A weekly podcast with the latest e-commerce news and events. Episode 193 is an interview with Doug Straton, Chief Digital Officer at The Hershey Company.
Doug Straton, Chief Digital Officer at The Hershey Company. In this broad ranging interview, we discuss Hershey’s digital footprint, the challenges of temperature-sensitive products, incumbents versus challenger brands, Amazon, Hershey’s data strategy, and the future of digital grocery.
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Episode 193 of the Jason & Scot show was recorded on Tuesday September 17th, 2019, live from the Grocery Shop trade show in Las Vegas, NV.
Automated Transcription of the show
[0:24] Welcome to the Jason and Scott show this episode is being recorded live from the grocery shop
trade show in Las Vegas on Tuesday September 17th 2019 on your host Jason retailgeek Goldberg and unfortunately Scott was unable to join us today so I am solo
[0:41] but I’m making up for it by bringing you a great guest welcome Today Show Doug straighten he’s the chief digital officer at the Hershey Company Doug welcome to the show.
Doug I know there’s probably no listeners that are not familiar with her she but I sometimes think you’re,
a broader company Than People realize can you give us the the elevator pitch for Hershey.
[1:03] Yep shirt so first of all this years are 120 V birthday.
And you know that’s iconic I think we’re number of reasons it it it’s it’s both accounting the fact that you got a brand that means so much to people,
it’s been around for this long and why they recognized as both being still hip and cool yet by the still being you know you know I’m kind of a legacy brand.
[1:27] But you surpass the fat stage.
[1:29] Yeah yeah so retro is cool again and you know so so you know her she’s doing it’s doing its part,
so that I think the the other couple things about Hershey that I think I really really amazing so the first thing is,
Milton Hershey to quit this entire Fortune to the Milton Hershey trust and the Milton Hershey Trust,
funds the entire education housing I’ll room and board frankly for disadvantaged kids so originally it was orphaned boys and Snell been expanded to disadvantage Shop Boys and Girls,
it’s an amazing School located in Hershey Pennsylvania for thousand students and the Milton Hershey trust is our biggest shareholder so in fact.
We all work for a greater good Beyond just selling candy,
and making a profit where are you never actually that money goes to a very very good cause,
which I think is amazing and in terms of being brought her you know we have sister companies Hershey entertainment Resorts so we have a hotel we have an amusement park we have retail experiences,
in addition we’ve been expanding into adjacent cat snack and categories so we’ve added Brands like skinny pop,
Pirate’s Booty crave,
bark thins in a number of others so dark chocolate we are expanding into areas where we think we have the ability to win.
[2:50] It’s very cool and it’s it’s funny because I feel like these purpose base companies have become super trending now and everyone’s I go Millennials only buy from these purple space companies it’s it’s clearly not anything you guys been doing it for a hundred 25 year.
[3:03] Yeah like we have been doing it and it is interesting because it’s it’s it’s both fun and maybe a little bit hilarious.
To watch companies try to evolve a purpose when they’ve never been Purpose Driven and it’s interesting to see who becomes who seems authentic in terms of the purpose of,
and who doesn’t and I don’t think I think there’s no question it went to review the story of Milton Hershey,
how iconic and how amazing and how purpose-driven he was as an individual and how that manifests itself and what we do every single day so yeah it’s it’s it’s very cool.
[3:39] If it’s if it’s not authentic it’s a pretty amazing ruse.
[3:42] Yes exactly right yeah it’s like a right.
[3:44] Long Pond.
The name names but it is funny cuz they’re even other big confectionaries that have like recently tried to embrace.
[3:52] Yes yes.
[3:58] Baton at the end but this is not your first digital Rodeo the listeners are always really interested to know how you came to this position can you share a little bit.
[4:11] Yeah you know that I’ve been.
[4:14] Part of it was decisions I made part of his timing and you know not all the decision was based on I would say fully-formed back some of it was was you know,
instinctual but in essence I started I started my career in Beauty and with some of the big Beauty players and then moved into luxury,
is it a good luxury watches and then took a flyer in my early thirties to go to start up and help build run a startup which we’ve been sold to Unilever and it was exactly that experience which was most fundamental to the way I actually approach digital,
it was a very agile organization you know look at the data too quickly don’t overreact SAS on getting that data perfect,
but take a look at direct me what’s going on make a decision and move very quickly and so I brought that style along with kind of the bigger company professional chops and that lingo,
to Unilever when I was acquired when the business was acquired.
And and then essentially picked a couple couple consult internal consulting jobs that were interesting to me and digital always been interesting to me,
I’m in technology and Generals kind of a coder geek when I was in high school and college and I used to take this at the classes for.
[5:28] Music credits and so what I’ve been able to do in the last 7 years just going to reinvent my career,
I’m beyond the traditional cpg and into a really interesting space and be successful at it so it’s been yeah it’s been an interesting ride I’d like to say it was all thought out but.
[5:45] Some of it was and some of it wasn’t.
[5:47] It works it works best in hindsight which is totally fine and some of these times like we wouldn’t take these gigs if we knew all the facts.
I’m so sometimes ignorance is a good thing but I do feel like my sense from the outside is that you were really at Unilever while they were sort of inventing a digital cou which is sort of fool like you didn’t necessarily inherit a Playbook from the last,
last digital guy.
[6:10] There there was none and so it was very much like the way I looked at it my wife asked me if I was nervous about it.
[6:20] And I said well the good news is there’s nothing really to compare it to so you know it’s got you know the sky’s the limit,
and I think the one thing it was already obvious it was already growing as a very small business was always already growing double digits and the reason I felt confident about at least taking the business component,
digital is that I actually haven’t been in a business that’s that’s grown less than double digits for like 22 years.
So the business the volatility in the high-speed of the business in the high growth rate really didn’t bother me and make it in feeling comfortable about the ability to turn that growth rate into a a scalable and profitable model with him.
The broader cpg space didn’t warn me where it would probably would have worried other people.
But I just kind of felt that why wouldn’t why couldn’t it be me that,
that would do this as opposed to somebody else and I think it was a really wise choice I think you’re the most that the career track at a Unilever was very much like go working Ron and be the general manager one of the categories,
and I was taking a bath that actually my job would be more important than some of those jobs and I I felt that you know when I left that that position and join the Hershey Company,
that it was actually the best job in the building and more people probably wanted to get into my my job that was initially shunned then.
Then into the traditional role.
[7:43] That’s interesting in the traditional roles you probably would have had to like relocate to Brazil and also learn like. Share something in order to keep her progression.
What are things that is interesting though is Unilever is pretty cool because of the portfolio brands.
Pretty did you advance friends you got some you know in comments that are probably wait to digital with a lot of opportunity you bought at least one very well known to join native brand.
Dollar Shave Club exactly and then you also owned some direct consumer Brands like Ben and Jerry’s and others that owns a bunch of stores and stuff so you had somewhat like my Consulting role like you had some of that.
In the portfolio so then you moved out of her she and you know her she’s like mostly in the grocery space which is.
Got a very brutal margins like we’re just starting to get penetrated by digital like low average sales price is and then most of your stuff melts when you ship.
So it seems like you you took the level of difficulty from Unilever and maybe even ratchet it up a notch coming to Hershey.
[8:51] Yeah did you leave it as a beautiful portfolio nothing but good came out of you know getting that experience with Unilever the the beauty and,
otherwise some some of the categories migrated online before other categories and so you have this disability to kind of learn in.
And and food was the last to go but the interesting thing I didn’t like most people would have thought like why would you join a company where your.
Core portfolio is something that’s going to melt in the summer,
and how’s that going to get delivered through e-commerce but you know what we’d already known is either you live is a big global company with a lot of insights from the grocery models over in and Europe in the UK and we knew how they were solving for those problems.
And in fact something like an ice cream which melts over in Texas online.
[9:38] I did my bullet does not.
[9:40] It does not yet it but it is online and if that was like a big guy you know like a you know clouds are opening up and the god beings came down and we’re shining on people that they couldn’t believe that an e-commerce of all places that things are over index,
but there’s a component of you know hey it’s going to be delivered.
It’s going to be protected in some way shape or form or it’s me click and collect and it’s going to be staged in the way that the product Integrity is going to be maintained,
and as it turns out people may be more comfortable with buying ice cream that way and I was I was out I was going to head unit that fit and confection yeah we would have to solve for certain models,
with an e-commerce I shipped to home model but some of the other models that there is actually the way that they were being addressed at the the meltability would not be an issue.
And then in terms of you know average selling prices and whatnot that’s just a matter of him playing your portfolio the right way across the different e-commerce models as opposed to just one portfolio for e-commerce Broadway,
I want you to do some of that work you can you know you can make the economics workbook for you the customer and the consumer.
[10:43] And so it’s talk a little bit about Hershey’s digital footprint I would assume.
Bulk of it is not put cases of chocolate and coil packs and shipping will consumers home that the majority is,
like digital influencer sales use peroxide pick up like all of the sort of new digital experience that retailers are now.
Enjoying some success with that require fuel from you.
[11:07] Yeah well the interesting thing is.
You know we do just as well and kind of like those digitally native e-commerce jams after play channels as you would expect we would do in the offline and in it and some of the core parts of the the portfolio,
which took a lot of work and I wasn’t so sure that that that could be done you know it or there’ll be some some other level of success we get there,
what is a turns out there are ways to to make that happen so that was it that was actually a pleasant surprise and it was working the strategy and doing the foundation of work really really well.
The flip is the the models Beyond ship to home is generally what my experience has been both from understanding what happened over in Europe,
and then early raise from some of my Retail Partners for my experience with the last 7 years,
is that online Shoppers overall over index and so what I would and you knows what I was hoping is that,
in fact we would over-index online but the worry was is what component of that basket for example in physical grocery was impulse,
and is that method or that that kind of thinking around impulse categories goes away will the.
[12:23] Will the bigger online basket translating as it turns out it did,
and if it wasn’t for unexpected ways and so what we did is we just took a look at what what are the digital insights driving the behaviors,
and we double down on those instead of taking a look at what happened what what works in physical and trying to do an analogy online I think that’s maybe the fallacy of a lot of the categories in the physical spaces,
are you the insights over here and some serve an allergy of an end cap and that’s going to solve my my my issues online and that’s not the case it’s fundamentally different behaviors and if you can figure out what’s driving those then you should be able to.
You know basically replicate your business successfully online.
[13:04] That is a super interesting because that that comes up a lot right like two of the church side pickup in particular there’s a double-edged sword here right like there is,
there’s no impulse cash wrap in so like a lot of these unplanned purchases are harder to do once a consumer build a list they tend,
repeat that last tour manager that was so it’s tougher to get on or off that waist but then the flipside for your point like I talk to a bunch of Brands the buying behavior is very different and.
I somewhat speculate that there’s a slightly different Mission but for example I’ve talked to ice cream companies in there like yeah we saw a lot of courts in the store,
a lot of gallons curbside which is funny to me cuz I’m assuming part of that is that customers don’t want to push the gallon of ice cream around the store and Heather their neighbors see their ice creams and consumption habits.
[13:56] Yeah for those plants are being consumed in the car before they get home one of the two.
[13:59] Exactly one of each one when the go and one for show exactly.
Into what I am free from your answer is your sort of Leaning into those those changes in consumer behavior and not necessarily trying to recreate analog impulse in the.
[14:15] So the interesting get yaksha properly interesting things to pints vs. say gallons or half gallons so you know.
But we’re working on is yes get on the list but the pact that we get on that list might look very different from the pack and impulse and,
you know it’s interesting there’s a there’s an adage in the Inn in Hershey which is see Candy by candy candy.
And then you know they never Pete’s but they think about it within the context of an Impulse a like you and check out and you see it you buy it and then you eat it right away.
And the bet that we’ve been trying to kind of or not too bad I would say but what we’ve been trying to figure out and maximize is well if I can get candy into a pantry more often because it’s being it’s being curated off of the list,
where they’re going to see the candy and eat the candy is at home and it’s an expandable category people just eat it,
I’m going to stay there and then it’s time to list it’s just going to come again so is there a magic that we can we can exploit in terms of bad behavior that fully mitigates maybe even improves upon what we have gotten from an Impulse perspective.
[15:28] I mean so far I think the strategy of looking at things that way is working I think we can continue to refine it,
I’m only be able to really truly refined it I think as the retailers continue to improve their overall capabilities because obviously we don’t have soy,
on the technology stack so I can help us drive that.
[15:46] Sure in it that we may talk about this later but it still feels like sort of the first inning of of all of these.
[15:51] Yeah yeah yeah absolutely.
[15:52] It’s funny one of the like traditional Shopper marketing,
that you talk a lot about like the second purchase that way you’ll really you haven’t won until that consumer re buys your product from the shelf and you know it’s a hypothesis with these digital list is.
First purchase becomes much more important and so it’s almost like it fundamentally changes your customer acquisition strategy and where you to mess your dollars because.
Conquesting that first purchase and getting on that first list like it has so much more value attached to it than it did in the,
in the traditional model but let’s move forward a little bit like what are some of the digital tactics that you guys use at Hershey’s that have been successful if you have any sort of specific examples you can chat.
[16:40] I would love to give you some bright and shiny amazing miracle cure for being successful in e-commerce but Frank.
[16:48] Chicory with blockchain in virtual reality.
[16:49] Yeah yeah you can throw they are in there too so that the the real trick is and it’s going to sound you know rudimentary right is.
You have to have a clear strategy you have to understand exactly what you’re what you want to do what you’re going to expect to get out of that,
and then you make need to make choices and priorities within that framework that you design and that overall Vision that you’re you’re trying to enable and then you just make choices.
Really it comes down to just like anything that comes out of the fundamentals most of the time so you know people say well you know you going to need this technology platform in that technology platform you going to get this.
To certain extent it’s true you need a baseline of of Technologies but what you do with those Technologies and how you you know.
The inputs that you provided those Technologies to get the right outputs is actually the critical piece so it comes down to having really Christian sites.
[17:48] And then designing assets or whatever it might be for the experience you’re trying to drive and there for the sale that you’re trying to create,
I’m in a way that’s another really really effective and efficient and if you can figure out systematize that,
you know that will probably do more for any part of your business frankly not just digital but it certainly will do more for your digital business and anyone technology,
will do now technology still important and you need to keep an eye on what’s new what’s crashing and you know how the behavior is changing and so that doesn’t mean you have to know from time to time look at your stack,
upgrade button a lot of cases it really comes down to is how well can you get your company to execute against broader digital and not just think of it as a downstream activity but think of it as a full value chain activity from the start of innovation all the way through to go to market.
[18:41] It’s interesting cuz I mean it would be way more fun if you just like made a list of sexy baubles that.
[18:47] Plug for Adobe AEM.
[18:50] Did you not go wrong the shows not sponsored by.
[18:59] It could be if we keep talking.
[19:01] Yeah yeah we had lots of opportunities to monetize it but we love our audience so much that we we just we don’t want to distract them from the amazing content we deliver,
some of those unsexy things seem like they they have the opportunity to make a huge difference in the value of the business so I guess I’ve heard a lot like about.
Things that you wouldn’t think about but like Supply checking right and you got all these new demands signals from digital and in leveraging those for supply chain I know what Unilever you guys been a lot of times we’re Reinventing the digital shelf like is the,
is the confectionery digital shelf like where it needs to be or could you see that continuing to evolve.
[19:42] What you obviously everyone you know who uses their experiences and what they’ve learned in previous roles to inform what they’re doing and a new Rolls if if the roles are related.
And for sure we took a look at you know what Unilever had done to drive the universe standards around you no hero images which I think you’re referring to.
And you know the interesting thing was is.
Again you you would think it’s a silver bullet but if you don’t have the right insights you might draw the wrong conclusions and what we found was a version of a hero image does work for confection clearly but actually,
what really drives the engagement and therefore the sale is slightly.
[20:25] And then the other thing too is really really interesting is if you if you think about confection in the way infection is package,
it actually allows for some really really interesting things in a physical world sense where you can much more accurately.
Mirror the physical world in the digital world because you’re dealing with luck lots of rectangles and lots of squares in your packaging and so then you can start to unify and harmonize a lot of the creative around pack.
To make sure that it really is a seamless experience,
where’s the learning at Unilever was it you had to figure out what those cues were in the physical sense and then kind of replicate them in a new different interesting way so it was recognizable and a digital shell infections of a different,
so I’d allows you you know some benefits just from the the core packaging itself.
[21:17] You’re totally ruining our whole scam and Consulting where we just say.
Something’s the best practice and everyone should know.
[21:23] Yeah yeah yeah it is a best practice in terms of thinking how you’re going to approach you know you should approaching the way I like it how am I going to maximize the the Shelf when people are engaging with my product.
If you can if you can take it one step further cuz I really want to do that but it might be different for everybody competitors that something else might fire for them because they have slightly different product.
[21:47] Types of we talked a little bit about packs and early on I made a joke about stuff melting and being tough like you you guys have some specific learning about how to ship these perishables can you talk a little bit about,
how that came to be and what the solution is.
[22:04] Yeah well the the the,
the basic business problem to solve for was Hershey itself obviously is a chocolate company I mean we have broader Confections we have no candy mints and gum but chocolate is a big portion of our portfolio and it melts in the summer,
and so we were never going to be able to realize from a digital Commerce perspective at least in some models.
The sales that we would yield in a physical presence with the temperatures control.
[22:34] And so we worked with a number of Partners one partner and specifically to come up with a way where we could ship these items very expensive,
and it was really only be done within the context of D to cease a really really low volume unit volumes and transactions and also very high average sale prices for the for the units at retail so you have the ability to absorb bills cost in any conomic,
but we had to work towards is.
In terms of like you know what is the size of the prize overall for our category figure out what that is and then figure out something that between the months of with depends what part of the country but in general between May and then end of September.
How can you disable something and make money and make sure that the customer experience in the Hood the consumer experience with the individual product would be what we would hope it to be which is not melt.
Yeah so so we work with a couple Partners one in particular that has done really really good work and kind of really fine tuned to the degree where,
they use different types of cooling mechanisms or packs depending on how far the product has to go,
I’m so further reducing your costs and a couple other Nifty tricks,
and they just kept refining that until we have the ability to to to literally deliver hundreds of thousands of packs in an economically efficient way during the summer months and and in a way that the consumers experience.
[24:02] Nice and then you guys use that for your direct sales but you also make it available to your retail.
[24:07] Yeah absolutely yeah so it’s as if they have the same problem and this is one of those things where you at we work at the retailers they really didn’t want to deal with that issue and but you know because it’s not,
a huge portion of business over ology is you take out you know basket composition but it’s a big a big deal for us right so we said hey we can figure this out for you,
we have a model that work,
economically for your consumer economically for you and you cannot make way for us to make some choices and maybe leave some dollars on the table but but.
Necessary to make sure the experience for the consumers I’m going.
[24:43] I like it I noticed that you have a URL shop. Hershey. Com where your.
Selling direct it’s always interesting to me to talk to Brands about their direct efforts is that,
a green eyeshade play to grab higher margins and cut the retailer out or is it a opportunity to get some insight from customers or what how do you think about the.
[25:04] So if you went if a consumer wants to go to shop hersheys.com the portfolio is radically different from what they’re going to see in one of our retailers and there’s a reason for that you know of the week and the people that going to go there I really Hershey diehards.
And what we are attempting to give them is something they couldn’t find anywhere else something that’s unique,
and we charge you know it’s been a very different threshold area average transactions is in the mid-60s,
and it’s not anything that would be a high-value mover at a retail store and so so the retail was really don’t have any interest in it but they recognized it actually,
what’s generating that loyalty and that Equity is important both of us but but but obviously to them,
and so we don’t think there’s any conflict nardwuar retailers ever bring it up as a conflict because we’ve said this is exactly what we’re trying to do.
So since we’re loyalists do we make money on it yes we make money on it,
but the real reason we do it actually is it to understand better who are loyalists are and what makes them tick and then we can use those insights in that data and apply that to other marketing efforts,
both of you know it’s why are individual marketing and media arms or actually even with the retailers themselves.
[26:22] Yeah I was going to ask are there any examples where you like gathered an inside or or learn something that you didn’t been able to use the benefit the retail account.
[26:33] Yeah I think there’s a couple I think you nothing more lies maybe we brought another conversation with her and brought her dad up so we’ve been able to take that data as well as data that were grabbing tomorrow
our websites are brand.com so whether it’s Reese’s., Hershey’s., Hershey kitchens,
I’m take that information we’ve built out profiles we’ve done so we have,
best video the way you look at it you got addressable known you know so you have an email address or phone number of those type of things and then we’ve got a dresser but unknown but still have the ability to attach attributes to either one of those and in some cases you can merge some of those together,
and then we take that and because we have such good relationships with our retailers we even in some cases have the ability to gather inventory at a store level.
And we can marry up our media,
targeting activities to specific zip codes where we know that those stores are maybe I had a hard time getting the inventory off the shelf.
And then we would lighten up and zip codes where we know the inventory is selling through appropriately so it’s highly efficient for us to drive to media that way and it’s also really great for the retail but that only comes when you have the appropriate kind of dad and son,
a message to people in those zip codes.
[27:49] And that’s in that’s amazing because that like that’s a perfect example of these things that like we’re not in the old cpg Playbook.
[27:57] Yeah yeah totally.
[27:58] The digital totally tables.
[27:59] Yeah in the beauty of the beauty is too is people like they always they always focus on the the consumer one to one data and they’re like consumer one-to-one consumer Wonderland.
Yeah that’s important but but actually what we’re doing is actually using the profile smart first-party data store,
some third-party data information that are sales people are gathering in funneling into our supply chain cuz we use those inventory the data points for other use cases within the business,
that’s where you’re kind of like time consumer customer internal together in a really interesting new way and this was a use case it was fairly obvious to to some of the Geniuses we have in video we got some really sharp.
But until they actually knew some of that data existed because we figured out the government’s tube to marry things up and make things more transparent it would have never did it happen.
Since it’s a pretty interesting this case all the way around.
[28:50] Yeah I know for sure.
When did Jason and Scott show if we didn’t talk about Amazon been so I know firsthand that I can get all my favorite Hershey product from Amazon I’m curious where you guys are in the Spectrum there’s some people that are like,
Amazon’s amazing partner and they give us access to all these customers and sell all this and criminal stuff we would otherwise not sell and there are other people that are like gosh there a race to the bottom and they’re they’re taking all the margin out of our product and enjoy dinner places with a private label version.
[29:21] One could argue that at any given point in time over the read the history of retail that other companies have actually been cited as driving those types of outcomes.
[29:30] I feel like there’s always been a retailer that was accused of driving that out.
[29:31] There’s there’s always one driving that I can think of one action the physical space that people are very worried about it and it’s not called Amazon,
but it does have an A at the beginning of the of there their they’re store shopping there and we have to figure it out the trick for us is how we make sure that they made make money and we make money,
and the consumer for the mission that they’re on is getting what they want so for us was a lot of insights work figuring out what people were really going to Amazon for,
doing some work and having honest conversations both internally ourselves but also with Amazon around,
why we might not want to have our entire assortment online is it I think that’s a fallback position though a long tail and,
but you cannot have it didn’t make any sense so you know once you do those things and you you prove that those things are working,
and you bring some insights to in this with you choose any retailer quite frankly whether it’s Walmart Target or you know.
[30:34] Dollar or convenience if you have a Christian site around the behavior,
the cast that is interacting with that retailer and you proved it out and it works then it opens up the conversations to do more,
and so while you know a lot of times people would say this is a really difficult customer to deal with I would say you know there’s a lot of customers that are there difficult to deal with.
You know but you know they’re trying to make their model work and you’re trying to make your model work so you have to figure out a way that makes it.
[31:06] People and what I found is that if you can prove,
success on Amazon in new and novel ways you get the same kind of dope I wouldn’t you know it’s a different type of openness maybe but that’s different for every retailer to do a few different things and so we have to have the ability to influence,
how they’re bringing in product,
you know giving them good dad of the back backup you know that they’re leaving money on the table and we’ve also been able to be sharp around what’s the portfolio you want to have on that retailer that doesn’t leave the type of disruption,
in the marketplace my pricing or whatever it might be and so it’s a balancing act it’s it’s you’re always going to be working on it in some way shape or form,
but I think there are ways around it it just takes a lot of thinking and a lot of execution.
[31:52] Yeah yeah it’s it’s funny because you know there’s a lot of medicines that are good for us but don’t taste very good,
and then in some ways I think of Amazon is being a little bit of that affect that like you guys enjoy a ton of benefits from being the ultimate income then and owning the shell space in brick-and-mortar retail,
and so you got this like for great moat around your legacy business that you know frankly is mostly thanks to your predecessors.
On Amazon remote is a lot shallower,
and so it’s like in some ways it it forces better execution and in better development a new school skills and makes it easier for those income instead or those those sort of Challenger Brands to,
that sort of them eating your business and infant survive you have to like learn new skills and build a new playbook which is.
[32:45] Yeah totally right and I think you know the way the category at least in that ship to home model you know the core amazon.com out of now and not fresh not prime now or anything,
you know is you know it looks really different from the physical world anyway right so the Dynamics of a different soap ensuring that you understand that your Dynamics going to be a little bit different is really key cuz you have to send the appropriate expectations,
with your leadership and with your shareholders as to what you’re going to get out of out of that retailer if they’re concerned about it,
I would say though that the most were shallow or 5 years ago than they are now so the,
you know there’s a lot of press right now around how Amazon has been changing their algorithms to favorite profitability so that means that to the degree that you can serve them with a portfolio that makes sense for the mission.
And the consumer makes money for them and you.
[33:41] That’s a good thing and an MD it because you know if you think about the algorithm if you’ve got the probability thing kind of like mapped out appropriately then you should be in a good place you shouldn’t worry about that too much the other thing is is Frank would they have paid search,
and so paid search my mind is is you know it’s like taking up,
you know what I’m cap or you know it’s it’s it’s different manifestation but actually the smaller Challenger Brands you know they don’t have the scale or the ability on bass or maybe even the insides to actually.
Do some of that work so I actually think that while 5 6 7 years ago that the motive and Shout I actually think it’s deepening a to a certain degree and that actually is is actually good for us now there is always that the the Spectrum say I’m available but that’s true anywhere.
[34:30] So in an interesting point about the the paid media opportunities obviously it’s it’s become economically meaningful and Amazon the right the third largest advertising platform now it’s over 10 billion dollars or whatever.
[34:44] Disinterred but still.
[34:45] Yeah and way better margin than their actual retail business.
Like it’s also becoming more important to every other retailer that’s why pebble ate heavily economically challenged so we’re like right now seeing every retail are double down on building their own media offers and new jeans and.
Like replacing vendors with in-house teams and all these things.
Manufacturers funding retailers marketing initiatives is not a new idea has been around for a hundred years like you know they’ve been all these Coop models and Merchandising and accrual model.
Yeah but historically I would I would almost argue it was,
sir the quid pro quo like you buy a million dollars of my stuff and you get one and a half percentage of that to invest in marketing and so do you want to put in a circular fine if you want to put it in in cab that’s fine too,
these new media opportunities what’s interesting to me about them is.
Feels more like Brands like you are investing those dollars based on an Roi model rather than it being,
cost of doing business or I’ll punch you are a part of that account management their months is that true or am I being overly optimistic.
[36:00] No it would be true I think you know the.
You have to do a lot of work with you is you’re starting to engage with the retailers are doing that you have to do a lot of work up front in terms of the puts and takes,
and the messaging that we’ve really been focused on and and Charlie Chaplin who’s our head of media mentioned yesterday.
[36:19] What has mentioned another conversations is if you’re going to become a real media player that means you’re competing with the big media players and so,
you have to be able to prove that are alive you have to be to surgically more open with your data because what you’re saying is if you want to access that pot of money.
Then you need to be able to compete because what we’re going to do is because.
There are scenarios you think you like I’m going to have me invest in this new media platform but it’s not going to yield what someone of these other platforms and he’ll probably across the entire Marketplace,
that would affect that said retailer in retail sense so while they might be getting more dollars in media if it’s not if we’re actually spending in the wrong place or not able to drive the appropriate amount of traffic,
indosat retailer because they’re not efficient and effective then both of us lose.
[37:14] So a lot of the conversations are around like how do we make sure that we’re taking all of those things into consideration,
and ensuring that you know everybody wins as a post everybody loses the other than that we think about a lot is it yeah everybody’s thinking about becoming a media partner but there’s there’s certain retailers are never going to be able to do that.
They don’t have any Rich at your they might be Regional players and so I think their point of differentiation becomes even more.
I important and I think there’s a couple details out that they are making you know they’re like like we’re not be able to play that game going to different chicken other ways and I think that’s how they could possibly win mut most likely will,
but not everybody can become a media player and they have to if they’re going to become one they need to understand they’re going to be competing with you know some real heavyweights.
[38:01] Tell for sure but I think you’re exactly right like every decision any of these companies May,
why does a decision to move towards one choice and away from another into that other be creates a white space or someone else and so it’s like even,
is Amazon’s monetizing search and they’re selling those like top search results like I I was somewhere I might have been here yesterday Walmart was talking about like yeah we’re monetizing our side but we will never,
satellizer top search results because we think that’s a customer experience thing and so it just it just creates opportunities.
[38:31] Yeah totally and I think.
Yeah it’s really interesting, because I didn’t you know my understanding of this is again this is so you know from the press and just reading over the past couple days is there was a lot of internal debate at Amazon around,
do we want to put this attributed or algorithm and use that to drive some of the search results because they were so focused on,
the consumer experience and my guess is you know up maybe it’ll stick maybe it won’t they’re very smart they’re going to test it out and if they get plaque in some way shape or form their very quick,
to adjust but it is fascinating to watch a show to watch after the other thing that I think is fascinating is you know the media companies that are threatened by the retail companies in some way shape or form and how they’re reacting,
and now who they partner with us to make sure that they’re getting their fair share of you don’t some cases what is a major Revenue stream for them.
[39:22] Yep no absolutely like it that you know that readers are kind of become media companies the media companies are trying to figure out how to.
[39:27] How did yeah that’s right.
[39:29] It’s it’s funny all the old all the old Twin Lanes are breaking.
[39:33] Stop breaking down.
[39:34] I want Japanese grocery shop today and you just finished up a panel that was entitled connecting customer data points and first of all I heard of the moderator for that panel was amazing.
[39:47] He wasn’t credible.
[39:48] Yeah I don’t know who that guy was but the date they should get more.
[39:51] Michigan Adventure could give him another go.
[39:53] Exactly what are we taking off of probation can you tell listeners a little bit about like what you talked about in that panel what was.
[40:01] Yeah I think we did a lot of it here in the podcast the you know the focus was on you know you know.
Connecting customers and consumers in this case via data,
and so we had Scott from Wakefern to talk about it more from a retail perspective and I think he really focusing on the individual consumers and how that relates to Wakefern as a retailer,
my focus was a little bit different is you know we’re very focused on the consumer as well,
but from a broader data perspective where of the believe that being able to connect are both our internal data and our external data actually yields,
some goodness with him in terms of the consumer experience that you can’t get if they’re they’re disconnected in some way shape or form and and I was a little bit remiss action the conversation to to bring up,
you know how does that impact consumer engagement if you’re talking about internal information and I guess one of the one of the ways to kind of think about it is,
we’ve we create a huge amount of content.
All that continents are being digitized in some way shape or form if it is in a digital from you know.
[41:14] And we have to categorize that organize that and pump that out into individual channels whether their retail channels or whether their media channels and other marketing channels to get to the right consumer so you threw the right create a have the right call to action to that right consumer.
And that’s very difficult to do in a in a world that’s going towards you no more contextualisation and personalization that will have to be automated in some way shape or form.
[41:40] Getting your dad and a good place allows us to actually run algorithms over that and they will categorize and organize that and eventually they will just spit out the right messages to the right people at the right time that’s just a few years away and Technology really exist,
it’s how you get your data foundations in place to an able.
Is actually more a job once while people talk about the other customer care the consumer experience and personalization and what not what they sometimes ignore is that if you need to systematize that,
in a way that’s scalable so you can still have the efficiency of a mass media but just do it in a new and different way then you can have to do this data Foundation,
first and that’s what I was kind of pushing at in the conversation around restraining things together in a way where,
it’s not isolated nothing takes the the examples I gave you earlier around using data that was being originally connected,
or I take an an ingested into the organization to drive supply chain decisions is now being used to sit to do supply chain decisions but also to engage with consumers directly,
customers and I find that fascinating so that’s that’s what we were trying to push on.
[42:50] I like it and I think you’re exactly right I got you know I work for a big Ad Agency in so there’s a ton of 8
a bird in the air in that agency around Dynamic content what you were talking about in it exciting and people and work on it but for your point it’s garbage in garbage out if you don’t have the data governance right.
The content will be dynamic but it won’t be relevant to the right person and.
[43:09] Yeah there’s a there’s a bit of a risk to in terms of you know when you’re thinking through overall data strategy that you need more.
I need more or you need to do and I think those things are super important I think they need to be thought about as part of your overall digital strap are digital and data strategy,
but more specifically you need to understand what you already have and figure out if you’re even exploiting that to the degree that you can and that might be more important and give you more kind of home then the sexy new data goes back to the shiny things.
[43:43] That’s a great Segway.
Takeaways I thought was really useful from your panel you kind of talked about these three tracks and in data and,
I’ll let you explain it but like you and clients are asking for the like highest our Ally initiatives like it’s it’s almost never to get more data it’s usually to get a smart person,
to do something better with the day that you already have.
[44:08] That’s right so that the way we think about it is basically three tracks and you know it’s it’s.
It’s a version of people processing tools you know but the way we think about his data technology culture process would be within the culture Buckhead,
and around a damn what we think about is you know what is the dad of the way I actually did goes back to what we just discussed a few minutes ago what do you really need and and and what do you need to keep and what do you need to bring and use them and just dispose,
that’s actually a thing to think about the most people down the second second thing there is the health the garbage in garbage out making sure that the health is there in that one edger harmonizing and merging data sets,
and in the last pieces why do you make that even accessible to the organization because sometimes if you recycled it it’s difficult to find out you might even have the data but you might not know it’s there are,
where to go to get it,
I’m so sorry for that is really really Foundation important only then can you build your technology platforms on top of that and I’m a fan of simplifying that making it much more modular.
Point Solutions and letting the marketplace dictate the Innovations and being a little bit last song.
[45:22] And then around that you know there’s you know the passwords route optimization and automation that they are buzzwords but they are also true so have the be joyful in the tools that you’re going to bring on the platform you can you bring a gun while you’re going to use them,
obviously make sure that they can plug into the data but then as you’re using them making sure you’re optimizing them before you bringing out a new feature sets and what not and then to the degree that you can know a lemonade,
repetitive process is a knot that scan your first step in automation as opposed to going for the Big Shiny thing,
the to be really difficult to solve for the final piece of sculpture which I take you don’t have to really think about that is,
how do you make sure people are actually thinking digital and data first and thinking about how are they going to adopt the tools that you put in place with them as opposed to going back to their spreadsheets and everybody does a slightly different way,
and then think about the types of people that you either need to train for you know the kind of the new roles you have to train for with the with the workforce that you have and then think about how you,
recruit and bring a new new thinking and do Talent your digitally native town if you want to call it Dad or dad a native to.
That’s the way we think about it three tracks around the dad out the technology and then the culture get out and then there was no one here goes around those three years ago was around those and five-year goals around those.
[46:42] I I love it. We are coming up on time I want to squeeze one more question if I can.
If you put your crystal ball images I think I’m mixing metaphors so I got think you would.
You wouldn’t wear a crystal ball but if you get out your crystal ball do you have any sort of pod about how all this is going to continue to evolve over the next several years.
[47:05] The first if you were to wear crystal ball you’ll be Mysterio,
that’s true all right we can agree on that. Ok the I don’t know to be frank so the most wanted right after the panel out of I had an analyst Piper jaffray ask me questions like what’s going on I I I really doubt.
What we do know though is you would have continued convergence or I would say metamorphosis or transformation retailers in the Media Partners I think that is happening already.
And so the thing to watch will be out of the incumbent media players react.
So that that’s going to be a really interesting space I don’t know exactly how they will.
But I think got to be extinct the other thing at least in the US market is clear is that the the retailers are not Playing for Keeps in the groceries.
Space rights in the last 2 years you you saw a massive increases in click-and-collect operations both at Walmart and Kroger Target making moves with Cher.
I’m kind of the rise of instacart as you know what kind of about third-party solution for the retailers that maybe can’t afford or don’t want to go into those those areas themselves differentiating different ways and they do that to a third party.
So I think I think that I think the the cards are out on the table now now it’s a matter of.
[48:26] How does everybody make money from that scenario you know because it is diluted at least and it’s in the near-term and it’s going to cause everybody to rethink how do they address things in a way where.
Consumers are happy because they’re getting what they want the customers are making money and the manufacturers are making money I think.
That’s going to be really fun space to to watch.
[48:52] For sure I’d I couldn’t agree more and that’s going to be a great place to leave it because we’ve used up all our a lot of time Doug if there’s one on contact you or are you somewhere on the interwebs are you.
[49:02] Yes I keep a minimal footprint on LinkedIn so you’ll find me know where else but LinkedIn.
[49:09] I like it with the aggregate all your juice that there’s nothing wrong with that and as always want to continue the conversation they’re welcome to
hit us up on Twitter or post a question on our Facebook
page as always if you enjoyed the show the best way to assist a jump on iTunes and finally give us that five star review we’ve been desperately begging for Doug has been a real pleasure I appreciate you taking the time.
[49:33] Thank you so much.
[49:35] Until next time I’m happy you commercing.