Ep 34: New retail formats offer hope; How many real customers does Wix have?Will the FTC require ad tracking privacy opt-in?

Part 1 Video Starts 0:13 - Wix numbers are strange but a deeper look  indicate solid SMB base

Part 2 Video- Starts 8:45 - “Bloomies” experiments with a curated 22,000 sq ft reatil space with every changing stock

Part 3 Video- Starts 17:53 - 9 Dem. senators ask the FTC to make all advertising ad targeting and attribution opt-in? Could it work?

Reference Articles:

1. Greg Stering Tweet from Localogy on Wix
2. Is Bloomies the future of department stores?
3. Senators to FTC: Make All Personal Data Use Opt-In

Transcript:EP 34

Greg: all right. Welcome back everybody. To episode 34 of the NIR memo. I'm Greg and I'm here as always with Mike and David. And we're going to talk about search social and COVID. And all the interesting things that happened, or many of the interesting things that happened in the past week that we also cover in our newsletter and on the blog.

Um, and we're waiting to talk about apple maps in more detail until Mike can do a deeper dive on it, but that would ordinarily be a topic, uh, interesting topic today, but we're not going to talk about that. And Mike, you get to go first and you're going to talk about Bloomingdale's

Mike: so interesting. Article in retail down.

About the new Bloomies format. So as you know, or should know, you know, what is blooming Loumis is the concept from Bloomingdale's have a smaller footprint store is in the face of malls having difficulty in most department stores. In fact, maybe more than that. Closing and miles in 2021, many of the better retailers have gone to outside shopping districts or downtown districts.

And as part of that, Bloomy's developed, Bloomingdale's developed a smaller footprint stylist selection of products in a tech savvy space, 22,000 square feet, where instead of waiting through rack after rack, they have. It's heavily curated and frequently changing product mix, that rotates trends and they host activations and they feature these pop-up merchandise carts.

And so theoretically it prompts product discovery. They also offer Cuban food and coffee to keep you going while you're there. Um, why the Cuban food had no. It's called the colada shop, but I have no idea why they chose that. But so it just, it's interesting that they're, they're doing this heavily curated thing and they're, they're, they're, uh, what they call stylists.

These are people that can help you pick from the stylish things. Aren't displayed shoes and shirts. Everybody's cross-trained in every department and they have a QR code system. So if you're. Uh, call an associate over you scan the QR code and somebody comes over and then this stylist, as they call them, can help you either mix and match with the stuff that's there.

They can help you order online, or they can even order from other third parties. They're not limited to just Bloomingdale's stock. So I just thought it was an interesting response to the failure of the malls. The decline of department stores, the need for. Outdoors, you know, to these outdoor shopping areas.

And so I just thought it was fascinating that this is a response to the changing retail environment. That's more experienced. Hmm. And your thoughts, how, how, how

David: many strikes? I was trying to say that the Cuban food and coffee might be the only thing to bring me in

Mike: to that, but then when you're going down, these pop-ups,

Greg: it's, it's primarily, I mean, I'm at the risk of sounding sexist.

I mean, I think it's their target audiences is predominantly women. I would imagine. Right. It

Mike: sounds to me like it's style conscious people, but you could be right. I mean, certainly let me,

Greg: yeah. So younger chefs probably probably younger shoppers. Probably younger shoppers who are going to be more gender balanced.

Um, and, and maybe in, among older shoppers, predominantly women, I mean, do you do either, do you do either of you shop at Bloomingdale's? I walked through Bloomingdale's

Mike: golf shirts. I buy t-shirts at the end of this,

David: typically from courses I've actually played though. So I don't know that I would buy it, buy a shirt from Bloomingdale's.

Um, no, I think it's, it is an interesting concept. I think it, it ties in as well with. The sort of showrooming type, uh, idea for Warby Parker and Bonobos and those sorts of companies. Um, and certainly as a way for Bloomingdale's to say. You know, rent and, and, uh, higher rent and larger footprint stores. So

Mike: one of the interesting changes is this front desk, right, is, uh, where it's set up to answer questions, perform tasks like online pickups, returns, gift, wrapping, alterations, and styling, as well as a Dropbox for online returns.

It's interesting that the function of the back room stuff is being pushed up to the front and the cashier is being hidden at some level.

Greg: Hmm. Well, I mean, I think, go ahead, David, does it, does

David: it have the Amazon just walk out with the item, uh, you know, RFID chip or anything? No. No,

Greg: but I, I don't think that, that, I think that that's a context in a much higher touch context and, you know, I mean, I think just walk out works when you know exactly what you want.

You go, you pick it up off the shelf, but this, this is, it seems like this is designed to. Be a, an environment where these sales, these stylists interact, you know, I mean, as you say, in a curated way with, um, with, with, with shoppers, I think, you know, kudos to them for, for trying something really different.

Um, because you know, you can't just do the same old thing and expect success. It seems like there's like two categories now of retailers. Well, beyond the ones that are not going to do anything and screw up. But in terms of the ones that are trying to innovate, you've got folks like Walmart and target and maybe some others that are, um, leaning heavily on.

Technology tools and sort of buy online pickup in store and store fulfillment of online orders and that kind of thing. Um, but not necessarily radically changing the store experience itself, not, not up up upgrading the, the sales personnel or physically changing the store experience. And then you've got some others and maybe Nordstrom falls into this category with Nordstrom local, which has been around for a little while.

And this one Bloomies and there there's probably a couple of other things. And the showman Rumi examples, for sure. I think that that are, that are, that are very different, either different in their intention or different in terms of the experience, you know, Warby Parker wants you to come in and look at the glasses and they don't care where you buy them.

And, and, um, you know, this, this experience will be dramatically different and there's some other, there's some other examples in the UK that I think. I can't think of

Mike: top of mind, just a note about Walmart, which I find interesting, you know, that they talked about Walmart plus last week in the news, having seen great success, growing a lot, adding a lot of consumers, but also having a demographic very similar, if not even higher than Amazon, uh, program.

And I th and they were so focused on customer experience in this aspect of their online ordering. Deliver groceries to your door and they give you all these special perks. What I find fascinating with Walmart though in that category of order online pickup in store, from when I can read about the reviews and I still monitor the reviews, is there in store.

They never have enough cashiers. The lines are too long. The self checkout doesn't work effectively. And you know, it's like such a contradiction in terms of customer service and clientele between these two worlds. So

Greg: they're neglecting the fundamentals then.

Mike: They, I can't quite figure it out. It's like, there's so many line and cashier complaints.

I have no idea what's going on. I mean,

Greg: I think the, I think that just walk out stuff is a kind of a solution to that. And it's very, very interesting. Then that's kind of merits and other discussion, but in the interest of time, I want to move on to

David: recent issues. I was just gonna say, if there, if these are particularly apparent recently, it could be just labor shortage.

Uh, yeah. That's, that's,

Greg: that's entirely fair. Given the hiring challenges

Mike: deep look at it. I am, it's just fascinating to me that they would have so many. Going for them and screw up at the last of customer

Greg: interaction. Interestingly, this week you had target saying they're going to hire, I think a hundred thousand for the holiday.

And Macy's saying something like they're going to hire close to 80,000 for the holiday. I mean, if they're having trouble now, How are they, how are they going to get a hundred thousand people

Mike: writing CVS saying 25,000? You know, the numbers are bigger I'll show, right?

Greg: Yeah. I mean, maybe they're doing this as part of a PR push to get people interested in show, to show up, but it's going to be really challenging.

I think if they're having

Mike: trouble. Now, my advice for you, Greg is order your Hanukkah gifts early. And for you, David Dornier, Christmas.

David: Yeah. Great, great advice. Sage wisdom here on the

Greg: near memory. Yes. Yes. And to everyone listening or watching. Okay. Deep,

David: deep tactical insight.

Greg: Yes. So, so, um, I, I was at the low cology conference this week, which was very strange because it was like a mix of.

So I'm safety protocols and then total disregard of them. Um, but among the handful of sessions I attended was a session, uh, presented by Wix in which they revealed a bunch of numbers about their customer base and David that caught your eye. And you, you wanted to chat about that? It did.

David: So, uh, I was struck of course by the top.

Uh, number, not so much the 1.1 billion in revenue, um, which is certainly impressive, but would have expected, uh, something close to that from a company of Wix, the size, uh, the number that really caught my eye was the 210 million, what they defined as users. And that sounds really amazing until you divide 1.1 billion by 210 million and come up with a $5, uh, annual revenue per year.

Um, and so that's th that struck me as, okay. They have a lot of freemium users, uh, included. And the other thing that, that, that, that struck me about that as 210 million is actually about double the size of most estimates I've heard for SMBs globally. So that would tell you that Wix has not only every SMB on the planet.

Two of them, uh, have, have signed up for a Wix website or a Wix product. So there's something funny going on with the numbers there, Greg, you eventually, I think, got them looking at your follow-up here, that you eventually got them to disclose that a six and a half million of them are paying, uh, which translates to an ARPU of about $170, uh, which is great, uh, for a SAS company that's serving, uh, the B the very small business.

Like they are. Um, it, it just strikes me. It just a, you know, we see a lot of these big numbers reported by tech companies. I know Mike, you and I have have, uh, taken a harder look at some of Yelp's quarterly reports previously and, and. Uh, identified most of their revenue is due to sales headcount in most cases.

And, um, I just, it seems like there's a lot of tech companies out there trying to put numbers out there and hoping no one actually takes a deeper look at what they really mean. Um, so that was the first time. Greg you wanna say something?

Greg: Well, I just wanted to, I just wanted to say that Wix is a public company and so they really can't lie to the market about their numbers.

And I did, I did ask them just, just real quickly to interject. Uh, I had to chase down two different people to get these answers. Um, you know, are these 210 seats? And they said, no, these are 200 separate businesses or separate accounts, 210 million. And they also said half of them were in the U S basically.

And then the 6.5 million we're paying. And I said, well, who, you know, this is, these are way larger numbers. Then as you point out, David, you know, the reported number says S and B's, so who are these people, you know, side hustles and hobbyists, and, you know, sort of people who have this idea of starting a business, you know, so there's a, a wide range of folks in there, but it's, it, it sort of plays around with our notion of what the addressable market is, but.

Well, yeah, I'll

David: pick up on that point. So if that's true, if there's a hundred million accounts in, in the United States, that means one in three Americans and probably closer to one in two Americans who are old enough to use a web browser, um, or not too old to use a web browser one and two of them have a Wix website.

I mean, that doesn't even, that doesn't make sense to me. I would be surprised if one in two Americans has heard of Wix. Um, so I, there's just something crazy with these. Um, but I was going to actually spin this into a positive for, for Wickson standpoint. Um, just in the fact that they were clearly able to, regardless of what the actual number is, they are doing a good job of attracting people at a very early stage of their business.

And it strikes me that they're coming at this from the angle of, okay, we're gonna, we're going to get you online with a website kind of thing first, and then. Sort of is a little bit of a different angle to what Shopify and square are attempting to do on the point of sale side of things. And I know Greg, you pointed out wakes, was partnering with point of sale companies.

Uh, they're partnering with a whole range of, of, you know, other, other SAS product providers to sort of expand their suite. But it just strikes me that they, you know, they're sort of like, okay, you know, square square probably has the, the sort of top of mindness for someone who wants to start a retail. And Shopify probably has top of minus four, someone who wants to start a, an e-commerce business, but Wix is still getting in at a certain level with a whole range of maybe non traditional businesses that don't fit neatly into one of those categories.

And that might set them up for, uh, an opportunity to expand that ARPU with cross sells and upsells, uh, over time. And, and so it strikes me that earlier in the funnel

Mike: of business,

David: Right. And so there's an easier chance to build loyalty. You know, the, the huge switching costs, as we all know of changing a website provider or changing who hosts your email.

Um, so it seems like that's a, that's a positive for them, regardless of how big or small that, that total number is directionally. It's impressive. Well,

Greg: what's, what's what's um, I agree, but what's interesting to me. Is it, we've got, you know, we've got the us census bureau or the bureau of labor statistics saying there are 32 million small businesses in the U S from zero headcount to 499 people.

Right. And most of those are solopreneurs or Soho's or whatever you want to call them. And so that's 30 million and, but we've got a hundred million. At Wix and then we've got Squarespace and we've got GoDaddy and we've got WordPress and we've got Duda and we've got, you know, a bunch of hosts and they've got collectively, probably several million.

And so there's, there's th th the, the, the conventional wisdom that the, uh, addressable market for SMBs is somewhere in the 10 to 15 million range, which is kind of the informal discussion. It's it's, it's very strange to sort of reconcile all these things because, um, clearly some of these people who are on the Wix platform, which is the largest single platform or.

Trying to make money or trying to develop businesses or whatever, and do constitute small businesses. And so I don't, I don't quite see how to get all these, you know, w th th the conventional wisdom around who is the small business, who is the addressable market, this, this to me sort of raises a kind of interesting and fundamental question about that.

I mean, if you're an agency, go

David: ahead. So I would just say though, Greg, so even if you take Wix as paid numbers only, right. Which would be something like 3.3. Uh, assuming,

Greg: assuming that they're split evenly. Right, right, right. I mean, they made the comment. They may have more paid members in the U S than in us.

David: Okay, great. Which would even amplify my point of, okay. That's 10% of the typically addressable market. That's a huge chunk for one company. Particularly on the low end. So,

Greg: well, we continue to see these surveys from Shopify, from CallRail, from, from, you know, from a bunch of different sources that say still, we talked about this previous.

40. Plus the 50% of small businesses say they don't have a website. These are active marketing, established, small businesses that are spending money on Facebook, on Google. That's also very bizarre like that. If you try and extrapolate that number, the implications of that are really weird given all this, these other numbers around.

Right. So that would mean they're 50%. Small businesses out there that, that aren't on Wix or aren't on another platform. Right. And that just doesn't seem possible somehow. Mike, you have nothing to say about that.

Mike: I don't, I mean, you're gonna, you're going to have to start, you're going to have to come on full-time and your media and resolve that number.

Oh, I can

Greg: say, well, I it's, it's just really perplexing and you know, I've had a bunch of coffees, so that's probably why I'm as worked up as I am. I don't normally drink coffee anymore, but I did today because of sleep deprivation. So, um,

we

Mike: had one more number. Do your mix. Info USA is somewhere in the 16 million plus locations, which, which is a different metric.

And Google is somewhere just under 17 million in the United States. Maybe it's, location-based not, uh, and probably 500. A thousand of those are at fake SAP listing. So at the 17 million, so,

Greg: so seven to LinkedIn Google's case.

Mike: Yeah, I dunno. I was making a spam joke, but

David: somewhere just garage door listings.

Yeah,

Mike: exactly. Or, or, uh, insurance legions. Yeah.

Right.

Greg: Okay. All right. Maybe we'll do some reports someday about these numbers and make sense of the ball for everyone, if that can happen. Um, all right. So. Uh, for my sort of concluding segment here, there, there are a couple of things that sort of tie together.

One of the, one of the things that I think I included the newsletter on Wednesday was a letter from nine democratic senators to the FTC, asking them to, to undertake rulemaking that would enhance consumer privacy across a range of. Um, issues, one of which was use of personal data in presumably an ad targeting and attribution, and they were asking for that to be all opt in.

As far as I could tell, it was, it was a request to make for the FTC to make ad targeting and attribution use the personal data entirely opt in Allah Apple's act app tracking transparency, which I. You know, and the implication of that is that failure to ask for consent for use of personal data in digital marketing is deceptive because that would be the, the authority under which the FTC could regulate that.

Practices or deception, which is kind of a radical statement to make. Now, if it goes through, if it all happens, we're going to see a legal challenge. This is outside of the scope of the FTCs authority, yada yada, yada, but it's pretty rare. It's pretty dramatic. Um, so what do you guys think of. Of the implications of that.

Let's not handicap the, the, uh, the, the rule itself. Let's just talk about it as though it could, could go through. Wow. I

Mike: first thought is if it's not implemented in a system level, it becomes very unmanageable for the. Right. If it's a, it's like apple is implemented a system at a high level, the user only has to answer once and you're done and you move on.

It's very simple. But if it's like with websites now, as you pointed out in the pre-talk, it's a major pain in the butt, you got this click and that click, you don't know what you're clicking, then Pizzagate what you're actually agreeing to. And it's really problematic. It ends up being like HIPAA, where you end up sending 27 extra forms to just go see the.

Right. It's there and there's

Greg: no, and there's no, and the, and the desired benefit doesn't happen because you.

David: I think G I mean, apple, I think probably is being effective. It's a little too early to tell. Right. But I think GDPR has been a massive failure. It's just, I mean, I don't really feel like my data or CCPA, same thing.

I don't feel like my data is any more or less protected than it was three, four years ago. I just have to click through a bunch of crap to do anything. I

Greg: don't have any confidence whatsoever that if you go through. Effort to do the jump through the hoops that that's going to be, it's going to result in anything it's complete black box.

And an interestingly as an aside apple, there was an article in the Washington post that said, um, you know, there were, they were, they were looking at 10 apps. I don't recall the particular apps. One of them was a gaming app. I didn't look at all the names that were still passing on data. They were, they were receiving the no tracking prompt, and yet they were disregarding that, uh, And, and still passing our data.

Now, apple has a pretty powerful enforcement mechanism. They can just bar people from the app store, which is a pretty, pretty powerful thing. Um, but just real quickly, uh, Facebook now is complaining and there's been some reporting about how the, the, uh, opt-in consent is starting to impact Facebook. And in turn it's small business customers, you know, to the tune of, we can't really track things as well anymore.

We're having. It's really on the attribution side, more than on the targeting side that they're having problems. And so, you know, we'll wait and see at the next, uh, earnings call, whether it has any kind of impact on actual actual revenue, but that's sort of the, the early Canary in a coal mine. Version of what might happen wholly across the web.

David: Uh, some of the stories where the Greg were suggesting that the, that the cost of ads on Facebook because of the lack of charging out was too high. And so people were just bailing on the platform as a result, advertise. Yeah,

Greg: the cost is going up, which has been true for the last couple of years. And, and that may be a con you know, the cost is going up in part because it's getting tougher, I think, but that may be a, uh, uh, a variable, as you say.

Um, but Mike, you, you had a point about, um, before we conclude about apple maps is kind of an early indicator of what might be the future. From a data standpoint, apple

Mike: came out, refused a number of people, asked me on LinkedIn or Twitter, whether I thought they had. Engage with apple reviews. And it forced me to take a look at analytics and for a number of clients, a couple of clients.

And I looked at a range and what I saw was, uh, traffic that had come from Google was clearly identifiable as apple, but I was seeing in lowest case, 5% of their traffic was coming from dark apple traffic and in the middle. Pronounced case 25% of their traffic. This was a high-end spa restaurant hotel place.

25% of their traffic was coming from apple and doing things like booking and so on without a lot of conversions. So clearly in some areas already apple is having an impact. And as a marketer, it's dark, you can't really see it. All you can do is. God, it looks like you're doing well there, but we don't really know whether it's apple maps, that's driving it or safari.

Well, you know, whatever, it's unlikely duck, duck go. So as you pointed out, it probably is Google maps. And then the question is if that much traffic is coming to the website, how much is just stopping? Apple maps and make a decision there. How much of it's discovery versus recovery? There's all these things that we have no idea, but what it made me remember was in 2013, I was consulting with SeaWorld.

They called me desperate one day because cars are piling up at the bank. Obviously driving directions with the ground. I looked into it. Wasn't Google maps. It wasn't here maps. It was apple maps. This is a 2013. When apple maps was wrong, it was a huge problem. So there's high amount of usage. And now with apple maps becoming more discovery driven, as you pointed out in your newsletter this week, I think marketers have to get used to the idea that there's going to be less information and we're going to be working more.

Well,

Greg: that's, that's a huge topic that we'll be talking more about, but there's, there's a lot of interesting issues here to sort of parse and for future conversation. But unfortunately I think we're at a time and, um, as always thank you very much for listening and reading, and we'd love to hear more feedback from you and any last words from you guys this week,

Mike: none for me, but have a great weekend or week, whichever it is when you listen and stay.

I

David: hope everybody makes it back from locality safely. Yup. Yup.