As the battle for convenience continues to escalate the supply chain is becoming far more hybrid in nature and retailers are challenged to able to create a flexible--and profitable--solution for last-mile delivery. To unpack the evolution of the space and the exploding world of micro-fulfillment we're excited to interview Elram Goren, Co-Founder & CEO at Fabric a pioneering robotics firm and retail micro-fulfillment tech provider. It's a fascinating discussion on the process of innovation, where on-demand delivery is headed and how retailer's can address the daunting profitability challenges of online grocery and other low margin categories.
As the battle for convenience continues to escalate the supply chain is becoming far more hybrid in nature and retailers are challenged to able to create a flexible--and profitable--solution for last-mile delivery.
To unpack the evolution of the space and the exploding world of micro-fulfillment we're excited to interview Elram Goren, Co-Founder & CEO at Fabric a pioneering robotics firm and retail micro-fulfillment tech provider. It's a fascinating discussion on the process of innovation, where on-demand delivery is headed and how retailer's can address the daunting profitability challenges of online grocery and other low margin categories.
But first we discuss Steve's triumphant return to the big stage in Dubai and share a bit of new about Season 3's final guest (spoiler alert: it's Scott Galloway). Then we dig into the top retail stories that caught our attention this past week, including what the (mostly) strong earnings reports from legacy retailers and the largely profitless prosperity evidenced by disruptor brands suggests about retail's future. We also discuss reports of the potential profit squeeze being felt by Amazon marketplace sellers (something we worried about on in an earlier podcast episode).
McKinsey Online Grocery Article
Steve Dennis is an advisor, keynote speaker and author on strategic growth and business innovation. You can learn more about Steve on his website. The expanded and revised edition of his bestselling book Remarkable Retail: How To Win & Keep Customers in the Age of Disruption is now available at Amazon or just about anywhere else books are sold. Steve regularly shares his insights in his role as a Forbes senior contributor and on Twitter and LinkedIn. You can also check out his speaker "sizzle" reel here.
Michael LeBlanc is the Founder & President of M.E. LeBlanc & Company Inc and a Senior Advisor to Retail Council of Canada as part of his advisory and consulting practice. He brings 25+ years of brand/retail/marketing & eCommerce leadership experience, and has been on the front lines of retail industry change for his entire career. Michael is the producer and host of a network of leading podcasts including Canada’s top retail industry podcast, The Voice of Retail, plus Global E-Commerce Tech Talks , The Food Professor with Dr. Sylvain Charlebois and now in its second season, Conversations with CommerceNext! You can learn more about Michael here or on LinkedIn.
Be sure and check out Michael's latest venture for fun and influencer riches - Last Request Barbecue, his YouTube BBQ cooking channel!
Michael LeBlanc 00:05
Welcome to Remarkable Retail podcast, Season 3, Episode 20. I'm Michael Leblanc.
Steve Dennis 00:10
And I'm Steve Dennis.
Michael LeBlanc 00:11
Well, listeners or viewers, if things look and sound a bit different, they are. Steve, where are you coming to us, broadcasting live from, I think the other side of the world still, tell us where are you?
Steve Dennis 00:23
Yeah, I'm in the United Arab Emirates. The particular Emirate I'm in at the moment is Abu Dhabi and in my fabulous hotel room,
Michael LeBlanc 00:32
Very nice.
Steve Dennis 00:33
but earlier in the week I was over in Dubai speaking at the MENA Retail Congress, a couple day congress or event that is, I think, the longest standing retail related event in the Middle East, a lot of shopping center people, a lot of retailers there, so is a great deal of fun and quite interesting.
Michael LeBlanc 00:53
Well, and you and I were talking off-mic about some of the shopping malls and both scale and scope, you know, it's a great, it's, it's so great to you know, I'm a bit envious, it's so great to get out and see the world again, kind of back to the before time where you can actually, you know, walk, walk in different places and experience them at a top line, top level, any early impressions from, now you've been over to that side of the world before but any, any early impressions from what you saw today or this week?
Steve Dennis 01:22
Well, really, it's really a booming area, there continues to be a ton of construction. UAE has got a very high vaccination rate and has little app, kind of a vaccine passport. So, people are out and about, many listeners might know there are some pretty over the top malls here, a few of which I got to visit, one that I saw earlier this week has 1000 stores in it and 13 anchors from all the Emirates and Dubai.
Michael LeBlanc 01:54
Wow.
Steve Dennis 01:54
And, you know, a lot of, a lot of global brands, a lot of brands that are really specific to the region, but booming economy, I mean, just apartments, office buildings, tourist attractions being, being built everywhere. So it's a lot of fun to see.
Michael LeBlanc 02:09
Yeah. All right. Well, I'm sure you're, I'm sure you're still processing so I'm sure your insights will kind of roll out during season 4, as we kind of talk about different things, just great context, right. It's just a wonderful context to be out and seeing new things.
Michael LeBlanc 02:23
So, for this episode, we got a great episode ahead. We've got Elram Goren, who is the co-founder and CEO of Fabric, which is micro fulfillment, robotics. So, I, you and I've just been both so fascinated by both to some degree, the technology, but also just the, the strategy behind you know, fulfillment competing, by having a product where it is getting out of the back of the store or the side of the store. So it's a great interview and it really opens our minds up I think, to the possibilities and, and so anyway, I really enjoyed talking to Elram was, it was a good interview.
Steve Dennis 02:56
Yeah, I feel like there's this intersection, which I'm sure will keep coming back to, in some way shape, or form this intersection between the hyper growth of online grocery, you know, that was the category huge category that went from very low ecommerce penetration pre pandemic to like, it's about doubled in the last couple of years. So that's an interesting trend and then there's this whole idea that we get into, about how to make, how to improve the profitability of last mile delivery. So which goes beyond grocery, as we talked about. So yeah, it's a very, very interesting topic and I think, will be a lot of, a lot of news about that going forward.
Michael LeBlanc 03:36
Well, and it's a hot topic amongst the retailers I talked to, many are either considering it, it's on their radar screen, and some are actually in the middle of doing it. So, we're not talking about potential or theory here. It's a really burgeoning part of the retail equation. So, speaking of burgeoning part of the retail equation, that's a, that's a rough transition there for it. Let's talk about, let's talk about news of the week. So, have you been keeping your eye on what's happening back on this side of the world? What are your What are your thoughts? And what do you want to lead off with this week?
Steve Dennis 04:07
Well, I have you know, when the jetlag strikes me, I get on my computer and I just read, you know, go to CNBC or Wall Street Journal or whatever and see what's going on. Well, we are, I think, in the last week of big earnings announcements for that quarter and there were once again quite a lot of them. My takeaway, I kind of put them into two buckets. There were the, the earnings that came from Legacy retailers or retailers that have been around for a while, I guess you could call them analog native or not necessarily direct to consumer and for the most part, earnings were pretty strong. Both, both sales and earnings. Costco reported Lululemon reported Restoration Hardware, and they were all up very strongly on sales all had margin improvement, very strong operating performance. Rh is the one. I talked about RH in my book, I guess I don't know. Do you want to do the announcement about our final guests or shall I do the announcement?
Michael LeBlanc 05:08
Well, since you mentioned it, why don't I tee you up to hit the ball out of the park?
Steve Dennis 05:12
Like, are you satisfied?
Michael LeBlanc 05:14
Yes. Our season 3 finale interview, this gentleman mentioned RH when he thought of great examples of brand and retail and this gentleman actually is a teaser, was a part of your first book launch and he is the one and only
Steve Dennis 05:30
Scott Galloway, the big dog will be joining us. So, we have already recorded that episode so, we do know what he talks about and yeah, we talk, talk about RH and RH is one of those brands that really fights, continues to fight against the narrative, I often talk about them. As I mentioned, I talk about them in my book, I talk about them in my keynote, they're there, they've invested in these really palatial stores, and their digital capabilities are okay, but they're certainly not a digital first brand by any stretch of the imagination and they have continued to gain market share that continue to open stores, and blockbuster, sales performance and margin performance as stock has continued to skyrocket.
Steve Dennis 06:16
On the flip side of that are a number of reports from our digitally native direct to consumer brands, and they're all pretty anywhere from bad to, to disappointing. Rent the Runway reported too, their sales were up a lot and folks know Rent the Runway does what the name sounds like. But their sales were up a lot compared to a really dismal quarter last year. But despite that big sales increase, they actually lost more money CHEWIES, the Pet Supply Company had also pretty strong sales growth, about 24% Looking at my, my notes and margin expanded, but they also I mean, there's some onetime expenses in there, but their best case kind of breaking even.
Steve Dennis 07:05
And I think we talked about chewy last quarter, you know, they're sort of in this perfect position where they got this big bump from things moving to online and all the pandemic puppies seem to be driving a lot of sales. So, their stock took a big hit and then the last one I'll mention is Stitch Fix, which has been public for a while now. They've had really, kind of, a roller coaster.
Michael LeBlanc 07:32
Yeah, yeah.
Steve Dennis 07:32
Sales have continued to increase. They broke even I think for a couple of quarters, now they're losing money. Again. So, I think this is just all part of this narrative of, kind of, surprising it is that some of these brands that have gotten a big gift from pandemic in terms of a lot of the new customer acquisition and a lot of marketing costs going down, still just having a hard time making any money.
Steve Dennis 07:55
I think the thing to watch out for and we got into this on our profitless prosperity episode is I personally think for most of these brands that have been around for a while, it seems to me like it could only get tougher going forward. There's all these issues of, you know, Apple's cookie policy, acquisition costs are going up. A lot of these companies are now invested in physical and physical retail, which consumes a lot of capital. You don't have sort of the natural gift of traffic to, to online that you had in the, in the pandemic time. So, I think as,
Michael LeBlanc 08:32
Yeah.
Steve Dennis 08:32
We see more and more of these companies go public, and we see more their investor reports, we get to really dissect what's under the hood. So, we'll say,
Michael LeBlanc 08:37
All right, well, let's talk about let's talk about Amazon. There's some news out about Amazon that you were sharing, kind of, off-mic around, you know, it's interesting, the multiple parts of their, of their business model, this part looked at their seller fees. What did we learn this week?
Steve Dennis 08:52
Yeah, well, I think we're required by law to talk about Amazon in every episode. So this is our opportunity. I'm going to try to keep this brief. If people are interested, they should go check it out, but, but I thought that was an origin story for a couple reasons. One, in our recent episode with Chris bell on perch, we were talking with him about all the merchants that are selling through the marketplace and all the fees that Amazon charges them and whether at some point Amazon would basically squeeze those guys to maximize profit.
Steve Dennis 09:24
This report talks about how much those fees have gone up. The report from the Institute for local self-reliance, which is a great name, says that 34% of all revenue made by third party sellers will go to Amazon which is up from 26% in 2017 and 19% in 2014. Now, Amazon to be fair has pushed back saying that, that report is not, not accurate, but I think it speaks to two things.
Steve Dennis 09:53
One is potential squeeze on the third-party market which has become such a huge part of Amazon but you Second piece, which really gets to this narrative about that people still believe that Amazon doesn't make any money in retail. Well, this is the part of the business where they absolutely make a ton of money because they do charge some pretty hefty fees and they don't carry any inventory and there's a lot of really positive financial dynamics in the flywheel. So, again, this, this third-party marketplace activity has obviously become humongous for the whole industry, but, but a really important driver for Amazon and there's at least some indications that maybe some of the third party sellers are starting to get, get squeezed. So that's the problem of becoming too reliant, perhaps on Amazon.
Michael LeBlanc 10:39
Well, that's a great roundup of great stories, let's get, let's get to our interview with Elram, again, from the co-founder and CEO at Fabric and as a reminder, our next episode is our last episode of the season. We're going to take then, a bit of a hiatus until January. We'll, we're, all things go well, get together, you and I, for an in-person session at the NRF. I've described our podcasts as the pandemic puppy of podcasts. Because you, actually, you and I never actually been in the same physical place since we started the podcast. So, you know that. It'll be just a pile of fun and our last, our season finale is, it's just such a great episode, we've had the, already-, we've already had the interview. So, we know it's a great interview, wide-ranging, spot-on insights from the one and only Scott Galloway. So, be sure and tune into that, but for now, let's get to Elram at Fabric.
Michael LeBlanc 11:35
Elram, welcome to the Remarkable Retail podcast. How are you doing this afternoon?
Elram Goren 11:39
Thank you very much. I'm doing well. Thank you for having me.
Michael LeBlanc 11:42
Fantastic. Now, where are we finding you today, I think you mentioned you were coming to us live from the Big Apple. Do I have that right today?
Elram Goren 11:50
That is true. I'm talking to you from our offices here in New York City.
Michael LeBlanc 11:56
Let's jump right in. So, tell us about your background, you personally, and what you do at Fabric.
Elram Goren 12:02
So, I'm Elram Goren. I'm one of the founders and the CEO at Fabric. Actually, in my training. I'm an electrical engineer studied electrical engineering and physics back in Tel Aviv, Israel, here at Carnegie Mellon and then kind of came back to Israel spent about 10 years in the defense sector, and kind of was trained there in Israel and that was before we started, who was then called Common Sense robotics, and today, Fabric. That was in 2015, when we established the company and since then, we had our first round of funding. In early 2016. We were four founders back then and today kind of running the company and about 300 people in Tel Aviv, Israel, and here in the States.
Michael LeBlanc 12:56
Well, tell us all about your business. Tell us about Fabric, the origin story, you've hinted at it already in terms of getting together with counterparts? What's the scope and scale of business? Where do you operate, and give us all at sense of what you do?
Elram Goren 13:12
Actually, it's a fascinating story, I'll start, I'll start from the, you know where we are today and what we do. So, Fabric is in the micro fulfillment space, which means that we're building tools or technologies and services that enable retailers, in this case to offer on demand fulfillment services, and sustainable unit economics and that's, that's what we do, and we can spend some time on what micro fulfillment really is.
Michael LeBlanc 13:44
Yeah.
Elram Goren 13:44
And, you know, what kind of value it creates to these businesses. At its core, micro fulfillment is a new, or I should say, a novel way to think about supply chains, which is based not on the convention of economies of scale, and consolidating operations, rather, on distributing the supply chain to a network of smaller locations where you do pick and pack operations and from there, you do last mile deliveries and you're doing this to combine the benefits of fast, low cost, last mile operations with the benefits of highly efficient high throughputs and fast fulfillment operations.
Elram Goren 14:35
And the only way to do that really, is by injecting technology into those operations because the fact of the matter is that if you go micro, you're actually going up against economies of scaling. You're, things are actually harder when you're doing them smaller, at least in this space and so the company's engine or heart is in its technology and that technology is really what allows us to do what we do, but at the end of the day, what we do is provide those technologies or fulfillment services to other retailers so that then they can serve their own customers with on demand experiences and sustainable costs.
Michael LeBlanc 15:19
Now at the heart of it, this a bit of a chicken and egg or I should say, robot and warehouse question, which came first? Like, did you see you and your partner see the opportunity for micro fulfillment or did you create physical robots or robotic technology or software that runs it and then say, let's go looking for an application, which, which came first?
Elram Goren 15:40
Well, that's really, it's a great question, because it touches on how we started, and why we're actually doing this today. So, I'll give you some background. I mean, the founders of Fabric, we didn't come from supply chain, we didn't come from logistics, and we didn't come from retail. In fact, when I, when I usually tell the story, I usually tell folks that when I, when we started the company, I thought that fulfillment is just a feeling and, and that's, that's, that's true, I, we had no idea what fulfillment really meant. What we did was, so when we started the company, we started it by or when we started this journey, I should say, we started it by thinking as engineers, and we were, kind of, inventing these cool solutions, and then trying to try to look for problems that, that those solutions can, can solve for it. That did not work very well and so the first
Michael LeBlanc 16:48
It is a bit of a roundabout way to success, for sure.
Elram Goren 16:51
Right, right, but, but you'd be ama-, you'd be amazed how, how many initiatives actually start and usually ending, fail due to that approach and we've spent, you know, six months doing that process until we, we figured out that we might need to kind of change our approach and since we didn't, kind of, really come from any industry that we felt that we can contribute to because we came from the defense industry, and we weren't interested in, in going back there. We started thinking about problems that we face as consumers because that's something that we felt that we at least knew it was a problem.
Elram Goren 17:39
And we, we started thinking about this idea of what if we could get our groceries faster and cheaper than going to the supermarket, if we shopped for them online. Now, as mentioned, we had no idea how retail worked, we had no idea how the supply chain behind that work. So, we didn't know what denied us from, from that experience and so what we did was start to investigate how things actually work and we spent the next 12 months almost in understanding and basically reverse engineering, the PNL's of the businesses that we thought, or we wanted to serve, right, talking to folks in the industry, and really identifying what was broken, right. What denied that from, from happening.
Elram Goren 18:31
And what we've learned along that way is that supply chains are actually not built for on demand. They're not built for on demand from a functionality perspective, meaning, you know, the speed and inventory availability to actually deliver the right items, the right time. They're not built for that from, from a unit economics perspective. We've learned that in groceries at least and then, you know, we've learned that in other sectors as well. Most retailers are, is just losing money on every order, whether it's on demand or not. So, making it on demand just made it worse and third, it wasn't really built for, for scale. So, that's how we started, right. We didn't we didn't start from, from a very deep were any familiarity with the, you know, with the business that we were about to serve, and I think in hindsight that actually helped us.
Michael LeBlanc 19:31
Well, you weren't constrained by preexisting notions, right, there's some, sometimes there's an advantage of "We don't, we don't know anything about this", so you don't go in assuming "This is how it must be", right, you come at it from a very different place, right?
Elram Goren 19:43
I think you're right. I think what, what's unique about what Fabric is doing, is that its goal is to make on demand something that's accessible to everyone and then unit economics that do not dilute the business. Rather fuel it, so that's, that's where we are.
Steve Dennis 20:03
So, again, it's really, really interesting not only the specifics of what you're doing, but, but we talk a lot on the podcast about, about what it takes to bring innovation to life, and I think it's so fascinating that you saw this opportunity really from, from outside.
Steve Dennis 20:19
I've got a bunch of questions. I'm trying to think about how to how to boil them down, but, but one is, can you maybe help people that aren't as familiar with the supply chain or fulfillment in general, kind of understand how more about how you fit in, and what some of the challenges are, because one of the things we've talked about a couple of times, and I talk about in my, my book, in my keynote a little bit is that my perception was if you go back to the 90s, for sure, the supply chain, and you kind of touched on this, but the supply chain was really built, you know, there's a set of things that were done largely to supply stores.
Steve Dennis 20:55
And there were a set of things that were largely done to support mail order catalogs, which eventually became ecommerce principle, you know, pick, pack and ship it really from a regional perspective and there wasn't, there wasn't an ability to do same day next day, or, you know, even same hour kind of delivery, but COVID seem to have really, really has propelled us to the next level, but most, tell me if I'm wrong, but most retailers have largely because they don't have what Amazon has, with so many local distribution, last mile delivery centers, they've largely solved for it by making their stores the last mile delivery hub. Is that true and how do you see that, that playing?
Steve Dennis 21:36
Because Michael and I have talked about, sorry, this is a very long with the question, Michael and I have talked a lot about the unit economics of this being that it's always going to be better, it would seem from a grocers perspective, or any retailers perspective, to have the customer do the work, to come to the store rather than having to pay somebody to do it, and you also get the opportunity to sell them something else, but clearly, just because that's worked for you, that doesn't mean that's what the consumer wants. So, with that very crazy backdrop, if we can find the essence of the question in there, so how does this evolve, how do you see it evolving and, and more specifically, how do you see Fabric fitting in and micro fulfillment, fitting into that evolving landscape?
Elram Goren 22:13
The way retail, whether it's, you know, brick and mortar e-commerce evolve, and thus the, the way that the supply chain is for those different formats evolved, they sort of like, you know, the industry created a few species, right, that are kind of living these days.
Elram Goren 22:36
So, there's the there's the Amazon barn, where it's almost entirely, you know, fulfillment centers, in different sizes, different locations, perhaps for different SLAs in terms of, you know, service speed and then there's, there are the stores, which were built for a certain, you know, certain experience, and are definitely assets for that experience and, and then, as e-commerce grew, then you're seeing players with those types of assets, trying to leverage those to serve their e commerce business, you're seeing this target or some of this with Walmart are seeing this others.
Elram Goren 23:25
So, they're trying to do two things. One is to leverage them to grow the e- commerce business, but also there, I think what they're also trying to do is avoid those assets becoming more liabilities because if, if ecommerce is growing and brick and mortar is, is not growing, right, then the unit economics of those assets are changing, right and the viability, the financial viability, of that those assets is definitely changing.
Elram Goren 23:59
So, so there, those two kind of different ways to approach this, I think what Fabric is doing, so at its core Fabric is building or has built a local automated fulfillment platform that allows us to deploy this technology in a fulfillment center, that's sort of a dark operation, meaning customers do not engage it in any way, but you could also deploy it within a store.
Elram Goren 24:36
So, we're actually pretty indifferent to the type of supply chain that, that our customers are using it for and I think that's, that's one of the bigger benefits of that, that, that ability to be indifferent and that elasticity that's baked into the technology that allows it to be deployed in a 40,000 square foot facility like a larger micro fulfillment center, or a 6500 square foot facility, that's our, kind of, our, our first micro fulfillment center or a store.
Steve Dennis 25:13
Right.
Elram Goren 25:13
Bring fulfillment closer to the end customer while enjoying the benefits of automation and again, that combination is really the first time where, you know, retailers can enjoy both the benefits of truly a last mile operation and the benefits of automation.
Steve Dennis 25:35
I think that's helpful. Well, it's a complicated and you know, and we don't want to get too much into history or inside baseball here, around, you know, all the all the aspects of the supply chain, if only because, you know, I would, I would run out of gas on my knowledge pretty quickly, but, but I'm interested in your general perspective, one of the things I've worried about, or am worried about is, it seems like this ever escalating battle is occurring for, for convenience.
Steve Dennis 26:00
You know, it wasn't that long ago, where Amazon moved a lot to, you know, two day delivery, which I think could still largely be accomplished by a lot of retailers that were, you know, the cost of it might, might have been high, but they could at least serve many parts of the country through a regional fulfillment center, but if you're going to do same day, or two hour or whatever, you know, you can't have overnight from Federal Express. To make that happen, you got to have these local fulfillment centers, but the, the issue around the unit economics seems to be the big hurdle. I'm sure many of our listeners have seen some of the studies like McKinsey and Bain have both done studies about 90% of, of grocery deliveries lose, lose money.
Steve Dennis 26:43
So, I'm curious how much of this is, kind of, a race to the bottom, just kind of ever escalating, competitive dynamics, and perhaps Amazon is just very intentionally pushing, pushing this because they know 98% of the volume, you know, 98% of the volume on the part of competitors won't be profitable, and that ultimately work to their advantage versus this is a really fundamental shift in the way retail is going to operate and micro fulfillment in particular, offers a way to solve you know, not all these issues, but, but many of these issues, where do you see this, this playing out and what are some of the profit dynamics that you think people most need to pay attention to?
Elram Goren 27:22
Well, let me address this, this way. There's a, there's a, I think, a fairly famous quote by Jeff Bezos that said that, you know, customers will never complain about something that arrived too soon, or too fast, and it's too cheap and they got exactly what they want, right?
Elram Goren 27:43
So, I think that if we start from there, I think it's going to be as viable as technology allows it to be meaning, I agree with you that there are some players like Amazon who can afford to run operations that others can't.
Steve Dennis 28:05
Right.
Elram Goren 28:07
But then it's, kind of, up to companies like Fabric to build capabilities that will allow to push the envelope to a point where it actually does make sense, right, so if it did make sense to do same day delivery, and profitable unit economics, and I believe that more retailers would do that because I believe that consumers at the end of the day if they had a choice, they would prefer a more on demand experience.
Elram Goren 28:41
Now, does that necessarily mean that every shopping experience has to be a one hour, two hour shopping experience, I don't believe so. I think it's actually, you know, the reality is a bit more complex and there's some things that you would actually rather get tomorrow, if it means that you're getting a larger variety, and maybe there are some cost advantages and maybe their sustainability advantages that you care about. So, I don't believe it's necessarily everything right now, but I do believe that as long as technology pushes that envelope to a point where it's actually it's, it's more possible to do those operations and to do them on demand, and for those to be sustainable from at least from a unit economics perspective and I think you're, you're going to see more demand for this.
Elram Goren 29:41
And the reason I'm saying this is, you know, when I usually have these conversations, and the way I like to think about things is maybe we shouldn't imagine that we're really inventing something here. Maybe we should try to take a look at what has happened in retail in, you know, the last 50 years, right, because I actually don't believe that same days is new. I think that, you know, when I grew up, right, there wasn't even any e-commerce, but if I had the choice of going to a store and getting, you know, that pair of shoes that day, versus going to a store and getting it, you know, two days from that point in time, I think I would know what my choice would be, right.
Elram Goren 30:29
So, I, a lot of those things are not necessarily that unique to e-commerce, in a way, same-day was there a lot before it was there a lot before in brick and mortar than it was in, than it is in, you know, in e-commerce. So, I think if, if that possibility was open to more retailers and more consumers, you would see more moving towards on demand, but again, it doesn't necessarily mean that everything has to be on demand and again, at the end of the day, I think it really comes down to what capabilities retailers have to actually offer this in a more sustainable way.
Michael LeBlanc 31:09
I like how you're tying together. It's funny when you put it the way you just put it that you know, you had on demand, same day, you just got in the car, and you went and got it. Which ties back into.
Elram Goren 31:18
Yeah, I mean.
Michael LeBlanc 31:19
Yeah, you want it now. Sure, we have it, it's in the store-
Elram Goren 31:22
Yeah, just take a tour.
Michael LeBlanc 31:24
right near you.
Steve Dennis 31:26
To our warehouse that we call a store.
Michael LeBlanc 31:28
Exactly. A couple last questions for you and you've been very generous with your time and insights. So, thank you for that. Why, and, and how, when you think about this, intuitively, it makes a ton of sense, both strategically and tactically to, to be able to when it makes sense to fulfill in your area from the stores where the product are, particularly you're trying to close a gap from delivery, right, so, you know, micro warehouse, highly automated, A, what kind of objections do you get when you talk to retailers and say, well, that might not be for us, I'm kind of curious because it seems like that would be for many, maybe it's just volume driven?
Michael LeBlanc 32:05
And then B, and then this is another funny question is particularly for someone leading a company that's so advanced, what's next and maybe this is next and maybe that's a short answer, but A, what are some of the reasons why people don't think about robotic self, you know, micro warehousing and be, you know, what, what do you, what's in the tackle truck, what are you guys working on next?
Elram Goren 32:26
I think for us next, you know, the coming year or so is going to be, I should say the coming years, there's going to be a lot on execution. You know, Fabric has been fortunate enough to work with some of the leading brands out there and, and there's a lot ahead of us in terms of, you know, proving, you know, the promise because micro fulfillment, I mean, with, you know, with all due respect to everything I just said, it's still in its, kind of, first steps and there's, there's there is a lot to prove.
Elram Goren 33:08
So, a lot of it is going to be on execution and we're, we're very much focused these days on fast moving consumer goods, segments, like groceries and like health and beauty because they really fit or the pain points that they are experiencing, they, they're being almost entirely resolved by the micro fulfillment center, just that node. Which ties to your other question about what's next.
Elram Goren 33:44
So, when you think about micro fulfillment, one way to think about this is okay, within those four walls of that small location, close to end customers, there are these, kind of, cute robots that work together and fulfill, you know, a customer's order, but actually, when you think about, kind of, the broader context, then a micro fulfillment center is just one piece of a larger on demand supply chain and when we think about what next it's really about, it's really about that because for, for example, for fast moving consumer goods, segments like groceries and like health and beauty, the local demand density is that high and the complexity of assortment is not, is, is that low Polit, that a micro fulfillment center on its own, would solve the majority of the issues that have to do with e-commerce fulfillment and economic sustainability.
Elram Goren 34:48
However, if you looked at segments like apparel, right, or electronics, those would experience not just the kind of, the fulfillment challenges that groceries and health, health and beauty, you know, kind of experience. They actually experience other challenges like, how do I actually make, how do I make sure that the right item is in the right location at the right time, because the, the inventory complexity, or the assortment is much more complex and the densities is a lot lower, you can't afford to put, you know, all items in all locations.
Michael LeBlanc 35:32
Right, right.
Elram Goren 35:32
And the reason I'm saying this is when we're thinking about what, what’s next, it's really about how you how you're taking that micro fulfillment center, and starting to think about a micro fulfillment network that, you know, that links to the distribution layer and links to the last mile layer and what we can say today is that we're seeing a lot of opportunities in, in building those, those networks, it also kind of shifts our thinking from, kind of, this thought that's more limited to the four walls of the micro fulfillment center, again, to this type of thinking that starts at the city, right.
Elram Goren 36:18
So, how do we serve a certain locale, how many centers do you need, how big they should be, how many retailers could use her from the same location and how could the network serve that retailer more effectively, than a group of disconnected nodes that are not necessarily working together and there are a lot of, kind of, interesting and cool benefits to that. I'm sure we could spend hours on that, but I'm sure you know, we have some, we have some limitations in terms of time. So, I'll leave it at that when we're thinking about next, what's next. It's really about taking that to the next level.
Steve Dennis 37:00
Well, that's, that's I mean, I do, I do feel like theirs, this was just kind of seeing the tip of the iceberg here, but you've done at least two things that we really like to do on, on this show, which is help us think about what's next in retail, and I, and I think this is just such a fascinating area, and a lot more to come, obviously and also I just love how you taught us a little bit something about how to bring innovation, kind of, outside in to a sector. So, thanks, Elram, so much for, for joining us and sharing your wisdom. One last question. If people want to learn more about you and learn more about, about Fabric, where should they go?
Elram Goren 37:41
Well, first of all, thank you for the kind words and I do appreciate you guys and appreciate you, inviting us to speak here and if folks want to learn more about Fabric, then just go to getfabric.com where you can find a lot of the information and we'd love to continue this conversation.
Steve Dennis 38:03
Excellent. Well, thanks again and happy holidays and best of luck for incredible growth or for incredible growth in 2022 and beyond.
Elram Goren 38:13
Thank you very much. Really appreciate it guys.
Michael LeBlanc 38:17
If you liked what you heard, please follow us on Apple, Spotify, Amazon Music or your favorite podcast platforms and catch up with all our great interviews. Subscribe, so that it just automatically shows up and tell your friends and also new insights and new episodes will show up every week. So, tell your friends because that will help us share the word, the good, the good wisdom. Now be sure and check out and be sure and check us out on our new YouTube channel. Not so new anymore, we've got a couple episodes up there and just look for Remarkable Retail.
Steve Dennis 38:48
And I'm Steve Dennis, you can check out more of my work at my website, stephenpdennis.com or on Forbes or on Twitter and please check out my second edition of my book, ‘Remarkable Retail: How to Win & Keep Customers in the Age of Disruption’. Available just about everywhere books are sold.
Michael LeBlanc 39:08
And I'm Michael LeBlanc, Producer and host of The Voice of Retail podcast and a bunch of other stuff. You can find me on LinkedIn, learn about me on meleblanc.co.
Alright Steve, great episode. Look forward to chatting again next week. Be safe and have a great rest of your day.
SUMMARY KEYWORDS
fulfillment, fulfillment center, retail, micro, amazon, Fabric, retailers, unit economics, supply chain, groceries, demand, store, pandemic, sales, operations, customers, thinking, report, continued, week