Sylvain Perrier: Ladies and gentlemen, welcome to Mercatus’ podcast, Digital Grocer. I’m your host, Sylvain Perrier president and CEO of Mercatus Technologies. And joining me is Mark Fairhurst, our senior director of marketing.
Mark Fairhurst: Hello everyone.
Sylvain Perrier: And it’s a Tuesday, right? Sorry, I don’t know what day or the week it is anymore. I just blacked out.
Mark Fairhurst: This is what trade shows do to you.
Sylvain Perrier: Oh my God. It’s Tuesday here in New York. It’s gotten cold.
Mark Fairhurst: Yeah. And when we came in on Saturday, Sunday, it was 75.
Sylvain Perrier: It was beautiful weather.
Mark Fairhurst: Scary, almost.
Sylvain Perrier: Almost scary. The effects of global warming. Yeah.
Mark Fairhurst: Or you know, you would have to think.
Sylvain Perrier: I don’t know anymore. I’m not a climatologist or an expert at this stuff and I barely trust the weatherman. So, but any case, we’re here in New York city at RF 2020 it’s been a great show. Lots of cool stuff to see. Especially in the innovation lab upstairs.
Sylvain Perrier: I’ve been down here on level one. We’re at booth 1418 Door 1C. yeah. You know, the one thing that we like to do on this podcast, the Digital Grocer, to be completely unbiased and to help our retail community understand the choices and the options that they have and to better service their customers and solve their business problems and ultimately just do what’s right for them.
Sylvain Perrier: And this show is really not about Mercatus. I’ve talked about this quite a few times. In fact, we went as far as interviewing in a past episode, the CEO of ShopHero.
Mark Fairhurst: Rob Christian.
Sylvain Perrier: Rob Christian, which was a great interview. Rob published an interesting article on decoupling from Instacart on LinkedIn. So we figured we keep up the trend and we decided to bring in a eCommerce retail thought leader who is the CEO of GrocerKey. His name is Jeremy Neren. Thank you so much for joining us.
Jeremy Neren: Thank you so much for having me, pleasure to be here.
Sylvain Perrier: Awesome. So tell us a story about how you built GroceryKey. Its genesis.
Jeremy Neren: So much like you, been at it for kind of a long time. Close to 15 years, 2006 I started a direct to consumer online grocery business in Madison, Wisconsin. So I went to UW Madison and kind of saw a need at the time for delivery service, kind of geared towards college students. So you know, I call it an online grocery business. It was really more of a convenience store type deal. So no storefront, e-commerce only and it was more of a on demand kind of purchase patterns. So you know, 20 minutes or less, fairly small basket size, about a thousand SKUs and really a convenient service for college students. And over time we started to develop our own technology to power that business. And incidentally, I had a desire to scale that business and we transitioned away from warehousing all of our own inventory and to partnering with a local grocer in downtown Madison. That grocer had their own eCommerce business, which was powered by MyWebGrocer.
Jeremy Neren: And so we got to witness some of the pitfalls of that solution up front and center over a period of about a year. And we decided, maybe there’s a bigger opportunity here and becoming a B2B business. We had, like I said, developed our own software and we had felt like we had developed a lot of expertise that was really going to be valuable to the retailers because we saw this kind of local mom and pop in downtown Madison really struggling on the fulfillment side and I always say I’m kind of an e-grocery nerd. And so the e-grocery nerd in me came out and I said, maybe we could help these folks on the fulfillment side. And so that was kind of the impetus for starting GrocerKey in 2014.
Sylvain Perrier: Now, and you guys today are now how many retailers? North of 10?
Jeremy Neren: We work with 10 retailers throughout the US and Canada today.
Sylvain Perrier: Oh, that’s amazing. When you go into a project, I think you’re like me, you’re fairly hands on with the business, and you’re going in, you may be ripping and replacing an existing system or you’re doing something that’s fairly ground up for them. What do you advise as those first key things that these retailers need to think about in terms of being successful?
Jeremy Neren: I think the big thing is, it sounds so simple, but devising a strategy. I think a lot of retailers’ instinct is how do we get the website stood up? And to me that’s like a fraction of the equation. It’s like, what are we really trying to accomplish here? What business results are we trying to achieve?
Sylvain Perrier: Do you find that they’re more tactically oriented?
Jeremy Neren: I think that’s the retailers instinct. I mean, don’t you?
Sylvain Perrier: I agree.
Jeremy Neren: I mean, I think across the board and so we’re learning as we go through more of these implementations. Like that’s just the way the retailer’s wired and it’s kind of the way they have to be wired. And so I think rather than push, we have to acknowledge this simply is what is and how can we work within that environment.
Sylvain Perrier: We at Mercatus face, I don’t call it a daunting challenge, but some grocery retailers are more operationally oriented. And I think it depends where their leaders grew up, especially if it’s a family business. Some are marketing oriented. Some are IT oriented. You have any tricks in terms of how you strike that balance between those three groups?
Jeremy Neren: It’s tough.
Sylvain Perrier: It’s tough.
Jeremy Neren: Well if you develop any tricks, please let me know. It’s really difficult. I think you learn from the beginning, even in the pre-sales process, kind of who’s running the show. Because like you said, it could be any of these different departments. Could be IT, it could be marketing, could be ops, it could be the C suite and depending upon who’s kind of running the show, you’re going to see what the points of emphasis are. But it’s important to think comprehensively.
Sylvain Perrier: Do you find like one thing that we still see as a hurdle in the business working with retailers is product data. Do you guys see that at GroceryKey as well?
Jeremy Neren: It’s so big, and product data means different things to different people. So I’d even be curious to hear what your guys’ thoughts are on product data. But to us, and this is an area that we’re investing in pretty heavily now, it’s how do you standardize product data, and how do you build really rich attributes that then lend itself to greater customer experience. And I know you guys have the, you know, the IO one announced, I’m assuming that kind of ties in with all this.
Mark Fairhurst: Well it’s also, we’ve talk about data governance on the retailer side. We’re helping educate demos to what they need to do.
Sylvain Perrier: I think the challenge that the retailers have is historically the data that they’ve brought in has, and not to be too techie here is, has always been limited to some of the older POS systems.
Sylvain Perrier: So, 32 character limit.
Jeremy Neren: Truncated product titles.
Sylvain Perrier: Well, milk became MLK, the weird things. And the unfortunate thing is that data, because POS technology was one of the first big operating systems for grocery retail. That data has found itself bleeding into everything else. Into ERP systems, into planning systems and so on. So when we go in, and I think all of us license some form of data from Item Master, Label Insights, or Gladsen. And Quickie.
Jeremy Neren: Syndigo.
Sylvain Perrier: Syndigo, yeah, that’s true. Oh my God, they’re going to shoot me for saying that.
Mark Fairhurst: You get a nasty email.
Sylvain Perrier: That’s like brand police. Right. Thank you. I appreciate that. So then what happens is that as much as we license those pieces of data, that correlation between what a retailer may have in the backend doesn’t necessarily exist. So we’re having to come in with this process of data governance to say, okay, show us where your data lives, let’s assess the quality of that data, and then what can be reasonably achieved in a short period of time of cleaning up that data.
Sylvain Perrier: And then we’ve gone as far as actually working with the merchants and saying, Hey, by the way, next time before you sign that PO to buy, I don’t care if it’s 50 cases of Palmolive. I’m always thinking of soft hands. So random.
Jeremy Neren: You’re shaking a lot of hands.
Sylvain Perrier: I am. And I’m like, God, somebody give me some Palmolive, could you just make sure that the data’s that is being inputted in the system is at the very least, correct. That requires the marketing team or someone to come in and drop the hammer and said, this really needs to be done. For Brookshire’s what we did, out of Texas, we went straight in and introduced and they have a great ERP system. It was implemented by SAP. We went and brought in Syndigo to do that assessment to say, and they’ll do it. Syndigo will do it.
Jeremy Neren: Of course. Gladly. It’s their business model.
Sylvain Perrier: It’s their business model to kind of help that whole process be kickstarted. Because the reality is, and I think you know this, it affects your search.
Jeremy Neren: Enormously.
Sylvain Perrier: Enormously. It affects AisleOne enormously.
Mark Fairhurst: Or any personalization, any job engine.
Jeremy Neren: Yeah, sure.
Sylvain Perrier: And it effects the presentation layer in any case, and that becomes a really big challenge. Now you guys do something that we don’t do. I think not even the smaller competitors do, whether it’s ShopHero, Rosie, or Freshop. You guys actually run the entire infrastructure team for one of your retailers? I think it’s Woodman’s, right?
Jeremy Neren: We do it for two now. Woodman’s was the first and that was really the foundation, frankly, of building a business.
Sylvain Perrier: And so what does that look like? What you guys are doing operationally for those two retailers?
Jeremy Neren: In effect, we are their digital arm, both from a technology standpoint and from a labor standpoint. So when you think about what many of these retailers have as a solution with, maybe Instacart or Shipt, we’re providing something very similar, but we’re doing it under their brand.
Jeremy Neren: And one of our other big differentiators is we utilize W2 labor instead of 1099. We’re firm believers in that for a number of reasons. And I’m sure you can imagine some of them, but at the end of the day, you can get more accustomed with the store, you can actually implement, you have some level of oversight and kind of dictate how they’re functionally operating in the store.
Sylvain Perrier: Wow.
Jeremy Neren: And so we actually think while there is higher cost on a unit basis, there’s savings because you’re driving efficiencies by utilizing W2 labor.
Sylvain Perrier: Well that gives you guys an advantage in this space that you are not removed from the operational headache of running e-commerce.
Jeremy Neren: Exactly, we’re living and breathing it every day. I always say our solution is built from the inside out rather than the outside in. And frankly that’s our primary area of differentiation.
Jeremy Neren: There’s a lot of us folks in this space and I think we each do things a little bit differently and have something that makes us us and that’s what really is driving day to day decision making at GrocerKey.
Sylvain Perrier: So I think you probably face the same challenge as us, but, and I’ll answer your question. Sure. I’ll ask the question and I’ll answer it first, for a head-start. Every retailer wants some piece of innovation, a new feature or something. And when you’re dealing with 10 plus clients and you’re trying to be SaaS based and that’s a balancing act, right? SaaS based, single code base, multi-tenant. Not every feature can be built and you have to own your own product roadmap. And you also have to be truly respectful of other retailers product roadmap. And how do you strike that balance between what’s right for you as a business? How do you keep your clients satisfied?
Sylvain Perrier: And I’ll answer it first. I don’t want to put you in the hot seat.
Jeremy Neren: No, I’m happy to answer it. I mean we’re always talking about it, right? I mean the short answer is there is no perfect answer. If there was, we’d all be doing it because I think a lot of folks in the space deal with that problem. I think ultimately it comes down to just having really honest conversations with the retailer. Just say, look, this is our business model. Part of the reason you were able to save money by purchasing our software versus building it on your own is we’re a multi-tenant solution, and as part of that, it does mean we can’t satisfy every unique need of every one of our clients. So let’s figure out what are the priorities.
Jeremy Neren: I think at the end of the day you end up accomplishing the things that truly need to get done for that retailer. So it’s kind of guiding them to help them understand that. And it’s not always an easy conversation. And candidly, sometimes retailers get upset. But that happens in any relationship outside of business too, right? You’re not going to be aligned on everything and you just try to get aligned on the most you possibly can.
Sylvain Perrier: And I think you’re right. And I think the one thing that we’ve been trying to do in the last maybe a year and a half, when we get a request, and they’re not sporadic, these requests, because we try to meet from a product perspective once a quarter with our retailers to say, here’s where we are in a roadmap. Here’s what’s been completed, here’s what’s next, here are the features you’ve requested.
Sylvain Perrier: When a request comes in, we try to justify it with data. To see is this really going to make a difference?
Jeremy Neren: Why are we doing what we’re doing?
Sylvain Perrier: Right. And will it help the retailer?
Mark Fairhurst: As opposed to someone’s opinion.
Jeremy Neren: No gut instinct.
Sylvain Perrier: Yeah. It’s kind of like there’s this one feature we have, I know it’s table stakes in the industry, the ability to email a shopping list.
Jeremy Neren: Retailers love that one though.
Sylvain Perrier: They love it. But what we find in our platform, it’s less than 0.01% usage.
Jeremy Neren: But retailers are accustomed to, we have to accommodate everyone.
Sylvain Perrier: 100%. Then we explain, well listen, if we build that feature, here’s what’s going to happen. We have to regress it. Every time we make an update to the code, it’ll have to go through more testing and more testing and more testing and those things.
Sylvain Perrier: And again, we just can’t do everything. So we try to tell a story with the numbers more often than not. Now I know you and I are waging a war against the behemoth in the space, and you’ve been prolific on LinkedIn and everywhere, as have we, against Instacart. Are you hearing anything on the street of them these days?
Jeremy Neren: Probably the same things you are. I mean, I think we all hear the same things. I do think that there is a shift where retailers are starting to acknowledge some of the dangers of being exclusively reliant on them. I will admit over the last year or so I’ve kind of backed off a little bit because there’s been so much negative steam on them and I do think that there are some inherent benefits of working with them and Shipt for that matter. I think the challenge has been the way in which they’ve been utilized. So when you are exclusively reliant on an Instacart or Shipt, to me that’s just very dangerous and look at history and in every other industry for that. It’s how things have played out.
Sylvain Perrier: In telecom industry in Canada, Nortel, great example, top of their game and it’s just faltered. I mean we can think of so many different examples.
Jeremy Neren: Exactly.
Sylvain Perrier: Yeah, I would agree. We hear the exact same thing. I think, I hate to say the word Come to Jesus moment, but that’s the reality I think a lot of retailers have realized, whether it’s a small retailer, 10, 20 stores up to a much larger retailer, that we have to own our experience. We have to own our data. But more important, we have to own our ecosystem. My gripe about Instacart is not the fact that they’re a competitor in the space, it’s a closed in system. So you can’t, and the amount of times we’ve been engaged in conversations with retailers that are exclusively using them and the retailer wants to add in mart couponing. Or wants to add another third party system integration with Salesforce for their CRM or something like that. And no, we won’t, no Instacart won’t do it. And that’s not really a true enterprise class system more than anything. That becomes a really, really amazing challenge in the industry, in the space.
Sylvain Perrier: So you just joined Forbes for their technology council.
Mark Fairhurst: Oh, good, congratulations.
Jeremy Neren: Thank you.
Sylvain Perrier: And you’re welcome. So you published your first piece. I’m wondering if you could talk to us about that.
Jeremy Neren: Sure. So that was a technically a blog and soon we’ll be kind of doing an extension of that on Forbes, but splitting hairs, I guess so, yeah. Are you talking about the 2020 predictions?
Sylvain Perrier: Yeah.
Jeremy Neren: So, one of the big things is the kind of the marketplace movement. I do think this is going to be a huge year for that, just because there’s been so many retailers reliant on them that are starting to acknowledge that’s not the longterm answer. All the other kind of big headlines, where do I see it going? So ton of stuff right now around micro fulfillment, which I think is super interesting, but it’s not for every retailer. And so I think the way that’s being analyzed is fascinating to see. It’s going to be the answer in many cases, but in many cases it’s simply not, it’s cost prohibitive or just not in the right environment for it.
Jeremy Neren: An example being, we have a client, Fairway Market in Iowa, they have 120 stores throughout mostly rural Iowa, micro fulfillment. Probably not a near term answer for that. And then I think that there’s just going to be some consolidation. I think there’s going to be a lot of activity, perhaps even with Instacart. It’ll be interesting to see what the cascading impact of that is right now.
Sylvain Perrier: That could be huge.
Jeremy Neren: It could be enormous. I mean imagine if a big retailer swallows them up or they IPO and suddenly they’re maybe even drawing a more hard line with retailers. You can imagine all of the possibilities. I think we’re all thinking about it.
Sylvain Perrier: Imagine if it got harder for retailers within their relationship with Instacart.
Jeremy Neren: Yeah. It’s entirely possible. Yeah.
Sylvain Perrier: That’s insane, I can’t imagine. So if you had to give some advice to a retailer that’s going to get into the e-Commerce space, what would you tell them?
Jeremy Neren: Again I think taking a step back initially and saying, what are we truly trying to accomplish from a business standpoint, not just standing up the technology and stashing it in the corner, that doesn’t accomplish anything for, and I think really focusing on the fundamentals of what is the customer experience, not only on the technology side, but transitioning all the way into the customer experience. When I come pick up my order or the orders delivered to my home, that’s customer experience too. It’s not digital, necessarily, but it’s equally, if not more impactful in my opinion. So what that comprehensive customer experience looks like.
Sylvain Perrier: Did you, I mean you’ve been here for I think two days since Sunday, right? And you walk the show.
Jeremy Neren: Yep.
Sylvain Perrier: Did you see anything that’s like, “Wow, I never thought about that” or is it just more of the same?
Jeremy Neren: If I’m going to be honest, it’s more of the same. I think there’s more, you start to see thematically where there’s stuff that’s coming to the surface more and more. Obviously there’s more like Amazon Go look-alikes. There’s a ton of stuff around AI, which I know you guys are starting to dive into more and more. So there’s common themes and you have to take something away from that. But I’m big on simple solutions to complex problems. And, candidly, that doesn’t make for a great trade show booth. So you don’t see it.
Mark Fairhurst: You don’t know. Put that on your bed.
Jeremy Neren: Maybe it does. I don’t know.
Mark Fairhurst: I think he took it off, you’re the first.
Jeremy Neren: I haven’t trademarked it yet.
Sylvain Perrier: That’s hilarious. Jeremy, thank you so much for joining us.
Jeremy Neren: Thank you for having me. It was a lot of fun.
Sylvain Perrier: You’re welcome. How do people get ahold of you?
Jeremy Neren: I am a LinkedIn power user, so you know Jeremy Neren last name spelled N-E-R-E-N. Please look me up on LinkedIn, email’s better. [email protected] and it’s G-R-O-C-E-R-K-E-Y. Sometimes there’s a why inserted at the end of grocer. We deal with that. I don’t know if you guys deal with name issues at all.
Sylvain Perrier: Oh, we do.
Jeremy Neren: There’s another company called Mercatus, right? Or a couple, maybe?
Sylvain Perrier: Yeah, it’s a health care. It’s a health care. But we also deal with companies that have names that are close to us.
Jeremy Neren: Sure.
Sylvain Perrier: But it’s okay. We take care of those issues. And Mark, how do people get ahold of us?
Mark Fairhurst: www.mercatus.com.
Sylvain Perrier: Awesome. Folks. Thank you so much. Appreciate it. And don’t forget to listen to our next episode.