices, playrooms, or whatever. And, you know, I think you've seen that on the retail side, too, like Home Depot has been killing it. So there's, it goes both ways. And I'm sure if you have a project, 

Michael Maher  15:59

There's lumbers hard to find, it's super expensive. 

Jake Barnett  16:01

Lumbers hard to find. Yeah. So it's not like just eCommerce has benefited from these trends. And I think some stuff you need right away, you'll go to Home Depot, maybe you don't want to pay the shipping, if it's something big, and then other items, maybe you can't find them at Home Depot, or, you know, you'll wait two days and you'll get it off Amazon.

Michael Maher  16:23

Do you remember when Craigslist is really popular, and people would sell like live animals on there. But you're not allowed to do that.

Jake Barnett  16:30

I don't remember any live animals. But I think I bought a couple things off Craigslist, like way back in the day.

Michael Maher  16:37

I bought a ton. I've also sold stuff in my house. But more what I did more of was music equipment. So I would sell like different keyboards or synthesizers or microphones, whatever. I used to wheel and deal, I guess on that site all the time, I had a buddy who did it too. And when I was going, like when I was going somewhere, there's one time I was driving up like 45 minutes north of my city at night. And I was like, Hey, I'm gonna just turn my phone on. Will you just like, you know, listening and if I like get killed, or you hear me like screaming just like call the police? Because this guy, I went to this guy's house. Yeah, basically, like, okay, took me into this shed in the back where the keyboard was, there's like a blacklight. I was like, Okay, I'm gonna, you're gonna be fine. You're gonna make it. And all I had on me was my phone turned on. I didn't, I didn't have any kind of protection. So it was a little bit crazy. But yeah, I'm pretty sure there's also some pretty good personal ads that are on Craigslist, that I have a buddy, he would all send them to me. And I'm like, this is funny. But are you like really interested? I can't tell you send me these all the time. Are you telling me that this is you like you place this person? Anyway, 

Jake Barnett  17:50

Yeah,

Michael Maher  17:51

I think the brand. I mean, I'm hearing more people, even just within the past 10, 15 years, like celebrities, thinking about their brand. What's your personal brand? I don't think anybody was talking about that in the 80s, or the 90s. It was very product focused. And marketing has really evolved to be more about stories. And I think that makes total sense. I said this before, I'm a big fan of Donald Miller and story brand. And how they talk about being able to, like within an instant going, it's like this going to I snapped and I can hear it, go into someone's website and being able to know exactly what problem this solves right away. And, and it being applicable people, applicable, that's part of brand being able and just maybe conversion rate optimization. But I think, since the dawn of time, we've been writing on cave walls, telling stories that way, why wouldn't we go to more story, you know, base stuff? And I think that I'm curious to know, you know, why is it that you feel now that you change your tune? Why is brand mattering more to, to maybe the buyers?

Jake Barnett  19:06

Yeah, it's an interesting question. Like, maybe when I think about like, why brands are becoming more important, maybe it is actually because of Amazon, like kind of democratizing eCommerce and just making it Hey, you go there, it's easy, you find anything you want. So, you know, there, it's been so hard to differentiate because of Amazon. And maybe that's it, it's driving prices down for a lot of sellers. So maybe at the same time that's creating the need to differentiate through a grant to maintain premium pricing or whatever it might be. So I think that might be part of it. I do think, you know, the marketplace has evolved on Amazon to where people are looking for higher quality goods as well. And maybe the brand is one way of seeing that. So I think that's probably part of it. 

Michael Maher  19:50

They've also made some efforts to bring on more high-profile like at least fashion designer brands. And so I think to help raise the image because for the longest time people thought, you know, I heard people saying, you know, several years ago, I don't want to go on Amazon, because it's a cheap platform, and I don't have a cheap product. And I have clients who have products that are a couple $100. And they do pretty well, with those. So yeah, they've definitely changed things.

Jake Barnett  20:13

Yeah, the one that brand I just mentioned, they're selling for over like $300-$400 product. You know, 

Michael Maher  20:20

Oh wow, okay. 

Jake Barnett  20:20

Yeah, it's very expensive for Amazon, but it's so I think Amazon's evolved, and, you know, chicken or the egg, I'm not sure which one came first there. But brand is becoming more important, I think people aren't just going and looking for cheap commodity items on Amazon alone, you know, I'm probably guilty of it too. As much as the brands might hate it sometimes, you know, I find something I like I go on Amazon to find it. So I can, you know, get it tomorrow, we're all kind of guilty of and I don't think that's the end of the world, I see a lot of people, Amazon sellers, that they're trying to grow their other channels direct to consumer walmart.com, whatever it might be, but still, at the same time taking a lot of traffic from off Amazon and pushing it to Amazon to boost their sales there. So I don't think you know, a lot of people are kind of anti, they say, find a product on Amazon and then go to the website or go to a store to buy it. But you know, if you leave if you make the purchase on Amazon, and you leave a good review, and you're really helping that brands probably in a better way than buying it on their website.

Michael Maher  21:19

Yeah. I was I've heard people always say, or lots of people say, Amazon has killed small businesses. And it's totally not true. Yeah, I was able to earn a living with my small business selling on Amazon. I know lots of other people. I'm helping people. Other agencies are helping people. So it's raised up, you know, not every brand is going to be doing a million-plus, I think, the average for most brands out of the millions of sellers. Are there millions of sellers? 

Jake Barnett  21:52

Yeah, I guess there's like

Michael Maher  21:53

like a hundred thousand. 

Jake Barnett  21:54

100,000 million sellers. And there's something like 40,000 on Amazon, US, they're doing over a million in sales. I've personally spoken with hundreds of sellers that are doing over a million in sales. I was just at an event yesterday, I met a guy doing like 35 million in sales. Almost all the stories that I hear from these people, I'm always interested in the story behind the brand and the person. You're all these stories of immigrants coming to the US $200 in their pocket. Now they're doing 20 million of sales on Amazon and off Amazon. So, you know, maybe

Michael Maher  22:23

So crazy.

Jake Barnett  22:24

maybe it killed the old small business person, but it's given birth to a whole new generation. So maybe they're different people, you know, the guy who and *inaudible*

Michael Maher  22:33

I always thought,

Jake Barnett  22:35

it's hard to go to Amazon,

Michael Maher  22:36

Okay. He and that's that was what I was gonna get at is. I think people didn't evolve. And so some of those businesses died off. Amazon was just utilizing technology and making it more convenient. That be mad at the people who invented the internet, I think

Jake Barnett  22:55

We can go probably get mad at *inaudible* 

Michael Maher  22:57

Al Gore invented the internet, right? I think Al Gore said one time he invented the internet. Get mad at that guy. You know, it wasn't. It wasn't Amazon's fault. They were just legitimately leveraging what was out there. And I think a lot of people, especially sellers that started out so low and have you know, grown on Amazon, it's really personal to them. It's not like they're getting into just run a business like this is their brand. This is their livelihood. This is what pays their bills. And so they feel like every time Amazon nickel and dimes them or cuts them off, or does something like man, Amazon, they're just they're the worst. But they're also the best because they're allowing you to sell products on their site. Some people say, Oh, well, it's, you know, 15% right off the top of your product just to sell, I'm gonna go to my website. And to my responses. I think you should do that, but not in place of Amazon, because now you have to pay people to come to your site. Amazon already has people on the site. And so now you just need to pay get in front of those people, which is, you know, a whole other story. But there's, there's pros and cons. And I don't see them as the big bad wolf. I also don't see them as the savior. I just think they're, they're a great channel, they're changing, you need to be on it to your point, people are going and looking stuff up on Amazon to find products. They could be doing a majority of the time they're doing that 54% of people are going when they want to know about a product. They don't go to Google, they don't go they go to Google maybe 25% of the time, but 54% is going to Amazon. So if you're in target, and you see a brand you don't know. And you're like okay, I'm gonna go check them out on Amazon. What does it look like? Oh, wow, they got really bad reviews. Okay, I'm not going to buy this product. There's no reviews and Target or Walmart or whatever the case might be. So that is is directly impacting the retail sales as well.

Jake Barnett  24:46

Yeah, I think they feed each other, they feed each other and we're in strange ways. So I see, I have a friend with a business that does the standard kind of like product inserts in his Amazon packages. And he said he actually gets a lot of people come to the website, sign up there and start making purchases on the website. So Amazon can feed the website vice versa. Yeah, you know, we'll see spill over into institutional retail as well. So I think it's, you know, retail is not dead, I think, look at it the last few months, it's coming back. But it will probably be different, right, you're going to certainly not buy some of the same things that you used to buy two years ago that you can now get on Amazon, like, some of the some of it will never have come back.

Michael Maher  25:30

Yeah, I couldn't. I couldn't find demographic information. But when, you know, eCommerce sales went up, it forced people across many different generations to now utilize Amazon. And I think anyone that's older who, you know, doesn't want to put their credit card information on the internet because people will steal it. Yes, Mom and Dad, I'm talking to you.

Jake Barnett  25:55

Probably over the phone. So they're not worried anymore.

Michael Maher  25:58

Yeah, they've had, they've had some people scandal before. But it wasn't anything that they allowed is like someone took stuff over. So anyway, I'd say that because I think it even forced those people to get on and use Amazon and say, oh, wow, the convenience of this is incredible. I'm going to start utilizing, especially for food, I get that. And I was talking with another Amazon agency owner earlier today. And she was saying how the food category that they've worked with a lot of food brands is now a lot of their business. It's really taken off. 

Jake Barnett  26:32

Yeah, I've seen some really cool food brands. And I know there's a couple aggregators that are like specifically going after food brands, which is pretty interesting, too. And, you know, look at like, actually, Amazon's push into brick and mortar, and a lot of that's around food as well. So, you know, some items are never gonna really work online. Maybe like fresh milk? I don't know. But it seems like Amazon has changed our minds about that. I used to think groceries you would never do online and, *inaudible*

Michael Maher  26:59

And they were doing produce, I want to feel my produce that kind of stuff. But, yeah, I don't have time now.

Jake Barnett  27:05

I've actually gotten it online. And you know, they seem to package only the ones that are good anyways, and I'm not a professional chef, what do I know?

Michael Maher  27:12

I thought you're gonna say, professional shopper, 

Jake Barnett  27:14

or a professional shopper. So yeah, it's been interesting seeing like Amazon getting into brick and mortar more and more

Michael Maher  27:22

of acquiring Whole Foods. That was a big one. I know people who are getting prime now I think has just been rolled out to Amazon Fresh but they're they're getting stuff delivered to their door. I'm thinking about this, like, what is the big thing that's changed. And I think it's convenience. Everybody's very busy. They don't want to put, you know, another thing on their list to do. So if you can order groceries while you're at work, you know, bout to get on the train, go home. And you can have your groceries there by the time you get there. If you're out in the fields, and you're a farmer, and you're like, I want to get some delivered to my door. So by the time I get out of this field, when some weed I don't even know if I'm saying the right stuff, but sounds I'm gonna get I'm gonna get stuff delivered to my door. Or like I'm a mom at soccer practice. And Oh, I forgot to get these like three things for dinner tonight. Like that convenience, I think is really changed people's minds.

Jake Barnett  28:18

Yeah. And it works, you know, works well enough. So no problem there. And yeah, it's I but I guess getting back to the multi channel thing. I think that is the really interesting part. So just being available at the most convenient place for that particular customer. You know, and that's, I think, something you need to scale for. So if you loop that back to the aggregators and what they're trying to do in the market, I don't think they're that interested in retail right now. 

Michael Maher  28:44

Sure, I think in the future, maybe. But not now. 

Jake Barnett  28:46

I think in the future like I think once they max out what they're doing on Amazon, and then once they move into walmart.com, and then Shopify, and they cap there, because, you know, once you capture 80% of the market on Amazon, that's it, it's growing 5% a year or whatever, you're not growing 50%, like they want to do it, that they'll just try to you know, that's how they do the 10 or 20 acts that they want to do on a return for a brand that they're not going to do for everyone, but they get them in front of everybody. And so what's the most convenient place for you as an individual? Is it a store? Is it online, etc.

Michael Maher  29:20

I also feel like more, there's more touch points. I know people talk like with consumers now. There's not just one shelf that they're going to and then television, there's so many more screens, there's so many more devices, so many opportunities to advertise to people so you know, being in those different touch points could potentially raise brand visibility and it just keeps you top of mind to someone I mean, that's why they're retargeting campaigns. For someone who clicks on your site and then use like, I didn't want to buy that drum set. So it stops Guitar Center. Stop showing me programmatic advertising, I don't want it and it just shows up everywhere until you're like fine I'll just spend $2,000 and buy it. So you'll get out of my retargeting space. 

Jake Barnett  30:04

Yeah. And then you see that on a store shelf. And then you see it on a billboard. And you're like, well, well, this is a this is 

Michael Maher  30:12

It's meant to be. 

Jake Barnett  30:12

This is a brand. Yeah, this is serious.

Michael Maher  30:15

What? So what Amazon's a big channel. We talked, you said Shopify, and I think there's a misconception by some Amazon native brands, you think, yeah, I need to get on Shopify, that's a good channel. And it's not just like a Walmart or Amazon, you have to have content. And so a lot of brands, yeah, and you have to have a brand, for it to look good. And for people to purchase the product. So you have to be able to differentiate yourself. If you don't have anything to put on your website. It's just going to be you know, all white or all black and some texts, like you're not going to sell products, you're going to send, you know, advert you're gonna send traffic to your site, and no one's gonna purchase. 

Jake Barnett  30:55

Yeah, and you need to know how to like, buy traffic, you need to know how to send traffic, right. So that's, that's more of the skill set, I think it's a different skill set a different model than most folks are used to. Although I do think that's more the future of Amazon, I was just meeting with a really cool Amazon PPC agency in Ukraine. And these guys are real pros. And you know, we say this is the future, like, they don't really care about organic ranking on Amazon anymore. You know, it reminds me of Google like 15 years ago, you should just throw up a site, you got some backlinks, and you were at the top. And then everyone just said, Why invest in that when you can just buy placement. And I think that's in the similar stuff in in Amazon. So I think you'll see the profile of these Amazon, even the small brands that don't get snapped up by the aggregators, I think you see the profile change to, you know, hey, I'm really good at product research and content just on my page or on my store, to people that are just really good internet marketers that are also good at advertising and conversion.

Michael Maher  31:53

There, there has been an A aversion to advertising by brands that have been around for a while. And I have, personally, my team has gone in and held to specific brands that were, you know, almost, I want to say on the brink of extinction, it sounds very dramatic, but just had huge changes in sales, like month over month, because of different events. And one of them is a pandemic, and utilizing advertising to come in, and really bring the brand back up. And of course, it looks bad, because you're like, Oh, I'm less profitable. But you have to boost yourself up to get visible so you can keep the sales so that you can actually bring more money in and get profitable by getting a better return for your advertising spend. That's the way that you can get there. But it requires an initial, you know, deposit in the Amazon advertising bank.

Jake Barnett  32:48

Yeah, I mean, I talked to people that they're just launching brands, and they say they're gonna run it unprofitably for the first six months, all their new product launches, just investing in advertising losing money all the time. So that's like, okay, you have to be really good at advertising. And that's going to just make it more difficult for everybody else in that same niche trying to compete. And Amazon, they're just adding more and more paid spots at the top, right?

Michael Maher  33:13

That and it could just be like a more traditional media buying agency that's used to spending hundreds of 1000s of dollars each month. And they're not thinking about the return to the visibility, creative, all that kind of stuff. It's all you know, display type advertising. And that's what people are focused on. It's on Amazon, like, Oh, you know, we're getting a point three return, who cares, whatever, we're really getting visibility out there. But no, that's not you. Here's the other thing, Amazon makes the most money, not up at advertising. But when your product sells, so they have a separate ad algorithm. And I think of this as a conversation, but you can you can say, Hey, I'll pay 10 bucks for this keyword, I'll pay 10 bucks for this keyword. And someone else is like, well, I've been paying to consistently Amazon's like, let's see, let's see what this $10 a click keyword guy does. And even based on Amazon system, that's not what you paid. But you know, if that product doesn't sell this other person whose product sells they want to. And I think about it from Amazon's perspective, they're the most, they want to be the most customer-centric company in the world. So they don't want to put products in front of people that they don't want to see and that they don't want to purchase. So if you can't optimize your ads well enough, they're going to go back and show those other spots that they know they're going to consistently selling.

Jake Barnett  34:27

Yeah, I mean, it's an interesting point, I think like so I was just at this conference yesterday for a lot of top Amazon sellers. And one of them told me he said 

Michael Maher  34:34

By the way, ASGTG conference, 

Jake Barnett  34:36

A great conference. A lot of *inaudible*

Michael Maher  34:38

Rosenburg is a really incredible guy, reach out to, get on his website and look at his telegram groups, his WhatsApp groups, lots of community. There I highly recommend him. 

Jake Barnett  34:49

Super pros over there. But some somebody told me that they thought one of the biggest differences they see in the last year or so and having related to aggregators coming in is that the conversion rate that you need to compete, it has gone up. So you know, you look at the people that 20% now it's at 30%. Plus, there's all these new tools that aggregators are using. And, you know, they're just, I think investing more in things like A plus content and better pictures and better, better assets. And on top of that, they're probably spending more on advertising, I can tell you, as a buyer, we used to look at like leavers of growth. If you pump up advertising, that's a great one. And at the same time, they invest in conversion, okay, win win, but it makes it much, much harder to compete in the niche. And it's probably going to drive down margins at some point.

Michael Maher  35:39

Drive down margins, and it's going to probably be more difficult for brands in certain categories to go up against those brands that are gonna have to really be efficient, but maybe they don't end up getting it as efficient as they want. And they take it over. I think, from an aggregator standpoint, I think one of the things that it's very easy to come in to Amazon, if you've got any kind of eCommerce or digital marketing experience to say, Oh, yeah, I know how this works. It's fine. And you can get in there and it doesn't go well, because Amazon doesn't operate. It's all it's all his holistic, everything is inside of Amazon. So it's, you can't treat it like AdWords or something like that.

Jake Barnett  36:18

Yeah, yeah. It's probably like, there's some things in common. And I know some, some of the top sellers on Amazon that I know, are people that used to do, you know, Facebook ads and Google back in the day. And they take that same kind of same, like, let's reverse engineer the algorithm approach. And that probably works. But it's not just a day one, you're the top guy. These are people that have been doing it five or eight years on Amazon, digital marketers, and for 25 years. And though so those are those are some of the real pros. I think there's some crossover.

Michael Maher  36:51

There's definite crossover in those kind of people. I think, really, they've learned a new skill set. It's not they haven't been just said, you know, they've evolved, they're not just like, Oh, yeah, I do digital marketing. I can handle this. It's okay, this is a new platform. Let's figure this out. How are we going to do it best? And then they go with what works?

Jake Barnett  37:08

Yeah, I think eventually, we'll see them all converge, right? Because it's gonna be a multi-channel. There's more brands that are sending off Amazon traffic to Amazon to boost their organic rankings, that kind of thing. So I think we'll see it continue to kind of converge slowly the the digital marketing and the eCommerce Amazon world.

Michael Maher  37:27

Yeah. So that's all the time we have. And you know, I'm saying that because I'm just saying it's over. It's done. So, Jake, if people want to find you, where should they look like in a record store? Yeah. Look at a playground. Where would people find you?

Jake Barnett  37:41

Yeah, you know, I'll be in Kiev next week. If anyone's around there. I'm not sure we're going live. But I hopped around.

Michael Maher  37:49

It'll be going live in a couple weeks. So okay, so we already made that point.

Jake Barnett  37:53

Who knows where I'll be but if you know if you're somebody, you're a seller interested in looking at an exit Fortunet.net where you can find us jake@fortunet.net f o r t u n e t dot net. or LinkedIn look me up Jake Barnett. I'm always happy to like connect and have these conversations and see what might happen.

Michael Maher  38:18

Yeah, we'll put some links down somewhere.

Jake Barnett  38:20

I appreciate it.

Michael Maher  38:21

It's not gonna be me, someone else who's knowledgeable is gonna do that.  Thanks for coming on. I appreciate the conversation. Yeah, I mean, I honestly I think almost every conversation I have could just go on and on and on and on. So maybe we save something for season two. 

Jake Barnett  38:28

Yeah, next time like in person over a couple beers? How about that? 

Michael Maher  38:42

Oh, that would be great. Can it be bourbon though, because I stopped drinking beer.

Jake Barnett  38:45

Why not? Bourbon sounds great. My family's from Kentucky. So I'll, I'll enjoy it. 

Michael Maher  38:50

Oh, are they really? Oh, man. *inaudible* Now we got to pull up a conversation and talk about. I live in Cincinnati, some right across the day. 

Jake Barnett  38:57

Oh, yeah. *inaudible*

Michael Maher  38:58

Huge Bourbon fan. It's actually hard to find some good Bourbons here because they've already they already have distribution in here and so people know what's good. So prices have gone up and some things it's like it's I can't find blends anywhere on the shelf. It's so incredibly difficult. Buffalo Trace, if you see this, and you want to sponsor this podcast, I would love that and I will read the hell out of what you have. Because I'm a huge fan of Buffalo Trace. But alright, I guess next episode is talking with 

Jake Barnett  39:24

Naptime and *inaudible*.

Michael Maher  39:25

In person. All right, cool, man. Well, thanks. I'm thanking you. Thanks for coming on.

Jake Barnett  39:31

Thanks for having me. 

Michael Maher  39:32

That's it, people. We have no rest of the show. It's over so I don't know. Go do your chores or something. Peace.