EPISODE 093 : 12/22/2022
Michael Zakkour is the Founder of 5 New Digital, a global retail and digital consulting firm with offices across the U.S., Europe, and Asia. He has worked with hundreds of companies on their retail, eCommerce, marketing, technology, and international growth strategies for more than 25 years. Additionally, Michael is one of “Rethink Retail’s 2022 Top 100 Retail Influencers,” the author of two Amazon bestsellers, “The New Retail” and “China’s Super Consumers,” and a 5-time “Alibaba Global Digital Influencer.”
Host: Ned Hayes and Kira Cleveland
Guest: Michael Zakkour
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Topics discussed in this episode
- Detailed small business insights from Olympia, Washington
- Small business resiliency and adaptation during COVID
- Doubling community outreach during the pandemic
- Opportunities for small business loyalty programs
Watch Spark Loyalty’s Small Business Success Channel
Ned Hayes [00:00:00] Welcome to Spark Plug, where we talk to smart people working at the intersection of business and technology brought to you by Snowshoe. Your smarter loyalty leader Sparkplug is excited to welcome Michael Zakkour to the podcast today. Michael is the founder and chief strategist at Five New Digital, an exclusive consulting organization and ecosystem that advises clients on structure, strategy and implementation across the five new. That means new retail, new technology, new finance, new supply chain and new consumption. He is also the author of the bestseller China’s Super Consumers and a regular guest on the BBC. CNN and VR and NBC is appeared in the Wall Street Journal, Forbes and MSNBC, and now today on Sparkplug. So we’re really happy to welcome you today, Michael.
Michael Zakkour [00:00:50] Thanks, Ned. Thanks, Kyra.
Kira Cleveland [00:00:52] Yeah, great to have you. And you have such a rich background in the retail and luxury markets, particularly in China. How does the retail industry differ from American retail and luxury items?
Michael Zakkour [00:01:04] My background in retail goes all the way back to my very first jobs as a teenager. I was a typical eighties mall rat, and so my first jobs were at the Gap in Macy’s at the local mall here in Livingston, New Jersey. So really started out there and my career took me really into retail economics, consumer behavior. And then really in a stroke of luck, I stumbled my way into the Web 1.0 world. And so I’ve literally been in the e-commerce world since 1994. So I was working for Microsoft. I was on the launch teams for Expedia and Car Point in for about 12 years. I worked in the Web 1.0 world, and that’s carried all the way through to today, which we can talk a little bit more later. But the second stumble that was sort of fortunate in my life was in 2003. I was offered the opportunity to go and live in China and work in China. My original portfolio was to go and help a Chinese American joint venture build new businesses that would leverage China’s accession to the World Trade Organization. So China was just joining the WTO in 2002, and some people told me this China thing was going to be really big someday. And so I went over there and for my first few years I worked on the manufacturing and sourcing side of the business, which turned out later to be really, really important for my my later work in retail and e-commerce. In fact, my first year in China was quite the adventure. My boss, who I met, didn’t speak English. There was one English speaker. I was the only foreigner working at the company in Beijing, and on my first day of work he told me to get lost. And he meant that literally. He sent me out to wander around China for 90 days by myself and gave me some phone numbers and destinations to check into. After three months, I went back to Beijing and he came out and he told me to get lost again. And this time he sent me to live on a pig farm, Inner Mongolia. And I spent three months living in a year learning how to take care of the pigs and feed the pigs and raise the pigs. Unfortunately, they also show me how you have to kill the pigs in order to not take their skins because his factory was making leather garments, jackets, belts, etc. from pig napa. So I got back from living on the pig farm, and then the next thing he did was he put me on the factory floor for three months and I learned how to sew dye, cut, pack and ship all these products. And finally, at the nine month mark, he told me to get lost again. And he sent me back to the U.S., where I went knocking on doors at Macy’s and Kohl’s and JC Penney to sell the product. And so the point was, I learned that products that we all love and use every day don’t magically appear on thin air. If I was going to help his company figure out where the world was going in terms of making an international trade, he pulled me all the way from the pig to the factory floor to knocking on doors at the big retailers in the U.S. And as you can imagine, for a guy who just spent 11 years in the tech and e-commerce space, that was quite the education.
Ned Hayes [00:04:25] That’s such a change from, I think, much of our kind of spreadsheet and PowerPoint world that you were actually able to dove into the complete supply chain there.
Michael Zakkour [00:04:33] Literally from pig to store shelf. And that taught me more about retail than any five years I could have spent at school or maybe working a store for. It was amazing. The big change for me came in 2004 when Alibaba introduced its first e-commerce platform called Taobao, and so it was China’s first real e-commerce platform and against all of. Here I am. I was literally at the starting line, day one for e-commerce and the internet in the US. And 11 years later, I’m on the starting line, day one for the Internet and e-commerce in China. And I immediately said, This is the future. I said, China may be the factory of the world today, but it’s going to be the largest consumer market in the world someday. So I packed my bags and I moved to Shanghai and I started a company called China Brightstar with the sole purpose of bringing foreign brands, products, retailers to the China market and working with them on their China market, consumer and digital strategy. And so over the course of the last 18 years, I’ve seen all of the evolutions of retail consumption and the use of technology in retail and consumption in China. And that’s been an incredible experience. One of the things I’ve been able to do is bring those experiences. And make no mistake about it, China is consistently 4 to 5 years ahead of where we are in the West in terms of the integration of online, offline, in tech. And I’ve been able to not only help my clients in China, but to bring all of that knowledge and experience to my clients in the US and Europe on how to stay ahead of the competition in the new what we call the new retail or unified commerce there.
Ned Hayes [00:06:27] What an exciting journey you’ve had. While I have a little bit of Chinese background myself, I was actually born in Taiwan and grew up there and I visited China on many occasions, but I haven’t spent years there like you have. I’m really curious, though, when you were bringing a U.S. company into China, what did those companies have to learn in order to be successful?
Michael Zakkour [00:06:48] Well, you know, so many things. Patience, long term commitment, cultural flexibility. But I think, two, that that really stand out the most are one in China. It’s all about putting strategy before structure. One of the common denominators of foreign companies have gone to China and failed is that rather than spending the serious time and effort it takes on due diligence and research and planning and strategy, they’d rather go in and just say, okay, let’s, let’s build it and see what happens. So let’s build it and figure it out as we go along. So I think, number one, really spending the time on the consumer and starting with the basics, what we call the core for culture, language, history and philosophy. If you want to understand the purchase motivators in China, you have to start with those four building blocks. So I think that that’s number one. Number two is very rarely can a company or a brand export who they are to China. Right. Rather, the keys to success actually lies in building the China version of yourself. One example I remember years ago I had a chat with the head of Disney International and it was right around the time they were getting ready to open Shanghai, Disney and Hong Kong. Disney had been open for years already. And he said, Well, we’re doing things very, very differently this time. And I asked what he meant. He said, Well, we got a lot wrong in Hong Kong, and Disney doesn’t usually get it wrong. They can’t go to Paris, in Orlando and all over the world. And, you know, Disney just doesn’t get it wrong. The Imagineers and the planning, the logistics. Right. Disney is a logistics company. And he said what we did was we exported Disney to Hong Kong and it didn’t work. What happened? First of all, we thought they would be just like Americans, where the average group that came in was two and a half people. The average group that came in in China was eight people, folks. Right. So capacity planning, mistake number two. What would happen is the family would come in, they’d seek out the closest restaurant or table and they would plant themselves there for the day. That was their spot. And so some family members would go on rides and then come back and the others would go out. So we had no turnover in the restaurants. You know, we got the temperatures wrong. We didn’t have the right beverages. And on and on and on. And they said what we realized was if we were going to be successful, we needed to build the Chinese Disney from the ground up in Shanghai, which was very different from what they tried to do. And we’ve seen examples of this over and over and over again. I mean, Best Buy went to China, got their strategy completely wrong. You know, they couldn’t build these massive 200,000 square foot stores in downtown. So they had to build of 20 miles outside of town. Many people didn’t have cars. And how do you bring a TV back to the city center? Oh, and by the way, you’re a discount consumer electronics company in the country that makes all of the. Founded Consumer Products, and then they topped it off with a with a real doozy, where they instead of actually inventing the right Chinese characters for their name, they did a transliteration that read the Chinese people as think 100 times before you buy here.
Ned Hayes [00:10:15] What?
Kira Cleveland [00:10:16] Oh, no. Yes.
Ned Hayes [00:10:18] Oh, yes. Oh, my.
Michael Zakkour [00:10:19] Gosh. So strategy for structure and try and build, you know, the Chinese version of who you are. Stay true to yourself and your core. You know, Chinese people don’t want a Chinese Louis Vuitton bag, but they want to be sold to and treated in the consumer experience to be what they expect.
Ned Hayes [00:10:39] Right. Well, you’ve talked to some degree here about what Americans can learn about operating in China. I wonder if I can flip that around and ask, what are the Chinese markets doing that Americans could learn from and apply here?
Michael Zakkour [00:10:53] Yeah. So, you know, a couple of years ago, I wrote a book called The New Retail and the idea the book was how Chinese tech and retail titans were basically changing the way global retail was understood. I think the most important lesson, if we go back to about seven years ago, was when the idea of the new retail model was introduced in China by Jack Ma from Alibaba. Initially what it meant was you need to completely integrate your online and offline offerings and activities to build an ecosystem that people would want to enter and stay in and have all the products and services and local services that they need. That idea was invented by Alibaba and perfected by them. And so the idea behind the new retail model is the complete integration of online, offline technology, supply chain and entertainment that when you integrate all of that, you have now built an ecosystem. And you know, I had the good fortune of working alongside Alibaba for many years and having a front row seat to the development of that model. And, you know, six years ago I came to my American clients and said, this is the model of the future, this is where things are going. And that’s panned out because if you look at who the big players in retail and consumption are Amazon, Apple, Walmart, Target, what all of those companies have in common. Nike is they have adopted a unified what we now call the unified commerce model, the integration of online, offline technology, supply chain and content to create an ecosystem. Four years ago, I wrote a white paper saying that Walmart and Target were going to do this. I was universally laughed out of the room, metaphorically and sometimes actually literally, but that’s exactly what’s happened. And so if you look at the dominant model globally right now, whether it’s MercadoLibre in South America or Rack A10 in Japan, obviously, you know, Alibaba, JD, Tencent in China, Amazon, Walmart, Target in the U.S. and Europe. Everybody has adopted this mega ecosystem platform. So what does that mean for brands and merchants today? It means two things. One, they have to fully understand these mega ecosystems and how to play within them to their advantage. And then they also need to learn how to build their own right sized version of an ecosystem for themselves. Right. So. What’s one of the biggest problems of e-commerce today? The dirty little secret is. For the most part, it’s not profitable. Five New Digital. We did a study. We talked to 100 C-suite level e-commerce executives in April. Some of the takeaways were astounding. 40% of the pure play e-commerce companies reported that they were not profitable.
Kira Cleveland [00:13:58] Really.
Michael Zakkour [00:14:00] For real. 90% of the executives answered said We expect our e-commerce to grow exponentially in the next five years. So how you put those two together, you’ve basically got all of them agreeing that their e-commerce is going to grow and almost half of them saying we’re going to grow unprofitable. How do you fix that? I mean, there’s a few ways. What we try to help our clients understand is your biggest problem is twofold. Three, really your cost of consumer acquisition is too high. Right. And that’s due to inflation in digital marketing and media, which has been exacerbated and complicated by, you know, the changes to the Apple iOS. The other thing is, guys, right, let’s talk about digital advertising for a moment. The promise of digital advertising 20 years ago was that it would it would solve the age old Madison Avenue conundrum of, I know 50% of my ad budget isn’t working. I just don’t know which 50%.
Ned Hayes [00:15:03] Right.
Michael Zakkour [00:15:04] Right. So the promise was, well, we’re going to eliminate that and performance marketing and targeting and retargeting. Every dollar you spend is going to have an afterlife. That didn’t really work out that way. And we could probably spend an hour talking about all the reasons why. The other problem you have is even in e-commerce today, your average website still has something between a two and 4% conversion rate, and that’s considered pretty good. Wow. So 25 years of e-commerce, 20 years of digital marketing, and we’re still only converting two and a half percent of the people who come to our website. So now your costs of consumer acquisition, you have inflated media. Media that doesn’t work. Low conversion rates, 90% cart abandonment. Why? Because you’re not integrating your online, your offline, your technology, your supply chain and your data science to fix that problem. And the other problem you have is disruptions and inflated costs and supply chain and logistics. And so if you look at this unified commerce model and you employ it correctly, that eliminates a lot of the costs of consumer acquisition and it eliminates a lot of the costs in the supply chain logistics. And it integrates what you’re doing online and offline. And now you can be profitable.
Kira Cleveland [00:16:28] Such a great playbook. You know, I’d love to also kind of touch back on the mega ecosystem platform. You know, it’s one thing that’s gone global, like you said, and I imagine there’s more changes coming as well in the next year or two. What are some of the upcoming trends that you think will emerge as a global trend?
Michael Zakkour [00:16:45] Boy, I don’t usually put my 2023 predictions out till December, but Kara, you’ve got me on the spot here, so I guess I’ll throw a couple out to you. The one that we’re really focused on and working with our clients and the message I’m carrying out to the retailers and brands around the world is the idea of immersive commerce. Okay, so this is my big picture view for the next 12 to 18 months. I started talking about the idea and thinking about the idea of immersive commerce about a year ago. And the reason I came up with that term is because everybody is talking about augmented reality, virtual reality, extended reality, the metaverse livestreaming. And I found myself in rooms where I had to do a lot of explaining on all of those concepts to people. And it was really hard, you know, for my peers and other people in the industry to understand, never mind, you know, some some people were not as exposed to these ideas as we are in the industry. And I said, you know what? Let me take a step back and simplify this. I said, let’s make this a problem solution story. Okay. Problem is that retail has gotten away from its roots and essence. Retail, right. Is a place that was immersive, experiential, face to face. Human to human. Right. Yeah. And this goes back 5000 years to the Roman Forum, to the Agora, to the Egyptians. Right. Retail changed its shape over a couple thousand years, but its principles remain the same. And what we’ve had and we talked about, you know, kind of the sameness let’s start with online shopping for the better part of 25 years. It’s a two dimensional flat experience that has no interchange on any of the things we just talked about. So we don’t really shop online. We tend to buy online. So we scroll, we click a picture, we read a description, we read a review, we scroll, we do it again. And then we say, okay to buy or not to buy. That is the question. And a 3% conversion rate. Most people are saying not to buy. Right. So where does immersive commerce come in? Any technology or channel or methodology that you can use to turn online shopping from a two dimensional, impersonal buying experience into a three dimensional, human centric, fun shopping experience is what we’re talking about. And I think this is you want to know where the future lies. It’s in that. So that’s where things like augmented reality. Let’s use examples already today. I can pick up my iPhone and I can point the camera at my risk and I can scroll through what 100 watches look like on my wrist and then decide right then and there to buy or not to buy. I can point the camera at my feet and try on 100 pairs of sneakers. Right. That’s one example. Another example is live streaming. There’s probably no greater evangelist for livestreaming commerce in the U.S. today than me, which is something I learned in China. We’ve been doing livestreaming there for six years. And what’s the beauty of livestreaming? You know, what is livestreaming, first of all? It’s putting a host who could be a CEO, an influencer, a floor manager, anybody in front of the camera. And for roughly 30 minutes to an hour, putting on a show about the product or products that you’re selling. Right. And so you might be broadcasting this livestream to anywhere between 100 and 100,000 or a million people. And what’s happening is you can see each other, you can talk to each other, you can ask questions, you can exchange emojis. And most importantly, you can hit the buy button while the livestream is happening. And it doesn’t have to take you somewhere else where the consumer might have time to say, maybe not hit the buy button right then and there. Why is this important? Let’s just start with the fact that livestreaming commerce averages conversion rates of 10 to 30%. How does that look against your 2 to 4%? Okay. It serves as a customer relations tool. It’s a customer information tool. It’s a loyalty tool. And by the way, okay, it’s going to have an effect on your offline act. Seventies as well. So I’ll give one example. Last November, we did a live stream from the flagship store of a very high profile fashion brand in New York City. Not only during the hour did they sell more than that store normally sells in a month, but in the 30 days afterwards, store traffic went up, physical store traffic went up, physical store conversions went up, visits to the Web site went up. So that one hour livestream had a knock on. And this is where unified commerce and immersive commerce merge. How do you integrate online, offline technology, supply chain and content and how do you use immersive commerce to enhance the shopping experience? So that’s the big one for me. I think that this is the year that people start looking at these immersive technology experiences and tools and technologies with a much wider adoption rate. Of course, you know, there’s a lot of talk about the metaverse. You know, I think the metaverse for retail is a real thing already. You know, if you’re following what’s happening with brands and merchants on Roblox and Fortnite and on Twitch and some of these other platforms, it’s very real. It’s certainly in its infancy. I’m a big believer that something that we will recognize as Web 3.0 will emerge over the next 3 to 5 years. But right now, I want to talk the metaverse under this immersive commerce umbrella and say what combination of these tools and experiences can we use to enhance the experience not only online but in store as well?
Ned Hayes [00:23:03] Right. Well, it sounds like a really, really interesting future that you’re painting. Definitely not. Not the world we’re living in today.
Michael Zakkour [00:23:10] Well, not fully. But I would say in a lot of ways we are. I mean, for example, live streaming commerce is already a $350 billion part of the retail universe in China. To most people’s surprise, it’s already a $5 billion industry here in the U.S. that we estimate will be a 35 to $40 billion industry in two years. So from a live streaming perspective, on the other hand, you know, these things can happen quickly. In 2019, I wrote my predictions for what’s coming in 2020, an article, and I said the biggest export from China next year will be QR codes. And the universal response was What’s a QR code? And then a year later, QR codes became ubiquitous, certainly accelerated by the pandemic. But you know, you can’t go anywhere today without seeing a QR code on a package, on a shelf, on a magazine ad on the side of a bus, on your TV screen. And so, you know, these things can happen quickly. And so I think there’s more of this immersive commerce. I’ll give you another example, Ned. One of my favorite immersive commerce experiences is what the North face is doing in their physical store. It’s one thing to go into a store in a mall when it’s a comfy 72 degrees and try on a ski jacket. Well, it’s another thing when you walk into the north face and they put you in a cold booth and they turn the temperature down to 32 and blow some snow in your face, and then you try the jacket on. Another example I can give you a project we did for a cosmetics company. We tried to turn the sampling experience into something that was more useful for the consumer as well as the seller. And so what we did was we created, you know, the old claw game at the beach or in the casinos, you know, and you try and grab it. And of course, they always make it so loose that you’ll never pull anything off. But what we did was we created a game for the samples where the consumer would come and they would flash their QR code on the side. And by flashing the QR code they got ten chances and they pulled five samples out and we know exactly which samples they got, who they are when they were in this store, did they end up buying, you know, the full size product of the samples in-store or later online or not at all. And we were able to, etc., etc., etc.. So rather than just somebody, you know, throwing absentmindedly, throwing a sample in your bag, walk away, we have no idea. You know, we’ve created a more immersive. So this whole idea of immersive commerce is there, it’s developing and it’s appropriate for online and offline, and it’s appropriate for the integration between online and offline.
Kira Cleveland [00:25:53] They love the creativity that you shared with them, those kind of immersive experiences and enhancements to the shopping. I’d love to kind of shift gears a bit to one of your books, The China’s Super Consumers What 1 Billion Customers Wants and How to Sell It to Them. It was a best seller in the US, England, Germany, Singapore and South Korea. Congratulations. We’d love to know what do 1 billion consumers want?
Michael Zakkour [00:26:17] Well, you know, Kara, the answer to that is evolve. You know, that book came out several years ago. I think there have been some consents in the years, the intervening years. From when the book was first published and then various versions that that came out internationally in the years that followed. I think first and foremost, what, what these 1 billion consumers want is very, very similar to what we all want. We want to feel secure. We want to feel noticed. Handsome. Pretty accomplished, right? What are these products about? They’re about aspirational living. They’re about feeling safe and secure or luxurious in our home. So a lot of the things that Chinese consumers want, right? They’re buying Veuve Clicquot. They’re buying Armani suits. They’re buying, you know, Procter and Gamble diapers. Right. They’re buying a lot of the same things we’re buying. But it’s the purchase motivators that are slightly different. Right. And you have to understand that Chinese consumers are rightly proud of a 4000 year old culture. I remember years ago I was at a dinner banquet in Beijing and a lot of business people like myself and some diplomats and some members of the Chinese government, there was a French gentleman who was loudly proclaiming the superiority of the Republican form of government. And he eventually turned to one of the Chinese gentleman to his right and said, So what do you think of our form of government? And the guy looked him dead in the eye and said, Too soon to tell. There was a real lesson there in that lesson. You know, you’ve been doing this for 175 years. Good for you. We’ve been doing this for 4000 years. And I think you have to tap into that. We talked earlier about, you know, starting with the basics of understanding culture, history, philosophy and language and understanding those purchase motivators. So I think, you know, in many ways, the products and the services that Chinese consumers want are very much the same as the ones we want. And I think, you know, most products sell on the basis of or the perception of acquiring power, security and sex. Right. And so, again, I don’t think it’s too different over there, but maybe for different reasons. What I can tell you now, though, the major thing that’s really changed over the last four years or so is that Chinese consumers started what I think is now a global trend in what consumers want. Right. If we look at the matrix of consumer demands over the last four years, most of them have fallen off of the page. And we’re left with one big demand and like 96 points type in black and a headline says, Spoil me or else I will find the brand. The product, the e-commerce marketplace, the physical store. Who will spoil me or spoil me URLs. And to address that first in Asia and now globally as my clients. We came up with what we call the forces in the for use. Right. How do you get to spoil the URLs? If we look at the term unified commerce, the purpose of unified commerce is that spoil your consumer. Nobody does that better than Amazon. Right. Kind of like, you know, screw the vendors, screw the stockholders, screw I’ve got screw everybody. We care about you, the consumer, for better or worse. So how do we spoil them? We do one by building a unified commerce system. But number two, we say here are the forces we’re going to focus on. We are going to be, number one, completely consumer centric. Number two, we’re going to offer you the best in convenience. We are going to offer you customization and we are going to allow you contribution. You’re going to tell us how we can do better and what products and services you want. We’re listening to you more than we’re talking to you. And you think about it, right? Unprecedented in our history. The entire world is a focus group and not enough brands and retailers pay attention to the fact that the world’s biggest focus group is out there and spending the time to listen to what people are saying about you and other brands on social media, you know, in chat rooms, in what they’re saying on Twitter and what they’re saying on Twitch and it’s all there. Right. So those are the forces. Right. How do you do that? How do you how do you give the forces to spoil the consumer? That’s what we call the for use, which is unified commerce, unified technology, unified marketing and unified logistics. Right. So spoil me is a result of giving them the forces and the methodology is by employing the for use.
Ned Hayes [00:31:24] Right. So what you’ve just described is vitally important for retailers to thrive in this economy. A lot of retailers are struggling just to get by. And so I’m curious if that changes when you’re in a really fraught situation, if you still need to spoil your shoppers, if that’s still job number one.
Michael Zakkour [00:31:44] I think in this environment, it’s even more important. You know, if you allow yourself to fall away from that, then it becomes ever easier for a consumer to just have zero brand love, zero brand loyalty. I’m simply just going to buy the cheap, you know, the paper plates or $0.20 last a dozen. Fine, I’ll buy those. If you let them go now, you’re gonna have a hard time getting them back when things improve. Right. And so we were talking earlier about costs of consumer acquisition. We’ve seen inflation rates on CCAC that range anywhere between 100 and 450% over the last five years. So if three years ago, it costs you $100 to bring on every new consumer, it costs you $300 to do that the same today. So you want to let that go now? You spent all that money with the attempt to create a lifetime loyal customer and lifetime value. You don’t want to let that go because starting over again is just simply going to cost you more money. And if we look at where the big retailers, the big grocery companies, the big integrated commerce companies, you can just Google it now. You don’t need me for this. I’ll show you. They’re actually all spending more on technology and supply chain right now in the down economy. So if you’re a small or medium size brand or retailer, if you sit back and do nothing, the gap between the share of market that the big guys own and what you own is going to get bigger. Right. So it’s all fine. And well to say we’re just hanging on and you know, I got to see why a and now is not the time to innovate. You know, there are two types of companies in an environment like this, and they’re the ones who, you know, double down on the future and they’re those who run scared. And so, you know, like I said, you can look this stuff up yourself, but Walmart and Target and Nike and Apple and all these guys are spending more on retail, tech and supply chain than they were prior to the recent economic headwinds.
Kira Cleveland [00:33:57] So looking from that place and looking at doubling down on the future rates, what’s the best advice you can give other entrepreneurs who want to drive loyalty for their commerce or physical retail businesses?
Michael Zakkour [00:34:09] Yeah, you know, I think it comes back to that. You know, start on day one and say, how do we spoil our consumer and kind of work backwards from there? So things like, you know, if we took one of the four things and we say convenience, make it possible as long as the economics work for them to choose whether they want to buy in a physical store or through livestreaming or through social commerce, make it easy for them to buy, make it easy for them to return. That sounds so basic and fundamental on the service surface, but granted there’s a cost to doing it. But I maintain there are tools and technologies and service providers out there who take most of the pain and cost out of that. I’ll give you one example. There’s a company out there I love called Happy Returns. They’re now a PayPal company. What they’ve done is to help solve the cost of return issue for brands and merchants is they’ve set up 5000 drop stations around the US and you bring the product you want to return to the drop station again, scan the drop in the box, you walk away and your return is done. Well, how is that different than bringing your return to the UBS or. Well, here’s how it’s different. What they’re doing is they’re consolidating mass amounts of returns on behalf of the merchants and sending them back container loads at a time instead of one piece at a time. And voila, the merchant is now saved 20, 30, 40% on the cost of retards. So you can say, yes, I want to give my consumer convenience of returns, but it’s costing me too much money. Okay. My answer to you is there’s a solution for it. I can’t keep spending all of this money on digital advertising for a 2% conversion rate on my website. Okay, we have a solution for that. Have you tried live streaming? Have you tried QR commerce? Have you tried a better integration with your online and offline, so to say, how do we spoil the consumer? I also think that where I see things going for newer companies, for start ups, is focus on the product and the brand. We’ve had a culture for sometimes better or worse over the last decade plus where founders are so focused on the capital raise that it almost becomes the end in itself rather than the means to the end. So I think it’s twofold. Let’s go back to people, founding companies, because they have a great product or a great idea or an actual problem to solve, you know, not because we want to raise around. I think that’s been really, really detrimental to some creativity in the consumer product world. That’s number one. Number two, let’s get back to some of the basics on branding and storytelling. I think there has been an overreliance on performance marketing over the last half decade. I think we’ve lost touch with the idea of storytelling and branding. So for me, I would say to, you know, some new CPG companies or product founders focus on the product and the story and the brand and don’t be as focused on the capital raise. I know I’m going to get killed for saying this and it’s totally unpopular opinion because that’s not the way it is out there right now. But I, I think going back to basics of branding, storytelling and focusing on the product and the consumer, that’s where I would ask people to go.
Kira Cleveland [00:37:44] Absolutely. Michael, you’re such a tremendous resource and have given our listeners so many great tools as they move forward into this next year. Kind of a last question. Getting back to you as an individual, what do you hope your legacy will be? What do you want to be remembered for?
Michael Zakkour [00:38:02] You know, I’ve been doing business in the international realm since the mid-nineties. And, you know, whether it was when I started out in Europe, in the Middle East, eventually I transitioned to China and the rest of Asia. I’m doing a lot of work now and focus on India. That’s my next frontier because, you know, handling 2 billion people. Wasn’t enough for me. I felt like I needed to add another three and a half billion people to my portfolio. But what’s honestly been my mission and it’s in my books and it’s in my speeches, it’s in the people I work with is if you can make people’s lives better, you start with that mission and work backwards from there. And I’ve worked very hard over the years to build bridges between cultures and people through business. I have zero artistic talent. I can’t draw a circle. I can’t play a note on a guitar. Some people build bridges and understanding through art and in other ways. Mine has been through it. I think I’m slightly you fairly confident in that, which is, you know, for business and trade. So it’s always been that I’d like to be remembered for, you know, did he make the world a little bit smaller and did he improve people’s lives around the world by, you know, creating wealth? That’s probably the most important one to me. And I guess a second one, you know, minor would be he had a good crystal ball. He was the guy who could see around corners. You know, I think if there’s something that people recognize in my career over the last 15 or 20 years, especially, that I’ve been pretty good with the crystal ball. And so that’s probably something that, you know, might be a nice legacy to that. You know, there’s a downside to that, too. It’s like the artist who didn’t make a penny while he was in his lifetime and now his paintings sell for $100 million. I don’t want to be that guy, but.
Kira Cleveland [00:39:56] Crystal ball has served to balance them already. So you’re well on your way.
Ned Hayes [00:40:00] Well, thanks so much for taking the time to talk with us today, Michael.
Michael Zakkour [00:40:04] My pleasure. Thank you. Thank you. Care, really. It’s been a great hour. I appreciate it so much.
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