Subscribe
Share
Share
Embed
Unlocking Retail Media is the essential podcast for leaders and marketers navigating the rapidly evolving world of retail advertising. We move beyond day-to-day operations to explore the strategic future of the industry, covering major investment trends, the shift to hybrid marketplace models, and the existential disruption posed by Agentic Commerce. Host James Avery brings in top industry veterans and visionary founders to analyze how ground-breaking technology is transforming customer journeys, influencing product catalogs, and forcing retailers to rethink on-site, in-store, and digital media strategies to remain competitive in the modern age.
Matt Nichols: [00:00:00] I think we will get to a world where this shopping experience at ChatGPT feels more like, I have a query. I'm looking for something. It's tech-based. Maybe it's similar to what we have today, but the output actually inside of the ChatGPT experience probably looks more like a Shopify site. And then if you believe that's true, then honestly like the retail media fits in pretty nicely.
So if you think that the experience on Chat GPT is gonna feel like Shopify, then it's not that much of a stretch to think about what. Retail media inside of that Shopify experience, inside of Chat GPT looks like, if that makes sense.
James Avery: Welcome to Unlocking Retail Media, the podcast where we explore the evolving world of retail media from data strategy to monetization and everything in between.
This is the podcast that breaks down how retailers can build smarter data-driven media networks by aligning with what
Matt Nichols: brands truly need from scalable ad solutions and meaningful metrics to cross channel attribution and programmatic strategy
James Avery: today. I'm excited to host Matt Nichols. Matt is a [00:01:00] partner at Commerce Ventures, a firm that stands out as one of the most active investors in the retail and retail media ecosystem.
We'll be diving into the major trends and some of the investments that Matt is making and seeing in the ecosystem. We're gonna talk about the rapid growth of the retail media market and the transformative impact of AI and generative commerce on retail in general. We will also explore the shift towards marketplace models and lean supply chains that are reshaping how retailers and brands operate, ultimately providing a comprehensive, high level view of the entire retail commerce space.
All right, welcome to Unlocking Retail Media. Uh, today we're joined by Matt Nichols, uh, with Commerce Ventures. Uh, thanks for joining. Matt.
Matt Nichols: Great to be here.
James Avery: So I thought, uh, you know, I'd start this out as you know, this is a little bit of a different episode 'cause Matt is an investor with, you know, one of the, one of the, uh, kind of bigger investment funds in the, in the retail and retail media space.
Uh, so [00:02:00] as opposed to kind of talking about just what, you know, what it takes to run a retail media network, we're gonna talk a little bit more about the kind of industry as a whole and kind of what's happening in the industry. What, you know, companies are being funded. What's Matt, what Matt has seen is kind of the trends.
Uh, in the industry, uh, and kind of a little bit of a broader view. Um, but I wanna start it out. I actually in, in preparation for this, uh, so Matt is one of our investors at ml. Uh, so we've been working together since 2020. I spent a lot of time together, but I was, I was curious. I was trying to think when, when did we initially first meet and like, how did that happen?
So I went and like, looked at my, you know, searched Google and like clicked back like 20 times and then found that it was like a, a LinkedIn connection. So I went and, and went and found it on LinkedIn. 'cause of course LinkedIn keeps the messages forever. Uh, so this is the initial one, intro to Commerce focused vc, Matt Nichols, James, sorry for the cold outreach, but I'm a partner at one of the most active retail tech focused funds, commerce vc, have been trying to make an investment in the next generation hook [00:03:00] logic.
I came across you guys, I was wondering if you'd be open to connecting, there's some other stuff, but this was December 10th, 2019. So I think one of the, one of the cool reasons to have you on here, Matt, is like, you, you kind of saw this, this trend before it was happening. Uh, obviously Hook Logic had existed, um, but you know, you, you kind of read ahead and now we're kind of in the throes of retail media where everything's retail media, but that definitely wasn't the case in in 2019.
Matt Nichols: Yeah. So I mean, may, maybe I can tell you that yeah. That my history with retail media or Yeah. My, my history broadly, and I'll, I maybe that'll lead into sort of how this thesis came about. Um, so yeah. I'm Matt, um, a partner here at Commerce Ventures. Uh, been a, a venture firm. It's been around for about 13 years, um, based on sf.
Um. I've been in venture since 2002, so a long time across a couple different venture funds. Uh, although in the middle of my venture capital career, I took a five year detour where I ran this direct to consumer e-commerce business. Uh, it was a jewelry business called gva, backed by a bunch [00:04:00] of, uh, one on venture capital firms.
We ultimately sold that business to Berkshire Hathaway. Um, and why it's. Relative retail media. When we were acquired, I was running Berkshire's B two B2C jewelry business, and at the time, the entity that bought us was probably the biggest seller of crappy gold jewelry on Amazon, Macy's and a bunch of other places.
And. I remember one of our goals was, you know, we were a big seller on Macy's and then we're trying to figure out what are ways that we can get more of our jewelry to show up at macy's dot com. And I remember we were using Hook Logic and it was like honestly, the only thing that worked way back then. So fast forward to Commerce Ventures, looking at various trends that are happening in the marketplace.
You know, Amazon had started to get to build a reasonably sized retail media business. Um, at that point the light went off and said like, there really hasn't been any innovation in this market since Hook Logic and actually predating my, my post to. To [00:05:00] James. I think what, what, and I would ask you what the, the, the post that someone else identified James for me was, I put a post out there that says, is anybody on LinkedIn?
Is anybody building Hook Logic 2.0? And I think someone reacted to it and said, I know this guy James, who's running Keval, which is what prompted me to do the cold outreach. So that's the sort of the, the story arc of me seeing, being involved in retail media in the early, early days and then seeing sort of the, the genesis of it happening on Amazon and then realizing, Hey, look, everybody else is gonna wanna get in this game.
Hence the, the, the outreach to James.
James Avery: Now I need to go find the LinkedIn post that you posted about. Is anybody building Hook Logic 2.0 and see who I owe? See who I owe a Thank you.
Matt Nichols: I'm gonna, I'll go back and we'll go find out who it was. I forget who actually made the connection. So,
James Avery: so that was, I mean, that was back in, so that was in 2019.
Uh, obviously, you know, you guys invested in our A round in 2020, but in between we kind of saw COVID hit. Which caused a big acceleration in e-commerce. I think it caused an acceleration in retail media. Uh, we saw a citrus ad kind of, you [00:06:00] know, grow a lot out of that. Uh, but now we are, you know, we're kind of five years later.
Uh, you know, how do you, how do you think the, you know, the market's kind of developed and, and kind of what you expected?
Matt Nichols: Yeah, I mean, I think back then. Really the only options available to folks, um, were sort of like, totally roll it yourself, the Amazon way or honestly like totally outsource it. And that was the hook logic, um, citrus ad approach.
Um, I think what I like then and could do to like about what, uh, you all, uh, ke have done is. Is finding a way for there to be a middle ground here? I think what has happened is that retail media has just gotten so big that I think for the largest players. I think you can't afford to fully outsource it.
And I think that's what's changed, which is, you know, some of them hit the easy button in using some of these platforms, but a realization of this can't be a, you know, a sort of a, a secondary thing to my business. This is so core [00:07:00] that I wanna own it, but at the same time don't want to own the core technology.
Um, and I think that's where, where you all have been, been really successful at helping these, you know, large retailers. Bring the sort of customization uniqueness of the retail media offering to their sites and not sort of fully outsource 'em. I think that's the big been, been the biggest change as people have realized how important and sort of durable retail media has been.
James Avery: And do you think that, I know one of, one of the things you guys end up doing is talking to a lot of the. Really higher up leadership at retailers. Right. I won't name their names. Right. But you know, a lot of 'em are like LPs in the fund or, or kind of do tech road shows with you. So you kind of get an interesting angle of not just the, the people running like a retail media network, but the, you know, the Cee o of the multi-billion dollar retailer.
Like, is that as the amount that you hear from them about retail media increased, or do you think it's about the same, or, you know, what, what do you feel from those like higher up executives?
Matt Nichols: Yeah, and I think it's definitely increasing [00:08:00] and, and part of it is you just can't ignore this for, you know, executives that have run low margin retail businesses, the allure of this massive amount of money that Amazons, the Instacarts, et cetera of the world have been, been able to monetize.
You just can't afford to miss it. So I think, um, the, I think the, the pressure they're putting on their teams has only increased to accelerate. The efforts in these areas. Um, so yeah, so I think it's, it's definitely happening more and more.
James Avery: Yeah. And if you, uh, you can only yell at your outsource provider so many times to increase revenue, sometimes you have to like, take it into your own hands and, and do it.
Matt Nichols: Yep. Totally. Yeah. I mean, I think, you know, you if it becomes that core Yeah. You. Someone that you can control, which is usually, you know, someone in your own team or someone that that's working directly for you rather than, you know, tapping into some, uh, you know, less differentiated network out there. [00:09:00]
James Avery: Yeah.
So, and step like, I guess similar question, but kind of not just focused on retail media, like what, you know, you, you talked to all these, you hear up from all these executives. What are, what are the other things on their radar? Like, where are you, are you guys kind of looking at making investments in, in the retail space?
Matt Nichols: Yeah, I, I think one of the biggest topics out there is. We called it Gente commerce, but you know, I think it's the, the rise of AI and the implications for AI on how consumers are finding and ultimately purchasing product services, et cetera. Um, and I think there is a huge amount of downstream things that have to happen or thought differently or said differently.
There are a huge amount of things that retailers and brands are needing to do to, I would say. One brings some of that AI magic to their sites so that someone continues to shop on target.com, tesco.com, wherever it might be. So bringing some of that magic that all these consumers are [00:10:00] now experience on chat GT or perplexity, bring that to their sites.
So we made some investments in that space, like. Fundamentally improving search and doing a bunch of different things. Um, and I can come back to that in, in a second. And then secondly, so that's sort of like how do we preserve the status quo, the pre AI status quo. People used to coming to our.com sites, but then also realizing there will be some amount of people.
It can be, you can argue it's gonna be everybody, which I don't believe in. I don't believe it's gonna be nobody. There's gonna be a, you know, a decent number of people who will be engaging with your brand, your service. In your products, in these platforms and trying to set yourselves up for that. So I think about sort of feed management technologies to get your products out there so that chat GT finds them and can recommend them.
I think there's a set of transactional capabilities so that someone could actually make a purchase. In those AI platforms, how the merchant records still be, the retail or the brand, et cetera. And there's a bunch of tooling and things that are required there. So we're looking at sort of all of those areas as, um, sort of interesting capabilities that I [00:11:00] think retailers and brands will need to invest in given what's happened in the sort of AI world.
You know, and this is in addition obviously to all of some of the efficiency plays of which there are a lot as well. So.
James Avery: And how do you think, I mean, this is, this is now becoming like the hot topic, I guess we're gonna ask every guest. Because I talked to Mark about this a little bit too, which is, you know, how do you think that affects retail media?
Like, I think it's the, the big question a lot of people is, if people are shopping in chat, GBT, how many people are gonna do that? How does it affect the, the business that we're in?
Matt Nichols: I think there's, I think there can be two impacts, right? I think there's one, which is how does AI change retail media on sites?
So I think one of the biggest changes that we'll see from people bringing this AI tech to their sites is that there's this, like there'll be a move away from keyword based ta. Historically to give consumers a great experience to help 'em find the products they wanted. You had to think about all the characteristics of these products beforehand, and then when the [00:12:00] consumer did a search, usually with a keyword that that would surface the right products to those consumers.
I, I think the biggest change with AI is your ability to utilize, not in real time, utilize these large language models to figure out all of these associations between products that a human probably could never have figured out and bring those associations. To your site such that searches that consumers do on the site deliver what they're fundamentally looking for based on all these connections that live out on the internet and not just the ones that you've been able to capture in tags.
So I think about how that impacts core retail media. I think the opportunity for retail media is actually just as big. If not bigger, it's just the way that people will be bidding on these language searches on sites may have to change. So I think there's gonna be some innovation there, um, to bring, like, how, how does retail media look like when it's a lot less keyword oriented?
So, so I think that's like sort of a, not a [00:13:00] positive or negative, but just a change that I think people have to think through on the retail media businesses.
James Avery: I think we're seeing more and more of that. Already just in the way that people are bidding. Right. It's like we want Yep. You know, we're trying to encourage brands to think about less specif specificity in their campaign and less about Yep.
It's only these keywords and these geos and it's more of, Hey, I wanna sell more of this product, just sell more of this product. Yep. Right? Like, I don't, you don't have to overs specify, let let the, let our, let our machine learning or anybody's machine learning do the work to say. Here's where, you know, here's the best place to show this, this ad or this product listing or, or whatever, uh, to drive a conversion as opposed to somebody coming in and saying, this is ketchup.
So I wanna advertise on ketchup and hotdog and, and mustard. Yep. And, and assume that that's the right stuff when it turns out some people are searching for picnic items, right? Yes. Or something, something crazy, right?
Matt Nichols: And I also think just the, the ability for the ai, for AI in general to help optimize that, [00:14:00] right?
I mean, historically it's just been sort of humans like hacking at what they think the right bid for that, you know, catchup keyword should be. And I think there's gonna be an opportunity to sort of self optimize utilizing AI so that. Really your, your goal is to sell more ketchup up, right? That's your goal.
Your goal isn't to do ads on the catchup keyword. So figure out what things I should be advertising against. And maybe it's mustard or maybe it's ketchup, I don't know, but like what's, what's the right way to optimize those sales? And I think that will accrue to everybody's benefit because I think the, the better that retail media works, the better it works for the retailers and the better it works for brands.
The ROI goes up, they spend more money and that's like a, an additive function of bringing sort of that AI optimization. To to, to advertise. And I think that's a broader trend that we're seeing across retail generally, of like moving from systems that were designed to be workflow tools where the human was like, how do you make it as efficient as possible for people to do that keyword bidding in this case?
Another example I'll use is like [00:15:00] email marketing. So every email marketing platform and the history of time has been focused on how do you create segments, flows and content and moving from that like. Sort of workflow tool to a self-optimizing tool where the AI's thinking, who are the segments, who are the content, who are the flows, and then trying something, seeing the results and iterating in a way that just humans can't do in any of these, these realms.
So I think that's another really interesting thing about AI, is just, again, tools more from workflow to self optimizing systems.
James Avery: Yeah. It's really more about getting to, getting to what's the outcome you're desiring. Right. Like in the email marketing standpoint, you're like, I, I want more people to, you know, subscribe to our mailing list post purchase.
Matt Nichols: Yes.
James Avery: And letting the system figure out, oh, here's how I'm gonna do that. Is it, do I send it the day after? Do I send it two days after? Do I send it three minutes after? Do I send this message? Do I send this message? Do I, you know, et cetera, et cetera. Like, you're right. It can, it can do the work of a very [00:16:00] qualified person and just brute force it and figure out, this is what works, this is what I'm gonna
Matt Nichols: do.
Yeah. I mean, you think about it, it's surprising that we've gone so long without that, right? Like to be able to optimize a revenue from your email campaign, someone has to have tested the right thing, seeing what things work and what things didn't, and then be thoughtful enough to the next time, really write that email differently, send it differently, send to different people, et cetera, to then generate more revenue and like, it's just.
I dunno. It's not, it's not chance today, but it's, it's, it's a lot harder than if AI was really figuring that out.
James Avery: Well, and you have to consider too, there's so many limitations because of humans doing it that we're only, you know, you're only doing certain permutations, right? Yep. You're saying, oh, I'm gonna create seven different segments for my thousand buyers a week.
Versus maybe the right answer is 350 different segments. Or the right answer is zero segments and it's something custom written for each individual person based on what we know about them. Things that couldn't, you couldn't do scalably before.
Matt Nichols: And a lot of 'em are just limited by, honest, by the content.
Like you can [00:17:00] only have so many segments because one your point, you can't think of that many segments. And two, even if you could think of that many segments, you would drive your creative team mad because they'd have to create content. Right? One of those segments. And I think that's where we're, those are the sort sort of things we're unlocking.
You also ask the question about like, how is retail media like as this, I answered this sort of the onsite thing. I think there's another question of like, what does retail media look like when the purchasing is happening on. Chat, T perplexity, et cetera. I think that's a much more complicated question, uh, because I think those platforms in general, forget retail media for a second.
I think they're just trying to figure out what is the advertising mechanism that actually works there. And you know, just think about what Google search has been all about. It's been all about drawing intent based on the specific search and then delivering a set of. Paid ads that go alongside a set of, you know, the best 10 websites that Google thinks are relevant to your search.
And that kind of worked. It has worked and [00:18:00] created the, the behe, it worked pretty well. It worked pretty well, uh, incredibly profitable. But because like the, the deal with the consumer was different, right? There wasn't like Google serving up the right answer, you know, chat, GBT is serving up what they think is the answer.
And it's not even totally obvious what the right ad format is. To serve against that. And I think there's, there's two ways you can think about it. One is the how do you monetize those links that are in the, in the thing that Chate has already recommended. And I think about that as like skim links for chate.
Right, which is interesting, but it's not, ultimately doesn't capture the power of what Google did. If Google just did that, they would not be nearly as valuable as they are today. They were valuable today because someone could advertise and change your mind, change you to to click on this link versus the link that was organic and that's what people are willing to pay so much money for, and it's not clear yet what format does that and still make sense in the minds of a.
Chat chip bet user. And I think [00:19:00] that's the biggest conundrum that chat chip's gonna have to figure out, figure out how advertising generally, and then it'll probably, I mean it looks, it will look sort of like retail media, but it's that fundamental format that I think they have to figure out first before we'll know how it plays out in that AI world.
Externally,
James Avery: how much do you think people, this is something I go back and forth on, uh, with a lot of folks, is how much do you think people will actually just shop in chat GBT.
Matt Nichols: I think quite a bit over time. Uh, I probably got more on the bull side than the bearish side on this front, but not, and, but I think, and I think people who say, Hey, yeah, people only buy toilet paper on Chatt bt 'cause that's easy and there's no, you know, emotion around it.
I think that's maybe true in the way that shopping works on Chachi Chet today, which is basically text in, text out links, et cetera. I think we will get to a world. Where this shopping experience, the ChatGPT feels more like I have a query. I'm looking for something. It's text-based. Maybe it's similar to what we have today, but the output actually inside of the [00:20:00] ChatGPT experience probably looks more like a Shopify site.
Shopify experience with products and like, you know, like it almost, it feels like you are in an e-commerce experience, although you're probably chatting with it rather than clicking and faceting, but like, that's a, a small nuance. So I think a lot of this emotive pieces can actually be brought to that platform.
And then if you believe that's true, then honestly like the retail media fits in pretty nicely. So if you think that right, the experience on experience, experience on chat, BT is gonna feel like Shopify, that it's not that. Much of a stretch to think about what retail media inside of that Shopify experience, inside of Chat GPT looks like, if that makes sense.
James Avery: Yeah, I think, I think there's a level where I think that makes a lot of sense. I think today the world of, you know, I'm looking for, I wanna buy a new tv, help me, you know, decide which TV to buy.
Matt Nichols: Mm-hmm.
James Avery: And then it shows you, you know, oh, go ahead and click this button to buy this from Best Buy or Costco or whoever.
I think people are still gonna go click through and, [00:21:00] and shop. Are still gonna go through to cost to Best Buy. But, but I, but I think there is a world, like you said, if if more of the retailer piece was brought into Chatt BT, it makes sense that you would actually just do your shopping there.
Matt Nichols: Yeah. And a lot of people will say, people ask me a reasonable question.
I've thought about this too. People are like, well, like the whole Google shopping thing like that didn't really work that well. You know, Instagram shopping has gotten decently sized, but it's not like in, I mean, TikTok shopping has gotten big, but it's not like, changed the world of retail fundamentally.
Like why is that? What, what is it about ai? Why is there a potential for AI to change shopping experience in a way that those things haven't? Um, which I think is a very reasonable criticism. My thesis, I dunno if I'm totally sure this right yet or not, the thesis that I have about why more could ultimately happen on ai.
Platforms than did in those other platforms, was in those other platforms. If you served up a product in a Google shopping feed, or frankly a TikTok shop, you [00:22:00] had to, I had to serve the exact right product to James, right? Gimme exactly the right product, and you had to be in the moment to like, I'm ready to buy.
I don't need to ask any more questions. I don't need to understand anything about the brand. I don't need to understand about delivery. I don't need understand anything about the product characteristics, any of those things. I just had to be ready to buy, and I think in most cases you aren't. To your point, you like you wanted to find some more information.
In an AI context, a lot of those secondary questions that you would've historically in those other platforms had to finally click off and go off platforms that you're no longer go Google shopping. Those can actually happen on the platform, right? They're clunky today, they're done in text, but I think more and more of the shopping journey could be done inside the platform.
Therefore, this platform could garner a higher, high, much higher percentage. Of purchase transactions than I think any of those platforms that at the high level look similar, but ultimately weren't because you had to get the right shot with no more questions.
James Avery: Yep. No, it makes sense. It makes sense.
Especially, I think the, the Google shopping analogy is a great one because people today are [00:23:00] using Chad g BT as a replacement for search. Mm-hmm. But Google Shopping, you know, didn't have the level of success. I think everybody thought it would. But you're right, it was, it's a, it's a little, you know, tiny little product listing at the top of search.
It doesn't have any of that information. You can't ask the Google, Hey, I have a question about that tv. Does it have 17 HTMI ports? Or whatever you need. Uh, you know, things like that. That makes a lot of sense.
Matt Nichols: Yeah. I think the other thing that's gonna be interesting is the, the sort of the consumer data that's gonna be gathered as a result of.
People's shopping, genically, both on chat GBT, but also on these sites and like what is the, the sharing mechanism going to be between say a Sephora and Chat GBT and Chat GPT back to Sephora? 'cause each of those entities in a commerce perspective knows a lot of very interesting and sort of proprietary information.
Sephora knows all the things that. You know all the beauty products that someone has bought over the past five years and Chatt BT knows all of the [00:24:00] searches that she has done on everything else. And I think delivering the right commerce experience is gonna require sort of the bringing together of those two data sets, regardless of whether the consumer is shopping Ally on Sephora or shopping Ag Genically on chat, GBT.
And I think we're gonna see. Some interesting data sharing. Maybe it's like ranked catalogs based on a per, like a persona or a person such that both platforms can get sort of the benefit of the understanding of that consumer, um, in ways that are just more rich than I think you could do in a pre AI world.
So I think you'll see some interesting things happen there.
James Avery: Yeah, it's interesting. We haven't seen, uh, we haven't seen push from AI yet. Right? Mm-hmm. Like when you go to chatt t it's always, I'm starting a new conversation, I'm sharing something. Chatt BT is obviously learning that, uh, you know, even in each of your different little context windows, you might, you know, if you keep talking to it in the same window, it's learning more and more about what you're talking about.
I think one of the interesting things we haven't seen [00:25:00] is it, it doesn't, one wake up and say, Hey James, you asked me about this a week ago. How's that going? Right. Did you, did you end up booking that trip to, to Colorado or do you still, are you still looking at options? You know, 'cause I found a better option for you.
Right? Or, you asked me this skincare question and Sephora actually has a new, a new skincare cream from so and so that, that could be a good fit for you. Right? Like, we don't, we don't see that yet, but it's not a big leap to think that, you know, it wouldn't be hard to implement that from a, from a chat two BT standpoint.
Matt Nichols: Totally, totally.
James Avery: Now we have a new business model. We're gonna, we're gonna go create ai, push, uh, from, from the chat engines.
Matt Nichols: Yeah.
James Avery: But what else are you like, uh, you know, in the retail space, obviously AI is big, efficiency is big. Um, you know, what do you, what do you see, you know, if you look out 10 years for retail in general.
Like, what do you think the world, what do you think the world looks like?
Matt Nichols: Yeah, I think there's a bunch of interesting changes that are [00:26:00] out there. Like one topic that I've been sort of obsessed about for a while is like how supply chains work. Um, you know, I had the benefit of running a, basically an inventory free jewelry business.
Everything was made to order and like I saw the power of like operating with. Super low inventory and be able to react to trends, not have to put stuff on sale, et cetera. And I've sort of been obsessed about like what are the tools and capabilities to allow a broader set of retailers to have, maybe not that full experience, but get closer to that.
And so I've been thinking about like what she and Timo and Quince and all of these guys have done, which is. Fundamentally created a new business supply chain model that allows retailers to react to the change of which tastes are changing. Like in a way that similar way that what Zara and h and m did to Gap and J Crew 15 years ago.
Right. I think they're doing the same to, um, to [00:27:00] those big fast fashion players. I think it's not just fashion, it's everything. And you, can you think about where retail has gone? A lot of the innovation in retail has gone, like Amazon and to extent Walmart have been totally focused on how do I get products as close to the consumer as possible, right?
I got warehouses everywhere so I can ship fast, so I can get the consumer like efficiently, get a product to the consumer. I think that works for a small set of retailers. Um. I think there's a, weirdly a, a, a with the power of a shein and her Timor or quince is actually the opposite, which is like, how does products live as close to the manufacturer as possible?
And if your product lives as close to the manufacturer as possible, you can react really quickly. To resupply stopping resupply, et cetera, in a way that you can't in the other model. And I think it's what, what's allowed some of these retailers to grow really fast. So in a world where I think tastes are only gonna change at a increasing pace, I think changing of the supply chain model is gonna be really interesting.
And I think this will be, you know, impactful as we [00:28:00] talk sort of retail media and marketplace businesses. A lot of marketplace businesses are now looking at that model and saying, wow, I could actually expand my availability of products. Some of these, you know, brands to utilize this not model and not have to invest a huge amount of inventory bringing to the US to put it on a Walmart, on the Walmart marketplace, right?
I can sort of be much more nimble, react more quickly, and that enable them to sort of power the marketplaces and then ultimately drive retail media as some of those brands. Like a, you know, imagine a smaller version of a Windstar team or whatever. Being able to supply those marketplaces. So I think we're gonna see massive innovation, massive growth in that market as the big guys just get torn up by people who have this as a dedicated model.
So a little bit of a side on retail media, but it's the other thing I'm sort of the, the non-AI thing that I'm been obsessed with recently.
James Avery: Yeah. Well, based, based on the number of, of Quinn's, uh, packages that show up at my house, I think they're [00:29:00] doing very well. Uh,
Matt Nichols: so that they're doing in incredibly well.
And it's just, yeah, you know, it's probably, you look at it, but like they never had to put stuff on sale. Because they never, they never oversell, right? Yeah. They honestly, they undersell Sometimes you try to go buy like the sheets on quince and they're always like outta stock, et cetera, but, you know, I think they'll get better and better at that.
But I, I think it's just a, it's a fantastic model and it's just, it's hard to be a retailer with inventory. And you look at every earnings report from every big retailer, it's usually because they had too much inventory or not enough inventory. You know, at the places where consumers ready to buy 'em. So,
James Avery: I mean, what do you, what do you think about all the, I mean, 'cause it seems like the, the trend for the last couple years has been every retailer launching a marketplace.
Matt Nichols: Yep.
James Avery: Right? Like, do you, you know, obviously Amazon kind of led the way there, but now there's folks like Miracle that are turning this on for every other retailer. Do you think that becomes more prevalent or do you think that's just, uh, a trend that's happening for a while?
Matt Nichols: I think it will be more prevalent, honestly.
I mean, I think if you're big enough [00:30:00] to, to drive the audience to your site, ultimately someone came to your site 'cause they wanna purchase. I mean, yes, there are some people who just go to sites just to browse for fun, but like ultimately they're looking for something and conversion rates are already, are, are low just on every retailer, almost by definition.
And I think if you can bring augment. With third par augment, you are first party products with a relevant set of third party products that can live up to your brand reputation from a fulfillment, from a quality of product, et cetera. There's almost no downside, right?
James Avery: Yeah.
Matt Nichols: Um, so I think at a, it's a function of like how aggressive you go.
I think it depends on who the retailer is, but, um, I mean, there's a reason it's been such a powerhouse for growth for Amazon. Just 'cause it's a great model, right? You, you don't take the inventory, you're, you're relying on someone else and you can scale really quickly. So I, I think it'll, I think it'll only continue and I think it just technically it's getting easier and easier to be able to Yeah.
Yeah. Launch marketplaces.
James Avery: It's a good opportunity for [00:31:00] more retail media.
Matt Nichols: Totally. Yeah, exactly. Because those, it's those folks. You know, re retail media shines when it's a third party product on some retailer site. And it's all about you as that brand pushing your product to the top. And, you know, I don't know what percentage, I mean, it's like that's, it's what, it's what's driving Amazon's retail media business.
So, um, yeah, makes sense. That would drive everybody else's.
James Avery: What do you think, and uh, I guess last question. We've talked about a lot of stuff that's changing ai, you know, everybody else adopting marketplaces, kinda a lot of this innovation that's going on. Where do you think Amazon is in 10 years? Are you kind of buying or selling their continued dominance in this space?
Matt Nichols: It's hard to, like, Ima like, like I would, I'm still bullish on Amazon. Um, I, I, I think. They, they have a fulfillment model, fulfillment engine that I think is gonna be really hard for almost [00:32:00] anybody. All that maybe Walmart to compete with. And there is undeniably a huge number of products that like you want the quickly like, and having the delivery networks and the efficiency to deliver those products to the consumer as fast as possible will persist.
I think it's interesting to see where. They have been vocal about trying to block AI traffic, right? Yeah. So like, they, like, they, they don't want this trend to happen because they are, they perceive of themselves as the search destination for commerce and don't want to give up that ground. I think that makes a lot of sense.
Honestly, though, even if they were to open things up. I think consumers are still gonna wanna buy from Amazon in many cases, 'cause the for certain products because the efficiency, the deliverability, all those things. So they have some sort of unique advantages in fulfillment that I think can persist regardless of the change in how consumers find products.
But I just think that their first party sales. Someone coming on Amazon or one of their apps [00:33:00] will be so much more valuable to them than someone doing that and paying any kind of vig to chat GBT that they're gonna sort of resist for as long as humanly possible. And they'll probably bring some interesting AI to their experiences, argue that what they've brought so far is not that interesting yet.
But I'd be surprised if they don't bring something that's interesting on Amazon to get people to, you know, continue to shop there. Versus going to check ccpt. So, um, yeah,
James Avery: I mean, I can't tell you how many times I've seen, I've seen a product on Instagram or TikTok or somewhere, and then I just go search on Amazon and buy it from there.
Matt Nichols: Yes. Yes. '
James Avery: cause you know, your payment details are in it, you're comfortable, it's gonna get to your house. You have no concerns. Like, I think they, you know, I think even if you're buying it through chat DBT and you're given the option, you're still just gonna pick Amazon.
Matt Nichols: Yes. Oh yeah. My, but, but, but my, uh, I would say my ability to call Amazon has been both good and bad.
I, my, my first investment ever as a human, I invested a [00:34:00] thousand dollars in Amazon stock in 1998, and I, did you sell it? 15? I took it to $15,000. So I 15 x and I thought I was the smartest guy in the world. And then it tanked and I felt even smarter. And then unfortunately, I went back and looked at what that $1,000 would've been if I had kept it till today.
And I think it was. Two and a half million, so Yeah. Yeah. So, so, uh, well, who know, maybe you put that 15,000 wrong about Amazon.
James Avery: Yeah. Maybe you put that 15,000 in an even better investment. You know, you never know.
Matt Nichols: Exactly. So, but, um,
James Avery: awesome.
Matt Nichols: Yeah, no, we we're, we're, we're optimistic. I think there's just so many, like with this change from ai, it just creates more and more opportunities for those that are willing to move fast enough to react to it.
James Avery: Awesome. Well, if people want to, uh, get in touch or, or pitch you, where can they, where can they find you?
Matt Nichols: Just send me an email. I'm just, I'm Matt at Commerce vc. Easy to find me. So
James Avery: awesome. Well, thank you, Matt for coming on. This has been great.
Matt Nichols: Thanks, James.
James Avery: Thanks for tuning in [00:35:00] to Unlocking Retail Media.
If you enjoyed this episode, don't forget to subscribe and share this show with your network. We'll be back soon with more insights to help you navigate the future of retail media. See you next time.