What Happened to Zulily? Exhibit “A”…the comeback of brick-and-mortar retailers; higher profits, more foot traffic and improve customer experience. All of this translates to double of profits vs prior to the pandemic. Together, they share how to adapt to consumer demands, the ideal times to target consumers online, and the dangers of offering too many discounts.
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This episode is brought to you by Global Teck Worldwide.
If you are planning to enhance your communications by deploying a cloud-based solution or need help deploying cyber security across your network, contact us at https://circuitloops.com/contact-us/
In this episode…
During the pandemic, online sales skyrocketed, and brands pivoted rapidly to meet demand influxes. Conversely, when the pandemic ended and people returned to the office, brick-and-mortar retail resurged, leading companies to juggle omnichannel sales simultaneously. Tune in to discover how some retailers doubled profits with strategic systems while others declared bankruptcy after failing to conform to shifting buying patterns.
According to online retail experts Rolando Rosas and Dave Kelly, purchasing habits evolve with consumer behaviors, so companies must adapt to these market changes. For instance, individuals working remotely may shop online at specific times of the day and frequent physical retail stores on weekends. Without adequate insight into your consumers’ buying patterns, you may encounter inventory shortages and shipping delays, ultimately diminishing revenue and profits. This occurred with the once-popular online brand Zulily, which declared bankruptcy after relying heavily on email marketing to spam customers with seemingly endless flash sales. In contrast, leading retailers like TJ Maxx and Marshalls experienced slight profit drops during the pandemic before escalating by aligning inventory with demand changes.
Here’s a glimpse of what you’ll learn:
[0:00] Dave Kelly and Rolando Rosas return to discuss the fundamental shift in consumer preferences
[8:26] How — and why — Zulily declared bankruptcy
[13:30] The dangers of consistent discounts
[24:53] Navigating shipping delays, increasing consumer demands, and diminishing profits
[29:45] Does consumer behavior impact buying patterns?
[35:30] Retail returns: how leading brands doubled their profits after the pandemic
[46:24] Tactics for adapting to consumer demands
[55:09] Rolando and Dave share optimal times to target consumers online
Rolando Rosas is the Founder of Global Teck Worldwide, which offers business and office technology for seamless customer communications. In his role, he leads his team to provide insights on e-commerce trends, digital marketplace strategies, and client success metrics. Rolando is also the Founder of CircuitLoops.com, which uses AI to match businesses to the lowest-priced internet service provider. As an entrepreneur, he has founded three startups and hosts the What The Teck? podcast.
Dave Kelly is the General Manager of Global Teck Worldwide and the co-host of the What The Teck? podcast. He holds a bachelor’s in telecommunications management from the New England Institute of Technology, where he focused on the acceleration of networks transitioning from digital IP to support successful business communications. Before Global Teck Worldwide, Dave was the Account Manager at Jabra and the Territory Manager at Polycom.
Resources mentioned in this episode:
• Rolando Rosas on LinkedIn – https://www.linkedin.com/in/rolando-gtw/
• Dave Kelly on LinkedIn – https://www.linkedin.com/in/dave-kelly-a2440811/
• Global Teck Worldwide – https://global-teck.com/
• Circuit Loops – https://circuitloops.com/
• “Creating a Legacy in Digital Media” with James Orsini on What The Teck? – https://circuitloops.com/creating-a-legacy-in-digital-media/
• “Why These Three Companies Failed to Make a Comeback” with Rolando Rosas and Dave Kelly on What The Teck? – https://circuitloops.com/why-these-three-companies-failed-to-make-a-comeback/
• “Work-From-Home: An Unexpected Economic Boom” with Nick Bloom on What The Teck? – https://circuitloops.com/work-from-home-an-unexpected-economic-boom/
• “The Primal Brain: Five Primal Instincts Every Business Should Know With Tim Ash” on What The Teck? – https://bitly.ws/39c4m
• “Building a Tech Company: How To Disrupt the Market With Innovative Smartphones” with Sandeep Chennakeshu on What The Teck? – https://bitly.ws/39c4g
We are a full-service online retailer of professional headsets, webcams, and speaker phones from top manufacturers.
Since 2002, Global Teck Worldwide has provided communications equipment for Unified Communications, Micrsoft Teams Voice, ZoomPhone, Managed Cybersecurity and Business Broadband.
We have served thousands of customers in a variety of industries with value-added services, including ergonomics, employee work accommodations, and hearing-impaired services.
What happened to Zulily? Once valued at $2.6 billion dollars in 2013…. They just declared bankruptcy. They pushed a lot of emphasis pushed a lot of their marketing through the email there was a constant bombardment Dave.. that led to spam fatigue and customer annoyance
They did a lot of flash sales which led an erosion of that thrill Factor you know Imagine an Amazon Prime Day every day where you’re having all your vendors lower their prices Eventually it doesn’t really become an exciting thing. The comeback of retail…
I’ve done some shopping recently was blown away that it was hard to find parking there were lines there was a buzz in the air going into a store touching something holding it buying it you leave with it that’s that satisfaction all together immediate gratification I’m impressed consumers still are attracted to retail stores
5, 4, 3, 2, 1,…. you’re listening to Welcome to What The Teck your gateway to business strategies and tech secrets shaping today’s workplace Dave, you know… I saw that Zulily I don’t know how much shopping you do on Zulily
But I saw that Zulily once valued at $2.6 billion USD in 2013 just declared bankruptcy or went bankrupt what happened to all the money what so tell us so I I know a little bit about Zulily it’s you
Know where you get your Fashion Wear you get your fashion and clothes from Zulily don’t you oh no I you know what I’m a little I am not a fashionista buying clothing online for myself not something I’m super comfortable with doing you know I like to go I like to try things on
There’s been too many times where I’ve even just purchased something from a store but something that I didn’t try on nine times out of 10 I find myself returning it oh my well you know that’s
What a lot of people when they shop they buy you know I I don’t do too much online clothing shopping period but when I do I do get three or four items because like for shoes they don’t
Always fit great sometimes the especially for me pants don’t always fit great so I always get a couple just because I know I may have to return some but I’m sure some of this change and shift in consumer preferences you know talking to other people that are in the industry talking about how
Customer preference have changed since 2020 and as we were looking into this and looking at the research it surprised me Dave I’m sure it may have surprised you too that the retailers the physical retailers themselves have in some cases doubled their profits since 2020 you would think
Maybe not maybe they’re barely surviving but it’s not the case their net profits in some cases as we’re going to highlight today doubled I find that amazing sure maybe they’re like maybe more people like you they don’t want to shop online as much maybe they want to go into to the store
And try their pants and shirts and whatnot I if I’m ordering something online my expectation has only grown over time if I if I was getting it in two days in the past now I want it in one
Day if I was able to return something within 30 days now I want 60 days to return it I want it to easier I want a better experience and frankly the the online shopping experience from ordering
To getting it delivered it’s my experience hasn’t been super great you know over the past 6 months or so it’s a little worse oh my goodness well things are about to get hairy cuz I don’t know if you’re following Dave what’s happening in the shipping industry but anything coming out
Of the Middle East that was going through the Suz Canal it’s going to be delayed by at least 3 weeks three to four weeks cuz now they got to go all the way around Africa to come out of there and
Deliver Goods into Europe and and the rest of the world the rest of the western world so if you’re waiting for your your Persian Sombrero why they don’t have sombreros here what do they have over there whatever Goods dates you like your your dates I love dates you know a lot of them
Come from that part of the world I’m going to be waiting a little longer hopefully they don’t you know go bad in the meantime but when we’re talking about online shopping you know that’s kind of in
Our wheelhouse we’ve been we’ve been uh on selling on Amazon for a long time and we’ve seen some of those customer demands shift uh from 2020 2021 23 24 now where we’re in a I don’t want to say New
Era cuz it’s not really new it’s new and that it’s different but the a shift has definitely occurred we’re going to highlight some retailers who have doubled their profits since 2020 as well as one really big one we just talked about Zulily which is on the decline well more than decline they’re
Out of business basically and others Etsy is reporting lower profits as well so there are some huge shifts happening in the entire economy in the marketplace in the online landscape that business should be paying attention to yeah for sure and with the increase with some of the retailers
The physical retail outlets you know that we’ve researched for this I think it’s very eye opening consumers are not afraid to walk into a store they want they not only not afraid but they’re doing it
They are doing it yeah and before we jump into the research that we uncovered for this episode I want to give some big props big props to James orini AKA Jimmy the pencil who stopped by the podcast
Uh earlier uh on another episode you know he was if you don’t know about James Orsini let me just tell you two second maybe 10 seconds about him he was handpicked by Gary vaynerchuk AKA Gary
Vee to head up his organization within a Search Group the he’s right now uh heading up the Sasha group I understand he may have some news in in the coming future with regard to uh what he’s
His role there is so I’ll wait for him to break that news but Jimmy the pencil you know reminds me a little bit about I told him you remind me a lot of Al Pacino and I put a vote I put my vote
In right now for when they do the reboot he is the lead actor for the role of the new Michael Corleone James Orsini you get big props today and you know Dave I can’t wait till he comes
Back second time because he’s got a lot going on and I know that when he was handpicked by Gary Vee the biggest reason he told us he wanted to avoid the big business mistakes that come with
Businesses that have been in business for 26 30 or more years and he was at the helm him James at a lot of other organizations that were large other media companies at agencies and he wants to avoid
The traps and mistakes that those agencies made well hey in respect to avoiding traps and mistakes the Harvard Business Review study reveals a sobering fact did you know that employees can switch between 22 different apps nearly 1200 times daily that’s context switching you know that
Mental juggling it takes a toll it increases stress it slows productivity it completely undermines Focus now picture an organization that’s Tethered to outdated systems the stress of budget cuts shifting customer preferences right so in an uncertain and rapidly changing economy
You want a partner like Global Tech worldwide with over two decades of business Communications expertise to seamlessly integrate diverse tools for your workplace a failure to update technology it’s not just a risk it is a threat to your company’s survival so Global Tech worldwide
Not only offers a solution but Global Tech offers a Lifeline inviting businesses to navigate the uncertainty of rapidly changing technology book an appointment at Global tech.com that’s Global dte.com to get started today thank you Dave terrific so we were just talking about online
E-commerce and talking about the changing preferences I just want to ask the question what happened to Zulily Dave what happened to him you know I mean what What’s happen what’s happening in the on online e-commerce space today because we’re in a new place than we
Were in March of 2020 we’ve had invoking James orini he said you know companies can swell and companies can grow organically and he had a front row seat you know he worked as a as an analyst I
Think I recall as an analyst for Goldman Sachs the financial analyst and so he had a front row seat to numbers to IPOs and all the rest and he told us he says you know you want to grow you can grow but
You can swell or you can grow organically which you can sustain and I would imagine that a lot of companies during covid some of them shrunk because their Industries got hurt and some of them just grew especially if you were anything online and you could ship it out tomorrow or the
Following day and you know my question to James it had to do with you know what are the dangers of what’s the danger of a swell a swelling business versus a growing business and we’ve seen this in the communications industry right so during during the pandemic people needed solutions they needed
Communication solutions they needed platforms so we saw some public organizations just go through the roof within a very short period of time and when that happened they had they had to hire they
Were on a hiring move it’s like we need as many people as we can and I think of organiz gz ations like Zoom Zoom that they became a household name in such a short period of the time I didn’t follow
Their stock price and I I I feel like I I should have spent more time analyzing that but obviously the business is growing customer demand customer expectations and then once the pandemic kind of moved along and people started going back to the office and people were using different platforms
Than just Zoom that the need for all these employees was no longer there you know so they went through kind of a a budgetary I don’t want to call it necessarily a crisis but we had a lot of
Contacts that were with Zoom one day and no longer with them the fin the next um that and that’s kind of the like what you’re saying writing that wave and so we like you said Dave writing that wave
And going back and understanding how did this all go down you know are there some things that are happening cuz Zulily is not in the same boat I mean you Zulily Etsy and I want to say there’s
Another online retailer jane.com forgive me if I botched that one but I know there was another one floating around that was um contemplating uh bankruptcy as well when those kinds of things happen those are signals that there are shifts because you know overnight um things can change
And that happened at the beginning of the pandemic and I wouldn’t say overnight things have changed since the pack because it’s not overnight it’s just been a rolling thing like work from home hybrid work all of these things have contributed um but in this case study when we’re looking at
Zulily there were some factors that led up to where where they are now which is essentially bankrupt so Dave if we look back um I’m going to look at my notes because there’s a there’s a lot of stuff that we um we’re looking at a timeline it turns out that Zulily’s marketing
Was predicated heavily on email marketing which is interesting because you know uh we I heard a video where gr Gary Vee talked about back in the day early 2000s Zulily was re uh or he I’m just
He did a ton of email marketing and the open rates were through the roof like 70 80% that’s not the case today so if you’re relying heavily on email marketing and we’re showing a video here if you’re
If you’re listening to us on the audio platform we have a video of Zulily playing on the video side um they’re really catering to the to the market female Market um the the 20s the 30 year olds U and that demographic that’s also budget conscious and that demographic has changed and
We’re going to talk about that later on as as we jump into the uh retailers that are succeeding in this current environment but given that they push pushed a lot of emphasis and pushed a lot of their marketing through the email there was a constant bombardment Dave that led to span fatigue and
Customer annoyance which is interesting I I don’t know about you but I get tons of spam every single day I hear that Google’s doing some major things that they’re planning on doing to cut down on the
Spam um but we’re going to wait and see here in 2024 how that all plays out one other thing that came up that was interesting was that they did a lot of flash sales so constant flash sales uh
Which led to an erosion of that thrill Factor you know think about what Amazon does with Prime and Amazon Prime days there used to be one now there’s two usually one in July sometimes they they throw
One uh in Q4 as well and so imagine a prime day every day or something of that sort where you’re having you know very all your all your vendors uh lower their prices eventually it doesn’t really become an exciting thing eventually it’s not really a sale it’s not really a deal per se
And I know when I worked in the consumer package industry that was also the case you run the risk if you’re constantly quote having a sale then it’s never a sale there’s never really a deal because
The consumer starts becoming used to the fact that what was a deal a special deal it no longer becomes special in the mind of the consumer and that’s one of the things I I really hate when I’m
Shopping for something online or even doing some research online and I haven’t just seen it with physical Goods I I get spam I get email marketed every single day and sometimes it’s one company
And the messaging is always you know it’s 50% off it’s 60% off it’s always a buy one get one which is 60% off like it’s always this the exact same offer and I say to myself do they think that I’m
So stupid that I have to jump on this you know I’m looking um we have a gym we have a new gym that just went up about five miles away from my house five days ago I went on their website I was just
Curious how they offering anything for you know end of year beginning of 2024 and they did they had a special and that special ends today this was five days ago I went on their website last
Night and it’s giving me the same thing it’s like the special ends at midnight tonight and it’s the same offer that I was looking at five days ago so I’m thinking to myself what’s my hurry don’t
Trick me don’t trick me into um the the your call to action you know the marketing people out there it’s always this call to action put a put a timer up that’s the worst one Rolando the
Timer there was backwards yeah yeah a lot of of websites have gone to timer uh some of the travel websites have been very notorious for doing that and there was a video that was circulating on the internet recently uh when Black Friday happened um I believe it was Target this this this this
Woman was with her camera going around taking um so at the stands in in the kiosk that where they have these deals like you know this big pallet of of paper and and socks and whatever the heck it
Was they had the call outs the price call outs right that sit above you know these kiosks and on it it said Black Friday sale and then the lady took off the there it is that’s the one so so if
You can watch this on the video ory you are spot on today you get a clap ory look at this Black Friday so pause that aie we go back and when when she’s taking the the price out the yeah
What right there look at this look at this and she found this throughout the store Dave so so this is the physical version the physical manifestation of what you were just talking about now it’s a
Little Switcheroo it’s not it’s saying save it’s making it seem like a deal it’s not really a deal because it was the same deal that was there yesterday and it’s all you’re doing is putting
A new cover on it thing at Black Friday sale and you could see if you’re watching this video so if you’re not watching it it’s a Tik Tock video that went viral with a lady shopping through
Target and she’s removing the um the prices that are on the call outs and they’re the same that they were previously there’s no difference so if you overplay your hand at this and it seems like Target got caught here um in doing a little bit of the switcheroo then eventually the customer is
Going to find out information’s instant today right back in the day 10 15 20 years ago you could probably get away with the switcheroo you can’t today customers are going to share that information and I would imagine over time it’s nothing special Dave it was just like you set
The same deal it was two weeks ago to be in one of those board meetings with those marketing Geniuses right bunch of Ivy Leaguers like well what’s our move for Black Friday and someone said let’s spend money let’s spend money to look like people are getting a deal let’s let’s reduce let’s reduce
Our sales margins increase our operational expens all for the sake of fooling the consumer yeah I I feel like there’s a lot of that happening and I’m insulted I am I am insulted by it well you’re not
The only one because when you look at the Timeline here so in 2015 according to what we found in 2015 uh these flash sales started eroding for Zulily the thrill was gone the surprise factor is gone
And in some this is probably Dave the same thing that we just saw on this video from Target was happening a 48 hour sale on Friday so you think okay I better do this before I get back to work on
Monday you go back on Monday you go if you go back or Tuesday you see that’s a 48 hour sale again you know there is another retailer actually online I won’t say who they are cuz I know who these
People are they they sell hundreds of millions of dollars and they use this tactic for years 48 hour sale you go back on Friday it says still 40 hour sale you go back on Wednesday it still says
48 hour sale so and they said it was workinger right yes a timer counting down um so they they could do that because sometimes C customers don’t come back every single day to their website and they know that the the traffic You by looking at the analytics you know that that’s not happening
But if you’re trying to build customer confidence you’re trying to build uh brand loyalty you’re trying to um have build a community of customers that are coming back over and over again because that’s where the money’s made Dave coming back repeat customers you can’t Resort uh to these
Tactics forever because they’re not going to work over time so in two 20 think about 2015 Dave so around 2015 2016 Amazon really starts ramping up their efforts when when you’re talking about prime so one of the things that we saw was that Amazon around this time is ramp amping up their efforts
Especially around the subscriptions around Prime and so if you look at the Timeline between 2015 and and right up until the pandemic 2020 you see that um over time things start happening to uh Zulily um you know they they do get they get acquired in 2015 by a group called the quate group
Or qate Retail Group and when you bring in a new set of eyes new set of management you inevitably are going to have friction some people in the company being acquired are going to see things
One way the acquirer is going to see it another way and so one of the things that we found was that this management um L this new team that took over um there’s obviously some conflict there in
The in terms of the vision and this turmoil you know is never good for any organization and as it all plays out and it’s and you move forward in time you get a couple of other things that
Start popping up on the radar Dave and what we found was that um they they started running into shipping delays and being in the online space ourselves being sellers on the on on our own website and on Amazon you know like what you just said about customers customers today want delivery
Next day and in some cases can get delivery same day right with with delivery and in and in more retail stores curbside pick up the same day so the expectations the preferences of the consumer
You know who you know who told us the same thing James orini told us the saying big props to James again he said he was sitting uh at a at the mall and he’s like you know um why am I sitting here
Waiting 20 or 30 minutes I actually I could get this to delivered today by Amazon so so when you have competition like in the way of Zulily they’re competing against Amazon in some ways and Amazon did ramp up their fashion um their they um they’ve ramped up their efforts to attract fashion brands
To their website and I and I really remember that in a strong way because you know we get emails all the time from Amon every single day as a matter of fact and more and more started popping up on the
Radar when it comes to um sellers in the fashion business sellers that sell clothing sellers that sell to women they started changing their policies um so in in the background you don’t always know what’s going on over there you know and Amazon plays a very strong a very good role here because
As a competitor they can influence the landscape in ways that others can’t and during that time frame Dave if we if we move forward and you think about shipping delays you also add inventory issues you add the fact that you know these 48 hour sales or Flash sales are not real sales
Anymore what do you think that’ll do to a a brand when you know things don’t arrive on time you have inventory issues deals are not really deals anymore what do you think starts happening you know people get excited about a hyped up brand so if they make if they’ve made the purchase they’re
Waiting for it to arrive and then if the product is stuck because of bad delivery or there’s no inventory available if the consumer has to cancel the order they’ve probably lost a lot of Hope or desire you know for that brand it Market marketing and getting that brand loyalty is in creating the
Excitement around a brand is so hard with all of that work and effort to then not be able to to deliver the physical Goods man all that work for nothing and you absolutely and think about
The time frame where U you know the pandemic hits all the all of the um 20120 hits you have shipping global Shipping so now you you throw a brand Zulily who big Focus was on clothing and and and
Marketing towards females every single container ship that was out there in 2020 and 2021 was absolutely being called to the Call of Duty rates were through the roof companies were also going out and purchasing their own um container ships or ships to move cargo because it was what was $2,000
Or $3,000 a container went up as high as $220,000 a container ouch wait a minute I’m going to hit the wrong button hooray hoay for the shipping guys they made it they made profit hand over
Fist retailers if you depended on clothing which most of it isn’t made in the US Dave most of it is made off offshore China Vietnam you know Pakistan India where all the all the in Central America you
Can’t get Goods fast enough during the pandemic right just like you’re saying so now things start swelling but you run foul if we ran into some of these issues customers need this I want this give
Me this I need a headset I need a phone I need a this I need of that because we got to send people home now we can’t get Goods so you go fast forward into 2022 you haven’t resolved those issues a
Lot of the third-party sellers that are on their platform become uh a little bit um annoyed let’s just put it that way with what’s happening there you you start you start a vicious cycle and then
Compound that with the fact that and I want to give you the numbers here so if you’re if you’re a nerd like me and you just give me the numbers I’m going to give you the numbers on their on
Their profitability just so that you can get a timeline you know the lack of profits will make a company will put a lot of stress on a company so in 2020 uh they reported a a negative margin of
18.9% net income margin and these are Financial numbers that are being provided here on Google and 2022 a minus .08 margin and uh up to 2023 for for the records that are available a -1 12.73% Amazon Amazon in all of those years that I just mentioned 2020 2022 and 23 was right around
2 to 3% margin 2.99 in 2020 all the way to 2.4 so far in 20 23 so even though was still only a few points in profitability profitability is different than negative you’re in the negative you’re in the
Red you can’t survive you cannot last you got to be able to make profits to survive so all of these things compounded Dave which in the end if you’re not making profits you’re not going to be around
For a long time so what was interesting that you just shared was in 2020 that’s when they started to started to feel a kind of a drop in Revenue uh the in in net income well I didn’t look back
We didn’t look back to 2019 or 2018 but what we could get was from 2020 to 2023 and and in those um years it was all negative I don’t know prior to that um if it was positive or not but what I
Do know is that their valuation peaked right after their IPO and just kept steadily going down um based on on the on the information we have so if if their stock valuation keeps going down then you probably going to run into some issues here uh when it comes to profitability because the the
The market would only hang on so long and asking where’s the profits it’s interesting with Zulily being fashion how fashion you know I’m thinking 2020 height of the pandemic yeah fashion was no longer a priority right people were in their homes right and and who knew who knew think about 2020
Now we’re jumping back to 2020 from we did not know that um everybody was going to be hanging out at home forever right um or that work as we knew it and I remember in March 2020 having to cancel
Meetings and I and I remember telling a couple of our suppliers that we’re going to we’re going to meet well you know I’ll see you in a I’ll see you in a month don’t worry about it that turned into
Many many many many months two weeks two weeks yeah don’t worry about it in a couple weeks you know we’ll get this under control and that didn’t happen but here’s the thing Dave after people started getting a taste for working at home right now we’re around 25 a quarter of the workforce
That can work is working some kind of hybrid or remote work that number is not insignificant and you know we we talked to Stanford Economist Nick Bloom who said that there are major shifts happening in worker preferences so one of the things that you have to ask yourself if customers
Patterns whether it’s at work or other patterns are changing Can it have an effect on the online buying patterns and I say yes and we have some of our own data that we’re going to share in a little
Bit to show that it does change so if customers are now also changing what they normally do on a given day that affects what I’m going to buy based on what Professor bloom had told us people are are
Doing less of their like regular daily personal care or hygiene they’re showering less they has to save time on on the shower they would have taken they are shaving less so they’re they’re
Saving time on the the shave that and all of this can add up to about 70 extra minutes 70 it’s a big amount of time so now Dave the question I ask you if you’re one of these workers that gets to work
Home whether it’s two days a week three days a week or even fully virtual wouldn’t you think that since my pattern has changed regarding work that that would also impact other parts of my life in what I’m going to do in my experiences in my shopping Behavior yeah absolutely absolutely you
Know I used to buy a few pairs of shoes every couple of years because I’m using them all the time same thing with my pants and my shirts and you know my my dress my dress clothes my work
Clothes I haven’t had to update anything CU I I really haven’t gotten a lot of miles out of the clothes I not I haven’t left I haven’t walked as many miles in my shoes my clothing is lasting
Longer because really I’m wearing track my my my workout clothes my sweats my my athletic wear my casual stuff is kind of what I live in you know if I’m going to be on camera I might throw something
On what do they call that waist up attire but yeah you know if you saw the sneakers that I have that usually or so sorry if you saw if you saw the shoes that I had that I have right now you would
Be shocked if I told you that I’ve had them for six years I haven’t had to I haven’t had to wear them all that much so yeah you know if you’re not without that normal wear and tear it’s going to
Last longer so you won’t need to spend your money on it to replace it right and so I I I recall a conversation I had with um I believe it was Tim Ash who told us that you know to create change
You only need about 20% 20% of people to create change if you’re talking about an organization and um other things 20% seems to be the the the mark where it then starts making an impact and we’re
Over that margin over the 20% when it talk when we’re talking about people working from home and just like you said Dave you know you think about behaviors changing you know again we if we were to cite Nick Bloom’s research from Stanford he talks about leisure activities increasing
Golfing and gyms he said gyms were were about to be gone right and they and so golf courses and now it’s reversed people a lot more people used to live in cities people moved out some of those
People have been recalled with return to office mandate but a lot of people moved around changed their lifestyle changed their priorities travel right now to foreign countries is as high as it’s been since the pandemic uh so people have shifted their dollars it’s a shift of dollars maybe I I
Did buy an extra a tie and you know or if if if I’m W some heels and I’m buying some extra heels because you know the other ones broke from going to meetings and conferences that’s not happening
Nearly as much and one of the things that we had on one of our previous episode is those signals the signals being ignored can overtime lead to really big problems so one week a little little lower okay fine next week third week if if that isn’t being watched when especially when it comes
To inventory big problems can happen you know and in in the case of the pandemic post pandemic inventory and Logistics scks are all a mess all of them are a mess and if you don’t have it down
Cold or if you’re not having real tight systems to manage this because all of a sudden consumer preferences start changing the inventory that took you know nine months to bring in is going to sit
There for a lot longer and tie up a lot of cash so now during the pandemic Dave because we’re talking about a shift you know things started opening up people started shopping again stores they went
From being closed a lot to opening uh and having hours where um you know early hours for seniors you the the the vulnerable folks could a shop and and more and more uh places started doing pickup curbside pickup um same day pickup and as as things started opening up to my surprise Dave
I you know we’re we we sell tons of stuff online but to my surprise and and I think uh Professor Bloom kind of planted the bug in in our heads a couple weeks ago when he came out he said big
Enterprises doubled their profits when you look at 2022 compared to 2020 and we checked it out and it checks out Dave I would call it the comeback of retail especially for these three companies that
We looked at in this case study you know I I I’ve done some shopping recently and was blown away that it was hard to find parking there were lines there was a buzz in the air you know um there was
Product on the shelf and here we’re seeing that sales are up I’m I’m impressed that the that the consumers still are attracted to retail stores going going out and making purchases you know I don’t know if it’s because FedEx can’t deliver a package anymore I don’t know if it’s because
Delays with Amazon or where the delays are are coming but I’ll tell you going into a store touching something holding it buying it you leave with it that’s that satisfaction all immediate gratification it’s an immediate gratification and I think retailers the the good ones right
This is not happening across the board but the ones that were strong prior to the pandemic and they were growing like TJ Maxx like Walmart like Marshalls and Ross Dress For Less and the reason we’re highlighting those four is that those four have an overlap with the Zulily customer in some
Cases is particularly the off-price retailers um and so if you’re a budget conscious female and you were shopping on Zulily and you have a lot of overlap in the inventory that Zulily had and now you know what things open up and sometimes it’s horrible timing for some companies it’s all about
The timing right these companies you know in 2020 2021 they saw they saw a temporary pullback and so they’re thinking how do we bring them back what do we need to do the consumer consumer doesn’t
You know like you’re saying it’s top up or what is it uh from from the waist up from the waist up you know there’s still people zooming and doing all of that on camera so that’s still have driving
Some sales and we’re showing here a graphic of of TJ Max’s sales and that their profits doubled and I know we have we have those numbers well let me tell you a little bit about those numbers uh
Because they are amazing TJ Maxx after a slight dip in 2020 TJ Maxx saw its Revenue return to pre-pandemic Levels by 2021 and they have steadily reached $6.3 billion do in 2023 with their fiscal year ending June 30th now get this the important part is not the Topline numbers that gives that’s
Just like a ther thermomat it’s telling us more or less what’s happening but what you want to know is how much money they put in the bank as a result of all those sales and here it is in 2020 they generated net income of 434 million that’s about 100 million every quarter amazing
They amazing but in 20223 2023 can I say that 2023 they generated income of 88 8 million Dave doubled almost doubled and that’s exactly what Professor Nick Bloom told us but it doesn’t end there that
Was just TJ Maxx you think okay that’s just one blip it but we found that to be the case with a few others as well doubled their revenue sorry yeah doubled their their profits in two years yeah
That’s amazing so they figured out they figured out hey uh real quickly we got to find a way to survive right the pandemic shut us down we got to find a way to survive people are not going to
Be wearing as many ties people are not going to be you know buying Wing taped shoes and all the other stuff that comes with normal office wear right and other things and other preferences that that they
Sold HomeGoods all the rest so your inventory mix has got to reflect that change what you have got to get rid of some of that stuff you got to bring in what the customer wants and not only that Dave
But then they go in and start doing some of the Amazon like things about pickup and returns and improving their processes the customer experience now gets way better than you know at that zy they keep messing up my order or it gets cancelled or it gets delayed I’m not doing that anymore
Right doesn’t take long for customers to bail on you when you have that kind of experience so now the question remains is what we’re seeing in retail places like TJ Maxx is this sustainable growth that we’ve seen for the past two years or is this a swell interesting question Dave I
Think we before we answer that question we have to look at what’s happening in the retail space as a whole especially in these off retail Brands we’ve got two others that we want to highlight before we answer that question so hold that question let’s come back to all right Marshalls another
Competitor to Zulily there’s some overlap with the budget conscious Marshalls I’ve found good deals myself going to Marshalls um I’ve gotten stuff that’s you know they love selling stuff that’s uh liquidated merchandise from the retailers or high Brands those luxury brands that are selling
Goods at Marshals but check this out let’s look at the numbers so here’s what the numbers say about Marshals Marshall’s Revenue jumped back in 2021 and climbed the Topline numbers jumped to 11.4 billion in uh reaching I’m sorry reaching 11.4 billion in 2023 here’s but that again ignore
That part this is just the Topline number here’s the profits the what’s matters to the investors what matters to the shareholders what matters to management net income or profits witness to rebound they went from 246 million in 2020 to a whopping 500 million in 2023 in year fiscal
Year 2023 Dave again doubled the profits it’s exactly what Professor blo told us and that’s exactly what’s playing out here with Marshalls let’s round it out with the anchor leg of all all the mother I would I guess some people would call it the mother mother of
All off brand retailers Ross Dress for Less they experienced in 2020 a temporary we call it now a temporary decline in in revenue and returned to a prepandemic trajectory in 2021 and still since 2021 has maintained a consistent growth in their numbers where in 2023 the Topline number was 14 .9
Billion in sales again let’s look at the bottom line what they kept in the bank the profits the their net profits saw a steady recovery going from 378 million in 2020 to 600 million in 2023 so again they almost doubled again following the pattern that um Economist Nick
Bloom had mentioned uh during the time and so to me there’s a clear pattern right now they’ve been steady growing their profit their bottom line um usually a good sign of management as well and if
They’re able to keep their finger this is what I would say getting back to your question about is it sustainable they’ve doubled their profits in two years three years right 2020 2021 2022 2023 so three years they’re doubled their profit you know if they grew 80% in one year which is what
Happened at Logitech that’s unsustainable right because it you need a lot of stuff to meet the demand when 80% growth is what you experience and so a lot of companies that were in the tech space that were in the hardware space uh and others that delivered Goods into into homes and into people’s
Um lives to make it better during the pandemic saw a huge drop off because now I can go back to Italy I want to go to Rome Dave I want to go experience something in France I wanted to I wanted to travel
You know a lot of RVs took off RV sales took off during the pandemic now a nice Glide down the patterns change so having the finger on the pulse of the customer whether they’re buying RVs whether
They’re buying cameras or now flying to Monaco or France or Brazil or wherever that’s going to have an implication on other things a ripple effect and really good companies are paying attention to those signals and the signals sometimes are just hidden because you really think oh that’s that’s
Not going to affect me but hold on there because you can end up oh in a real bad situation when one thing leads to another leads to another leads to another which is what we’ve found in the case of
Z one thing to another their competition was doing better offline retailers are improving their game and now if the experience with your customer is poor and which seems to be the case as well things
Are going to go bad well I’d be interested to take these three companies and kind of see what they were doing pre pandemic it’s my feeling that it’s my feeling that there has been a shift where folks
Want to go to a retail environment but this it we don’t have enough information here to really to really gauge that if it’s my opinion um well you could yeah well it’s you know I’m I’m think I’m
Considering that if if for TJ Maxx for example if they were able to double their net earnings in two years yeah what were they doing prior to the pandemic because if it if it’s still flat is
That a is that a major win but we don’t have the numbers to compare it well you think about retailers that have been in business you know some one of the key indicators is that uh really good organizations are able to learn from failures you know we I’ve heard that recently from several
Several guests watching other podcasts they have other experts on it learning for failures is key you know we learn for us just internalize it to our own experience uh both pre and post pandemic is that you’re going to have to make pivots sometimes several pivots you know for us we
Had to change the way we got inventory the way the inventory went out the types of products customer wants uh the CER customer at once and today that has changed as well simply because the customer needs are different than they were two years ago 3 years ago even five years ago so
Meeting that customer demand is it can be very elusive um because data can have a lag on it um weeks sometimes months but having a good um a strong connection to both the customer as well
Well as the data to back up you know the hunch or or a decision is where companies tend to excel um you know there’s a lot of company there’s a lot of data out there today on all sorts of things
And I would imagine that those companies that as part of their DNA as part of their culture look back and re-evaluate what’s happening rather than saying hey you know it’s all good we we don’t need
To change we we we got the best widget in the world I mean we had the president of blackberry former president of blackberry that was on mean and that that whole business has changed right Blackberry was great they are no more compact was great they are no more uh digital was great they
Are no more and so you’re only as good as your your your your desire to keep up with change I would I would say for us in the it business that’s especially true because of the rapid
Change rapid Innovation things are changing AI who knows what’s going to come down the line with AI That’s moving so fast but the ability to say hey look we don’t have all the answers today but we
Know things are changing and we always have to go back and re-evaluate what are we doing right what are we doing wrong what’s working what’s not working and be willing to say you know what we
Failed at that but we’re going to make the next version better is something of I think a mindset and some people don’t want to admit they’ve made bad decisions or wrong decisions or failed which doesn’t always need to be a bad thing I’ve heard what Steven Bartlett say he failed 70 times and
The ability to learn from those failures and say okay I’m not going to do it this way I’m going to do it this way I’m going to run this experiment instead of that experiment and the
Keep that going is what allows you to then come up with this is exactly what the customer wants this is exact what they want to hear this is the exact product we should be building because we tried four versions that didn’t work and and we learned from those four this is what
We’re going to put on version five right so I think that that has to be part of the culture is to constantly be learning constantly improving you know I think about my experience with some of the brands I’ve worked for and every few years there was always some massive changes we we had
To change our strategy in our Playbook you had to evolve with the marketplace you had to evolve with your customers that’s kind of our our lead in with with the Technologies or the solutions that we offer we want to help companies evolve their technology to meet the changing customer demand
I’m not trying to put a um a commercial in the middle of this but this is this is sort of our Mantra we have access to new technology that can help the small median businesses upgrade their technology you have to evolve your strategy your playbook is changing your customers are changing
You need to update your technology to meet those customer demands or else you’re risking the um you’re risking your business so I I didn’t want to I wasn’t trying to throw that in there I wasn’t trying to be corny about it but change is good if your business isn’t changing their playbook
Maybe you’re in a market that’s not changing but how can it but how can it not be unless you’re a boutique seller of something special and you know where your clients are but you know not not
Paying attention to where they are or how you’re going to change the way that you grow sales or meet customer demand whatever it might be you’re you’re not you’re doing a a disservice by by not
Paying attention to that and so much is changing and so much will continue to change I hope that the retail environment I’ll tell you nothing is more depressing than driving through a town and seeing seeing a uh the mini malls what were those called the stretch I don’t even know the names of
St malls yeah the strip malls seeing a strip mall that’s just vacant is a very depressing sign seeing a huge mall with a vacant parking lot or just 10% of the parking lot being used
That’s a that’s an ugly bad sign when I drove by my min mini mall and our full-size Mall uh this past weekend both were packed and I don’t know why it just makes me feel good it’s nice to know that
People are still out there spending money doesn’t have to be online but it’s nice that they’re that they’re out there buying things and that they’re not afraid to still use their money or get in
Their car and get out there and you know to do it not everything can be virtual business um it maybe it’s part of your strategy but the customers what I’m seeing from just this past week from to
Compared to a couple of years ago I feel just from my own eyeballs that more customers are out in retail so for me I I like that idea um we’re our products that we’re selling we’re not going to be
In retail anyways so we’re selling more business type Solutions so it’s not an indicator for our business it’s an indicator that people are perhaps tired of waiting for a delivery truck to get an
Item that doesn’t fit that they’re going to return anyways so well to to speak to that Dave I know we were we were going to share some actual numbers around golden hours now what is golden hours so if you’re selling online here’s some insight if you can determine when your customer is shopping
Or the bulk of your orders are coming in online and you can Target them better through ads on like for us Amazon is a is a one channel it’s a very big channel for us and if we can know when
The consumer is going to be online shopping we can Target them much better and if we just spray the ads from midnight to 11:59 p.m. because this consumers doesn’t shop that way uh they don’t shop at all hours all the time although shopping is occurring through the entire day when we look at
Our data there is a concentration of that so now if I can find patterns in that data I can better allocate my budget I can better allocate my time or resources and targeting those customers so we
Look back at thousands tens of thousands of our own orders when it comes to online and here’s what we found we found that in 2022 there was golden hours for our products now we are in the office
Space a lot of our products are used in it our it products used you know for folks that are sitting at a desk or Road Wars and that kind of thing and we found that for example Wednesdays golden hours
For shopping were 9:00 a.m. to 9:00 p.m. which means I had a long stretch of about 12 hours where a good chunk of orders tended to come in Fridays 8:00 a.m. to 6:00 p.m. so there’s some
Shifts just within those two days for those golden hours but get this in 2023 well we found this on Wednesdays that shifted from that 12-hour window to 8:00 a.m. to 4 p.m. so the window shrunk where
The bulk of the orders were coming in same pattern on Friday Fridays in 2023 we found that 8:00 a.m. to 300 p.m. were golden hours where again bulk of the orders tended to come in so the shifts
In the buying pattern so that if more people are doing that what we also find that supports the patterns of hybrid and remote work days when people are in the office versus at home um and this pattern and and golden hours is also uh magnified when you look at summer versus winter
We found that on Fridays the golden hours instead of the 3 pm Mark uh that I mentioned I’m sorry 6: PM during 2022 that we would see that even at around 2 pm a massive on Friday around 2 pm
Friday during the summer there’s a massive drop off in orders and we found this over and over again throughout different product lines so Fridays are not friend Fridays are not a friend of the employee to go into work and they’re not always a friend for folks that are
Selling products like us so why would you waste money when they’re not at their computer they’re not on their mobile phone shopping it would be a total waste of your ad spend ad dollars marketing budget if they’re like a lot of our customers on during those hours whether they’re
On their phone mobile phone shopping or they’re on their computer doing the buying you want to Target them when they are there and what we’ve found is a better Roi when we’re doing that and that’s what we wanted to share with you that take a look at your um marketing advertising budgets
If you’re if you’re doing that with digital ads you will find a pattern it may not match ours but I guarantee you whether you’re marketing um something to the consumer or you’re marketing to a business buyer you will find a pattern and patterns are hard to break unless something major
Like what happened with Co and what happened with after the Pandemic those patterns don’t change people get up in the morning they log in to work they start working now more than ever on their on their laptops at home and those patterns tend to repeat themselves over and over
And over and over again finding those patterns can make you a lot of money I encourage you to find those patterns those patterns right now if you go check out those patterns I guarantee you the data will validate what your hunch and somebody said this to me recently you instinctively know that
Whether you’re in a big business or in a small business this is when this action is occurring you may just need the Val the validation from the data and I guarantee you you’re going to find it
If you look in your data especially if you’re sh if you’re selling online today Dave did I miss anything else or you do you want to add something about executing and targeting customers during golden hour you know I’m glad that you analyze this because there’s a lot of money that’s being
Spent on ads understanding your golden hours when I’m said I’m glad I said hours um analyzing when that’s hot is obviously important to keep your operational expenses in line I’m very interested to see what happens when we take a deep dive in 2023 to kind of look at those Trends and
Of course have our ear to the ground for 2024 Trends coming up I I am and so I can’t say any more there uh Dave because I think we’ve said it all today but if you’ve been hanging out here we
Want to tell you we appreciated your support in 2023 and are looking forward to an unbelievable 24 with you if you want to support us go ahead hit that like And subscribe we don’t normally say that
But go ahead and do that it not only shows your support but helps us bring this program to you as uh more people will get to see it when you hit the Subscribe as well as hitting the like
Button on whatever platform you’re on so we really appreciated your support in 2023 and if you want to nerd out on more of these failures Dave cuz you learned by other people people’s mistakes cuz I don’t want to make other people’s mistakes and if I can grab a couple of nuggets out of
There and put it into play in our business that’s what I want to do so go ahead and check out some of these big business failures when it comes to the missteps made by compact Sunbeam and Sports Authority we cover those in previous episodes with actual tangible executable things that you
Could do so that you can avoid some of those same mistakes Dave and I will see you in those episodes now for those that are on YouTube Dave as well as me will provide you more value on how you can
Grow your business faster with the videos we’ve got up here Dave and me will see you in those videos
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We can all learn from failures and use that to improve what not to do or do it better.
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