This week on the Friday 15, Andy & Brian tackle:

– Is Amazon being unethical when they started selling on other marketplaces to gain intel?

– Do you need to bring in outsiders to help you revisit a digital strategy?

– How do you prioritize the changes you want to make to your digital strategy?

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Brian Beck: All right, welcome to the Friday 15. I’m with a very cool looking Andy Hoar just back from Miami. Well, hey everyone, this is Friday 15 with Master B2B. Thank y’all for joining us today. We got an exciting session today. Andy was on the road this week. He was in Miami. And I was in Charlotte, North Carolina. So what’s the report from the field?

Andy Hoar: Conference season is alive and kicking, you and I both know this is when we start to get hot and heavy in the next couple of months, big time.

Brian Beck: Yeah, I was impressed with the companies that were at the Industrial Supply Association. I heard an economist speak, which was really interesting about, the state of the economy and where we’re going, and this guy is predicting a depression in six years. I don’t know, I don’t know how these guys come up with this stuff, but anyway, maybe it’s true. (laughs) So, we’ll see, but hey, Friday 15 today and we got some exciting news and Andy let’s roll into this because we got some exciting stories to cover. Let’s get our little music on there. Here is some breaking news and you see this week, Inside Amazon Secret Operation To Gather Intel on Rivals, what the heck is this about, Andy, their staff went undercover on Walmart, eBay and other marketplaces as a third party seller called Big River and the mission was to scoop up info on pricing, logistics and other business practices. This sounds so Amazon. Andy.

Andy Hoar: This reads like a spy novel. Honestly, this is from a new book called, what’s it called, the Everything War by a Wall Street Journal reporter.. And it’s got hundreds and hundreds of former Amazon employees, partners, ecosystem members, et cetera, and kind of pieced all this together and determined that Amazon was actually participating in rival marketplaces under the auspices of Big River services. And they were Amazon employees, but they didn’t identify themselves that way. There were a bunch of lawyers involved, telling them exactly what they can and can’t do. So I know they got the legal side of this, right? But they probably got the moral and ethical side of it, very wrong. You’ve got to hear some of this stuff. So we all know about them copycatting products, right? Everybody does that and the brain sucks where they invite people in and pretend to want to invest in them and then steal all their best ideas and dump them by the side of the road. Every company does that. It’s not nice, but they do it. I’ve got some stuff written down there. They had a set of something called Project Curiosity where they went to rival events. They actually pumped a lot of products on Amazon’s own website to increase their seller status so they would qualify for pro status on eBay and Rakuten and other sites. So they could get pricing discounts and they were learning basically about the pricing methodologies of all these companies. The thing is they can actually technically do this, but they weren’t allowed to share this information internally. So they were getting proprietary information from companies like FedEx about pricing logistics and they were sharing that information within Amazon, which was where they made the big mistake, but I got to tell you, they had no intention of making money doing this. They were hiding who these people’s identities were, but you know how it got blown? Not only does this reporter find out about it, but LinkedIn, these people could not fake who they really were. So they were actually working for Amazon and in public filings, which they also can’t fake, they had to put the address of these fake companies. If you dig really deep into it, which some people did, when you got down to the last page, it would say corporate headquarters and would have Amazon’s address.

Brian Beck: Andy. And this is news why? Because in the world we live in today, it’s Amazon and they’re the behemoth. Retail’s been doing this stuff for years, dude.

Andy Hoar: Yeah, I know. I can tell you. I think there’s one big difference. Amazon is a marketplace. Amazon’s a retailer, but it’s also a marketplace and you can’t really put your thumb on the scale when these people are selling through your marketplace. It’s definitely borderline on Amazon. It’s terrible PR because third party sellers are now thinking, “Uh-huh, I always suspected this. They’re using our sites, but the operation, and you know what, end up blowing it. Not only did some of these public filings, but the employees themselves at Amazon started feeling really uncomfortable living like a, a dual life is like a Mossad agent and while working for Amazon.”

Brian Beck: This has been happening for a century. I can tell you stories from my retail days. We would send people with private label, on our private label bands, into other retailers, to trade shows, to, I mean, competitive research has been happening for thousands of years. This is not news. Distributors – one of the things we do at my Amazon company Enciba, we tell distributors to do this with Amazon, and guess what, they don’t even have to hide it. They just go launch in a program on Amazon, and they learn everything about how Amazon works.

Andy Hoar: Right, so are clients, but they’re not misrepresenting themselves as something they aren’t. Again, when you’re, when you’re the marketplace and the seller, that’s a real problem. But anyway, this is only the first because there was a story a couple days ago as well about another Amazon operation, and this is one of the B2C side, but again, they’re starting to see a pattern here, that’s been around for a while. Short story, Amazon hired an executive from Trader Joe’s, because they wanted to crack the code, because Trader Joe’s is not selling online. They wanted to create something called Wickedly Prime is what they called it. They were a food brand, and they thought, “Trader Joe’s has got this cult following. Let’s do it, right?” They didn’t know what it was, because they couldn’t access stuff online, so they thought, “Well, we’ll hire somebody.” They pressured her into sharing sales information, margin information. They put black bags covering the doors. They had all these Trader Joe’s foods, which is totally fine, but what ended up happening here was interesting. She refused to do some of this stuff, but one of her colleagues reported to the legal team at Amazon that this is something they shouldn’t be doing, and her boss got fired. So the guy who actually hired her to do this stuff and pressure her to do it, I think he got fired because they got caught, but so there is a bit of a moral, ethical line that they even, they won’t cross, but the story is laden with narratives about how Amazon does this all over the place.

Brian Beck: People never hire anybody from competitors. That never happens anywhere again.

Andy Hoar: Yeah, but you can hire people from competitors, but I lived in Silicon Valley there for 10 years, and if you took information from a company, – you probably do GLG and stuff like that, and they make you sign all these documents and you’re not sharing specific company information. There’s a line you can’t cross, general understanding, yes, but sharing specific data from a competitor with another company,

Brian Beck: Did you see that the boss got fired? So he crossed the line, okay, so some guy, some person crossed the line in Amazon, they got fired because they crossed the line, okay, fine. Look, people do this all the time, they hire from competitors, and then one of the reasons to do that is because they have their expertise. Now, yes, sure, there’s certain data you don’t, you can’t really really use.

Andy Hoar: But sharing margin information, that’s pretty bad.

Brian Beck: I don’t know, man, I think you’ve been living under a rock. This has happened forever. You want to put all of retail on trial because that’s right, you’ve been doing these things forever, indict them, okay. You want to go around the FTC, Andy?

Andy Hoar: Yeah, but you know, this makes a great point, is Amazon a retail or a marketplace? That’s another discussion.

Brian Beck: Here’s the topic for this week, what’s the best way to recalibrate your digital strategy? Last week we talked about the timing, so we did a poll here, Andy, and… This is the question, there’s not much debate about when, or what causes the revisiting. I mean, look at the data from our earlier poll last week, which said, “How often should B2B companies revisit their strategic plan for digital?” It was pretty clear. There’s a cadence here, once a quarter, or anytime, reading business signals, business changes happen, that signal will change. But if the when might be established, but the how to do it, right, Andy? That’s the piece that we wanted to come into this week.

Andy Hoar: It leads to loads of questions, like I can’t know how often I should do it, but how should I actually do it? How do I recalibrate if I discover that there are things that need to change? And so, we talked about this, this is done in exhaustive lists, but it’s at least these three questions. How do you know if your strategy’s working? I know that sounds like first-grader-ish and Crayola, but you’d be surprised how many companies don’t actually know if it’s working, or they can’t quantify it. So we’ll talk about that. Who should lead the review process? This is the insider versus outsider question. We actually did a poll on this. We’ll talk about that, too. And then, ultimately, great. So, you think you know what’s working, not working. You’ve got the right person in charge of leading the review. You know the time frame, the cadence, like we talked about, but how do you prioritize the changes? We have a little framework we’re gonna share about that one. So, let’s dig into each one of these.

Brian Beck: Right, so how do you know the strategy’s working, Andy? And some thoughts here. Reviewing objectives, right? Certainly, are you against where you are? You know, how have you performed? And if, you know, obviously, if you’re missing profit and sales goals, that’s a big piece. But what else here?

Andy Hoar: Well, do you have, do you even have goals? We talked about a company that doesn’t really have a goal. Number one, what are the objectives? And are you meeting them? That’s kind of a first pass. Second one, and this is the most important one is, you’ve got to measure your activities. Let’s say you have some goals, but how do you know how you’re performing against those goals? The big three have always been customer satisfaction, cost effectiveness, and then revenue. Are you generating, in particular, incremental revenue, not exclusively, but how you’re performing quantitative and qualitative, and it’s gotta be customer-centric. And the last one is, how do you compare your competitors? I’m not a big fan of benchmarking everything, because then I think you’re just the fastest turtle in the race. And I don’t think that’s really the way to go. I think it’s better to have independent objective standards that you’re measuring yourself against, but for all intents and purposes, you’ve got to measure yourself against your direct competitors, industry pure plays. You cannot exclude them. They may have a different model, they may have different metrics, but they’re competitors. I think there’s also best in class examples like Amazon, ultimately everybody has to compare themselves in terms of the customer experience to them. But do not forget, you can get great competitive intel from partners and customers. And if you’re Amazon apparently from everybody else.

Brian Beck: You wouldn’t have a project curiosity. You just have a “Project Crawling into a Cave and Hide.” Because you don’t want to go see what anyone else is doing, right? (laughing) Yeah, you’ve got to benchmark. You need to know how you stand against competitors, but ultimately you’re right. The customer needs to come first. So, I think it’s clear, if you have a plan, I think it’s clear to folks, when they are, whether the strategy’s working or not, but then when we get to the point of, you want to revisit the plan, who should lead it? This is a question that we have some debate on, right?

Andy Hoar: Yeah, we write on this a lot. Companies have a kind of default position that somebody internally should do it because they’re going to execute internally. And then frankly, other companies are just the opposite. We’re like, no, no, we don’t trust ourselves. We need an outside view. I can’t tell you how many times in my career, in the last 15 years at Forrester and Paradigm and Master B2B, when I’ve been asked to come in and talk to a company, and essentially tell them exactly what the person who hired me has already told them.But I’m told, they’ll listen to you, they won’t listen to me. And I’m like, this kind of begs a question about what’s wrong with this company, if they don’t respond to the right information. Especially if it’s backed by data. If you’re presenting real data, why do you need someone from the outside to come in and present the same data?

Brian Beck: The root of that is, and I’ve been asked the same question so many times, whether it’s B2B commerce, Amazon, whatever, it’s the strategies there. I think a lot of it has to do with a view across businesses, across industries, you and I, as sort of industry people, quote unquote experts, people will ask us to say those things because people we’re not vested, right? That’s the outside perspective and that’s why a consultant can be helpful – because you have that perspective. So I hear you, but you’re right. Is there some internal dysfunction around, well, is this guy just trying to get their thing going? I think self-interested, so the VP of e-commerce is just trying to get more investment for themselves around this particular issue. You know, that sort of thing, and advance their own interests at the cost of everyone else’s, right? Because you can only invest in so much.

Andy Hoar: Well, and there’s some pros and cons. Quickly, the insider knows the system and the people, – we have this on the screen for our podcast listeners – but there’s also kind of a question of will to change, you know? If you’re part of the problem, so to speak, what’re you going do, we feel that you’re the problem. There’s a bias against doing it. And the outsider can bring a broader perspective, isn’t beholden to the internal systems, but there’s also a steep learning curve because you don’t know the people, you don’t know the internal workings. We can question whether that’s valuable or is valuable as companies think it is, but it’s certainly important. You need to know how things can get done. So, but we did a poll on this. We’ll share in a moment to let people know what people thought, but this is the most important part. Okay. How do you prioritize this stuff? So let’s say you figured out what you’re good at, what you’re doing well, how you perform against your strategy. You’ve got the right persons or people involved in kind of executing on the change, but how do they actually decide what to do first? We think there are basically three things. Again, not an exhaustive list, but three things that everybody should map these priorities to. One is, what’s the return of investment timeframe? Is it short term? Is it long term? You can argue that one is not necessarily better than the other, but you need to figure that out because there’s a reality here on money. Second one is, what’s the size of the benefit? Is this a small win? Or is this a big win? Again, there’s value in both. And the last thing is, does this give you competitive differentiation? And so I’ll give you an example of one thing that we’ve talked about here is like better search. Let’s say you do this analysis, you figure out that your search on your site is just not up to snuff. It’s not good enough, objectively and subjectively. And so you say to yourself, okay, what’s the ROI timeframe on this? Well, it’s very quick because we’re going to see conversion rates go up immediately once this is in place. And we can do it on a monthly basis, kind of using discretionary funds as opposed to a big capital investment. So this is a win on ROI timeframe – Size of benefit is huge. I mean, revenue, incremental revenue, new markets, Big check. But last one might be in question though, because it could be that you’re not actually going to differentiate, you’re just going to achieve parity or even just catch up with everybody else. So maybe that’s a small check. So you look at it and go check, check, small check or maybe an X. Then you have to say, what’s the opportunity cost? If we do this, what could we do with a dollar instead? And there’s other stuff. You could have stuff that the benefit is big, the differentiation is big, but it’s gonna take forever to get the ROI on it. You gotta consider that too, right?

Brian Beck: Well, and I think you also have to think about the customer first in all of this. Andy, we just got a comment in from David Rolo, which thank you David for this comment. He says a couple questions to say, revisit the digital strategy. So I think, who are your staff for it? Can you elaborate how to optimize staffing strategies that might help increase the bottom line on this P&L? Andy, David raises an interesting point. You think about AI, right? And AI is a signal that you need to revisit your digital strategy. Great, great point to what David just mentioned. You know, listen, that has implications for cost to serve. That has an ROI in terms of number one. Does this mean that you can use a tool like AI to make your people more efficient, right? And when we looked at the polls and all the data that’s coming around around AI, the number one use case that, and the reason people are investing, I think it was a Forrester poll. So in fact, they found late last year, is efficiency of staff and delivery of projects and content and all the things that AI can help accelerate. So yes, I think staffing tools or changes in the market can lead to this kind of a change or shift in digital strategy and say, hey, it’s time to look at this. And it has these prioritization attributes here, these three we just described. It can impact all three of these, right? So yes, David, good question and comment. Thank you for that. I think that’s just another point you would tackle as it relates to what caused you and how to do it. Now, when you think about how to do it with an AI tool, you know, or AI approaches, you will need most likely some external help in that because there’s a lot of ways to skin the cat with that, there’s technology, there’s also approaches in how you do it and then there’s change management questions too, right?

Andy Hoar: Well, I’m just saying, staffing strategies is the third rail of all this stuff. I was on a panel the other day and somebody asked me, what is it that people are not doing that they should be doing based on what’s happening in the marketplace? And I’m like, re-thinking their model, Behr, the German company, just announced recently that they’re getting rid of a bunch of people in the middle management layer and they’re going with like little teams, four to five thousand teams, they’re going to organize around use cases and it’s a very interesting idea. It’s either going to be a smashing success or an abysmal failure, but it does kind of make you wonder, massive change in the market, customer interaction, et cetera, but nobody’s changed their organizational model in like a hundred years. And so, you know, maybe this is the last thing to touch because it’s the most controversial and it’s the one they least understand, but I completely agree, this is one that has been way below the radar for too long. Companies are not designed for the market we have today.