Gross To Net

Ep. 1 - Chasing Arbitrage with Eric Martindale | Gross To Net

• George Milton • Season 1 • Episode 1

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Today I talk with Eric Martindale about the digital shelf and how he's spent his life chasing arbitrages. Follow Eric on LinkedIn for nearly daily posts about where food and bev retail media is going: 

https://www.linkedin.com/in/eric-martindale-amazonagency/

George:

Hey everybody. Welcome to Gross to Nut, the podcast. This is gonna be official episode one. I'm your host. George Milton. And today I am joined by Eric Martindale. Welcome Eric.

Eric:

Thank you for having me, George.

George:

Eric is waving cordially. You guys can't see it, but it was a super good wave.

Eric:

polite,

George:

super polite wave.

Eric:

like Canadian.

George:

Are you Canadian?

Eric:

No, but it was a Canadian polite wave.

George:

Today we're gonna talk about Eric, I think the way that we queued this up was we were gonna talk technology and the future, and I wanna learn everything about your life and about Amazon and the digital shelf, which is how we got connected. Eric runs a digital shelf agency. Actually, why don't, Eric, why don't you describe how you describe your agency.

Eric:

Yeah. Eric Martindale, the founder of e-Commerce Group, and we are by our DNA Amazon Management Agency. But over the years we've grown into retail media. we essentially do marketplace management, which would be your Amazons, your walmart.com, TikTok shop, and then retail media, which would be whole food ads, Instacart Sam's Media you name it.

George:

So you started as an Amazon agency?

Eric:

I actually started as an importer. And then you turned to Amazon for a solution for something back in, I think it was 2012, and then just really leaned into it pretty hard from there.

George:

tell me about your import business,'cause we've never talked about that.

Eric:

Yeah. that was another life. So I was in the Marine Corps at the time and I had done a number of deployments we've become so much more global now than we were at the time. I knew it was gonna transition out of the Marine Corps, and that seemed very appealing to me. Long story short, ended up with a few revenue streams out of that. And then at one point I was importing something from Australia, and I got caught where I couldn't move as much as I was supposed to. that's where I turned to Amazon To get some volume.

George:

Gotcha. And you were like, Hey, there's something to this Amazon thing.

Eric:

Oh, I fell in love with it. Like right away I was, it was just like love at first sight. I just, the, it was pretty forward-leaning at the time. It was I had done some things with eBay before that, just as like a hobby. But not really Amazon until 2012. And just figuring out the technology. There were very few videos. I just love the technical side of it.

George:

Yeah, I get that from, and I should say Eric does do work for my company for. Amazon and we're looking at a few other things, so I can attest to the fact that you like the technical side of it. I'm interested in that part of it too. And I think that there's just there's a lot under the hood for. Advertisers or sellers? we started working with Amazon in 2014, so I was a little further behind you, and I'll say that we probably went slower because I wasn't doing that as my business. It was an auxiliary thing. In hindsight, I wish that we had probably leaned in. Faster and harder on Amazon, but, hindsight and all that sort of stuff one of the things that you said that I think is interesting just from a just from the entrepreneur side of, this podcast and publication is. you talked about revenue streams, like having a couple of different revenue streams. one of the things that I've noticed when I talk to entrepreneurial people is that they think in terms of. Revenue streams as opposed to, in terms of gigs or jobs or things like that. Can you maybe expound on how you think about that?

Eric:

I think everybody. Almost every entrepreneur you run into has that story of, when I was a kid I, sold candy bars at school or whatever, had the lemonade stand or whatever. I don't want to just give you another me too story, but that was always me. I was always trying to flip something, even as a little kid. And then when I was in the Marine Corps I was always. Doing something like that when I could. I did some really off the wall things. There was a time where I was buying gold and silver jewelry and sending it into a mint and having it, melted down. it seems really strange, but it worked for quite a while and I was always poking around looking for things like that. I flipped iPhones when they first came out. I would get'em on. Craigslist and sell'em on eBay. If you don't go all in on something it's really hard to max it out. So I think when I wanted to import, I didn't even know what I really wanted to do. It seemed like a good idea. And then I think in any business. Back to your point about revenue streams, you have to get something coming in before you can even figure out what direction you should go. There's so much refinement that happens over time where none of us are really doing what we did. I don't wanna speak for you, but as a brand, I've even seen like packaging changes that are more recent, where your brand looks a lot different than it did a few years ago. But I think for me, back to your question I really wanted to get income coming in so that I had something to refine, something to work on, something where I could figure it out from there.

George:

Gotcha. When did you start? Was that was, I assume, your own stuff. You were working on your own stuff on Amazon in 2012?

Eric:

It was actually something I was importing and then at the time it was even in 2014, it was the wild west where you had people just flipping things. And when I first realized that it worked I was one of those people. I was just flipping everything. I was going to like Lowe's and buying DeWalt drills off the shelf and flipping'em on Amazon. And, then, I started doing a lot of, and this is something I don't think you and I have ever spoke about, but I did a lot of resale back in the day. That's why I don't have as much patience for them now.'cause I know how I acted back then. Sure. To respect somebody's brand. And people even now that don't respect somebody else's brand. But I did a lot of that in the beginning and then it became I actually got the volume. I was doing a quite a bit of volume. For the time. And then I would have, people would reach out and say, Hey, I see your storefront all over the place. Can you sell my brand? Can you manage my brand? Whatever. And that's how it evolved into agency or man brand management, Amazon.

George:

Yeah let's touch briefly on the flipping stuff on Amazon, because I I do think that's how Amazon got so messy. And of course, Amazon made billions of dollars in fees while you were, because they made money for you. You were out there putting in the work to go to the store and buy a hundred DeWalt drills and,

Yeah.

George:

put that on your credit card and then store it in your garage and then. Jeff Bezos is getting a new yacht every time you do a hundred thousand of those.

Eric:

He

George:

made a

Eric:

lot more than I did.

George:

Yeah. Yeah, he made a lot, he made a lot more than all of us did. But basically what it was from my point of view, and you can tell me as somebody who's done this, but I've had a number of friends who have done that flip kind of thing. Is that anything, like people want to buy everything on Amazon, and that has just continued to be more and more of the case. As they've put in more and more convenient. Like I needed a USB cord, yesterday and the day, like the Sunday before Labor Day, I ordered this USB cord and it showed up in two hours. And that's crazy, And I feel like an old man saying that oh, turn around and get everything in two hours. But I think once what you're talking about is once people realize that I want a drill and I want it to be at my house in, back then it was two days or three days. there was no such thing as same day, but still pretty miraculous to say okay, I need this new drill. I know which one I want. I don't need to go to the store for it. people aren't really paying attention to what the markup is on a lot of those things. I had a friend and his thing was like, BIC pens, nobody knows what. Oh wow. Nobody knows what a 20 pack like tell me right now, what does a 20 pack of BIC pens cost if I go buy it? No idea. No idea. So if I go to Amazon and I find, A 20 pack of black bick pens or red or, blue Bick pens or whatever. I have no anchor as far as what should that cost. So if I find a good deal on that at Costco or Sam's Club has got bick pens on clearance and I can get, a 20 pack of BIC pens for, I don't know,$4 and then I can go put it on Amazon for 7 99. you need bick pens. You don't really know what Bick pens cost. You just click on it and say okay, it's gonna be at my house. I don't have to go anywhere for these big pens. So you've got people, who realized that? There were a lot of people who figured that particular thing out about Amazon, like it, I don't have to sell this DeWalt drill for the price of the DeWalt drill. I don't know if you had a markup figured out or if you just figured it out by item. How did you figure that out?

Eric:

I was just, I was looking at things. That we're selling. And there, there were a couple of really basic software tools back then, but I was looking, okay, it's selling for$299 and I can buy it for a hundred bucks. I'm just gonna sell it for$299 for whatever reason. I don't know why. I did everything. I literally remember sitting down on my couch. And I had a list of people in note notepad or whatever it is on my iPhone. And I just did everything on Amazon and just buy now. Just found the gift. Buy now. Buy now. I think I got through everybody in 30 minutes. So the value of your time. At a series of retail stores before Christmas, it's like days, hours and hours boiled down to 30 minutes. And even back then, I think you had, contractors who needed drill. they're not gonna drive out to Lowe's to get it. And they just click a couple of buttons and that's it.

George:

But I think that because let's talk about what sucks about Amazon. I had in my notes for today.'cause I know that is, I know this is your business, right? But I would love, I know what I think sucks about Amazon doesn't mean that it doesn't mean that I'm not gonna go like full bore. On Amazon, but based on all your experience and you mentioned like seeing it from that side as like a three piece seller where you just kinda you're not thinking about DeWalt's brand, right? My, my buddy's selling bick pins is not thinking about Bicks brand. He's think he's just thinking about getting the buy box. That's what you're, that's what you're incentivized to do. There's no incentive. There's no incentive for you to give a shit about DeWalt's brand or like the quality, like the listing quality other than you want the listing you want the listing to pop up and sell and get the buy box.

Eric:

Back at the time, absolutely it was sales and that is what makes it hard for those resellers that are still around today. they need sales. They don't need the same things you do. But if you look at mission alignment, Amazon's mission and your mission are not that well aligned. You both want sales, but Amazon doesn't want your sales and they don't want sales your way. They don't wanna, it's not in their best interest to protect your brand. It's in their best interest to sell a lot of something, whether it's your brand. That's why I think one P is a is a bit of a trap because in the end, Amazon doesn't really care how much you sell. They just care that they sell. Again, back to your point about buy box, they, Amazon doesn't really care who has the buy box. They don't care what your brand looks like as long as it looks presentable to them. there are places where the mission intersects and places where it does not.

George:

I think one of the things that become clear to me after years working through Amazon is that it really works for them when they have competition on a listing and it really works for them when there's competition on price. I think that in retail, you get price pressure from the retailer, you get price pressure from. Not as much the distributor, but you do get price pressure from a retailer, to say Hey, we're gonna push back on price. So from the consumer side, you guys should be, happy that you go in and All of these retailers are pushing back on their suppliers on price. Hey, we want to keep the price below it. They've got an idea for like unit price and different categories and stuff like that. They could be right or wrong, whatever, but like they're pushing back on price and it happens differently at Amazon, right? So if Walmart buys my product, for example, like they're always buying it from me. So if I'm selling screwdrivers, I'm competing with other brands, selling screwdrivers, but I'm not competing with anybody else who's selling my screwdrivers. I'm the only one selling my screwdriver. So that I got, I have a little bit of a path to protect my price or say that okay, it's a premium screwdriver, so it should be priced higher, whatever, on Amazon you've got all these other people selling. Your brand or selling in some cases, like a knockoff of your brand, which is a big, bigger problem on Amazon than people probably even realize. And so you have all of this like price competition even on your own products, especially if those products get into distribution. And so yeah, there's not a ton, there's not like a ton of alignment between Amazon and brands. Not less competition, but like you, you want to be able to say, one of the biggest problems that we've always had is like controlling what's on our listing.'cause there's a lot of people who will put something on the listing to try to get a sale. They'll put something like I don't know. Be like, oh, this, like somebody, I don't, I didn't even know how this happened, but at one point, we sell hot sauce and at one point somebody went in and put barley as an ingredient on our hot sauce. Like they changed the listing. So it said barley on it. So like gluten-free, people are shopping for gluten-free, which is a big deal where oh, I can't buy this hot sauce. what else sucks about Amazon?

Eric:

I don't know. We could probably go on and on about that, but I think, God, there's a lot of things that suck about Amazon, but I think you could piggyback on the idea that Amazon. Doesn't really care about your brand. They'll take your buy box if they find something selling, more inexpensive anywhere else, they'll take your buy box. If they think you're priced too high for the category, they'll they'll, launch a private label brand. We're seeing less of that now because of the antitrust case. But they'll launch a private label brand that looks just like yours and, miraculously they can get away with it. But where that really concerns me is where you see Amazon investing in ai and we tend to look at AI as well, open AI and Google and Microsoft. But Amazon is one of the biggest AI developers in the world right now, as is Walmart. And I think that Helping brands like yours try to beat Amazon's algorithm, Amazon doesn't care whether your brand sells or your competitor sells, as long as they get the sale. Whereas I want to come in and help you to get the sale over your competitor. And sometimes we're working against the algorithm to do that. We're trying to manipulate the algorithm. And I think the more advanced that their AI gets, the less we may be able to do that. That is, that's a concern of mine. But I think, a AI is another place where I'm a little bit worried about the direction of Amazon and it's already a complaint of mine changing listings. False positives all over the place. Again, taking by a buy, boxing, there's a lower price somewhere, yet there isn't. I dunno. How's that for a complaint?

George:

Yeah, That's good. I want to talk a little bit more'cause, let's, there, there's a, we could talk for two hours just about Amazon and I'm sure you could talk for longer about it'cause you've got pretty deep experience over there. But it's, I think we talked at one point, or you had posted at some point just to kinda go back to your agency, which is Elite Commerce Group. But it sounded like you've got since you started flipped over to doing your own Amazon work and then started taking on some clients, it sounds like most of your work has been built through inbounds.

Eric:

Yeah, almost entirely.

George:

So just to I know that we're ping ponging around and maybe giving people whiplash, giving my own self whiplash. But like in the kind of like entrepreneur journey, right? if you've got something to sell, to, monetize, whatever.'cause that's what the whole deal is hey, do I have something that I can sell outside of selling my time and labor to to a bigger company? I guess you figured out that you had something valuable when people started coming to you. Is that how you realized that your like knowledge of Amazon was something that was not readily available and not known by a lot of people?

Eric:

Yeah I think believe me I don't, I never really think, I would say at my core, I personally, if you said Eric, what do you do for a living? Obviously I have an agency, but I would say I'm a digital marketer at heart and some, there are some things where I would say, even if it sounds arrogant I might say at this thing, I think I'm the best in the world. I think I'm the best in the world at doing this particular thing, but at the same time I've never felt so. I don't know how confident you can be in anything digital or tech feeling like I'm the best and everybody should come to me'cause everything is changing so rapidly. So I think, yes, there was a time where I was like, all right, people are coming to me. But it always has felt like a race for relevance and a race to stay there. So yes it, this, my agency has been built from inbound. I don't take that lightly though. I don't rest on that, and I think every day is a new day. it is a fight to stay there That's probably if you look at what keeps me up at night, it's how do I stay at the point where. Brands are coming to me and us.

George:

Yeah. And how do you do that? I know that one of the things that you do,'cause I follow you on LinkedIn and you're pretty regimented about posting regularly on there. is there anywhere else that you're spreading thought leadership in the category?

Eric:

I started, actually started doing that. The style that I use on LinkedIn. I started with a marketing email? Email or like a kind of a newsletter. But it was the same thing. It was, here's how we're doing this, and then there'd be a little link at the bottom. If you need help just let me know. Sometimes we don't even put the link. And then when. We do the YouTube channel, we don't invest a lot into it anymore. There was a time where I did and it did a lot more and we got leads from that. Now we'll put up a video once a week and don't put anything behind it. Don't really talk about it much. Don't link it to anything else. We probably will again, but when I started taking what we were doing in email marketing to LinkedIn, it just has worked so well that. They say double down on what is working and that's working. So I've, I doubled down there. I'm not sure how much further I can take that. We really focus on CPG could we focus outside of CPG and grow it? Maybe I don't, I'm not sure I wanna do that. So it may be now that we go back through the loop and try to double down on email and YouTube.

George:

I think it's solid stuff, obviously. I think it's a good blend of humor and like shareable, giving it away for free. I think you do a pretty good job of giving it away for free. And I think a lot of people and a lot of agencies do the thing where they're like no. This knowledge is special and you have to pay for it. I see you doing a thing that I like to do, which is Hey, the more I share it, the more. Value I have. Do you think about that actively or are you just, because you're doing digital marketing for your digital marketing pretty constantly.

Eric:

Yeah. I use services too, so I we spend a fortune in different services and, I think it always comes back to how many how many things can you really be an expert in? For instance I always would say I can do anything that anybody does in my agency. And that was always the case until we hired our first developer. And I was like, oh, can any of us learn to write code? Yes. Should we? No. So I think you get to the point where if I'm gonna give something away and you're going to use it. You're not my customer. Like you're the, you have the bandwidth to figure it out and take what I have. You were never gonna be my customer. you weren't gonna bring me in. You're not in the place. It's not a priority, whatever. But if I give it away and you think like I do with developers, I could I learn this? Yes. Should I learn this? No. I feel like you put out the right information, the right people who wanna work with you will come to you. And the ones who don't, they weren't.

George:

I actually like that mindset a lot. That's what I was trying to pick at a little bit as I do think that there's a lot of people doing that stuff with AI right now, and maybe we can get into AI in a minute, I think a lot of people trying to falsely appear to be experts using ai. I'm not against ai and I want to talk more about AI and more about the future here in a minute. Maybe after the break and We'll, yeah. We can get into that. But I do think that there are a lot of people right now trying to falsely show expertise and kind of falsely be thought leaders just by having. Ai, do that work for them? Have you seen that? Are you, or do you have, I don't know how you think about competitors in your space.

Eric:

They drive me nuts. So my competitors in my space drive me bananas because they don't, I see so many of them they'll follow me and. They'll do the things that I put out there, and I, which is fine, I don't care if they do, but I want it to be a little bit more quid pro quo. If you're gonna I'll run into somebody at a conference or something like that and they'll be like, oh I follow you. I read, read all your posts. And I just want to be like I'd to also get, some something there from a competitor. With AI now, people starting to throw stuff up and it's so sloppy and careless. It has all the emojis all over it, like chat, GPT likes to do. And I don't think people really fall for that at this point. Do you disagree?

George:

I don't fully disagree. I think that There's levels where that stuff is helpful. I have a newsletter that's essentially like news aggregation. that I put out every single day, and I would not be able, to do that without a team of people, there is some coding and an algorithm that I've built. it's not a completely novel idea, right? But it is, like I, I'm not really putting my own spin on it, right? So I think that the biggest problem is when you have. A bunch of people trying to pretend to be experts and letting AI put the spend there. And I read somewhere a thing that I think is really like the most kind of compelling difference of what is the difference between what can humans do that AI can't do? And I think that list is gonna keep getting shorter probably.

Eric:

Yeah.

George:

But. the one thing that I did read that I really liked and I haven't been able to find a crack in this, is that like humans are gonna be able to continuously have a point of view. And I think that you can get AI to synthesize a point of view, right? Especially if you prompt it to do take a strong And that's what a lot of people like, even if you read the hey, here's how to prompt everybody's writing about how to prompt ai, right? So even if you're reading that stuff and they're like, really prompt it to have a strong point of view. So you sound like a human. It still is not like the people who are writing with strong points of view still cut through that, I do. But there are newsletters that I follow that are heavily AI written, AI driven, but it is aggregating some of the internet. Because the biggest thing, like when I started my, CPG daily brief, and it's basically just I was doing this for years where every morning I get up, I get up pretty. Early and I would spend the first part of my day just trying to figure out where the news was coming from. Like where was the signal that particular day? Yeah. Versus the noise, because E everybody wants to write there's always a bunch of noisy stuff. But there's I would say that there's some recent signals that are where you're like, okay, major companies are doing skew rationalization. So how do you get people like. If I'm a, if I'm running a CPG business, how do I learn that every day? Okay, Hormel's got a price increase coming because of the inflation of raw materials. I need that information. Or you've got certain commodities that are way up or freight lanes that are up or down or something like that. There's not a lot of great places to get that information. I think AI can do a pretty good job of not only summarizing like a document,'cause I think a lot of people use it like that. Summarize this article. But it can do a pretty good job of summarize the internet, summarize today's news, or something like that with, that's an overly simple prompt. Why don't we take a quick break? We'll come back and talk AI and retail media and the future.'cause I want to hear your thoughts on that. We'll be right back. Good. And we're back. Hey, I think I cut you off right when we were starting to talk about ai. Everybody wants to talk about ai, blah, blah, blah, ai, but I am interested in in how you're using it like in your business and your day-to-day life.'cause I think that a lot of the conversation here has been. Not can you use AI to replace people, but can you use AI to be more productive? And as an entrepreneur and a business owner, I'm sure that like we're all thinking about I, I think that people who work at companies are like, am I gonna get replaced by ai? And the conversation is probably more like. Are there more tools that can make us more productive, that can make us better at what we specifically do? How are you thinking about it as a business owner and somebody who lives in the digital space where AI also lives?

Eric:

I think we'd probably agree at this point, everyone is an expert on ai. Like everybody, the moment they open chat, GPT, and I use the heck outta chat. GPT by the way, you're talking about using some AI for your substack. And I do use it for LinkedIn posts. I don't UI will not have it right for me, but I use it for things like find me an article from the last two months that x or whatever. But I will say. I don't even write code. So I take my thoughts for what they're worth. I will say that the moment OpenAI offered an API, we were, I have a small team of developers. We use it for some very basic things, and what we're really leaning into now is Microsoft's AI that they offer through a data analytics platform called Power bi. They have some agentic capability where we're unable to really use it. For everything it's worth right now. But that's the direction we're leaning in. So what,

George:

what kind of stuff are you guys using that for?

Eric:

OpenAI we're using for, we most of that for volume. Listing volume. So let's say we have a brand that has 5,000 listings. We'll use open AI to overhaul the listings. And then we get, we still have to have a human go through because there, there's still our mistakes in it. We use it for images. We use, again through the API connection, so sometimes we can feed it for a listing, five images. And again this is for brands that really have a lot of volume. They can't just hire a photographer to get lifestyle photos for 5,000 listings, but maybe a listing has four images and we'll feed those into open AI and say, we want a fifth or sixth or seventh or whatever. So those things I think are pretty basic. we also use it for? Instacart. we do keyword research. we actually use Amazon. We'll pull keywords out and then feed those into OpenAI and basically fill in the gaps, so to speak. Instacart is all exact match, so you can take three words and you have to have'em in every sequence. we use OpenAI for that. Power bi. We're not really using the AI yet. we're using their analytics, their data, and they have some AI capability that we're trying to figure out exactly how we want to use it. So the difference there would be. Basically looking at all of the data we have for a listing, click through rate and conversion rate and then you know, all of that down through different keywords for listing. One listing might be converting for, hundreds of keywords. And what we're interested in doing now is trying to figure out if we can use. AI to drill down through a listing and figure out how to grow sales for that particular listing via different metrics that could be improved, if that makes sense. That's what we're trying to figure out right now.

George:

Yeah. How does your team incentivized to experiment and play there?

Eric:

How are they incentivized?

George:

Not do you have a monetary thing, but is how do you guys, culture wise, how do you talk about AI at your company?

Eric:

I would say that is driven more. By me than anyone by far. I, if I'm honest here, AI scares the hell out of me. We know it's already replaced people, what people it'll replace and to what extent and how many jobs will it recreate is we can just speculate on, but. AI really bothers me. And the more that we lean into it, and the more that I see that it can do, the more it bothers me. So I would say that I'm definitely the driving force right now, but the developers love it. They absolutely love leaning into this. It's their form of creativity. They're explorers right now. We've been to space, but. For these guys they're pioneers and, in their mind and to some degree they are. So it's not something where I have to push people. They love it and it's part of so many conversations right now. we go through standups because we're trying to figure out, Every brand is discussed In the agency every single day every brand that we work with. So as we go through, because we know we're trying to do things with open AI and Power bi, that comes up constantly. Is this something that we could get from ai? So it's part of our DNA at this point, I would say.

George:

what is it that scares you about it the most? Are you are you like a afraid that AI is going to, start nuclear war with us and put us in the matrix? Or what is the, is it just like the job insecurity or what is the I'll say for me not to lead you down the, not to lead you by the nose or anything, but like for me the scary part is just what does the world look like and over a time horizon. there are time horizons like call, call it 10, 20 years, which is not even long term. It feels long term because humans are short term creatures and it's hard for us to imagine 20 years in the future, but 20 years is not a we're still gonna be likely alive for that. When did chat GBT get released to the public? It was early 23, wasn't it? Like November 22 was, yeah. When they were, you got it. Yeah. And so like early 23 was like when we got the first. Just regular consumers who were able to talk to ai. That was two years ago. And just like the amount of progress, like it feels like AI has been around forever now, but it's been around for like in, in a like generative ai, not machine learning, which has been around for a long time. But like generative AI that we could talk to that now we're like scared is gonna take our jobs, has been around for literally two and a half years, right? At the consumer level. And so the thing that makes me nervous is just okay, stack that up times 10, right? Call it 20 years. What does the world look like? And it's not necessarily that I have a clear picture of what the world looks like. It's the fact that I don't have any idea what the world looks like. And I think that's a scary thing for me. But what is it? For you? Is it jobs? Is it nuclear war? Is it, what's the thing?

Eric:

it's not the wild stuff. But it could be, and it's not nuclear war. It is probably closer to what you're thinking, but I have a couple of very specific concerns and I'll unpack that with a quick conversation I had with my lead developer. When OpenAI first released their api, I went right to my lead developer and I said we need to do this. And I had a conversation with him and I said, look, you need to be. Aware of this as well, because it's gonna take your job at some point. And it is, it's writing code like crazy. There's so much code writing that you can do. There are apps that can write other apps with no code, where you don't know any code. He, his response to me, I hope he never sees this, but his response to me was. it's never gonna take a lot of jobs. It's not look at plumbers. Plumbers, they'll never take a plumber's job. And I said to him, my man, you are not a plumber. You are a developer. But even if you were, let's say ai, it's really, in terms of graphic design you're probably in trouble if you're a graphic designer. It's doing so much of that right now. But let's say you're not worried about it because you're a plumber and you have all these graphic designers that are displaced and you're fine'cause you're a plumber. Where do those graphic designers go? Or what if you're in, you watch Walmart. Walmart's a perfect case study and they are killers in AI development. Walmart is growing in revenue. If they're growing in profit every year, but they're diminishing their workforce every year, profit revenue goes up, manpower goes down. That's development. It's robotics, and it's it's not just ai. It's all kinds of technology. But now that's fine. You don't work for Walmart, but where do those people go? So when you start to displace major industries or major job fields, it's not just that you're safe because you're not there, those people are coming into your industry or your job field. What happens to wages when that happens, they go down, you become less competitive, you become less valuable. If there is a net decrease in jobs who is at risk? Everyone. In my mind that's number one. That's my first concern. My second concern is the law of accelerating returns. So if you look at, I think everybody probably knows Moore's Law and I don't know the specific, I think it was, had to do with semiconductors.

George:

I think it doubles every 18 months

Eric:

Yeah. 18 to 24 months I think it was. Exactly. There's a broader law called the Law of Accelerating Returns, which says that as technology advances the rate at which it advances also advances so that as technology is developed. That technology enables technology to move faster. there's a bit of an inflection point. And that's a known, we know that happens. So we look at the progress, like you said, chat GT's really two years old. That's crazy. And the progress, it was, it sucked in the beginning. It did suck in the beginning. Yeah. my thought was right away, this sucks, but the promise of it is incredible and sure enough, here we are two years later and almost, everybody's using it in some way. So that's just two years. as it gets better and it's able to write other AI programs and things like that, this thing at some point moves so fast. I don't know how you keep up with it. That's my opinion.

George:

I already feel like you can't it's well beyond. And I think that kind of, encapsulates my anxiety about it, is that it's un keepable. Like it's just, yeah. Because I'm subscribed to all these newsletters and it's all I can do to even know the names of the new tools that came out within the last week. And then the companies that are popping up that are like, oh no, this company's got$10 million in funding. and I use some of the vibe coding tools to build, mostly to build like internal stuff. For my company. Just like little simple, we're not a tech company, but every company is a tech company to some degree. But like that, just the fact that it's it's just un it's, you're unable to keep up with it. Just I was talking about okay, CPG news, it's hard to keep up with what's happening with tariffs and what ingredients and what countries and stuff like that. And that's moving more at the pace of. Of human of it's moving more to human pace. Yeah. Whereas like a AI is I'll wake up tomorrow and it'll be completely new stuff than what I was reading about today. And it's oh, I like lovable. Is one of these vibe coding platforms. I like it. It's good at some stuff and bad at some stuff, which is

Eric:

yeah,

George:

the norm. But it was like they were the fastest tech company to get to a hundred million in a RR like in the history of ever. So I think they got to, I can't remember the, what the timeframe was, but it was like they launched it and within like a month or something crazy. They were at a hundred million a R. and the fact that nobody had heard of Lovable and then everybody had heard of Lovable and then within a couple of weeks it was a hundred million dollars, a RR, which is a, I think that they were putting us something, billion plus valuation on it within a month. And it's just, good for them, but it's also like the speed at which that continues to happen is. Insane. And the fact that it's hey, I can, I like the fact that I can have an idea and then turn it into kind of a serviceable app. So because I'm doing it without developers, in order for it to be commercially viable, you'd have to put a dev team on it and put some user, some user interface design, all this sort of stuff. But like the fact that you could do it at all. Is like crazy.'cause I remember years ago, I took a coding class online and it was called Automate the Boring Stuff with Python. And it was just me trying to figure out how to make little apps to like, make my email work better or a little app to organize something for me. And now you could just do that. And now you can just feed it in and have an app, in an hour and it works. And it does that same thing.

Eric:

I have a friend who does that exactly what you just mentioned. He does that as a business. He has a couple of people he does it with, and all he does is go around to businesses and show them how to he basically integrates a whole bunch of. Just, how this is how you can sync your supply chain across the organization or whatever. Just stuff that's on the shelf, that's just all out there.

George:

Yeah. I think that there's a huge huge market for that right now.'Cause I'll say that my, company is not Was like you, where I was like, pushing AI first at the company. And hey, look, if you can show me that you're like using chat GPT for like work and it's helpful and it's moving you faster and then we will pay for it. We'll pay for it. Yeah. We want you to work faster and better and all that sort of stuff. But integrating it, fully integrating it, using all the tools like they're supposed to be used and really putting all that stuff into place is a big job. So I think there's probably a big space for that with people who know the playing field. We've gabbed about AI for a little bit. I wanna talk quickly before I run out of your valuable time, and I really appreciate you giving me some of it today. I want to talk about retail media a little bit because I'll let you put this in your own words, but you started on Amazon and then. You've got first of all, maybe can you define retail media for me? Because I think it's a fairly new-ish thing.

Eric:

Yeah there's a probably a couple of definitions, but for our purposes it is using digital media to drive retail sales. So very simple. Definition, but for us even more specifically, we're using digital ad platforms where people are shopping digitally for in-store fulfillment. So we're using those ad platforms to drive in-store sales. So that would be your whole food ads, your DoorDash ads, Sam's Media, Costco Media, et cetera.

George:

Instacart, walmart.com, Instacart. Yep.

Eric:

that.

George:

Yeah. And when did you guys start getting into that? Because I think that a lot of that retail media is copying what Amazon is doing or had been doing on digital. From my point of view, it seemed like Walmart was the first one to say, we gotta do what Amazon is doing. When did you have clients start to be like you know about this.

Eric:

Yeah we always got that and still do. I get the wildest request and usually we'll say there's so much to do with just Amazon, that we're not gonna jump into this flip cart or something like that. the exception is if nobody is doing it, that's where I've seen it goes back to flipping phones between Craigslist and eBay or DeWalt drills from Lowe's to Amazon. To me, if there's an arbitrage. Not just for me, but if I feel like for a brand there's an arbitrage. I want to be there so bad. And I've been I've been hunting arbitrages. You might even pick that up in my LinkedIn post. I am all, I'm constantly chasing the next arbitrage. So in 2019 there was one of our clients brands we work with. Came to us and said, Hey there's this thing called Instacart ads, which I think we launched around 2017, if I'm not mistaken. can you help us? We're starting to spend a lot of money here. Can you help us? And I said let me, let's audit it. We audit it that I could see, we pulled keyword reports and they're running an auto campaign. I was like, we can double. Literally double their sales on their current spend. So we did it for free the first month. I said, let me, because we haven't done this, let me just do it for you the first month and just see what you think. And sure enough, we doubled their sales go, moving from auto to manual campaigns. we can make them some money. But then we started to see. Oh you can actually target a couple of different retailers and now this Instacart's not just a channel, it's a lever for retail, and we just went all, all in. It took two or three months to figure out how powerful some of those things could be. It's not just, maybe you're selling$50,000 a month through Instacart, but the value of your retail That you're driving especially when you get more specific into a, like an Albertsons media or something like that. So we really started leaning in through the pandemic where all that stuff just took off during the pandemic. So we've been leaning in since then.

George:

Yeah. Yeah, for sure. I'm trying to remember the first year that we used it. I think we were maybe 2019 using a little bit of Instacart.'cause you get. Sometimes nudged by retailers to do some of these things. Hey, try this out. But yeah, it was, I remember when Instacart was nothing and nobody knew about it, and now it's oh, everybody wants to do that sort of thing. So what do you think? what are the kind of like biggest levers, like what are the biggest things that you consistently see brands missing when you go audit? When you go audit somebody's Amazon, like you went and audit at our Amazon, right? What are the biggest things like that you, that people have in common that they're just, they don't know yet?

Eric:

Oh, this is my favorite question.

good.

Eric:

Yeah this is the best because I sometimes get to talk to people like you who've been doing this forever and you probably don't realize how much I learn and soak up from simple conversations and I get to do this at scale. Like I talk to so many founders or executives and sometimes really big organizations and I learn a ton One of the things that I think a lot of brands are missing is the way that club can be used and the way it can be manipulated. And by club, Costco, Sam's and BJ's. I've gotten to, I've gotten help do this and I've gotten to see what the way different brands do this. But I'll just give you a quick scenario. So let's say a brand is in they have a, they get a rotation one, one Costco region, and you know it you're successful. If you're not successful, it might be a long time before you get another one. If you're successful, you might get three regions next time. And then if you're successful again, you might get a national, and then if you're successful again, you might get I forget officially what they call full-time placement. And sometimes it starts with a very few clubs less than a region. But if you take Costco for example. You can drive a lot of sales. You only have to make it for a few months. You drive a lot of sales through Instacart. depending on how the listing is set up, you could do a lot through Costco media as well, or Criteo. Now, if you just turn on some ads and you don't really do the math. You're just gonna spend more. Honestly, if you really do the math and you look at, okay, they want this many dollars per club per week I think I can do this many organically. I'm gonna use some kind of field marketing team and then you really budget for Instacart for sure. Maybe Criteo, depending on how the listing is set up. You can really gain that and you just have to gut it out for, three or four months. You can really grow club if you really do it strategically. And I've seen and work with brands that have done that. I can, you cannot do it. You cannot guarantee it all through Instacart for sure. But you can do a lot of it. You can do a lot of damage through Instacart. You get into BJ's now you can do it through Instacart, Costco Media or Criteo. And DoorDash, partners with BJ's. So you and I always look at club value. You correct me if I'm wrong, but club is quite oftentimes the on-ramp to your eventual exit. You do so much volume in a, like a national placement with Costco or Sam's or even BJ's. But that sort of game, just get in there with at some point, I feel like brands just need to get in there with, just get as many clubs as you can when you're ready. Not real young. Brands shouldn't be doing that when you're gonna lose money with every single unit you sell, and you do that at scale and you're in trouble. But just that game you can play with club. Is just killer. sometimes it just seems like almost a cheat code right now.

George:

Yeah. I've seen a lot of your LinkedIn posts about talking about club and retail media for club being a big cheat code. I need to give you a club rotation to go to go work on for us.

Eric:

It, George, honestly, it scares the life out of me every single time. Every single time we do it.'cause you can't guarantee it. And I always say to the brand, don't budget anything that's going. if you don't land this, you have to be okay with where you land and the budget you spend. So if you're like, I'm gonna spend$50,000 a month. And then you don't pick up another rotation or whatever you're going for if that's going to bankrupt your business. It's not a good play.

George:

Don't bankrupt your business, I think just in general, the comment about it can be a on ramp to an exit or something. It's man, people I've talked to so many funds and people think differently about it. Like some people just some funds will think of club business as just pure leaky bucket risk. And then some funds will look at it as like complete opportunity. Especially the deeper you've got, like if I've got one club rotation and I'm trying to sell that to. A strategic they know the value of one club rotation, which is maybe nothing. Maybe I'm comping right? Maybe I'm comping down against that if it doesn't repeat next year. But maybe like a guaranteed like national placement is better. but either way it is a big it's certainly a big lever. Like it can move if you have an item that works for club.'cause I think that, like before you talk about retail media for club, you gotta have. An item that works for club. Yeah. And it's very, it's a very specific, it's not just like a price pack thing.'cause I think that you get when I talk to other brands, like people get obsessed with price pack. Really a lot of it has to do with are you meeting a need of that shopper? Are you meeting the need of the club shopper? Because the Costco shopper and the Whole Foods shopper overlap, but they don't go into Costco for the same reason that they go into Whole Foods, right? Which is why the stores look nothing alike because they don't have the same value proposition. And if I go into Costco thinking I'm gonna bring the same value proposition as I bring to a Whole Foods shopper, then it doesn't matter how much retail media I spend, I'm dead in the water if I don't bring the right. Product after I've got the right product, and then I gotta think about the right price pack. And then after I've got the right price pack, then I gotta think about retail media because you do have those hurdle rates where I've gotta move a certain amount of dollars per week and I've gotta be at a certain discount to to the rest of retail and all that sort of stuff. But Club is one of those things where if you've got the right shampoo or the right condiment or the right. Snack or whatever you've got, if it's right for club and you can invest in it and really launch it into the stratosphere. It is it is the quickest way to, to like ramp your business. you can't, it's really hard to ramp on Amazon the way you could ramp at Costco. It's just insane. Yeah.

Eric:

Yeah, there, there's definitely things that I think would look terrible I don't know if you've heard of a, of one time volume buy that Costco does. We worked with a brand that was like, Hey, we're doing this one time volume buy where Costco just came in and bought a whole bunch of trucks. And they're like, can we, can we ramp this up with retail media? And I was like what's the play here? And they're like eventually we'd to get a rotation. And it was a really. Very BFY brand. And I was like, man, you guys we're gonna have to convert for the word customer search for drinks. Do you guys think you can convert for that? And they're like, I, and now if you don't make it, now you have however many, however much volume you did this year that you're not gonna repeat next year. And what's that gonna look like in terms of revenue for next year?

George:

It's gonna look bad. We've done

Eric:

how volume at a loss, and then next year you don't get it again.

George:

Yeah. Yeah. And I would say that we've done stuff like that because sometimes you get somebody who comes along and you have a, Hey, is this a, we need the revenue? Like I would, we've taken it big revenue bumps, not at a loss, and even not at a loss. You're like. Hey, I gotta comp against this, next July or whatever you have. I don't know if I'm gonna get this order next July. So now I gotta go, say to my board and my investors like, Hey guys, we didn't get it this July. And the answer is always I don't understand. I don't understand. We got it last July. It was there last July. Yeah. Where is it this July? And you're like, that's, it's that's what a one-time buy means.

Eric:

Yeah.

George:

Anyway, this is it, man. I could keep talking with you for another two hours. But I've taken a lot of your time. And we've certainly pumped a lot of information into our listeners' ears. before we get off, where can people follow you? do you still have a newsletter? How do people get more of Eric Martindale into their inbox and into their brain?

Eric:

Well, LinkedIn is my preferred social channel. Eric Martindale, LinkedIn or you can always email me, eric@elitecommercegroup.com. Cool.

George:

And I'll post some of those in show notes But Eric, thank you so much for joining me, man. I hope you have a great rest of your day.

Eric:

Yeah, it was a blast. Thanks for having me.

George:

Bye-Bye.