August is over and so are summer vacations. That means tourists are flocking back home and I’m finally done explaining why “french fries” are rightfully called “chips” here in England. Well until next year that is.
Our top transcripts for the past month cover a wide range of items across the consumer sector and items we’ve covered before like the importance of loyalty programs and data collection in order to best tailor your products to an ever-changing consumer who is seeing their purse strings tighten.
I’ve split up our top transcripts into three different categories, giving AMZN (Amazon) one of their own as many of our experts referenced the e-retailer behemoth’s vertical integration. Take a look at what piqued our readers’ interests this last month and sign up for a free trial to our expert call transcript library.
Top Expert Call Transcripts of August 2022 by Engagement
Top Ten Expert Call Transcripts: AMZN
It’s no surprise that AMZN searches by themselves could make up their own category in our top transcripts for August. So here we just decided to break them down by showing you the top ten and giving you insight into two in particular.
What experts most pointed out was AMZN negotiating power, or, mainly their insane capacity to vertically integrate every aspect of their business. From the #3 AMZN transcript:
“One, Amazon owns the whole chain, last-mile. They own their own trucks. They own their own fleets. They own their own warehouses. That’s one. That’s super important. They’re never talking to FedEx or UPS or co-manufacturer as a warehouse. They own the whole thing. That helps a lot, for sure. It’s a big investment, big CapEx investment, but certainly, cuts their costs down because they own the thing.
There’s no way Amazon can house all that inventory. Think about all the SKUs they have on Amazon. There’s no way. They have certain thresholds and they have a model that I think they figured out financially when it makes the most sense to have someone ship through them, and when it makes the most sense for someone to ship it themselves. It’s really no different. They’ve just perfected the model.”
–Vice President and General Manager, The Clorox Company (Prior)
At a time when most companies are looking into cloud technology and migrating their information into that ethereal space, the #2 August AMZN expert notes that AMZN has consistently relied on making their own product, cutting out any middlemen and placing their bets on, well, themselves.
“Amazon does not like to use third-party providers for anything. That’s a very interesting thing that I learned. Amazon loves to write their own code. They like to build their own servers and storage, and they like their own processes. On a rare occasion, you will see third-party software in there. It’s a good thing that you’re in control because you can make yourself more efficient with your business processes. You can integrate your business processes with your applications because you have a lot more control than using a third party.”
–West Coast Infrastructure & Data Centers, Amazon Web Services (Prior)
Cloud technology has become a growing asset, and especially for startups that have the backing to do so.
“As long as there’s a startup starting, they’re going to go to the cloud. I think I mentioned earlier, there’s a direct correlation between investment in venture capital and startups to the cloud. VCs all have like these agreements that when they start up these things, they’re going to go to the cloud.
In good times, when there’s a lot of investment, you’re going to see that helping to drive. That’s going to continue to increase. The other component is, as I believe, only about 25% of all companies that are over $1 billion in revenue have moved to the cloud. There is so much opportunity out here. They haven’t even started the migration. They may have brought in virtualization in their data center or running a local cloud, let’s say with VMware Hypervisors and so forth.
I think the CIOs, the directors of IT are all understanding. When they move into the role, we’re going to go to the cloud. There’s a mind switch amongst management to say, “Let’s go to the cloud.” You’re going to find these large billion-dollar companies get these younger executives. I’d say younger like 50 years old or something like that. Those people are going to take that other 75% and really cut into that because they’re going to want to go to the cloud. If we have this conversation 10 years from now, I’m expecting adoption rates of over 50% of large companies. That’s what’s going to drive that double-digit growth.”
–Amazon Web Services – Director, West Coast Region Infrastructure & Data Centers (Prior)
Top Ten Expert Call Transcripts: Consumer Cyclical
Moving on to the hospitality and athleisure sectors, companies like Booking and Lululemon have found different ways to keep their customers coming back and expand their numbers.
A one-stop shop through discounts
I’ve written before about the importance of leveraging loyalty programs. That doesn’t mean spamming your customers or asking them to sign up. Rather, take it from BKNG on how to become a one-stop-shop for your customers needs through special offers that cuts out the middleman:
“I think it just became very clear for Booking that in order to keep their customers loyal and to keep coming back to them directly, you have to extend your offering to more than just accommodation and provide value for that. If someone wants to book an accommodation booking, you would then potentially offer a 10% discount on the car rental so they don’t go out there and go through the likes of Google, etc., search for a car rental deal, they’ve got a deal already with Booking.
That’s how you keep people in your ecosystem without leaving… It just becomes a recurring thing, you keep going back to Booking. The loyalty program works in such a way that once you make enough bookings, you unlock the genius program levels.”
–Head of Transport Partnerships, BKNG (Prior)
Fund innovation and talent
In another industry, LULU retains an innovative edge over other athleisure brands, according to a former head of design, especially by investing in the talent behind the clothes, the brain trust of what keeps the brand churning out cutting edge material.
“They’ve been an innovator in fabrications. That’s what really leads them in the market where it has the fabrics that they research and do and also, the fit…They’ve really built a very solid foundation where you have innovators in fit and technology and fabric and they have all of those people in place that have allowed that company to be very, very successful.
They allow the team that needs to build in innovation and they have enough people there. A lot of other companies will be very short staffed or they won’t put the right groundwork into the team that needs to develop fabric or that needs to fit the bras or that needs to design so they don’t even have maybe the talent in those positions where LULU does have the right talent in those positions.”
–Director of Technical Design, LULU (Prior)
Top Ten Expert Call Transcripts: Consumer Staples
Lastly, our other top 10 includes Pepsi and Costco and how these two established companies have adapted to changing consumer tastes.
Outsourcing matters but compliance matters more
For example, PEP has been able to capitalize on recent trends towards healthier foods despite their massive size due to what a former PEP director says comes from obtaining the necessary compliance for new items.
“It definitely has moved towards health and wellness. Indulgence is not cut off. Indulgence is there. There may be certain tweaks to indulgence as well to make it a little more, “healthier”. For example, you could have reduced sugar and you can have lower sugar. The type of preservatives. The answer is definitely a shift to health, and wellness. You had not seen getting rid of indulgence but maybe tweaks to indulgence formulations to make it a bit more healthier.
If you think about starting up a new company, you could have the idea, you could outsource R&D, you could outsource co-packing, and you could focus on distribution. The reason, in my opinion, why you have very few independents succeed is, first of all, from a governance perspective it is very expensive to make sure you have proper compliance. Without that sales capital expertise, you see failures.
Also to keep the brand in the market, also, sales. A lot of these smaller companies may be successful, but if it’s a niche product and you don’t see the volume that’s an issue. When you outsource basically all your operations it’s a lot cheaper, but you have less control over product quality. You have less control over supply chain issues. In a perfect world, on paper, when you map everything out it’s 100% faster, in my opinion, and less costly but to maintain it.”
–Director of Global Innovation and Commercialization, PEP (Prior)
Build it and they will come (or keep it and they will stay)
Finally, COST, where I still buy both a chicken bake and a pepperoni pizza after filling up on free samples. A former executive at the company points out the reason why I keep coming back – they keep items at the same price despite the economic condition as it’s already costly to remain a member at the big box store.
“We’re not going to raise membership fees until the world looks a lot different. That’s one of the things that tells you about our culture. Let’s go back to $1.50 hot dog. The rotisserie chicken. Would we like to raise the price on that? Yes, but we’re not going to because those are two signature items that, you can’t talk about the hot dog and soda and everybody doesn’t know that it is a $1.50 at Costco. You can’t talk about rotisserie chicken and not know. Those are two things in our culture that we do. We’re very sensitive to how the public might react to us taking high margins during a time where everybody’s wallet is tight.”
–Senior Regional Vice President, Costco Wholesale (Prior)
By keeping costs down, COST takes advantage of what is essentially an already loyal customer by staying in tune to the larger picture and chasing membership numbers instead of margins.
Take it from the former executive:
“When your customer is hurting, you have to be sensitive to that. We’re more in tune to driving the topline and keeping that healthy as opposed to driving margin. That was the biggest thing. We kept gas very, very tight too. If you look back profits in gas and profits in the building were pretty tight, and didn’t grow year over year like they have historically. We didn’t cut labor, which Wall Street didn’t like. There was a lot of layoffs that followed that scenario. Yeah, we didn’t cut labor so that made our expenses look high. When your comparative store sales are tight in the 2%-3%-4% range, it’s very hard to control your expenses. It looks like your expenses are higher but it did shrink the bottom line so that’s what we did.
Costco doesn’t shift its business model like some other retailers might. We understand that there are going to be dips and valleys we’re willing to take the hit on Wall Street knowing that in the long run it will come back. The other thing is, when you’re at the highest peak of the mountain, keep in mind, it’s okay to be out of stock at Costco. People get it. What I mean by that it also creates this, you’ve heard of the treasure hunt atmosphere. I’m trying to think what the right word is, but it’s the opportune time to buy because you might come back.
Look at how our members renew. The percentage is unheard of. It’s not cheap to shop at Costco. You’ve got to pay a membership fee, but you better come in with $200 in your pocket as well. We built that trust. Don’t take your girlfriend in there to shop unless you’re going to spend $200.”
–Senior Regional Vice President, Costco Wholesale (Prior)
Speaking of COST, I need to head there now to stock up on some fish and chips, and maybe more samples if I’m lucky!
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Read all posts written by Humberto J. Rocha
