Jack Record: Food is so personal, and our groceries are so personal. We don’t care where our shoes come from, or our clothes, right? But the food we put in our kids’ lunch boxes or dinner tonight is coming from this person, who’s bringing out to my car and who’s texted me throughout the process. I mean, getting a 15 or 20 second video text from my butcher saying, “Hey, these cuts in meat look fantastic. They’re in stock today.” That’s new. That’s available to us and getting the grocers to start to use their imagination is exactly the evolution that we’re starting to see in the stores.
Sylvain Perrier: All right, ladies and gentleman, welcome to another episode of Digital Grocer, Mercatus very own podcast in Las Vegas at Grocery Shop 2019. This is a wrap-up episode, which is kind of sad.
Mark Fairhurst: Well, we’ve done a lot.
Sylvain Perrier: We’ve done a lot, right? We’ve done a lot. We’ve done a bunch of shows. We had a bunch of retailers and to kind of do a show recap …
Mark Fairhurst: But it’s the last episode from here. Let’s be clear about that.
Sylvain Perrier: It’s not our goodbye episode.
Mark Fairhurst: It’s not because our guests are going to shut this one down.
Sylvain Perrier: No. Well, not yet. No. So we’re joined by two important people today. We have Jeff Baskin from Flybuy Radius Networks.
Jeff Baskin: … or powered by Radius. Flybuy Pickup is the name of our curbside solution. Sorry, I had to do that.
Sylvain Perrier: No problem. Perfect. And from ShopperKit, Jack Record, CEO.
Jack Record: Hello.
Sylvain Perrier: And I got to say thank you because you’re taking the red eye because of this podcast.
Jack Record: I’m getting on a later flight to be here with you guys.
Jack Record: I’m excited about it though.
Sylvain Perrier: Thank you. Jeff, tell us a little bit about what your company does.
Jeff Baskin: We’re here for Flybuy Pickup. We have a location-based curbside solution. So what we’re able to do is is to tell the store when Sylvain is 15 minutes away and provide a really accurate ETA for them and then we’re able to take along the journey, some points along the way. So operationally, for grocery stores, they typically want to know when you’re about five minutes out and that alert to the staff is then able to tell them, let’s go get everything from the freezer, let’s de stage the entire order and then I’m going to be able to essentially be waiting for that customer when they pull up into the pickup zone. And we’re able to do kind of alerts when I’ve pulled onto the property and then get really precise accuracy on the pickup zones and when someone’s entered a pickup zone.
Jeff Baskin: Really automating the entire process for the customer, as well as for the staff.
Sylvain Perrier: So we’re today, retailers are relying on an individual walking into the store or texting or calling some sort of phone number. I mean, what kind of results are you seeing after you’ve implemented your technology?
Jeff Baskin: Yeah, so what we’re seeing, what almost every retailer has told us, who has a manual solution where like you said, I’m texting her, I’m calling her, I have to go to a call box and wait in line. Typically, wait times are somewhere in the eight to 12 minute range, but in reality, they actually have no idea because people are out there and, we’ve talked to a lot of people today that are literally out there with stopwatches trying to figure it out. A woman today said that they had a 35-minute wait time the last time they did it or they, when they watched someone, so they’re all over the board.
Jeff Baskin: What we’ve been able to do is when everything works properly, which so far cross my fingers, it has been with the retailers that we’re currently in, almost all of our orders are under two minutes, with a majority of them being under a minute.
Sylvain Perrier: Wow. That’s phenomenal.
Jeff Baskin: Yeah. So we’ve been able to really get those wait times down and ideally, in a perfect world, someone is literally waiting for you when you pull up into the pickup zone and you have that aha moment, that wow moment. So that’s what we’ve been able to accomplish here. So it’s been great.
Sylvain Perrier: Is the interest in your solution, I’m just kind of curious, right? Do you see it more geographically on one side of the United States versus another? Because I’m kind of curious because I think that solution in the Northeast would be amazing when it’s like below minus, in Canada it would be minus 40, is that a case or is it just-
Jeff Baskin: No. we’ve got partners all over. So I think it’s East coast, West coast. I think every … no one likes to wait anywhere. No-
Jack Record: One minute’s better than eight regardless of where they’re-
Jeff Baskin: One minute’s better than eight regardless of where you live. So yeah, so we’ve been, we have not had any geography specific areas, so.
Sylvain Perrier: Awesome. Yeah. And Jack, tell us a little bit about ShopperKit.
Jack Record: Yeah. So we’re a great part of Mercatus. We are kind of the fulfillment side of the coin. So whereas, online orders come in through the Mercatus platform to the stores, once they get dropped in the stores, ShopperKit kind of takes over, from your basic blocking and tackling on the picking side all the way through fulfillment orchestration with hub and spoke type of fulfillment from dark stores, warehouses, micro fulfillment centers, et cetera.
Jack Record: And then inside the store, communication platforms, specifically around things like substitutions and additions, but also around integrations with things like FlyBuy, where ShopperKit’s the system that’s alerted when the customer’s five minutes out. That unstaging process that Jeff talked about happens within ShopperKit so that we’re waiting in the parking lot or the grocer’s employees are waiting in the parking lot with the totes when the car pulls in, but it’s also a very interesting five minutes for impulse buys.
Jack Record: Right? That same messaging that came in to trigger the unstaging is now an opportunity to send a text to say it’s 95 degrees in Georgia, would you like Coca Cola and a Snickers bar or it’s minus 40 in Canada, can we get you a hot coffee? Or something like that. So the impulse buy aspect of that has been very important and interesting to show. I think a lot of the CPGs are actually starting to figure out that e-grocery is here to stay and particularly the people who make their money at the checkout counter are trying to figure out how to leverage Mercatus ShopperKit and Flybuy together to say, how do we communicate with the customer at the right time? You try to sell somebody a Coca-Cola when they’re sitting in front of their computer in the morning, maybe putting in their grocery order, probably not that interested, don’t want the calories, but it’s 5:30 in the afternoon and they want that sugar rush and the kids are in the car.
Jack Record: That’s an opportunity to really do something. So all fulfillment. That’s great.
Sylvain Perrier: I want to ask you a question, Jack. When we talk to grocery retailers to this notion of the ecosystem and that ecosystem is very present in the partners that deliver the experience on the website and on the mobile application, but it gets lost the moment the order is submitted into the store. And is there a reason for that?
Jack Record: We hate to use the phrase, but we’re kind of the redheaded stepchild. The sexy part of the conversation happens in the front of the store with, we’re talking about predictive analytics and things of that nature, but inside their store, there’s so many opportunities to one, reduce labor costs, right? Let’s get to volume that we’re talking about. The estimates are saying somewhere between 15 to 20% of overall revenue is going to be online.
Jack Record: Whether you’re say 2024 or 2025, that’s a major shift in a short amount of time. Being able to use your stores as fulfillment centers in a profitable way is a very important thing. We’re at that point in the conversation, so we need to be looking at money, so reducing labor costs and increasing basket size weren’t necessarily things that people were looking at when it was only two or 3% of overall revenue. Now that is straight into breaking that barrier and we’ve got conversations around delivery. I mean, part of the conversation around delivery is people think they want it delivered to their house because they think they’re going to spend 20 minutes in the parking lot getting their food. If they realize that they’re basically putting the car in neutral and popping the trunk and the baskets are being loaded inside two minutes, all of a sudden that changes the paradigm and the cost of everything.
Jack Record: So I personally am very happy to see the conversation start to enter into the store, into the warehouses and into the actual parking lot. But you’re right, it’s taken a little while to get here.
Sylvain Perrier: And do people understand from your world, ShopperKit was born from your team’s expertise and actually implementing complex systems in distribution centers and warehouse. And it’s two different things.
Jack Record: Absolutely. But it’s an important aspect. That’s a great question. So things like optimize, pick paths and multi order picking and zone picking. Those are all things that should be leveraged inside of a grocery store. But a warehouse is a highly prescriptive environment that I can control and we have a mantra to kind of do what the gun says. We want our workers in the warehouse not to think, they should just do exactly what the next thing in line is.
Jack Record: Different conversations out of a grocery store. When you’re a mother and you’re pushing a baby stroller down the aisle and all of a sudden, somebody comes around with a multi tote e-commerce cart and you’re trying to compete with that, that person needs to be able to say, okay, I’ll come back. Right? I’m not going to do what the machine tells me to do. I’m going to use my mind. I’m going to go on and maybe come back to this picking later. So yeah, it’s an absolute … There are things inside the warehouse that are applicable to the grocery store, again, to reduce labor costs, to increase pick times and accuracy, but it needed to be done in such a way that was better for retail.
Sylvain Perrier: Right. Absolutely. Jeff, when you guys are implementing your solution, you have certain criterias that define success. What does that look like in the eyes of a retailer that’s thinking about implementing your solution?
Jeff Baskin: Yeah, so I think first and foremost it’s wait time. It’s that wait time that we talked about. It’s getting that down from that eight or 30 minutes down to almost nothing. That’s first and foremost, but it’s also staff efficiency.
Jeff Baskin: So some of the pickup areas or in the retail stores have three or eight people. The ones that don’t have the resources to go hire more people to really have a good experience, they can use the same three people and by having for instance, an integration with like a ShopperKit, all of the information and data that we’re processing and passing to the staff through a dashboard, we’re now able to do it through backend integrations and the same tablet that they’re using to go pick groceries and do what they’re doing, they’re now going to get an alert on that same thing with the same notifications of that, Hey, Jack is going to be here in 15 minutes. Jack is now five minutes away and Hey, let’s put, let’s put this order to the side for now because I got to go take care of Jack and I want to be out there waiting for him.
Jeff Baskin: So the staff efficiency is really big for the retailers and the ROI piece is obviously really big, right? So if my click and collect is three X that of an in-store order, the ROI is pretty good. If I can get two or three more customers to do pickup than come in and store, it’s paying for itself and I can get more people to do that. So those are kind of some of the factors that they’re looking at.
Sylvain Perrier: Excellent. And Jack, not necessarily a similar question, but you and I’ve talked about this. When you’re implementing technology, you’re having to undo certain behaviors.
Jack Record: Sure.
Sylvain Perrier: Or just quite frankly, bad habits that have developed over time. What does that look like in your world?
Jack Record: Yeah, there’s a lot of learning that has to happen inside of a store and again, it’s a function of volume, right? So if we’re doing four or five orders a day as a grocer, we’re probably struggling to find the right staff to staff the stores to do the right things to communicate with our guests.
Jack Record: Jeff said something very important. He used the word Jack and uses the word Sylvain. It’s a face-to-face when we’re handing the bags off and while the store is shopping for the guest, there’s somebody in the store, it’s Mary in produce, and it’s Ted, my butcher, and the guest, the online guest is actually visualizing what’s happening in their local store while the shop is happening. That’s a very interesting thing that’s unique to grocery, right?
Jack Record: That’s where the bookstores and the electronic stores weren’t able to compete when the big boys kind of came into the marketplace. Food is different. Food is about trust, so it’s actually training the in-store associates to really be the eyes and the ears and the hands of the online guest to represent them in the store. That’s not necessarily something that historically, grocers have had to do. They’ve always been about efficiencies and getting things in the right place at the right time. Now understanding that we need to kind of spread our wings and it’s a skilled position. It’s actually changing to actually having someone in the store that I trust to be my proxy. The technology exists to now do that.
Jack Record: Whereas, 10 years ago people didn’t have smartphones and it wasn’t until maybe five years that texting is now ubiquitous, but getting a 15 or 20 second video text from my butcher saying, hey, these cuts of meat look fantastic. They’re in stock today. That’s new. That’s available to us in getting the groceries to start to use their imagination is exactly the evolution that we’re starting to see in the stores.
Sylvain Perrier: Yeah. I appreciate the way you’re saying that, and I think historically, when you look, you would say that the grocery store, to a certain extent, aside from its position in the community, would have been faceless, with the exception of the cashier.
Jack Record: The utilitarian. [inaudible]
Sylvain Perrier: That’s a great way of saying it, but I think the reality is now this position becomes hybrid of the technologist. Extremely customer-facing, has to carry the sensibility of the customer and represent the brand. And that’s not easy.
Jack Record: No. It takes training. It takes vision. Like there are beer gardens in grocery stores today. That’s an evolution that we’ve seen in the last what, five years? And it’s a place of community and it’s a place where people trust. And again, I think that’s a very important concept in grocery. When we think about the Amazon, Walmart, Target’s of the world, who want to make this entire thing about efficiencies and economies of scales. And if we fight that battle on that battlefield, I think the grocery market’s in trouble.
Jack Record: Whereas, if we invite the guest, the online guest into the store while their online shop is happening and represent what’s happening, I feel like that competitive differentiator of trust, that really important competitive differentiator of trust, is something that grocery can really sharpen in the online world.
Jack Record: Rather than say, oh, well, we lost this to Walmart or Amazon.
Sylvain Perrier: That’s an interesting point because I’ve had a conversation the other day with a technology vendor in the space, and there’s two really apparent models. There’s the large distribution center or dark store type setup that is sort of squeezing out the human element from the experience.
Sylvain Perrier: And then you have the traditional grocery setup, which is so reliant on the human aspect. And both your offerings are anchored around that. So where do you see that struggle unfolding?
Mark Fairhurst: I was going to say that what I’ve seen when I go onsite, and we do this a lot, is the people that are doing it right and that are implementing our technology, I was really shocked to see customers would be coming up and the people that are delivering their order out to them are giving them hugs and talking about their kids and they’re petting their dog and it’s like, the people that are doing it right, it’s unbelievable.
Mark Fairhurst: I mean, I’ve never had that experience.
Jack Record: Food is so personal and our groceries are so personal. We don’t care where our shoes come from or our clothes, right? But the food we’re putting in our kids’ lunchboxes or dinner tonight is coming from this person who’s bringing it out to my car and who’s texted me throughout the process? I mean, it’s an opportunity, to answer your question a lot, the CEOs of grocers that I talked to that really consider their brand familial and their people their most valuable asset, when when Tim Lowe from Lowe’s foods is in a store and they have this thing called the chicken dance, when artistry chicken comes out, the whole store stops and they do a little dance. He does the dance. Right? And that’s part of the brand. It’s part of the reason people shop in the store.
Jack Record: Those kinds of leaders in grocery are willing to invest in their people, in the store to say how do I empower these people to talk to my online guests? When they go out to the car, they say, there’s some organizations in the world who’d say don’t touch the customer. If somebody tries to hug you, keep a pen. Especially in America, right? It’s a litigious society, right? We want people who embrace that and say this is a familial type of concept. That’s the root of grocery, particularly here in the US. How do we build on that in the online world and bring that, and again, it’s a competition because if it’s really utilitarian, it’s really about efficiencies and it’s just about getting a box that’s cold stored to my doorstep with a food I want in it. That’s a nameless, faceless thing, the future of groceries in jeopardy.
Jack Record: But Americans in particular don’t really want to feel like their food comes from a warehouse down by the airport and picked by some nameless robot. They want to know Ted, the butcher and Mary in produce, who knows how to pick the ripe avocado. And when they go in the store, let’s not forget that online grocery doesn’t mean that the guest is never coming back inside the store. They still come in two or three times a week for smaller shops. They say hi to these people, they develop relationships with these people. So yeah, I think that’s absolutely where we want to be is it’s the grocers who are willing to invest in their people, to develop online relationships as the fulfillment process, as the pickup is happening.
Sylvain Perrier: And there is a, fundamentally, a class of retailers that understands that there is a balance between the brand overarching everything they do and then technology complements that.
Sylvain Perrier: But I think there’s also this, the dichotomy of this, other retailers that are just wowed by so much technology. And we were talking about this, how do you become a better you in this space as opposed to trying to be better against a Walmart or an Amazon and you get lost in that seat.
Jeff Baskin: And they’re just trying to copy cat a lot. So in the grocery space specifically, and I’ve been in retail for a long time, but grocery is literally trying to play catch up from a technology standpoint in a big way. So I’m not sure everyone knows where to go first. So they’re saying, I got to have scan and go, I got to have Go stores, I got to do all these things. And someone said to me yesterday and they mean it, they said, we launched this and we piloted it for six months and we don’t even know if our customers really want it or like it, and so they ditched that and then they’re focusing on some other stuff.
Jeff Baskin: So I think they’re so scared of what’s happening with Amazon. And to be honest, like with Walmart, Jack and I were talking about this the other day, like, people should be a little bit nervous about Walmart. They’re technologically way ahead of everyone else. I’m not saying that every regional grocer or someone else should ask to go out and do all of the technology wants, but they should be paying attention to what’s happening in this space. And kind of what they’re doing.
Jack Record: Fight the battle in the field that you are most comfortable. Why follow them down a supply chain path that you’re never going to win? That’s a field you’re going to die on. Win in the field that you’re most comfortable with, which is relationships and the inner brand. And it’s very important. What you said is exactly right. Do what you do, just do it better and do it in the online world.
Jack Record: If someone came to me and said, I have a quarter to invest in either machine learning, AI and automation, or I can understand why my guests come inside my brick and mortar store and try to translate that to the online world. That’s a [inaudible] no brainer. Figure out how to bring them into the store even though they’re outside. Technology lets us do that today. Leave the automation and the other things, and by the way, you’ve got technological partners in us and in others who should be working on the machine learning and the AI.
Jack Record: It shouldn’t be up to the grocer to try to figure that out. You guys should figure out how to run your business. And then again, translate it into the online world so that I’m just more comfortable ordering from my local grocer because I know who they are.
Sylvain Perrier: Yeah. And it’s interesting, I think, that the lesson learned when you look at Amazon, which I think retailers should take, they will find something ad nauseum, even if it fails, only to learn. And I think that’s where retailers.
Jack Record: [inaudible 00:18:54].
Sylvain Perrier: Exactly. And retailers are a little bit afraid of that in the sense that, okay, well, we shouldn’t try this because failure is not part of our DNA and we don’t necessarily have the culture of continuous learning.
Jack Record: Yeah, That’s dangerous.
Sylvain Perrier: That’s very dangerous because then you’re into that rabbit hole and you can’t get out of it.
Jack Record: Fail quick, but certainly if you’re not failing then you’re not trying.
Sylvain Perrier: Right. Exactly. Exactly. And learn from that.
Sylvain Perrier: Yeah, absolutely. Now you guys walk the show. Jeff, what are you seeing out there that’s like, that’s exciting. I think that has a future and what does it mean for the industry?
Jeff Baskin: The last mile delivery? I think there was a lot of, Shipt had a big presence here. Those types of companies have a big presence here. We’re here kind of talking about curbside pickup and the in-store experience. The other stuff that I saw was a lot of the proximity enabled marketing and location based stuff inside of the store, as well. So not only are they looking to do no wait time at the curb side, but they also want to have less wait time and kind of more product-based and location-based offerings when I’m walking down the aisle. So I want to be able to communicate with that customer via their mobile device where they are in the store. So I think there’s a lot of that, actually a lot more than I expected, of that there at the show today.
Sylvain Perrier: Jack, same question.
Jack Record: I think that for the first time, this goes back to Shoptalk, even prior to Grocerytalk, I think we are now in a position where we’re seeing the best of breed players kind of evolve beyond their own hemisphere or their own best of breed and start to integrate. So this is a great example, the three of us sitting at the table, Mercatus, ShopperKit, Flybuy or Radius powered by … Flybuy Radius, we have to figure that out. We can walk into a grocery tomorrow and say we’ve effectively got a turn-key solution. That’s new. I mean, that’s, maybe a year ago we felt comfortable doing it. We have. But it’s now, we can sit down and just without any hesitation with the retailer and say, there’s no problem. Here’s what he does, here’s what we do, here’s what Jeff does.
Jack Record: And there’s a few other pieces of the puzzle that we can bring in, as well. That’s different. I think even a year or two ago, the grocer kind of had to reach out to each individually and put the pieces together. So we’ve developed relationships and I think the marketplace and the conferences is showing that.
Jack Record: Yeah, there’s definitely some shiny objects out there. There’s automation and there’s geo location stuff and all the other stuff. But the true blocking and tackling of bringing e-grocery to the enterprise to get to that 20% of overall revenue is now in a position where the best of breed players are all working together and can sell and support and train and learn and grow together.
Sylvain Perrier: Yeah, and I think with Instacart and Shipt and all these guys who years ago, said, hey, I got to have delivery. I got to have e-commerce.
Sylvain Perrier: Boom, I’m going to plug them in. Some of them are starting to rethink that and now if I can own it, how do I do that? Do I have to go talk to, like you said, there’s an ecosystem of partners that can come and do an integration with their current stuff. They own the customer. It’s kind of, there’s no branding on it, except their own. They own the brand.
Jack Record: And people like us are kind of behind all of it and making it work and making it work well.
Sylvain Perrier: Seamlessly and still leveraging Instacart and Shipt and DoorDash and all the people for the last mile. I mean, there’s still a place for those people in the equation, right? They do what they do. The delivery side doesn’t, if you want to get into grocery, 10 years ago, you had to build a fleet of trucks and maintenance and insurance and gas and everything else.
Sylvain Perrier: It changed and leveraged the gig economy for last mile while still owning the relationship with our guests.
Mark Fairhurst: 100% and I think the one thing that resonated for me, technology aside, is a few things that the ecosystem partners have matured and focused enough and are unbiased in the sense that three of us can sit down and not worry about the pie and you say, here’s what we’re each individually good at. Here’s how we’re going to work together. I would throw in the in-market quotients that flip that are part of that rich experience. And I think the retailers that swung the pendulum so far on delivery have realized, wait a minute, maybe we did something wrong here. And very small, local retailers now, we’re approaching us at the show. And Mark and I, and approached Mark and said I think I made a mistake.
Mark Fairhurst: And what does that solution look like that’s going to help me really compete that much better in the industry?
Mark Fairhurst: That’s pivotal moment to hear that coming out. That’s very, very much grassroots. That’s kind of exciting, right? So gentlemen, I’ve got to say thank you so much for joining us. It’s been a pleasure having you guys part of our podcast.
Sylvain Perrier: Thank you.
Jack Record: Thanks for having us.
Sylvain Perrier: And for the wrap-up show, Mark, how can people reach us?
Mark Fairhurst: www.mercatus.com.
Sylvain Perrier: And Jeff, how do people reach you?
Jeff Baskin: Two websites, www.radiusnetworks.com and flybuypickup.com.
Jack Record: www.shopperkit.com.
Sylvain Perrier: All right, folks, don’t forget to tune into our next episode. Thank you so much. Thanks. Thanks guys.