Behind the Brand®

Jeff Adamson [00:00:08]  Welcome to Behind the Brand presented by Neo. We take an inside look at the leaders behind today's most influential brands. I'm your host, Jeff Adamson. As co-founder of Neo Financial and SkipTheDishes, I'm fascinated by what it takes to build great companies. On this podcast, we'll learn from leaders that are reimagining, transforming, and innovating in the financial and retail industries across Canada. Let's get going!

Our guest today is P.J. Worsfold, Director of Ecommerce at JD Sports Canada. Always ahead of the curve, P.J. started his career in digital media and e-commerce in 1996. An expert at bringing together digital technology and business strategy to sell great products in-store and online, P.J. has built some of Canada’s largest online shoe retailers.

In 2020, P.J. took on the role of Director of Ecommerce for three of the JD Sports Fashion banners. Established in 1981 with a single store in England, JD Sports is a leading, global digital retailer of sports fashion and outdoor brands. In 2021, JD Sports entered the Canadian market, opening 10 stores in its first year with plans to add an additional 15 across Canada in 2023.

P.J., welcome to the show!

Okay, P.J., I'm gonna start with a really difficult question. How many pairs of shoes do you own?

P.J. Worsfold [00:01:20] Probably 20, give or take. I keep things for a long time. I love my clothes and I love my shoes, and so I've got shoes that were given to me probably 20 years ago that I wear from time to time. I don't throw things away.

Being in retail, one is often conflicted, or I'm often conflicted about it because I have a problem with consumerism. I have a problem with the waste that it generates. But by the same token, I love products. I love cool stuff. So I am very, I guess, conscious of things that I bring into my house and my closet. And I, I treat things well. I don't throw them away unless it's, they're literally falling apart. You don't tend to acquire a lot. And also in this business, you see the hype of things and you become kind of immune to it to a degree. So I don't have a need to be like, “Okay, I gotta buy this one, I gotta buy that one.” With that said, I mean, I definitely have a lot of nice stuff.

Jeff [00:02:16] So let's go back to the beginning here. Where'd you grow up?

P.J. [00:02:19] Well, I was born in Hamilton and then my mom and I moved to Vancouver when I was three. So I claim Vancouver.

Jeff [00:02:26] And you have been involved in e-commerce pretty much since the dawn of the internet. And when I think about the late nineties, early two thousands, this is when people really weren't looking at the internet and people were still skeptical of whether or not it was gonna be a thing. And how did you go about thinking about making that career choice of really going deep on e-comm?

P.J. [00:02:45] It kind of came together naturally. So I did a year of university at Western. I had no idea why I was there other than that seemed like the natural thing to do. Guidance counselors or whatever they were called at the time said…

Jeff [00:02:56] Good party school too. [Laughs]

P.J. [00:02:57] Yeah, well, that's it. Um, that is really it. [Laughs] I had a guidance counselor that said, “Oh, you're, maybe you're not cut out for university.”

And I'm like, “Well, fuck you. I am cut out for it and I'll do it.” And I scraped together grades that were just good enough to get into Western and everybody's like, “Oh, you're gonna have a great time.” So cool, I did it.

A good friend from high school, actually from elementary school, he and I went there together. We were roommates and we had a great time. But I didn't know what I was doing and why I was there and, and so on. And, at about that time I became aware of electronic music. I went to my first rave in London in like the basement of a, like a community hall. I can't remember exactly what it was.

Jeff [00:03:38] But London, Ontario, not London, U.K., right?

P.J. [00:03:39] Yeah, yeah, yeah, yeah. Hey, if it was London…

Jeff [00:03:41] Different levels of raves.

P.J. [00:03:42] London, Ontario, tiny little rave. But this music was just really exciting. Exciting in a way that I wasn't getting at all from university. So, long story short, I just said, “This is not for me. I'm gonna go back. I want to get into music,” and a friend that was down in Hollywood at the time at, uh, a school called M.I.T., not the one in Michigan, but Musicians Institute of Technology in Hollywood.

He was doing a bunch of music studies there. He and I agreed to start a music studio back in Vancouver and just dig into electronic music, dance music. We wanted to learn all about it and produce it. Growing up, I was always in bands. Music was kind of my first thing I gravitated towards culturally and that led its way to fashion and stuff like that, that we'll talk about later.

Got into tech to make this music. Learned about, yeah just computers. And at that time, the internet, this is, so this is like 96/97. The internet was at least something I was becoming aware of. I played around with, with, uh, bulletin board services and the like, kind of just outta high school. But that was just more, just kind of out of curiosity.

But then, you know, as this tech started to become something that more and more people were on, it was a way to promote the music. I bought that book ‘Teach Yourself HTML in 24 hours’. And I did. And so I made a simple website and it just sort of grew.

And as that was growing, I became aware that the music business just wasn't for me. I liked the idea of being a musician better than actually being a musician. And, and maybe this, my skills just weren't where they needed to be. My buddy Sean that I was working with, he's now a successful video game and, and film scoring guy, like he was somebody that was all in, you know? And I wasn't all in, but what I loved was the tech.

And so web kind of opened up and you know, now we're kind of late nineties and I connected with another buddy of mine and we said, “Look, let's just start a consulting company and let's just be, let's build webpages for people and let's learn how that works.”

And so we connected with a couple guys that had just finished their MBA out of UBC and they were trained as pharmacists and they wanted to start a business selling prescription drugs online. And they approached us and it was just like, “Look, e-commerce, let's figure it out.” So, You know, I remember dealing with banks to get merchant bank accounts and then dealing with hosting companies to get an SSL certificate and 350 bucks and you get this SSL certificate and then we gotta figure out how to put it on. And we were running their whole site on an access database. Super nerdy, but I don't think the credit cards were encrypted like it was, we were just figuring it out as we were going.

I guess that, so it just kind of dropped my lap, but it was figuring things out as you go is something that, it's a recurring, I guess, pattern as, as I look back and think like the music was kind of like that now e-comm was kind of like that. And yeah, so to answer your question, it's kind of dropped in my lap a little bit, but I was, you know, at the right place at the right time and it was interesting.

Jeff [00:06:37] I imagine you work with a lot of people who come from more formal education. Do you notice a stark difference between people who have kind of learned it the way that you did versus people who were more traditionally educated in it?

P.J. [00:06:47] So I did everything backwards. Like I ended up doing my undergrad online when I was 30, and then I did an MBA when I was, I think 35 at UBC. So, I was backward. I think it comes down to the individual. One wants to say, I guess, that people that have that formal education are more rigorous and I certainly see that.

You see that with a good developer. I'll often come to them, come to a developer with some idea and I'll just, “Blaaaaaah, here's my idea”, and they'll, they're just like, UX people are also really good at doing that. They'll just, you know, okay, dial you back, dial you back. What's our MVP? What are you, why are we doing this? What happens if this? They force you to think through it so they have that rigor. I think it could be said that people that start with that traditional or more formalized education come prepared with that rigor.

Jeff [00:07:36] Starting out your career that way, P.J. — figuring it out as you go, get clients, figure out how to sell drugs online, then transitioning into more of like traditional workforce, like working for larger companies. Was that a hard transition for you?

P.J. [00:07:50] Yes. It was, because I was a little older. And if one just does like the usual you know, kind of path, trajectory, you leave university when you're 22 and then you do these junior things and then you kind of go up and up and up. Your cohort, the people that you're coming up with, everybody's about the same age, doing about the same things.

If you come in late, kind of five years late, six years, whatever it was, because I spent all this time doing music, it is a little bit odd and it's a little bit like, where do I find my footing here? And so I had some funny roles. Like I came in as a consultant at a few agency roles and then that turned into a contract and then I stayed around longer, but I was never really senior because I was brought in as a consultant, but I was never really junior because I had sort of different ideas.

So I think to answer your question, yes.

Jeff [00:08:41] Well, the reason I ask is so often you'll see people get labeled as, “Oh, that person's a startup guy or girl”, or you know, “this person's a big company person.”

What I always find interesting is when you have people who maybe are a startup guy or girl and they go and work for a large company, and then how does that company adapt to that individual or vice versa. And sometimes the company is like, “Hey, we need that type of thinking in order to make the changes that we need.”

And sometimes you'll have a small company that's just all over the place and you need someone from a big company to come in and put in some structure. And it's really this like…

P.J. [00:09:16] Yes.

Jeff [00:09:17] This magic of figuring out how to work together. If I went into RBC today, I imagine that would just be a, it would be a train wreck because like their culture is just not made for someone to come in with tons and tons of change really, really quick.

P.J. [00:09:28] Yes.

Jeff [00:09:29] And vice versa. If someone from a large company came in to Neo, I think that would be fairly tough because like we have to be able to move quickly. But there are aspects of both that can be used. It just kind of comes down to like, you have these skills now how are you actually gonna go about using those?

P.J. [00:09:44] Yeah, I agree. I can think of many cases where it's worked well when somebody from a big company has come to a startup, and if they're the right mentality, I'm thinking of a good COO type, they're gonna come in and they're gonna not do anything to cap the energy of the startup, they're gonna just put framework and process in.

And if it's somebody that the leadership or the founder or founding team respect and appreciate then it will work really well because I've found that junior people in particular like structure. Yeah, a good COO type can come in and provide that. I think going the other way is something that companies like to say, “Oh we've got a…” what do they call it? An in-house entrepreneur or…

Jeff [00:10:27] Intrapreneur I think they call it.

P.J. [00:10:28] Yeah, or a resident entrepreneur or um, whatever it is. It's a nice news release but the structure of the company isn't equipped to have an intrapreneur who's used to doing things [like], “Okay here, you wear this hat today, you wear that hat today.” And it's like, “Uh, what? I don't know.” And it just, the thing falls apart and it's just discouraging.

Jeff [00:10:49] Yeah, I think if they were really committed to being entrepreneurial, they'd probably hire a CEO to be the intrapreneur.

P.J. [00:10:54] Right.

Jeff [00:10:55] In 2012, you joined ShoeMe.ca, which would grow to become the largest shoe retailer in Canada or online shoe retailer. And you were employee number two. You guys blew up. You grew to 30 million in revenue, over 300 brands, you had a team of over a hundred people with offices across the country. Tell me about that growth experience. What did you learn from going through rapid growth? Like what are the elements that you took away from that growth experience that stick with you today?

P.J. [00:11:23] I've thought a lot about this. It is being comfortable with ambiguity, it's something that, it's hard to teach. And it's something that you notice people that have worked only [at] larger organizations are extremely uncomfortable with.

You want a leadership team that's got the North Star and they've got the KPIs and they're, they're doing the ‘Rockefeller Habits’ type stuff, but you accept that when winds change or when financing is kind of on thin ice, you gotta pivot. That pivoting can be interpreted by the rest of the team as flip-flopping or uncertainty or whatever it is, when it is, it's survival mode. And so it's that comfort with ambiguity to say, “This is the general direction and we're all gonna work to get here, and we're sort of going along. We're in the direction, but we just, things might shift. So be cool, don't freak out. Don't start blaming each other. Just say, okay, we're in this new situation. What do we need to do now?”

I feel really lucky to have experienced that and I hope it makes me sleep better at night when things are crazy and I hope that that sort of spirit of thinking makes its way into me being a good parent and stuff like that outside of work.

Jeff [00:12:43] It's not talked about, a lot about kinda the early days of companies or even companies that just go through rapid growth about that ambiguity. For the people who really do need a lot of direction, it can be quite challenging.

But I think it also does, it can bring people together as well. And did you find that the crew that you were there with during that period of time where you have all this rapid growth, you have so many problems, a lot of fires to put out, did you find that it brought you together?

P.J. [00:13:09] It definitely brought some of us together. Here at JD Sports, I've brought two people from that Shoes.com team over to work with me because I know what they're like when things go sideways and I know what they're like, you know, on good days and I know what they're like, you know, after too many drinks. It's all good and I can really trust them and they're gonna do great work.

Yes, it did bring us together. Some people didn't work, it didn't work well and they just weren't happy. And it brought out a lot of ugly in people too. It's like when you, I dunno if you've ever planned a wedding or, or been around that, but things like that bring out the best and the worst in people. And it's like these high pressure situations tend to do that with people.

Jeff [00:13:44] Yeah and you do find out a lot about yourself, who you are, what you value, when you go through these periods of high intensity and having leaders who have been through it, it almost reminds me of like war movies where there's like bullets flying and you've got like the sergeant who's just like smoking a cigarette.

P.J. [00:13:58] Yes.

Jeff [00:13:59] When like there's bombs going off everywhere and, and that level of calm is actually needed.

P.J. [00:14:03] Yes, like Robert Duvall in Apocalypse Now, I think. When he's like, he's got his stogie and there's bombs going [off] and he's talking about surfing.

Jeff [00:14:10] [Laughs] Yeah. So you're in charge of e-comm at JD Sports now and for the audience, tell us a bit about JD Sports and why should Canadians care?

P.J. [00:14:19] JD Sports is a beast. Out of the U.K. and I think they have [a] combination of 3,400 doors around the world. I mean, you can check their website and just to see all the different brands that they own, but it's a lot. What I think they've done really well is combine all these different multi-brand retailers and present them in a way, or I guess, acquire brands that have this high energy, that are differentiated in the marketplace. And give those brands the tools to flourish while getting out of their way.

So size? is one of their brands, so that's size.co.uk in the U.K. and size.ca here. It's a great brand, a 20-year-old brand. It's serving that sneakerhead customer, but doing a great job of celebrating the culture and the community that makes that whole sneaker world work as opposed to being very transactional.

It's celebrating all these things with the knowledge that if you do a great job in building a great culture, then the rest will happen. And I think what we're doing here with Livestock and with size? in Canada falls in that same tradition.

So why should people care? Is that, I think they're doing a great job of bringing a really good retail experience to Canadians and great product. Product is king in this business and so everybody at the JD team is very, very aware of that. We've got great relationships with brands. I mean, I'm excited to bring all that to Canada.

It's funny, I don't know how you feel about this or if [it’s] something you're aware of, but growing up, one was always aware that the product offering in Canada was less than. You go to the [United] States and the States is the land of abundance for whatever you want. Growing up in Vancouver, you go to Bellingham, which is an hour and a half away from my house and the selection was always way better. They would get, you know, whatever CD was coming out way, way earlier. You always felt that, “Oh, Canada's a little bit less than”, so with JD coming, I'm excited to be like, here is world class-level product offering, whether you want, you know, boutique stuff, the Livestock world, or if you want great mall stuff for the whole family, the JD world, or you know, in the middle with size? That's cool.

Jeff [00:16:29] It's true though. It's still like that in Canada in many ways, like banking is a good example that like we just are so, so far behind the rest of the world when it comes to banking.

Things kind of get validated elsewhere. They're cool elsewhere. And then once they're already a trend, then they come to Canada. Are there any trends that you can think of in fashion that are very much like ‘started in Canada’ and then we're exporting that abroad? Canada Goose comes to mind like that, that's a global brand that's exported around the world, but what else comes to mind for you?

P.J. [00:16:57] I mean, two from Vancouver, Lulu[lemon] and Arc’teryx. Being just so early in that world, and my wife works at Arc’teryx, sort of a fun fact I think of is the COO of Arc’teryx took me to my first concert. He was my babysitter, uh, to see Metallica in 1989 [laughs]. I've known about Arc’teryx and their kind of growth from like the dirtbag climber community all the way up to the beast that they are now, where it's, it's a, it's become a status brand. And so they've done an awesome job of exporting all of that. And I think the same can be said for Lululemon. I mean, they created a whole look.

Jeff [00:017:34] What is it about brands that were kind of made for that dirtbag culture that have somehow become status brands? Like I think of Patagonia, [The] North Face…

P.J. [00:17:42] Yes!

Jeff [00:17:43] Arc’teryx. I feel like a lot of the founders of these companies [are] watching guys on Wall Street walk around with Patagonia vests on it just seems so…

P.J. [00:17:51] It must kill them.

Jeff [00:17:52] They're built for the climbing community and they could not be further from who's wearing it.

P.J. [00:17:56] Look, I think it's because all those brands were started by product people. Hearing about the care that, especially the early people at Arc’teryx put into designing stuff, and still like their level of warranty coverage and all like, they care so deeply about the product.

And unfortunately, that's uncommon today that people care about whatever it is that they're doing. Especially, or, or at least in, in North America. They're not venture backed and they're just doing their thing, grinding it out and they make these incredible world class products and then they, like, they cross the chasm and become status symbols.

I know that's a challenge for anybody in that role, and I don't, I'm sure they have very mixed feelings about it.

Jeff [00:18:41] Yeah. You can't choose who's gonna wear your clothes.

P.J. [00:18:44] No.

Jeff [00:18:45] Or your products. Let's talk a bit about e-commerce [because] this is the world that you live and breathe in. From the late nineties, early two thousands to now, what stands out to you as things that have changed the most? And then where do you see it going from here?

P.J. [00:18:58] Mobile's kind of a, it's the obvious thing and everything that's happening with, on a technical tip with just responsive.

When responsive hit, people with [a] better understanding of CSS than I do, we're able to suddenly make something that rendered properly on your phone and on your laptop and the same code base. That was big! That opened up, I think mobile commerce and that's a biggie.

I think also fulfillment. I mean Shoes.com, you know the things left when they left, you had an SLA with FedEx and “Hey, the thing got there in whatever time it was”, and that's that.

Yeah. Now it's Prime, Prime sets the standard and we've all got to aspire to that. And you see from a bottom line point of view, you see how expensive that is and it'll be interesting to see what happens next year economy-wise. Do these D2C brands that don't have the deep Amazon pockets, do they start scaling back on the free shipping side of things or the two-day shipping side of things. It'll be interesting.

So I think it is the fulfillment and it's mobile and where it goes, I don't know. I think your guess is as good as mine.

Jeff [00:20:07] It's interesting you bring up the fulfillment side because I do feel like this is the side that, they deserve a lot more credit cuz I feel like that's where the rubber hits the road.

P.J. [00:20:14] Yeah.

Jeff [00:20:15] Is [that] we spend so much time thinking and obsessing about the customer experience and it's like, well, customer experience still exists after someone checks out. How do you guys think about competing when, when you do have Amazon Prime that is sometimes same-day [delivery]. Just speaking as a consumer, like when I buy something from Amazon, if it takes two days, I'm almost freaking out. But when I buy something from pretty much anyone else, I'm just kind of like, “It's gonna arrive when it arrives.”

Like, are you guys trying to get there? Because there, the costs are just enormous to get to the point where you can do same-day, next-day delivery. Like are you even aspiring for that? Or is it, should brands just kind of say, listen, our studies show that if you can do it in three days, then the marginal benefit you get from getting down to two days is negligible and the costs are just so high?

P.J. [00:21:00] Look, Amazon's the leader in e-comm. Last I checked, they get roughly 50 cents of every dollar spent on them. So they're the people that are setting the tone. It's interesting that you said that your expectation with Amazon is like it's gonna be there and it feels very transactional. If you're buying from another brand that you're kind of into enough where you went to their site to buy their thing, you give them a lot more slack on the fulfillment side, which says something about, I guess your relationship with [them].

And I'm with you. It says something about your relationship with that brand where you feel you've got some love for them, so you're gonna give them a little bit [of] you know, a wider berth. Whereas Amazon is just like, look, this is transactional. Get me this. And that's, it's different.

I really want to be able to do same-day. And there are lots of regional, same-day players that have pitched us and they've got Shopify integrations that make this sort of thing possible. DoorDash has a similar thing and I think Staples is up with them, and that's something we're looking at. We can definitely do it. Our logistics team is awesome and I feel really confident that we can make that happen.

Shopify makes this stuff possible as well. If you're clever with your tags and so on, you can make these experiences happen. Look, it's not a choice. I think we have to do it, but I'm also excited and I think we're well-suited to do it. We're also benefiting from scale where we have all these stores and we've got a big e-comm business, and so we've got a great relationship with FedEx. We can make it work financially.

Jeff [00:22:33] What do you think the role that Amazon or even marketplaces play? Like, it's kind of like the supermarket online, like everything you need is kind of there. I believe it was Nike that ran a pilot with Amazon and they were selling Nike directly on Amazon, and then they ended up pulling back.

Now Nike themselves isn't listing their products on Amazon directly anymore, but like how, how do you think of direct-to-consumer versus distribution channels like Amazon versus your own stores, like it's basically your distribution model. How do you guys think about that and the role that marketplaces play in it?

P.J. [00:23:06] The way I think of multi-brand retail was put well by my boss, Gary, which sounds like I'm, I'm sucking up, but I'm not! I just think he articulated really well and that's to be in service.

Multi-brand retail should be in service to, obviously to the customers, but to the brands that they carry. And so by that I mean, if I'm carrying three brands, what can I do to act as a marketing arm for those three brands?

How can I build a top of the funnel for those three brands? And celebrate where they are. And to the customer, the service is how do we contextualize those brands? How do I show, “Here's how it fits in your lifestyle, customer. Here's what you might wanna try with it.” So that's the value that multi-brand retail plays.

And that's why to me, it never goes away because you need that group creating the point of view that says, “Oh, this is the vibe that I want to play in to a customer. And now here are all the accoutrements that make that thing happen. And so that works at the highest boutique and it's something that we do at JD in the mall.

So I think where marketplaces play is that it's a great hedge against inventory risk for brands, for multi-brand, for boutiques, for multi-brand retailers just to put product on there. It's not something that we would ever do, but I know lots of smaller businesses do and, and great!

From a customer point of view, the marketplace gives you way more selection. Look, I did an accelerator, we were part of an accelerator with Farfetch, so we learned all about how [marketplace], that's a luxury marketplace, but we learned a lot about how that works. It's a fascinating business and if you're a customer that's looking for [a] highly sought after thing, the marketplace is, is a great… like look at eBay!

Before a lot of this eBay was the place to go for anything fashion related. So I think that's about product addressing people's needs to satiate sort of scarcity and that kind of thing. Yeah, there's always a place for everybody.

Jeff [00:25:05] I always feel like there's a tension sometimes between what's right for the brands that you serve, what's right for JD Sports and what's right for the customer.

And the example that comes to mind when we were, when we were running Skip, is this idea of, okay, well when I enter my address, which restaurants are gonna show up first? And so for the longest time, it was always just the who, whoever was closest. And then we came up with a scoring system that was based on reviews and a bunch of data. And now, now you're basically serving the customer, based on criteria that you create and decide on what the value of each. And then eventually it's like, okay, well let's, let's create a sponsorship banner. So there's a place where people can kind of, you know, bid to get placement.

If you're accepting sponsorship, then basically what you're saying is we're going to “Allow someone to kind of buy their way into higher visibility”, which, and even though they may not be the best brand for the customer, they're willing to pay you for it, so it's kind of better for your brand like or better for your bottom line at least. But then you're, you're trading that off against showing a customer a product or a restaurant or a brand that maybe they don't want.

So from an e-commerce perspective, how do you think about balancing those different, you know, interests?

P.J. [00:26:18] Yeah, yeah, yeah. So we think about that a lot. It's just interesting that you had a very similar, I guess, debate in your head.

We've got three groups. We've got the brands that we sell, we've got our customers, and then we've got our team. And when we're thinking about big decisions, we think about the impact to each of those groups on whatever we're doing. And it won't always benefit all three, but we would never want it to negatively affect one of them. And that gets into a ton of debate, which is healthy. But that's the framework that we approach those sorts of things on. And there are lots of examples that we go through that are similar to what you're talking about, where people with money can buy their way to the front of whatever line it is, and it's potentially affecting, negatively the customer experience.

Right there. I've just said it. Well, it's a negative customer experience. Do we wanna do that? And, and I think not because it's bad for the, ultimately bad for the brand, which now trickles back to the brands that we sell. And so yeah, that's the framework that we use.

Jeff [00:27:21] But I guess, how, how do you make decisions on it? Is it, is it like a dial where you're like, “Listen, this is not good for the customer, but it's like, not that bad.” Maybe it's a negative one out of a, on a scale five. Like do you actually have a framework that is that objective?

P.J. [00:27:36] No.

Jeff [00:27:37] Or is it very much just like, “Hey, we get around, we look at it, we all have a fairly good gut feel and we make a decision.”?

P.J. [00:27:42] That's it. It's not a decision you make on a Friday afternoon when it's you and whoever else. It's, let's get people, stakeholders and let's get customer service in the room. Let's get the warehouse team in the room. Let's bring everybody in the room and think about what are the downstream effects of all these things that you might not have thought about.

Jeff [00:28:01] I wanna talk about third-party integrations in e-commerce, and I feel like there's just an explosion of just different things you can plug into your e-comm platform - virtual sizing, you know, having a, some sort of integration that will kind of give you an indication of whether or not what you're buying is gonna fit you. BNPL, check out integrations. What are some of the technologies that you've implemented that you've noticed a significant step change? This actually was as good as advertised.

P.J. [00:28:28] Yeah, I can give you a couple things there, I guess. Algolia is our search-and-merch platform.

Jeff [00:28:32] Search-and-merch?

P.J. [00:28:33] Yeah, so they power the site search and, sorry, it's like, yeah, I hate jargon like that. It's our search and merchandising platform. And so that integrates with Shopify. And so when a customer types in ‘Nike Air Force One’, that's the means by which, you know, those products get surfaced. And there are algorithms that will let us, if let's say we are low on white/white Air Force One’s, this algorithm will let us push a gray, let’s say. This is something that's comparable or a shoe of a similar silhouette that somebody might find comparable.

And likewise, it could do things like, if I'm searching in Vancouver for a jacket it has a weather integration where it knows to surface a nice Arc’teryx jacket. Cause you want a waterproof, gore tex shell. But if I'm on the east coast, then it's gonna give me a parka because it's freezing cold. So it does that sort of thing and much more.

That's personalization and I'm big on that. And I'm big on just clever merchandising. And what these tools let you do is, they integrate with other tech that you have. So it would say, and it would know that, “Oh, margin’s better on this. Let's try to push this”, or “inventory's a little thin on this, so let's deprecate it a bit.” And so, I'm big on that. The caveat is that you need to have somebody overseeing it. This, none of this stuff is turnkey. If you've got the right person who understands the business needs as well as the customer needs, which we're fortunate to have, I've seen that live up to the height.

The other side is something I'm gonna have firsthand experience with. Prior to JD, I was with FTSY. We were making sizing tech. So you download an app, you measure your feet, like taking a panorama shot of your feet, it builds a 3D model of your feet, matches you [with] shoes that fit. Sounds awesome and we had an integration with Shopify. What we found though, my always kind of feeling in the back of my head is that this sizing tech raises the sort of the specter of “Ooh”, in the customer's head of, “Ooh, I'm buying something that's a sized item and this might not work.” It's even just by kind of raising the fact that, oh, would you like help finding the right size? It now reduced conversions and it's friction in the customer's head and there's like, “Oh, you know what? I'm just gonna go to a store.”

We don't have data to back that up. I never gathered data, but that seems like a reasonable thing to me. So yeah, I've been on it on both sides.

Jeff [00:30:56] Yeah, and it's interesting you bring up the kinda conversion and even like the returns that I think like, it seems like that's coming up more and more now where, you know, as e-comm exploded over the last couple years. I think that there's more data coming out now that just returns were off the charts.

And so, you know, as someone that's in charge of e-comm, how do you balance out driving continued growth through that channel versus in-store, while, you know, returns have gotta be cutting into the bottom line, how do you balance that out? Or am I incorrect on that?

P.J. [00:31:27] Our returns at JD are among the lowest that I've seen, and that's not tooting my own horn because frankly it's not something we've put a ton of focus on. I think it's the types of customers that we're working with are knowledgeable about fit and they're thinking about it and they're not, they're just thinking about it. So we're fortunate there. At Shoes.com. We add return rates in the mid twenties. Brutal! And when you think about free returns both ways. I've done a lot talking to other brands, and that's not uncommon.

Direct-to-consumer, like single digit return rate, that's more common. But if you're talking multi-brand, it can get in the twenties. So we're lucky at JD that our return rate rates are very low. We'll continue to keep them low, but they will always be higher than brick and mortar. You're, you're right there. We do [a] great job with fit guides. On the Livestock business, we just put a new fit guide. We do a lot on measuring the fit of products. We do all of the measurements ourselves. And that's something that I've picked up from Farfetch, they do a great job of doing all that. So it's something that we're on.

Where I would like to go in 2023 is, this is something else that I picked up from Farfetch, they call it bracketing. When people order a nine and a nine and a half, it's clear that they're not sure about size. So what can we do to help them? Can we have a customer service agent reach out and talk to them a little bit about the fit? Do we look for “repeat offenders” that are always doing this, and can we think of a solution? Can we reach out to the customer? And say, “Is there an issue that you're concerned about? Can I help you in some way?” Because as a customer, you don't want the hassle of returning. How can we make this right? So we can write some jobs that search for bracketing, and then let's think of ways to approach it.

Jeff [00:33:08] The secondhand market is growing incredibly fast. It seems like there's more and more companies that are partnering up with secondhand marketplaces. I think there's one based out of San Francisco that just got acquired, I think for a couple billion. More brands seem to be caring about this. How does JD’s think about, about secondhand? And what's the best path forward for brands, especially multi-brand? Like do you create your own, you know, marketplace that people can sell their own products on, or do you just donate it to charity? What's the, what's the path forward there?

P.J. [00:33:37] Secondhand isn't, isn't a focus. So that's, the resell market in general isn't a focus for JD. It's about ‘Let's get the newest, best product in front of customers.’

It's just not part of our focus strategically. I think it's an interesting business. I think what StockX has done, if the listeners aren’t familiar with StockX, they've created a site which tracks the value of coveted goods. So we look at it a lot for the value of shoes, apparel in general, but I think, you know, if you wanted to know the value of a camera or whatever else, a Birkin bag, you could go there and look it up and it's interesting because it's tracking the value of these things.

I think that's great, I wish I thought of that. It's not something that we spend a lot of time thinking about. As I mentioned eBay earlier as the place, like I remember going to eBay to buy brands like Bathing Ape that weren't available, widely available in North America at the time.

I get that reseller market, but it's also a very ugly market. It gouges people on price and I think that sucks. We've all been that young guy or girl that's in line or whatever, wanting to get your thing and you don't get it, and the knowledge that somebody has written a bot that, you know, rips through, grabs all the inventory, and now they're selling it for four times or five times or whatever it is. It's a hard thing to like, look, you can't knock their hustle. I get it, it's cool, but it's ugly. And it makes the lines for products ugly because people behave poorly because they're not the people that are fans of the product, they're people that are just doing it for, for money.

Jeff [00:35:10] I don't think that's the majority though, P.J.. I mean, I think if I look at marketplaces like Poshmark for example, you know, it's mostly people who just, “Hey, I've got a nice shirt. It's in good condition. I paid a hundred bucks for it. I think it's probably worth 20 bucks now. Who's interested?” I don't think it's people going in and like buying up all of an exclusive brand and then trying to mark it up online. Like, that's probably a small percentage, isn't it?

P.J. [00:35:34] The business for resale shoes is huge. I don't know the figures. So, that's what's closest to me, that's where my bias goes. Poshmark, great! All that stuff, no problem with. I've used those services myself to sell things in my closet that I want to get rid of.

I'm fascinated by that. I think it's good for the environment. I like the idea of people buying better and not more, so totally good with that stuff. I just think the resale, when you're talking about these massive markups, is a problem.

Jeff [00:36:00] Yeah, you're right. It does seem like shoes is something that there's like a certain color of Air Jordans that come out and then like, you can't find them anywhere, and there's like some guy selling him out of his trunk for 10 times the price. I have heard stories about that.

Where can people follow you? Where can they hear from you? Are you active on Twitter? Are you a TikTok star?

P.J. [00:36:19] Not yet! I'm working on being a TikTok star. I love TikTok, I think it's amazing. I haven't got the courage up yet to post anything, and I don't know if I ever will. I am active on it as a consumer. LinkedIn is great. Just find me on LinkedIn. Verified identity, people just being relatively civil to each other, you know, if you wanna see pictures of me with my kids and my family and so on, then Instagram's your spot, but I don't think anybody's interested in that. [Laughs].

Jeff [00:36:41] Well, PJ, I really appreciate you coming on, this has been great.

P.J. [00:36:45] Thanks, Jeff. Yeah, it's been a lot of fun!

Jeff [00:36:00] Thank you for tuning into Behind the Brand presented by Neo. If you enjoyed today's show and are interested in learning about Neo for Business or our customer products, visit us at neofinancial.com. And don't forget to subscribe on Apple Podcasts or Spotify, so you never miss an episode.