This week we talk about the broader eco-system of last mile delivery and the role of 3 rd party services. Specifically, we go deep on Instacart, with our special guest Kiri Masters, founder & CEO of Bobsled Marketing and co-author of Instacart for CMOs (a follow-up to her 2019 book Amazon for CMOs). We unpack the key elements of Instacart's business model, what's driving growth, the challenges that lay ahead and where they are likely headed.
This week we talk about the broader eco-system of last mile delivery and the role of 3 rd party services. Specifically, we go deep on Instacart, with our special guest Kiri Masters, founder & CEO of Bobsled Marketing and co-author of Instacart for CMOs (a follow-up to her 2019 book Amazon for CMOs). We unpack the key elements of Instacart's business model, what's driving growth, the challenges that lay ahead and where they are likely headed.
Then we move on to our fast-paced weekly segment “Remarkable or Forgettable?” where we give our hot takes on retail headlines, and deem them wow-worthy, best ignored or somewhere in between. This week's big stories include stellar earnings from LL Bean and RH, Walmart's Project Glass revelations, the battle between landlords and retailers on what counts as a sale and Krispy Kreme's vaccination donut offer.
Kiri Masters is the founder of Bobsled Marketing, a digital agency that helps consumer product brands to grow their sales on Amazon. Specializing in operations, marketing and advertising on online marketplaces (Amazon, Walmart, Instacart), I'm watching the profound shift that's occurring for brands and retailers who are trying to figure out their business model in the age of marketplaces.
Kiri wrote the books "The Amazon Expansion Plan," (updated in 2018), "Amazon For CMOs" (September 2019 - co-authored with Mark Power), and "Instacart for CMOs" (2021 - co-authored with Stefan Jordev), which offer a close-up view of generating predictable results for Amazon sellers, advertisers, and CMOs.
Kiri is a regular contributor to Forbes Retail, sharing the collective wisdom gathered through managing hundreds of brands' accounts on Amazon.
Learn more about what we do at: www.bobsledmarketing.com
Read Kiri's posts on Forbes at: www.forbes.com/sites/kirimasters
Listen to Kiri's podcast at: www.ecommercebraintrust.com
Speaking opportunities: at www.kirimasters.com
Find Kiri's books at: www.amazon.com/Kiri-Masters/e/B01MD17BBK
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Join us to celebrate the release of Steve's new book.
Monday, April 12 at 5pm EST. We'll be joining Trevor Sumner and other retail luminaries for a Remarkable Retail takeover of "This Week in Retail" on Clubhouse.
Tuesday, April 13th at 5pm EST. Join us on Zoom for our Virtual Book Launch Celebration with special guests Seth Godin, Sucharita Kodali and many more. Space is limited, so please register here ASAP.
To pre-order the hardcover or ebook click below.
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 will be released April 13th and is now available for preorder 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 and The Food Professor with Dr. Sylvain Charlebois. You can learn more about Michael here or on LinkedIn.
Michael LeBlanc
Welcome to Remarkable Retail podcast, season two, episode nine. I'm Michael LeBlanc.
Steve Dennis
And I'm Steve Dennis.
Michael LeBlanc
Today, we're gonna be talking about the broader eco-system of last mile delivery and the role of 3rd party services, specifically Instacart. With our special guests, Kiri Masters, founder & CEO of Bobsled Marketing, co-author of 'Instacart for CMOs', a follow up to her great 2019 book, 'Amazon for CMOs'.
You know, Steve, to help the audience and help the listeners frame the interview to them, I want to talk about online shopping has, and how it has evolved. I mean, depending on the way you look at the statistics, thanks to the great acceleration of the COVID era, I'm sure north of 20% of core retail in the US done online right now. More or less same thing around the world, but less in Canada, but more in England.
Let's talk about you for how are you shopping? How do you shop?
Steve Dennis
Enough about you, let's talk about me.
Michael LeBlanc
How much of your shopping is done online? Like do you plan on changing? Like what kind of shopper are you?
Steve Dennis
Well, I think I'm, I hate to say, bifurcated, but you know, that's, that's my thing. I think, for things that are very convenience oriented, I'm overwhelmingly an online shopper, I do a ton of online shopping, but it's almost all for things that I don't care that much to get involved in the purchase. So, you know, basic items. I do a lot of gift shopping online, because I just don't like dealing with the stores in the holiday period, you know pre COVID. So I'm a big online shopper, but, but it's very much on convenience oriented, or when I pretty much know what I want and just want a good price, and want to get it over with.
But I'm pretty much an in-store shopper when it comes to things like groceries and clothing. And, you know, I do like being able to see things. It's not necessarily so much the immediate gratification, sometimes it is so.
So, you know COVID didn't change my shopping behavior all that much, other than I would say, I certainly made fewer trips, like a lot of people, I made fewer trips to the store.
Michael LeBlanc
Bigger basket,
Steve Dennis
And I consolidated. Yeah, I consolidated. But I didn't have like a big switch to online, grocery shopping or anything like that.
I would say I probably do more research online before going to the store. That may be changed a little bit. But you know, that's been growing for me. So, I know, I don't know how representative I am. But I do like the physical store shopping or experience for some stuff, and other things. I'm like, all the way online baby.
Michael LeBlanc
Yeah, yeah. Well, I mean, and there's some things I just don't care about. I love the product, but I don't care about the experience. So, I always talk about pet foods. You know, I love my dog and, and I buy him the best food. But, I get nothing from going to the pet food store, and buying a 50 pound bag and schlepping it around the 'de-schlepping of retail' as you, as you've described it. It's perfect, it just shows up my door. I love it. He loves it. You know, it's a great solution.
And talking about that we've seen this explosion of third-party delivery services. Particularly in grocery and with restaurants. Let me ask you this as a strategist, do you believe the tradeoff of having your customers build loyalty to the third-party delivery system at the start and the end of the journey is a risk worth taking?
Steve Dennis
Well, it certainly makes me nervous to have customers go elsewhere to form perhaps a lasting relationship with a third-party company. So, you know, on the one hand, I think if you can avoid doing it, you would rather own that relationship, own the data on the access, you know, the direct access to the customer if you possibly can. I think the challenge is, which you know, I think we'll get into with Kiri a little bit is, you know, in some cases, it's just not possible for certain size retailers to have the scale to really do that. And, so they really don't have a choice as a practical matter of doing it. And in the other cases, if consumer behavior just shifts so much fundamentally to that sort of behavior, you know, you don't want to fight fundamentally against what customers want.
So, I think it's very challenging. And, certainly it's going to be an issue that more retailers are gonna have to cope with, because I think we're certainly on a, you know, even with some moderation of the trends we've seen during COVID. I mean, we certainly have seen a huge, huge growth in diverse services.
Michael LeBlanc
And I know, I know, for some grocers that I've talked to, it's a bit of a hybrid, right. In the major metropolitan areas, they get enough volume and enough, you know, 'root density' as they would call, to do it themselves. But in other smaller communities, they're like, you know, we can't build that kind of density, let's go for the third party that works for the people, so.
All right now just before we bring Kiri on, you've got the revised and expanded second edition of your book, 'Remarkable Retail' coming out very soon. And we're doing a couple of special events to celebrate it, right?
Steve Dennis
Yes, so, on Monday, April 12th at 5pm Eastern Time, Trevor Sumner is hosting a special edition of his 'This Week in Retail', which is a Clubhouse thing he does every week. And we're going to do a 'Remarkable Retail' takeover. And a number of friends will be joining us. So, if you're on Clubhouse, check that out. And then, the next day, Tuesday, April 13th, also at 5pm Eastern, I'm going to be doing a virtual book launch event on Zoom. And we'll have several special guests, including Sucharita Kodali, from Forrester, Seth Godin, and several other friends. And you are nice enough to have agreed to host that. So save those dates. And we'll be providing all the details in the show notes and on social media. And so I think at this point, I'll stop all the shameless self-promotion and we'll bring on the star of the show, Kiri Masters and talk all about Instacart.
Michael LeBlanc
Kiri, welcome to Remarkable Retail podcast. How you doing this morning?
Kiri Masters
I'm very well. Thank you for having me.
Michael LeBlanc
Well, it's morning where you are. It's evening where we are. We're going global on the podcast. Welcome, and thanks again for joining Steven I.
Well, why don't we just jump right in. Tell us a little bit about yourself, your professional and personal journey, personal, professional journey and what you do, and what Bobsled is all about.
Kiri Masters
Sure, So I started a digital agency focused on helping brands with their Amazon sales channel back in early 2015, called Bobsled Marketing. I didn't come to that world with any agency experience or even a bunch experience with retailers. I was a commercial banker before that. But I had a, I started an e-commerce business and sort of figured out some things to do with Amazon. So, what do you do next? Of course, you start an agent, an agency. So, that was early 2015. Really drinking from the firehose there. Today, we're a team of 35 people. We work mostly with mid-sized consumer product brands on Amazon, but also Walmart, and Instacart now as well.
Michael LeBlanc
Now, where did, where were you when you started this agency? Because right now we're talking to you in Perth, Australia.
Kiri Masters
Yeah,
Michael LeBlanc
I don't think Amazon, I think Amazon is fairly new to the Australian market, actually.
Kiri Masters
Yeah, I launched here in 2017. But it's still pretty small part of the retail landscape. So yeah, I lived in New York for about six years. And that's where I started Bobsled. So, the company is based out of the US. The team's in the US and Europe. I'm the only one in this awful time zone.
Steve Dennis
That was, there's worst places to be.
Kiri Masters
And so how I noticed I know Steve, actually because we both contribute to Forbes Retail. And, you know, back when we went to conferences, sort of bump into each other along the way there.
Michael LeBlanc
What is this conf, what are these conferences you speak of?
Kiri Masters
it's all a bit fuzzy to me now.
Michael LeBlanc
Yeah, no kidding. Okay,
Steve Dennis
Yes, I think I saw you at NRF last year, about four weeks before the wheels came off. So
Kiri Masters
That's right, your book was, I got the galley copy of your book. And then it all, yeah, the world changed.
Steve Dennis
Yeah, I heard something about that.
So, speaking of books, has that for a very smooth segue. You've got a new book out, that you've co-written with, I believe your colleague at Bobsled, Stefan Jordev, called 'Instacart for CMOs'. So, tell us a little bit about what the books about and why you decided to release that now.
Kiri Masters
Yeah, so Instacart for CMOs really is a playbook for brands, for consumer brands, who are looking to understand the Instacart platform. And you know, what they can do to influence sales there and reach, reach customers there. Instacart really came onto the radar of a lot of consumer brands in 2020 for for two reasons. One, the pandemic and the huge migration over to in, grocery delivery apps like Instacart. And Instacart also released its self-service ad platform in May of 2020. Which opened up a new retail media channel for a lot of brands who are interested in targeting shoppers at the point of purchase while they're building their shopping cart on Instacart.
So, lots of interest from brands but not very much documented in the way of playbooks or like a roadmap for, for brands wanting to understand how does content work? How does inventory work? How does, you know what are the advertising options? So at Bobsled, we do a lot of thought leadership content. And we just saw a huge white space for this topic around Instacart and addressing all the questions that we were starting to receive from brands.
So, Stefan, who is our Director of Marketplace Strategy and Insights, and I sat down. We interviewed about ten brands, ranging from multinationals like Revlon to challenger brands like Simple Mills and a few partners, like solution providers in there like Profit Hero and Pack for You, who have, you know, a lot of data and insight on how the platform works. So, yeah, it's, it's really this, the first and most comprehensive guide to Instacart out there for brands.
Steve Dennis
Well, I love, I love all the detail. Maybe we could just start, I mean, I actually thought I had a fairly good understanding of what Instacart was, but I have to say your book gave me a new appreciation for the richness of it. So maybe just for people that aren't as familiar with Instacart, maybe you just describe what Instacart is about, and maybe talk about some of the different components of their strategy and their offering.
Kiri Masters
Sure, so there's a few things here, a few concepts that I think. One that's unique to Instacart is that it's a four-sided marketplace. So, with online marketplaces like Amazon, or Walmart, you've typically got two-sided marketplace between the brand and the shopper. And also, Walmart and Amazon sell their own products as well, that is still a two-sided marketplace in that Walmart, or Amazon is selling to the shopper there.
But Instacart has four stakeholders, there is the customer, the end customer, the shopper, who's the gig worker, sort of zipping around picking your order, And they interact together the shopper and the customer and you know, figure out replacements and things like that. I have even heard of shoppers recommending products to customers. And then you've got the retailer, and the advertisers. So the advertisers in at least right now are pretty much all the brands who have their products available to sell on Instacart.
So, that's a four-sided marketplace. And that creates, you know, a bit more complexity in the relationship with that brands have with Instacart. Because the brand can't control content, pricing, availability and assortment on Instacart in the same way that they can do on Amazon and Walmart and all the other marketplaces. So, the fact that the retailer is at the center of the relationship and control so much of the experience is very unique to Instacart.
Steve Dennis
I imagine it creates some complexity too though, right?
Kiri Masters
Absolutely, yeah. So, if you're a brand, and you don't have control over where your products are, you know, where your products are available to customers, you might be dark on a whole region. And that's just because your retailer hasn't integrated properly with, with Instacart. A lot of especially grocery retailers are notoriously behind on their inventory management software. And so, you could, you've got no control over availability as a brand. So, it's a very unique situation.
Michael LeBlanc
Have you heard of, I'm gonna pull in a couple of threads around, around this four sided market. Have you heard of brands, CPG, companies spiffing the gig worker the shopper? In other words, incenting them to recommend one thing over another where that opportunity comes up. It feels like there's opportunities at each point for that to happen.
Kiri Masters
I haven't heard of that and actually imagined that would be quite difficult because they're, like you said that gig workers they're not employees of Instacart. How would you find those people and actually like communicating with them on a mass scale the very difficult? I've heard of it more so like, there was, there was some customer who commented "Wow, I'm so happy with my Instacart shopper. They saw that the Clorox wipes were in stock in a store, and they asked if I wanted some because it was so rare to see Clorox wipes",
Michael LeBlanc
Right.
Kiri Masters
So it was more like a, shoppers, in store shoppers are not incentivized to cross sell or upsell or anything like that. They've, they've got a very specific job to do.
Michael LeBlanc
Yeah, and that specific job is really rooted around, around the consumer basically right. Is to do right by them so they get tipped, right. So they get a bit of incentive on top of their, their base. Is that the way it works around the world? Is the model similar no matter where they operate? Is there any differences? I mean, I know, you know, US states like California have or pending gig worker legislation. So, does it do they flex their model a bit around that?
Steve Dennis
Not right now. So Instacart is, just from a footprint standpoint, it's available to 85% of US households, and 70% of Canadian households. So, it's still only operates in those two markets. But, one of the big advantages that the company has is its footprint and the, the extent of the relationships it's built up with retailers.
From a labor perspective. Instacart does not have a unionized workforce right now. That could change and that, that is a threat to the company. But that's why for some retailers who do have unionized workforces, it is, it is a good solution, because they wouldn't be able to go out and replicate this themselves with their unionized workforce.
Michael LeBlanc
Yeah, not easily. So, let's talk about that, what makes Instacart different, other than the fact there's a Canadian founder, Apoorva Mehta is Canadian. So that, that makes them special, at least in my eyes anyway.
Steve Dennis
I had to wonder, by the way, on when Michael was gonna bring that up, I went,
Michael LeBlanc
It's only a matter of time, only a matter of time. And, and part of their tailwind came from when they did the big deal of Loblaw here in Canada as well, which was a pretty, I think, a pretty huge deal for them.
But I turned my mind to, you know, Target, for example, who had I believe a relationship with them and then decided to kind of backward integrate and buy shipped. And, you know, other choices are made at any given time by retailers. Is it, was it a first mover? And so far, they've just been able to get the momentum and build big enough, and now that's going to be hard to shake them out. Is, is that, is what that is roots into their core key advantage and why so many retailers turned on Instacart?
Kiri Masters
I think it is. I think that the cut through that they already have with the again, 85% of US shoppers, and 70% of Canadian shoppers, there's no competitor that really comes close to that. And,
Michael LeBlanc
Yeah,
Kiri Masters
As you alluded to Instacart has partnerships with nine of the top ten US retailers. Not all of them are full-fledged, some of them are still pilot stage. But you don't get those kinds of partnerships over the course of a few months. That's a, that is a huge effort. And, you know, I can't even imagine the enterprise sales pros process that they went through to get these retailers on board. So that is actually a massive barrier is that existing partnerships with so many retailers, and so many of the large ones. And you would have seen that they've been expanding way beyond grocery into other verticals as well, like Sephora, Best Buy are now partners as well. So, it's
Michael LeBlanc
Indigo, Indigo books and gifts in Canada, I got my last, very last minute, super last minute Christmas gift with an Instacart order on
Kiri Masters
Oh, great,
Michael LeBlanc
On Indigo
Kiri Masters
Well, that's actually that, that is another great use case is these sort of like immediate gratification. And that's something that in the book. We talk about e.l.f cosmetics, they provide a number of different delivery options to customers on their website. You can purchase from Sephora. You can purchase from their DTC site. And they also provide an option 'Do you want to get it within two hours with Instacart?' and get that immediate gratification, essentially. So that's a great use case that brands are seeing with Instacart as well as that, through this platform, you can, you can create an immediate, you know, two-hour delivery for someone.
And I'd say just sort of to close out the other, the second main advantage that I see with Instacart over competitors is its technology. And this has been, you know, caught, they don't have stores, they don't have warehouses, they don't have, you know, employed shoppers. The assets, the asset that Instacart has, is its technology. And the biggest thing that you've got to get right with this type of business is root density, it's really essential to Instacart business model to have that many retailers on board and to have a level of critical demand flowing through their platform to actually make the economics work. If you don't have enough deliveries scheduled on for a driver on a day, you can't make that an profitable route. So, Instacart's really been the company that's mastered that route density and delivery technology. They, they have their own map algorithm. And that's another huge barrier to entry to actually build that technology.
Michael LeBlanc
It feels like it's a bit of a race between building loyalty to Instacart and building loyalty to your own brand. I mean, I've been in similar discussions around coalition loyalty programs, right. Do you start your own? Do you join on someone else's? There's pros and cons to each. But you know, if I'm sitting in the chair of a, I'm running a grocery store, I want my customers to be loyal to me, not whatever service, you know, I don't want that service to pick up my customers and move them somewhere else. So it does feel like a bit of a, I guess, an arms race. Have you, in your discussions with, you know, both brands and CPG, and retailers, how are they, how are they looking at that right now?
Kiri Masters
So, the brands are in a lot of cases sort of ambivalent as to where they reach the customer, as long as they can control the message. And they, they have some mechanisms to reach that reach them, like through advertising, and display the right content at the right time. They're okay like e.l.f. cosmetics, for example, they're okay if a customer shops on Amazon or Instacart, or their DTC site, or Sephora, wherever it is, they're okay with that. They recognize, you know, different, different channels for different situations and different shoppers.
But the, the retailers certainly are concerned with having this intermediary now, between them and the shopper. And a research report that we, that we cited in the book from Barclays Equitie's research, showed that shoppers would not, would switch to a different retailer on Instacart if a product was out of stock for every retailer, except for Costco and Sprouts. So, Costco and Sprouts were the only retailer where a customer would actually like, leave the app and, and shop directly with that retailer. So that, that really tells you that the retailers in this model are sort of commoditized. And it's the Instacart app that shoppers are really getting, becoming loyal to.
Steve Dennis
So that's super interesting. I want to go back a little bit to the economics of all this, I think McKinsey and others, have dissected the profitability of grocery e-commerce and maybe a little bit of discussion that we often have on the podcast about what counts as e-commerce. But putting that aside, I take your point about the route density being really important to making the economics work.
But there's still this phenomenon of, at least until we have drones or robots that are delivering stuff, that you know, you have a person, in a car, having to go pick stuff up, you know, have all the packing costs at stores, and then you know, going to the customer's home. It's a fair amount of labor involved, even when you get it very, very efficient.
And I'm curious how you see that evolving over time, particularly since it seems with the pandemic, you know, we have sort of this forced, so to speak, adoption of home delivery of groceries. So, how do you, first of all do, I guess, do you generally agree with that overall premise? And to the extent that you do, how do you see this playing out as we get out of, you know, out of the pandemic and people start to work on other ways to get the cost down and the profitability up?
Kiri Masters
Yeah, I think that aggregating demand and fulfillment across multiple retailers, at least in the back end, is essential. You know, Fresh Direct, who I used to shop from living in New York, has been operating successfully for years with their model. And obviously they have their own, that, their own warehouses and own brands and things like that. So, that's one key.
I think that the retailers themselves, any strategic direction that they choose, whether that's to continue partnering with Instacart in its current model, or build their own technology, or maybe license some third party technology, they all have to look at store layouts and concepts like doc store, sorry, the micro warehousing and all these new paradigms of of store layouts and how items are picked. Because, if this, if you believe that this is here to stay, which I do, then that shopping experience for the customer walking into the store is not that great when there's a, there's an army of Fresh Direct gig workers running around like cutting, cutting you off in a line or whatever. It just doesn't, you can't serve two masters in the existing store layout. It's not optimized for professional shoppers. And the end consumer is not really pleased with the experience anymore, either. Those things have to change no matter which strategic direction a retailer chooses.
Steve Dennis
Do you have any concern that retailers will, I'm just guessing to a certain degree that a lot of, I don't want, say Instacart's success, but certainly the acceleration of their performance had to do with the dynamics of COVID, where, you know, customers were much more willing to try a home delivery and retail partners were much more willing to just try to make that happen to respond to demand and stay competitive. But, you know, what I worry about as we come out of this is that retailer start to say, you know, I don't love the profitability of this. So, either I'm going to, you know, raise my prices, which presumably will tamp down consumer demand, or I'm basically going to do things to try to encourage customers to come into the store. Because not only do I not like the economics of home delivery, particularly, but also this general idea that if I get you into the store, I'm going to sell you more things through impulse items and things like that. So it's kind of like merchant, I'm using this term loosely, but kind of merchandising your offering to higher profitability, when maybe you can kind of get away with that, because the pressures from COVID aren't so extreme. Does that make any sense to you? Or no?
Kiri Masters
Yeah, it does. And I will say that retailers have a choice right now. And there's a good spread of of approaches here, of whether they actually mark up their prices on Instacart to account for the take rate, Instacart's take rate.
So Costco, for example, one of the most successful retailers on Instacart does mark up all their prices accordingly. So you pay a premium to shop on Instacart for Costco, versus going to the store. So that is, and that's been their model, I think from, from the very beginning. Still successful on Instacart. So I think retail retailers do have a choice there, whether to eat that cost or to pass it on.
Yeah, it is a good question. I look at those surveys, those future behavior predictors of how, how likely are you to shop in a store in the future? I don't know. Like, those survey results really aren't worth the paper they're written on. We're terrible predictors of our future behavior. So, I think we don't really know. I will say that there's two demographics where I see Instacart, having great long longevity with and that is with seniors, and very young generations.
So, the seniors, Instacart launched a senior's shopping helpline where they will just give tech support to seniors shopping on the app. And just anecdotally, I know of a lot of people who have helped their parents or grandparents start shopping on Instacart. And they're not going to go back to go into a store. It's just a great solution for them.
And then the very young generations, I have a four-year-old, so he's not quite yet shopping online, but people who have teenagers tell me that teenagers just expect everything to arrive within two hours, and they wouldn't go into a grocery store. And you know, this is just a generational thing. So I think that there is a great use case at the older and younger end of the spectrum that's going to have great longevity for Instacart.
Michael LeBlanc
Well, the book is 'Instacart for CMOs', I imagine it's available and all the usual kind of places.
Last question for me, and then I'll hand it over to Steve to wrap things up. What's next for Instacart? It seems like we're at an intersection point. The grocery has had a huge tailwind with the pandemic and the shift of consumption. And, you know, has it accelerated grocery home delivery? Has it woken up grocers to 'boy a better get that curbside pickup going'? Or somewhere in between? What do you, what do you see? After it's a funny question, if you just said predictions aren't, intentions aren't worth the paper they're written on. But I'm gonna still ask you. What do you think's up next for Instacart? What do you seen the future?
Kiri Masters
So there's some speculation that Instacart could create a model where they actually sell their own products and open their own warehouses. That's been, there's some speculation out there around that. There is, there is, I think that is a path that they could go down. There's a company in the UK, where grocery deliveries more widely, widely used bit more mature.
Delivery Hero started life as like a Grub Hub, food delivery, food delivery and pivoted into groceries. And they rolled out their own stores, their own convenience stores called D Mart. So, they actually run two business models, their own stores, and the third party retailer relationships side by side, and they integrate into a front end together. So that that's interesting. And that could be a model that Instacart pursues, but I personally doubt that. I think like I said, those relationships that they've built up with the largest retailers is a massive asset. If they were to start competing with those partners, it would really turn, it would turn sour a lot of those relationships. So, I don't see them. them doing that. That's my hypothesis.
I see them going the enterprise, enterprise software route and developing the back end. And maybe some retailers will choose to come off the front end and just use Instacart tech on the back end. That, and Instacart could charge a lot of money for that enterprise software. So that's my, that's my prediction.
Steve Dennis
I guess we'll see how that plays out. Certainly, a lot going on in grocery a lot going on in the last mile delivery world. So, plenty to stay tuned to.
Well, thanks. Thanks so much for joining us Kiri. I would definitely recommend your book. I think what's, one of the things that's great about it is that it gives a good overall high level strategic perspective. But it is, as was said earlier, a playbook for folks that want to implement any kind of partnerships or marketing using the Instacart platform. So check it out. And thanks for joining us, Kiri.
Kiri Masters
Thank you, Steve. Thank you, Michael.
Michael LeBlanc
Alright, another week of 'Remarkable or Forgettable'. Steve, let's talk about, let's talk about LL Bean results.
Steve Dennis
Yeah, I mean, their results, I think were remarkable in a somewhat surprising way, because they actually ran a pretty good sales increase for the quarter. And they are for the year I guess, about, you know, 5%, which in the scheme of things is not amazing, but given how apparel has really struggled, you know, they happen to be into home goods and recreational goods and more casual stuff. So, I think that bodes well for them. And they've got a pretty good omni channel or harmonized presence. But yeah, record, record holiday sales and for 20 years, and they're also planning on paying their employees their first bonus in 10 years. So yeah, pretty good. Some people were surprised.
Michael LeBlanc
So let's talk about RH, in some ways, no surprise. And another way, there's someone who went against the current, so to speak, and opened up these, these massive stores, but the results are just blockbuster.
Steve Dennis
Well, as you know, I feature, talk about RH in my book. And particularly highlight them in the, the chapter on memorable. And, and yeah, they've gone in the opposite direction of building bigger stores, more elaborate stores and continuing to open stores. And they had a blockbuster quarter, both in terms of sales and earnings. And they're also doing some interesting things, in terms of getting into real estate development and these guest houses and expanding internationally. So they've got some pretty ambitious plans.
And I have said previously, that when I first heard about this strategy, because I was at a conference where Gary Friedman spoke six or seven years ago, and I thought he was nuts. And though at the time I didn't,
Michael LeBlanc
you weren't alone, and that you weren't alone in that.
Steve Dennis
No, but I mean, it really truly is a remarkable story, remarkable results. And they're, they're definitely taken, taking some risks in terms of taking the brand to the next level.
Michael LeBlanc
We'll talk about taking the brand to the next level Houston, we have a problem. Dallas, we have a problem. Bentonville, we have a problem. Some news out, Walmart's kind of brutal self-assessment, that, an article you're reading about their, their relative skill in e-commerce talks about that a bit?
Steve Dennis
Yeah, I'd encourage people to check this out. So, this internal presentation, I guess, called Project Glass is the name of their, their project got leaked. And it's a pretty brutal assessment of where they stand. The one phrase that jumped out to me was something like, you know, 'we fail our customers every day'. And it goes through a list of things that they do, you know, that they don't do, I guess, relative to Amazon. You know, I think it's remarkable to be that honest, particularly when your brand is big as Walmart. And you know, in a lot of respects, they've done quite a few things pretty well now that have
Michael LeBlanc
More well than, more well than falls short for sure. I mean, Doug McMillon, has done a great job with that shop. They take, they've taken some risks, and they brought in Mark Lore, and they bought stuff and they sold some stuff. But overall, I mean, your company that big, you've got to make, you got to do something really different to move it right? Talk, we'll talk about this cargo ships, but turning the ship like that, in any degree is is a big effort, right, it took a lot.
Steve Dennis
Yeah, and I think you can, you know, to me, what I really applaud them for is it would be pretty easy to rest on your laurels in a lot of ways. Because their sales results and earnings are pretty good. They're investing in stores are, as you said, experimented with a lot of stuff. But I think, you know, you've always got to be comparing yourself to where you need to get to, and particularly given how fast even is changing, as well. Yeah. And also, I think we're seeing as we, you know, we talked a little bit about past episodes, there's this grocery war brewing with Amazon as well as just you know, the ongoing competition that's been there anywhere. So I think, I think this is pretty, pretty interesting. And a lot of other brands should, should be willing to take a hard look at themselves.
Michael LeBlanc
So from Wall Street Journal article, and we probably see, saw this coming and we'll continue to talk about it. The retailers and landlords clashing on what exactly a sale is.
Steve Dennis
Yeah, I've actually been writing and speaking about this for a while, you know, some of this just relates to stuff we've covered a bunch of times, which is the reality that stores drive online and online drive store traffic. And, you know, certainly we, were seeing even more and more of this, this blurring. And when the role of the store does more than just transact in that physical store. And you know, for the most part, you have traffic going down to stores, and certainly many retailers losing volume in terms of stuff that's actually rung up. You can see how landlords want to say, 'Well, you know, we want to get paid for sales that the store is helping with but may not get booked'. So, yeah, I think this was inevitable. You know, I don't know how this is going to sort out. It's certainly generating a lot of buzz that makes it remarkable, but it's not so easy to implement.
Michael LeBlanc
Well, I think it's interesting on both the front side and the back sides. So on the front side, you know, you've got your Indochinos for example, men's wear, where it's really just a showcase. Right, the deal isn't, isn't done. And then you've got people, retailers, encouraging people to do their returns back to the stores. You could have negative sales in some stores.
Steve Dennis
Right, right. Yeah.
Michael LeBlanc
And if you do it by the accounting, right. So that's I think, I think it's an interesting, an interesting, interesting days ahead.
Speaking of interesting, would you get a vaccine if I gave you a doughnut?
Steve Dennis
Well, there's a lot of things I would do for doughnut so I'm not sure that I'm the best, the best person. But yeah, Krispy Kreme giving away doughnuts to people that are vaccinated. It, I think it's kind of funny that you know, on the one hand, we want to encourage you to take care of your health on the other hand, we were going to give you a doughnut every day. So, I mean, I guess remarkable in the sense that this is creating a lot of buzz you know, usually when I talk about remarkable it's more in the context of business strategy overall. But it's interesting I'm not sure I understand the economics of this but good marketing.
Michael LeBlanc
Well, I, it is, it is and I think they're gonna have to up their game though, as the months go by, maybe it's going to be a free ride on the glossing table, right? That you get to know,
Steve Dennis
I'm their
Michael LeBlanc
Grand prize. Grand Prize. We'll just, will put you on the glossing table
Steve Dennis
Sign me up.
Michael LeBlanc
And no kidding.
All right. Well, that's our latest edition of 'Remarkable or Forgettable'. Tune in again next week. All right, Steve, well another great episode. We're back from Australia, back to the North American shores for our next episode. But for now, take us home.
Steve Dennis
Well, if you like what you heard, please follow us on your favorite podcast platform so you can catch up with all of our great interviews and insights and new episodes will show up every week. Please take a minute to drop us that elusive five-star rating and tell a friend in the retail industry to check us out as well. I'm Steve Dennis, the expanded and completely revised second edition of my bestselling book 'Remarkable Retail: How to Win and Keep Customers in the Age of Disruption' is out in April. You can preorder your copy right now at Amazon, Indigo, bookshop.org or wherever books are sold.
Michael LeBlanc
And I'm Michael LeBlanc, Producer and Host of The Voice of Retail podcast and you can learn more about me on LinkedIn or www.meleblanc.co. All right. Have a safe weekend everyone and Steve, talk to you next week.
SUMMARY KEYWORDS
instacart, retailers, shoppers, brands, store, customers, book, remarkable, retail, shopping, kiri, grocery, amazon, delivery, bobsled, people, bit, steve, sided marketplace, profitability