Speed and Agility Trump Scale and Heritage: Warning Signs from the Hidden Economy, with Jeriad Zoghby, Former Chief Commerce Strategy Officer at IPG

Transcript

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Lauren Livak Gilbert (00:00):

Welcome to unpacking the Digital Shelf, where industry leaders share insights, strategies, and stories to help brands win in the ever-changing world of commerce.

Peter Crosby (00:22):

Hey everyone. Peter Crosby here from The Digital Shelf Institute. We have long looked to Jeriad Zoghby, CPG C-Suite Whisperer across leading commerce roles at Accenture. And until recently, chief Commerce Strategy Officer at IPG, he brings the data and the color commentary about the big transformations and strategies necessary to win at commerce. He arrives at today's podcast armed with two new sets of data about the platform shifts in CPG shifts that will demand deep organizational and process change for you to drive growth at a reasonable cost in the future. Welcome back to the podcast, Jeriad. We are so excited to have you back.

Jeriad Zoghby (01:04):

Same here. Love talking to you all and quite excited to cover this topic too.

Peter Crosby (01:12):

I mean, you always have new reports, new data that helps inform what's happening in the C-suite. And one of them that you've been working on recently, and I know this is near and dear to Lauren Heart, is the fact that organizations need to redesign to drive growth in the next 2, 3, 5, 10 years, to be honest with you. So I know you've got some great data from a lot of great conversations. And so before you dive into the data itself, I'd love to know why for you, you just see this as such a critical issue for sort of corporate, am I overstating to say for corporate survival? No,

Jeriad Zoghby (01:51):

No, no. In this context, it's funny you said because when you first introduced I was going, I see it as like an existential crisis, not a, Hey, we could do better, but literally if we don't fix this, we're in a lot of trouble. I also loved your very generous description of me of always having an opinion. I never short on opinions, I always have something to share,

Peter Crosby (02:12):

But always data too.

Jeriad Zoghby (02:14):

Yes, no, absolutely. In fact, to that question and also the premise of the report, it came out of two things. One was starting at about, and many of us in the industry saw this, right? If you go back to around 20 17, 20 18, we were all starting to feel things, but your CEO of most of the large brands just, it was not even on the radar. And I've joked about this, that having one of 'em give me a hard time going, look, I sell stuff in frozen and dairy. I don't care about Amazon. All it meant back then, and then you hit the C period where it didn't just accelerate adoption of digital, it fragmented our shopping, right? I mean, you think about it right now, I can walk into Walmart, I order through walmart.com, I can see something on TikTok that leads me to Walmart. I can shop on Chachi, BT, and end up at Walmart.

(03:06):

And that effect is, is that there's just greater fragmentation in the whole spectrum. And dealing with the massive scale of that is allowing smaller brands to really dominate in some of these channels. And it's where we're seeing the share down. So to your question, if they don't rethink the operating model, they're not going to be able to handle the new scale that they're dealing with because none of the models were built for this error, none of 'em. And so that's one of the things I loved about the report you all had. And then the other thing is, again, we're seeing it in the financials. It's no longer a thing where the head of commerce is frustrated they don't have enough people or they're not able to do what they want to do. It's now the CEO and the CFO talking about we've got sales decline, our sales are flat, our cost structures out of wh CFOs are leaning in to talk about retail media. So it is absolutely an existential crisis and you got to get back to the foundation to fix it.

Lauren Livak Gilbert (04:04):

And I love your point, Jeriad, about how organizations are not built for this. I mean, think about large CPG companies that have been around for hundreds of years. They're still built for in-store shopping like supply chain r and d, even the way their buildings are set up to collaborate and talk to each other. This is a big, big, big, big change. So I fully agree with you, and I think it's a good realization for anyone listening that this is a massive change.

Jeriad Zoghby (04:32):

I love the hundreds of years. It was an industry built for dropping off pallets and walking away and running a TV ad to pull through the supply chain. And now all of a sudden, and I think this is the really, we've been talking about this a lot internally lately. The future of the retail model is so dynamic that the traditional retail model, and I'm going to say something, it's a bit provocative here, but it's dying and dying fast. The future is a platform retail model. We saw this with Walmart As they made their pivot, they're looking around and going, I can make the one to 2% margins on my retail business, or I can make massive margins selling access to shoppers. And that's a platform model where you're saying, my job isn't to buy and sell your products. My job is to sell access to the hundreds of millions of people who visit my site, visit my stores, have things locally delivered.

(05:23):

It's a much more profitable business. But as soon as you say that as a brand, you look around and go, wait, I was used to dropping off the pallet. Now I've got a manage product page and a storefront and media. And oh, by the way, every retailer has its own algorithm, like its own game master deciding who's winning and who's losing. Every retailer has its own rules I've got to follow. Every retailer has its own competitive set I've got to deal with and I have to do that at scale. And to your point, that was never a thing that you worried about 5, 10, 15 years ago

Lauren Livak Gilbert (05:55):

And not LLMs. Yeah, exactly.

Peter Crosby (05:57):

Don't forget about ai. Well, I mean I think if we bring it back up to growth, where's the growth coming from has to be on, I would imagine every C-suite person's mind that you're talking to, if right now we're losing sales and it's more by leakage sort of than by some big competitor, they know how to go after big competitors. But if the sort of environment is set up where winning really does require scale and agility, scale should be the big company's friend. But the agility part, the ability to grab some market share every day by changing something, by learning something, by doing something is now going to become more possible in an AI powered content supply chain or whatever you want to call it. But you have to make sure that you're set up to be able to do that at that scale. And it's complicated. And it's not technology, it's process, it's incentives in charge of identifying where that growth is and driving everyone towards it. The

Jeriad Zoghby (07:19):

How.

Peter Crosby (07:20):

Yeah,

Jeriad Zoghby (07:21):

I couldn't agree more. It's funny, as we also looked very recently, first of its kind of analysis who's winning? Because there's always been a question in large, if you walk through a physical retail who's winning, I mean large CPGs, they own the shelf, they own the best shelves, they own usually more than half the shelf. You get into a marketplace environment, it's a completely different ballgame. And to the question you were just posing is speed and agility trumps scale and heritage. And we've now seen it in the numbers. The numbers are shocking how well the small brands, especially third party sellers who would've normally never had access to the shelf, how well they're performing sales wise, not just winning a shelf, but literally sales winning out on sales is shocking. And so when you're a large brand, and I think this gets to the core of what both of you're saying and what I loved about your report, it's not sufficient to go and say, now I have some AI enabled tools to do what I was doing better because what you were doing was never built for this era. It's not going to be good enough to upgrade it. You literally have to build an AI native operating model in order to deal with the scale and complexity that we already have today. And to your point, what's coming, it's just going to go faster. So if you're not fast and agile now it's going to only get worse over the next year or two.

Lauren Livak Gilbert (08:52):

And you mentioned the CFO role. I think that it's super to make sure that the CFO is a part of these conversations, but in general, from which C-suite roles are you hearing from that are focused on this and are a part of the conversation and you think need to be involved to be successful?

Jeriad Zoghby (09:10):

So let me highlight, just so I don't lose because I want to answer that question. There's two reports that we did very recently. One of 'em basically is the C-suite interviews 40 C-suite executives of CPG companies and what they were saying, and then the second one was, how are the big CPGs compared to the small, right? So for the former, to your question, what shocked me was the CFO's perspective two, one, I was part of some of the interviews and it was very interesting. We have a very large, very, very well known strategy firm who led these interviews and I was in one of the very first ones and the CFO said, Garrett, I totally get this. The thing is we've been paying retailers forever, slotting fees and co-op dollars and stuff. And I said, yeah, but they didn't report it to the street. And he froze and he goes, oh my God, you're right.

(09:59):

That's very different. And I said, yeah, it is going to mean that they're going to put their foot on the gas because this is where they drive their margin. And it really opened his mind. And that was in the early step, and that was somebody who had actually been A CFO but wasn't actively doing the role. As soon as we got to the active people in the traditional interviews that was, like I said, we were teaching the strategy firm how to do these interviews. They're very much in tune with this. And I would say the thing that comes out is the difference between return on ad spend, which is more of an operational metric and return on investment, which is more the c ffo metric. So they may look and go, yeah, it's great retail media, you're getting a better return on ad spend, but at the CFO level, all they see is my costs are going up and my sales are not, and that's not sustainable and that is part of their job.

(10:45):

So I think what's interesting is the CFO is now leaning in, I think the head of sales or the chief commercial officer or chief growth officer, they're all starting to pay way more attention to this because it's finally impacting the top line numbers the way they're managing it. And I went to Cagney in February and the CEOs were finally starting to talk about this, not all of them. So I think that's the difference is for all of us who've been living in this space, you have a lot. Lauren and I are part of a community of commerce executives and stuff, and they're very knowledgeable of all this. It's been the C-suite who hasn't fully grasped the risk to the business, and I think the C ffo is probably the one leaning in the most right now.

Lauren Livak Gilbert (11:29):

I just think that finance as a whole needs to be brought into retail media planning conversations, digital shelf conversations like yes, the C ffo, but also for anyone listening, bring your finance partner in as you're doing joint business planning, as you're doing strap planning, the more that you can educate them around the why you're spending all this money and where they're going to see the return and when the better. You'll be able to collaborate moving forward. But traditionally, you've just kind of given them a sheet of paper and been like, Hey, analyze this or give me my budget. And that's kind of in those old ways of working, right? That's not how we are going to work moving forward in order to be successful, and that's part of that agility. So I just want to double click on that finance piece for anyone listening, bring them in, start educating them and make sure that they are a part of that overall conversation.

Jeriad Zoghby (12:19):

Yes, it's a great point. We had 15 of the 40 people that were interviewed were CFOs. They were way more in tune than we realized, and they understood that the margins were getting squeezed and it was going to get worse. It's funny if you're reading something like an Adweek or an adage or, oh, retail media is growing, it's so great. Not if you're a brand, not if your sales aren't going up, it's not a positive sign. The other thing I was really shocked by was that same group of 40 execs. We had CTOs, CEOs, a handful of CMOs, not as much. We had some head of sales, but was how much they recognized that their competitor had shifted. It had always been that other brand on the big fiscal shelf who they were fighting for shelf space for. And now all of them were acknowledging the small brands were the real threat small and private label.

(13:12):

Because one of the reasons we did the second report and somebody, I had a quote in that report, lemme see if I have it up, I don't have it with me for a sec, but they referred to it as basically the Romans versus the barbarians, and they were like, we're so used to doing things a certain way. We don't have the agility that we need and that's who we're competing with. That led to the insight that many of 'em came up with, which was our siloed functions are going to prevent us from being able to compete in this new world. I was surprised that the insights they had around that, they not only knew that they were disjointed, but the objectives within in each of the function, and I'm not talking just within commerce, but supply chain marketing, commerce, working at odds with each other. Even to today, I would say most companies don't realize that by not using social to push traffic into their commerce channels, they don't realize the benefit to organic search rankings and how you get a double benefit if you just drive the traffic into the commerce channel. And it's so hard for a brand to do that because socials manage elsewhere and they have their own objectives and it's completely disjointed from what you're trying to do in commerce,

Peter Crosby (14:22):

The outcomes that you're looking for. Yeah. So what do you feel like based on all the mulling you've been doing on this, I know Lauren has her opinions, what is the biggest reason as to why today's current org structures don't work and what does it look like to take a move on that? What's the risk of not

Jeriad Zoghby (14:46):

Evolving? It's funny as remember I'm ex Accenture consultant for a long time. It's hard to move a big ship.

(14:56):

It's hard to do change like that, and it is truly fundamental change. You're talking about op model changes, org, structured changes, ways of working, because I think we're all agreeing is you can't simply say, here's how I've been doing the work forever. Now I've got ai because I'll give you an example. If you've got 2000 products you're selling across Amazon, Walmart, target, Krogers, which is a good portion of our mid-size CPG major CPGs mid-size, that's 8,000 product pages you're now responsible for. And as Laura and I can attest to, most companies will admit they're managing maybe 10% of those on a six month cycle. So you look at that and you go, right now, maybe I'm looking at a few hundred of these that I'm optimizing with all the intelligence I can a year when you really should be doing about 8,000 a week, I can give you all the AI tools in the world you want.

(15:55):

The most enhanced tools in the world is. But if it's following the old process and the functional silos, you're not doing 8,000 updates a week, you're not doing 8,000 updates a year. So the only way to do that is to rethink the entire operating model and process starting over from within AI native framework. It doesn't mean you're replacing all the people. The truth is, if you kept the team the same size and you started to bring in a true agentic process, you'd probably still need the same people because you're not only not doing 90% of the work just for things like product page optimization, you're still not doing things like excess inventory, rebalancing, marketplace risk monitoring. There's all sorts of, so you look and you go, I need the team I have, I just need to rethink how that team does their work from the ground up. It cannot just be that they're doing what they did already better. You need to increase the efficiency by a hundred x. So I don't know if you agree, Lauren, but that's to me, the thing is you cannot upgrade the old model and think that you're going to succeed in the long run.

Lauren Livak Gilbert (16:58):

If anybody can see my face, I'm nodding vigorously as you've been talking, but yes, I a thousand percent agree and it Jeriad and I can sit here and say, break it and start over. We know that that's hard.

(17:11):

It's so hard, it's so, so hard. But there are some very fundamental things that can be done. I think the thing we always talk about, Jeriad, is shared goals. Even if you think about making sure marketing and sales and supply chain and r and d are all working towards one unified goal for a company instead of like, okay, supply chain just is focused on this and then sales has a non e-commerce number just for in-store for Walmart, and I don't really care what the e-commerce team does. There's little things like that that can help with that fundamental shift, but I also think it's a big culture change. It is a really big culture change, and I've been doing a lot of investigation and discussions around this because it becomes more of a collective we rather than an individual. And that means that all of the information that you have and you're sharing across the organization is for everyone. That means your idea can be moved from supply chain to marketing to sales, and they can build on it. And it is just a very different mindset shift where you're a collective, not an individual, and that goes against the way that people are metrics. So that's a

Jeriad Zoghby (18:24):

Great point.

Lauren Livak Gilbert (18:24):

I would love to hear what you think about that, but I've been really diving into that cultural shift.

Jeriad Zoghby (18:28):

No, no. So I come from, as you both know,

Lauren Livak Gilbert (18:32):

Supply chain

Jeriad Zoghby (18:32):

From supply chain and manufacturing. And the two things I would say is whenever you have massive change like this, you're usually looking one to say, is it possible? Have we done this before? And two, I need, and I know this sounds crazy, financial leverage. I don't care how great the solution is, I don't care if we all agree on it. Change is hard. I just cannot understate that. And the one thing I saw in my early days was first you need that financial leverage. I'm going to talk about that. That's that second report that we had put out. I think people need to realize how big the risk is, and that allows the CFO to stop being the person who's coming over to the shoulder and saying, why isn't this better? And start becoming the advocate for doing it a different way. That's the problem I think is happening right now with the cfo is they're trying to do the right thing helping, but what they're really doing is being the critique of how you're doing things instead of the enabler.

(19:27):

And I do think the CFO can be enabler, and that comes from me coming from the consultant site where I've seen that work. The second thing is, have we seen this before? And I think of this as an inflection point. I mean, we have now hit a scale. Again, you go back five years ago, Krogers dot com's not a thing. Walmart curbside is not a thing. You didn't have to worry about a lot of this stuff. It really happened over a very short window of time. So now you go back and go, okay, it's only been five years, but we've hit an inflection point where the model that we've had, which by the way, all the people who built their models coming out of COVID, incredible work. It wasn't built for this though. Where have we seen this before? It was in the back office, the supply chain manufacturing 20, 25 years ago.

(20:13):

Same thing. Problem got too big. What did they do? They moved to what you call systems. They stopped saying, Hey, you go take your reading and you go take your reading. And they basically said, no, no, the readings are part of the system. Your job is now to manage a system. I'm not an SEO expert with an SEO tool. The SO expertise is in the system, and my job is now to manage the business with that system. And that is a really, going back to your point, culturally monumental flip. Not everybody's going to be happy about it, but the truth is it doesn't work otherwise. So I do think those are the two things. If I was in those shoes, get the financial leverage of the CFOs on my side, remind everybody that this has happened to the back office, but until generative AI came along, you couldn't do equivalent in the front office. That's what's really changed in the last three years.

Peter Crosby (21:01):

I was talking with a head of e-commerce the other day and he was essentially saying, a lot of my job is becoming prompt engineering about getting really good, being the superior brain, applying his knowledge to how the world should work, and being able to then see what AI comes up with and be the smart one, kind of knowing how to direct it. And that set of skills I think is incredibly important to develop over this next period so that you can free yourself up to do that so that you are sort of talking to the system and guiding the system so that it can work at the speed of agents and input coming from digital analytics programs like actually leading to action for the first time instead of just data. That's the part we have to get to for all this to work at the kind of scale and speed that you're talking

Jeriad Zoghby (22:03):

About. I couldn't agree more. I would say that the thing that happened is scale used to be the greatest security blanket

(22:11):

For major CPGs and now it's become the greatest burden. If I'm a small brand who has 50 products, and I've seen this for many of, I've been working with Uni C for a long time, who had his own company went public. It amazed him because when he was running his company, he had hundreds of products. If they needed to change to A PDP, they would do it in 30 minutes. They would just make shit happen and they wouldn't just make stuff change. They would literally go, no, we're checking all the consumer reviews, we're watching all the search trends, we're seeing what's happening with all our competitors, and then we're bam, bam, bam, bam, bam. And small businesses who were built in this era operate that way. But if you're a big CPG, you're looking around and going, well, hold on. I have those 8,000 product pages and the storefronts a way bigger competitive set way more complex.

(22:59):

And your point, what you just described, you're looking going, I need to pivot away from doing the bit piece work. It's not scaling and moving to that level, like that small brand who's way more agile, way more inside and going saying, no, no, no, I got my report this morning. The system's optimizing everything, but I'm looking through things and I'm seeing that there is a big concern with packaging right now that's starting to form not just for me, but in the category. It's a great opportunity for us and how do I coordinate this? We need to change the way we do the work because otherwise the scale is going to be the greatest burden that there is for these big brands. They just can't compete. And if you don't mind, I'll keep this short, but that other report which we'll share healthcare, the major CPG brands versus the smaller brands.

(23:49):

The smaller brands are winning 93% of the sales on those shelves. Skincare, which you wouldn't think would be it's 70 to 30. We're not talking about where, and that actually really shocked us. Small brands are winning. It's 16 of the 18 categories that we looked at. We looked at pet, we looked at personal care and beauty, we looked at center store, we looked at health and wellness. And the truth is the small brands are already winning and in some cases substantially. When I mentioned that thing about financial leverage, if I had one real important message for everyone, it would be today everyone's looking inside and saying, why aren't we doing better? And they don't realize it's not me as a brand issue. It is an industry-wide problem as a major CPG, my scale as a burden is causing all of us to bog down and we can't keep up with the same speed. And that's allowing these more agile small brands who are now massive in numbers to actually win the shelf and not just win the shelf. Like, oh, I got better position literally owning the sales in the category.

Lauren Livak Gilbert (25:06):

So Jeriad, because I know everyone listening is probably like, oh my gosh, what do we do as a large CPG company? And I know Jeriad and I spend a lot of time talking about this, and there definitely are some steps you can take. So what would be your top two, top three to start with? To get ready for the change or to see a big impact?

Jeriad Zoghby (25:28):

Okay, yeah. Number one, I would say treat your product page as your most important brand asset. I cannot stress that enough. Your product page is not only where people transact digitally, it is also the thing that informs them when they're walking to the store and they're trying to look up reviews or ingredients or features. And it is also the thing that the lums are crawling. So when you think about it, we've gone from a world where that TV ad was the most important brand asset to actually that product page. Things like the specifications, which is a thing that many people don't even bother to fill out has now become critical because when I'm searching on LLM and I'm going, yeah, I saw about this one ingredient and whatever, and if it's crawling that information and I'm not in there, it's lost. I would say elevate the product page to be the center of the brand's proposition. I know that sounds kind of anti brandand in many ways come from a marketing world into a commerce, but we have to realize that the whole world switched, Chachi PT is now a commerce channel and the product page is actually the brand ambassador for it. So if we don't make that pivot, I think that's the first one. So I'll pause there for second.

Peter Crosby (26:34):

And also I would say your brand is becoming whatever the answers are to a consumer's question in a chat bubble. And those questions are about why is it better? What do reviews say about this? It's the sort of the non hard data that actually is what causes somebody to go over and make a choice. Or even before that, what will LLMs recommend? It's going to be the stuff they can answer reliably. And that's where I think what you're talking about, which is then start with the product page.

Jeriad Zoghby (27:20):

How be the product age? I'd

Peter Crosby (27:21):

Be an anchor and build the ability to do that on a flywheel and then expand from there makes a lot of sense to me.

Jeriad Zoghby (27:30):

And I'm not saying it's the end all,

(27:33):

But I had Justin Light, good friend, brilliant Mind workflow labs genius. He and I were catching up at Unboxed and he made the comment that Jerry, the only consciences in the world are producers and consumers. And I love that point because it says everything in the middle. Again, I can walk through Walmart and buy something. I can do walmart.com and have it delivered my house or curbside. I could go, TikTok could link me to Walmart, catchy PT could lead me to Walmart. His point was we're going to continue to see fragmentation and evolution in the middle. So you look at that and you go, what do I own? That is the thing that kind of flows through the lifeblood through all of that. And that is honestly the product page. I know it sounds crazy, but it really is. And so should you be creating other content? Yes. Should you still be doing things in social? Absolutely. Should you still even do some of the video? All I was saying is if that's not at the top of the priority list, you're not prepared to compete in today's age period, whether it's a LLM, whether it's shopping digitally, whether it's again, walking to the store and just trying to find information on the product, you're just failing. So I would say that's priority one is because that's going to help you with everything else.

Peter Crosby (28:44):

And can I ask you, you were chief commerce strategy officer at IPG, so I would imagine a firm that's in the business of doing a lot of big swings and big creative and all of that kind of stuff, how is that playing for, because those agencies are the ones that are serving these people and helping them make those strategic investment decisions and things like that. And I imagine that's a change for them as well.

Jeriad Zoghby (29:13):

I think it's for the whole industry.

(29:16):

I was fortunate enough, I won't name names actually with some of the senior most people at Amazon with inbox I was having lunch and I don't think most people got it that they were talking about their full funnel. That was their whole thing. You can now personalize to the top of the funnel, literally show different ads in live TV to different people and you can connect the data all the way down to the bottom of the funnel. If you're doing things like creative for TV advertising and you're not looking at these commerce channels as going, one, I need to be able to use this new canvas in a way that I hadn't even thought it's the most powerful and provocative media ecosystem we've ever had, but if it's not tying back to my product page and I sell in this channel, shame on you just such a miss.

(30:06):

It's such a miss. But I would argue that when I said this to them, I said, I don't think they're grasping the full funnel. And the response was, they're not, but they will. And I think it's because the small brands will show them the way, sadly enough enough of 'em are starting to make their way up the funnel that they will lead in kind of trailbla and help people understand the potential of it. But I don't think as an industry as a whole, there is a grasp of that question to your point, that the PDP should be literally the top of the priority list and everything should be about getting people to it versus the other way around.

Peter Crosby (30:41):

It's the foundational fuel of incremental growth. If you don't, like you said that earlier, if it doesn't have its shit together, then none of the other things that lead things to it and that then create the conversion and that then decide how they're getting it and where they're getting it is going to be able to operate. If you can't get to that point.

Jeriad Zoghby (31:05):

And Lauren, back to your question, the second thing, simple direct messaging to leadership on the financial implications of this, I cannot stress that enough. If you're going to drive change, whether you're putting in a new system, whether you're rethinking your entire operating model, whether you're just simply trying to make sure that the CFO is on your side to help you do what's needed, it comes from two things, financial argument that is not overly complex. It's simple. It's one of the reasons we did this report was so someone could go and say, our categories as major CBDs we're losing, am I losing? I should go look into this. And then the second thing is talk in their terms. The CFO doesn't give a shit if you're getting better return on ad spend. If the ROI has negative, they just don't. It's like a ship that's sinking and they're like, Hey, but we've got better buckets for scooping out water. And you're like, it's still sinking, that's great. We're sinking slower. But that's not an actual answer. So those would be my two pieces of advice. I mean, everybody has to figure out the right solution for them, but those two things should be constant through whatever your plan you have. So

Lauren Livak Gilbert (32:13):

I love that. And I think the one ad I will make is I feel like brand.com is also getting a facelift as well in this new era, right? Because yes, the PDP is definitely where you should be focusing your time, and that's where the conversion happens. But for all those brand sites that all these CPG brands have had that were just like where to buy and they didn't really have a lot of information, well now LLMs are scraping that and you own that. You own the information you put on that site, you can add more claim information, you can add instructions, you can add data that is context to feed the LLM. So there's a lot of owned properties that are in the control of the brand that can actually influence a lot of what's happening with Chacha, BT and Rufuss and Sparky and all those things.

(32:59):

So new facelift to the brand.com. And then the other thing I think that we've talked about a lot, Jeriad, in tandem with what you just mentioned around the simple financials is also just a simple story. My favorite part of one of our dinners was someone said, I went into my C-suite and I said, if you are not on the first page of search, they're not going to buy your product. And it just clicked for them. But that's such a simple sentence and such a simple story. So as a brand, find your story or find your sentence and then just go explain it to your leadership and it makes such a big

Peter Crosby (33:33):

Difference

Jeriad Zoghby (33:34):

Over and over and over

Lauren Livak Gilbert (33:34):

Again. Yes, over and over and over and over again.

Jeriad Zoghby (33:38):

First of all, I love that and I couldn't agree with you more about the brand pages and the fact that stuff is growing. I'm going to say two things that if you ask me where would my, and I'm a conceptual person, so I'm always like, how do I set the direction and then we'll figure out how to get there. The figuring out is super critical, but if we're not all aligned to the direction it becomes a problem. So here's the two things. One, it's not just about creating speed and agility, it's about creating speed and agility. That's the equivalent of a small brand. You really can't just say, well, we're doing things faster than we did before. And you're looking around and going, these people are updating their page literally in 24 hours. They know they can take it down in 24 hours. They're able to look at all the consumer, you've got to be able to get there.

(34:23):

And that should help you back into what do I need to build to achieve that? If that was a thing with somebody I was working with and they were doing some great work, but I did kind of challenge 'em going, I think the model you're building will help you do like 500 optimizations a year. And I said, but you need to be doing 40 to 50,000. And I think that was a bit of a shock to them to think about it, but it helped them go, oh, you're right. I'm way bigger. I have way more to manage. I need to be able to operate like that. The second thing is at a really high level from a, there's something in this report that's kind of sneaky threat. It is like that. You start reading the report, you're like, oh, small brands are being big brands, but there's something in there that I'm going to put out there.

(35:10):

Not like it's meant to be sneaky, but it should scare the living daylights out of every major CPG brand about where the world is headed. Again, this gets back to the idea that retail as the traditional model is dime. We're all moving towards platform models and Walmart has made that pivot. They make way more money off of selling access than they do selling products. In the report, it goes into simple flow. Small brands are winning in 16 to 18 categories. The only category big brands seem to own is cat food and treats, which is amazing to me, consistently minute. But then we take those small brands and we break 'em down and we look and go, who's really in the small brands? And you've got Amazon private label, and we picked Amazon because it's basically the bellwether for.com, but Amazon private labels in there, small independent brands are in there and third party sellers.

(36:07):

And what's really interesting is third party sellers is the dominant player in almost all the categories. And when you just look at third party sellers by themselves versus major brands, they're winning I think 15 of the 18 categories by themselves. And in some cases pretty like skincare I think is like a 63 to 37 split. I mean, they're winning easily. Now, the reason that's not the provocative part. This is the part that your C-Suites won't know. Those third party seller brands, Amazon's not buying their product. They have complete control over the pricing. They would've never gotten access to these shelves otherwise. And because of that, they're willing to give up a ton up to 50 cents on the dollar in their sales on average is what we've heard was they're paying a commission fee for every sale. They're paying for advertising and they're paying for fulfillment.

(37:00):

They want to be two day prime. They do not have better ratings than the major CBGs. Even though they're winning, they do not discount more relative to the list price. Now, granted, packaging can make things complicated, but still they don't discount more. What they do is they own the shelf. They're like an 80 20. There are so many more of them. And some of you know, I used to do this thing with the neck wrinkle cream, and I'd always pull it up and show people and go, look how long it takes to find a major brand. And there's these small brands selling 50, 60,000 units a month, some of them up to 200,000.

(37:35):

These aren't small sales. These are massive sales. And especially when you look at them as a whole. And the reason the provocative piece comes out is when you hit it and you go, they're winning. They're a massive collective and it's effectively a new private label model because unlike the Amazon private label model where they've got a contract with someone or they have their own factory, they have no obligation to these companies at all. It is what you call an asset like private label model. They have no commitment, no requirements. Someone else beats them out. They're like, Hey, I'm good. I still make the same kind of cutoff this stuff. That's why it should be scary because this is not about competing with big brands. It's not about competing with small brands. It's about competing with a new economy, an economy where the marketplace and the third party sellers are in a combination, a much bigger threat to a major CPG than anything by itself.

(38:32):

And you have to realize that is the future. It's where all the growth is coming profitability wise. It's why Walmart's doing it. And I would remind everyone, and this is the part that I didn't even think about until this report came out and we finished doing all the numbers on Walmart and Target and some of the other platforms, you can kind of tell who's a marketplace seller. You can't tell on Amazon. It is so seamless and beautiful. I have to teach people. I've worked with some reporters and we go and say, you see where it says sold by you? Notice it doesn't say Amazon. That company is literally treating this like a flea market where they've set up their table and they're just selling. It's like if someone set up a table inside a Walmart and said, no, Walmart let me build a store within store.

(39:13):

I get to sell whatever I want here on this table and I've invented my own product. That's what we're talking about. But it's so seamless. They're right next to the big brands. That's the real threat. And the story in this thing goes through that small brands are winning. It's really third party sellers driving it, and it's really behind this new private label machine, which is a different kind of, and we call it the hidden economy. It's that hidden economy that, sorry for the super long ramp on this, but you can tell I geek out of this, but this hidden economy, we

Lauren Livak Gilbert (39:43):

Love

Jeriad Zoghby (39:43):

It. The biggest threat there is to a major CPG and not seeing it. That's one of the things you should make sure in your messaging to the C FFO and CEO, because if they see that, then they realize this is truly existential. This is not about a small brand we can acquire and everything solved. This is about a machine that's going to keep running. So

Peter Crosby (40:03):

Well, as an endless fan of our listeners, I would've to say if there are any people in the industry that can pull these conversations off that we're talking about, that can sort of punch up with data and storytelling and financial proof. It's the people with their ears to this podcast right now because we've seen it. They've already done it and now. And so if you can get the scaries away and think about the opportunity, that sounds pretty cool. And then to close out, Jeriad, because you talked about these two reports, where the heck can our listeners get these reports?

Jeriad Zoghby (40:45):

Well, we have a website called Compete. Compete, not Competing, compete@machinesfeed.com. And the reports are in the carousel at the bottom. One is called The Hidden Economy, and that's the one where you'll get the data. And I think that's a really powerful one for you to be able to use and show is my category being dominated by small brands third party, and it even breaks it down. You'll see how the private label's doing and stuff. And then the other one, which is actually a point of view call competing at machine speed is also at the bottom there. And that has the C-Suite interviews. So if you want to see what are they saying, and it kind of takes you through everything. But the other one is fresh off. We snuck it out right before Thanksgiving. This report a, we did a thing on IT Media Post did recently, but we really haven't gotten out to the CPG world. But it is a shocking set and it's got a bunch of nice tables in there. You can just take out of there and use 'em for leverage to get the funding you need to do the right thing.

Peter Crosby (41:42):

I love it. compete@machinespeed.com. Jeriad, thank you so much for coming and just talking this through with us. I think it is the Clarion call of 2026, and I'm excited to see how the year unfolds for all of us at the DSI for you and for our listeners. I think it's exciting times.

Jeriad Zoghby (42:06):

Well, I love geeking out with you all. I love that you let me ramble on forever. It's very kind of you and Lauren and I always love to talk about this topic. And by the way, I love the report you all had. I think this is, everyone should be making this. The number one thing they're looking at is their operating models going forward. So thank you for inviting me. I've had a blast.

Lauren Livak Gilbert (42:26):

Thanks so much, Jeriad.

Peter Crosby (42:28):

Thanks again to Jeriad. Hope we found the right mix of fear, inspiration, and practicality to help you take your place as the chief engineers of this next transformation. The Digital Shelf Summit in May in Atlanta is a perfect place to dive deeper into all of this with your peers and some of the most knowledgeable folks in the industry. Digitalshelfsummit.com. Thanks for being part of our community.