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The Sam M. Walton College of Business

Episode 13: Allan Peretz of Bold Retail Talks About the Future of Ecommerce

February 27, 2019  |  By Matt Waller

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Allan Peretz is the Co-Founder and President at Bold Retail, Inc. Bold Retail is a management consulting company that helps potential businesses grow faster. They specialize in eCommerce Marketplace and Direct-to-Consumer selling.

Episode Transcript

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00:07 Matt Waller: Hi I'm Matt Waller Dean of the Sam M. Walton College of Business. Welcome to Be EPIC, the podcast where we explore excellence, professionalism innovation and collegiality. And what those values mean in business, education and your life today. Today I have with me Allan Peretz, who is the founder and CEO of Bold Retail. Thank you, Alan, for joining me this evening to talk about e-commerce.

00:41 Allan Peretz: I'm really glad to be here, thank you for inviting me.

00:44 Matt Waller: Your background, I think is so interesting. On the one hand, you worked for Procter & Gamble, for 15 years I think.

00:52 Allan Peretz: Just about 15.

00:53 Matt Waller: And you had many different roles, but you learned a lot about consumer goods marketing and process management, and so forth. But now you're in e-commerce and you have your own company, Bold Retail. I know I've heard a little bit about what you're doing, but the business model for managing a large consumer packaged goods brands is very different than what these small companies are doing in e-commerce today, it's amazing. And yet, you're kind of marrying the two to some degree. Would you mind sharing just a little bit about that?

01:31 Allan Peretz: Yeah, so about two years ago, I had a background in e-commerce already, but I got really interested in studying the small companies that were taking a lot of market share online. We looked very, very closely at what they were doing, did a lot of data analysis, spoke to a lot of these companies first-hand, read the same books that they were reading, used the same tools that they were using, and in the process came to realize that they had a more comprehensive approach to e-commerce than what we had been doing at much bigger companies. What Bold Retail is all about is applying that very aggressive style of small company e-commerce to bigger companies and that's what we do every day. And so we work with companies typically from 10 million, all the way on up, and we help them analyze their situation, build a winning proposition, and then grow that proposition over time, with very active management of their presence.

02:34 Matt Waller: One thing that's really interesting to me about what you're doing is, big companies when they have products they have elaborate planning systems, elaborate processes for determining when the product will be rolled out, what types of advertising will be used, what the message will be, what the pricing structure will be, what the channels of distributions. Very rigid, very well planned and then executed very carefully. Today in you selling consumer goods through e-commerce, small companies are doing the opposite, they're using an experimental approach.

03:14 Matt Waller: It's like the big companies are using a centralized planning approach and the small companies in e-commerce are experimenting. They try something, they see what happens and you get to see so quickly. I remember when Walmart rolled out Retail Link people loved it because you could get fairly up to date sales information from all the stores. But when you're selling online, you get it in near real time, you can change the price real easily, whereas when you are selling through brick and mortar stores, generally speaking, price changes are a big deal.

03:51 Allan Peretz: Absolutely, yeah it's a very different world. I'm a former military guy, so I think a lot in terms of military analogies, but big companies are building static fortifications. They're spending a lot of time, energy and resources to build something that's gonna be there for a very long time, where as you said, smaller companies are much more experimental and it's easier to be experimental in today's world where you can put something online, maybe something that you haven't created a whole lot of and get very, very quick consumer feedback and iterate and change. So for me the big lesson of today is you have to be responsive.

04:37 Matt Waller: Well, it's interesting because if you think about it, we've always in business thought we need to listen to the market. But the ability to listen to the market used to be difficult, and now you can change prices and see what happens. You can have different prices in different e-commerce channels.

05:00 Allan Peretz: Absolutely.

05:00 Matt Waller: You can change photos, you can add video, you can change product descriptions, you can use search engine optimization, you can use social media, the various social media channels. And so in some ways, the new e-commerce platforms are allowing companies to sense the market more quickly and with more precision. The big companies are having trouble adapting to that because they have created processes that are rigid to protect their brands. So I would think for a company like yours, you could add tremendous value to a well-known brand, that's really big, but I would imagine it would be hard for them to give up any control to allow you to really do that. How do you deal with that?

05:54 Allan Peretz: Well, the big companies today, they're absolutely getting feedback, but they look at feedback particularly ratings and reviews as another element of marketing. So they're trying to manage the perception that those reviews give off and internalizing what those reviews actually say is very much secondary, and that's where the big companies and the small companies differ. A small founder-led company making protein bars, or banana muffins or whatever they're making, they're gonna read every single review and take it personally and act on what they see. If there's complaints about the flavor being off, they're gonna stop production, and they're gonna fix it before they ship another case. Big companies, again, they're still operating with that mass market mentality where for them, the reviews are something that someone else is gonna see and they wanna make sure that it just looks as good as possible.

06:50 Matt Waller: Successful experiments require information and there's more information available today than there's ever been. And so that is probably one of the mega trends that has been affecting consumer products marketing. But I actually noticed this is going on in all industries, even outside of consumer products, this whole idea of getting feedback from the market, adapting, pivoting, morphing and then trying something. And really, you never get out of that no matter what you are, what business you're in or what kind of a product you have, there's no end to what you can learn from customers and no end to the opportunities, but this unbelievable amount of differentiation that's occurring.

07:44 Allan Peretz: How the broadcast mentality is still where a lot of big companies are today versus the one-to-one mentality that a lot of small companies have to adopt just based on the virtue of their size.

07:56 Matt Waller: Yeah, and it used to take so much money to make a high quality video to be used in mass media. But now it's like, there's a lot of entrepreneurs out there that get quite good at film video because they're constantly experimenting and trying new things and they find out what works. So if someone can create a one-minute video and put it on Twitter and then they can say, "Well I think I should have tried this." They can keep... They can try an infinite number of things and they eventually find one that works. That's a very different mentality than what used to be done in advertising.

08:42 Allan Peretz: Absolutely and yeah, there's another element at play too and that's authenticity. So huge production value, putting tens or hundreds of thousands of dollars on a video, so it looks perfect. That's what I was trained in, and that's what my peers were trained in. But if you get a founder with an iPhone to give a heartfelt message to their customers, sometimes that 30-second video can be as or more effective than anything that you might do on a larger scale.

09:13 Matt Waller: If you look at this trend there's going to be more and more customization of products and services because of this ability to experiment. From an economics perspective, that means that people are gonna be better off. There's gonna be... It used to be that you had very few choices in what kind of cloths you wore, what kind of car you drove, etcetera, etcetera. And now, the variety just keeps increasing and I think that's only gonna continue. And so I wonder, maybe the competency of the company of the future, where they... Maybe they're not gonna be able to get economies of scale but maybe there's gonna be economy of scope where you have processes you put in place that are really good at one: Understanding customer demand and two: Morphing simultaneously and maybe even leveraging off of multiple products and services. So, I wonder, from your perspective, are you seeing this tremendous proliferation of variety that's going on?

10:28 Allan Peretz: Absolutely, and a lot of that is just a function of shelf space as a historical constraint, right? So if we go to the world of physical retail, you may have 4 feet or 8 feet or 12 feet for a category and you can only fit so many brands in that space and give each brand a meaningful impression, in e-commerce that constraint doesn't exist and you can have hundreds or thousands of brands in a category and each one of them has an equal shot at being found if they execute well. So it's a huge leveling of the playing field and it's giving lots of smaller brands, the opportunity to shine in ways that they never could before.

11:08 Matt Waller: Allan, the first time we had a conversation, you told me a story about selling a product through Amazon, that had no brand equity, there is no reason you should be able to make money selling it, but you did, would you mind sharing that?

11:31 Allan Peretz: Yeah, so the genesis of our company is actually my wife Lisa, and she had been selling online for years, actually for more than 10 years doing what's called retail arbitrage, so she would go and she would buy some things at a good price in a store and then she would sell them on eBay at a higher price and make a little bit of money. But a couple of years ago, she decided to launch her own brand, and that brand was an employee appreciation gift that she had manufactured and designed and shipped to the US, and sold and together, we tried to make that work as you said, there was no brand equity, there was no history, but we were able to put a story around this product and execute really well, from a marketing standpoint and from an SEO standpoint and quickly the brand grew to multiple six figures and continues to grow at this point and we have very, very high hopes in fact, such high hopes that we've launched another brand in the same space as a companion.

12:36 Matt Waller: And how did your wife get interested in this kind of arbitrage through eBay? How did she even learn about eBay?

12:48 Allan Peretz: She was a buyer before she was ever a seller and I think she made the choice to be a stay-at-home mom, but she wanted to try to find other ways to economically enrich the household and I don't know if she spoke to a friend or read something online, but at some point, I started seeing bags of stuff show up at the house and her on the computer, selling and it worked, it worked enough to where she continued doing it for quite a long time, and eventually she decided that other people's stuff wasn't enough and I think that whole arbitrage model got more difficult, anyway, so she decided she wanted to launch something of her own.

13:31 Matt Waller: Your experience in working for a large CPG company and you've worked globally, not just in North America, but you've worked globally. How do you think working globally might have given you insight into this business?

13:50 Allan Peretz: I don't know if it gave me the insight needed to succeed in this business, but it did give me an experience where I had to operate in a very uncertain and ambiguous environment. So, the experience you're talking about was in Central and Eastern Europe, Middle East, and Africa. And I was managing a fairly new business for that region. We didn't have a whole lot of data. We certainly didn't have a whole lot of precedent on how things should be done. And working with my team, I had to figure out a lot of that stuff on my own and that was an enormously scary situation for me. I was coming from the US market on a big category that had been doing very similar things for the past 30 years, but now I had to operate with a lack of information, and eventually, I learned to trust my gut and I was fortunate enough to spend three years in that assignment. And to this day, I consider it the best experience I've had professionally. So I think the way it prepared me for today is just the ability to deal with uncertainty and ambiguity, which is very much what brands are dealing with today in e-commerce.

15:05 Matt Waller: Allan, are there any unusual trends you see occurring or that you think will occur that are gonna have a big impact on the future of CPG?

15:21 Allan Peretz: There are short-term trends and there are long-term trends. The consumer today has different expectations for what they put in their body. They have different expectations in terms of understanding where products come from. And these are trends that continue to grow and will continue to grow for the near future. But I think the longer term trends go back to what we talked about earlier, which is the expectation of the consumer that they wanna be involved in the product development process, and they wanna be involved in the story of the brand. They consider themselves active participants, not passive users. And I think that is what we can expect to see in the future a blurring of lines between the maker and the user. We'll all have to be ready for that.

16:14 Matt Waller: Here we are in Northwest Arkansas, home of the Fortune One company, which turns out to be a retailer, where we have over 1,000 consumer products companies with offices here. Some of the offices here are huge, hundreds of people. And we have, as a consequence, a number of companies that have started to serve those consumer products companies. So we have an ecosystem here, but we also have Tyson, which is the largest protein producer in the world. We have JB Hunt, which is one of the most innovative logistics companies and is growing fast and very profitable. All of these companies are doing quite well actually. And there's many other companies in Northwest Arkansas. And I see these kinds of entrepreneurial endeavors like Bold Retail. Not exactly like yours, there seems to be an infinite variety of companies that are popping up, but they are a result of a rich and deep understanding of consumer products as a business, as an industry. But one trend that I've seen, very clearly, is a trend towards producer to consumer. And not necessarily true producer, but I would say smaller brand to consumer. And you even see big CPG companies, I don't remember the numbers, but most of the biggest CPG companies in the United States have a dramatically smaller variety set of SKUs assortment than they had 10 years ago.

18:18 Matt Waller: Sometimes it's like a 10th, and they're doing well still, because the brand still speak something, and they speak quality, they speak consistency. They have various things that are important still to shoppers. But I would imagine over time, it's gonna get more and more difficult. But one thing that is going on is we have so much direct consumer, and it's really not possible to be as efficient, say as a Walmart going directly to a consumer. There's a lot of... Our economy is spending a lot of money, more and more money on parcel delivery, which is way more expensive than sending a truckload of product to a distribution center. It's then co-mingled and sent with, you have a heterogeneous truck going to stores, and then you have shoppers going in and getting all the things they need for the next week. That's a pretty efficient supply chain.

19:27 Allan Peretz: Absolutely.

19:29 Matt Waller: But I would imagine that we're gonna start seeing some innovations in this way. We're already seeing it really, Walmart's clearly innovating in this area. Where do you see big brands going? In other words, I see big retailers like Walmart just changing the way they bring efficiencies to the market that a single company couldn't do. It's not easy, but it can be done. What about big brands? What do you think their core competency is gonna be longer term?

20:08 Allan Peretz: Yeah, so I'll start with your first point, by the way, which I wanna expand upon which is the inefficiency of some modes of e-commerce. And to me e-commerce is not really about the fulfillment but it's about how you buy, it's where the transaction happens. So, as you know, Walmart is making a great business out of Curbside Pickup. The transaction happens online, but the shopper goes and opens up their trunk and someone puts the bags in the car, that is still a mode of e-commerce and from a supply chain standpoint and an efficiency standpoint and a waste standpoint, it's very, very similar to what happens in a regular trip to a store with a shopping cart and the whole process that we've become familiar with for many, many years. An interesting point is that when you think about these small brands that are starting direct to consumer and maybe only today shipping the consumers in boxes via UPS, USPS, whatever the case may be, when they reach a certain size they become interesting to that Walmart and that Kroger and everyone else, and then that traditional means of distribution becomes available to them. So, more and more you're seeing brands pop up online and quickly get established within the traditional retail footprint.

21:38 Allan Peretz: In terms of the role and competency of big brands in the future, my point of view is they're gonna have to find some ways to make their scale work. A lot of the capabilities that they traditionally, exclusively had are now available to much smaller players. You can rent large parts of your supply chain, you can outsource big parts of your R&D, your production, all of these other things in ways that really weren't as easy in the past. Big companies I think are gonna have to win on the more complicated sides of innovation so it's very easy for any small food company to come up with a new flavor, but it's not as easy for a small company to come up with a new technology to clean clothes, or new technology to get whiter teeth, or any one of a number of the bigger problems that consumers face. So I think the... From my point of view, the role of big companies will be those bigger more complex problems that require a lot of capital, and a lot of discipline and a lot of the competencies that these companies have built for many decades.

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23:00 Matt Waller: Thanks for listening to today's episode of The Be EPIC Podcast from the Walton College. You can find us on Google, SoundCloud, iTunes, or look for us wherever you find your podcasts. Be sure to subscribe and rate us. You can find current and past episodes by searching Beepicpodcast, one word that's B-E-E-P-I-C Podcast, and now be epic.

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Matt WallerMatthew A. Waller is the dean of the Sam M. Walton College of Business, Sam M. Walton Leadership Chair and professor of supply chain management. He is also the host for the Be EPIC Podcast for Walton College.

 

Walton College's EPIC values -- Excellence, Professionalism, Innovation and Collegiality -- are the heart of Dean Waller’s podcast. Since the beginning of the series, Waller has interviewed business professionals, industry experts, CEOs and Walton College students to bring listeners first-hand accounts directly from the entrepreneurial world.

 

Waller is an SEC Academic Leadership Fellow and coauthor of “The Definitive Guide to Inventory Management: Principles and Strategies for the Efficient Flow of Inventory across the Supply Chain,” published by Pearson Education. He is the former co-editor-in-chief of Journal of Business Logistics. His opinion pieces have appeared in Wall Street Journal Asia and Financial Times.

 

Waller received an M.S. and Ph.D. from Pennsylvania State University and a B.S.B.A., summa cum laude, from the University of Missouri.





Walton College

Walton College of Business

Since its founding at the University of Arkansas in 1926, the Sam M. Walton College of Business has grown to become the state's premier college of business – as well as a nationally competitive business school. Learn more...

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We're sitting down with innovators and business mavericks to discuss strategy, leadership and entrepreneurship. The Be EPIC Podcast is hosted by Matthew Waller, dean of the Sam M. Walton College of Business at the University of Arkansas. Learn more...

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