Amazon’s own products are ‘basically irrelevant’: Thrasio CEO

Amazon kicks off its much-anticipated Prime Day today. Thrasio Co-Founder & Co-CEO Carlos Cashman joins Yahoo Finance Live to discuss.

Video transcript

AKIKO FUJITA: Well, Amazon is kicking off their two-day shopping event. The shopping event, or Prime Day, we should say, is expected to rake in $11 billion this year, according to Adobe Analytics. We should point out, it is the very last one under the leadership of Jeff Bezos. That $11 billion money expected to be a big windfall for a lot of third party sellers who rely on the platform.

Let's bring in Carlos Cashman, Thrasios co-CEO and co-founder. Carlos, you have really been instrumental in helping a lot of these third party sellers build out their digital footprint. Give me a sense of how big of a bump they're likely to get as we continue to see this event grow.

CARLOS CASHMAN: Well, I mean, look, Prime Day itself will provide a huge bump just because of the publicity and everybody coming to the site and stuff. But you have to prepare for it. So the range can literally be anywhere from 20% bump to 300%, maybe more. It really depends on what you prepare for and what you do, the deals you put out, and how your products are ready to move.

ZACK GUZMAN: Yeah, what's the differences in the ways that some people are preparing well versus maybe preparing poorly? Is it just product set around this? What's kind of the takeaway that you've seen in the businesses you guys have acquired that have done it well?

CARLOS CASHMAN: It's not necessarily product set. I mean, certain products move better at deal times perhaps than others. But it's really more like you have to have your marketing in line. I mean, Amazon brings people to the site on Prime Day. But there's still advertising being bought on every page. You still need to have your product ranking in the right place with the right organic search results on Amazon, the right deals. We put deals in place.

A lot of the stuff you got to do months in advance and planning with Amazon. And so you have to be preparing with them on what deals you want to have when, how much. And then you've got to have your supply. If you don't have enough inventory in in time, you're not going to be able to sell as much, so you can't do as much of the other things. They all tie together, all of these things.

AKIKO FUJITA: Carlos, this comes at a time when there's been a lot of concerns raised by third party sellers about how, in fact, the data on the platform is used to Amazon's benefit. And I wonder, as somebody who's been in this space for a while, whether you've seen an impact at all from those who are saying, well, maybe Amazon isn't just the best place because of concerns, or ultimately, is it sort of a must? Is it a requirement to be on the platform, just given the scale of Amazon?

CARLOS CASHMAN: So I don't know if this'll be a popular thing to say or not. But that is a massive red herring and I mean massive. First off, every seller learns to get on the platform by using Helium 10 or Viral Launch, these software platforms out there that have pretty much the exact same data. And certainly, it's within a few percent, 5%, 10% accuracy of what Amazon's own teams might have.

So you can already get this data and look at it. Beyond that, Amazon's Amazon Basics group has to operate as a separate entity inside of Amazon. It has to buy advertising and all these other things. And they're not particularly good at all of this stuff. They're not even great at doing their SEO or always product quality. So we don't see them on a lot of our listings. You're talking a few percent.

On the scale of what Amazon sells, $300 billion-plus and 60% of that being third party sellers, Amazon's own products are basically irrelevant. I mean, on any search results page, if you go search for an umbrella, I'm competing with 20 other sellers. If one of them happens to be named Amazon, it doesn't matter. It shouldn't matter to me. I still have to do a good job.

ZACK GUZMAN: And when we look at of where you guys are at right now, it's always interesting to chat with you at Thrasios because you guys are one of the big players in this third party space. But there are reports you might be looking to go public via the SPAC route right now. And I wonder what the different weightings would be if you go the traditional IPO route versus the SPAC route, what the cash needs are in the business and the way you guys are operating right now, since it seems like one where the cash flows would be pretty good based on the way that this whole third party business is structured. Talk to me about what the thoughts are there.

CARLOS CASHMAN: Well, look, cash flow is good. But the opportunity is even better, right? So the scale at which we can move and the size at which we can handle this and the growth, that demands more capital in the business. And we could keep raising it privately, and we might. I mean, I can't comment on any rumors out there.

But look, the way I think about being public and why and how you do it-- look, six months after you're public, a year after you're public, no one remembers how you got public. I think regular IPO, a direct listing, a Dutch auction like Google did, or a SPAC, they're just means to the public market.

At the end of the day, you have to have the goods. You have to be a strong company that can report its financials quarterly, that can deliver, and can keep growing, hopefully, right? So look, being in the public markets, there's a lower cost of capital. And there's a broader group we can source from. And this is a global game too. It helps us on that front, I think. So of course, we consider that, as among many other options. And if the time is right and we make the choice to do that, we would.

But again, all these different mechanisms of getting there-- look, people love to report on this stuff and say, oh, SPACs are great, oh, SPACs are terrible, oh, IPOs are great. I mean, for every company that went out through a SPAC-- which, by the way, have been around for 30 years, most people don't know. That maybe didn't do well-- I'll show you many of them that did. I can show you many public companies that did traditional IPOs that were terrible companies.

Let's talk about Enron. Let's talk about WorldCom. I mean, those are just the big examples from the back in the last dotcom crash. But there's no assurance of anything. At the end of the day, you've got to have a great company, great people, executing on a strong vision. And the public markets give you access to capital at better rates than anywhere else.

AKIKO FUJITA: Well, Carlos, you could argue that the thinking among investors is that because there is increased scrutiny from the SEC on these SPAC deals, it's the perception that could potentially hurt any kind of listing. Does that factor into your decision at all?

CARLOS CASHMAN: So look, perception, I believe, may affect things in the short term. In the long term, performance is going to win out. So there were times that Amazon was perceived as a bad stock, as a money losing company. People didn't understand their vision. But let's look at where they've gone over time.

I'd say the same thing with Facebook. People perceived them to not be with the mobile game and to be behind. They've obviously delivered enormously. So I do agree. Look, investors move on perception more often than they should. Markets are not as rational as economics professors would like us all to believe, I think because they're run by human beings who have emotions. And so they move up and down.

But we think of this company in 10-year blocks, in decade terms. We always have. So I'm not necessarily thinking about the short-term perceptions and what happened when I've got a vision that I could execute over another decade. And I'd want to have the right investors along with me who understand that.

AKIKO FUJITA: Some interesting insight there. Carlos, it's good to talk to you today. Carlos Cashman, Thrasios co-CEO and co-founder.