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Peter: Welcome to Unpacking The Digital Shelf where we explore brand manufacturing in the digital age. Hey everyone, Peter Crosby coming to you from the Digital Shelf Institute Studios in Boston. We're here with our weekly episode of trend and takes on the industry news that you might just want to pay attention to. I'm lucky, I'm starting off the new year with Justin King, our B2B whisperer. Justin, you're Zooming in from your home studio in Maryland. Yeah? Happy New Year.
Justin: Happy New Year to you. I had a great holiday. It was interesting, Peter. Over the holiday I realized, I have four kids, I think I've mentioned that a couple of times, and as I was watching football I realized, man, I wish during this holiday I would have had one of those quarterback helmets. So as a dad I wish I would have had one of his quarterback helmets, that the coach is talking to you while you're talking to your kids. Like, "Don't say that. Don't say it in that way. Don't say it in that tone or call an audible. Call an audible." Or even better, "Run the ball. Run the ball. Run as fast as you can." I wish I had that over the holidays, but I didn't. But it was a good holiday anyways.
Peter: Do you have an idea of who the voice in your head you would pick to be talking to you with that advice?
Justin: I think my wife would like it to be her, but I think I would like my dad to be the voice in my head.
Peter: That's good. It's good that your dad was the example that you look to. That's very heartwarming in this current day and time. Well, I unfortunately was spending more time on Twitter than I should have or wanted to during the holiday and one thing that jumped out on me was I don't know if you've heard of Tom Goodwin. He's a pretty big thought leader on tech marketing and advertising.
Peter: He, he wrote the book Digital Darwinism in 2018. His handle, anyone who's sort of interested in kind of the intersection of tech and marketing and advertising, Tom@TomFGoodwin on Twitter, but he tweeted about, it was a two part tweet, things that have not changed advertising or marketing and look unlikely to anytime soon and then a list of things we really should be getting excited about advertising and marketing. It really jumped out at me because just the contrast between the two lists. So I'm just going to breeze through the list of things that have not changed advertising or marketing and look unlikely to anytime soon. Basically he's saying in 2020 don't worry about these things, and I just want to get your take on them.
Peter: Drones, 4g, internet of things, 3D printing, robots, which makes me sad, blockchain, big data, augmented reality, virtual reality, AI, micro-targeting, voice, self-driving cars and personalization, which I thought was super interesting. Well first of all, what jumped out at me from this list is that basically anything fun is not happening in 2020. Like the cool stuff, the drones, the robots, voice, self-driving cars, none of that's happening. All the things everyone's getting you all excited about, it's not going to have any impact on real business accomplishments in 2020. Do you agree with that?
Justin: No, I completely agree. I wish drones. I have a drone and I like to fly my drone, really enjoy flying it and I wish of any of those that drones would make its way. I don't know how it would make its way, but I wish drones would be a part of that, my own passion.
Peter: I don't know. That seems to me like dystopian future. I remember that time there was a, a joke, Amazon photo of an Amazon blimp flying over some city and then drones flying out of it to deliver.
Justin: Right, flying out of it.
Peter: I thought it was real and I'm not sure I want that, but boy, that would take a lot of regulation, which is probably why it's not happening in 2020.
Justin: I agree with marketing advertising and things he's saying. Marketing and advertising won't be changed from that and the main premise is, hey you got to go back to the basics, right? I think the one thing in business hat I think has moved the fastest on the business side has been blockchain and not all aspects of blockchain. I don't mean Bitcoin blockchain, but the actual applications of using hash graphs and blockchain. I think especially as we looked in 2020 that I think there's a number of SASS software providers that are starting to release technology that's based off of blockchain, especially in the business world of EDI that actually has legs. That's not going to change marketing and advertising.
Justin: But I think it's starting to change business. We've watched GS1's Epics standards being released on blockchain for, I think it's IBM's Food Trust blockchain. Retailers like Walmart starting to look at that and even adopt that as a better way of transmitting transactions. Right now EDI is so peer-to-peer, right? It's one company sending another company information. Blockchain has this opportunity to get rid of the internet protocol and transmit EDI documents over blockchain. I think that probably has the biggest legs. I think we saw the biggest moves in 2019, but it's kind of a boring area too, EDI, and certainly not as sexy as marketing and advertising, but I think it has the biggest legs.
Peter: Well, I think at the core of what people look for in blockchain is that establishment of trust, right? That there's a way to scale things up but know that what you're getting is accurate and reliable. Is that kind of where you see it?
Justin: I think trust. I think security is probably the biggest area of that and I think trust fits into that. When we look at security protocols in the internet, it's completely always being able to be hacked. But secure blockchain has a lot more. It's a lot more high resolution than internet protocols is more low resolution. So I think security, whether it's EDI transactions, other communications. I think marketplaces on blockchain have become really interesting mainly for the security aspects. Both currency exchange, currency seams, transactions, contracts, terms and conditions, all that have a blockchain play.
Peter: Yeah, the one that jumped out at me, I think I stopped even when I read it was just that he's sort of writing off personalization in advertising and marketing, which for an advertising and marketing guy seemed kind of stunning. I wish I had Tom on here right now just to drill him a little bit on that. I'm guessing what he's talking about is if you combine GDPR and things like that, plus I think it's getting harder to be able to know who you're talking to and then to be able to actually deal with that fact in a secure way that respects privacy and all that, and maybe the world is just becoming more and more difficult to actually personalize to the individual in any sort of really finely grained way. So that's just my guess. I don't know if you had another thought on that one.
Justin: I think what you said about the Peter is a fine grained way. I think personalization is happening in small pieces and chunks and things like GDPR restrict your ability to be able to collect that information. But at a macro level, personalization is not happening, right?
Justin: I think that's the key. It hasn't significantly changed anything in marketing and advertising. It's still on that wishlist, right?
Justin: We were talking about personalization in 2009, right? That's when I wrote my first slide on personalization in 2009 and 10 years later we're still saying it hasn't affected much yet, which is fascinating.
Peter: Yeah. Well, given that one of the things in his list is also big data, which is exactly what's required to really do personalization scale, that says we maybe have a little ways to go, but then moving into his list of the things that we should be excited about gave me some clues of where he ... I think in some ways he's saying personalization is this kind of really, really tough thing to figure out and it requires a lot of things to be in place for you to even make a dent in that.
Peter: But then the things he said we should be getting excited about, he said, use basic tech to make everything frictionless, to reduce irrelevance, to make wonderful, premium, thoughtful, seductive ads that move, to serve ads sequentially, to guide people through advertising through their buying journey, right? Which is essentially a form of personalization, but in a way that you can actually control with data inputs that are already present in platforms like Facebook, et cetera. Make every surface shoppable, which I think is really key. Serve customers far better and make dynamic ads. Now again, he's marketing and advertising focused, but I mean sort of summing up all of those things to me is work through basic technology to provide a great shopping experience for your customers, right?
Justin: Right. So little to do with tech, right? He's basically saying do the basics. Go back to the basics. Think about your customer. Try to remove the friction from the buying experience, the discovery experience.
Peter: Yeah, let's walk through each because I think each one of these, some more than others, but have a little bit worth digging into as people think about what they're going to do in 2020. Tell me a little bit, what are your thoughts on the sort of frictionless thing? To me, I think-
Justin: In my B2B world, frictionless, it's still very frictionful. Is that the opposite of frictionless? I don't know.
Peter: It is now.
Justin: But it's very frictionful. In fact Digital Commerce 360 just did an article last week, I think, or two weeks ago, that says that only 7% of people rate their experiences with B2B websites as excellent. Seven percent, Peter.
Peter: Seven percent. I know, I saw that. Marc Rowan did that article that you're talking about and even if you raise the, lowered the bar a bit and said it's excellent or good, it's still only 36%. 47% said it's average and 14% fair. That's just really depressing.
Justin: It's really depressing. Then he listed some of the reasons for it or what people can do better at, and the first one that caught my attention is lack of transparency of shipping, right? So in the B2C world, lack of transparency, shipping is a no brainer, right? When you create an order it tells you how much it's going to cost to ship. In B2B, 90%, I would say is even higher, 95% of distributors when they create the order, shipping is not a line item on it. Shipping is actually calculated when it leaves the warehouse. So you could have a $1,000 product and have a $500 shipping bill that you didn't know about until it ships and leaves the warehouse. That's normal. When I talk to distributors, it's almost like, "Oh, we don't want to solve that problem yet because it's just normal for our customers." Well again ...
Peter: I don't know, 76%-
Justin: ... going back to [crosstalk 00:12:22] move friction, right?
Peter: Yeah, 76% of the respondents said that that was the biggest response area for what frustrates them about the experience of shopping online. Gosh, that seems like a huge opportunity for a distributor to say if you really invest in the area and you say you will never have to wonder what it's going to cost to get stuff. And I'm sure that's complicated. I am not a shipping expert, but I'm sure that's very complicated with significant B2B orders. But that seems like [crosstalk 00:12:51].
Justin: It doesn't really matter. Even if they're not significant, I think the other parts of this actually lead into that, Peter. So it talks about other things that are missing. Information about the customer. Customers just want to know that their information has been recorded, right? What we've purchased, who I am, what industry we are, and then just general product information. So if you don't have general shipping dimensions, weights, which many, many distributors are still missing inside of their ERP, you can't calculate shipping. How do you calculate shipping without dimensions and weights?
Justin: Right? So lack of product information that supply chain data, lack of product information, content on the website makes a worse experience for the customer. You can then calculate shipping. It's just a kind of a snowball.
Peter: That's interesting because yeah, 69% said a lack of images to truly see what the product looks like. Then 67% said inadequate product content.
Justin: That's right. That's right. By the way, many times it's not that they're lacking more than one image, right? In the B2C world, we might say, "Hey, it's only got one image. It should have four or five or six images. Just kind of show the product from different angles, how it's being used." I think what they're saying there is lack of image, not lack of images. Lack of image, which is again just crazy. But I think that's changing in 2020. I really do. I see it changing but we're still lacking some of the general basic things.
Peter: When you say you see it changing, is it just from conversations with distributors and brand manufacturers that you've been having where you're seeing a shift?
Justin: Yeah. I was talking to distributor a recently and 2020 for them is all about how do we get, first of all in the first quarter, all of our supply chain data, correct? Right? That's weights, dimension sizes, what comes in a pallet, what doesn't come in a pallet, what are pack sizes, and then it's about product content in the second quarter and their goal is within six months to have a full catalog with both supply chain data and web-ready content within six months. That's a really, really large distributor. Then I talked to a number of their manufacturers and their manufacturers said, "Yes, we are ready. We are ready to start thinking about how to provide better content. Of course, we want to provide supply chain content, but not just supply chain content. How we provide and control our content on this distributor's website because we think it's actually going to sell more."
Justin: That's the crazy thing, right? If we provide better content, we think it's going to sell more. I think that's a "duh" statement, but it's absolutely true that that same distributor said that they cleaned up. They cleaned up three categories and their products, right? So they didn't create better content. They just made sure the category, in three sub-category, three nodes, that the content was correct. They said traffic to those three categories within 30 days increased by 34%, conversion rate increased 20%. He said they made seven figures difference by just making sure the content was accurate. This is a B2B hardcore distributor. So I think that push is definitely coming in 2020.
Peter: I think that kind of data is so helpful to people making the case inside of their organizations to do this kind of work.
Justin: That's right.
Peter: More of those stories can be told where I did this thing that I thought would work. We said, gosh, of course common sense says it will, and then when it actually does, you need to capture those and communicate them back out to the organization. That loop, that sort of encouragement loop that goes on when you try something, it works, you have to celebrate it and you have to redouble those efforts because that's what gives people, at the end of the day, these are all human beings that have entirely full plates of work that they need to do and figuring out where you're going to put your effort and where are you going to put your passion requires that kind of proof to make you go, "All right, that tells me that's where I ought to be putting my energy."
Justin: Well, and within the organization and then I think for the first time this distributor in our conversation and started thinking about, oh, let's not just tell people what to do, let's collaborate, educate, evangelize to our supplier community, to them about, hey, this is the value of providing us better content. Here's the value of providing better supply chain content. Here's the value of providing better web-ready, marketing-ready content.
Justin: By the way, even for just EDI, we started talking about EDI in the beginning, even just content for EDI so that the distributor can do EDI with its customers, just having good generic information about the products that they're selling through EDI increases EDI purchases in the double digits for sure.
Peter: Yeah. Yeah. So I think that was just Tom Goodwin's first point, to make everything frictionless. I think there's so many opportunities in there to do that. There are always the early adopters. We are lucky to talk to a lot of brands that have been making early adopter investments and some of them have been on this show and that's fabulous. That's incredible that you have people that have the capacity and the vision and the in some cases the cash to be able to make these investments.
Peter: But for a lot of our audience, they are just in that state where they're figuring out, all right, what do I do this next quarter, this next six months to move the needle? I think this kind of stuff that Digital Commerce 360 is talking about is part of that core of experience that people can actually move the needle on.
Justin: Yeah, and it's not new technology, right? It's actually not a technical problem as much as a, again, a change management problem of are we going to try to remove that friction in this experience for our customers and what does that look like and should we test some of that? Should we look at if we change this, how it affects the whole buying experience? That's not a technology issue. That's just a looking at the customer and how they're interacting digitally to take it into account.
Peter: When I see that number of 76% of people complaining about the lack of transparency in shipping, that seems like such ... If you're looking at it from what's ticking off your customer, how do I get rid of that or reduce that anger, we rail about the airlines all the time where it seems like there's this low hanging fruit that if you just did these things better, it would be a better travel experience for everyone. I think in distributorship and B2B manufacturing, there's an opportunity right there.
Justin: Right, and we got to move beyond ... The bar's been set low and that's good and that's bad, right? On the bad side it's companies become complacent and say, "I don't need to deal with that. My customers are used to shipping," even though this data shows they want more transparency, my customers are used to my shipping procedures, versus a mentality of like how do I really enrich my customer's experience with me? And maybe shipping information and transparency, better content, better information about my customer. Online is the right thing to do for them.
Peter: Yeah. Then sort of moving out, some of the things obviously because it's from an advertising and marketing perspective that Tom talks about is really around a better ad experience for consumers. At the other end of the scale, right now we're talking about sort of distributors, but when you think about consumers or even B to B buyers that are being pelted by ads all the time, there's a few about wonderful premium, thoughtful, seductive ads that move, serving ads sequentially, being able to provide that experience throughout their buying journey. So they're not seeing the same ad all the time, but something that acknowledges you've already expressed interest in this so here's a little bit more information, which reduces sort of the boredom in ads as well and definitely increases conversion, make dynamic ads.
Peter: Essentially what they're saying is that if we can't achieve personalization where I'm in this perfect bubble and all I ever see is exactly what I want, then at least make the experience engaging. I think that's achievable within this year. We're already seeing it with ... One of the biggest things I hear, I see in this is make every surface shoppable and sort of if you combine that thought with what is the advertising experience? So you look at something like Instagram's new checkout capability, right? So that's turning something that has been an advertising platform now for a while, but through the voice of influencers and now being able to turn that into something where here's also you right now can take action without going anywhere else.
Peter: That creates that shoppable experience for the consumer that's in their moment of desire and it makes perfect sense. So there's going to be, I think we're seeing it, across a bunch of other social platforms a lot of these capabilities are going to be coming online this year and people want to be able to test and learn and take advantage of those opportunities.
Justin: Peter, I never thought about that of when you said every surface my mind went immediately to screens, right? But you just talked about a surface being like Instagram being a surface. What are some other examples of other surfaces that can be shoppable?
Peter: Yeah, you certainly can look, Pinterest is going to be expanding their capabilities I believe this year. You've got [House 00:00:23:23], the platform is now possible as a shopping surface and I think you're probably right. They're both, there are those two perspectives. There's the surface, which could be your refrigerator, but basically anywhere the consumer is going in their journey to be exposed products, they ought to be able to buy them right there where they engage.
Peter: So I think in this case surface is probably more certainly in the context of things you can do this year, I think the surfaces that we're talking about could also be considered channels. Where are your buyers and consumers? Amazon Business is another example if you're thinking of it from a B2B perspective. What are the experiences that you are serving up anywhere your consumer might engage? Anywhere and everywhere are difficult words for people, but you do need to understand where your consumers are engaging with your content and prioritize work on making those experiences consistent, accurate and engaging.
Peter: I think that the basic tech exists today to be able to do that and the data exists to tell you where you ought to put your investment. I think that's worth paying attention to in 2020.
Justin: I think on the B2B side, I'd say make a surface shoppable would be more applicable for us.
Peter: Yeah. Yeah, I think so.
Justin: Make one surface shoppable. Not all surfaces, just pick one or two. Make something shoppable in your experience. We're just behind and that's okay.
Peter: Yeah, that's okay.
Justin: I think this is the year for that.
Peter: Also, I think there's sort of two ways to look at this because one, you need to understand where your category is in this journey, which tells you how far ahead or behind am I compared to my competitors. At the same time, you also need to acknowledge that even if you're selling lug nuts, your customer is out there having Amazon level experiences and they have some expectations that have changed as a result of that.
Peter: The sooner that you're able to take advantage of that and to provide a better experience than your competitor and outpace your competitors, there's going to be a business impact in a positive way. I think that's worth thinking about.
Justin: In the meantime, if someone could invent a dad ear piece in the meantime, that would be great. If an inventor is listening to me today, invent that. I'll be your first customer. I'll provide your review.
Peter: There you go. You've got a first customer. This sounds like a new D2C product ready to hit the market.
Justin: That's right.
Peter: So Justin, why don't we close out. I know you have some thoughts on predictions for 2020 for B2B and we've got about five minutes. Why don't we just dig in and run through them?
Justin: Yeah, I think we've started to scratch the surface on them a little bit. I think again in my B2B world it's very practical and hopefully not too boring, but I think when we look at B2B predictions for 2020, I think the first thing is the year of the marketplace. There was a great article this week or a couple of weeks ago that talked about how Amazon Business is most likely going to become its most profitable business unit, which is amazing. They're, they're predicting $52 billion in sales and 31 billion in revenue in just two years. That's a compound growth rate of 115%. The year of the marketplace.
Peter: Yeah. That was a Business Insider article by Daniel Keyes, and those numbers are kind of stunning.
Justin: They are. They are, and the growth rate, if you look at 10 billion last year to 50 billion in just three years, again, the growth rate. B2B is a seven point $4 trillion market, at least in the US. I think what's the kicker there though, is who's the competitor to Amazon? In the B2C side you have Walmart, you have Target, you have lots of kind of direct to consumer.
Justin: In the B2B world we just don't have a lot. We have mainly category competitors like Granger in MRO, Tech Data in electronics, Ferguson in plumbing. These are multibillion dollar businesses. But when you think about it, they're still pretty niche. I think this year we're going to see other marketplaces sprout. By the opportunity that Amazon Business is creating other marketplaces you're going to, they're going to pop up and so it's not going to be the year of the marketplace as in Amazon. I think it's going to be the year of the marketplaces. We're starting to see some development of those even launch this month.
Peter: Yeah. I still think though there's going to be a focus because the complexity of the B2B sale, and you tell me, you're the expert here, but that Amazon, in the categories that they're choosing are naturally choosing the less complex buying process categories.
Peter: Right? So for other marketplaces to come in going at that same segment, they will have to figure out just like other people that are competing with Amazon are figuring out, how am I differentiating my experience from Amazon? Cause the convenience, the Prime value and all that stuff that Amazon brings is just being put into place in B2B just like it is in B2C.
Justin: Yeah, that's right.
Peter: So what is the point of competition? But I do agree with you that I think more and more marketplaces year, but I wonder if it actually will be more specialization in marketplaces.
Justin: Definitely. Niche marketplaces, the year of niche marketplaces. I don't think you'll see people direct competing with Amazon on their breadth of product. I think you'll see it in the niche. I think along with that is the year of the distributed e-commerce. I spent the last 10 years really, when I spoke I talked about, "Hey, come along with me. You got to do e-commerce." I was trying to convince them to do e-commerce. Slowly my message changed to, "Listen, you got to do this or die." I think now this is the year of distributed e-commerce. So many companies have launched eCommerce sites in the last year. I was personally part of at least 18 different launches of distributor sites last year, and I think this year is when we start to get traction. We go back to those predictions that we were talking about earlier, removing friction, just using basic technology to do that.
Justin: Looking at a shipping transparency, product content, customer content, those basic foundation of eCommerce. I think district is going to put together and I think that will also enable the amount of revenue done on those sites to increase. I think we're at $1.3 trillion this year compared to a 500-something billion dollars in retail. So it's still more than double even in a very low mature market. I think both of those predictions, marketplaces and distributor sites, I think on the manufacturing side it's going to be the year of controlling content. They're going to follow in the footsteps of their B2C counterparts, brands that have said, "Hey, we've got to control our content where it's being sold. So in the B2B world, it's manufacturers have to control their content where it's being sold on their distributor sites. They need to collaborate better with their distributor partners.
Justin: They need to provide them better content. They need to keep that up to date. They need to control it. At the end of the day it's about how do we control our brand on this new digital shelf. I think this is the year where, it's catch up, it's catch up to our B2C brethren, but we're going to start that process in 2020.
Peter: My other prediction is that there will be a quarterback helmet from Justin King for brand manufacturers and distributors to where as they go through 2020, it's called this podcast. So definitely keep listening. Justin's-
Justin: King's Helmet. Look for KingsHelmet.com and we're going to go by right after this.
Peter: Absolutely. Hey Justin, thank you so much for starting the new year off with us. It's great to reconnect with you in this new year.
Justin: Absolutely. Happy New Year.
Peter: Happy New Year. That's our show for today and we are delighted to be back with you through the year, and please share the podcast with your friends. Leave a review. Join us @Wind Digital Shelf on Twitter or drop a comment or a question on our LinkedIn page and we will talk to you soon. Thanks again for being part of our community.