“Because my own perspective is that Amazon has become the largest net destroyer of innovation in world history, and that’s something we all should care about.”
What you’ll learn:
In this episode of the Page One Podcast, your host Luke Peters talks with Jules Pieri, the co-founder and CEO of The Grommet, a managed marketplace. Jules begins by describing how the company works and touches on how coronavirus has impacted The Grommet and different ways that Jules is working hard to care for her team during the crisis.
In the second half of the episode, Jules discusses the main differences between The Grommet and Amazon, her perspective on using social media like Pinterest and Facebook, and the opportunities that Amazon’s shortcoming open up for businesses like The Grommet. Finally, she and Luke talk about the takeover of large companies like Amazon and changes that need to happen to protect smaller businesses.
About our guest:
Our guest, Jules Pieri, is the co-founder and CEO of The Grommet. Educated at the University of Michigan and Harvard Business School, she has gone on to compete with huge companies like Amazon and start The Grommet, a site that has launched more than 3000 innovative consumer products since 2008. The company’s citizen commerce movement is reshaping how products are discovered, shared, and bought.
Jules is one of Fortune’s most powerful women entrepreneurs in 2013 and won Goldman Sachs 100 most interesting entrepreneurs in 2014. She is an Entrepreneur in Residence Emeritus at Harvard Business School and an investing partner at XFactor Ventures.
She also happens to be an author! Jules’ first book, “How We Make Stuff Now: Turn Ideas into Products That Build Successful Businesses,” was published by McGraw-Hill in April 2019.
Key takeaways from this episode:
- How The Grommet has handled coronavirus and Jules’ strategies for taking care of her team during this time
- The differences between The Grommet and Amazon
- The centrality of product videos on The Grommet’s website
- Jules’ view of using social media like Facebook and Pinterest
- How Amazon’s shortcomings open opportunities for companies like The Grommet
- How to protect against cheap, counterfeit manufacturers and changes that need to take place to protect businesses
Speaker 1: Welcome to the Page One podcast, a podcast featuring a variety of guests and thought leaders on topics ranging from digital marketing, sales channel strategies, influencer marketing, best in class product launches, and all the details about how to accelerate sales. Now here’s your host, Luke Peters.
Luke Peters: Thanks for joining us on the Page One podcast. I’m your host, Luke Peters of NewAir Appliances and Retail Band Digital Strategy Agency. We are now in a coronavirus world and I know that’s on everyone’s mind, so I’m going to adapt all of the interviews to ensure that you, the listeners, are getting the most out of this podcast. Before we jump in, I’m also offering a free evaluation of your online sales strategy. If you’re interested, find me on LinkedIn or email at email@example.com.
Luke Peters: In this episode, you’re going to learn from Jules Pieri on how she started The Grommet, building to consumer marketplace against all odds competing with huge companies like Amazon and winning. Jules is co founder and CEO of The Grommet, a site that has launched more than 3000 innovative consumer products since 2008. The company’s citizen commerce movement is reshaping how products are discovered, shared and bought. She’s named one of Fortune’s most powerful women entrepreneurs in 2013 and won Goldman Sachs 100 most interesting entrepreneurs in 2014. She’s an entrepreneur in residence emiratis at Harvard Business School and an investing partner at X-Factor ventures. Her first book, How We Make Stuff Now, Turn Ideas Into Products That Build Successful Businesses, was published recently by McGraw Hill in April of 2019. So thanks for joining us Jules, anything I missed in that introduction?
Jules Pieri: No, that was great. Thanks Luke.
Luke Peters: Awesome. And before we go on, so you guys are, I think what’s going to be really interesting here for the audiences, is you guys are a marketplace, I don’t want to say similar to Amazon, but just so people can understand it, you’re selling other people’s products and you guys are unique in that you are really curating that list of products by making sure they’re high quality or pre-vetting the product so that way the customer can have confidence when they go on their site. Is that a good description of it or anything else I can add?
Jules Pieri: No it’s perfect. I think one of the … we represent one of the biggest trends in eCommerce right now, which is managed marketplaces. So Amazon’s at the extreme of unmanaged, so would maybe be Wayfair. At the far end of highly managed would be RealReal for designer consignment goods or, oddly enough, I’d even put Fanatics in there because they’re a marketplace for branded sporting goods, licensed sporting goods. And we’re up there too in that. I wouldn’t have imagined the need for vetting for authenticity in new products when we started the business 11 years ago. But I always knew there was a need for vetting for quality. So we’ve always done that. But authenticity has become a hot topic too.
Luke Peters: Yeah. I can’t wait to dive in. And just for the listener, I mean just think about what this means. They are selling, The Grommet is 100% direct to consumer selling other people’s products, really ensuring quality and having to compete head to head with Amazon and all those massive names and they’re doing it. They’re successfully winning. And so it’s going to be, and I know a lot of the listeners own brands and they’ll sell some direct to consumer but mostly through marketplaces. So it’ll be kind of fun to understand how Jules has built this business and how literally probably the most important thing I’m assuming is just acquiring and keeping customers.
Luke Peters: Because when the LTV, or lifetime value of the customer is bigger, obviously you can … your ROAS in advertising spend and all of those formulas change big time compared to say if it’s a one and done type of sale. So it’s going to be really kind of fun to jump into that. But before we do, let’s talk about coronavirus. Let’s start with just basically how has it impacted you and the company?
Jules Pieri: First of all Luke, I can’t believe how early you were on this. You talked bout this on February 7th. But that was not in the conversation, or my podcast that early. So kudos to you for giving your audience a bit more of a heads up.
Luke Peters: Thank you.
Jules Pieri: Insight about that. As far as The Grommet goes, listen, we support small business. And as long as their doors are open, ours are too. And so of course we had to assure safety measures for our two warehouses was the primary activity that was important to me as, essentially as an ethical CEO, but it has impacted our makers. That’s what we call our vendors, our suppliers. 16% of them either are out of inventory because their supply chain is disrupted or they cannot ship. But having said that, we have a super nimble media machine behind the company. We are very active in social media and half of our sales come from email.
Jules Pieri: So the way it’s impacted us is having to be super nimble because we’d never expected to be talking about what we’re talking about now, where folks are turning their homes into everything, whether it’s a gym or a school or a commercial kitchen, and obviously an office for many people. And fortunately our products tend to be very high in the problem solving and practical side. So we even had intense face masks a year ago before we thought we’d ever sell out of them. But whether it’s a standing desk, or getting gym equipment. We launched Fitbit a thousand years ago. We are useful to people right now, so business is actually up quite a bit, including the coronavirus period.
Luke Peters: Yeah. It just seems that obviously customer preference is going to be to go online and you guys will fill that niche. I think what was really interesting of what you just said, obviously 16% being impacted and I feel bad for those companies because I guess it depends where you are geographically in the country, but even when they’re shutdowns, a lot of the supply chain has been allowed to run. So that’s just really unfortunate for some of those companies. And then half of your sales coming from email, that is awesome and incredible.
Luke Peters: So let’s jump into that a little bit later on when we talk more about how the website machine works, but that is a big percentage. I’ve seen other companies doing that. That’s a representation that your audience likes to receive your emails. So they’re not unsubscribing probably if you’re able to generate that much. So that’s a great sign right there. Have there been any business changes that you’ve had to make with coronavirus? I’m assuming you guys are working remote, but anything else out of the ordinary that stood out to you?
Jules Pieri: Moving to [inaudible 00:06:48] was pretty easy for us, not unlike other tech companies because we fully had all the protocols and infrastructure in place. And we have a domestic remote team in our engineering team anyway, so a lot of the folks don’t live locally. We’re in Boston. So that actually wasn’t so hard. It was more the human side of it that had to be addressed as well and continues to be addressed in terms of our employees experience of life, our parents in particular have it hard because not all of them have childcare, and children need not just attention but the uncertainty in their lives is something that the parents barely know how to address, right?
Jules Pieri: So I thought a lot about that during this time. And we do some tactical things that help, like the leadership team’s available off weird hours if it’s better for somebody who’s a parent that’d be trading shifts with their partner. We have, like many companies embraced grandparents, dogs, children, cockatoos showing up on a video. That’s okay. In fact, one of the VP of [inaudible 00:07:54] reports to me, we have a 3:30 check in call with the leadership team on Fridays and it’s a little bit more social. Honestly, just starting to close out the week and he always brings his little baby, right? Because we want to see her, she cheers us up.
Luke Peters: That is cute. So you guys … and this is interesting and literally I ask so many people this because I want to learn from them. But as far as the frequency of calls, it sounds like you have that one main 3:30 leadership check-in. And I’m asking this just because when everybody’s at the office you can just pop in and say hi to people or you probably have your weekly one on ones, but now it’s hard because a lot of that’s remote. Is there any other type of standard weekly calls that you guys have put in place to keep the culture and team unified?
Jules Pieri: Great questions. So each individual team within the company has their own cadence. Some are doing a daily call, say the engineering team has a daily stand up. But that’s something they’ve always had because of the remote teams. Others might be doing, like finance and accounting is doing twice a week stand up call. And it’s a check in my own leadership team. I have the Friday 3:30 you mentioned. Then on a Tuesday call that we’ve always had. And so those are sort of processed answers, but the other side of it, we always have all hands meetings every three weeks and we’re continuing those. Those are really important.
Jules Pieri: I send a daily email out to the entire team, what some people called lifeline, whereas I used to do a weekly and one engineer told me, “Well, that used to feel kind of redundant, your weekly. Because I already knew everything in it. But now your daily is a lifeline.” And it’s because she feels like she could become disconnected. When she’s working with a subset of the team and can’t see the rest of them. We have two people on our customer support team are organizing coffees with six people. And they mix it up, a random assortment. We have 74 people. So they take a subset of six and they have some volunteer hosts. So there’s a regular rotation where you get invited to these randomized coffees and those are really purely social, but really helpful.
Jules Pieri: We have super active on Slack, like a lot of companies. And we opened up some new channels, where people are cooking and the pets channel is super active. Work from home is a new one. And we have a pool we just started to predict when the Boston restaurants would reopen. So sometimes a little bit of a competitive edge comes in as well just to make it fun. And do a survey of some of the folks’ individual reactions to the quarantine is a part of that pool. So we’ll share those results.
Jules Pieri: So I would say it takes a lot of thought, honestly, how to do these things. Effected somewhat of our vacation policy because people cannot their vacations right now and I didn’t want them to worry about that. So you have to think about a lot of different things. And for me at least, am I keeping a little bit more active and visible with that daily email. I’m very active on the Slack channels, places where I may not work with everybody in the company, well mainly I don’t see them. I’m pretty good about seeing most of the people in the company normally every day, at least saying hello. So this is a new thing I can do. I’m also doing a rotation where I reach out to 10 people a week and ask them how they’re doing. And it’s illuminating. People are pretty open and I share how I’m doing as well or some of my hacks get through. So this is probably 20% of my week, is doing something about this.
Luke Peters: Yeah, I’m taking notes. I really like a couple comments here that I just wanted to repeat. So I really love the idea of the randomized coffees. I think sometimes teams can get siloed, especially when they’re digital, you know? So yeah, just like you brought up, the accounting team meets and the engineering team meets, but I think that’s a great idea. I’ll try to see how I can implement that with NewAir. But we do have a little bit of cross meetings where different groups are put in. But I still think that’s really cool and I think the size of six is smart. Sometimes you get too many people and especially over, we’re using Teams, but Teams, Zoom, whatever you’re using, it’s hard to get a word in once you get over six or eight people.
Jules Pieri: Yeah, that’s it. Do you know about the dinner party rule too? If you want a great dinner party, six. That’s where that number came from.
Luke Peters: Oh smart. Okay. I mean it makes total sense to me because there’s, it’s just … I mean Zoom, you know what’s funny is, and you guys are using Zoom Jules? Is that what you guys are-
Jules Pieri: No. We were ahead of the security concerns of this. So we implemented Google Hangouts, whatever, several years ago. We helped them launch it actually. We took over Fenway Park for an event twice actually. I think it was 13 14 and that was when Hangouts was being released. So we were a launch partner to them.
Luke Peters: That’s awesome. I was just on one yesterday. So yeah, Hangouts is great and we’re using Teams. But anyways, yeah, I like that. I like the size of six, and then that you reach out to 10 people. I think that’s great. Your team is hearing from you. So you have 74 staff total it sounds like.
Jules Pieri: Yeah.
Luke Peters: Okay. And you have two warehouses. Where are they located?
Jules Pieri: Lancaster County, Pennsylvania and then Mira Loma, California.
Luke Peters: Okay.
Jules Pieri: And they’re third party, we don’t own them. We don’t operate them. And our partner, if you will, the way we got connected to these is through Shipwire, which was bought by Ingram Micro.
Luke Peters: Oh yeah.
Jules Pieri: So shout out to them. Ingram Micro has been a great partner through this.
Luke Peters: Oh I know them well. Okay yeah, great company. So wow, that’s awesome. So you’re, as far as the business model goes, you don’t have all of that capital cost and you’re not having to operate warehouse. You’re obviously working with one of the world’s number one 3PLs with Ingram, and then it sounds like your partners. Do you handle the Ingram contracts and then your partners kind of fit within your contracts or do they individually-
Jules Pieri: Yes.
Luke Peters: Okay, gotcha. So it’s easier.
Jules Pieri: Yeah, they draft off … We have a mix of products that we buy and own and ship and drop ship partners, very much like Amazon or Wayfair where we have direct and indirect.
Luke Peters: Oh okay. So you own some of the inventory? Gotcha.
Jules Pieri: We do. Yeah. When we have high velocity products or international products, companies that don’t have an infrastructure in the US and we want to bring them to the US, that’s a great competitive asset to have that ready to spin up.
Luke Peters: Awesome. Okay, that’s good. I think I got a good feel for the business, number of employees and kind of the scale of the warehouses. And then something else, I was looking, I think we’ll talk about this further on, but I guess before we get to it, channel mix is a question I usually ask business owners, but it sounds like you guys are 100% direct to consumer. That’s your channel. You’re not also, these products aren’t being sold in other channels?
Jules Pieri: No. Other than Ace Hardware, who was an investor in the company. So we do have kind of an express route to the six or 5000 Ace Hardware distributed across the US and internationally, most are in the US. But no, otherwise, direct to consumer, always been.
Luke Peters: Cool. And Jules before we go on also, what do you see as your personal strength? What’s something maybe that you feel you uniquely bring to the business or industry or what you really enjoy doing?
Jules Pieri: Just kind of, I’m an industrial designer and I’m not afraid of a blank screen or a blank piece of paper. So I like to create things. I like to make something from nothing.
Luke Peters: Good for you though on also being an entrepreneur, because sometimes it’s hard for experts in areas, so to say, to be able to make that jump into entrepreneurship. So that’s a unique skillset.
Jules Pieri: I was the first designer to go to Harvard Business School though.
Luke Peters: Well there you go.
Jules Pieri: I’ve always loved business as well as design. Design is my passion. So business became my craft.
Luke Peters: You know, talking about Amazon, obviously Amazon’s, I mean for a number of reasons are in the news, and everybody has to quote unquote, let’s say deal with them because they own such a massive proportion of the eCommerce sales. But also frankly they can be difficult to work with. Is Amazon a friend or a foe and how do you guys position yourselves against them so that say, your customers do want to work with you?
Jules Pieri: Well, our products generally being new to market are unknown, undiscovered. That’s our promise to the world. We’re looking at two to 300 products a week to launch five of them. So we see sort of everything up and coming in our categories, which are broad. Our experience is that these companies do nothing on Amazon when if they launched there without any kind of external marketing and awareness building. So initially it’s kind of crickets on Amazon. Nobody’s searching for something they never heard of or a product that solves a problem that they’ve never seen solved before.
Jules Pieri: So the idea is that we can be essentially a megaphone for these companies in a way that Amazon cannot because we’ve built a large community of people who want to know what’s new every day. I wouldn’t call them the leading edge of mainstream, they’re not the leading edge because leading edge people would do all the research we do than the [inaudible 00:16:48] they like that stuff. But most people don’t have the time for that and they trust us to do it. So you can definitely create credibility and move markets in a way that Amazon doesn’t even aspire to. That’s not their job.
Jules Pieri: And where the rub comes in is if later on down the road or before we encounter a company, they start selling on Amazon. That’s really disruptive for what we’re trying to do sometimes because they open themselves up to massive counterfeit and trademark risk and they open themselves up if they sell directly or they don’t control their distribution very well to pricing disruption and then we can’t work with them. And neither can any credible retailer, or at least harder. And so we try to prevent that problem before it happens. But it happens and sometimes really brilliant products, I’ve seen so many businesses ruined. And the pace of that has stepped up quite a bit since Amazon, since 2015 has allowed direct sales from China in particular.
Jules Pieri: So I’m sure your audience knows all about that. But our small businesses don’t tend to know about. They come into this endeavor with, 90% of them, no prior experience. They are dentists, they’re teachers, and they see something that, a problem they want to solve or they have an entrepreneurial bent, but they’ve never done a product before. So their experience of Amazon is purely as a consumer, what’s not to like? When they get on the other side, they can be quite surprised. And my expectation is, so we’ve been explaining this for a long time, it’s business 101 to not have over dependency on one source. I think that will be more clear now since Amazon stops for a while they’re receiving or shipping their products. And a lot of small businesses will be put out of business because of that over dependency.
Jules Pieri: And they’ve been really grateful to us who present both on Amazon and on The Grommet, of which are many, we’ve been their supporter and I think they at least appreciate it. But it’s a story that will double down on going forward.
Luke Peters: Yeah, that’s a great of understanding and synopsis of Amazon. I mean obviously Amazon can do wonders for sales, but you’ve got to make sure that they’re also doing that for your margins and there’s a lot of things involved. But I think the most interesting part of that was just on the product launch because you’re absolutely right. Amazon as well as pretty much everywhere else now is pay to play. So to say where you have to put in a bunch of advertising, otherwise no one’s ever going to see your product or at least have a really strong social media and direct to consumer website of your own that you can then channel to Amazon if you want to. But that’s a great description and kind of differentiation of how The Grommet works. So thanks for that.
Jules Pieri: On that point though, you mentioned earlier the prohibition from doing that, because most of our companies are not venture backed. They don’t have the kind of capital to really break through and sometimes a unit economics wouldn’t work. You mentioned that earlier.
Luke Peters: Yep.
Jules Pieri: It wouldn’t have the lifetime value. They don’t have the repeat purchases to justify that kind of marketing investment. Usually they also don’t have the sophistication to pull it off. So they become a little bit too hostage to letting Amazon di the work, and that’s where the risk comes in.
Luke Peters: A hundred percent. A hundred percent. I mean it is around sophistication. I mean if that entrepreneur is a digital expert, understands social and SEO, then they’ll get it. But most of the time, not everybody is that expert. They’ll have expertise somewhere else. And number one, it’s expensive to hire those people. If one doesn’t know those skills, it’s also hard to manage them or even know how to hire the right person. I mean I can go on and on and on. It’s really difficult if the DNA of the company isn’t digital to all of a sudden become digital. And then the just scale really helps with advertising. So you guys are in a good position there and I’m sure getting good percentage of repeat sales with loyal customers. If you have 50% of your sales from email.
Luke Peters: And I did a quick look on your site traffic just with some online tools and it looks like you guys are doing over a million visits a month. It was actually higher than that, but it was kind of factoring in. You guys look like you have a really big Q4. What’s your best conversion rate hack on the site? I’m just curious for listeners, is there something that you guys have done on the conversion rate side that was special? Maybe a guarantee or some sort of offer or some sort of couponing or anything that you feel has worked really good on the D2C side?
Jules Pieri: Well, the best thing for conversion is the stores where you mentioned this a little bit earlier, but two things convert best for us which would be, other than press. Press is wonderful, you just can’t … it’s not a business plan to have press. So for us, email, you mentioned earlier because essentially when somebody comes in through email, they have a broader sense of who we are and what we do. And when you’re launching one product a day that can be a little harder to design when you just go on the homepage or something. So they’re getting kind of a, it’s all opt in. We’ve never bought a name, we don’t do anything that isn’t opt in. And so those are people who want to hear from us and that’s been a key company tenet from the beginning. So that traffic’s going to convert better because they know who we are and what they’re getting even before they’ve bought.
Jules Pieri: And we’re also very successful with physical catalogs, the kind of old is new these days. And a lot of direct to consumer companies are leveraging that vehicle. I think it’s a couple of reasons. I don’t think the catalog industry has any notion of arbitrage like the digital one does. So when it’s really successful they don’t get any extra toll on it, but on the converse, if it’s not successful they get their share. And so that dynamic will change ultimately, but right now it’s the current state. So that’s been really important to us in this time period because I didn’t know if people would be afraid to touch catalogs. I can tell you they’re not. They’re helpful to them.
Jules Pieri: As far as landing on the site, we do have some promotions for new customers. But I don’t have anything sexy. It’s having the right price so that we’re trustworthy. It’s having an open-ended return policy, which actually was just changed last year. We’ve always been very generous with returns. We’re not looking to cause a fight and we want people to be happy, but it’s been easy to be generous because we have less than 3% returns. And most eCommerce sites would be in double digits, solid double digits. And so last year we expanded it to you can return it any time, kind of like the old L.L.Bean policy. And I thought oh no, there goes my favorite number. I love that return rate number. And it actually went down. So I think it helps because people had even more security about a return with The Grommet.
Jules Pieri: So maybe I’m underplaying that, but I think it’s pretty important. I would say video is also super important to us. The returns, but also people who watch a video have a 33% higher conversion rate even if they don’t watch the whole thing. And we kind of invented the idea of video in eCommerce, I know that sounds ridiculous because it’s so prominent now. But it didn’t exist when we started. So that’s been helpful to us as well.
Luke Peters: That’s awesome. And let’s dig into that video point a little bit, so 33% increase in conversion rate makes total sense. They’re going to be more engaged. Is the video just part of the image slider or is there any special way that you encourage more people to watch a video on the product detail page?
Jules Pieri: Used to be more prominent than it is right now and I’m actually wondering if we need to change that and bring it more and more prominent. We put it in the slider which is pretty typical stuff. Used to be kind of the main hero image was a video as opposed to a photo. But I have to say it’s still holding up, so my theory may be wrong. That we ought to reconsider that. We changed our product page late last year. So no, they’re just tripping on it. We were, I mean it sounds crude, but shoving it in people’s faces before because it was the first thing you saw. And I think what’s helpful is the whole world’s doing video so we don’t have … We used to have to train them that the possibility of video was even there. This was so unusual. So maybe I, and we can have more confidence that people are looking for videos. You don’t have to make it the first thing they see.
Luke Peters: Yeah, no, that’s right. It’s so ubiquitous now. What about social channels? So I looked at your Facebook, you guys had something like 450,000 followers, which is awesome. Does any one social channel stand out? I know going back in time, Facebook, at least in my opinion was, and probably most people’s, was a lot better a couple of years ago when it wasn’t behind a paywall. And now a lot of social is, are you able to speak to what you like about social and where maybe future investments are?
Jules Pieri: I always feel like whenever we pay more attention and stay on the trends in those channels we do better. And we go in and out of how good we are at that. I’m not a big Facebook fan just for the reasons you mentioned. It used to be a great channel and I would have never founded the company if it didn’t exist. I considered it central to our success. Unfortunately it’s not as central as I thought it was going to be. But it’s been a hard thing to plan for in terms of right now it’s inexpensive, but generally it’s been difficult.
Jules Pieri: And like right now we just started paying more attention to Pinterest to go in and out of how much time we spend on it and [inaudible 00:26:17]. So it’s literally having the people to do the right thing. And that’s why the whole marketing game’s changed so much because in the old days, marketing, as you rose in marketing, your job was just spend more and more and it was a fairly efficient thing to do through the established channels. And now you need this army, very flattened sort of pyramid in marketing. This army of people who actually deliver value by very much more hands on work, and that’s especially on the social channels is what I’m mainly talking about. So we go in and out of effectiveness. It’s bizarre. But it just takes so much effort and time and just if we have a change of one person in the company, it can reduce our effectiveness.
Luke Peters: Yeah, makes total sense. Talk about what you’re seeing though. You guys are seeing so many products it sounds like, I think you said something like, you reviewed 200 and only approve five or ten a week. You’re really picky and you guys are getting to see a lot of trends. So what are the best consumer product opportunities right now? What type of models or trends are you seeing?
Jules Pieri: Well, it’s not a new trend, but it’s one that we’re particularly good at is personalization. So there’s a whole bunch of types of personalization. AI personalization is something you would see in [inaudible 00:27:34], that’s not what I’m talking about. It’s something more basic, that I want this product to reflect me in some way. So one of our most popular products is Lake Art, it’s a piece of art, which I would have never expected art to be even on our radar. But it’s a 3D bathometric map of a body of water and you can pick the body of water, some place you love. And it’s laser cut out of wood in a little town in Michigan, Harbor Springs. They’ve created dozens of jobs for that company, and it’s just a pure joy, that product.
Jules Pieri: So personalization in any type of product when you manufacture products is enabled by changes in manufacturing. Everything from 3D printing to laser cutting and other technologies. So that’s something that’s hard for most companies to do well. You can’t get that on Amazon. But we do it well. Etsy would be king of that, right? Etsy would be the ultimate expression of that because you can personalize just about anything on Etsy.
Luke Peters: Yeah, 100%. It’s the definitely a great way to compete against brands that are maybe just Amazon brands and a great way to be unique. So I think we can all think about that as manufacturers, how do we make our products more personalized? It’s tough because unless you’re … It’s hard to do it when your supply chain is in China for sure because of the lead times, especially if the product’s bigger. But that’s great. That’s one we can think about, and I’ll look at our businesses and try to improve on that. Speaking of Amazon, what opportunities is Amazon opening up for competitors? I guess personalization would be one, but how else do you see it?
Jules Pieri: I would say mainly it’s the authentication because 40% of what’s sold on Amazon is coming straight from a Chinese factory now. And I don’t mean by the types of supply chains that you’re talking about. I’m talking about straight from a Chinese factory with no brand of its own or no operations in the US. And 90% of those products are counterfeiters, copycats. So our makers, or our opportunity, Jeff Bezos famously said, “Your margin is my opportunity.” And I guess I’m making this up right now in the podcast, but I’d say, your bad business practices are my opportunity. Because our makers, their blood, sweat and tears just can be destroyed overnight by Amazon support of counterfeit products. The counterfeits win the listing because they’re cheaper.
Jules Pieri: They are brazen about stealing all the trade dress, so the logo, the name, even our maker’s photos or the kids’ photos, they’re on a package. They will steal. They will cost reduce the product so it’s not functional and it doesn’t work as well. And you buy it and you think it’s real and it’s not. It fails and you blame the maker. You don’t even blame Amazon, right? You aren’t aware that Amazon was the super highway to a counterfeit product and the press, especially the Wall Street Journal is doing a lot of work on this right now, especially in the areas where products become dangerous, anything you ingest, electronics, anything related to your children, your pets. Those things are … it’s criminal to allow counterfeit supplements or foods or toys with lead and those kind of things happen.
Jules Pieri: And I think the general public’s still a few clicks away from understanding that frankly, at least in my travels. But the business community is ahead because they’re motivated to be ahead. The risks are too high
Luke Peters: And Jules, I didn’t realize it was 40%. I mean that is amazing because I don’t think American companies have that ease of sale into China. And I know right now there is a lot going on just about, there’s just massive talk about supply chain and supply chain risk and all of these types of things. Where do you think, do you know or have a feeling where this is going to go politically if anything’s going to happen to that to protect companies, especially ones that are making it here. I mean I know the government’s definitely trying to support that, but I don’t know if you have any additional thoughts on that.
Jules Pieri: Well, you mentioned at the top of this talk, this notion of citizen commerce, and that’s a term we’ve trademarked, but I gladly share it with the world in terms of the general population having a better understanding of its power. And we have a lot of power in this area and it’s the simplest power ever. It’s by virtue of what companies we support and which companies we don’t. I always tell people if you just take 10% of what you buy and really thoughtfully direct it against companies who match your own beliefs, their businesses practices, you can really make a really big difference.
Jules Pieri: So when it comes to to what I’d like the see, which would be antitrust actions, again in particular, Amazon. People can have a lot of power and I think they get agitated right now about shipments not coming and about employment practices. But it goes further than that. Our own jobs are always threatened if any one company has as much power as Amazon does to control all distribution and pricing. That evolves to the extent that we use AWS in our companies. Where we sell a product and we’re paid by a company that makes the product. Or we’re in retail or we’re in transportation, or we’re in healthcare, or we’re in grocery, we’re in pharmaceuticals. Amazon is everywhere and that power that they have has a direct impact on all of our paychecks and all of our job security.
Jules Pieri: It’s not as simple as, “Oh, I’d really miss Amazon if I didn’t buy from them.” You’d miss your job more. And that’s what people are waking up to. I think it’s still early days, and most of the activists are ahead of the general population. There was a cover story in the New York Times on Sunday in the business section about an activist group in Portland, Maine. Believe me, they make friends with them soon, and in association with Lena Kahn who’s a pretty prominent writer or legal scholar out of Yale. They’re taking things on from an antitrust perspective, and I’m taking it on more from a, what’s good for society perspective. Because my own perspective is that Amazon has become the largest net destroyer of innovation in world history, and that’s something we all should care about.
Luke Peters: Wow. That’s an amazing quote and what I really liked about what you just talked about was you said, the individual consumer has the power, buy from companies that you support. And wow, this is, it is going to get interesting. I don’t often get political on the Page One podcast or ever, but we really do have three or four companies controlling everything digital with Google, Facebook, Amazon, and there’s probably a couple of others mixed in. But those three literally control everything from a large proportion of the news to people’s comments to who gets seen and who doesn’t get seen, what companies make a sale and what companies don’t make a sale. It’s unbelievable.
Luke Peters: So I mean most companies pay multiple times more in paid advertising than they’re making in their net profit by a long shot. So those three companies were definitely smart in how they aggregated massive audiences. But it is going to be interesting to see what’s going to happen in antitrust. I don’t know if anybody’s ever done a study about comparing what Rockefeller, is his percentage of commerce against these. It would be really interesting to compare it. Because I’ve read biography on Rockefeller called Titan and it was just interesting how he was so … he just owned industry and was so competitive in gas and oil industries.
Jules Pieri: I think if you look up that Lena Kahn paper you’ll find what you’re looking for.
Luke Peters: Oh cool.
Jules Pieri: Her last name’s K-A-H-N, and I know the title of it has the word paradox in it, and certainly it’s about Amazon. So you can find it and she does a really good job of tracing the history of and the changes and the way we enforce antitrust and the reach of those robber baron companies that really inspired all that legislation and today’s, which it will curl your toes though. It’s far worse today than it was when we actually took it seriously.
Luke Peters: Yeah, well I think the companies now are smarter because they have a lot of people in Washington, probably more than in the early 1900s did. I’m just guessing, but I’m pretty sure because anyways, there’s a lot to talk about there. But I definitely will check that out. We will have it in our podcast notes. So just for the audience, the podcasts are listened, they’re transcribed and we have unique podcast notes, so we’ll have these things in there and also hopefully a couple of cool quotes that we’d like to put in there as well. So we’ll have that for you guys.
Luke Peters: Listen, this has been a really interesting talk Jules and we’ve kind of gone so many different directions and I really support the movement that you’re putting together because I think there needs to be more diversity online. And you talked about it earlier where you said, it’s really dangerous when there’s a high concentration of sales just from one retailer. People are seeing that now unfortunately with coronavirus, especially in-store retailers, they’re kind of seeing it on that side. But that’s how companies have to protect themselves overall. So love what you guys are doing at The Grommet and want to wish you continued success. And before I let you go, you wrote a book. Tell us about the book you wrote.
Jules Pieri: Yeah, it’s kind of a give back. It’s called, like you said earlier, How We Make Stuff Now. And I was watching, we’ve worked with over 3000 makers directly and I’ve watched them all solve the same problems in isolation. Like how do I market? How do I get packaging done? How do I pick a brand name? How do we get financed? And how do I get started? That’s the biggest one. And so I wrote a book. It’s a very straightforward how to manual. I discuss the 16 things you need to rock to be good at this game and give a lot of case studies. So it’s totally a give back. I just want the next generation of makers to know what the current generation already knows.
Luke Peters: And we need to make more stuff here. So I love that topic. How can folks find you or get a hold of you?
Jules Pieri: I’m very visible online with just my straight old name. So you’ll see it in the notes on the podcast and so I’m @JulesPieri on Instagram and Twitter. I have a blog under that same name as well. The book’s easy to find. It has its own website and I recommend you buy it through Porchlight or your independent local bookstore. The one I use is Porter Square Books. There’s a nice one in Hoboken, New Jersey that’s doing online ordering right now called Little City Books. So you can order it directly from them, they’ll ship it. It’ll take about a week. They’re not Amazon speed, but they’ll get it to you.
Luke Peters: Great, and thanks again Jules, really enjoyed your insights all around on eCommerce and I think it’s going to make a great podcast here. And also want to thank the audience for listening to this episode of the Page One podcast sponsored by Retail Band. Hope you enjoyed this interview today. Truly appreciate your reviews on iTunes and hope you join us again for the next interview.
Speaker 1: Thanks for listening to the Page One podcast with Luke Peters. If you enjoyed this episode, please help us out by leaving us a rating on iTunes. Want to double your online sales? Check out www.retailband.com and don’t forget to join us next week with our next amazing guest.
0:55 – Luke introduces today’s guest, Jules Pieri
1:50 – A description of Jules’ company, a managed marketplace
3:58 – How coronavirus has impacted Jules’ and The Grommet
6:38 – Business changes during the pandemic, meetings, and communication
12:43 – The Grommet staff and warehouse locations
14:48 – Jules’ personal strength: designing and creating
15:28 – The differences between The Grommet and Amazon
20:49 – The Grommet’s site traffic and conversion rate
24:00 – How The Grommet uses product videos on their website
25:12 – How The Grommet uses social media like Facebook and Pinterest
27:03 – Jules talks about the best consumer product opportunities
29:00 – What opportunities does Amazon open up for competitors?
31:09 – Jules’ perspective on the changes needed to protect companies
37:00 – “How We Make Stuff Now” by Jules Pieri