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Grocers are sitting on the Holy Grail of shopper data

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Mercatus Radio presents the Digital Grocer - Season 2, Episode #9

This week, we’re joined by Dan Bourgault and Beccah Rybalsky from Replenium, a provider of intelligent product replenishment solutions that improve the way consumers shop for everyday products. Dan and Beccah discuss how Replenium helps levels the playing field for grocery retailers competing with Amazon’s service Subscribe & Save, empowering retailers to build customer relationships and loyalty, all while maintaining full control of customer data.

Dan and Beccah note the power of shopper data and how grocers’ access to the conversion points in shopper data puts them at an advantage, especially when partnering with CPGs: “It’s one thing to have the data and be in control of it, but you’ve got to know how to use it. You got to know what to do with it. And you’ve got brilliant CPG partners who know exactly what to do with that and how to help you with it to help drive sales for you, as well as for them. And they will invest behind you on that.”

Listen now to learn more about Replenium and key insights into how grocery retailers can compete with the likes of Amazon, Walmart and Kroger.

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Sylvain Perrier: Ladies and gentlemen, welcome to Episode #20 of Digital Grocer, Mercatus’ very own podcast. My god, the weather is so bad outside here in Toronto. We’re here at HQ, 545 King Street West. I think winter is creeping in. A bit of a chill, I think we said goodbye to summer. It’s kind of obvious. And, when it’s the fall, it means that Mercatus just got back from Grocery Shop 2019 in beautiful Las Vegas. I think my lips are still dry for some reason, the odd sand storm and a sand dune, although I never really left the hotel.

Sylvain Perrier: It was kind of an interesting year at Grocery Shop. It just wasn’t the same. The energy was, I think, kind of peaked. And the subjects were kind of interesting this year. And one of the key topics that kind of came up over and over again was about subscriptions. How do I, as a grocery retailer, compete against Amazon? How do I make it that much easier to replenish certain key items inside my stores? How do I create sustainable relationships with the CPGs that are out there? And we thought, and I’m alone today, I guess you guys haven’t noticed. Mark has been sequestered one more time. I don’t know why these things keep happening to him.

Sylvain Perrier: But anyways, so we felt that it was probably really appropriate as a business to bring in the experts. And I think that’s what we did today. They flew in, I think, late yesterday or early this morning. They’re still fairly chipper right now in our office, so I suspect it was late yesterday.

Dan Bourgault: Slightly.

Sylvain Perrier: Slightly, right? It’s the folks from Replenium from San Francisco. And there are two people joining us today, which is amazing. First person is Dan Bourgault, the VP of sales and business development. And Dan has 20 years of experience. And I swear to God, when you talk to this guy, it feels like a hundred years.

Dan Bourgault: Thank you.

Sylvain Perrier: You’re welcome.

Dan Bourgault: I feel older now.

Beccah Rybalsky: It does.

Sylvain Perrier: You feel older? I look much older so don’t worry about that. He’s in charge of sales and marketing, business development. And, prior to Replenium, he was the head of brand partnerships for Instacart, leading the company’s efforts in developing strong relationships with all the CPGs. Now, sitting right next to him is an amazing person who has tons of insights.

Beccah Rybalsky: Thank you.

Dan Bourgault: That’s very true. Very true.

Sylvain Perrier: You’re welcome. And it’s Beccah Rybalsky. I hope I pronounced that right.

Beccah Rybalsky: It was perfect.

Sylvain Perrier: I… well, thank you. And she’s ahead of consumer insights. And she’s been doing this for over 20 years as well. And much prior to her working over at Replenium, she was also part… and she actually led the whole brand partnership and insights analytics for Instacart as well. Thank you much for joining us today.

Beccah Rybalsky: Absolutely.

Dan Bourgault: Thanks for having us.

Sylvain Perrier: Oh. You’re more than welcome. So, indulge the audience. Share with them, what is it that you guys do at Replenium?

Dan Bourgault: So, Replenium is, having built ad sales teams for quite a while now in the grocery space and having come from Instacart, one of the biggest things we looked at in the e-commerce space is just how hard retention is to get customers to repeat their business. So, we were looking for a pretty compelling tool, as the CPG brands were all telling us that one of the best tools that they invest their monies in on a regular basis is in a program that Amazon has been very, very good at doing, and pretty much the only one in the space who has been doing it well. They launched it, I think, in about 2014. Right?

Beccah Rybalsky: Yeah.

Dan Bourgault: And so, we happened to stumble across the very guy who built that for Amazon. And he built basically, if you would, an open source version of Subscribe & Save, what we’re talking about, for the rest of the grocery industry. Subscribe & Save for people who don’t know, it’s probably for me being an ad sales guy and selling all these products, a Subscribe & Save is probably the single most significant ad platform there is in the space outside of search. For people who don’t know Subscribe & Save, it’s the ability for a consumer to automatically subscribe to a single product on a regular basis where they get a discount if they stay loyal to that product longterm. Talk about great retention, not only for the retailer, but also great retention for the brand themselves. And brands invest in this product in a significant way on Amazon to where some of those categories generate 40 to 70% of their total volume through the Subscribe & Save program at Amazon. It’s so big that Amazon generates about ten billion dollars in Subscribe & Save.

Dan Bourgault: Now, if you were to take Subscribe & Save, just that promotional program, and place it in the grocery world, they would be a top ten retailer. To me, being an ad sales guy, that is one compelling platform and one that I wanted to be a part of. And, if you don’t know Tom Furphy, he’s absolutely a brilliant guy who launched the grocery business for Amazon, built the Dash button business, built the Subscribe & Save, Prime Pantry, and Amazon Fresh.

Dan Bourgault: So, we love it from that perspective because what Beccah and I did at Instacart was this incredible program that is pay for performance, drives huge value to the retailer in terms of helping baskets grow, but also create incredible loyalty for consumers with particular brands. And I think, from a data perspective, it’s just an absolute gold mine. Becky, you probably want to jump in on that.

Beccah Rybalsky: Yeah. No. I think for what we heard at Groceryshop, it’s really important for retailers to understand how to get new customers, how to really be successful in this online world with all these different services and opportunities for them to engage in. So, really understanding what drives customers to them, who owns the customer, what does that retention look like, what does that lifetime value look like? And really just our goal is to be really transparent with the information so that we can really build that partnership with the brands and the retailers. And then, evolve that over time and continue to optimize in real time.

Sylvain Perrier: So, that’s interesting. So, explain to our retailers that are listening… sounds great, it’s amazing. But, if they’re running their own platform or maybe their licensing and other platform, and that could be a Mercatus platform, that can, quite frankly, be anyone else’s platform, how do they set this up? Is it difficult? And walk us through that whole process.

Beccah Rybalsky: No, it’s not difficult. So, we really want to enable retailers to own their customers, to be able to have a customer, go to their site, and shop but have these capabilities that will drive retention and drive that longterm value that they’re looking for. So, it’s a really easy partnership, easy integration with the retailers. And then, the data that we collect from there, we share that in real time so that they can act in real time as well.

Sylvain Perrier: Now, in terms of fulfillment, does the fulfillment come directly… is it the CPGs that take care of this, the brands, or is it the retailers?

Beccah Rybalsky: It depends. We have different models. So, we do direct to consumer where there are some manufacturers or brands who do the fulfillment themselves. We also partner with retailers who will do the fulfillment. But, in either case, it’s either the brand or the retailer, depending on which model we’re integrating with.

Sylvain Perrier: Okay. And is there a hesitancy from the retailers in terms of the data that is shared back with the brands?

Beccah Rybalsky: No. I mean, I think as long as everyone is in it for the partnership and wants to optimize on both sides, I think the retailers will be happy to share the information with the brands knowing that it’s going to lead to improvements longterm.

Sylvain Perrier: Okay.

Dan Bourgault: And the beautiful thing from the CPG side, the CPG side of the business, they’re such great innovators. They react to the information. If it’s great and sales are absolutely booming based on them being involved in this program, they’re going to invest more. If, for some reason, it’s showing that there’s a downtrend in their business, what they’re going to do is invest more in that regard. Right? They’re going to react to it in both ways. If they have products sold in a particular retailer, they’re not going to say, well, this didn’t work, so I’m going to pull my product off shelf. They’re going to say, hey, this isn’t working. I must reinvent how I’m doing something with a particular retailer.

Beccah Rybalsky: Right.

Dan Bourgault: Let’s try something different. Is it a different mix? Do we increase our spend? Do we try a different offer value? Different ways for them to do it. That’s the beautiful thing we love because of our relationships with CPG brands.

Beccah Rybalsky: Mm-hmm (affirmative).

Dan Bourgault: They’re just great innovators. They love to test and learn. And they’re very nimble at being able to do that. And it’s across the board in terms of the smallest players, as well as the largest players out there. They know how to be nimble and to make sure that they’re driving great value for themselves, which they know will drive great value for the retail partners that they have.

Beccah Rybalsky: Yeah.

Sylvain Perrier: And do you find this whole idea of auto replenishment… I mean, it’s more linked to the commodities inside the grocery store? Or is it better for one type of product versus another type of products?

Dan Bourgault: You know what’s amazing is Amazon has done the ten billion dollars worth of business.

Sylvain Perrier: Mm-hmm (affirmative).

Dan Bourgault: Which Amazon’s model strictly is a ship to customer business. So, Amazon has avoided anything that’s nonperishable.

Sylvain Perrier: Right.

Dan Bourgault: So, as successful as they have been to date with a limit on the categories that they actually offer up this functionality to, imagine how much bigger their business will be in Subscribe & Save when they open it up to milk, and yogurt, and bread, and the things that… right? Shampoo you buy, what, maybe every month?

Sylvain Perrier: I don’t have any hair, so.

Dan Bourgault: Well, we’re radio so nobody hears it, right?

Sylvain Perrier: Right.

Dan Bourgault: So, and suddenly you’re now adding repeatability of a product that you’re going to subscribe to and hold dear to buying it from Amazon on a weekly basis, your bread, your milk, your cereal. That becomes an even more powerful opportunity for retailers to embrace. Right now, Amazon hasn’t. We all know they’re going to, as we hear the rumblings of them coming up with new retail models. And I’m certain that, when they launch same day delivery across the board for Whole Foods, they’re going to open it up to all these categories. They are no fools. They know how well they’ve been doing with this opportunity, this platform. And nobody has caught on to it. And that’s what we’re trying to help.

Sylvain Perrier: I have to assume, if you’re turning on auto replenishment from an operational perspective, it actually smooths out the whole… I don’t want to say the whole supply chain, but the whole aspect of predictability, when to get ready, volume.

Beccah Rybalsky: Absolutely.

Sylvain Perrier: And makes sense, right?

Beccah Rybalsky: Yeah. Yeah. It really does help the retailers do a better job of forecasting and making sure that the items are in stock and working with the brand partners to make sure that deliveries happen on time. So, from a logistics operations perspective, absolutely.

Sylvain Perrier: Which drives, ultimately, a better experience for the consumer at the end of the day.

Beccah Rybalsky: Yes. Yes.

Dan Bourgault: And, from a retention perspective, right?

Beccah Rybalsky: Mm-hmm (affirmative).

Dan Bourgault: If a customer is locked in longterm to their coffee, or their milk, or their bread, they’re basically giving you the opportunity to reconnect with them for the next time that order is supposed to come up.

Sylvain Perrier: Right.

Dan Bourgault: And it may not hit the minimum threshold. So, hey guys, your coffee and your yogurt is in your basket, but you still need a 35 minimum dollar basket. So, why don’t you add some more before we ship this to you in a nice, effective way.

Sylvain Perrier: Yeah.

Dan Bourgault: Beautiful thing that you can talk to your consumer because they’ve already instructed to you two months ago to keep doing that.

Sylvain Perrier: Yeah. It’s funny you say that because I remember when I used to be part of the Dollar Shave Club, used to be part of it and I kept forgetting to turn off…

Dan Bourgault: And you have a nice beard and mustache for people who can’t see that.

Sylvain Perrier: Thank you. I appreciate that. It’s kind of raggedy right now because it’s that season here in Toronto. But I kept forgetting to turn stuff off. So, I was actually giving the razorblades away. And I’m like… and then, they started upselling me on a bunch of things. But I just really liked the convenience and the service.

Beccah Rybalsky: Mm-hmm (affirmative).

Sylvain Perrier: But eventually, obviously, I had to turn it off. I wanting to keep this going. So, you guys get to hang out with Tom, Tom Furphy, who is like a pioneer in this space. And I always ask as often as I can remember when we’re recording a podcast to some of my guests, what’s out there today that you guys are seeing that’s getting you excited as marketers, data scientists, and quite frankly at the cusp of everything that’s new and exciting in e-commerce? What are you guys seeing out there that’s just blowing your minds?

Beccah Rybalsky: I mean, from a data perspective, I think the level of personalization is just getting more and more sophisticated. So, I think really being able to talk to that consumer and having everyone think that what you’re doing is for them personally is going to evolve. I’m excited about some of what we’re seeing in the market for that. In terms of… what? No.

Dan Bourgault: You went to data. That’s so surprising.

Beccah Rybalsky: I went to data because I love data. But you can go. What have you seen, Dan?

Dan Bourgault: No, no. I just was really stunned that you were going to say something about data.

Beccah Rybalsky: Yeah.

Dan Bourgault: That’s shocking to me.

Beccah Rybalsky: It’s the most important thing. No.

Dan Bourgault: I think it’s the size and scope of how many people are getting involved in this space, right? It’s the Door Dashes of the world who are getting in, Target reconfiguring their Round L opportunity, Walmart wanting to bring that in house from a tryout perspective and bringing it in house. Amazon, making it a point that they’re going to make sure that they’re doing a significant media spend. This is becoming just like… right, Netflix and everyone where media became a big play. In the grocery space, there’s a lot of opportunity here to connect on a one on one basis with consumers.

Sylvain Perrier: Mm-hmm (affirmative).

Dan Bourgault: Retailers are sitting on a load of data. Exactly, when I used to work at NBC, right, data was a big deal. But all we can sell was really awareness, and we think we can get you in front of women 25 to 54 in certain Bravo shows. From a grocery perspective, the amount of data that retailers are sitting on, like Beccah said, is just… it’s the Holy Grail of, how do you get to the bottom of the funnel? Facebook and Google have been fighting over that 110 billion dollars worth of search spend. Now the grocery space is getting into this to where, hey listen, we can give you search, but we’re at the bottom of the funnel. We can show you conversion on how many times people who searched milk in the last week actually bought milk and how large was that milk purchase? How much cereal did all these people who searched cereal? That’s really powerful stuff.

Dan Bourgault: So, these retailers are sitting on the ability to be really strong media players to take advantage of their customer base that they’ve worked so hard over the decades to build. And now, that opportunity for them to be able to monetize it, which will only benefit them and their consumer base, because greater offers come to table, larger basket size. And, in turn, these brands who are such great innovators look to media like Facebook, and Pinterest, and Instagram where everything is becoming shoppable. We’re doing stuff with NBC in terms of creating shopability through CPG brands and their media spin from digital assets back to these retailers. I mean, that’s free exposure that retailers building these really strong, nice media tools with their audience can parlay that into exposure and free exposure for the retailers. Because these brands want to sell their products. And they’re going to make sure that their products are available to each consumer where they can be found and make it the most convenient way for them to do it.

Dan Bourgault: So, retailers need to make sure that they’re one of those dropdown retailers when that key shopper of theirs is available in St. Louis or available in the Bronx. That’s what I find really, really compelling in the space.

Sylvain Perrier: Well, you think of it this way, retailers need to understand that they are at the point of conversion.

Dan Bourgault: They are.

Beccah Rybalsky: Mm-hmm (affirmative).

Sylvain Perrier: Much more than in Facebook, much more than in Google.

Beccah Rybalsky: Right.

Sylvain Perrier: So, the opportunity to truly influence a consumer in the most intelligent way possible is that their… I like to say, it’s at their fingertips. And I think in the conversations we’ve had in Mercatus with some of our retail partners, I think that idea, that notion of being able to do that is intellectually there. I think the how is still a little bit more difficult.

Sylvain Perrier: Tell me your thoughts, and we internally continue to talk about Amazon’s acquisition of Whole Foods. And I’m pretty preachy when it comes to that in terms of saying, listen guys, at the end of the day, grocery has the highest household penetration rate in the United States. The data is exceptionally valuable. If you’re Amazon and you’re not co opted to a consumer in their hip as often as possible, buying a Whole Foods just makes so much sense in terms of influencing what they buy, not just in the grocery category, but everywhere else. Would you guys agree with that?

Dan Bourgault: Yeah, I would. I would absolutely agree with that. I mean, Amazon buying Whole Foods was brilliant. I mean, I think that I’m surprised they haven’t bought more retailers, right?

Sylvain Perrier: Right.

Dan Bourgault: There’s always talk about them possibly buying Target. I mean, some things get pretty scary in terms of what Amazon can do to increase the size of their world. They’re smart in terms of how they are. They found out a long time ago that they’re at the bottom of the funnel. And they’ve been building that bottom of the funnel very, very well. And I think the other retailers need to realize that, hey, listen, you’re in the same boat. You may not be at their scale, but to create that differentiation that you’ve worked so hard to build, you need to be in that pocket of your consumers to say, hey, listen, I’m going to make it very easy for you to shop with me as well. And I’m going to make it as convenient as possible.

Sylvain Perrier: Yeah. Now we do know that Amazon, from our contacts in the L.A. market, that they have signed some store leases. They are going to come out with their next concept. What are your thoughts? Is it a hybrid of an Amazon-like store with a Whole Foods? Or is it going to be something completely left field?

Beccah Rybalsky: I’m thinking it’s going to be more of a hybrid, leveraging the freshness and the credibility of Whole Foods, but then laying in some of their other industries where they’re pretty successful, and that Amazon Prime, probably.

Sylvain Perrier: Oh, good to know.

Beccah Rybalsky: I don’t know. I think it’s just a lot more for them, from a warehouse perspective, to get back into the delivery game.

Dan Bourgault: Yeah. I think, when I started with Instacart, Amazon Fresh just ruled the world.

Sylvain Perrier: Yeah.

Dan Bourgault: Their product was just top notch. You could talk to anybody, they would tell you that Amazon Fresh is still the way to go. And then, Amazon said, listen. We don’t think we’re very good at it. We’re going to stop it. We’re going to retool it, and we’re going to come back. That should be spooky to everybody in the grocery space.

Beccah Rybalsky: Mm-hmm (affirmative).

Dan Bourgault: If you haven’t been to an Amazon Go store, it’s spooky good.

Sylvain Perrier: Mm-hmm (affirmative).

Dan Bourgault: In just the sheer functionality of it, it’s amazing. The quality is top notch. If they do a larger version of that and it’s a hybrid between the Whole Foods idea and Amazon Go, they’re going to be really good at it and they haven’t even fully launched same day delivery in that space. Everybody better be ready because it’s going to be a significant player. And those who haven’t noticed that Amazon has been taking a lot of their grocery business in select markets like St. Louis and other places, where it was basically an invisible retailer to some of these players, they’re now going to see Amazon physically in their space. And they’re going to see just how good they can be. It’s going to be interesting to see what it is.

Sylvain Perrier: Now, we’re seeing a lot of players in this space. Do you think we’ve hit that peak of maturity and determined the world of digital e-commerce for grocery? Or is it this is just the beginning?

Beccah Rybalsky: I think it’ll continue to evolve. I think, when Amazon bought Whole Foods, it really lit a fire for retailers to get online.

Sylvain Perrier: Mm-hmm (affirmative).

Beccah Rybalsky: And they did. But I still think they’re probably still in that, let’s maintain our online business now, versus thinking of the next evolution of it. So, I think we’re still going to see a lot of growth, new features, new platforms, or different ways that consumers want to shop.

Dan Bourgault: I agree. I think it’s still going to evolve. I think the caution to grocery retailers is, how fast are you at innovation?

Beccah Rybalsky: Mm-hmm (affirmative).

Dan Bourgault: Because Amazon is out investing against you five to one. And Amazon doesn’t have anybody to worry about controlling their speed of innovation, where with retailers, if you’re with a third party that isn’t focused on you as the retailer first, your speed of innovation can be at the mercy of the overall network. Right?

Sylvain Perrier: Right.

Dan Bourgault: So, I think with retailers they have to be careful not to get stuck behind their ability to evolve and move at the speed of innovation that someone like Amazon, and Kroger, and others are doing.

Beccah Rybalsky: Mm-hmm (affirmative).

Sylvain Perrier: Good point. So, you talked about speed of innovation. So, if you had to give the retailers that are listening some advice on how to compete in this space, what would you say to them?

Beccah Rybalsky: Go ahead.

Dan Bourgault: Oh, I get to go first?

Beccah Rybalsky: Yeah.

Dan Bourgault: It’s easy. I think you got to define that you own your customer, right? Data is King in this world.

Beccah Rybalsky: It is.

Dan Bourgault: I think you would agree with that, wouldn’t you?

Beccah Rybalsky: I do agree with that. Yeah.

Dan Bourgault: Or queen? It’s more of the queen. So, I think data is King in this space. And Beccah and I know that all too well, as being ad salespeople, that we knew the power of what that did, and how that improved your business, and how that generated incremental revenue for you to monetize it. And the only way to know how to evolve with your customer base in these changing times is you have to know all the information that you’re generating from them. And you’ve got to make sure that you have control over that. It’s one thing to have the data and be in control of it, but you’ve got to know how to use it. You got to know what to do with it. And you’ve got brilliant CPG partners who know exactly what to do with that and how to help you with it to help drive sales for you, as well as for them. And they will invest behind you on that.

Sylvain Perrier: Great.

Beccah Rybalsky: Yeah.

Sylvain Perrier: Thank you. So, Dan, Beccah, thank you so much for joining us today in Toronto. So, how do people get ahold of you?

Beccah Rybalsky: You can come visit us at Replenium.com or email us. My email is [email protected]

Dan Bourgault: That’s very catchy.

Beccah Rybalsky: It’s very catchy.

Dan Bourgault: I’m boring. I’m [email protected]

Sylvain Perrier: So, thank you so much for the time.

Beccah Rybalsky: Yeah. Thanks for having us.

Dan Bourgault: Oh, you’re welcome.

Sylvain Perrier: Ladies and gentlemen, thank you for listening to episode 20. Don’t forget to tune in. And, you know what? If you want to reach out to the folks here at Mercatus, mercatus.com. Thank you.


Dan Bourgault

Dan Bourgault is the VP, Sales & Business Development at Replenium with over 20 years experience in Sales, Marketing, and Business Development. Prior to Replenium, he was Head of Brand Partnerships for Instacart, leading the company’s efforts in developing strong relationships with all CPG companies.

Beccah Rybalsky

Beccah Rybalsky is the Head of Consumer Insights at Replenium with over 20 years experience in CPG, Retail and Tech Industries, focusing on research and analytics and developing insights to drive decision making for partners. Prior to Replenium, Beccah led Brand Partnerships Insights & Analytics for Instacart where she developed the research and analytics platforms for CPG Partners.

Sylvain Perrier

Sylvain is president and CEO of Mercatus Technologies, and the driving force behind the leading digital commerce platform in grocery retail today.