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Using an Omnichannel Approach To Maximize Sales
Shane Hohenstein is the Founder and CEO of Voyageur Group, an e-commerce agency that supports consumer brands across Amazon, Walmart, and Target through merchandising, marketing, content creation, and advertising services. As an expert in retail advertising, Shane spent 10 years in Target’s marketplace where he held a variety of roles including Lead Strategic Account Executive, Omnichannel Partnership and Negotiation Expert, and Merchandise Planning Analyst. Shane is also the Co-founder and CEO of Paddle Commerce.
Here’s a glimpse of what you’ll learn:
- [2:03] Shane Hohenstein’s career arc and entrepreneurial journey
- [5:53] The importance of an omnichannel strategy for e-commerce businesses
- [7:27] How brands can evaluate and leverage the potential of Walmart’s marketplace
- [14:01] Shane explains Target’s customer categories
- [16:06] Target’s mass-market strategy for ensuring quality and authenticity
- [20:33] The criteria to sell on Target’s marketplace
- [26:13] Does Target have fulfillment options?
- [29:30] The benefits of selling on Target
In this episode…
In today’s dynamic e-commerce marketplace, it’s essential to have an omnichannel strategy to sell your products. Target creates a viable opportunity for brands to expand their services. So, how can you leverage the potential of this marketplace to maximize growth?
One of the advantages of selling on Target is that they guarantee product authenticity by curating their assortment and preventing resellers. Their detailed vetting process for each product and brand helps you mitigate competition and ensure customer trust. And, with Shane Hohenstein’s guidance and expertise, you can develop a selling strategy for Target’s developing marketplace.
In today’s episode of the Quiet Light Podcast, Mark Daoust talks with Shane Hohenstein, Founder and CEO of Voyageur Group, about optimizing your growth prospects using Target’s online marketplace. Shane explains Target’s customer categories, their mass-market strategy for product quality and authenticity, and the benefits and criteria of selling on Target.
Resources Mentioned in this episode
- Shane Hohenstein on LinkedIn
- Shane Hohenstein’s email: [email protected]
- Voyageur Group
- Paddle Commerce
- Quiet Light
- Quiet Light on YouTube
- Mark Daoust
- Joe Valley
- Quiet Light Podcast email: [email protected]
- The EXITpreneur’s Playbook: How to Sell Your Online Business for Top Dollar by Reverse Engineering Your Pathway to Success by Joe Valley
Sponsor for this episode
This episode is brought to you by Quiet Light, a brokerage firm that wants to help you successfully sell your online business.
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If you’re new to the prospect of buying and selling, Quiet Light is here to support you. Their plethora of top-notch resources will provide everything you need to know about when and how to buy or sell an online business. Quiet Light offers high-quality videos, articles, podcasts, and guides to help you make the best decision for your online business.
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Hi folks. It’s the Quiet Light Podcast where we share relentlessly honest insights, actionable tips, and entrepreneurial stories that will help founders identify and reach their goals.
Mark Daoust 0:32
Hello, everybody, welcome back to the Quiet Light Podcast. I’m your host for today’s show. Mark, you might be wondering who is this guy? I’m actually in the introduction for the podcast, you may have heard, Mark and Joe. It’s been a while since I’ve hosted an episode, Joe does such a good job. And every now and then I have to jump in host an episode, make sure that he doesn’t take my name off that introduction. So happy to be doing that. And I also wanted to dip in because a few months ago, I had a conversation with Shane Hohenstein, a fellow Minnesotan here, you know, up in my neck of the woods here up in the Twin Cities. And Shane has been doing a lot of really cool work in the target space, a target marketplace, kind of the latest up and coming marketplace, or everyone sees these marketplaces coming up. So as this next Amazon killer, we’re going to discuss whether or not that’s even a possibility to have an Amazon killer or if this is just a different flavor of a marketplace that we need to be taking. taken care of. And so Shane, absolute target marketplace expert. I’m excited to have this conversation with him, which is why I wrestled this from Joe. He actually did Shane, just so you know. He’s like, Oh, he’s a target expert. I should talk to him. I said, Oh, Joe, this one’s mine. Okay, I stopped being possessive. You’ve dominated the podcast. People are tired of hearing from actually I’m sure you’re not. Shane. Welcome to the show. Thanks for coming on. Appreciate it.
Shane Hohenstein 1:47
Yeah. Thanks, Mark. Pleasure to be here. Joe. We’ll talk someday. But yeah, Mark, for the meantime, thanks so much for having me on.
Mark Daoust 1:53
Absolutely. Well, let’s start easy here. Let’s go over your background a little bit here. Just to tell us a little bit about your entrepreneurial journey and how you got into what you’re doing now. Yeah,
Shane Hohenstein 2:03
I mean, my entire career has been in retail and retail advertising. So I started out with school at Target Corporation as a business analyst on the target.com team back when target was actually hosted by Amazon’s platform. So a lot has changed since then. But I left target in the early part of 2018, to sort of have a semi entrepreneurial experience where I got to build an agency within a distributors company. And that was a great experience. And one that taught me a lot for what I wanted to bring to my own agency. And so I launched Voyageur full time in March of 2020. So right while the world was collapsing, but a really favorable time for e-commerce. And so today, we support consumer brands across Amazon, Walmart and Target. All the way from full service, merchandising, marketing, support, content creation, and manage advertising services across all three.
Mark Daoust 2:59
What a time to be starting a business. Hmm, right, as you said, as the world was collapsing, that was really uncertain. That must have been kind of terrifying at the moment.
Shane Hohenstein 3:07
It was, I mean, we so when I left, I had the revenue to support our bills. And so that was an exciting ability to jump in entrepreneurship with a little bit less risk. But there is 24 hours of like, legitimate anxiety after having multiple conversations for months with my wife to say, Okay, we’re gonna do this thing. And then right when we did it, is when March Madness was canceled, and the world is sort of falling apart. And so in this Oh, crap moment, but I woke up and I was like, Oh, wait, people can’t go to stores. People are going to go, you know, to eat calm. And so not only do we become incredibly important for the existing clients that I had on my side, hustle portfolio, but you know, brands just came out of the woodwork needing our services. So it ended up being one of the, you know, the silver linings of celebrate amidst the madness of the last few years.
Mark Daoust 3:55
Yeah. And that’s obviously the way it played out. I can tell you at the time, and we had people that were anticipating just carnage I had I had buyers that, you know, people often think like during the recession, our business must slow down. It doesn’t necessarily slow down, it slows down during change periods. Right. But there are buyers looking for distressed businesses. So when we’re in recession and all that there’s buyers that get excited about that. So I had buyers calling me saying hey, once these deals are you know, maybe a little bit cheaper, I’m ready to go a little did they know it was actually going to be a boon for this space and for anything e-commerce. We can look back and say that makes it makes total sense. Right? Yeah. Yeah, absolutely. So you work for target is kind of a local secret here up in the Twin Cities, everybody works for target at some point. It’s a behemoth here up in the Twin Cities. So not not a huge surprise that that you work for them a little bit. Let’s talk a little bit about the marketplace in general and the evolution. I know when Amazon first opened up their FBA program, or back then it was a little bit different, right didn’t I just opened up the ability to sell on Amazon, we started promoting this as something that that store owners e-commerce business owners should do this idea of expanding beyond just your current website and opening up different sales channels, obviously, you know, that completely flipped, and now everybody’s going to Amazon. And it’s become its own ecosystem, in and of its own right, extraordinarily powerful for people to start a business, but the message that we have is still the same. And I know a lot of people in this space are the same. And that is don’t put all of your eggs in one channel, let’s be multi channel and understand that, that there’s a lot of different things, a lot of different marketplaces to be able to sell on. Can you comment a little bit on that? I mean, do you view this the same way, especially having some experience, you know, quite a bit of experience with with Amazon, there? What are your thoughts on this multi channel sort of approach for e-commerce business owners?
Shane Hohenstein 5:54
Yeah, I think it’s so spot on. I mean, and there’s not a client that we work with on the Amazon side that hasn’t had some horrendous experience with their account listings taken down, you know, that kind of issues. And so there’s a natural resilience that gets built in by being in multiple marketplaces. I think what is exciting right now, though, is that, like the two that I’d say are most party after Amazon would be Walmart and Target. And those two marketplaces make up 10% of the e-commerce space, and Amazon will still a behemoth is 40%. So there’s a lot of opportunity to be had like going after additional marketplaces. I think by having that and having that additional resiliency, I think it’s important. Plus each marketplace has mutually mutually exclusive buyers that you just aren’t reaching, you know, customers that you won’t reach if you’re just on Amazon. And so for me going multi marketplaces is frankly, Paramount. And starting with those three general merchandise marketplaces, Amazon, Walmart and Target are key.
Mark Daoust 6:53
Let’s talk a little bit about Walmart. Because I’m kind of, I don’t know, I, I want to like it. And then I also don’t want to like it, because it’s Walmart. And there’s this sort of sense of man, it’s Walmart is cheap, right? I know, a lot of people love Walmart. I’m not trying to dig on them or anything like that. What’s your sense? And what have you seen? Um, you’re advising a lot of clients, what are you seeing as far as performance on Walmart? How does it differ both in terms of volume and everything else, but just sort of the different mindset that you might need as you’re going into a Walmart store?
Shane Hohenstein 7:27
Yeah, got it is such a mixed bag. And honestly, like, we have this conversation all the time through our experience of which which brands makes sense for Walmart, and which don’t, I’d say any brand is successful on Amazon has a really good shot at being successful on target. Where Walmart has such a low ao V that frankly, there’s brands that we represent, that just can’t take off on Walmart. But if you are a value brand, or if you are just sort of category average, in terms of pricing, Walmart is a massive opportunity. We see brands do between one and 10% of their Amazon sales. But what I like about Walmart is your cost per acquisition is much lower, there’s far less competition. And it’s also a rapidly growing marketplace. And so just six weeks ago, they made massive changes to their advertising platform that’s allowing us to have brands cold start much faster, and really gain market share. And so if you’re not rushing to Walmart, now, while these exciting changes are happening, it’s going to be where, you know, you look at the glory days of getting on Amazon early. And then also people catch up to sort of a category leader. I feel like Walmart is sort of in that spot. But you make a good point. Like, I wouldn’t recommend premium brands launching a Walmart yet, it just doesn’t make sense.
Mark Daoust 8:44
But we’re gonna talk about target in a minute. But I want to focus a little bit more on Walmart here. Do you have a good way to test? First of all, let me back up. I love the test that you’re talking about. Right? If you’re a premium brand, if you’re not competing on price, if you’re a higher ARV that totally makes sense. Walmart is known as a commodities powerhouse, right? You can buy things inexpensively at Walmart. So that sort of makes sense. If you’re that in between territory, and you you’re not sure if you want to just dive in. I mean, if it’s only 1%, or even 5% of sales, is that worth the effort that you’re going to put in? Do you have recommendations on how somebody would could test that out before making that big dive? Yeah, I mean, the fantasize
Shane Hohenstein 9:27
about Walmart is it’s an open marketplace like Amazon, right? And so they have a little bit more stringent rules for getting on the platform, but it’s pretty open. My personal opinions, there’s really not a lot of risk for testing your top items on it. If it doesn’t work and you invest a little bit of effort, then hey, like it doesn’t work, then you can always go back to Amazon. But for me, it’s too low risk not to try because the worst case scenario is just go back off Walmart and no longer support your brand there. But there’s so many reasons why it’s important one is, if it works, it’s going to be incremental opportunity for you. There’s actually oftentimes now wfs opportunities for enhanced profitability as long as you’re selling at the same MSRP. Because your acquisition costs are lower, you actually have a little bit of a profit benefit on Walmart, which sounds crazy right now. But the reality is I always tell brands as to is that if you’re not selling your brand on Amazon, then somebody else is going to, and that’s starting to happen on Walmart as well. And so for me, a brand who wants to protect their brand image or their sort of merchandising contributions going on Walmart, if for no other reason than to make sure that you are corralling all these different resellers and making sure that your actual brand voice is coming through in your listings. For me that’s important just in itself.
Mark Daoust 10:47
That that makes. Yeah, that makes complete sense. Interesting stuff. Are there customers that would shop on Walmart, you mentioned this at the beginning, you teased us a little bit. Talk to me about the customers that would shop on Walmart that may not be shopping on Amazon, because I can hear some people thinking, Well, I mean, I’m gonna reach those customers, Amazon is so much bigger than them. Is that true? Or is that not true that the same customers will also be on Amazon.
Shane Hohenstein 11:12
There. So there’s definitely overlap. But there’s also a pool of customers. And I don’t know the percentages, but there’s a pool of customers that are exclusive to just Walmart and there are core Walmart shoppers, so they’re using Walmart for their in store trip and then going on walmart.com potentially not even realizing it’s a marketplace searching for their online shopping. And so for that customer that’s not going on Amazon anyway. That’s a huge opportunity. And while Amazon is massive, it still is 40% of the marketplace where Walmart is almost 8%. So, you know, for me like there is a lot of opportunity there. It’s just making sure you have the right brand that fits.
Mark Daoust 11:49
Even saying those percentages is a little eye opening, right? I mean, I don’t think we think about it when we think about it’s not a percent of Amazon size, it’s actually closer to a quarter of Amazon’s size at that 40 to eight ratio. So fascinating. Yeah,
Shane Hohenstein 12:05
yeah, it’s it’s 80 billion on the you know, the trillion dollar you know, e-commerce opportunity in 2022. So it’s, it’s still a massive, massive marketplace,
Mark Daoust 12:15
measly trillion dollar marketplace.
Shane Hohenstein 12:18
trillion dollars of e-commerce sales for 2022. Totally crazy.
Mark Daoust 12:22
Goodness, holy cow. All right, let’s talk about the the I won’t say the newest entrance, but the one that we want to talk about mainly here. And that’s target. And obviously, we’re both locally here at the Twin Cities. Target is headquartered here. So we love Target for a lot of reasons. I don’t know about you, I grew up here grew up with target in the Twin Cities. But it’s kind of different feel, right? I mean, growing up, I remember there was the big three, there was Target, Kmart, Walmart, right, those were the three kind of big, big ones. And then target used to be kind of competing alongside them. And they made a shift, I remember when they made the shift to be kind of we’re going to sell a little bit higher end items, right? We’re going to be a little bit more pricey, but it’s going to be higher quality is kind of where we’re going. And that’s where they are today, right?
Shane Hohenstein 13:04
Absolutely. Yeah, the value equation was not just about price per target, right? It was about price with the products and that masstige nature of what nature of what target one offer, they’re what they call guests or customers. And so yeah, it is your national brand products is going to be competing eDLP with Walmart, but you’re going to find a lot of exclusives, you’re going to find a lot of target own brand, as well as different products within the same brand that are sort of built for that target customer, which is a bit more upscale than Walmart, for example.
Mark Daoust 13:36
Yeah, so let’s let’s dovetail the last question I ask all Walmart into this discussion about target. And that is the customer difference the different pools of customers. Whereas I would imagine with Walmart and Amazon and correct me if I’m wrong here, I would imagine the overlap is going to be fairly high there. I would also imagine with target, you can probably get a little bit more distinction in customer base. Is that assumption Correct? Or do you think it’s about the same? Or do you do you know? Yeah, I
Shane Hohenstein 14:01
think so. The target customer is much more affluent than the WalMart customer. But they’re also still deal seekers, right. Like, if you’re buying beauty at Target, you know, there’s a huge overlap between beauty at Target and Ulta, for example, which is why that marriage happened. But it’s not necessarily a huge Sephora overlap or Macy’s overlap, per se. So it is still premium to the mass market, or to like Walmart, but you still have value brands that perform extremely well which is why I love Target for a next step. Because if you were the lowest price within your category, you’re gonna have a customer that’s going to, you know, want that on target. But if you have a slightly premium or even premium product within your category, the affluent target, you know, guests as they say the customer is looking for your products as well. And that to me is super exciting. The other thing that’s important to think about with target is Target has trained their customer On which categories are standing for. And the marketplace is exciting because they’re gonna expand into new categories. But if you are in, you know, apparel accessories, so fashion, if you are in a mom and baby sort of personal care if you are in frequency categories beauty and personal care, OTC, these are all categories that target does extremely well toys, even electronics, to some extent, they do extremely well in those categories. So if you’re in that category, and you’re anything less than ultra ultra premium, I mean targets a great marketplace to sell on.
Mark Daoust 15:36
How are they going to avoid how sorry, you’re going to avoid becoming just another collection of everything, right? I mean, this was sort of the challenge that Amazon faced early on is you shop for a toothbrush, and you have 1000 vendors selling toothbrushes. So who needs that right? And you end up getting this really, it’s like the bargain bins that you find on the way out of a store, really no way of judging the quality? What is target doing to try and keep that sort of upscale to the mass market, as you put it?
Shane Hohenstein 16:06
Yeah, and that’s such a that’s such a good question to sort of, like dive into Target’s whole ethos about their marketplace. They their pride is building a quote, better marketplace, and better is both for brand protection, which then leads to consumer confidence, lack of counterfeits ensuring that you have authentic, authentic goods. And then for their suppliers that they view as an asset to them. Whether it be a marketplace seller or a first party vendor, they want to make sure that there’s protections in place for them so that way they prioritize the marketplace. So the what target does to make sure they curate the assortment, as well as ensure that there’s credibility there is they only have a one to one relationship between a supplier and a UPC. So a product that’s sold on target.com can’t be sold by multiple different resellers and sellers. So there’s a guaranteed authenticity and that decision for that UPC to be tied to that that vendor or that seller was actually made by a person at Target. So for any products that we bring, either as an agency, or through our distribution company that we’ve launched to allow more opportunities for smaller brands to be on target those decisions to list on target.com, whether it’s first party vendor, or third party through the marketplace, is actually approved by a person on the inside of target. And so that’s how they’re allowing you kind of expansion, but still making sure that there’s consumer trust and making sure that they can curate that assortment. So that was some so that was someone can’t just come on and list 1000 toothbrushes and help that one fix.
Mark Daoust 17:43
Right so the UPC, there’s only gonna be one unique product being sold by one vendor is what you’re saying, right? So if I have a can of Lacroix or your case of Lacroix, and I want to sell that, it’s probably going to be sold by Lacroix or their authorized distributor as opposed to 1000 resellers. That’s essentially what you’re saying. Right?
Shane Hohenstein 18:00
That’s exactly right. Yeah.
Mark Daoust 18:03
One of the advantages I could hear somebody saying about Amazon would be when you have multiple companies selling the same product, reselling the same product, it creates certain efficiencies in terms of pricing, right? Because how do you compete on a marketplace? Especially if you’re using that third party fulfillment of Amazon that they have? How do you do that? Well, the largest one out there is going to get some pricing leverage and be able to pass that on to the consumer at the end of the day, and all the other ones will fall off. Does target will allow for that sort of optimization of that third party seller for the consumer. In other words, as a consumer, I don’t want to necessarily go to just one seller who’s essentially got the monopoly on target. Are they working on that as part of their approval process? Are there Are there guidelines or restrictions there?
Shane Hohenstein 18:52
One, I mean, one other terms and conditions of being a marketplace seller is that they want to have price parity with competitive retailers, which essentially means Amazon or Walmart. So they don’t want you to come on there. And they will actually give you a notice if they see this happening and being you know, 10% above Amazon’s retail every day. Now target as a retailer understands the battle that all vendors go through with resellers and, you know, the the number of ways that product gets resold on Amazon causing price pressure to target has no interest in participating in that. But if a brand isn’t selling within a similar percentage, you know that retail, they’re not going to allow that seller on the marketplace. And that’s the type of structure that they have to make sure that their customers are also taken care of. But what is nice about it from a seller standpoint is if you know that you are undergoing efforts to get your retail price up within you know Amazon and Walmart targets not going to contribute to continue to pull that pricing down. So you can set your anchor there work on the other marketplaces and when parity is restored target won’t be part of that problem. And for me, that’s that’s a really nice part about being a seller on a marketplace.
Mark Daoust 20:05
It sounds much more manual of a setup process to get into the target marketplace. Right? I mean, signing up for walmart or amazon FBA is can be done quickly, right? It’s not a relatively quickly, what does that process look like? And what should if somebody’s saying this, obviously, look, I don’t want to compete against a bunch of other people in the marketplace. I can imagine there’s a lot of people listening right now that hear this and say, That sounds wonderful. What does that process look like? It’s got to be more gated than what you’ve seen in other marketplaces.
Shane Hohenstein 20:33
Yeah, such a good question. It’s so it’s so promo target strategy. So target is extremely exclusive. So it’s almost like selling into a buyer, right? Like, you have to actually get an approval from one of the category owners to list your products. And target is interested in expanding curated assortment, but they’re not very interested in expanding partnerships and sellers. And so the one of the reasons is, is that they actually dedicate a very hands on onboarding process to bring sellers on board, because they want to ensure a great customer experience. So they want to ensure that the sellers are legit. So what ends up happening is, they have a posted restriction that a new seller has to have at least 150 skews. And for voids group, there’s only a couple brands or companies that we work with that crossed that threshold. And so what we have done and which is a preferred path for target actually in times is we actually launched a company called Paddle Commerce, which is an affiliate company on board your group, and it’s our distribution entity. So we still give it the same white glove treatment that our agency does. But that seller ID allows us to aggregate across our brands, we crossed that 150 SKU threshold, and then therefore we can list and so there’s sort of two ways about going about it. If you’re a brand that has less than 150 skews, or I’d say less than 100, because we’ve seen them have some wiggle room on that 150 number. But if you’re under 100 SKUs, and you want to be on a platform, working with a preferred reseller that is in Target’s network is probably your best path forward, which is why we launched Palafox. If you have more than 150 skews, you know, the process starts with selling your brand in, you can’t just go list, there’s not a place to go on target.com and find a link to open up your even a seller application, you have to know somebody or know somebody who knows somebody. And so far the value we provide is having those relationships, like you said with everything and Twin Cities having worked for target at some point, a lot of the value that we bring is having x target team members at Voyageur Group and having a lot of personal relationships there that allows us to at least a better brand from a person that is actually making those decisions. And so once that is complete, you have to go through a rigorous three month onboarding process to ensure that your data quality is accurate, they have very strict guidelines, you can’t just have a crappy listing live on target.com, you have to actually pass a test for every product to be listed. And a part of that means that you’re using a listing tool like an ascender or a challenge visor or spa. And so those are all major considerations for launching target, it’s way more involved. But because of that, you get that nice exclusivity bonus.
Mark Daoust 23:19
Alright, so 150 skews to what they’re looking for, although they can bend a little bit. They wouldn’t be interested in a company that that might have fewer skews, but a really distinct, unique, proper, you know, set of products with IP and all that, you know, trademarks and everything that they’re going to turn away from that.
Shane Hohenstein 23:41
I think it I think it’s to be honest, it’s a little gray. So like let’s say let’s say all birds wanted to sell on target.com You know, hot shoe company, and they probably would cross this threshold let’s say it only got 50 skews. I’m not gonna I don’t see a world with target says no, you can’t sell that’s, that’s a perfect category, perfect price point perfect trend brand for the platform. So it’s a little bit great. But if you are not a very well known brand, you’re primarily an Amazon only brand. And you want to make the case for being on target.com to the marketplace. They’re going to ask you to either work with an approved reseller like Paddle Commerce, or they’re going to want to make sure you have at least that 100 100 to the SKU threshold
Mark Daoust 24:23
fastened, do they care about your current revenue levels to demonstrate market adoption and appeal of the product?
Shane Hohenstein 24:29
They do? There’s not a hard and fast rule. And when we present brands, oftentimes we will present their sort of rules in the category on competitive retailers. So we won’t say share revenues. But we’ll say hey, this brand is the third best brand in the category we can show empirical proof by sending links to their their BSR on Amazon, for example. And that has made huge inroads for us to get brands that were otherwise overlooked, to be considered for target.com But because they’re focusing on providing a marketplace that will lead to credibility for the customers lead to trust when purchasing on there, a lot of what they’re looking for, frankly, is just your ability to be a great marketplace seller. And so you want to have a great brand in the right categories, but they want to make sure you’re going to fulfill orders on time, they’re gonna want to make sure that you sort of know the playbook for success, which is why this strategy of having a few of these, you know, trusted distributors has been a big part of their new brand launch strategy.
Mark Daoust 25:31
Right. All right, let’s talk about the fulfillment of orders. Now, I know a lot of Amazon FBA sellers, one of the beautiful thing about that is you don’t need to actually touch the product right away. Obviously, as most of these companies grow, they start to and they figure out their pre processing centers, before they send in May maximize that sort of relationship there. But if I’m looking at a company that has 1520 skews at most, it will grow pretty big, we using the Amazon fulfillment network pretty pretty successfully. What is target.com looking at for their fulfillment? Is this all something that the merchant needs to work with a fulfillment do they have their own fulfillment options that they offer.
Shane Hohenstein 26:13
So target does not offer any fulfillment options. If you were a first party vendor selling into Target, and you were sort of an elite product grouping, they might purchase your inventory. But on the marketplace, you’re going to be doing your own fulfillment, it’s all FBM. And so if you have a great operation fantastic otherwise, where we steer our clients, if they’re not a paddle brand that we bring in, if we’re representing them as agency, we steer them to one of our trusted partners. So we’ve been working with deliver for a long time. They’re a great fulfillment partner for DTC e-commerce sites, we have brands that work with where to go, they are a great DTC fulfillment provider. And what’s nice about them is because Target requires it, use a listing tool like an ascender, or challenge visor, these different warehouses already have a built in API connectors that go right into them. So then the order flow down to those warehouses work seamlessly. And that’s typically what we have done is have our partners work with one of those because otherwise meeting targets requirements on a consistent basis was something that they feared. Now, if you’re a great DDC company, and you already doing tons of orders and order fulfillment isn’t a problem, then that will work out just fine as well.
Mark Daoust 27:31
So let’s talk a little bit about results of being on target.com. We raised said 40%, for Amazon and the e-commerce space. Walmart is 8%. And I remember you kind of grouping those two together at 10%. So my basic math here was a what 2% For target right now.
Shane Hohenstein 27:50
Yeah, 2.3% of the market is target points.
Mark Daoust 27:53
Do you know the growth rates on that year over year? How fast? Are they growing as far as the marketplace?
Shane Hohenstein 28:01
Yeah, so here’s the deal. 2020 was 2020. Target was actually like the biggest winner, but a huge chunk of that growth in their e-commerce sales was from two things one or really low base. And then two was from flexible fulfillment. So a lot of that volume that was reported was actually stuff that was ordered online, pick up in store, or drive thru, or same day delivery via shipped or truck. But what is exciting as we look at 2022, is target is actually predicted to be the fastest growing job merchandise retailer. So Carvanha and chewy are expected to grow at a faster rate. But then the third fastest growth site in all the states is target at a 22.3% growth rate. And so for me, it’s like it’s an exclusive retailer, hard to get in brand protection is there. It’s not huge, like Amazon, but it’s still the fifth biggest site in the country. And it’s the fastest growing from a rate standpoint. So for me that like that, that gets really excited. Yeah,
Mark Daoust 29:03
no, absolutely I, I love the spin that they’re putting on this as far as being far more curated than than what we’re seeing from every other Amazon killer, quote, unquote, right? Really hard to go head to head with Amazon, especially with their emphasis on fulfillment. They’re so far ahead on that. Talk about some of your customer successes, what are they seen when they go to Target? And we can boil it down to a simple question. Has it been worth it for them financially?
Shane Hohenstein 29:29
Yeah, so one thing I don’t think Target has, I don’t think target.com or targets marketplace, target plus has any intention of being an Amazon killer, where I think Walmart is very much you know, they’re an $80 billion e-commerce site. They’re very much going after trying to be Amazon at least more. So target is all about just using multi channel retail to win so the combination between stores.com providing a curated assortment building brand, trust and credibility. That’s where they’re going after is that customer experience. Um, in terms of results, I think the things exciting is, we’ve seen brands on Walmart that do half a percentage of Amazon sales. Because it’s premium, it doesn’t work. We’ve seen brands on Walmart average do between one and 10%. What is awesome about target is there’s usually a much higher floor. So between five and 10%, of Amazon sales we’re seeing, but the thing that I think is most exciting is we’re seeing the cost per acquisition be so much lower. So using, we use citrus ad for our target product ads, brands can use Criteo, as well. But when we’re sponsoring exact match keywords on citrus, we’re looking at a fraction of the expense of your cost per click on Amazon. And so the success story isn’t necessarily the brand is going to come out and see, you know, 15%, or Amazon sales and this massive growth for their, their brand. But if they see between five and 10%, it’s highly incremental and more profitable, because those dynamics have cheaper acquisition costs. That’s I think, what makes it really worth the effort.
Mark Daoust 31:07
Yeah, it makes complete sense. I mean, just encourage anyone to research the principle of economic rent and how it whittles away profits of any company. And Amazon is a complete live example right now with their advertising network of the principle of economic rent, target seems like it’ll be protected against that because of that, which is going to be fascinating to look at as they evolve.
Shane Hohenstein 31:29
And I’ll be the first to admit that I look at this way too, simplistically, because my team does this all day, every day. But for me, if you are a successful brand or seller on Amazon, the knowledge and skill set and an incremental time to go be successful on Walmart and Target if you if you have the luxury of selling on target.com. Those aren’t massive incremental skill sets. There are nuances PDPs with different advertising, but there’s a lot of shared knowledge that can be deployed and from me talking about as a result worth it. They think it’s one of the fastest and most profitable ways to get 10% increase in your business is to launch a profitable and exciting marketplace.
Mark Daoust 32:12
That’s fantastic. Do you remember jet? Yeah,
Shane Hohenstein 32:15
I’ve been to the headquarters New Jersey that say jet on it, but it’s really just Walmart’s new building. Yeah.
Mark Daoust 32:20
There you go. Jet was gonna be the Amazon killer. Do you remember that? I remember the big launch and everything about it right? And then and
Shane Hohenstein 32:27
then Walmart acquired them for some insane, insane valuation, and it hasn’t done much. And not only has it not done much, I haven’t seen Walmart really build any of that into their own ethos. They haven’t really taken any of that secret sauce in their own business.
Mark Daoust 32:43
Yeah, you know, I think there’s like a bigger lesson here. at play, right? Google used to be the search King, and no one has unseated Google as a search King. Other than diversifying, right Amazon now is the number one place for e-commerce based searches. And we never thought of Amazon as a search engine. But that’s where Google gets gets sort of fractured is in more specialized searches with specialized verticals, how do you beat Amazon, you don’t try and go head to head like jet was going to do you do a target is doing and like I said, it’s not an Amazon killer. It’s more of a niche creator, in kind of a pocket that’s going to be hard for Amazon won’t be able to touch that.
Shane Hohenstein 33:25
And and what Amazon lacks, because it is essentially just a search engine for products is that ability to build brands and drive category browse and dwell time, right? So target actually does that really well still, and and that could change over time with new brands in the marketplace. But you know, depending on the category, I mean, half of detail pageviews can still come from category navigation browse on target.com. We’re What 95% or more of all detail page views comes from an ad or a search bar on Amazon. And so that’s one of the things that target has that I don’t Amazon would love to have is that ability to just keep people on the site, navigating discovering, and brands launch and leave Amazon all time because it’s just not as often as much a Brand Builder as target comm if you don’t want to search for an Amazon, you’re not going to be found or target can allow for a little bit of that brand development. Yeah, and
Mark Daoust 34:20
make no mistake. I mean, target is a Smart Company. They were doing customer analytics before it was the thing to do right. They were doing it a long time ago with it or their mailers at a pretty advanced level. And set the tone. Absolutely fascinating. I’m personally really excited about target.com as a marketplace, because it feels so different from what we’re seeing like Walmart obviously, like you said, massive company, so they’re going to be able to make some headway there for sure. But I just love some of the seller protections on target. It’s super exciting.
Shane Hohenstein 34:55
In your Paddle Commerce, you know our distribution company, we have the luxury of being on the line launch, you know, multiple marketplaces at the same time. So we’ll be in 10 or more marketplaces, by the end of this year, that company launched focusing on target and what I liked about, you know, Target and Walmart, but primarily target the stages, that exclusivity and that early adoption opportunity. For me it’s just exciting because I think in five years, we’ll be talking about this moment where target sort of caught steam and brands that got there early reached a, you know, disproportionate value from those that will launch your
Mark Daoust 35:31
industry. And this is a great segue. I’m sure there are people here that are listening to this that would love to talk to you. What’s the best way to be able to reach you?
Shane Hohenstein 35:38
Yeah, so you can go to our website, which is Voyageurgroup.co Voyageur is spelt with an e u r. So voyageur.co Or just shoot me an email [email protected] I’m happy to chat and share your knowledge working
Mark Daoust 35:56
is a super fascinating, exciting sort of marketplace. Growing up, I really appreciate you taking the time to give us kind of a primer on it. I’ve learned a few things. Hopefully everyone listening has as well. Shane, thanks for coming on.
Shane Hohenstein 36:09
Thanks, Mark. Appreciate it and hope you have a good rest of your day.
Today’s podcast was produced by Rise25 And the Quiet Light content team. If you have a suggestion for a future podcast, subject or guest, email us at [email protected] Be sure to follow us on YouTube, Facebook, LinkedIn, Twitter and Instagram, and subscribe to the show wherever you get your podcasts. Thanks for listening. We’ll see you next week.