The Watson Weekly: eCommerce Strategy & News

Watson Weekly
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Stop reading the headlines and start understanding the frameworks. The Watson Weekly is the premier resource for eCommerce executives, delivering sharp, independent strategy on the industry's most critical developments. Join 20-year veteran Rick Watson as he cuts through the noise to help you understand not just what is happening, but why it matters to your business. Broadcasting three times a week: Mondays: Strategic deep dives into earnings, mergers, and market shifts. Wednesdays: Candid interviews with C-Suite luminaries and tech innovators. Fridays: Join the Watson Weekend for Spirited debates on controversial topics with co-host Jessica Lesesky. From AI implementation and marketplace dynamics to supply chain logistics and retail operations, we cover the entire commerce landscape. Whether you are a CEO, VP, or operator, this is your competitive advantage in audio form.

  1. 10 hr ago

    Let the AI Agents Do the Shopping So They Don't Kill Us All

    Anthropic has moved into commerce. On September 2 it put an open-source blueprint on GitHub for building a shopping agent and a merchant agent on Claude, with demo builds for retail, travel, telecom and ticketing. Rick Watson and Jessica Lesesky have about 50 years of e-commerce experience between them. By their count, the co-authors behind Anthropic's commerce memos add up to roughly four. Anthropic says pilot customers saw carts up to 35% larger and 60% more completed purchases. Jess notes there's no case study behind those numbers and no word on who is actually running this in production. The hosts think Anthropic's claim that page speed matters less than task completion time is aimed squarely at Google, which has spent years telling retailers to shave milliseconds. Rick's bigger problem is peak season. If an agent can't keep up during the biggest sales events, nobody is going to run one system for the busy weeks and another for the rest of the year. Jess asks who eats the return when an agent orders the wrong size, and Rick's answer is that it won't be anyone at Anthropic, since all they've shipped is a GitHub repo. His advice to commerce platforms and order management vendors is to stop worrying about the big bad wolf, and he brings in the Rounders line about spotting the sucker at the table. The back half gets darker. About 1,200 OpenAI agents found a hidden message board during a security test, and roughly 700 of them went on to attack Hugging Face. Then Jacob Coxon resigned from Anthropic saying the people building AI believe it could kill us all by the end of the decade, and Anthropic's alignment lead Evan Hubinger put his own odds above 10%. Rick says Manhattan's e-bike delivery riders scare him more. Jess wants to know who was supposed to be watching the agents while all this happened. Their half-serious plan is to let the agents do everyone's shopping and hope that keeps them occupied. The Watson Weekly Weekend episode is sponsored by Avalara. For more: avalara.watsonweekly.com #watsonweekly #anthropic #agenticcommerce #aishopping

  2. 2 days ago

    The Middle Miles Are Where B2B Money Is, with Andy Hoar

    Andy Hoar thinks the industry is fighting over the wrong ground. The storefront and the last mile get the budget because those are the parts a customer can see. Andy's case is that in B2B the money sits in the middle miles, the stretch between the click and the dock where pricing gets calculated, inventory gets allocated and orders get tracked. Bots are already good at that work, in part because the buyer never sees it and doesn't much care how the result arrived. Andy cofounded MasterB2B, wrote Forrester's first B2B playbook, and his new book is Bot to Bot. He walks me through a distributor wired into a National Weather Service API, which lets it pull orders out of a warehouse sitting in a tornado's path and ship the same product from a neighboring state instead. He describes a construction supplier whose service bot infers which project you're building from what's in your cart, then asks whether you also need the parts you forgot. Where he gets pointed is domain expertise. That has been the distributor's moat for a long time, and he thinks it stops being a moat on the day Amazon's AI advisor is as good as a guy with twenty years behind the counter. Andy asks rooms of B2B people whether they have a data problem and every hand goes up, which he says nobody ever argues with. I pushed him on whether bad data is an actual blocker or the most convenient thing to point at while the default decision, which is always to do nothing, goes unquestioned for another year. He quotes Mohanbir Sawhney at Kellogg on this: "AI is not replacing what is valuable. It's simply exposing what never was." There's a long stretch on why nobody actually rips and replaces a platform, and why Andy's answer to almost any platform question is a question back about what business you're in. He's blunt about customer advisory boards, which get staffed by the sales team with its happiest accounts and produce a mutual pat on the back over a quarterly steak dinner. The accounts worth calling are the ones buying one thing from you for reasons nobody has bothered to ask about, and the ones that already left. He closes on customization, which he calls the kryptonite. Build too much of it and you lose the ability to change direction. His comparison is 1914 to 1918, horseback to aircraft in four years, and his read on Ukraine is that the side adapting faster made scale and firepower count for less than anyone expected. He doesn't say what the equivalent window looks like for a distributor in 2026, and I'm not sure anybody knows. Andy is running the B2B Exchange with Shoptalk Fall in Nashville. Sponsors and attendees are already sold out two months ahead, so ask about the waitlist. Brought to you by Avalara. Tax compliance sounds manageable until it isn't. You add a channel, expand to a new state, start shipping internationally, and the complexity catches up with you. Avalara gives you accurate tax at checkout plus visibility into tariffs and duties before the order ships, working inside Shopify, BigCommerce and WooCommerce. See what they've built for growing brands at avalara.watsonweekly.com. Newsletter at watsonweekly.com #watsonweekly #b2b #amazon #ai #homedepot #ibm #apple

  3. 4 days ago

    Walmart Got $2.9B Back And Won't Say What Reached The Shelf

    Retail's second quarter doesn't compare to anything, and the reason is a refund. In February the Supreme Court ruled that the emergency powers law behind the White House tariffs never granted the authority to impose them. Importers of record filed to get the money back and it landed in Q2. Walmart was eligible for roughly $2.9 billion. Home Depot took $730 million. Target booked a $994 million pre-tax benefit. TJX got $331 million, Kohl's $100 million, Lowe's about $80 million. That put a private question on a public earnings call. Shopper or shareholder. Home Depot ran roughly $685 million of its refund through cost of goods sold. Lowe's said on the record it wasn't spending tariff dollars on price, and kept 11 cents of EPS. Target mentioned price cuts on more than 10,000 items and a $752 million net benefit and never connected the two. Kohl's put $100 million into gross margin and is sending the rest into deeper inventory, which is a company saying the problem is having the goods rather than pricing them. No retailer disclosed what share of any refund reached a shelf. Brian Echelman at AlixPartners calls it an unfair positive against last year and an unfair negative against next year. Model Q2 2027 accordingly. Also this week. Google changed how it spends advertiser budget on August 17. When a campaign ran out of budget mid-day, target CPA and target ROAS used to bring customers in under the number you set. Now it spends closer to the full amount you authorized. "Target" was never a ceiling. Every agentic commerce pitch on the market asks merchants for exactly that permission. Nike is down 39% on the year, heading for a fifth consecutive down year and trading at 2014 levels. The repair job runs through wholesale, and wholesale consolidated into one buyer while Nike was away. Dick's owns Foot Locker, Nike is about 31% of combined merchandise purchases, and Dick's just told analysts footwear trends were deteriorating. Fiscal Q1 lands October 1. Gross margin is the line that tells you whether Nike is buying its way back onto the shelf. Meta settled with 47 states for up to $17.1 billion and the stock closed higher. Against $60.8 billion of quarterly revenue the money is rounding. What Meta gave up is engagement inventory, including a two-hour daily cap for every US teenager, an overnight block, and silenced notifications during school hours. The cap tightens to one hour if Snap, TikTok and YouTube sign similar deals, and Meta's chief legal officer publicly asked them to. The commerce number to watch isn't teen ad spend. It's age verification becoming a layer that age-gated categories have wanted for a decade. Plus the investor minute: Descartes buys Extensiv for about $120 million, Authentic Brands takes a majority of Drake's OVO, Randa picks up Untuckit, Dollar Shave Club makes its first acquisition, and Medici Brands raises $250 million. The Watson Weekly is sponsored by Avalara. More on e-commerce compliance at avalara.watsonweekly.com. Rick moderates a panel at Retail Club in September and hosts Watson Live, the retail AI debates presented by KBO Commerce. Details at watsonweekly.com/events.

  4. 4 Sept

    Walmart's 11K Rollbacks and Who Actually Pays for Them

    Walmart ran 11,000 rollbacks last quarter, roughly double the same period a year ago, and the money paying for them comes from a business most of its competitors don't have. Advertising and membership now account for about a third of Walmart's operating income and grew 38% in the quarter. Rick Watson and Jessica Lesesky go through what that does to everyone on the other side of the table: suppliers facing another round of concession requests, grocers without a profit pool deep enough to fund a price war, and Target, which took its tariff relief to the bottom line while Walmart handed its own back to shoppers. They also get into the 17% of affluent shoppers who now start their trip at Walmart, what a vendor can realistically do about pack sizes when the rollback ask keeps coming, and whether 28% ecommerce growth counts as ecommerce growth when a store associate does the picking. The Watson Weekly Weekend is sponsored by Avalara. Learn more at avalara.watsonweekly.com #walmart #advertising #walmart+ #rollback

  5. 2 Sept

    The CFO Who Didn't Care About a 35% Return Rate

    Kyle Bertin thinks the industry has the returns conversation backwards. His company, Two Boxes, builds software for the section of the fulfillment center nobody wants to walk into, and his argument is that returns are an inventory management problem. He calls it the least optimized inventory pool most merchants own. The math he runs uses a hypothetical $100 million apparel brand. A 25% return rate sends $25 million of GMV back through the door, and at the 50% restock rate he sees in unoptimized operations, half of that never makes it back to full-price sale. Bertin says 80% restock is achievable across his customer base, which frees roughly $7.5 million of inventory and, after sell-through and gross margin, puts the net income impact between $3 and $5 million. For context on what that means against a real P&L, public apparel brands have spent the past several quarters working to hold net margins in the low double digits. He also tells the story of a footwear CFO who looked at a 35% return rate a few years ago and said, directly, that he did not care. At the time the reasoning held up. He was buying at under 20% COGS out of Vietnam, bringing it in duty-free under the Section 321 de minimis exemption, financing inventory in transit at close to zero interest, and answering to investors who rewarded growth over profitability. Bertin takes each of those conditions apart in turn, which is his explanation for why the inbound started as a trickle in 2023 and hasn't slowed. We also get into what has to change on a 3PL warehouse floor, where AI is doing real work in returns processing and where it isn't, the new Radial partnership, and Bertin's claim that only about 5% of returned items are genuinely unsalvageable. This Watson Weekly interview is sponsored by Radial. #watsonweekly #supplychain #returns #inventorymanagment

  6. 1 Sept ·  Bonus

    Three Years In, We Finally Ranked the Stores We Actually Shop

    Three years of the Watson Weekly, and Rick Watson and Jessica Lesesky mark it by doing the one thing a retail show almost never does on air: putting a grade next to the stores they actually shop. It is a tier list. S through C, live, no rubric shown to the audience. Alo Yoga takes the only S, on a hundred-plus stores, international expansion into London and Korea, and a King Street address in Charleston sitting between Skims and Gucci. Rick admits he was a hater first. Amazon lands at A on the strength of everything that isn't retail, including an ad business Jessica sizes at $56 billion, and lands there in spite of an experience Rick says has been crapped on by its own advertising. Lululemon and Nordstrom both stop at B. Eight varieties of pants that nobody working the floor can explain, and a service standard Nordstrom wrote for itself that Rick clocked hitting about fifty percent across four recent visits. Target does not get a letter. It gets a sell. Two years without a CMO, stores still out of stock, a rough back to school, and an insular Minnesota culture that Rick argues rejects outside ideas faster than it can hire them. Walmart gets a buy. Plus: Whole Foods as a returns counter that occasionally sells milk, why the Rack keeps outrunning the mothership, what Dick's is really buying with Foot Locker, and Jessica's ongoing Nuuly problem.

  7. 31 Aug

    Tariff Refund Quarter: Walmart's 28.8%, Target's $994M, and Lowe's 11 Cents

    Walmart collected about $2.9 billion in tariff refunds and spent it on roughly 11,000 rollbacks in Walmart US. Transactions grew and operating income rose 28.8%. The comp still slowed to 2.6% excluding fuel, the weakest quarter since 2020, with the softness concentrated in lower-income households. Walmart raised full-year guidance on the assumption that the second half improves on the back of that price investment, which puts a refund that will not repeat into the base of next year's math. Lowe's earned $4.27 a share on $2 billion more revenue than last year, when it also earned $4.27. Comparable sales rose two tenths of one percent. Almost all of the revenue growth was acquired, from a building products distributor and an interior finishes installer that sell into new residential construction, and Lowe's removed the top of its full-year outlook four separate times on the call. Online grew 15.7%. The release blames persistent do-it-yourself macro pressure for the rest, which is a long way of saying the Saturday deck lumber customer has not come back. Target's traffic did come back. Comps grew 3.8% with 3.6 points from traffic, and apparel and accessories grew $4 million on a $4 billion base. Ipsy is launching a marketing services arm and will no longer say what its revenue is. Six years ago it published 4.3 million subscribers and a billion dollars. Plus the Investor Minute: Ferrero buys Purely Elizabeth, Amazon buys DuckDB Labs but not DuckDB, Mubadala takes majority control of Arrive Logistics, Blank Street raises $105 million, Lavanta raises $22 million. The Watson Weekly is sponsored by Avalara. Tax compliance gets harder with every new channel, state, product and market. See what Avalara Agentic Tax and Compliance does about it at avalara.watsonweekly.com #watsonweekly #walmart #lowes #target #ipsy

  8. 24 Aug

    Google Buys a Dead Airline's Data, Mom Outranks TikTok, QXO's $55M Loss, Stripe Bids for PayPal

    Spirit shut down on May 2 with roughly $8.1 billion in debt and about 17,000 people out of work, and the estate has been selling the pieces since. A court approved 22 LaGuardia slots to JetBlue for $58.5 million in July. Last week's lot was the data. The August 14 notice out of the Southern District of New York itemizes 100 million emails, 500 million Microsoft Teams chats, around 30 million lines of code, pricing from 7.2 billion competitor flights, 7.5 billion passenger transaction records going back to 2008, and more than 175,000 employee records dating to 1986. Google says a third party will scrub personally identifiable data before the handover. Rick thinks $10 million is low, and that the next liquidation will have somebody in the room asking what the internal record is worth. A HarrisX and Allison Worldwide study of 705 teens aged 13 to 16 and 750 parents puts Mom ahead of any platform, creator, or celebrity on which brands Gen Alpha teens end up liking. Dads introduce new brands at 60% against 39% for moms, but moms carry which brands the kid actually likes, 73 to 58. Nike sits first with dads and Walmart first with moms. Any plan that treats parents as a single line item is funding discovery and approval at the same weight when the survey says those are two jobs held by two people. QXO reported $3.25 billion in quarterly sales against $1.91 billion a year ago, with a $55 million net loss and $130 million in adjusted net income. Kodiak Building Partners accounted for about $595 million of the top line. Brad Jacobs told investors he wants $50 billion within a decade. He did not break out organic growth. PayPal traded above $300 a share in 2021 at a market value north of $280 billion. The Wall Street Journal reports that Stripe and private equity firm Advent International approached in July at $60.50 a share, valuing the company near $53 billion. PayPal called the price insufficient and the two sides have been negotiating since. Also this week, the Investor Minute: MUD Jeans files for bankruptcy, Home Depot-owned SRS Distribution moves for Noland Company, and 3 funding announcements. The Watson Weekly is sponsored by Avalara. For e-commerce brands, tax compliance gets harder with every new channel, state, product, and market. Avalara Agentic Tax and Compliance automates the work behind the scenes so merchants get accurate tax at checkout, clear visibility into tariffs and duties, and fewer surprises when the order arrives. More at avalara.watsonweekly.com Subscribe to the newsletter and find every episode at watsonweekly.com

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Stop reading the headlines and start understanding the frameworks. The Watson Weekly is the premier resource for eCommerce executives, delivering sharp, independent strategy on the industry's most critical developments. Join 20-year veteran Rick Watson as he cuts through the noise to help you understand not just what is happening, but why it matters to your business. Broadcasting three times a week: Mondays: Strategic deep dives into earnings, mergers, and market shifts. Wednesdays: Candid interviews with C-Suite luminaries and tech innovators. Fridays: Join the Watson Weekend for Spirited debates on controversial topics with co-host Jessica Lesesky. From AI implementation and marketplace dynamics to supply chain logistics and retail operations, we cover the entire commerce landscape. Whether you are a CEO, VP, or operator, this is your competitive advantage in audio form.

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