What's Coming Next in Wholesale Distribution & Manufacturing, with Mark Brohan

[00:00:04] Welcome to Around the Horn in Wholesale Distribution with Kevin Brown and Tom Burton. Sponsored each week by LeadSmart Technologies, Tom, Kevin and their guests review the news of the week and dive deep into the topics impacting manufacturers, wholesale distribution, independent sales agents, and the global wholesale supply chain.

[00:00:24] Whether it's M&A, SaaS and cloud computing, B2B e-commerce, or supply chain issues, we peel back the onion with our guests into the topics that impact your business the most.

[00:00:37] I'm Kevin Brown. I'm here with my lifelong friend and business partner, Tom Burton. Tom and I are the co-founders of LeadSmart Technologies, and we get together every week with hundreds and hundreds and hundreds, sometimes thousands of people that join us listening on our live show that we're doing this morning, as well as the podcast.

[00:00:54] That will be available later today. And we review the news of the week in supply chain, the economy, marketing, mergers and acquisitions, AI, technology, cybersecurity, sales and marketing, lots of different topics.

[00:01:06] And we try and bring those back to the impact that the news of the week has related to those topics on wholesale distribution and manufacturing.

[00:01:13] We do that through the newsletter that we publish each week. The newsletter is called Around the Horn and Wholesale Distribution and Manufacturing.

[00:01:19] It goes out right now to approaching, well, it's over 10,000 people now, probably approaching 11,000 shortly.

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[00:02:01] So we're going to get started here in just a moment.

[00:02:03] But before we dive in again, if you're listening in on the podcast later today and only hearing us, then you don't see these three handsome faces here.

[00:02:11] We have Tom Burton and Mark Brohan and myself.

[00:02:14] Speak for yourself.

[00:02:15] There we go.

[00:02:16] Well, I'm surprised we don't have any comments from the audience on that one yet.

[00:02:21] But if you're listening in, remember that what we're reviewing is that newsletter.

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[00:02:29] We come to you each week.

[00:02:31] The only way we're able to do that is we've got to be able to pay the bills, which we've got a wonderful producer and editor behind the scenes, John and Lily, on our team that's working on this.

[00:02:41] And so Lead Smart Technologies, the company that Tom and I work for, sponsors this show every week.

[00:02:45] We're on number 121, which is astounding.

[00:02:49] We're well into our second year on this show now.

[00:02:52] And Lead Smart is the company, again, that Tom and I work for.

[00:02:55] Lead Smart has developed an AI-enabled smart CRM and customer intelligence platform.

[00:03:00] And unlike traditional CRM and other products that are related to that, we take information from across an organization from ERP systems and marketing automation and e-commerce and other data from the organization.

[00:03:13] We bring all that together to make intelligent and actionable decisions that helps accelerate growth within businesses.

[00:03:19] So if you have the desire to learn more about how you can accelerate the growth of your organization by using technology that's affordable, that is rapid implementations and very focused on the growth and acceleration of your business, we'd love to talk to you.

[00:03:35] So at that note, gentlemen, let's get started.

[00:03:38] Mark, thank you again for being with us.

[00:03:40] Why don't you tell us a little bit about not only what you do now for our friends that are providing data for us each week on this show, much of which you write, but a little bit of background on your career as well.

[00:03:51] Well, first, let's cut the chase here, guys.

[00:03:54] Happy holidays.

[00:03:55] I mean, to anybody out there, happy holidays.

[00:03:58] We made it.

[00:04:00] Another one is almost in the book.

[00:04:02] So, you know, let's start with that.

[00:04:04] And then secondly, my kudos to you guys.

[00:04:09] I mean, I do a lot of podcasts, you know, as a journalist and market researcher, and I'm a big admirer of your show.

[00:04:17] So I'm excited to have to be invited here.

[00:04:20] So, boy, I'm an august company.

[00:04:22] So thanks for having me.

[00:04:24] Very good.

[00:04:24] Now, it all began on a 5,000-watt radio station in Fresno, California.

[00:04:28] No, sorry.

[00:04:29] That was the Mary Tyler Moore show for another day.

[00:04:31] Now, I am a senior vice president and head of B2B with that lofty title at a company called Digital Commerce 360.

[00:04:41] But I have been a business journalist for going on 40 years.

[00:04:47] I have been around e-commerce technology since the very beginning in 1998.

[00:04:54] But we, our company, Vertical of Medica, Digital Commerce 360, we call ourselves a news-based, journalistic, research-oriented company.

[00:05:05] What that means is we develop actionable insight and analysis based on data and interviews that we do with the industry.

[00:05:14] And that includes most, of course, manufacturing and, of course, distribution.

[00:05:19] My wingman, my friend, my colleague, Paul Demery and I, we have been at this for 20-plus years.

[00:05:25] We go back to the very beginning of this when it was pretty much electronic data interchange and the dot-com crash.

[00:05:31] So we've seen a lot of things coming, a lot of things going.

[00:05:34] We're not afraid to express opinions.

[00:05:36] So I look forward to kind of a fun discussion today.

[00:05:39] But, you know, the upside is our limitation today is certainly not e-commerce.

[00:05:46] I mean, we talk a lot of people about all things, back-end systems, front-end systems, you know, the gamut across the enterprise when it comes to operations for a distribution company.

[00:05:57] So we hear a lot of stuff.

[00:06:00] And we're happy to kind of share what the market's telling us that we can tell you today.

[00:06:05] So, how's that?

[00:06:06] I'm looking forward to it because, you know, there's a lot of – and we'll jump in here, Mark, in a minute.

[00:06:12] But I agree with you, man.

[00:06:14] It's been a whirlwind year.

[00:06:17] Yeah.

[00:06:17] I think there's a lot of confusion out there about just, you know, not only technology but economy and all those things that I think people are trying to sort out going into next year.

[00:06:28] Well, you're absolutely right on that because, I mean, you know, you folks probably know the numbers as well as anybody.

[00:06:34] But, you know, if you look at – I look at Department of Commerce sales frequently, if not monthly, then weekly and certainly quarterly.

[00:06:42] And if you look at the last couple of years coming out of the COVID mess, you know, manufacturing sales and distribution sales have been putt-putting along.

[00:06:52] And so, if you look at the very macro level of where the market as a whole – and by that I define that as manufacturing, wholesale, distribution sales – has been going along, it's been extremely flat.

[00:07:06] I mean, putt-putting might be a kind word to you.

[00:07:08] So, our observation has been that for the last couple of three years, the expectations that distribution companies have of everything from outlook to technology spending to what they want to do or can do or would like to do but can't do with the customer, it's all over the map.

[00:07:27] Tom, to your point, there's a mess of confusion out there.

[00:07:30] And if you want some specifics that companies are telling us, we can get into that at some point if you'd like.

[00:07:35] Yeah. No, I think as we get through the articles, let's kind of see if we can make some heads or tails of some of this stuff because I think we have a wide variety of topics today.

[00:07:43] So, I think we should roll. Kevin, what do you think?

[00:07:46] Yeah. No, let's – yeah, let's – what happened, Tom, this week? What did Jerome Powell do? Do you want to talk about that?

[00:07:55] Well, our friend, Mr. Powell, or Chairman Powell, he did his third – third – did you hear that?

[00:08:03] Third? Third.

[00:08:04] Rate increase this year, as we all know.

[00:08:07] Reduction.

[00:08:08] Pardon?

[00:08:09] Reduction.

[00:08:10] Reduction, sorry. Did I say increase?

[00:08:12] Maybe I thought I was the one that was a little fuzzy.

[00:08:15] Okay. Anyway, rate reduction or rate cut.

[00:08:17] However, he said that next year, probably plan on two quarter point cuts throughout the entire year.

[00:08:26] That has spooked the market a bit, although I guess the market is a little less spooked today.

[00:08:32] I looked before we came on here, and it was up significantly because there was another inflation reading that came in last night that was a little bit better than expected.

[00:08:41] Yeah.

[00:08:43] Yeah.

[00:08:43] But clearly, there seems to be a disconnect between the stock market and the bond market in terms of their expectations for inflation and so forth going over next year.

[00:08:53] And I think, you know, Mark, this just ties right back into the same – what I call confusion.

[00:08:58] It's like, you know, I think a lot of people expected much, much bigger rate cuts going into next year, much more cheaper money.

[00:09:07] I'm not sure it's going to play out that way.

[00:09:09] What's your immediate thought on that?

[00:09:11] Well, a couple things.

[00:09:14] There's a newsletter I get every single Monday.

[00:09:16] It's the first thing I open Monday morning.

[00:09:18] It's basically a nice digest of leading market economic indicators from Goldman Sachs.

[00:09:25] And they kind of give you the latest on unemployment, you know, rates, rate, inventory, all that stuff.

[00:09:30] And the macro trend is that our growth as an economy is continuing.

[00:09:38] And they're forecasting, they being Goldman Sachs, based upon the data they look at, and other people are in line.

[00:09:45] The economists are forecasting what?

[00:09:47] Anywhere from 2.2 to 2.3 to 2.4 percent GDP growth for the fourth quarter.

[00:09:52] As they project that out, you know, they're looking at that going into maybe the first three quarters of 2005.

[00:10:00] So the macro trends for now are holding.

[00:10:04] But, Tom, to your point, let's cut to the chase with distribution companies.

[00:10:08] A lot of companies that we talk to have had their head in the sand wondering what to do as they got through the first 10 months, 11 months of 2020-24.

[00:10:18] They're worried about interest rates.

[00:10:21] They're worried about still supply chain disruption.

[00:10:24] They're worried about spending because of the overall macro conditions of slowing economic sales when manufacturers distribution companies.

[00:10:32] They took a huge wait and see this year.

[00:10:35] And that was reflected in every single survey we did, macro, micro, otherwise, at DC360 or across the board.

[00:10:42] And believe you me, I look at a gamut of research every single day.

[00:10:45] Okay.

[00:10:46] So the confusion you mentioned, Tom, is going to stick around for a little bit more because they thought when the election was done, they got a clear mandate from somebody.

[00:10:57] But then suddenly we're into an era of a possible government shutdown tomorrow and tariffs that have, you know, companies running to kind of figure out, I didn't see that curveball.

[00:11:07] I've heard it coming, but now it's going to set.

[00:11:08] So, yeah, to your point, head in the sand, I think at least for a little bit more only because, you know, there's these curveballs and the macro level keep coming at them.

[00:11:18] That makes people cautious.

[00:11:20] Yeah.

[00:11:20] I read this morning that Paul said in his speech the other day that 12-month inflation has actually been moving sideways.

[00:11:27] As we're lapping the low readings from last year, sideways was kind of an interesting thought to me because we've said simmering.

[00:11:35] We've said lackadaisical.

[00:11:37] We've used a bunch of different terms over the past couple of years about things.

[00:11:40] And sideways was an interesting term to go with that.

[00:11:44] You know, a very interesting metric that if your listeners don't do this, at least the folks in marketing ought to take a look at this because if you look at the transcripts, the quarterly transcripts of some of the bigger public companies, I'm talking the Graingers, MSCs, you know, Beacons, all kinds of things, Global Industrial, what you're going to see there underlines the indicators we're talking about now.

[00:12:08] And for a lot of those companies, they're forecasting somewhat decent growth going into Q1.

[00:12:17] But that was based upon expectations prior to the events we're talking about now.

[00:12:22] And their bread and butter customer across the board, Grainger says this, Global says this, MSC says this, Fastenal says this.

[00:12:29] And Fastenal, by the way, was the most effective in their outlook from this, which is their small to midsize business customer is pretty iffy out there.

[00:12:39] They're holding put.

[00:12:40] And because of that, that's got the enterprise folks on the distribution side kind of wondering, okay, well, do maybe we keep this holding pattern going a little bit more?

[00:12:49] So that's my read on how your typical distribution company out there in distribution land is reading these macroeconomic conditions.

[00:12:57] Yeah.

[00:12:58] And I think, you know, moving ahead here, right?

[00:13:00] But it ties exactly into what Mark was just saying is that next article for monitor distribution management.

[00:13:07] Yeah.

[00:13:08] Which is industrial production ticks down, continue or continuing to tick down, but it ticked down less than expected.

[00:13:16] A slight manufacturing bump.

[00:13:20] Do you think, Mark, that this is all driven off of uncertainty or is there something else going on that is, you know, maybe not as obvious?

[00:13:33] Well, I can throw in the economy now.

[00:13:34] Okay.

[00:13:35] I'll take it.

[00:13:35] Great.

[00:13:36] We'll make the economy great again.

[00:13:38] My point is, I don't worry about this one.

[00:13:40] I don't worry about this one.

[00:13:41] It's uncertainty, Tom and Kevin.

[00:13:43] It's uncertainty.

[00:13:43] I mean, if you look at the indicators of what manufacturing companies are doing, they're laying out quite the pipeline of what they intend to do.

[00:13:52] So you got to cross this bump.

[00:13:54] I'm not worried about production.

[00:13:55] I'm just not.

[00:13:57] Mark, let me ask you a question tied to that from the folks that you're talking to consistently related to all this is obviously tariffs is a big deal, right?

[00:14:06] Is it tariffs on China and the components and things that go with that?

[00:14:12] Is that what we're seeing, the big caution is, or is it broader tariffs across the board?

[00:14:20] It's a multifaceted question.

[00:14:21] It's a great one.

[00:14:22] And I can tell you what companies are telling us, which is these guys got the memo.

[00:14:26] They got the memo three years ago when COVID hit and China dried up on them.

[00:14:30] So what they're doing and have been doing, but what they're currently accelerating is, you know, tariffs, no tariffs.

[00:14:37] All they know is they want that pipeline of sourcing coming in.

[00:14:40] So they've had three years to stockpile, diversify, look for new avenues, change, you know, their entire way of supply chain comings and goings, if you want to use that term.

[00:14:56] It's probably not a term.

[00:14:57] What that means and what people are telling us is what they're looking for is diversification among supply chains.

[00:15:05] So, you know, one of the fastest growing, I'll just focus on digital commerce for just a second here.

[00:15:10] The fastest growing channel I have ever seen in 20 plus years of covering this stuff is B2B marketplaces.

[00:15:17] I counted 75 and my, and my, and my, and Paul, we count these every year.

[00:15:22] I do a ranking on it, you know.

[00:15:24] Five years ago, pre-COVID, 75, I can tell you who they were.

[00:15:28] And they're in automotive healthcare and a couple of old line industries with the occasional new launch.

[00:15:34] Within two years, there's currently 630 of them that I'm tracking across the U.S.

[00:15:42] If you include Europe in that, it's going to be over 1,000 by the end of 2005.

[00:15:48] And that's B2B marketplaces across all kinds of different verticals.

[00:15:52] But the end game is the same, which is the buyers and the sellers are getting together and including distribution companies looking for new avenues for sourcing to diversify the supply chain.

[00:16:04] And that's a trend that's going to do nothing accelerate in the next two years.

[00:16:09] So that's the entree for other countries and so forth that can produce, that can get in on those marketplaces and help offset the risks that's coming from China.

[00:16:19] Well, it is, you know, distribution companies are still a little skittish with doing anything international, especially after the escapade with, you know, before COVID and that kind of thing.

[00:16:30] But most of the guys I talk to, you know, they're not talking so much about tariffs just yet.

[00:16:34] But what they are talking about is, do we have that pipeline across the supply chain to secure source things when we need them?

[00:16:42] And with manufacturing, there is a whole lot less just in time, which was the buzzword for what?

[00:16:50] Most of the last two decades?

[00:16:52] They're changing that.

[00:16:53] They're changing that because until they get the supply chain in order, they can't even think about doing just in time.

[00:17:01] And if you look at the poster child for all this, the automotive industry, they're the ones I think a lot of other industries are going to emulate kind of going forward.

[00:17:09] But, you know, a lot of stuff out there, a lot of things.

[00:17:12] I think to go with what you're saying, I think, you know, if you look at it, there's a whole lot of manufacturers and distributors who were looking at all the, you know, everybody got caught at some level.

[00:17:22] Well, they'd already had struggles with importing from China and so forth pre-COVID.

[00:17:28] But then when all of a sudden Shenzhen and other ports just are shut down and there's no ships coming in and the hit that that took to supply chain, people were already looking to make those ships at great, great length.

[00:17:41] And I talked to a lot of folks specifically in the industrial and the safety world, which is where I come from.

[00:17:46] And, you know, they've been moving wherever possible out of China.

[00:17:50] But I think the smart ones we're also seeing because we've known for, what, a couple of years at least now who was going to be running in the election that we just had and the likelihood of potential of tariffs would come out of that as well.

[00:18:00] So, well, this will be an interesting one to watch.

[00:18:03] You know, you might have heard us talk about this, the investor, one of the early PayPal guys, Peter Thiel, who's a well-known software and technology investor.

[00:18:14] And he has, he said very clearly, any big Trump supporter, and he said very clearly, he said, take him serious, but not necessarily literally.

[00:18:23] So we'll see how that plays out.

[00:18:27] Yep.

[00:18:28] All right.

[00:18:28] Let's move ahead here.

[00:18:30] See that sound that Will Quinn just complimented you.

[00:18:35] No, Mark, he's a big man.

[00:18:36] I'm just kidding.

[00:18:37] That was for Mark.

[00:18:38] I know you guys are buddies.

[00:18:39] Yeah.

[00:18:40] What's the old term?

[00:18:41] A legend.

[00:18:41] Like the old Clint Eastwood line.

[00:18:43] He's a legend in his own mind.

[00:18:44] I'll take that.

[00:18:45] How's that?

[00:18:45] Yeah.

[00:18:45] Very good.

[00:18:46] No, no, you're well-known.

[00:18:48] By the way, when I was stranded in Chicago for the better part of three weeks for conference after conference after conference,

[00:18:55] you made the time to come see me and have lunch and we'll just talked about it.

[00:18:59] So I was looking forward to spending some time with Will, but he got busy doing in for business.

[00:19:04] So we'll get Will next time.

[00:19:06] Yeah.

[00:19:06] You know, my problem is, though, I can, you know, I get around the block with this stuff, but I still can't sing and dance.

[00:19:11] So what are we going to do?

[00:19:12] You know?

[00:19:13] I'd stick with the writing.

[00:19:15] I think you're right.

[00:19:16] I think you're right.

[00:19:16] Stick with the writing.

[00:19:17] Yeah.

[00:19:17] So good.

[00:19:18] Stick with the horse that brung it, as my grandma used to say.

[00:19:21] That's right.

[00:19:21] Good.

[00:19:22] Next article, Tom.

[00:19:23] Yeah.

[00:19:24] Let's hit this quick because I want to get into some of these other things here.

[00:19:27] But this is, you know, again, another set of maybe another data point of, you know, GDP upgrades, their GDP estimates.

[00:19:37] One of the things that I read in that article, which, again, just keeps is mind boggling to me, driven by consumer spending and consumer demand.

[00:19:47] And I just don't know how long the consumer can keep spending or where they're getting their money, given that, you know, the savings rates are as low as they've ever been.

[00:19:55] Credit cards, debt is as high as it's ever been.

[00:19:59] And yet the consumer keeps driving us along, at least according to what we're hearing here in these estimates.

[00:20:05] Mark, any immediate thoughts on this?

[00:20:07] Well, you nailed it.

[00:20:08] I mean, you nailed it, which is, by the way, way back in the day, in the days of yore, when we were part of Thomson Reuters, we had, we were the biggest publisher of credit card and debit card trade publications.

[00:20:24] So, yeah, credit cards and debit cards have been a sweet spot of ours for years.

[00:20:28] So, Tom, to your point, it's coming to an end because if you look at what the, if you look at just the credit card metrics alone, it's getting tapped out out there.

[00:20:37] And, you know, I'm not too concerned about GDP growth for the first three quarters.

[00:20:43] But I think as the year really gets into, you know, where the election is taking us and the new administration and the tariffs, all that, then I think you're going to see after mid-year some consumer change and become a lot more cautious.

[00:20:56] And that could affect GDP growth.

[00:20:57] That's what I think.

[00:20:58] But, yeah, the consumers tapped out.

[00:21:00] The numbers show it.

[00:21:01] No question there.

[00:21:02] So are they just talking about that for nine months?

[00:21:05] Pardon?

[00:21:06] You've been talking about that for nine months.

[00:21:07] And I'm amazed, right?

[00:21:10] I'm amazed at where all of us continue to get the dollars to spend.

[00:21:14] The only thing I can think of is sort of the wealth effect from the stock market going up.

[00:21:20] And, you know, people having money potentially in retirement accounts or other things that they're like, okay, I'm living large.

[00:21:27] But I just don't know where the dollars keep coming from.

[00:21:30] And I was telling Kevin, Mark, before you got on, I was out at a sporting goods store, a Dick's Sporting Good store yesterday, shopping, you know, middle of the afternoon on a Thursday.

[00:21:40] And it looked like it was a day after Thanksgiving.

[00:21:43] I mean, the lines to get out were out literally around the store and all that stuff is like, man, what is going on here?

[00:21:50] Just a lot, a lot of spending happening.

[00:21:53] It boggles my mind, but I think you hit the nail on the head, which is I think I'd give it six more months.

[00:21:59] And then I think you're going to see some change in the GDP numbers.

[00:22:03] You know, these big numbers we throw around are one thing.

[00:22:05] But, you know, when you're supporting a family on what you're making and you still see inflation going up, that's a whole different ballgame, you know?

[00:22:13] So your increase in income is nowhere near what the increase in costs are and the average person.

[00:22:19] I think the big part of this is hangover from, you know, COVID relief dollar spending and different things that people had.

[00:22:25] They were just spending and they've kept their spending habits.

[00:22:28] I would agree.

[00:22:30] Yeah.

[00:22:31] Well, and we've touched on this a little bit as well as, you know, what's the impact of Doge on GDP, right?

[00:22:38] It's real easy to say we're going to cut a lot of government spending, but there's a lot of government spending as well that's included in GDP.

[00:22:45] And government funds a lot of jobs too, right?

[00:22:49] What's the percentage, Tom?

[00:22:50] We were talking about this a while back.

[00:22:52] What's the percentage of government employment on GDP?

[00:22:59] I don't recall, so I don't want to throw it in a crowd.

[00:23:03] It was substantial.

[00:23:05] It was approaching a third, I think.

[00:23:07] Yeah, it was substantial.

[00:23:09] Yeah.

[00:23:10] So, all right, let's move ahead here.

[00:23:14] I know we've already kind of hit on some of these, but this next article in the manufacturing and distribution section, actually, this is one of the more interesting articles, I thought.

[00:23:23] It's how productivism, I think it's a new word, can reverse the erosion of American manufacturing.

[00:23:30] And basically, the gist of this article was, you know, hey, as America, we've outsourced production and we've become consumers over the last few decades.

[00:23:41] And their point in this article is it has to change.

[00:23:44] We have to become now producers and not just consumers if we're really going to grow.

[00:23:51] And, you know, going back to the things we just talked about, what do they say here?

[00:23:56] Abandoning the experiment of decentralization or deindustrialization is urgent and necessary.

[00:24:05] Mark, Kevin, what's your guys' take on this one?

[00:24:07] I think my first one that hit me was the manufacturing tying to national security, right?

[00:24:17] You're outsourcing all of your production of guns and butter, so to speak.

[00:24:23] Is that Kenzian economics or something?

[00:24:26] Was guns and butter?

[00:24:27] It was a long time ago that I had that class.

[00:24:29] But I think that's an important factor with that.

[00:24:33] I'm going to give you folks an interesting stat here, which I think about, which is if you look at, like I said, I'm kind of a geek for all this Department of Commerce numbers stuff.

[00:24:46] Their databases are pretty complex to wrestle with, which is why the federal government put it together to kind of make it that way.

[00:24:52] Oops.

[00:24:53] Sorry.

[00:24:54] Political opinion.

[00:24:55] But anyway, once you get past how to read the data, the data itself is just completely compelling.

[00:25:01] And if you look at the number of manufacturing companies in the U.S., the telling stat is this.

[00:25:09] 90-plus percent employ 50 employees or less.

[00:25:13] So, of course, the big multi-global manufacturers are going to dominate offshore this, offshore that, offshore production facilities, so on and so forth.

[00:25:27] I mean, the headlines are full of that every single day.

[00:25:29] But one of the things I love about my job is that we talk to manufacturing companies and distribution companies that live long day.

[00:25:38] And if you look at a lot of the stories that we're hearing from the front, I like to say, these are smaller American manufacturing companies.

[00:25:49] They are proud to make and build in America.

[00:25:52] They source as much as they can from local, support the local economy or the regional economy or certainly within the borders of the U.S.

[00:26:01] But, come on, it's the 2024.

[00:26:05] It's a global interconnected economy.

[00:26:06] They depend upon things from foreign parts, from foreign shores to do what they do.

[00:26:12] But, to them, they've always been an American manufacturer making things here in the U.S. for our audience and a global distribution audience, too.

[00:26:22] But, you know what?

[00:26:23] To them, this whole issue of outsourcing and whether you put a plant in China or India or Mexico, what have you, is moot to them.

[00:26:32] Because they're an American-made company.

[00:26:34] They see themselves as that.

[00:26:36] And you don't hear that story much.

[00:26:39] And there's just a lot going on there.

[00:26:41] But that's kind of a subtle driver of what manufacturing companies are telling us about how they feel about the question we raised just here.

[00:26:52] So, are you saying, Mark, that they don't think it's a big of an issue is what this article is saying?

[00:26:58] Exactly.

[00:27:00] I think big companies are uber concerned with that.

[00:27:04] I think medium-sized to smaller manufacturers are not as much.

[00:27:08] They may look at it, take it into account.

[00:27:10] But, you know, I've explained kind of their state of mind these days.

[00:27:13] They're kind of focused on what they're doing here in the States.

[00:27:16] And as long as they can get some of what they need from overseas or all of it and not get disrupted,

[00:27:20] or if they can supplant that with doing something locally, regionally, or nationally, they're doing that, you know?

[00:27:31] Yeah.

[00:27:32] And, you know, this article was pretty severe, right, about basically, you know, saying that the destructive force of having so much done offshore.

[00:27:45] You know, they're saying here, destroying the middle class, innovation is down, market share is down, trade.

[00:27:51] I mean, it just goes on with listing, a listing, a listing of these.

[00:27:55] It's an interesting counterpoint that you're bringing up there as to whether or not, you know, really this is as big of an issue as they're making it out to be in the thing.

[00:28:03] Maybe what we have to do with this is tie it to types of manufacturing, right?

[00:28:07] Yeah, probably.

[00:28:08] The big guys or the small guys and the regional players and so forth.

[00:28:12] And I think Mark really brought that all together for us.

[00:28:14] And I think we talk regularly about on-shoring and near-shoring.

[00:28:18] And you're not going to see that from a $20 million a year, you know, family-owned manufacturer in Waukegan or whatever it might be.

[00:28:27] So to the same level that you are with the big guys.

[00:28:30] Would that be consistent with what you're seeing work?

[00:28:33] Oh, yeah.

[00:28:34] But I mean, you know, I mean, I've been a business reporter for a long time.

[00:28:38] So skepticism comes with the job, you know.

[00:28:40] And if you can't have a skeptical reporter, get out of the business, you know, at least for our line of work.

[00:28:45] So here's the thing.

[00:28:47] If you look at macro numbers, take them for what they are.

[00:28:51] Macro numbers, and I think macro numbers are very important to be aware of.

[00:28:54] But as you pointed out, Kevin, it is such a different story from vertical to vertical.

[00:29:01] And if you're that billion-dollar manufacturing company and above, you play in a totally different world than the guy who's out there in Naperville, Illinois, where I live.

[00:29:10] Right.

[00:29:10] With 50 employees, meet payroll every two weeks, and serving their customers the best they can, and doing pretty well for the most part, providing, you know, they see some relief from the macro level with not having their, you know, life disrupted by tariffs that would do all kinds of things.

[00:29:29] So, yeah, it's a moving parts to a lot of different verticals, I think, is the short answer.

[00:29:33] But for the most part, people are telling us we do it okay.

[00:29:35] And that ties back to what you were saying earlier about looking at the annual reports of a Granger or an MSC or a Fastenal because they're servicing those big guys, but they're also the place that, you know, the belts and the bearings and so forth, that that guy that's, you know, in Naperville that you're just described as getting his stuff from those folks.

[00:29:54] Well, I mean, the only reason I bring that up is I'm a big indicator and looking at indicators to see where things are going.

[00:29:59] And that's just one aspect.

[00:30:00] If you kind of know where, if you want to kind of know where at least where, you know, MRO and industrial supplies is heading or at least the big guys and overall big distribution land, you know, that's how you kind of read the tea leaves and kind of put together where you think things are going.

[00:30:14] But that does have, you know, kind of a trickle down effect to medium size and small suppliers as well, depending upon which vertical you look at.

[00:30:22] Yep.

[00:30:23] Very good.

[00:30:25] All right.

[00:30:26] Want to roll us ahead?

[00:30:27] Yeah, I think we're going to go jump past this article here.

[00:30:30] This is kind of, we've already kind of hit on this.

[00:30:32] U.S. manufacturers predict growth in 2025 after prolonged slump.

[00:30:37] We'll see more of the, more of the same here.

[00:30:39] I wanted to jump ahead to this next article and the last one in this section, warehouse orchestration, the next great supply chain breakthrough.

[00:30:48] And basically what this is, this doesn't look like the right paragraph here, but what this is talking about is using AI, other technologies, everything to really orchestrate the process of a manufacturing process and a manufacturing element.

[00:31:11] It was interesting in reading this.

[00:31:13] I was like, man, this is a lot of the same stuff we're doing in the front side of the house with sales and operations and so forth.

[00:31:20] But one of the things that was pointing out is, and Mark, this is really like your take on this, is where a lot of companies are talking about this.

[00:31:27] Not a whole lot are doing it.

[00:31:29] And, you know, what are you seeing in terms of technology, you know, moving from talk and concept to actually implementation and execution on, you know, this type of technology?

[00:31:42] You know, if you folks have a chance, and I'll suggest this for one of your links for next week's newsletter or whenever you publish next.

[00:31:50] I put out something, it was just a write-up of a report that I found.

[00:31:56] It was on the growth of the 3PL industry and, you know, the size of it and some market breakdowns.

[00:32:04] But I bring that up for a very key reason, which is there is kind of one of the things we don't hear much about unless I think you're in the logistics or warehousing space is that there's been a sea change going on for quite some time.

[00:32:21] So it used to be you had your own distribution center.

[00:32:24] You stockpile it as best you can, you know, and then here's my blueprint of how I serve my market or, you know, I build or release another one to kind of get West Coast versus East Coast versus Midwest.

[00:32:36] That was the traditional way that distribution companies still today look at how they get, you know, product from place to place, customer to customer.

[00:32:46] But the difference here is that there is a lot going on with warehouse automation.

[00:32:56] And the technology for that is really about to change if you kind of look at some new AI applications coming out.

[00:33:02] And now whether or not a company is going to spend big money on that remains to be seen.

[00:33:07] But I am seeing increased investment or at least priorities marked for investment tied back to warehouse management and automation.

[00:33:17] But the biggest single trend that we've seen is that more and more manufacturing companies and some distribution companies like I can think of here,

[00:33:27] what they're doing is they're kind of getting out of this whole distribution center expansion business and they're expanding it to do more 3PL types of logistics.

[00:33:38] There's a whole new industry that's sprung up with names that are yet to be household.

[00:33:45] But my point is, there's a sea change going on here.

[00:33:52] So, Kevin and Tom, to answer your point, I think you're going to see increased spending on warehouse management systems.

[00:34:01] AI is going to play a big role in that.

[00:34:03] It's been hyped and talked about for two years.

[00:34:05] I do think the back half of 2025 is one that's going to hit.

[00:34:10] And what's going to drive that is these companies looking at more ways and more 3PL options to outsource and do even more, you know,

[00:34:18] with somebody who's like an expert, like with you folks and SaaS-based CRM.

[00:34:22] To answer the question.

[00:34:23] Yep.

[00:34:24] Well, it's funny you say that.

[00:34:26] It just made me think I was looking at this article and it said that 77% of warehouse decision makers admit to being slow to implement new technologies and devices,

[00:34:35] even if they recognize the need to modernize their operations.

[00:34:38] And, you know, we see that every day on the front of the house where you've got sales leaders,

[00:34:44] C-level executives knowing that they need to increase the technology that's in their business to get visibility and accountability into their data.

[00:34:53] But they know they need to do it, but they're yet to take the step.

[00:34:56] You know what changes that?

[00:34:57] It's called the competition.

[00:34:58] Here's an example for you.

[00:35:02] You're never going to hear this on the earnings call, you know, from Mr. McPherson at Granger.

[00:35:06] But you know what?

[00:35:07] Those guys are scared of Amazon business, and rightfully so.

[00:35:12] Amazon business is there because of Granger's business.

[00:35:14] I go to conferences like a lot of you guys do.

[00:35:19] And, you know, being in my line of work, especially the cocktail part is getting interesting because, hey, Mark, what do you hear?

[00:35:27] What I do hear is this, which is I've talked to a lot of distribution companies the last several years,

[00:35:32] and they might put a public different spin on what they're thinking about marketplaces and especially Amazon business.

[00:35:39] But then I get a lot of people asking me, how should we do business with them, and how can we do it because they're worried about the competitive factor?

[00:35:46] To back into that, there is a big reason Granger down there in Dallas is building its biggest distribution center yet because, like a lot of big distribution,

[00:35:59] they are uber worried about getting as close to the customer as they need to be because those B2C expectations of next-day delivery,

[00:36:08] believe you me, that's hitting everything from, you know, get my napkins and paper products over or whatever tomorrow.

[00:36:18] But you know what?

[00:36:19] Now I want my jet airplane part two.

[00:36:21] So work on that, would you?

[00:36:23] You know, and that's driving.

[00:36:26] That is a key driver.

[00:36:28] The competition to come is going to drive a lot of kind of changing demographics and trends and spending with this whole warehouse stuff.

[00:36:36] And that ties back into the question that we're talking about, Tom.

[00:36:40] So, yeah, competition is going to change things.

[00:36:42] It's already doing it.

[00:36:43] Yep.

[00:36:43] Despite priorities or indications or surveys and this and that, when the business says you do this, you either do or you don't, and you survive or you don't grow.

[00:36:51] Simple as that.

[00:36:52] I think that's extremely well said.

[00:36:54] I think it's – we talk about it as a concrete and the carpet side of the business.

[00:36:58] Both sides of the business need to be looking at that.

[00:37:01] But we've talked often about – right now I think it's still a little bit of a gray area.

[00:37:07] But I think it's going to be completely clear for us very soon is that consumers – I'll say B2B buyers, let's put it that way.

[00:37:14] B2B buyers are expecting the same service levels that they get in their personal life.

[00:37:23] And, I mean, I'll use the simplest example.

[00:37:25] I got home from a dinner with our team, kind of an end-of-year dinner on Wednesday night, and dropped Tom off at his hotel and headed home feeling like this horrible – how horrible I feel right now.

[00:37:39] We had no cough syrup, and we didn't have any COVID tests in the house.

[00:37:44] And I went on my phone, and at 5 o'clock in the morning, Amazon had them on my front door.

[00:37:51] Now, I don't think anybody's going to expect that Granger is going to have a, you know, 7-8 ball bearing, you know, to you in four hours.

[00:38:00] But the expectations are growing dramatically about that window coming – that delivery window getting much shorter and much closer to what I expect in my personal life.

[00:38:13] Yep.

[00:38:14] All right.

[00:38:15] Let's move ahead here.

[00:38:17] We're now going to move into our e-commerce and marketing.

[00:38:21] We should get a guest soon that knows something about e-commerce.

[00:38:23] We don't really know much about this, but why don't we just skip this section?

[00:38:28] And the first article, I think we've kind of touched on this, but it says e-commerce not immune to sluggish climate.

[00:38:36] And, you know, we've talked about the sluggish climate, the sluggish environment, but this is basically saying that, you know, the growth of e-commerce is not growing any faster than the overall growth that's there.

[00:38:50] As I was reading this article, and I really wanted to get your take on this, Mark, because I see this from the technology side of working with companies.

[00:38:59] Are you finding, and especially with distributors, are people shopping more on distributor e-commerce sites versus buying and then making the purchase, you know, through other means?

[00:39:11] Or what are you seeing here as it relates to e-commerce, particularly in the distribution area?

[00:39:18] And should these companies be thinking more about marketplaces or upgrading their own in-house e-commerce or all of the above?

[00:39:25] I know that's a lot, but what's your immediate thought here?

[00:39:29] Funny you should ask that.

[00:39:31] I figured that was a good question for you.

[00:39:32] No, I got to tell you, I have been one of the biggest single trends that I became very, very engrossed with is B2B buyer and seller activity.

[00:39:43] And there's a lot there to digest.

[00:39:45] But here's, let me lay out a couple of points to you.

[00:39:47] And some of these are my research and some of these are Forrester or a host of others.

[00:39:52] But, you know, almost three-fourths of business buyers are dissatisfied and 10% are really honked off.

[00:40:00] And the source of that was a survey that Forrester just did quarterly with their 500, it was like 5,000 respondents that they have, if you will.

[00:40:10] So that was a very telling stat to me.

[00:40:15] And that same 78% in 2024 was the exact same percent as it was in 2023.

[00:40:23] So your B2B buyer out there from a distribution company has been kind of honked off for a while, at least on macro level.

[00:40:29] Let's not take away from the fact that a lot of companies do stellar service and always will because that's who they are.

[00:40:35] On the macro level, B2B buyers haven't been happy campers for a couple of years.

[00:40:39] The more telling stat was is that that 10% used to be like 6% or 7% in the last year.

[00:40:45] So that kind of tells you that the Uber honked off guys, a few more of them.

[00:40:50] So a few things happening, which is guys like me, and I'm going to be 66 and a half in about one day here.

[00:40:59] We're retiring, you know.

[00:41:01] We used to be the old guard, you know, that was e-commerce, digital stuff.

[00:41:06] You know, we got a website.

[00:41:09] They preferred what they knew, which was very traditional manual ways of doing business.

[00:41:13] That's changing.

[00:41:14] The average, I mean, a lot of guys like me retired in force, either got riffed out, laid out, had enough.

[00:41:20] COVID did all that.

[00:41:21] The incoming B2B buyers are either they're in their 40s, they're digitally savvy, they prefer self-service over omni-channel, if you will.

[00:41:32] Or they want omni-channel as long as it's digitally driven.

[00:41:35] And most important, they're not just individual.

[00:41:39] They're buying teams that go across the organization.

[00:41:41] So these interconnected enterprise buying teams that buy things across as few as three or as many as 11 different channels, they know exactly what they want.

[00:41:57] And to your point, Tom, are they shopping more?

[00:42:01] That's not the term.

[00:42:02] What they're doing is they are taking exactly 3.7 months to figure out who they want to buy from, and then they will try that distribution company and that digital experience once.

[00:42:15] And if you need it, you've got a great chance for a return customer.

[00:42:19] If not, we tried you, you didn't measure up, and on you go.

[00:42:23] And I don't want to go on and on about this, but I could.

[00:42:26] But the factors are that the B2B buyers today, they've got a set criteria of what they want from, let's say, a distribution company's site.

[00:42:39] And they don't just want the e-commerce site or the app tied to the e-commerce site.

[00:42:44] What they want is digitally driven, omni-channel integration.

[00:42:49] So if they come in as e-commerce but end as punch-out or they come in as search but end as an EDI transaction, they don't care.

[00:42:58] All they want to know is big, small, otherwise guy in distribution land, can you handle that?

[00:43:03] Yes or no.

[00:43:03] If you're not, then I'll find somebody that can.

[00:43:05] And so the expectations are very clear, and price is not the option.

[00:43:11] Bottom line, price is not driving all this.

[00:43:15] Now, this part of it, big part of it, but do you have what I need when I want it?

[00:43:21] When can I get it?

[00:43:22] When can I get it?

[00:43:23] And then how soon can I use your configuration tool to figure out precisely what I want and get the quote from it?

[00:43:31] And by the way, if I want to finance it, what are your terms for that?

[00:43:34] Because my boss wants to know.

[00:43:35] So that's just a short list of the metrics that buyers expect these days.

[00:43:42] The disconnect is sellers have gotten the memo, but this requires enterprise spending from marketing to back-end technology to front-end technology to increased customer service.

[00:43:56] It affects all parts of the enterprise.

[00:43:58] So it's a big spend thing.

[00:44:00] So their customers are telling them pretty clear, I want this, and I'm going this way.

[00:44:04] Come with me or not.

[00:44:05] But the pace of adoption by the sellers, which in this case are distribution companies, there are fantastic examples of success.

[00:44:17] There's fantastic examples of a plan to kind of get them there within the time frame that's right for their company.

[00:44:24] And there's so many cases of companies shooting themselves in the foot.

[00:44:27] I can't even begin to relate to that.

[00:44:29] And that's distribution companies, not anybody else I'm talking about.

[00:44:31] So, yeah, it's all over the place.

[00:44:34] It's all over the place like it always is.

[00:44:35] But I'm telling you, these customers these days, they're clearing what they want.

[00:44:40] And whether it's the sales rep or the branch or the site or a combination of all those plus then some, they want this thing digitally driven.

[00:44:50] And that's the bottom line here.

[00:44:52] So anything they do these days as it relates to a sale for a distribution company, it is digitally driven.

[00:44:57] And that's a fact of life.

[00:44:58] And that's not going to change.

[00:45:03] Mark, are you saying to go along with that, that there's potentially that somebody would be willing to pay more for the right experience?

[00:45:09] Oh, you bet.

[00:45:10] Of course they would.

[00:45:11] I know they would.

[00:45:12] That's great.

[00:45:13] Yeah.

[00:45:13] And I'll just, I'll get Bob's comment here.

[00:45:15] And I want to make it, you know, Bob's saying demand gen through e-commerce without having face-to-face conversations is much more difficult.

[00:45:21] What I'm hearing you say, Mark, and I think this aligns with what Bob just said, it's hard to have attribution, meaning, well, they're only buying through e-commerce or they're only buying through a certain channel.

[00:45:34] It's not a channel driven scenario.

[00:45:36] It's a buyer journey driven scenario.

[00:45:39] Right.

[00:45:40] Which can end up touching multiple channels along the way, including face-to-face.

[00:45:45] Very well said.

[00:45:46] Oh, very well said.

[00:45:47] Right.

[00:45:47] So it's more horizontal than vertical, in other words, right?

[00:45:50] It's looking at the journey versus looking at the horizontal channel or the vertical channels.

[00:45:54] You know, if I can just kind of back up for one point, because, you know, your listener made something very, very, very keen observation, which is, you know, I've been doing e-commerce for 20 years.

[00:46:04] That's my wheelhouse.

[00:46:05] I know that.

[00:46:06] But I want to step back for a sec.

[00:46:08] I'm not talking just the e-commerce channel.

[00:46:10] I'm talking about basically digital transformation across the distribution enterprise.

[00:46:15] And you're right.

[00:46:16] Of course, he's right.

[00:46:18] It's, Tom, to your point, it's buyer driven, journey driven, not channel driven.

[00:46:24] And case in point, if you look at the poster child of who made their sales reps the happiest guy in the world, first and foremost, it was Coca-Cola.

[00:46:33] And if you know Marta Dalton, who's been around for a long time, is a good friend of mine.

[00:46:38] What she did was she created the path and the model a lot of other companies were following to digitize and incentivize the sales force to use e-commerce as a tool to sell more face to face, as opposed to just here.

[00:46:52] I'm going to take your order and place it.

[00:46:53] So, yeah.

[00:46:53] But to your listeners' point of view, and to your point of view especially, we're talking digital transformation here.

[00:47:01] But the thing is, it's customer driven, not channel driven.

[00:47:05] You're right about that.

[00:47:06] That ties to our good friend and your good friend, Ian Heller, who said this on this show and heard him say it other places.

[00:47:14] You've got to meet the buyer where they're at.

[00:47:16] You bet.

[00:47:16] The challenge right now with that is, and you see this a lot, and I've had an opportunity a couple times to listen to Ian as a keynote.

[00:47:27] And it's approaching about almost two years ago.

[00:47:30] He spoke at a conference that Tom and I both spoke at as well.

[00:47:33] And he had the same discussion.

[00:47:35] He says, you know, the challenge is that a lot of distributors will want to go put, you know, they put a website up because their buying group said,

[00:47:42] here's the partner that we have, here's how we make it easy, go get an e-commerce store up on your website.

[00:47:47] And they made it easy.

[00:47:48] And then they look at the investment from that and, you know, the owner, the CEO or the CFO kind of start looking at that and go,

[00:47:56] well, wait a minute, you know what?

[00:47:56] We only did, you know, $75,000 this quarter in online transactions.

[00:48:03] And why are we doing this?

[00:48:04] And the frustrations there, right?

[00:48:06] And what they can't get their head around is that omni-channel in meeting the buyer where they're at.

[00:48:11] Because that buyer, if you could follow this, and I'm sure eventually we'll have the ability to track these metrics.

[00:48:17] But if you were able to see to your point earlier is that this transaction started with somebody reading specs for a Milwaukee XYZ product.

[00:48:28] But it actually just got added to a, the decision to make was bought from the e-commerce data.

[00:48:34] But it actually got added to a phone-in order that got picked up at a branch.

[00:48:39] Now that transaction started because the decision was made on a reasonably good e-commerce system.

[00:48:44] And so how that actual purchase is made could be across the board.

[00:48:49] But that experience, meeting the buyer where they're at, is critical.

[00:48:54] And attribution is irrelevant, really.

[00:48:56] Right.

[00:48:57] It is, but people are typically trying to do that, right?

[00:49:00] Of course, people are always trying to look at attribution, right?

[00:49:02] Both in marketing and...

[00:49:03] Well, in wrapping that up, you know, we talk about this all the time here.

[00:49:08] And I think it was Forrester's research that went from, what was it, 67, I think it was, to, I think it's 71 now, percent of B2B buyers and millennials.

[00:49:18] And I tell distributors this constantly.

[00:49:21] If, if your buyer from this research, your buyer is, and you referenced this earlier, Mark, is retiring or is, you know, getting ready, looking at, I'm out of here in, you know, 18 months or whatever.

[00:49:32] He's training that replacement.

[00:49:33] That replacement isn't typically 50.

[00:49:35] That replacement is a millennial, maybe even Gen Z, getting ready for that.

[00:49:41] And it's only reasonable to think the incoming salespeople that you're going to have, Mr. Distributor, are also going to be millennials or Gen Z.

[00:49:50] Because the workforce is the workforce, right?

[00:49:52] And so there's a balance approximately that should be found there.

[00:49:57] So be thinking about the, what are the needs of my buyer?

[00:50:00] And what are the needs of the people that are coming into my business?

[00:50:03] I ask, you know, prospects this in conversation all the time.

[00:50:07] It was like, when was the last time you interviewed somebody that wanted to know about what your technology was that you had in your business?

[00:50:12] And more and more and more, they're saying, absolutely, that's the conversation.

[00:50:17] Yeah.

[00:50:17] Two quick throwaway stats, only because we're asking about e-commerce being sluggish.

[00:50:20] Because usually it's the next month before I get all my numbers crunched for market growth.

[00:50:24] But you know what?

[00:50:26] If you just strictly look at the B2B commerce stuff, and that's sites, apps, and marketplaces, north of 2 trillion, trillion, by the way, 15%, 16%, 17% growth.

[00:50:37] So that's not skyrocket growth.

[00:50:40] That's above average growth.

[00:50:41] That's going to stick around for at least the next two years.

[00:50:43] So B2B commerce is going to roll along just fine and keep growing for a number of reasons.

[00:50:47] But that's the top line number that I think is a pretty good indicator for next year anyways.

[00:50:54] Maybe 2.2, 2.3 trillion all in?

[00:50:57] Wow.

[00:50:58] Wow.

[00:50:59] Small companies don't.

[00:51:00] I mean, I tell small companies quite a bit.

[00:51:03] Just be aware of the macro numbers because they're just that.

[00:51:07] They're an indicator of where the market may be heading as an indicator.

[00:51:09] But you know what?

[00:51:11] You focus on your customer.

[00:51:12] You do the best you can.

[00:51:13] You create the best digital game plan for you and you're home free.

[00:51:16] Simple as that.

[00:51:17] Yeah.

[00:51:18] All right.

[00:51:19] I'm going to move ahead here.

[00:51:20] The next article here, I'll just touch on one thing here.

[00:51:23] This is most effective LinkedIn B2B creative trends of 2024.

[00:51:29] The one that jumped out at me, I don't know if you saw the article, was using bright colors in your LinkedIn posts like hot pink and purples and things like that.

[00:51:39] That those posts got way more traction than dull, you know, typical photo colors, which I found interesting.

[00:51:47] There are a couple other key points in here, but I thought the color photo one was interesting.

[00:51:53] I just updated my profile with a beautiful pink wig.

[00:51:58] Good.

[00:51:59] Good.

[00:52:00] It's going to look great.

[00:52:00] I think we should really go fluorescent in everything that we do now.

[00:52:04] Right.

[00:52:05] I was thinking about this, you know, forwarding it to Lily that's on the marketing side in our business and it supports us on the podcast here as well to kind of think about that as she's developing some tools.

[00:52:16] Moving ahead to the, and I want to move ahead here because I know we're, we're, we're, we still have a bit to cover here.

[00:52:22] Next article is 17 emerging B2B marketing trends to watch for in 2025.

[00:52:29] I won't go through all 17 of them here.

[00:52:31] Um, what I found interesting in here, which I actually found refreshing actually is one of the trends is moving away from AI to create crappy content, which is what has happened in the last, last year.

[00:52:44] And using AI to actually be more strategic and more to drive personalization and drive insights and research.

[00:52:54] And actually more time spent on providing higher quality content.

[00:52:58] That isn't this AI crap that's here, Mark, you know, and especially yourself as a, as a writer and a content producer, this must be somewhat music to your ears.

[00:53:08] Cause I think the last year, because I still have a job to do, you know, that old argument.

[00:53:14] Okay.

[00:53:16] We've seen so much AI garbage that has come out from a content perspective.

[00:53:21] So I think that people are, uh, I think that people are really fed up with it.

[00:53:27] Well, you know, for, for starters, uh, you guys would know far, far more, you know, in your line of work with marketing and been being a SAS based CRM.

[00:53:36] And on the forefront of AI than I ever possibly could.

[00:53:39] So I think I would defer to you on, uh, on this question, but I will, I will say a couple of trends to keep in mind.

[00:53:45] One personalization is going to be even more hypersensitive in the next year because it just is.

[00:53:54] And if you kind of look at where the rubber is meeting the road with some of these distribution AI applications to do better personalization, there's some very innovative and groundbreaking things going on there.

[00:54:08] And I think 2025 is going to be the year you see a lot more of that.

[00:54:12] So, you know, personalization and merchandising and that kind of thing was always the first wave of this AI stuff, you know, the marketing stuff for anything AI with distribution and manufacturing.

[00:54:21] But you know what?

[00:54:22] Because it's been two years in the making, some of these personalizations and AI initiatives are getting really good.

[00:54:29] I'll give you a really quick example if I can.

[00:54:31] Sure.

[00:54:32] I keynoted the Alibaba user group for the last two years and, you know, I know Alibaba well.

[00:54:39] They are all over AI, all kinds of things to kind of change and change their company.

[00:54:46] But anyway, they introduced an AI sourcing tool that can be used across 17 different languages that your basic small guy who wants to manufacture a product and sell it to some guy here in the States of that market.

[00:55:01] Because that's what they want to do.

[00:55:03] And they want to source that from all over the world.

[00:55:06] They put together a personalization, AI driven sourcing engines that lets you, you can prompt it, you can speak to it.

[00:55:16] That delivers you results in very detailed form across 200,000 different manufacturing platforms and not just all in China.

[00:55:25] It's global.

[00:55:26] And I got to tell you, that is personalization that the small guy was using.

[00:55:31] I talked to a number of people, thought that was the greatest thing since canned beer because it worked, you know.

[00:55:36] So that's just one small example of how this stuff is coming out to play for the broader world of distribution, I think.

[00:55:44] Mark, was that example that you were talking about using sort of a chat conversational element to it?

[00:55:50] Or how was it driving the personalization?

[00:55:53] Well, in other words, because I want, you can do the CPQ on it.

[00:55:58] And then if you're tired of typing, there's like, you can do live chat or voice driven chat or both.

[00:56:03] So there's kind of a semi-human aspect to it, if that kind of clarifies things.

[00:56:08] Okay.

[00:56:08] I got to tell you, I sit through a lot of tech demos and some it's like, okay, you know, wow, good luck.

[00:56:16] This one, boy, I was impressed.

[00:56:19] And when people tell me the war stories of the sales they got from it or what they're doing with it, and that's where rubber meets the road, I was really impressed.

[00:56:27] So, you know.

[00:56:27] That's great.

[00:56:28] My takeaway with this was number nine, genuine empathy and connection.

[00:56:33] Because I think what we've seen now in the last couple of years is, you know, Tom, you comment about this regularly is that, you know, the, I'll call it almost vomit of content.

[00:56:44] And it's shown up on LinkedIn and, you know, all the emojis that people are leaving in, you know, write me a, you know, three minute read blog post about e-commerce and distribution.

[00:56:56] And they, you know, they just copy it.

[00:56:58] They don't even read it.

[00:56:59] And it just, you know, the amount of data that's now, or not data, but content that's on all of the social channels that are AI driven.

[00:57:07] I think we're just coming back now full circle to people going, all right, time out.

[00:57:11] You know, enough of that.

[00:57:12] I've seen enough of that.

[00:57:14] Let's get real.

[00:57:14] Right.

[00:57:15] Let's get engaged in conversation and show some empathy as we go along with this.

[00:57:20] Well, I'm using AI, in my opinion, for a lot more valuable application than dumping out blog posts with a bunch of emojis in it.

[00:57:28] So, all right.

[00:57:29] And I'm going to move ahead to our technology, cyber security and AI.

[00:57:33] Let's talk about digital twins.

[00:57:36] Yeah.

[00:57:37] So, our first article here, Colgate testing new toothpaste on fake people.

[00:57:44] Boy, that sounds pretty impressive.

[00:57:47] But what they're saying is they've built, which I found interesting, right, is they built digital twins.

[00:57:54] And I assume they're actually physical robots or something.

[00:57:59] But they're digital twins of people using all of the data that they've gathered over the many, many years around buying habits and what people, what types of toothpaste they get and all that kind of stuff along the way.

[00:58:11] And are using digital twins to test new products to determine what they believe will be the response from the market when it goes out to market.

[00:58:22] Yeah.

[00:58:23] I'm wondering if that is, you really wouldn't even need to build a robot in that setting, right?

[00:58:30] You could just do it and look at all the data that I have from my focus groups and from my requests for things and complaints and everything else to just take all of that data and say, based upon all of this, what is likely to occur with this from this group of people?

[00:58:46] Yeah.

[00:58:46] I don't know.

[00:58:47] Two words, new Coke.

[00:58:50] Yeah.

[00:58:51] I mean, you know, marketing thought that was going to be the greatest thing since canned beer.

[00:58:54] And they thought that their technology and forum groups and consumer testing had validated.

[00:59:00] And like, you know, well, the consumers have, eh, doesn't taste like Coke.

[00:59:03] Been there and done.

[00:59:04] So the fact that Colgate wants to test toothpaste a new way, good luck to them.

[00:59:08] But, you know, I don't know.

[00:59:12] I think we're going to be to the place at some point.

[00:59:15] I don't think we're anywhere close to it right now, where those types of scenarios will work.

[00:59:19] I think if we start looking at it and if we bring this back to, you know, to our audience and you're thinking about a manufacturer, you know, getting ready to launch a new product and then looking at all the data that they have from the end user and the distributor to put that into some AI models that basically says, should I or should I not?

[00:59:36] Or what is the right pricing for this?

[00:59:38] Or where does it fit and how do I market it?

[00:59:40] I think we'll get to that place.

[00:59:41] But I just thought this was kind of great that we're, you know, we talk about digital twins pretty much every week.

[00:59:47] And here we are with Colgate doing some testing with it.

[00:59:51] Yeah, it just seems to me with toothpaste, in order to really test toothpaste, you have to test flavor.

[00:59:56] You have to test consistency.

[00:59:58] There's a lot of things that go beyond, I don't know, that you can just do with a completely digital.

[01:00:06] Don't this stuff scratch your head?

[01:00:08] Yeah.

[01:00:09] I got to tell you, people laugh when I say this, but I'm kind of, I think I might be serious about it.

[01:00:14] In a couple of years, if I'm lucky enough, you know, to be back as a guest to talk about future trends, well, guess what?

[01:00:22] You know, you're going to call me up on my rotary dial phone and I'm going to ask, okay, how will this fit into my A-track?

[01:00:28] And we'll take it from there.

[01:00:30] So, I don't know.

[01:00:32] I think this goes to Bob's point here.

[01:00:35] Maybe this is a great example.

[01:00:37] Just because we can doesn't mean we should.

[01:00:40] So, maybe that will be an example of this one.

[01:00:43] Well, he's spot on.

[01:00:44] He's spot on because I got to tell you, I mean, is AI going to transform all kinds of things?

[01:00:50] You bet it's doing it now.

[01:00:51] But, you know, Ian had me as a keynote for one of his AI shows last June.

[01:00:55] And I got a little feedback from this one.

[01:00:57] But you know what?

[01:00:58] It's the old axiom.

[01:01:00] It's a tool.

[01:01:02] It's figure out how you want to use the tool.

[01:01:05] Use the tool the right way.

[01:01:06] And if it gets the results you want, then you've got maybe something remarkable to work with.

[01:01:12] If not, then just because it's AI something or other, that's not going to do you any good.

[01:01:17] So, you've got to figure out your game plan for this stuff and then plan accordingly for how it's going to work for you.

[01:01:22] Simple as that.

[01:01:24] All right.

[01:01:25] Well, let's move on from our toothpaste testing.

[01:01:29] Our next article, CFO Scrambles.

[01:01:32] And again, I'm going to kind of hit these quick just so that we can kind of zip through the rest of them that we have here.

[01:01:36] But it says, CFO Scrambles for new AI talent amid fierce competition.

[01:01:42] And the one takeaway that I had from this, what they're saying is obviously they're finding it hard to find people with a lot of true AI talent, deep AI talent, you know, above and beyond somebody who can use chat GPT.

[01:01:55] But one of the things that I found interesting in there is they're looking, and this is finance, right?

[01:02:02] This is CFO.

[01:02:03] They're looking to use AI to analyze financial information and financial results and structured data.

[01:02:12] Right.

[01:02:13] And, Mark, one of the things that I think is going to be the big differentiator of AI in business use cases is how well AI works with structured data.

[01:02:24] And generative structured data, meaning, you know, numbers and spreadsheets and things like that that are not, it's not the unstructured data.

[01:02:32] And I think there's going to be a real, this next year, we're going to see a real application of that, an understanding of the application of that.

[01:02:42] Because we're using it in our business, we're using it with our customers.

[01:02:45] And the amount of insights that we can pull out of lots of even sales data or customer data or prospect data that is just, would never be discoverable otherwise is really quite remarkable.

[01:03:00] And it kind of gives you a roadmap or a spotlight on where to be focusing on things.

[01:03:06] You know, I couldn't agree more.

[01:03:08] And, you know, I have toiled in a lot of vineyards over the course of my 30-plus years in trade press and, you know, our wheelhouse is e-commerce.

[01:03:18] But at one point, I was actually the web editor and publisher of something called DM Review, which is read by, you know, the business intelligence database data warehouse guys.

[01:03:29] So I got a pretty good understanding of all that back-end stuff.

[01:03:32] And if you want to bring it home, and why I mentioned that, to distribution today, which is one of the biggest single messes that people still talk to us about for anything, e-commerce or otherwise,

[01:03:44] is the fact that their back-end systems to this day remain siloed and legacy.

[01:03:52] And you can put all the front-end stuff you want out there to do everything that the customer wants.

[01:03:56] But you know what?

[01:03:57] Get your data house in order.

[01:03:58] And, Tom, to your point, I can tell you verbatim that the people we're talking to on this kind of subjects tell us that they see their initial four-way into AI maybe being supply chain stuff,

[01:04:14] personalization stuff, but then right there as one, two, or three getting their data house in order and how they need to do it.

[01:04:22] And that's directly to your point, I think.

[01:04:23] That supports that.

[01:04:25] Yeah.

[01:04:26] And they're trying to figure out how to get that data house in order.

[01:04:30] Yep.

[01:04:31] Right?

[01:04:31] It's interesting.

[01:04:32] Slow and messy.

[01:04:33] Slow and messy.

[01:04:34] I've talked to, I don't know, probably 20 companies in the last, whether it's at conferences or in our sales cycle or whatever it is,

[01:04:44] companies that have hired chief digital officers now.

[01:04:48] And for the most part, they're really smart people.

[01:04:52] But the AI component of it that goes with that, they're just still learning.

[01:04:57] Right?

[01:04:57] They're just smart people that understand technology.

[01:05:00] But I don't think we've yet run across where somebody has truly been able to say,

[01:05:05] I am the chief AI officer in a business.

[01:05:09] That's a title, but somebody that really understands and knows how to do that, few and far between.

[01:05:15] Because I've talked to quite a few different folks that are with that title or related title, right?

[01:05:24] Who are kind of still using legacy thought processes in a digital world.

[01:05:30] They're charged with getting to that next level, but they're struggling to get there.

[01:05:36] Yeah.

[01:05:36] I mean, one of the things I tell, I talk to our company or our customers about as it relates to looking at their structured customer and sales data is,

[01:05:44] what is some information or insights that would be almost unfathomable?

[01:05:49] You'd like impossible.

[01:05:50] Tell me something.

[01:05:51] Give me an impossible insight that you would like to get.

[01:05:56] And they start to think about that, you know, and then they start thinking it's hard in some cases for them to even come up with an answer.

[01:06:02] But when they start to really go out of the box and they think about, man, well, God, if I really knew this or if I understood this or if we had this information here,

[01:06:11] they start to, you know, brainstorm around that.

[01:06:14] Those are the types of things that we should be thinking about applying AI to.

[01:06:18] We should not be thinking about applying AI to the same old things that we can.

[01:06:22] It doesn't mean it can't be used to the same old thing, but that's not where all the rare value is.

[01:06:26] You know, one of the things I'm hoping I'm giving you folks today, which I was trying to emphasize here,

[01:06:32] is real world examples from, you know, from the world of distribution.

[01:06:36] And here's one.

[01:06:37] There's a hometown hero company out here in Chicago called Partstown.

[01:06:41] And they're on a run rate to hit maybe $2 billion in sales this year, banner year for them.

[01:06:48] Smart company, great people.

[01:06:51] But, you know, they basically do food service equipment.

[01:06:55] That's kind of their genre, if you will.

[01:06:57] And they're all over AI because they're pushing things even farther out to the contractor.

[01:07:03] You know, the guy out there who wants to use his phone to do this stuff and not the office thing, that type of thing.

[01:07:08] But to your point, Tom, and to your point, Kevin, if you look at the latest sourcing tools, configuration tools that they are coming out with,

[01:07:21] A, it's AI-driven, and B, the first thing they did, and I talked to their chief digital officer about this and how they did it,

[01:07:27] was get that data house in order.

[01:07:29] It was the very first thing they did.

[01:07:31] So they got their ducks in a row and they began where they needed to begin, which was,

[01:07:35] is the data set to build this thing with the AI model to build this out to get to the end customer.

[01:07:42] And everything's going up to the end customer from them.

[01:07:44] So that's just one core example of a company doing something to get their data house in order,

[01:07:50] use AI to do it, and then think of a brand new way to come up with a very influential tool

[01:07:55] that makes life easier for the contractor or the person on the job out there in food service and food equipment land.

[01:08:04] Yep, exactly right.

[01:08:07] All right.

[01:08:08] I'm just going to kind of skip through these sales and M&A, a couple decent articles here about true value

[01:08:13] and do it best in the acquisition and how they're handling that with the people here.

[01:08:19] That's a good one, Tom.

[01:08:20] Tom, you know, I hate to interrupt you, but I was supposed to have done this like 30 minutes ago,

[01:08:25] is our little weekly reminder going through the middle of the show is that,

[01:08:29] you know, if you're listening on the podcast, what you're not hearing is that or not seeing

[01:08:34] is the newsletter that we publish each week.

[01:08:36] And the newsletter that we publish each week is called Around the Horn in Wholesale Distribution and Manufacturing.

[01:08:41] If you would like to get access to that, you can just do it very simply by, if you're on LinkedIn,

[01:08:46] just search for Around the Horn Podcast and Around the Horn Wholesale Distribution,

[01:08:51] I should say, podcast, and that'll pop up.

[01:08:53] You can subscribe there and you'll get that into your LinkedIn feed as well as an email.

[01:08:57] You can send us an email to hello at leadsmarttech.com and we'll get that out to you

[01:09:02] or the website for the podcast is www.aroundthehornpod.com.

[01:09:07] So we're looking at these articles as we go through this.

[01:09:10] So if you're listening and not watching, you're not hearing that.

[01:09:13] So sorry to interrupt you, Tom, but I realize it's important that we shared that again.

[01:09:19] Okay.

[01:09:19] All right.

[01:09:20] So I'd actually maybe like to put this in next week's article or next time, the next show.

[01:09:25] This is a good article about nearbound selling, basically using,

[01:09:30] how do you effectively use partners and customers

[01:09:36] and other influencers in your industry to actually drive sales?

[01:09:41] And there was a great quote in there.

[01:09:42] Let me see if I can find it really quick.

[01:09:49] I'm not going to find it very quick.

[01:09:51] That's okay.

[01:09:53] Make it up, make it up.

[01:09:55] I'll make it, yeah.

[01:09:55] When in doubt, I'll make it up, right?

[01:09:57] No boy, don't encourage you.

[01:09:59] No, here, I think I found it, right?

[01:10:01] It is basically, basically in so many words, buyers are no longer asking how to solve a problem

[01:10:11] or where to find a solution.

[01:10:13] They are asking who has solved the problem and they are relying on people they trust.

[01:10:20] I mean, that's a pretty subtle thing, but I believe that's true, right?

[01:10:25] They're not going to a vendor and saying, how do I solve the problem?

[01:10:28] They're going to somebody that they, who has done it and tell me about it and tell me what you did about it.

[01:10:36] So they're trusting more of that peer-to-peer.

[01:10:39] Anyway, this article gets into how you can kind of leverage some of that strategy

[01:10:43] to kind of flank your inbound and outbound strategy.

[01:10:46] So worthwhile article.

[01:10:51] Boy, people in leadership, I am going to skip all of these for right now.

[01:10:55] That's good.

[01:10:56] And get into our industry scuttlebutt.

[01:10:59] NetPlus, their Outlook, distributors forecasting strong finish.

[01:11:04] Dan Judges writes his quarterly forecast and that's great stuff.

[01:11:09] Yep.

[01:11:10] There's this article here from Digital 3 Commerce.

[01:11:13] I'm not so sure about it, but...

[01:11:14] No, no, don't trust those guys.

[01:11:16] Oh, no.

[01:11:16] What do you think about this one?

[01:11:17] Ferguson thinks he's in Q1 but stays afloat.

[01:11:21] I don't know.

[01:11:22] We should see if we can find the author.

[01:11:24] Yeah.

[01:11:24] Yeah, I know.

[01:11:26] Hit him where he lives, you know?

[01:11:27] So, I mean, just very quickly, you know, 60 plus percent of everything Ferguson does is

[01:11:33] digitally driven.

[01:11:34] And that's across...

[01:11:35] That's, you know, that's everything from e-com to EDI to their internet-driven, you know,

[01:11:40] vendor machines out there on the factory floor or in the break room or whatever it is.

[01:11:45] So, I put that because they didn't have the best first quarter, which goes back to the

[01:11:52] very start of our conversation, which is how the macro economics affected this big distribution

[01:11:58] company on their overall macro sales.

[01:12:01] But, you know, digital did pretty well for them.

[01:12:04] And I bring these guys up and I kind of wrote that headline for this reason.

[01:12:09] Ferguson is a bellwether for the plumbing and HVAC guys, you know?

[01:12:14] And that is one of the last bastions of these old-line industries yet to fully automate or

[01:12:20] digitally transform.

[01:12:22] So, these guys are at least a bellwether for, you know, for macro trends and digital trends

[01:12:30] for, you know, for the HVAC crowd.

[01:12:32] And if you look at, you know, consumer spending on DIY was huge three years ago.

[01:12:38] Not so much anymore.

[01:12:39] And that's affecting their contractor business and their wholesale business and their consumer

[01:12:45] business.

[01:12:45] And that's why they are.

[01:12:50] But, you know, they're looking ahead.

[01:12:51] They'll do okay.

[01:12:52] They always have.

[01:12:53] Yeah, I think they'll make it.

[01:12:55] By the way, just quickly, they're a UK-based company that does 95% of their business in

[01:12:59] the US.

[01:13:00] Although, I think they filed for an IPO to do all US.

[01:13:04] Now, I've lost track of that.

[01:13:05] But that's kind of a...

[01:13:07] I don't know if the numbers are the same.

[01:13:10] I don't think they are because they're very big in the UK as well.

[01:13:13] But that's kind of like Bunzel on the retail and food side of things is UK publicly traded

[01:13:19] company with huge operations here in the US.

[01:13:21] So, that's good.

[01:13:22] Well, our friends at Famous Supply added a big new distribution center in Cuyahoga County

[01:13:28] in the Cleveland area.

[01:13:29] Great, great friends.

[01:13:30] Good customer of ours.

[01:13:32] And so, I always like to promote those folks in the weekend.

[01:13:34] So, congratulations to the Blosshield family and all the team there.

[01:13:38] And can we touch on that for just a sec?

[01:13:40] Sure.

[01:13:40] I wrote a story and I think I posted Monday.

[01:13:42] It blew me away.

[01:13:43] There is $9 billion worth of new warehousing and distribution space being underway thanks

[01:13:54] to folks like Famous Supply and others.

[01:13:56] And it's all e-commerce driven for the most part.

[01:14:00] But one player, 25% of all that new distribution and warehousing being built is by Amazon.

[01:14:08] Yeah.

[01:14:08] So...

[01:14:09] That article will be in next week's newsletter.

[01:14:11] I read part of it yesterday.

[01:14:13] Yep.

[01:14:13] I appreciate that.

[01:14:14] So...

[01:14:14] It's rare that we don't have something that you wrote each week.

[01:14:18] So...

[01:14:19] And sometimes multiple things.

[01:14:21] Thanks, guys.

[01:14:21] I appreciate it.

[01:14:22] Of course.

[01:14:23] We all support each other.

[01:14:25] So...

[01:14:26] All right.

[01:14:26] Well, wrapping up here.

[01:14:28] Good article here on the Great Reads, reflecting on your ear, how to end strong and start...

[01:14:34] I'm sorry.

[01:14:34] Yeah.

[01:14:34] End strong and start fresh.

[01:14:36] Yes.

[01:14:37] So, as you're coming out of the year, worth taking a look at there.

[01:14:40] Don't have the flu.

[01:14:41] Is, I think, the first thing.

[01:14:42] Don't get sick.

[01:14:44] Right.

[01:14:44] Don't get sick.

[01:14:45] That's right.

[01:14:46] But other than that, I think that ends us off for today.

[01:14:50] So, Kevin, we'll let you go back to bed.

[01:14:52] And Mark, thank you.

[01:14:55] Really good insights today.

[01:14:56] No, I got to thank you guys.

[01:14:58] I love your podcast.

[01:15:00] It's one of the most preeminent in the industries.

[01:15:02] And I'm just...

[01:15:04] I was thrilled to be invited as a guest.

[01:15:05] But, you know, once again, to everybody, happy holidays, especially you two.

[01:15:09] So, I appreciate being on.

[01:15:11] Thanks for having me.

[01:15:12] Well, that's great.

[01:15:13] We appreciate you being with us.

[01:15:14] I have two favors to ask you.

[01:15:17] One is continue to tell your friends about what we're doing.

[01:15:20] I will do that.

[01:15:20] What I want you to do is 110% love to have you back in the new year.

[01:15:24] And we're going to start doing some kind of unique things next year.

[01:15:27] We're going to play with our format a little bit.

[01:15:29] This format will never change because I've had some other preeminent folks in the industry say,

[01:15:34] if we ever stop doing this format, they're going to implement it the next day.

[01:15:40] So, which was flattering because great folks that said that.

[01:15:44] But we're going to add some one-on-one interviews next year.

[01:15:47] And then we're going to do some more with some panels and so forth.

[01:15:50] So, I think getting you on a couple of panels might be a lot of fun.

[01:15:53] I'm like a bad penny.

[01:15:55] I always show up.

[01:15:55] So, there you go.

[01:15:56] That's what I'm accused of being as well.

[01:15:59] So, again, Mark, thank you for being with us.

[01:16:01] Thanks for having me, guys.

[01:16:02] How can people find you the best if they want to keep on top of your writings and your work?

[01:16:06] What's the best way to find it?

[01:16:08] Digitalcommerce360.com.

[01:16:09] And that's enough said.

[01:16:10] So, we appreciate the plug.

[01:16:11] Thank you so much.

[01:16:12] No, absolutely.

[01:16:13] And then you're available on LinkedIn, I'm sure, as well.

[01:16:15] Yeah.

[01:16:16] And coming soon to store near you.

[01:16:17] You know?

[01:16:18] That's right.

[01:16:19] Exactly.

[01:16:19] Isn't that amazing?

[01:16:20] With your new digital twin toothpaste.

[01:16:22] With some fluorescent items.

[01:16:25] I will do just that.

[01:16:27] And digital twin toothpaste.

[01:16:29] That's right.

[01:16:30] Thanks, guys.

[01:16:31] Take care.

[01:16:31] Happy holidays.

[01:16:32] Bye.

[01:16:39] We hope you enjoyed today's episode and our guests.

[01:16:42] Each week, we try our best to dig into the topics that are impacting your business.

[01:16:46] So, please reach out to us and let us know how you think we can make the show better or topics you'd like for us to tackle or talk about more often and even guests you'd like to see join us.

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