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. 16h ago

    Amazon Isn't Your Friend. The FTC Says It Overcharged Sellers $20B

    The FTC and 22 state attorneys general are suing Amazon over its ad auctions. They say an undisclosed soft reserve pushed up what 1.2 million advertisers paid and cost them more than $20 billion since 2019. Amazon says CPCs stayed flat after inflation, conversion went up, and nobody was harmed. Rick Watson and Jessica Lesesky go through the complaint, Amazon's same-day rebuttal and its Genesis-style blog post, why Chair Andrew Ferguson picked this fight in a midterm year, and what Amazon's struggle to grow CPCs means for the fees and ad formats sellers will see next, including sponsored prompts. Sponsored by Avalara: avalara.watsonweekly.com Get the free Watson Weekly newsletter: https://www.watsonweekly.com

  2. 2d ago

    How to Buy AI Agents Without Getting Stuck on One Model

    Every CIO has been told to invest in agentic AI. Nobody has told them how much to spend or when. Shawn Mandel is working through that decision right now as CTO of Dentalcorp, which supports more than 650 dental practices across Canada and, since July, the US. He joins Rick Watson for a Watson Weekly webinar on technology decisions in the agentic era, alongside Jason Cottrell, founder and CEO of Orium and president of the MACH Alliance, and Anatolii Iakimets, director of product marketing at KIBO. Shawn has lived through cloud, mobile, big data and the first round of enterprise AI, and he thinks the old playbook still holds. You start with the business outcome and work backward. The speed is new. So is the position a lot of mid-sized companies are in, making these calls with small engineering teams. His argument is that a lean shop has to choose its first use case carefully, because that use case ends up funding the infrastructure everything after it depends on. Jason says people are the slow part, and rethinking processes takes years, well past any single model release. He would rather see a company running five agents on safe, permissioned access to its systems and data than one running hundreds without it. Anatolii sat across the table from Shawn a decade ago selling big data. His advice to buyers is to show up knowing the exact prompts and roles they want automated, then press vendors hard on permissions and audit logs. The panel also gets into model lock-in and why narrowly scoped agents tend to succeed where big general-purpose builds stall. Shawn points out the category is roughly ten months old. When Rick asked what good looks like, his first answer was that maybe nobody knows yet. #AgenticAI #MACHAlliance #EnterpriseAI #KIBO #WatsonWeekly

  3. 3d ago

    Costco Said Next Was Growing, Then Deleted It Over a Weekend

    Dollar Tree's everyday basics grew almost 6% last quarter. The discretionary side, toys and seasonal and party goods, grew under 2%. Dollar Tree and Dollar General reported the same day, and both chief executives worked hard to tell analysts the spread doesn't mean what you think it means. Dollar General credits its share gains to households making over $100,000 a year and raised full year guidance. Rick's read is that a retailer winning because the economy is bad has borrowed the quarter and pays it back later. The more durable move is the $1 frozen set sitting on top of DG Fresh, because a dollar store with a working cold chain is a grocery store in places that don't have one. Costco shut down the Costco Next marketplace at the end of August, over a weekend, with no notice. Members who bought through it can no longer return the item to Costco. Customer service hands them a vendor phone number. The last thing Costco said publicly about Next was on the third quarter call last May, when CFO Gary Millerchip said a single quarter's sales matched the program's entire fiscal 2022. There has never been a dollar figure for Next in any filing, and a growth rate without a denominator is what you hand analysts when the absolute number is small. Fourth quarter and full year results land September 24. Greg Foran is rebuilding Kroger with the people he ran Walmart US with. Nate Faber, who cofounded Jet.com and ran supply chain for Walmart's US eCommerce, started as eCommerce chief September 1. Mark Ibbotson, formerly central operations at Walmart and COO at Asda, starts in stores today. Earnings landed between the two start dates. eCommerce grew 20% and turned a profit for a second straight quarter. Identical sales excluding fuel grew two tenths of 1%, and the full year outlook for that measure got cut. Foran called the price work a glide path funded by cost savings rather than margin, which raises the question of what actually pays for it when almost all of roughly $147 billion in revenue is food, operating profit is a little over 3 cents on the dollar, and more than 400,000 associates work under UFCW contracts. Anthropic published a commerce agent blueprint on September 2, a public GitHub repo with two working reference builds, one shopping agent and one merchant agent. The company says retailers running these see carts up to 35% larger and shoppers 60% more likely to complete a purchase. Those numbers come from the vendor giving the code away, with no baseline and no outside auditor. The blueprint is also silent on payment. Visa and Mastercard are quoted in the announcement talking about trust, and neither shipped code. Shopify's Vanessa Lee says they're building a reference storefront connecting the blueprint through catalog, the universal commerce protocol, and Shop sign-in, which puts Shopify's own login layer inside someone else's agent framework. Somebody could run this in production before December and find out what a 35% lift looks like when it's measured by a party that didn't build it. Plus the Investor Minute with four raises: Locus Robotics Series G, Atorie in seed, Advizar pre-seed, and Overroute in seed. The Watson Weekly podcast is sponsored by Avalara. Learn more at: avalara.watsonweekly.com #watsonweekly #dollartree #costco #kroger #anthropic #ecommerce

  4. Sep 11

    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

  5. Sep 9

    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

  6. Sep 7

    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.

  7. Sep 4

    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

  8. Sep 2

    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

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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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