What can eCommerce brands learn from the video game industry ⎜ Carro ⎜ EP 206
Ryan Cramer: What's up, everyone? Welcome to my corner of the internet. I'm your host, Ryan Cramer, and this is Crossover Commerce, presented by PingPong Payments, the leading global payments provider, helping sellers keep more of their hard earned money. Hey, everyone. Welcome back to another episode of Crossover Commerce. I'm your host, Ryan Cramer, and this is my corner of the internet, where I bring you the best and brightest in the Amazon and e- commerce industry. That being said, this episode, like every one before this, and the other 204 episodes before us, is presented by PingPong Payments. PingPong Payments is helping sellers and entrepreneurs grow by sending funds internationally, whether sending or receiving, helping you save time, money, and effort. How are they doing that? Well, when you pay out your VAs, your suppliers, your manufacturers, you're paying fees all the time when it comes from your bank account. Every time that you're growing your business to get more supplies, or to pay out those virtual assistance, if you will, you don't want to pay those extra, exorbitant fees. That's why PingPong Payments helps you with that regards. If you're receiving funds from all over the world, whether it be direct to consumer, or on Amazon, helping receive those funds and not paying those transaction fees. Or those conversion fees, if you will, if you're receiving funds from all over the world. Check out PingPong Payments. It's free to use, and free to sign up. So, go to usa. pingpongx. com/ podcast to sign up for free, and catch all of our previous episodes that have gone on live. But speaking of live, if you are watching us on Facebook, LinkedIn, YouTube, or Twitter, thanks for joining us today on another episode. If this is your first time, or your 205th, we appreciate you tuning in just for a little bit of the time today. Because this is a live show, if you are watching us, you can actually ask your questions, let us know where you're watching from, live in the comment section below. If you're listening to us at a later time, feel free to ask your questions and just tag our guest. No problem there. We'll make sure that you get your questions answered, and put you in the right direction of how to contact them, as well. That being said, thank you for joining us in episode 205. I have a great lineup. I call it my D week, because every guest, it seems to start with the letter D, which is super funny and fascinating in how things work out. That's how 2022 is, already this year, it's how things work out. We're going to go with the flow. But, I'm really excited today, because of taking a little bit of a departure from just Amazon focus that we normally do on the show, and working more into the direct to consumer side of things. Our guest today, his name is David Perry, and he is from the company Carro, where he helped found it. It's now a new partnership network by over 30,000 Shopify brands. But, what's really cool is the background of where he previously comes, obviously from the gaming world, and selling a business to a little company called Sony PlayStation. You might have heard of them. Selling a company to them, and helped them grow their network, in that regard. So, we're going to be actually marrying the two, how gaming kind of pervades to e- commerce today, and what I like to call how e- commerce... Excuse me, the inaudible, what you can learn from e- commerce brands learning from the video game industry. So, that being said, I'm going to shut up and let our guest... Welcome onto our guest on Crossover Commerce for the first time, David Perry of Carro. David, thank you so much for helping out Crossover Commerce today.
David Perry: Thanks for inviting me. This is going to be fun. I've been looking forward to the conversation.
Ryan Cramer: Absolutely. Well, I kind of spoiled the surprise, obviously, about where you're coming from. But, give me a little bit background on yourself, before we jumped here on live. You were giving me your background, and your exciting nature of the business you're in. But, from your mouth to the public, what is who you are, and maybe how you arrived to where you are today?
David Perry: Well, I actually, I was kind of lucky. I got into the video game industry when things were really getting going in the early'80s. Not in the very, very start when they were coming up with a concept of what is a game.
Ryan Cramer: Right.
David Perry: But, in the early'80s, the games I was making were black and white. There was no music, it was beep beep beep, that kind of stuff. And so, crosstalk-
Ryan Cramer: The old Ataris, right?
David Perry: It was actually, I was in United Kingdom. So, I grew up in Northern Ireland. Imagine I'm in Ireland, and they have something called the Sinclair ZX 81. Over here, it was the Timex Sinclair 1000. It was this little 1K computer. 1K is so funny these days, like we wrote a whole game in that. And you know, today, I don't know, an Icon is 16K. So, it's kind of funny what we squeezed out of these machines. But, the concept was, in Ireland, there's a kind of a joke, which is, it only rained twice this week, once for three days, and once for four days. So, anything that you can do in inside is a good thing. Making games turned out to be a lot of fun for me. So, I got them published in magazines, and I didn't realize that you actually get paid to make games. So, I got to check in the mail, and I didn't even have a bank account to cash it into. I literally was like," Wait, hold on a minute. You can get paid to do this?" And so, I started making lots of games. In those days, games were being sold in some stores, but not many. A lot of them were in magazines and books. So, you had to type them in yourself. And so, I ended up getting published in books, and ended up doing my own book, at the time. And so, that seemed to be my journey. But then, I got offered a job to move to England, and actually join the game industry seriously. So, I was in high school. Imagine you're in high school, never completed my studies, and I had to make a decision to just get up and leave, and move to England. All my teachers were like," You've lost your mind. What the heck is the video game industry? It's the dumbest idea ever." It's like," It's not going to be around for long." It was tough, but I left, and I ended up making games. What I learned was that brands matter. And so, one of the first big games I got to work on was The Teenage Mutant Ninja Turtles. When you make a Teenage Mutant Ninja Turtles game, it goes straight to number one because of the branding.
Ryan Cramer: Right.
David Perry: It's a hit driven industry, much like movies and music. So, when you have a number one hit, then people want to work with you. And so, I found that, throughout my career, every time I got attached to brands, my career would take a huge step forward. And then, I could use that money to do some fun stuff that I wanted to do. And then, I would go back and do another branded game. When I was in England, I got offered the Terminator from Orion Pictures. It was kind of funny because, in the old days, they didn't really think about games, so there was no plan. It was the equivalent of a coffee cup to them." Do you want to put the Terminator on a coffee cup?"" Do you want to make a video game?" They're the same thing. So, we would say," Okay, we want to be the Terminator in the video game." And, and the movie studio was like," You can't have the rights to the Terminator. We don't have Arnold Schwarzenegger's signature to do that."
Ryan Cramer: Right.
David Perry: crosstalk wait, hold on, we're making the game and we can't have the Terminator in it? And then they said," We don't have the rights to Sarah Connor, either," Linda Hamilton. Back in those days, it just wasn't great, the sort of support of Hollywood. But we went ahead and made a game starring a guy that dies on the movie, Kyle Reese, which is a pretty funny example. But, ultimately, then things started to change, because the people that started to take control of Hollywood and the entertainment industry, grew up with video games. And so, they had played in arcades. They knew what Pacman was, and they actually started to really understand why games matter. We got offered Aladdin from Disney, at one point. Jeffrey Katzenberg, at the time, was the head of the studios. He basically gave us the full feature animation support of Disney. So, imagine you're making your video game, and you have Disney animation doing your animation. It's insane. And the music was all authentic, and everything. And so, that was sort of a turning point, I think, where our expectation was, we want more support. And so, to cut along story short, the last major one I did was the Matrix with the Wachowskis, and that was at peak Matrix. And that was crosstalk-
Ryan Cramer: Back in the'90s and early 2000s, yeah.
David Perry: Yeah, yeah. That was right when Reloaded was coming out, and it was a big deal. And so, I had fun with all of that, but I started to get interested in how the business was changing. So, video games was very much, you paid for your game, and you would play it. So, I call it the money wall. We would create a money wall. There'd be a certain amount of money you had to pay to play someone's game, let's call it$ 60 or$ 50. If you can't afford that, then you can't play the game. And, if you could afford way more than that, we don't care. Sometimes, people would buy a game or$ 60 or$50, and then play it for hundreds and hundreds of hours. Somebody else would buy the game, play it for one hour, and they'd both pay the same for it. None of it made any sense to me. What I was watching was, over in Asia, things were going free to play. This idea that you can pay what you can afford, and it was just fascinating to watch how much money they were generating from those games. And so, that business model was one that I wanted to learn more about, just to understand. I kept giving speeches about, you know, is anyone paying attention to what's going on in Asia? I flew out there, and, in a bunch of the meetings, they were like," You guys are the first Westerners to ever visit us." It was just really interesting to learn, but, ultimately, you can see that started to really impact the West, which is what I was trying to say. The game, like the Clash Royale and games like that, that are making literally billions of dollars, are using those models. But, business is definitely something that I was constantly trying to work out, where is this whole thing heading? I had this concept on how to sort of think forward. So, whatever industry you're in, you keep sort of asking yourself," What would I do you to beat that? Okay, if I did that, what would I do to beat that? If I did that, what would I do to beat that?" One of the problems that they were having in Asia was getting people to just get into the game as effortlessly as possible. Like, what's the lowest friction way to get a game running? And it turns out, in some games I would do demonstrations of, it was 37 clicks, you had to print something out, and give them your mother's maiden name. The audience would be laughing as I'm showing just how horrible the experience actually was. And so, our thought was, how could we get games to appear instantly? That required the cloud. And so, we started building servers, and doing deals to try to get access to the cloud at scale. We ended up getting games loading instantaneously, because they're already effectively running in the cloud. And so, that turned out to be really quite exciting. It became clear that... We had our sort of internal vision was everything, everywhere, instantly. If you can have movies everywhere, and music everywhere, why can't you have games? How many games do you want instantly? All of them. So, what would be the infrastructure that would allow that to occur? We built that, and then long story short, Sony ended up acquiring the company, and I'm building it into the PlayStation. Today, it's called PlayStation Now, and they have millions of people paying for that service. But, that idea of sort of making things more accessible, I still think, honestly, there should be a lot more of it. If I want to try out... We did a test with Adobe, to put Photoshop on adobe. com with one click, and it just appears. The full Adobe Photoshop. Why isn't everything like that today? It's kind of frustrating to me now. We've proved you can do it. And we've actually also proved that you can do it with no latency. So there's no... It feels just like it's running on your computer. And so, why isn't everything like that today is kind of surprising to me.
Ryan Cramer: There's so many different, fascinating things. And, I think today is even one of those days. Coming from the gaming industry over, I'm sure you are already aware, that Microsoft is buying the Call of Duty studio. Again, we're talking about how much money is out there in the gaming world looking to... In a form of commerce, I should say. The CEO announced to date that, I believe,$ 68.7 billion... That's billion with a B that they're buying, that deal, to expand into, again Metaverse, but also online gaming to bring it all in house, and to really showcase where the evolution of this industry is going. But, like you said, it's acquiring, it's building out this infrastructure. There's not a, just getting more to put into your hardware, and to run it, and to download the amount of data it is to run these video games. And it's really fascinating that Nintendo's working on it. How to at have scale, build beautiful games, now, and to get in front of the consumers without these barriers, if you will. That's where I'm seeing this trend that you're talking about, David, was all these different kinds of problems that you're having is, how do we take away those barriers? How do we put it in front of people quicker, and make that instant consumership happen, at a moment's notice, when they want to opt into that service, that game, that platform? And I'm assuming that's where that jump to e- commerce made a natural fit for you. Am I correct?
David Perry: Yeah. Yeah. It's funny because we proved all kinds of things. We put World of Warcraft on an iPad, and I immediately got a cease desist from Blizzard. Like," What are you thinking?" But yeah, no, I know all those guys, they've been in the industry forever. Bobby Kotick, the CEO, is going to be so wealthy. I'm, interested to see if he gets into building rockets with Elon Musk and Jeff Bezos. Is that his next thing? I don't know. Richard Branson's doing it, right?
Ryan Cramer: It's the next thing, it seems like, nowadays.
David Perry: Yeah.
Ryan Cramer: Well, that thing, too, with the acquisition. Is that something that... I'm curious, from the video game side. Is that something that had to be done in order to, instead of buying the rights and licensing, I'm assuming that's where the natural business comes into play. The licensing happens, and this explosion of licensing for these games of, we want it available on our platform. It just makes natural more business sense, in that regards, to buy it, acquire it, build in- house, and then license from internally? Is that Microsoft's plan? I'm curious to hear your thoughts, in that regards. Why are more companies bringing it more in- house?
David Perry: There's an interesting sort of concept, which is, if you're a mega company, and if you give the market good news that you just made a smart investment, and the value of your company moves up at all, just at all, you get the acquisition for free. Because, as your value moves up even one percent, the amount of money that covers... Because, I believe their market cap, today, is$ 2. 3 trillion. Remember that, right? When you're dealing with a really big face like that, these numbers can get out of control. The numbers get astronomical. I used to think 8 trillion for Skype was a lot, but 69... Or, sorry, eight billion, and 69 billion is a lot. But, in reality, there's a bit of a chess game going on. If you're wanting to control the content that goes in your platform, or you're at all concerned that content may get bought by somebody else, sometimes it's safer just to get it under your control. That the stock market, as you know, has grown a lot over the last years. And so, using some of that sort of enterprise value that Microsoft has, to control and capture assets like Activision, to me seems pretty damn smart. The question is, who's going to get Electronic Arts, right?
Ryan Cramer: That's true. Yeah. And EA, obviously, with a bunch of different... I'm trying to think of the whole library that they have at their disposal, which is, again, Madden.
David Perry: Oh, yeah.
Ryan Cramer: You have the whole sporting game community. I don't think... FIFA might be under the umbrella, which is a huge, international game. But, again, I think you're... How I see them, and, again, outside of the gaming world, I look at cross- functionality of where commerce is happening, where business... And that's what we talk about on the show all the time is, where people are spending their money, their effort, where business is happening. You see it in the likes of Twitch, which is owned, obviously, by Amazon. Amazon saw that as a live streaming platform worth acquiring. How live streaming is going to be, the future of commerce. When you have people that are playing, and their fans are making donations through different platforms. They're getting sponsors from a number of platforms. E- gaming community continues to grow in that context. How does that, naturally, in your mind, simply after you sold your business to Sony. What was that transition like to the e- commerce world? Was it it surprising? Was it," Hey, there's a lot more opportunity." What was that natural evolution from gaming over to e- commerce? Because it not totally the same, but very similar parallels, if that makes sense.
David Perry: Yeah. So, imagine I'm in the game industry for 30 years, and I bought and sold multiple companies, but my goal was to retire, and I built an unbelievable man cave. It's got all this CNC, woodworking, 3D printing, welding, photography studio, the whole thing.
Ryan Cramer: Send me pictures, man. That sounds awesome.
David Perry: Yeah, it's off the chart. So, I built this space, and it took a lot of effort. It's so funny, it's full of lumber, and the cost of lumber's gone up so much. It's hilarious. It's probably a good investment, but long story short, I got this great space. And, I found myself when I was... I got into photography, and I took a lot of courses with great photographers, trying to learn... By the way, I love that, when you get some guy who's been doing something for 30 years, and then they spend three or four days with you and download 30 years of their best tips. I can't believe... There's so many people out there willing to do that, and share their information. That's so valuable. So, I love that, but I was doing photography, and I found, in general, people didn't really care about my pictures. But, whenever I took photos of social media influencers, then people would go kind of crazy, because they loved this person. There was this sort of a pivotal thing for me, is I went to see Ed Sheeran in concert at the Rose Bowl in Los Angeles, and it's a huge, huge stadium. When you look around, the people are tiny. It's just a sea of people. I'm watching this going," Wow, look how powerful this guy is. He can get this many people to give him attention." Then I was in my studio one day, and I had some influencers, and I sort of did a quick count of how many followers they have, and they had 15 million between them. And I'm like," The Rose Bowl is about 60,000 people, and you can only do those concerts once in a while. These kids here have 15 million followers that they speak to daily." know, so I started to ask them, you know, what's it like being an influencer? And they said," Well, it's actually not that great, because we're constantly getting harassed by brands that we have no idea who they are. They want us to tell our audience that they're the best candles ever, but I don't even use candles. And so, it's kind of frustrating." And so, you can imagine I'm listening, going,"There's got to be a way to connect them to the brands that they like. There's got to be a way to do that." Then I was helping students in an entrepreneurial class. I was the investor, and there was an entrepreneur there. His name's Jason Goldberg. We ended up in this room. He was talking about influencers, and he built an app to try to help brands and influencers find each other. Not in the form of hassling each other, like DMing and then troubling them. They would actually sort of choose-
Ryan Cramer: More like a matchmaking solution, yeah.
David Perry: Yeah, like a dating app for influencers and brands. I was very interested in that. And so, we ended up having a separate meeting and he ended up saying," Would you like to be the CEO? And let's really go for this." And so, we started building the technology. The concept was literally just, is there some way that we can help the brands work out which influencers like their company? And we built tech to do that. You wouldn't be surprised, but there's brands out there with thousands and thousands of influencers that are totally into their brand. We then put them together. The response from the influencer is," Oh my God, I love your brand. I've been buying your products for years," right? So, that, to us, felt like a very authentic and real thing to do, to try to authentically put the influencers and the brands together. As you know, attention is the most expensive thing for brands to try... I mean, I've never met a brand that said," Please, no more attention. We've got far too much attention." That never happens. So, they're constantly paying Facebook and Google for traffic, but everyone's paying Facebook and Google for the same traffic. All these brands are just paying over and over and over to get the clicks to come to their website. So, we started to think about, with our network, which is currently around 30,000 brands. It's a lot. We started to look at how much traffic they have, anyway. So, what is their combined traffic in it? It fluctuates between 300 to 400 million visitors every month. And so, we're like," Well, hold on, if you have 300 or 400 million visitors a month, why don't we find a way for them to share that with each other?" Because, if they do, the efficiency in the network would become unbelievable. And so, we started to think about, well, what could they do with each other? One of the things that we thought would be important would be quite cross selling. Cross- selling simply means that their inventory becomes your inventory. So, today, if you're a bicycle store and you're selling helmets. Or, let's say you're not selling helmets, then that's bad, because you're missing out on the helmet sale. They're going to go buy that somewhere else. They'll open up another tab and go buy that helmet. But, in this scenario, we're saying," Well, why don't you partner with an actual helmet company, and we'll take all their helmets and put them in your store?" So, what happens is, then you're not actually having to guess which helmets are going to sell. You're not just choosing two or three color and buying certain... The obvious sizes. Now, you have all the sizes and all the colors, and you don't have to pay for any of this inventory, because it's just data. We just take the data, and put it into your store, and now you can sell those helmets. And so, that's an interesting concept, because now you've got virtual wholesale.
Ryan Cramer: Right.
David Perry: Virtual inventory. Everything's instant. You can have all the helmets in all the colors today. You don't have to shift things around. Moving products around, from one warehouse to another. Storing them, insuring them, freight. It's all wasted margin, and margin is everything. So, you know, if we can help you get attention, and take away your actual cost of goods, meaning you're not having to pay upfront for anything. And then you're also saving margin on all this transferring and storage. It means you can start trying products. You can experiment, you can grow your brand. And, of course, the bike company that got the helmets comes back and says," Do you have gloves? Do you have bike locks. Do you have lights? Do you have t- shirts?" Of course we do. They can have all of those without any cost. And so, that network efficiency, and, to me, that's really... You can imagine that, to me, is exciting.
Ryan Cramer: Right.
David Perry: So, what we have to do though, is we have to explain to brands that... It's not obvious to them, but brands are actually taste makers, and they don't see it that way. So, I'll talk to a brand who makes frozen baby food, and they think they're in the frozen baby food business. They can't can't imagine anything other than just another flavor of baby food, right? That's their world, that's who they are, and they just can't imagine. But, in reality, brands are becoming, in a way, influencers, too. When people look at the picture of some baby on some cool chair with a nice bib on, eating the food with cool cutlery, you can bet there's mothers going," What's that chair called? What brand is that? That's the coolest chair I've ever seen." Or," I love that bib, that bib's amazing. I wonder." And off they go on Amazon, and start trying to find the bib, right? And it's like, guys, you need to start realizing that you're creating these experiences that people want for their kids. I saw this lady who did spaghetti and, again, singular track. We just make spaghetti, that's it, and we do different kinds of spaghetti. But, her website had the most beautiful pictures of how the spaghetti meals were being presented. That's the lifestyle people want. They want that experience. I want that dinner. It's not just the spaghetti. I want that whole... you know, the way she laid her plates, and the cutlery, and everything else. But, they never ever think of selling anything other than just the one thing they make. And so, that's something that we're trying to break through to brands. And then, there's another side, which is kind of interesting, is the influencer piece, is stunningly, and this is shocking, that 99% of influencers don't know who they influence. That's like," Hold on, wait, what?" Because a lot of them don't have managers, so therefore they're not really thinking about this. They're sending affiliate clicks, and they've been doing it for years, to different places, but they don't actually have any customers. So, they are, effectively, the retailer because they're actually selling things. They're getting someone to desire it, want it, and actually purchase it. But the purchase happens somewhere else, and someone else keeps the custom, and they've been doing it for years. Som imagine you're amazing at selling electric bikes, and you've been sending all the clicks somewhere else. If you have your own store, and you put the electric bikes in your store, now they're your customers, and every single sale is your customer. Then you can go to the next electric bike company and say," Look, I have a hundred thousand people that have bought electric bikes based on my recommendation."
Ryan Cramer: On the website, yeah, exactly.
David Perry: "Wouldyou like to be in my store?" And they will fight. They will literally fight other electric bike companies to be the one that you recommend in your store. And so, this is really the future of influencing, and it's something that, of course, the biggest influences do this. Of course they all, the Kim Kardashians, and everyone. They have their own customers, and they're building a really... You know, besides their own brand, they're building real enterprise value in the assets that they're generating, and, again, you have to have customers. And so, what I'm finding... I mean, again, I'm new to e- commerce, so who am I to be sort of pointing and saying," There's room for operation here," but I see nothing but opportunity. Every direction that I look in e- commerce, there's opportunity. And so, helping the influencers is, without doubt, a huge opportunity, because these people want to do this professionally for the rest of their lives. They absolutely love what they do, but it's just not that easy for them to build stores, and to do any of that stuff. That's where Carro can definitely help. But, at the moment, our big focus is this cross- selling piece, because, during COVID, brands really needed as much revenue as they could generate, because they were getting a lot of returns from retail. So, retail just shut down. They started getting sent stuff back, and they needed to really rev up their online business. And so, that's why we put all of our engineering team on trying to get the cross- selling piece working as quickly as possible. But, you know, the continued operations that we're doing, and all the features we're adding, we're constantly thinking about how we can help with attention and sales. Those are the two key pieces that I think brands really appreciate the help with.
Ryan Cramer: There's so many great things that I can take from that, and see where you guys are really bringing true value to businesses. Not just on Amazon, but off of Amazon. This reminds me a lot of the frequently bought by section on an Amazon functionality. But you're taking it as a printed space approach of," Hey, we have space where you can put your products on our visibility of our website." That purchase, I'm Assuming, is shared between Carro, the website, and then the person who has the inventory. So, it makes sense amongst all three of those platforms, and maybe there's a fourth or fifth one that I'm not talk thinking about right now. But, just the concept of, like you said, building up traffic where the purchase is being made, empowering that influencer, instead of sending off- site to Amazon, or to a different website. Or, not utilizing that own resource, that influence, if you will, to build and stay within their own ecosystem. Super fascinating. But then also, pointing in that direction, that marketplace value of," Hey, let's work and cross collaborate together. I didn't know that brand was looking for influence," or," I love that product. Let me speak on that behalf." I think it's a very cumbersome approach. I think a lot of people in brands are looking for, nowadays, of finding the microinfluencers where it doesn't cost a lot of," Hey, love your lifestyle photography, love the vision, the brand that you're creating. Just wanted to send a product your way with no strings attached, and really just try to get in front of you, to see if that was something that you'd be interested in." We've had previous podcasts episodes of, I believe Kinship of," Hey, almost sow your field, basically, with different kinds of seeds, and cultivate what grows," Obviously from that sowing approach. But, this is more a tactical approach. I think that stitching those companies and those influencers together in more of a tech approach, instead of all the general process, and then the growing in the field process. Which is super fascinating, at least for myself. Where does this go, David? For this, I think that you're building that true network of, don't be many and by yourself be, be many, but together, in a marketplace. Is that where this continues to it, go in your mind? Or where does this evolve to?
David Perry: Yeah, our tagline is simple." Sell more together." Together is the most important piece of this. And with influencers today, when they send those affiliate clicks off somewhere, they get paid, like Amazon will, will pay them maybe three to five percent, depending on the product category that they're in. That's not great. If they're the actual retailer, they generally get around 30% plus for selling things. That's 10 times what they earn today, just by repositioning who they are. Like," I'm actually going to have my own store, and you can partner with me. Now I'm a retailer, so I want the retailer cut. I am not an ambassador that's just sending you all my customers." That's not a great deal for influencers. So, that's one piece of it. Another one, which I think is interesting, is Amazon FBA store owners, because those people are killing it. They're doing a great job. They've really worked out how to use the Amazon platform to make money. They've found the niches. They've found the best ways to source products, modify products, import products. They've done all this work, but at the of the day, my concern for them is, in a way, they're getting that influencer treatment on Amazon. So, they're actually, in a way, I would call them FBA influencers, because they're somehow building and trying to get these brands going on Amazon. But, Amazon owns all the customers. And so, at the end of the day, Amazon is going to decide, ultimately, how you do and how you perform on their platform. I had a slide, which I used to have in my presentation, which was just something that kind of shocked me, honestly, was I saw... You know when you have a piece of leather, and you want to stamp a letter A into it? You have a little leather stamp that you hit with a hammer, or you press it in?
Ryan Cramer: Right.
David Perry: Amazon has leather stamps, the Amazon leather stamps. They've actually got to that category. And so, what I would say to people is, if they're already at leather stamps, how safe do you feel in your category, that they're not going to come and build a private label and enter your space? When they do, Amazon comes in with the lower cost product, and they are able to make that product based upon the reviews that are for all the competing products. And so, at the end of the day, they're making good quality products. They're very low price, and they enter your category. And so, at some point, the thought was, well, imagine you decided, well, my sales have dramatically reduced. I'm going to go and build my own brand off Amazon. Well, you know what, you're going to be starting on the cold internet with no customers, and you're going to have to start buying your traffic just like everybody else, and try to build from scratch. And so, that was one of the concepts with Carro, as well. Is there a way we can build this collective or network of brands, that would welcome in new brands as they get started? And so, that's something that we've been putting a lot of thought in, in how to do that. This is just ongoing tech that we'll be building over the next 12 months. But the idea is to sort of have this place where other people, as they realize," Hmm, I'd really like to own my own customers. I think my company's going to be more valuable in the long run if I have built my own entity, instead of being..." Being a store on Etsy is fantastic, but you actually don't own those customers. So, the enterprise value of your store will never be what it could be if you were Nike or adidas, and actually building your own customer bases. Actually, that's not the best example, because they do go through retail a lot. You get my point.
Ryan Cramer: Right.
David Perry: The Fashion Novas, and people like that, are actually really killing it online.
Ryan Cramer: Right.
David Perry: Those kind of people.
Ryan Cramer: There's a great point you made, in that regards, of you don't own your customer if you're on Amazon. It's a marketplace that you're renting space, you're standing out to a customer, the transaction happens. You do get a kickback, but, again, the fees go to Amazon. You don't get the customer... In that regards to the information that you once used to be able to capture. They've gone away with it. I know they're trying to build more towards brands, offering live streaming, offering follow my brand. Really want people to start building up that functionality of it. But, again, I think the point of which, every Amazon seller, third party seller, would want to do is be omnichannel. Be not dependent on one piece of this revenue stream. We saw it in early 2020, as people were selling, they were not allowed to put inventory into inaudible warehousing. Again, pros and cons to being a third party seller on Amazon, as we all know. But, in this facet, I like the notion of what a lot of third party brands are very cautious of, and very... It's hard to conceptualize of how do I build traffic from zero, to where I need to be, to be competitive, to grow, to build that out? I think that half step, it sounds like that's what Carro's really shooting for, is let us not help you go from zero to Amazon numbers. It's," Hey, we can introduce your products quickly into all of our marketplaces of people who might, again, opt into your brains and products, and you can tap into those audiences." Like you said, it's a collective of hundreds of millions of people. That's amazing, but I'm assuming you want to still target people, still go after that subset, if you will, and really collaborate on that approach. So, in that regards, is that really the model? Instead people go on Amazon, it's easy to ship and get your products in two days. Is there other benefits that we're not really talking about, in terms of what Carro and kind of this network that is building out, in that regards?
David Perry: Yeah. I mean, step one is just that general concept of you want to own your own customers. I do think omnichannel, though, is important, so don't get me wrong. I think different ways to sell, and trying to think about how you can sell everywhere, is still important. So, social media, social commerce. Directly and in places like Amazon. It's all cool. They're all different channels for sales. But, I think that the fundamental center of the universe for brands and for influencers, who, frankly, are brands. Brands seem to think that influencers are billboards. They're not billboards, they're brands. Very commonly, an influencer's brand is bigger than the brand that's trying to book them. So, you'll get some belt company bossing around an influencer that's much bigger than the belt company. And so, once they start to realize they're actually working with other brands, then you can see how that starts to become more of a real network, because they're all, in a way, equal, they all can cross sell with each other, and collaborate in different ways. You can choose to be a supplier, a retailer, or both. You can bring in your own products. You can augment with extra products. You can even add services. So, the kind of things that we're working on is, we've launched bundles, now. So, you can create a bundle of products, from different brands, and even put a celebrity name on it. You could have Mariah Carey's skincare bundle. She could choose whatever her skincare regime is, and then that becomes a whole new SKU that can be pushed out into the network. You could create an experience. You could have an emergency call with a vet, for example. That could be a new SKU that your company sells. And then, you push it out into all the pet stores. And now, all those pet stores can sell an emergency call with a vet. And so, the amount of room for innovation in bundles, experiences, and experiences plus products in bundles, I think is interesting. It's kind of the Wild West, you know. When you really start thinking about all the possibilities of that, it gets kind of interesting. The next thing, which we also are testing right now, is network- based upsells. So, today, when you buy products, you'll see things recommended that are also in that store. So, very commonly, you'll buy an electric shaver, and it'll recommend electric toothbrush, because that's what they make or sell. That turns out, mathematically, not to be the highest converting thing that you can put with a shaver. And so, in the electric toothbrush example, what we found, on that one, is the highest converting thing you can put with an electric toothbrush is Kendall Jenner's toothpaste, from Moon Oral Care. It's a very, very easy add to cart. And so, that kind of concept of... What that becomes is network- based upsell. That's something that we've invested into. We believe very strongly in, why would you put something that doesn't convert as well as something that could convert much higher? Even if it's not your own product, but it's part of the network. Then, obviously, you'll get more sales, which increases your average order value. And also, by having more products... So, if you sell bikes, but now you have helmets, gloves, locks, scarfs, and everything else, now you have more products going into the cart, on average. So, your average order value goes up. In the world of e- commerce, average order value is what on unlocks your marketing team. That literally is your unlock, for your own marketing, is how much you... For each person that you can get to come and be a customer, how much money do they leave behind? If you can increase that at no cost, because you're not actually having to pay for all this inventory up front, you can see why having that inventory there for them to choose and add to cart, is really quite important. We're embracing the brands that think this way, because the more they add, the more they become that sort of full brand where it's more... The SEO on their store will improve, because they have other brands within their brand, if you know what I mean? Then, ultimately, if something sells really well. Imagine you're a bike store and the helmets are just... You're almost getting a one to one match with your sales. Then, at some point, you may want to make your own helmet, and maybe even do a white label deal, or a gray label deal, with the helmet company you've been working with, so that you can get your branding on that helmet. By all means. We're not in any way some kind of weird agent, or something like that. We're not trying to keep people apart. If they want to do deals together, then it's fantastic. But, we're all of the wiring to make it possible. That's really the point.
Ryan Cramer: That's amazing. Well, I guess a couple other things... Which, that sounds fantastic. My goal is to help eliminate any sort of questions. I guess the one thing I thought, David of, I hear consistently. They have to have a warehouse, or have their inventory on hand, correct, of, if I'm an Amazon seller, and all mine go directly to a fulfillment by Amazon warehouse. Is there a way to work with Carro, or is there a way to collaborate, or pull from the inventory? Or, does one have to have inventory on hand, in a warehouse, ready to ship, to be a third party, or their own shipping service?
David Perry: So, let's say you're the bike company, and you just added helmets. The helmets are actually just the metadata coming from the helmet company. When the order happens, what we actually do is, we send the... The bike company will accept the money for the helmet, but our tech immediately pays the wholesaler, or the helmet company, the wholesale price for that helmet. And then, they drop the helmet into the mail, to be fulfilled. So, that efficiency of it, the helmet never moved until the sale occurred, is the most efficient way to do it. And then, what's going to happen long- term is, we're currently on the Shopify platform. What's going to happen is, Shopify's investing into warehousing, so that they are trying to get closer to the customers wherever they are. And they're using AI to determine where to place the products. So, in the future, where's it all going? In the future, someday, the helmet and the gloves, even though they're from separate companies, can be placed in the same box and delivered next day, that improves efficiency, yet again. And so, for now, the way it works is that the helmet company will be paid instantaneously, and then they ship the product.
Ryan Cramer: Got you.
David Perry: Again, the brands, in a way, they're curating and choosing who they want to work with, and which partners they really like. What we also see is them tending to invite other brands onto our platform. So, we'll see a brand join, and they already know 10 brands they want to work with, but they're not on our platform, so they invite all 10 in, and we love that. You can imagine, that's just the best, when that happens. But, there's no reason any... These people tend to already know who they want to work with, like what products they're excited about, and what they would want to have in their store.
Ryan Cramer: So, would an ideal... I'm trying to think, too, because there's a lot of companies who are these brand advocates. The next thing I start to think about of, at scale, not just one company with one product. I'm thinking one company brand group, if you will, that's acquiring brands consistently, and they want to be in all these places. I would next think that you're trying to get in front of those people who have all these different kinds of products, that can be a resource to tap into, and be available. Like I said, if they're selling on Amazon, but they want to jump into the DSE market. If they have those warehousing... They have this network, if you will, of big sellers on the space, and Amazon jumping to direct to consumership, this is that way to kind of half step in there. Is that another way to like resource for them to reach out? For example, if you're new to the e- commerce space, like a Thrasio, a Perch, or a company of which brand aggregation is happening, they're buying those brands on Amazon or D2C companies, and now they're in charge of those and growing those companies. This way, I would think that you would be able to tap into that network, and kind of utilize a resource like Carro. Is that fair to say? Is that something that would be a good fit for those companies? Or is that more wholesaler?
David Perry: I guess-
Ryan Cramer: Yeah.
David Perry: They're under a lot of pressure, because there's about 60 companies buying and rolling up individual stores right now.
Ryan Cramer: Mm- hmm(affirmative).
David Perry: Then, the morning after, they have to actually grow those brands. And so, the two things that they want more of is more attention to more sales, right? More attention, more sales, can never have enough. And so, that's what we are all about. You can imagine, those companies are reaching out. They have two different new needs. One is, can you just help us grow these brands? And the other one is, can you get them to cross sell with each other? Because, sometimes, they roll out multiple brands that are in the same category. So, they're actually trying to build a category leader. So, imagine you buy five different brands that are all in a specific space of kitchenware or something. Then, they can have them cross sell with each other, and try to grow. Ultimately, they all have different strategies, but the net result is, they all want more attention and more sales, because that's what they're effectively trying to do for their investors, is by buying these brands, putting them together, they're going to increase network efficiency, and optimize these companies, so they're not all reinventing the wheel their own way. And, yeah, we're more than happy to help, and you can imagine that those companies are all reaching out. The same with companies reaching out that are super interested in investing into brands. So, that's another thing that we get asked quite a bit is, are there any brands in your network you think we should invest into, or acquire? And so, we sort of keep an eye on brands. The ones that seem to have a lot of energy, that people seem to really want to work with, those would be the ones that we would recommend. Like," You should seriously look at this company, they're killing it." But, overall, I think the core piece is just, it's addictive. Can we get more attention to more sales plays?
Ryan Cramer: Right, yeah, yeah.
David Perry: And at the end of the day, there's one other piece, which is net profit. That's very important, as well. If you are... Sadly, it's possible to sell product online, by the time you've taken all of your costs, the warehouses, the shipping, and all rest. When you've, when you've pulled out all of the costs for logistics and everything. Employees, and et cetera, et cetera, their margins get crushed. So, it looked good, they're getting sales, but by the time they look at their net profit, it's not great. Sometimes it's negative. And so, the idea of cross selling means that, when you sell that product, you're getting paid with no cost of goods for that. You're effectively getting the retailer cut. The retailer cut just goes directly to your net profit. So, the joke I have with brands is, how much more profit would you like? Right?
Ryan Cramer: crosstalk.
David Perry: How much do you want to add? It's unburdened, so how much would you like? It's kind of a fun conversation.
Ryan Cramer: No, that's fascinating. I would agree with Marie, who chimed in here on Facebook. He goes," Great topic." For those who are listening, I think a lot of buzz is creating... I think there's a lot of applications here, and I think that's not a bad thing. I think that's why you've built this company. And, like you said, there's a market that's being served in the different ways that they're not being served. For example, Amazon not being able to serve people, and build out customer bases and own that data. You're helping stitch those companies together, and start to build out lists, branding, and just audience, in that regard. I think that's what everyone wants to be in as many places at once, in a grand scheme of things, without the one to one interaction, like me talking to you of," Hey, would you want to work with my brand?" And go to the next person. That's not time that people have the ability to achieve that. You're kind of that, again, take everything and pull it all together so it's a lot quicker interaction, in that regards. Which is super awesome and fascinating, in my mind, David. I think, for you guys, in 2022, what's that vision like? What's the next step? In the last couple of minutes I have with you here, what's that next focus and achievement that you're working on, right now?
David Perry: I think the key thing is just, coming from the game industry to e- commerce, I think that the whole point is that this is such a wonderful, exciting, open space, and there's so much room to innovate. Our thoughts are very much around the network, and how can we help the community help the community? So, you're going to see that's putting more and more effort into that. What I realized... I was on the board of the Game Developers Conference for 10 years, and at our Game Developer Conference, which just grew continuously, was that people love to share. You doing this podcast is a good example. This something that you're putting effort into, but what you're actually doing is helping sort of spread ideas. It's incredibly valuable. I used to love going to the Ted Conference, because it was literally, that was the actual goal of the conference, was just to spread ideas. And so, I want to try to help our community do that. Because someone in our community is an absolute expert on getting your shipping costs down. Someone is a dead eye at getting the best product photography at the lowest cost. Someone else is some expert in selling overseas. We want to sort of unlock that, and let those people help each other within the community. And so, that's something that we're recruiting right now, to try to find leaders to handle that. That means someday, we'll do conferences, awards, and all of that kind of stuff that goes with having a community. And so, I find that very exciting, having been part of that in the game industry.
Ryan Cramer: Amazing. Well, stay tuned. It sounds like of a lot more things coming down the pipeline, if you will. Last question. I'm going to say, I think I know the answer. Are you a PlayStation or an Xbox person? Or is there one... Or maybe Nintendo, or something else?
David Perry: Well, coming from the game industry, I actually have to buy everything. So I have-
Ryan Cramer: That's right, that's true.
David Perry: ...silly amounts of VR headsets, and silly amounts of consoles. And, you know, going back through time, I even started collecting arcade machines, at one point. That was a mistake, because that takes up far too much space.
Ryan Cramer: Oh, my gosh.
David Perry: But, no, I'm a hundred percent Sony. Sony acquired my company, so-
Ryan Cramer: I was going to say. David, there's a natural, correct answer.
David Perry: Yeah. My loyalty goes to Sony, because Sony stepped up. On the other hand, do I have a good relationship with Microsoft? Of course. I know those guys, and I think anything that... You know that saying, that the rising tide raises all boats? At some point we... Everything that's going on in the game industry, as long as it keeps lifting the boats, I'm very happy about it. So, in a way, I think it's important that there's a Microsoft, and it's important that there's a Sony. It's important that there's a Nintendo. You'll see more stuff coming in the future, that I think will keep expanding the space. I keep saying to anybody, if you don't play video games today, you will. You will.
Ryan Cramer: Well... Yeah.
David Perry: We're going to get you.
Ryan Cramer: I was going to-
David Perry: The industry's going to find you, and get you, and you will play games, even though you might not today.
Ryan Cramer: Right. I mean, we didn't even touch on mobile gaming. We were talking about, we have friends that their company's called PFU. They literally A/ B test in the publishing, the e- commerce, and then the video game industry. So, there's these natural overlays in all these different ways of A/ B testing, graphics, A/ B testing topics, or any sort of thing that you can kind of compare the two, it's natural, in that regards. We didn't even touch on Metaverse today, but that's a whole another series-
David Perry: Gamification.
Ryan Cramer: Gamification.
David Perry: There's another whole discussion.
Ryan Cramer: Gosh. Well-
David Perry: Any time you want to continue the conversation, just give me a shout. One other thing-
Ryan Cramer: I was going to say. Go ahead.
David Perry: For the viewers, if anyone has a Shopify store and they'd like to try out Carro, if they go to getcarro. com, you can install. So it's Get Carro, C- A- R- R- O. com, then email us at hello @ getcarro. com and mention this podcast. We will give you concierge support. Literally email them, say that you heard this, and they'll give you all the help that you need.
Ryan Cramer: Absolutely. And you saw there, if you're listening to this, again, it's linked out in these show notes below. But if you're watching this on LinkedIn, Facebook, YouTube, or Twitter, we linked out in the descriptions and the comment section, as well, how to get in touch with David and his team. And David, obviously, we linked out to your LinkedIn profile. Just following you, just all the content that you're putting out there. So much knowledge. And, thank you for sharing just a little bit of that here in my corner of the internet called Crossover Commerce. I appreciate your time and insights today. I like to call people friends of the show once they make it through an hour with me, you become a friend of the show. So, you're more than welcome to hop on any single time you want to share.
David Perry: Perfect. Sounds great. Thanks so much.
Ryan Cramer: Awesome. Thank you so much, David. And thank you, everyone, again, for hopping on Crossover Commerce. Again, episode 205 is in the books. We have more content coming your way this week. Just to give you a quick insight on what's coming up with later this week. Tomorrow we have repricing and scaling operations with Dylan Carter of Aura. Then, we have Aggregator 2022 trends, Tech, Talent, and Turbulence. There was actually a really cool introduction. Or, I should say announcement, made by Perch earlier today about hiring their CFO from Amazon, directly. And then, on Friday, we have Customer Lifetime Value and E- commerce from the team over at Omniconvert. So, as you can see, lots of great content always coming from Crossover Commerce. There should be nothing new to expect if you're familiar with the show, but that's what my job is, is to bring you valuable insights and information in the Amazon e- commerce space to apply it to your business every single day. That being said, thank you so much, David Perry, for Carro and the team there. Go ahead and check them out. I've already been just doing research just on the podcast, just watching their website. Great information, you should definitely check it out. For more information to contact David and his team there. But, I'm Ryan Cramer. This is Crossover Commerce episode 205. We'll catch you guys next time on another episode. Take care.
Ryan Cramer of Crossover Commerce talks with David Perry of Carro one on one as they discuss what can eCommerce brands learn from the video game industry.
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