“Everything can be digital at the end of the day,” says Wingstop CEO Charles Morrison. “We still take a lot of phone orders and a lot of people still walk. So every time somebody accesses us we want the opportunity to digitize that transaction. Why? Because the digital transaction tends to have almost a five-dollar higher average ticket and is more profitable for our franchisees which means a better return on investment and more new restaurants to grow on.”
We believe it’s a fantastic partnership with DoorDash. What they focus on is making merchants successful. As the merchant that’s exactly what we want. And they take care of the logistics. In our partnership, we’ve made sure that we are always working together to ensure that no matter how you access Wingstop, whether it be carryout or walk-in or through delivery, you’re going to get the same great experience. We believe they’re best positioned to provide that.
Everything can be digital at the end of the day. We still take a lot of phone orders and a lot of people still walk. So every time somebody accesses us we want the opportunity to digitize that transaction. Why? Because the digital transaction tends to have almost a five-dollar higher average ticket and is more profitable for our franchisees which means a better return on investment and more new restaurants to grow on. I think people spend more time with the menu (on digital). They get to know the menu. They add a couple of items on to that and they’re not as intimidated by the phone call and the rush that they see at the front counter.
Digital Technologies Create Efficiencies To Help Us Grow
We’ve been a socially active brand as it relates to social media for many years. We’ve become large enough and have scaled to national advertising. Our franchisees generously added one percent to the advertising spend so they now spend four percent to a national fund. That has been redeployed into fantastic new media and new creative which is really helping drive that same point 7.1% comp that you saw in the first quarter.
In our brand, we’re pretty well insulated (against labor shortages). We have a very small roster already, so in that small footprint, it doesn’t take a lot of people to operate a Wingstop. I don’t know that you’ll necessarily see us doing anything to remove the number of people in a restaurant. We do believe through digital technologies and further digitalization of our business that we can create efficiencies that create capacity that will help us to grow. This will take the pressure off the labor line.
Everything Can Be Digital At The End Of The Day, Says Wingstop CEO Charles Morrison
“We’re enabling what we call this new era of hospitality,” says Toast CEO Chris Comparato. “We’re investing heavily in R&D. This is a massive opportunity and the restaurant community is a massive market. The market is untapped and we’re in the early days of a major transformation across the entire industry. For us in many ways, we’re still getting started because we’re making massive investments in R&D across the whole spectrum.”
Chris Comparato, CEO of Toast, discusses how the company is continuing to invest in R&D and innovate as they disrupt the hospitality industry in an interview on Bloomberg Technology:
We’re Enabling a New Era of Hospitality
We’re going to do a lot with the money. It’s a nice capital raise ($250 million). We’ve been busy over the course of the past two years really trying to affect a lot of change across the restaurant community. We’re enabling what we call this new era of hospitality. We’re investing heavily in R&D. We look at all of the stakeholders, we look at the guests, we look at the employees, and we look at the owner-manager-operator. This is a massive opportunity and the restaurant community is a massive market. The market is untapped and we’re in the early days of a major transformation across the entire industry. For us in many ways, we’re still getting started because we’re making massive investments in R&D across the whole spectrum.
A good example of what we are doing is how do you get orders into the restaurant? In today’s consumer, personalization, and convenience environment, how does the restaurant get orders? Whether it’s a tool like Toast TakeOut which we piloted in Boston, which allows you to do mobile order ahead with your phone. Or possibly a kiosk or online ordering or a device called Toast Go which we released last year that allows the waitstaff to take orders at the table and turn tables faster. Toast brings (to restaurants) two things. It’s all about more revenue in the door and then operational efficiency.
Toast Growing North of 100 Percent Year-Over-Year
First and foremost we’re happy being private and putting investments to pilots and R&D and really breaking fruit to the future for the restaurant community. I’ve had a lot of friends who have gone public recently and we’re in no rush. I think it’s a milestone. We’re after building long-term shareholder value. When we look at the opportunity for us it’s to build a pillar company in Boston for the restaurant community that builds long-term investor value.
We’re growing north of a hundred percent year-over-year in terms of the customer base (and revenue). We’ve got over 1,500 employees. We’ve probably added a thousand employees in the past couple of years. We have an engineering center in Dublin but we’re still US-based in terms of the restaurants that we serve. We serve restaurants across the United States, whether it’s an enterprise like Jamba Juice or nationally acclaimed restaurant operators like Danny Meyer and Jose Andres. We’re all over the US in 30 markets but it’s still the early days.
Innovating Across the Entire Restaurant Value Chain
We look at the entire restaurant value chain and we’re trying to make their lives better. It’s hard to run a restaurant. This week we announced Toast Payroll and Team Management. A lot of restaurant operators are spending hours doing payroll every Friday. If we can give them their Friday’s back and streamline payroll so that they can get hours back on efficiency to spend more time with guests that’s what we’re doing. We launched that this week which is an exciting new venture for us. We’re going to continue to innovate across the entire restaurant value chain. This includes the back-office, front office, supply chain, whatever it is.
There are areas where we built and there are areas where we partner. I think it’s a space that’s dynamically changing. At the end of the day, we want to help transform the community and move the community forward. The Boston Market (where Toast is headquartered) is tremendous. There is sort of two sides to the market. You’ve got this amazing supply chain of talent with MIT, BU, UMass, and Harvard. There is plenty of talent. Then you’ve got on the other side of the market these companies that are transforming industries like Wayfair, CarGurus, HubSpot, and Toast. It’s an amazing market for us to thrive in and it’s an awesome restaurant community.
We feel like we’re enabling the community to thrive. A lot of the restaurants that are running Toast are adding workforce. Because we’re making their jobs easier they can spend more time with guests, more time cooking, and more time managing the operations. We see a lot of restaurants that are thriving and adding labor and we’re trying to make it easier for them.
We’re Enabling a New Era of Hospitality, Says Toast CEO Chris Comparato
“We dropped back several years ago and started thinking about building the Target of the future,” says Target CEO Brian Cornell. “It really started with an investment in understanding the consumer and really understanding what they were looking for and how to build the capabilities starting with data science to really guide us through that journey. Whether that’s technology or supply chain capabilities, product design, or our focus on execution at the store level, data and analytics have been important guideposts for us as we’ve gone through this journey.”
Brian Cornell, CEO of Target, discusses the details of how the company is building the Target of the future in an interview at the Stanford Graduate School of Business:
Reimagining Stores and Investment in Technology is Paying Off
Target’s (current success) is really a combination of a number of things that we’ve been working on for several years now. If I go back to February of 2017 we laid out a three-year vision for the company. We said we’re going to invest billions of dollars. At that point, I said $7 billion dollars over a three year period to invest in reimagining our stores, in building new smaller stores and urban centers and on college campuses, reinvest in our brands, invest in technology and fulfillment capabilities, and make a big investment in our people.
The success we’re seeing right now is really a combination of all those elements starting to mature. We’re executing at scale and they’re all starting to work together. That’s driving for us great top-line growth, market share gains, and importantly more traffic in our stores and visits to our site.
In Most Cases Shopping Starts With the Mobile Phone
I actually think blend (of digital and physical) is the right term. I think from a consumer standpoint they’ve really lost sight of whether they’re shopping in a physical environment or a digital environment. In most cases, their shopping starts with that mobile phone in their hands, that digital device. It’s how they decide where they’re going to shop and what they’re looking for. If you went to one of our Target stores this afternoon I guarantee you we’d find consumers with a phone in their hand, they’d be looking at their latest Pinterest, they’d be checking things on their favorite digital site, and they’d have their shopping list there.
That device really guides them through the shopping experience. I think more and more there’s a blurring and a blending that’s taking place and it’s a combination of both. The consumer today is enjoying the fact that shopping has become really easy. They get the best of both. They get a physical experience when they want it and if they don’t have time they can shop from their desk or from their classroom. They’re constantly in touch and we’ve made it really easy now for them to interface with our brand on their own terms.
Building the Target of the Future
We dropped back several years ago and started thinking about building the Target of the future. It really started with an investment in understanding the consumer and really understanding what they were looking for and how to build the capabilities starting with data science to really guide us through that journey. I can talk a lot about strategy, but the other thing that we’ve recognized is how important it is to have the right capabilities in place. Whether that’s technology or supply chain capabilities, product design, or our focus on execution at the store level, data and analytics have been important guideposts for us as we’ve gone through this journey.
We’ve been fortunate in that we’ve recruited quite a few Stanford grads. I think what’s attracting them to our business is the richness of our data. The fact that on an average week we get 30 million consumers shopping our stores and a similar number going to Target.com. We have all this rich data and we understand where consumers are shopping, what they’re looking for, and I think they’ve been really intrigued by the ability to take that data and help us build a future.
The Consumer is Looking For a Unique Personalized Experience
I’ve certainly seen this trend towards personalization and localization. If I think about the changes in consumer packaged goods, in some cases those big brands that you and I grew up with, well they’ve been replaced by smaller local niche brands that we didn’t see when we grew up and they’re being regionalized across the country. I think the consumer today is looking for that unique personalized experience, whether they’re shopping a Target store or they’re walking through a local store right here on the Stanford campus.
I think I walked in recognizing the importance of a clear strategy for an organization. But I’ve come to realize just how important culture is, a clear purpose, and importantly ensuring that our strategy is supported by great capabilities and the importance of team. I think (as we look toward the future) we’ll still be true to the purpose we have today. It’s really focused on bringing a little bit of joy to all the families we serve each and every week and really enhancing their everyday life. I think that focus on families, that connection we have today with moms with kids with families across the country, will be as true in the future as it is today.
“The secret of these business models or products is not just going beyond on products. Think about your customers,” says Zuora CEO Tien Tzuo. Zuora helps companies implement subscription business models into their existing products and services using their cloud-based software. They help their customers which include OTT (Over the Top) content providers, tech companies, and even traditional consumer brands like Fender Guitars enter the subscription economy.
Tien Tzuo, Founder and CEO of Zuora, discusses how even the most traditional of companies can successfully implement a subscription business model in an interview on Fox Business:
This is the Early Days of OTT
It seems to easy as an end user. You just pick up your phone, fire up your browser, and you start using these (subscription) services. A lot of things have to happen behind the scenes. You have to check your credit card, remember to send out the monthly bill, figure out how much revenue you should recognize, or allow your customers to upgrade to a family plan or a better bundle. We take on all that so that companies can focus on what they do best which is providing a great service and a great experience for their customers.
I think people are missing the big picture which that OTT really today only represents 5% of the $500 billion spent on TV. This is really the very early days and there is probably room for many vendors to thrive. If you think about the cell phone market there’s AT&T, Verizon, T-Mobile, and Sprint. It’s true that they use pricing packaging to compete with each other but they also have differentiated products in the marketplace.
Think About Your Customers
The secret of these business models or products is not just going beyond (and reinventing) products. Think about your customers. The great story about Fender (Guitars) is that Fender realized their customers obviously wanted to be musicians, but it was hard. Over 90% of their customers actually stopped playing the guitar after 90 days. So they asked, “How do we help our customers over the hump?”
How to Play Guitar, by Fender
If they are playing them well they are going to play for life and they’re going to buy a lot more guitars, a lot more amps, a lot more picks. They launched Fender Play to really teach their customers for a simple $20 a month how to play the guitar. They are seeing enormous success in the customers that actually sign up for Fender Play in sticking with it. So stick with the guitar and you can become really good. It’s never too late.
The Secret to Subscription Business Models is to Think About Your Customers – Zuora CEO
For businesses, especially those operating heavily within E-commerce, what do truly sustainable solutions look like? From open lines of communication to central intelligence systems, as the pressure in the shipping and logistics departments mounts, retailers have more to focus on than just creating quality goods and services. Artificial intelligence is changing the game for sustainability in supply chains.
In 2018 alone, eight out of ten customers were unlikely to shop again with a retailer after a poor delivery experience. Setting aside dissatisfaction of products, poor quality, or too high prices, consumer focus on fast and reliable delivery is quickly becoming a top priority. Between 2016 and 2017, E-commerce sales themselves grew by 16%, express shipping air freight volume grew by 9%, and US imports increased 5%. As a result, companies in the US are spending a total of $1.5 trillion on shipping and logistics, and yet, it still may not be enough.
Amazon shipping options have undoubtedly raised the bar for both consumer expectations and E-commerce as a whole. Free two-day shipping, for its millions of customers, is well worth the yearly Prime subscription and keeps shoppers localized within Amazon’s marketplace. Yet, three in four consumers would choose another retailer over Amazon if that retailer offered better delivery options – no small feat.
Perhaps more so than any other department, shipping and logistics come with plenty of unique complications and problematic inefficiencies. Too many inefficiencies and the consumer base is likely to notice. For late and unsatisfactory deliveries 90% of consumers expect a full refund; additionally, their expectations range from notifications, flexible delivery windows, and real-time tracking visibility. This can be tricky to manage for businesses, especially when juggling the existing inefficiencies of transportation of tools, equipment, and even people. Over 2018, empty trucks traveling accounted for 16% of total mileage used by just one US company and unscheduled vehicle or equipment repairs made up 65% of all maintenance costs.
Businesses with huge logistical demands need better solutions than just traditional operations efficiency standards. Now that customer experience and satisfaction is tied so deeply in with shipping and delivery, new standards are required – and smart suppliers are looking to AI. A 2017 study among retailers revealed that 71% of those retailers surveyed found that sharing logistical data like shipment, order, and delivery data, among all departments, was an important step for their business.
While AI steps into the service industry, its presence in the world of e-commerce is more symbiotic and stabilizing. With AI, retailers and manufacturers can have opportunities to aggregate data from all parts of operations, even past data, to help build better and longer lasting solutions. In more board terms, AI is able to predict market demand and shift to help recommend solutions for adjusting inventory and avoiding excess, passing efficiency on to the customer.
When the success of a business hangs in the balance of consumer satisfaction, and consumer satisfaction lies within shipping and delivery quality, smart business leaders make proactive move to streamline operations. Learn more about how AI is making sustainability possible.
“Especially today, younger consumers want to connect emotionally with brands,” says Manny Chirico, CEO of apparel company PVH, which owns many lifestyle brands including Calvin Klein and Tommy Hilfiger. “They don’t want to just aspire for your brand looking down the runway, they want to be part of the life of the brand. I think Tommy Hilfiger does it well.”
Manny Chirico, CEO of apparel company PVH, which owns many lifestyle brands including Calvin Klein and Tommy Hilfiger, discusses how the company has turned around by focusing on ecommerce, technology, and connecting with young consumers. He was interviewed on CNBC:
Consumer Experience is Critical
You have to be willing to make the investment. I think we really have done it (turned around the company), from not only a brand marketing point of view, but investing in all the new technologies and investing in the ecommerce platforms that really will drive the business going forward. Our stores are highly profitable and we need to continue to invest in those stores. The consumer experience is critical and we’re making connections with a younger and younger consumer.
We’re all dealing with the challenge of the distribution models changing, but fundamentally we’ve always been a multi-channel retailer. We have big businesses in brick and mortar, both direct-to-consumer in our own stores and through our key wholesale partners like Macy’s here in the US or Galeries Lafayette in Europe. Those key players we continue to invest back into those platforms.
Younger Consumers Want To Connect Emotionally with Brands
The challenge with that high-end collector fashion business is are you connecting with a younger consumer today and how do you make your investments as you as you go forward? I think it needs to be more balanced than it’s been. Especially today, younger consumers want to connect emotionally with brands. They don’t want to just aspire for your brand looking down the runway, they want to be part of the life of the brand.
I think Tommy (Hilfiger) does it well. We just have a fashion show in Paris with Tommy selling product immediately after that trying to connect with the consumer at more affordable price points than what you would see from the luxury point of view. That’s how you build big businesses. We’re not trying to build niche businesses selling just $2,000 men’s suits or evening gowns. We’re really about building big lifestyle businesses.
Levi Strauss began trading on the New York Stock Exchange this morning under the ticker symbol ‘LEVI.’ By mid-afternoon, the stock was at $22.66, substantially higher than the price offered to institutional investors. It’s clear that investors believe that Levi’s can leverage technology and innovation to successfully compete online and in brick and mortar stores.
Levi Strauss Soars in NYSE Debut
Charles Bergh, CEO of Levi Strauss, discusses how technology and innovation are driving increased sales and market share in an interview with CNBC coinciding with their IPO:
We Are Denim and We’re the Market Leader Globally
We are denim and we’re the market leader globally. A lot of people as we were doing the (IPO) roadshow said aren’t you guys just riding the denim wave? We’re creating the denim wave. We’ve been driving the category with innovation across our men’s business and our women’s business. We’ve expanded to other categories. Last year we finished with 14 percent growth coming off of 8 percent growth the prior year. The business is really humming right now.
I believe this is sustainable for the long term. Maybe not double digits forever. But we’ve got clear runway for growth across the categories that we’re competing in. We’re building share in our core categories and expanding to new categories. Last fiscal year, when we finished the year our growth was really broad-based. If you looked at it in the categories where we competed we grew every single category. If you looked at it by geography we grew every single geography. If you look at it by channel we grew across wholesale, including US wholesale, which is a little bit of a melting iceberg right now. We grew in our own brick-and-mortar and ecommerce. It was very broad-based growth last year and we’re confident we can continue that.
We Have Built a Very Big Platform for Big Data
First of all, to be successful it does come down to strong brands. Consumers at the end of the day love an emotional attachment with their brand. We’ve recreated that that love for Levi’s. We have built a very big platform for big data. In fact just a couple of weeks ago we announced that we’ve hired a head of advanced analytics and machine learning who will sit on the executive team and report directly to me. We are mining the data that we do collect and really turning it into revenue.
Our strategies are working and one of the key strategic choices that we made seven years ago, shortly after I joined, was to become a leading world-class omnichannel retailer and it is working. The mix has shifted to omnichannel. When I joined the company it was about 20 percent of our business. Today, it’s almost a third. It is faster growing than our wholesale business and we’re continuing to invest in it. Most of our capital investment is going into retail and ecommerce and knitting that seamless consumer experience together.
Implemented New Instance of SAP and Investing in RFID
It (IPO funds) is going to go into continued investment in building out our omnichannel. So both brick-and-mortar retail as well as our ecommerce business and then knitting it together with technology. For example, we’re implementing a new instance of SAP and investing in RFID (radio frequency identification). We’ve implemented RFID across our business in the US and UK and that’s actually really turning into money. Every one of the products in our store is tagged with RFID.
I’ve actually had this experience happen to me myself in our new Times Square store. There was an item I wanted to buy and they didn’t have it in my size. A stylist came over and scanned the tag and she could see that my size was available in the back room. Just two minutes later I was in the dressing room trying it on. A year ago before our RFID that would have been a lost sale. That just wouldn’t have happened. It gives us instant clear visibility to the inventory in our store, both in front of house as well as back of house.
Levi’s Driving Market Share Through Product Innovation
Back in 2013 and 2014, the headlines were the death of denim. It was all about athletic tights and Lululemon tights. It became a throwdown moment for us as a company. We have an innovation center a couple of blocks from our office. We brought our suppliers, the mills that make denim for us, into that innovation center. We understood what women were really telling us by wearing tights. That used to be a denim occasion. They wanted soft stretchy comfortable material that made them look great and gave them confidence. That was what was driving that conversion. So we innovated around soft stretchy comfortable denim which we can now do. We developed proprietary four-way stretch so that women don’t get baggy knees, which is their biggest dissatisfier.
We relaunched our business in the middle of 2015 and we’ve grown 14 quarters in a row and in the last eight quarters at double-digit rates. It has been a huge part of our growth. We were under $800 million just on women’s bottoms about three years ago. We’re over a billion dollars today. We are number one globally with a nine percent market share, but we’re not number one in a number of markets including right here in the US. So I really do believe we can continue to grow at an accelerated rate on our women’s business. There are lots of what I like to call share donors out there for us to build share while we’re building the category.
We haven’t seen any (backlash to being an American brand). This brand stands for everything good about America. Freedom, democracy, and allowing people to express themselves. Authentic self-expression is what the Levi’s brand is all about. We’ve not seen any backlash. None. We think there are lots of opportunities still for us. I am not worried at all about denim. We are denim and we’ll continue to drive this category through great innovation and marketing that connects with consumers and sends them into our stores.
Technology and Innovation Powering Levi Strauss Growth Strategy
“You will see the continuous expansion over the next year into many different categories,” says Rent the Runway CEO Jennifer Hyman. The company just raised additional funds at a $1 billion valuation. “Anything that you do not use every single day, we want to make it fiscally irresponsible for someone to not have a subscription to Rent the Runway. We’re trying to build the Amazon Prime of rental.”
Jennifer Hyman, CEO of Rent the Runway, discusses in an interview on CNBC how her company benefits from the growing sharing economy and how ultimately she envisions Rent the Runway becoming the Amazon Prime of rental:
We Benefit From the Advancement in the Sharing Economy
It’s been 10 years since we’ve been working hard to pioneer this new form of dynamic ownership. Ten years ago we were not a darling of the industry and really had to partner with designers to show them that this was an entirely new customer base for them and a new revenue stream. This is just how young people are thinking about ownership across the board. I actually think we benefit from the advancements in the sharing economy. If you think about how this concept of dynamic ownership where we have unlimited choice and the ability to use whatever product we want whenever we want it, our digital worlds have already moved there.
That’s how we consume entertainment. That’s how we consume music. The idea that you would have that closet in the cloud for the physical world and that form of dynamic ownership, the Millennial Generation Z consumer is so ready to adopt this behavior. That’s what we’ve seen since we launched our subscription, just this dramatic growth and acceleration, not only in how many users we have but in how frequently they use the product. They’re using it 120 days of the year with the unlimited subscription, which is now 70 percent of our revenue.
Dynamic Ownership Applies to the Closet, the Home, and Beyond
Think about how frequently millennials are moving and how your home has become this new bastion of self-expression. Your home used to be a private space and now because of social media, it’s as public as you taking photos of yourself every single day. So the ability to continuously dynamically change your home and have new items arriving we really think that this idea of dynamic ownership applies to the closet, the home, and beyond.
Think about all the things that you don’t have to use every single day and bringing that into the physical world and think about the sustainability of this as well. The millennial and younger customer really cares about the fact that there’s a huge amount of waste. Over 80 percent of the closet is not used regularly. So to create a new contract with the customer where she could have the variety that she wants but she doesn’t have to accumulate all of this stuff that she doesn’t use. You couple that with the fact that this younger generation is living in cities where you don’t even have the space to house all of the extra stuff that you might have put in your garage.
We’re Trying to Build the Amazon Prime of Rental
It (revenue) really depends on the item. That metric changes every year based on our cost to serve, which goes down every year. It also matters what cost we procure the inventory at. We started a model last year which is a platform where brands are giving this inventory on consignment and we actually are revenue sharing with them on that inventory. It’s our own version of fulfilled by Amazon and it’s now a new revenue monetization stream for the 600 brands that we work with.
You will see the continuous expansion over the next year into many different categories. Anything that you do not use every single day, we want to make it fiscally irresponsible for someone to not have a subscription to Rent the Runway. We’re trying to build the Amazon Prime of rental. Rent the Runway is primarily a logistics company. What we really do is we restore physical goods to perfect condition before we send them out to the next customer. We now know all of these different data points about any given fabric, how to restore it to perfect condition and how to maximize the turns while it still looks brand-new.
Direct to Consumer, or DTC, is a fundamental platform shift, according to former AOL and Verizon digital properties CEO Tim Armstrong. “There have been a couple times in my career where there has been what is basically a fundamental platform shift,” noted Armstrong. “I felt like direct-to-consumer was something that was going to be a platform shift. Not for probably the obvious reasons, but some of the reasons that were less obvious, but things that I thought were important for the future.”
Tim Armstrong, former AOL and Verizon Oath CEO and current founder and CEO of The DTX Company, discusses how direct to consumer (DTC) ecommerce businesses represent a “fundamental platform shift,” in an interview with Recode’s Kara Swisher and Jason Del Rey at An Evening with Code Commerce in Las Vegas:
Direct to Consumer is a Fundamental Platform Shift
About a year and a half ago I started spending a lot more time just on where the underlying infrastructure in the world was changing around the internet and mobile and all the things that we’ve talked about for years. One of the things that stood out to me was there’s been a couple times in my career where there has been what is basically a fundamental platform shift. I felt like direct-to-consumer was something that was going to be a platform shift. Not for probably the obvious reasons, but some of the reasons that were less obvious, but things that I thought were important for the future.
One was data management, just in terms of things like GDPR and similar things that were happening. I think the power and data is going to shift back more towards the consumer side over the next 10 or 20 years. I thought that would fuel direct to consumer. The second is that the product development cycles that were happening at the direct the consumer companies were much faster and much deeper than what was happening in the normal channels of product development. I think that’s another thing that over a 5, 10, 15, 20 year period these companies are going to have a real advantage in terms of how they develop products and distribute them.
Customer Communication: Two Way or No Way
The third thing was just the two-way communication. At DTX we have a growing team, but one of the things we say is two way or no way. Two-way communication with the customer having a direct relationship with companies. The last thing is how the relationships between consumers and companies are going to change. This seems like a really important trend and probably there’s a really big opportunity here. There may not be but that that’s what got me interested in it.
What we’re doing right now is really kind of two simple things. One is we’re putting investments directly into DTC companies and we’ve done a number of those and we’ll do a few more. The second thing we’re doing is spending a lot of time on an acronym that I hear all the time now which is CAC, customer acquisition cost. Really, on the operating side of the business what we’re doing is not CAC, it’s CRAC, which is an unfortunate acronym, but it’s customer revenue and acquisition cost. Having the balance on the equation of those two things we’re going to be testing things in 2019, some experiences and and other things that will hopefully put the R back in the CAC equation.
DTC Might Re-Engineer the Entire Way Commerce is Done
All of my experiences and basically all the stuff I did on the media side was all two-way relationships. The more time I started to think about really what happened was the reason I thought about DTC’s. I started to go back to those memories based on meeting a lot of the DTC founders and of coaching CEOs for DTC founders. I started to think about things like GDPR and some of the things that are happening underneath the surface that I think is going to change long term. I thought wow, this might actually re-engineer the entire way commerce is done and this is a really interesting opportunity.
There are a bunch of spaces online now you can look at where people are piling money and where there’s probably over investment. But DTC overall, if you went product by product, category by category, industry by industry, in DTC, there are so many companies that you’ve never heard of and rightly so. The Casper’s, the Warby Parker’s, those are amazing companies and they get a ton of notoriety. There are also about 10,000 other categories. They don’t have ten people, they might have one or two, but they’re doing interesting things in them.
People ask us all the time, is there a DTC ceiling, these companies can only get so big? That may be true but I don’t think it’s true. What will happen is the aggregate of all these things together. If you have ten thousand DTC brands and they’re $10 million or $50 million or $500 million they may not have to look like Google and Facebook right now, but when you add up all of them together over time and what’s likely to happen with a condensing of the market in the next 10 or 20 years (it is significant).
DTC Could Be an Amazing Transformation
There are two things that stand out to me. One is every major press article around traditional commerce tends to be negative. Not all the time, but there’s so much angst around what’s happening in retail overall. A lot of it is deserved, but there are a lot of interesting things happening in traditional retail. The second one is the DTC categories that are super hot, the four or five super hot categories, get 90 percent of the coverage and press. What we’re seeing and we have people coming in offices all day doing DTC and there’s just an amazing amount of ingenuity, invention, and innovation happening in different categories.
I think again it’s one of these things you’re going to wake up 5, 7, 10, or 15 years from now and say, wow, this was like a really amazing transformation. It’s going to be for the reasons that these companies all talk to their consumers all the time. The amount of product innovation that’s happening is truly tremendous. If you take the Beauty category or any category and you dig into all of the DTC brands and micro categories within, if you went to a Procter & Gamble or Unilever and look at all of their products, each one of their products has multiple DTC companies trying to innovate that space.
I think you’ll end up seeing the recreation of really large consolidated companies. It may not happen for years, but I think it will happen. The reason is not because they were cheaper than what happens in the Unilever Procter & Gamble it’s because the product innovation is hard. Having spent so much time now with DTC companies, the amount of product innovation that happens at that those companies with direct consumer interactions seems to me to be deeper and faster than it is at most other traditional companies.
The recent USPS shipping structure changes will increase retailers shipping costs, says Rakuten CEO Mike Manzione. What Rakuten does is help retailers offset these increases by utilizing a network of order fulfillment centers, thereby controlling shipping costs while decreasing shipping times. “With the change to zone-based pricing for First Class Packages, all clients must reconsider how to locate their product closer to their customers,” says Manzione.
Retailers Must Locate Products Closer to Customers
Our continued expansion into major metropolitan markets is a commitment to our clients. We’re creating a network that provides our clients a greater choice and flexibility that aligns their customer base with their product. With the change to zone-based pricing for First Class Packages, all clients must reconsider how to locate their product closer to their customers.
By 2021, worldwide retail e-commerce sales are projected to be 4.9 trillion dollars (USD). At the same time, customers are demanding shorter shipping timelines. RSL is uniquely positioned as an industry leader with our nationwide network of fulfillment centers. With our increased major metropolitan presence, RSL will reduce ground transit delivery to within one day.
RSL To Open 6 New Ecommerce Fulfillment Centers
Houston and Los Angeles will be our first 2019 expansion markets. The new Houston facility will be strategic for our clients importing product and materials from all over the world – including Brazil and Germany. Los Angeles will be strategically located near the Port of Los Angeles, a major container port. The Los Angeles location will be instrumental for our clients that import product from Asia.
As a leader in the order fulfillment industry, RSL will also be employing state-of-the-art technology in all six new facilities. In 2018, RSL began deploying ‘order fulfillment robots’, developed by inVia Robotics, in its facilities nationwide and will be expanding with inVia’s automation technology in the new warehouses.
About Rakuten Super Logistics
RSL Fulfillment Centers have been carefully managed from the ground up, to create unique, high-velocity operations:
Maintain complete control of your fulfillment with a cloud-based fulfillment management system.
Save on shipping costs and expedite shipment times with the 2-Day Delivery Network.
Improve customer satisfaction and earn repeat business from shoppers.
Focus on your business by partnering with the industry leader in eCommerce order fulfillment.
The demise of many retail chains is due to the rise of the internet and the inability of some retailers to keep up, says long-time retail executive Gerald Storch. “The proximate cause of the demise of chains like Charlotte Russe, Gymboree, Payless, Toys R Us, and Sears is the rise of the internet and their inability to keep up that environment,” said Storch. “It’s the decline in physical traffic to bricks and mortar stores and the mall.”
Retail Comp Store Sales Up 6 Percent During Holiday
Retail sales have been very strong this holiday. Of course, there are winners and losers. The winners are the people who are doing it right, who are mastering the internet and who are driving value to the customer. You see 4.2 percent out of Walmart, almost 6 percent out of Target, over 7 percent out of Costco, and about 18 percent in the US out of Amazon.
I put out an index called the Storch Advisors Index and the volume weighted comp store sales gain of major chains in the US was 6 percent for the holiday season. Of course, there were some poor performers but that’s because they are not keeping up with the consumer. Whether it’s JC Penny, Sears, Macy’s, Kohls, some of those are becoming yesterdays.
Gov. Report Showing Retail Sales Down is Absurd
I know the folks at the government work hard to collect that data but I think there’s something missing there. The world has changed. First of all the internet has happened and I think that makes a big difference. There is no way, if you look at those numbers it says the internet was down in December. Only a report from Washington could say that. That’s ridiculous. It says the internet underperformed department stores for December. Absolutely absurd.
Why can that be true? Actually, the raw data said that sales were up about 9 percent in December. But then they applied a negative 10 percent seasonality discount because it was December. I’m not sure that discount factor was correct. Among other things, both Cyber Monday and Black Friday fell in November this year and they were huge as we saw by all accounts. There is something a little wonky about that report. I choose to put it on the side and say it’s not typical about what’s really going on in retail right now.
Retail Demise Due to Rise of the Internet and Inability to Keep Up
The proximate cause of the demise of chains like Charlotte Russe, Gymboree, Payless, Toys R Us, and Sears is the rise of the internet and their inability to keep up that environment. It’s the decline in physical traffic to bricks and mortar stores and the mall. The origin though comes down to the fact that all of those companies have one thing in common, hedge funds and private equity put huge leverage on those businesses.
So at a time when the world changed and the internet happened, they had to invest huge sums in the internet and they had to make their stores more beautiful than ever. You can only do that with money. All these firms were leveraged right before, bang, this retail apocalypse happened. They had no money to make any difference. It didn’t matter if you had the best management in the world. The management at Charlotte Russe is pretty damn good. But they couldn’t do anything about it because they didn’t have the money to spend. Walmart did have the money to spend. They’ve been spending it and that you are starting to see in the results.
Walmart and Amazon Battle it Out
You have Walmart buying a lot these ecommerce companies to get stronger in ecommerce. Then you have Amazon buying the bricks and mortar. Why did they do that? One reason. To keep up with Walmart in grocery. Grocery is the ultimate perishable, food. It has a lot of waste. Grocery is already around the corner from everyone’s homes. You have to ship them from the stores. Walmart has the stores to do it and they are proving it now. Groceries is one of their best performers in the latest quarter.
Amazon was looking at how do we beat Walmart in grocery? Grocery is a huge market and one of the last ones that Amazon hasn’t conquered. They thought, well, we could try to ship it from wholesalers and centralized locations. They started that way and it does not work. So they bought Whole Foods so they could be around the corner from people’s homes. That’s why they are expanding Whole Foods. They may be the only grocer in the country that is adding locations, all so they can ship to your home.
The real secret to Venmo is that it’s not just a payment transaction, it’s really a social experience, says PayPal CEO Dan Schulman. “It really is tying into this desire in the millennial generation to tie into your social network,” noted Schulman. “It’s really a social experience. You do a payment, you tag it, you put an emoji next to it, you share it with your friends, and they see what you’re doing. It’s exploded.”
Dan Schulman, CEO of PayPal, discussed PayPal’s fast-growing social payment platform Venmo in an interview on CNBC:
The Real Secret to Venmo is the Social Experience
Venmo grew at 80 percent year-over-year in terms of its volume process. This year we will process over a $100 billion on the Venmo platform. The real secret to Venmo is that it’s not just a payment transaction. It really is tying into this desire in the millennial generation to tie into your social network. It’s really a social experience. You do a payment, you tag it, you put an emoji next to it, you share it with your friends, and they see what you’re doing. It’s exploded.
We’re adding more and more services to that like enabling you to use Venmo to buy things at merchants, to take money off instantaneously, and to have a debit card associated with your Vemma account. That’s allowing us to also monetize Venmo. We’re really seeing a tremendous turn in our ability to take that business model and turned it into a very profitable one for us over the medium to long term.
We exited last year at an approximately $200 million run rate for Venmo. That’s practically up from nothing twelve months ago. It’s obviously hitting an inflection point in terms of its revenues. But in terms of profitability people shouldn’t expect it to be profitable in the next one to two quarters. My view on Venmo is it’s an incredibly precious asset for us. We ought to keep investing in it, adding more services to it, continue to monetize it, and see the revenue start to scale quite nicely. Eventually, that will lead to profitability, but I wouldn’t predict exactly what quarter we will turn profitable on that.
Peer to Peer Payments Are Exploding
I don’t think it’s unfair at all that the banks partnered to create Zelle. That’s the way of the world that companies are coming together and sharing platforms. We share our platform with other banks and financial institutions as well. P2P or peer-to-peer payments is exploding in the market. It’s a multi-hundred billion dollar marketplace. This will definitely not be a winner-take-all.
The difference between a Venmo and a Zelle is pretty stark. On average a Zelle transaction is $250. The average Venmo transaction is about $50. The average Zelle transaction happens about once a month. Venmo happens four or five times a week. It’s a very different market and I think both will both will grow. We’re seeing all-time record net new actives coming into Venmo. The amount we’re processing is accelerating. I think the two will live side by side and it won’t be a winner-take-all.
This is a $100 Trillion Market
Asia is one of our fastest growing regions in the world. It has been for quite some time. That’s the thing about digital payments. It’s a great industry. It could be you know a $100 trillion market. That’s the total addressable market we’re playing in. We may have one to two percent share of that market today. Every region of the world is one that we can expand in, but every region of the world today, almost equally, is growing at a double-digit pace for us. I’m quite pleased with our progress in Asia but I think we can do so much more there still.
India is one very large opportunity and we’re gaining traction there. We launched domestically in India about a year ago and I’m really pleased with the traction we’re getting. You look at Japan, Indonesia, China, and they’re all great opportunities for us including other markets there.
With the future of retail we have crossed over the demarcation line, says Walter Robb, the former co-CEO of Whole Foods. “We’re not going back to the old retail,” said Robb. “It’s just not going to happen. That’s the combination of digital and physical. We’re in what I would call new retail, which is the integration.”
From where I sit the customer is doing pretty well. They’re spending. They’re pretty strong. There was a lot of pessimism at the back half of last year that was reflected in some of the stock prices, but I think that was overblown. We’re going to see a customer that’s doing pretty well this year in 2019 and might surprise a little bit to the upside. That being said, traditional retail models are under pressure. The customer is spending their dollars in so many different ways and places than they could before. You used to just open up four walls and open a store and now the customer has so many more options.
We do know that in the United States we’re about 24 square feet of retail space per capita and that’s two and a half times more than any other industrialized country. We have too much space so there’s going to be a winnowing out that’s going to happen here. There’s going to be winners and losers and we’re already seeing that. In 2019, I think that continues, but I do think that we’re in the second half of that. What we’re actually seeing that the mall is beginning to switch over and putting in exciting new uses and we’re seeing retail stores start to open again.
We Are Not Going Back to Old Retail
With the future of retail, we have crossed over the demarcation line. We’re not going back to the old retail. It’s just not going to happen. That’s the combination of digital and physical. You’re seeing the digital retailers, the Allbirds, the Warby Parker’s, come out and say, alright we’re going to open physical stores because we realize our customers want to experience our brand and be with us in that way. They’re bringing new ideas to that presentation of retail, which is pretty exciting.
At the same time, you’re seeing physical retailers adapt to digital ways. Take a look at Target and how they’ve employed all the new tools that they have for the customers, in-store apps and those sorts of things. You’re seeing a combination of these two. In some cases it’s adolescent and in some case it’s more mature, but we are not going back to just the simple form retailer. We’re in what I would call new retail, which is the integration.
The edge of which is actually in China with a supermarket called Hema from Alibaba, which is which is simply fantastic. It’s integrated on the back end and on the front end. I think you’re seeing retailers say, we’ve adapted to the age of Amazon and we understand this is how customers want to shop. We’re seeing a whole new generation of businesses and entrepreneurs say, I’m going to bring the customer this fusion of digital and physical in a way that’s really exciting and really compelling. We’re not going back. I opened my first store in 1978 but that’s just not as easy to do anymore because you have to have that the tools to really understand your customer personally. I think it’s pretty exciting to see what’s happening.
Physical and Digital Retailers Need Each Other
The business model on the last mile is very challenging unless you’re connected into a physical store. If you just out there floating without a connection to physical retail those have not proven to be sustainable. I think it’s clear to me that the customer wants that choice. I think the data is very clear that they want both. They’re not going to give up physical stores and that’s why you’re seeing these digital and physical retailers. They need each other and they need both parts of that to make the thing actually compelling for the customer.
I think there’ll be a shakeout. You seem some consolidation already, but the most interesting combinations are where the physical retailer buys the digital, where Target buys Shipt and where Walmart buys Flipkart or whatever you see around the world, realizing the combination is the most powerful. That will be the most sustainable from a business model perspective.
We Are Not Going Back to Old Retail, Says Walter Robb, former co-CEO of Whole Foods
The CEO of Geek+ Robotics Robotics, a China-based company, says they don’t see any strong competition outside of China and this includes the United States. “We’ve already entered Japan, Europe, Australia, and the United States and we are seeing a big demand for robotics and automation,” said Zheng Yong. “We almost cannot see any strong competitor outside of China.”
We think the market potential is quite high. We hope in the next four years we can deliver 20,000 to 50,000 robots per year. Our customers come from two directions. One is the retail companies including ecommerce. The second direction is the manufacturing companies.
There is very strong competition in China with lots of strong robotics companies that are growing very fast. We are not only starting automation solutions with robots to our customers, but we also provide logistic service to our customers. We own a lot of operational experiences and we combine those experiences inside our system. We have a lot of data and that will be a long-term advantage.
No Strong Competitor Outside of China
We haven’t got any money from the Chinese government directly. But because the government is promoting this concept in their Made in China Industrial Plan it can help us in the market. Overseas expansion will be our first priority next year. We’ve already entered Japan, Europe, Australia, and the United States and we are seeing a big demand for robotics and automation. We almost cannot see any strong competitor outside of China.
Our business is being impacted by the trade sanctions, taxes are higher. Our plan to grow our business in the United States is a little bit slowed down. We want to see the results of the trade conference between China and the US.
About Geek+ Robotic
Focusing on Logistics and Warehousing, Geek+ leads the technology revolution, by applying advanced robotics and AI technologies to realize high-flexibility and intelligent logistics automation solution. Geek+ provides leading, reliable, one-stop enterprise-level service with strong technological strength, precise customer understanding, thorough after-sales service, and ISO 9001: 2008 quality system.
Geek+ R&D team consists of Ph.D. and master graduates from Tsinghua, PKU, CAS, BEIHANG, USTB, etc., with much solid research and practice experience in the fields of robotics, embedded development, software engineering, artificial intelligence, most of them have joined domestic/international robotic contests and won the championship. All products are developed independently and possess the core patents, with a world-class level performance.
Domino’s software engineers and digital ad team have created a unique AI-powered ‘Piedentifier’ to launch it’s Super Bowl week marketing blitz. Domino’s is encouraging people to send in a photo of any pizza, even if you made it yourself, and it’s system will determine what type of pizza it is and give you ten points toward a free pizza in their rewards program.
‘Piedentifier’ launching for Super Bowl week marketing blitz
We’re going to give Piece of the Pie Rewards points for any pizza. Our customers are going to be able to use our great technology to take a picture of any pizza, send it up to us, and earn ten points toward a free Domino’s Pizza. The great thing about this is our team got together and created something called the ‘Piedentifier.’ What it does is it uses your phone to look for what they have referred to as the open-faced expression of crust sauce and cheese. Anything that looks like a pizza and you’re getting ten points.
Today we’ve got more than 20 million active members of our Piece of the Pie Rewards program. We don’t know the exact number of how many customers will come on board with us, but as the leader in the pizza category, we see this as a great opportunity not only to grow the overall pizza category, but also to invite new customers in to download our app and to try our product. We feel that when customers try our product we’ve got the opportunity to bring them back again and again.
This Sunday is a huge day for us. On Super Bowl Sunday, we’re typically up about 40 percent over a normal Sunday. We’ll sell about 2 million pizzas and about four million chicken wings. Each year, it’s the biggest day of the year for us. It tends to not matter which teams are in the game. Certainly in individual cities maybe it does, but broadly across the US it’s a huge day no matter who’s playing.
Average Franchise Makes $140K Per Year EBITDA
Opening up a Domino’s Pizza store is still a terrific return for our franchisees. Across the globe cash on cash returns are better than three years in our business. Just a few weeks ago at our Investor Day, we released again our unit level average for our franchisees in the US. Once again it went up. We’re expecting it to be somewhere between $137,000 and $140,000 a unit in the US on EBITDA on a Domino’s Pizza store that you can open for $350,000.
Driving is Still a Great Opportunity
Driving for Domino’s is a great opportunity because of the volume that we do out of our stores. In a lot of cases, drivers are able to come in and earn a lot more than they can driving for some of these other businesses. As we continue to tighten down our territories through our fortressing program, it’s giving our drivers the opportunity to get more runs per hour. That means more tips per hour and in turn, higher wages.
In addition to a job that earns a decent wage driving at Domino’s is also an opportunity potentially to be a franchisee in the long term. Over 90 percent of our franchisees today started as drivers or started in as CSRs answering our phones in our stores.
Self-Driving Cars Will be Here Someday
Self-driving cars will be here someday. We don’t exactly know what day but we’re working hard to really try to understand how our customer interface with that car when it pulls up to their curb. They’re used to having a uniformed Domino’s pizza delivery expert bring that pizza to the door. So we’re learning. As the technology evolves we’re going to learn how the customer wants to interact with us and we’ll be ready when it does get here.
One of the keys to making money with Facebook ads is to create and test 100 Facebook ad sets per day, says Kevin David who has become a successful entrepreneur by utilizing this strategy.
David explains precisely how he increases spending on the profitable ad sets and shuts off the unprofitable ad sets using automation rules built right into Facebook. He says there is no need to use third-party tools, simply use the tools Facebook already has in place.
Kevin David, who now trains others how to start a viral Amazon business selling everyday products, was recently interviewed by successful affiliate marketer Benjamin Yong at the Affiliate World Conference in Bangkok. Below is one strategy David revealed: (Video Interview Below)
Create 100 Facebook Ad Sets Per Day
Creating 100 Facebook ad sets per product for ecommerce is probably overkill. Realistically, $250 a day, which is 100 ad-sets times $2.50 per ad set a day is not that much money. So even if you’re spending $250 a day on ecommerce what’s that’s going to allow you to do is just get results faster. You could do ten ad sets a day but it’s gonna take you ten days. Or you can do 100 ad sets a day and it’s going to take you three days. You’re going to have your proven winners, so it’s just faster.
If you can do it the lazy easy way, which is just images, by making some really sleek 3D-rendered beautiful images, you don’t even need to go crazy and create videos. Even if you do create videos, all you need is a basic video that has the ability to go viral, that appeals to emotion, is fun and funny, has one of those things. Then all you need is six images and one video.
Use Facebook’s Automation Rules
No third party tools are necessary. You can do all of this with Facebook’s automation rules. You don’t need to have external tools, you can use automation rules inside of Facebook. People just don’t know it exists. Everyone’s looking for that little hack but Facebook has it all available for you. People just don’t know how to do it.
All you have to do is use the Create Multiple Ad Sets and then you just use automation rules to govern all of your different ad sets based on the criteria that you’ve set.
Scale Ads With a Positive ROAS by 21% Every 3 Days
The first rule is If an ad set has a positive ROAS, a positive return on ad spend of over one, I scale that ad by 21% every three days. With Facebook you can’t just scale something by 1000% because you just won’t spend the same, you’ll get penalized, you won’t have the same results. You won’t have profitable ad sets.
What I’ve found through a lot of testing is the most you can scale is about 20% a day. I figured that the smartest people who’ve learned that are doing it by 20% and so I’m doing it by 21% to try and be one step ahead of them.
When to Turn Unprofitable Ads Off
The second rule is how I turn things off. Since I’m running $2.50 per ad set I set an automation rule that turns off all active ad sets if they meet two criteria. The first criteria is if they’ve spent more $7.50, which means they have been running for three days, three days of $2.50 a day. The second criteria are if they have less than one lead.
It depends on what your business is. Maybe it’s less than one purchase or maybe it’s less than one lead, depending on how high ticket what you’re selling is. I know my funnel and I know that if I can get a lead for under $7.50 then it’s worth spending that money because I trust my funnel so well, but everyone has to know their own business. If it’s an ecommerce product, maybe you know it’s going to be different depending on how high ticket it is.
Wyze has always been anything but boring. They have an affordable $20 security camera that makes Ring users wonder if they’ve wasted their money. One of their founders, Dave Crosby, has an adorable singing daughter Claire Crosby that has appeared on Ellen and has 1.5 million subscribers to her YouTube channel. Dave has also been a contestent on The Voice.
Now Wyze has announced $20 million in Series A funding in dramatic fashion via a YouTube docudrama. It makes sense. Wyze considers their customers their community and being honest is part of the Wyze DNA. Letting customers in on the struggles of a startup via a documentary style video is a great way to reinforce that trust with their community.
Wyze Announces $20 Million in VC Funding via YouTube Docudrama
The funding round is led by Norwest Venture Partners and comes on the heels of Wyze’s massive success in selling over 1.5 million units of its first products, Wyze Cam and Wyze Cam Pan, since launching in October 2017. This funding is in addition to the previous seed funding investment from iSeed Ventures.
“We’ve had a singular focus on making pragmatic hardware and software that actually improve people’s lives, and this new capital infusion will help us continue that mission,” said Yun Zhang, Co-Founder and CEO of Wyze. “Without our tremendous and wonderful community, we would never have been able to build a $100 million company in just one year. We’re looking forward to offering them more, and listening to the community’s feedback as we continue to expand into new areas of the home.”
“This is the story about a lemon aid stand,” says Wyze founders and employees. “A story about a guy who put everything on the line. A story about 800,000 people that decided to give a no-name startup in Seattle a shot. A story about a brand that’s about to be a household name. At least that’s the plan. This is a story about you. This is a story about $20 million.”
“Now thanks to you there are 800,000 people at our lemon aid stand,” Wyze says. “Because you gave us such great feedback on the forums and the different social media our product is just getting better and better. Over 80 percent of customers have shared Wyze Cam with a friend. That is amazing. Thank you. That kind of growth is hard to manage.”
“Wyze proved that a smart home camera doesn’t have to be expensive to be great, which has driven adoption across a much broader base of consumers than ever before,” said Parker Barrile, Partner at Norwest Venture Partners. “I’m excited to partner with Yun and his team to build the next generation of smart home devices and services that everyone can afford.”
Ecommerce is a lot more than just Amazon, says UPS CEO David Abney at the Davos 2019 conference. Abney says that their focus is really on helping small and midsize businesses compete with the bigger players by enabling them to offer two-day shipping.
UPS recently introduced a product called Ware2Go which matches businesses with warehouse space in the US and around the world which makes faster delivery possible.
David Abney, CEO of UPS, discussed how UPS is focused on helping small and midsize business compete with big companies in an interview on Fox Business at Davos 2019:
Ecommerce is a Lot More Than Just Amazon
Amazon is a good customer of ours. We work closely together. But people kind of associate Amazon with ecommerce, but ecommerce is a lot more than just Amazon. You have the other big retailers. It’s really those hundreds of thousands of those small and midsize etailers that has allowed us to be the ecommerce vendor of choice. We will continue to do that through our portfolio and through our technology.
This hub is really designed to expedite and to enable these small and midsize businesses to where with today’s technology they can really compete with markets all over the world. If you look back a little while they couldn’t do that. This hub is just part of the strategy. But it’s our focus on small and midsize businesses. It is providing alternatives to these customers to where they can compete with the large ones.
UPS Focused on Helping Small Businesses Compete
More and more of the competition is having to do with being able to deliver to their customers within two days. That’s much easier for larger customers who have distribution centers all over the US and throughout the world. It was almost impossible for small and midsize.
We just introduced a product that’s called Ware2Go. We are a broker between people who have warehouse space all across the country and the world enabling these smaller companies that need to store inventory to compete. It has gotten off to a great start.
Ecommerce is Going to Continue to Increase
I believe ecommerce is going to continue to increase. It’s so convenient for many people using their mobile device to just order what they are interested in getting. That is why we are putting such an emphasis on it.
When we talk about ecommerce let me give you a couple of stats. Of European small and midsize businesses, only five percent export. You would think it should be much higher than that.
However, from the US only one percent of small and midsize businesses export. That’s why trade agreements are so important. They would benefit small and midsize businesses. It’s also why any technology that we can provide them would be helpful to increase their exports. I believe there is a big runway for these smaller retailers.
Retail Up 5.6% – It Doesn’t Sound Like a Slowdown to Me
I think we have to be very careful. I think sometimes people can start to build bad news on top of bad news. I will just give you an example of the peak season that we just finished through December. Retail is being estimated across the market to have increased 5.6 percent. That doesn’t really sound like a slowdown to me. All online retail increased 17 or 18 percent.
So again, healthy numbers. We think the US economy has held up reasonably strong. Internationally there are headwinds of course on trade-related issues. But still when you hear news that there is a slowdown theirs talk of one or two-tenths of a percent. It’s really not the kind of news that some people are taking it much further.
New Relic provides deep performance analytics for every part of a business software environment. It enables companies to easily view and analyze massive amounts of data, and gain actionable insights in real-time. Whether it’s for a popular mobile app, an online video game with millions of users, or a huge ecommerce platform, they all rely on critical New Relic insights to keep revenue flowing.
Lew Cirne, founder and CEO of New Relic, talks about how critical real-time insights from New Relic are to a companies revenue stream in an interview with Jim Cramer on CNBC:
When It’s Game Time for Retail New Relic is There
For retail obviously, so much of their business, particularly their web business depends on a very small number of days; Black Friday, Cyber Monday, etc. That’s game time. That’s the moment of truth. That’s when we’re working our hardest to make sure our software is there to make sure our customers can see what’s going on in real-time. Our customers were thrilled with the performance and availability that they delivered which turns into business results.
If your site is slower or down on Cyber Monday, forget it, you’re going to miss your quarter. You may never recover from that because you also have a brand hit. So it’s so vital. This is not nice to have software. Anybody who is competing on their software needs New Relic’s platform in order to succeed.
We’re a Massive Cloud Operation
We’re a massive cloud operation. We’re collecting millions of data points every second from mobile applications and from cloud infrastructure every time somebody’s pressing a button to buy something and every time someone’s watching this video on the CNBC app. We’re measuring the health of that and we do that on a massive scale. That’s one of the things our customers love.
When Fortnite said, “Hey we’ve got this huge app. It’s the biggest in the world and we want to monitor on New Relic.” We’re like great. Your biggest day is just another day for us. We collect so much data and we can do it for you.
New Relic Monitors Fortnite to Keep it Running for Millions of People
Epic Games is the company that created Fortnite and if you have kids or you’re into games this game has taken the world by storm. It’s the most popular game in the world. If that game is not working millions of people know about it and the company is affected.
So they rely on the New Relic platform to see everything in real-time on how that game is performing. It’s a very complex piece of software that has to work flawlessly in real-time. We measure everything going on in that game so that the builders of Fortnite can keep it running for millions of people 24/7.
There are different companies that do different things around observing what’s going on in this space but were the applications-centric company. What does that mean? It means that when you’re playing Fortnite what you’re doing is you’re using software.
We’re measuring the software in real-time. We do it in a cloud platform that integrates what’s going on in the software with the infrastructure and with the end-user experience, like the mobile app. We see all that together and do it in one unified platform and our customers love us for that.
New Relic Helps CNBC Scale Mobile App in Real-Time
At CNBC, you just launched an incredible new revenue app in the fall and it’s amazing. I use it a lot and I love it and again this is an app that’s getting a lot of uptake. I was talking to the team and they said customers love what the app is doing for them and they want to use it more and more. That means they have to scale.
When more and more people are using that app how are you able to handle the scale when people want to see the news in real time and want to see the stock quotes in real time? We provide them the visibility that gives them the confidence to move faster and scale to this amazing demand that the CNBC app is generating.
New Relic Helps Companies Move Fast in a Multi-Cloud World
This is so important to our customers. It’s clear that we’re entering a multi-cloud world. Obviously, Microsoft’s doing well and Amazon doing very well. We had a great show at re:INVENT. And there’s some hybrid cloud as well. What our customers are saying no matter where my software is running I want to see it all in one place. I’m sick of moving from one tool to another to see a complete picture. They turn to the New Relic platform to see it all in one place. That enables them to move fast with confidence.
Anywhere there are systems that need to perform well and scale well, those are systems that need New Relic. What we say to our customers is building great software is not easy, but it is the foundation upon which companies can build great competitive advantage. We want to partner with our customers to deliver amazing software that delights our customers and grows their business.
Label Insight says that it is powering transparency at the intersection of retailers, brands, and consumers with an industry-leading platform for CPG product attribute data covering more than 80 percent of top-selling food, pet, and personal care items in the U.S. They started out in the pre-cell era by literally going into grocery stores and manually copying the product labels and entering the information into a spreadsheet. That has changed, but what hasn’t changed is their value-driven innovative company culture.
Dagan Xavier, Co-founder and SVP of Data and Nutrition Sciences at Label Insight, recently talked about how the company started and how the company continues to innovate, in a feature on Entrepreneur:
At the Intersection of Brands, Retailers, and Consumers
Label Insight sits at the intersection of brands, retailers, and consumers. Our data and analytics essentially allow those brands and retailers to increase sales by empowering the consumer to make better-educated decisions around the products that they buy. Why did I start this business? This was a pure family need. When someone in your family is sick and they need help, the first thing you do is you go and help them.
I can remember the call that I got when I was at University, second year. I got a call from my Dad and he asked me to come home because he needed some help to determine what brand of noodles he could eat based on his new diet. Ultimately, it came down to what brand of ramen noodles he could consume that were low in fat, low in sodium, didn’t have any artificial ingredients, and no trans fat.
About Label Insight
Problem Solving is ‘Full of Massive Innovation
If anyone out there can answer those four questions on all the ramen products out there I would love them to come work for us. Essentially, that’s what started this. Innovative problem solving is the most innovative and most useful when it’s created from a real need. I think back to when we started this company. This was pre-cell phone days. We would walk down the aisles of supermarkets and use our dictaphones to collect information on the back of packages and dictate it out to Excel to create our database. That’s an incredibly manual process.
In over two years of work, we collected 8,000 products. Not very much, but in those days it was a feat. Having those problems and going through that manual workload, that’s when innovation really happens and starts to occur. I would say that our whole data-ingestion process is symptomatic of that manual history and is full of massive innovation.
Our Key Value is Intellectual Honesty
When I’m seeing Label Insight succeed it’s based on a shared set of values. It’s based on having multiple people moving in the same direction. The way that you can do that is by being mission-driven and value-based. Our mission is clear, we’re out to help people make educated choices around the products that they make. As a way to keep everyone going and moving in the right direction, it has to be about values as well.
We have a number of values that we hold true to ourselves. Obviously transparency, it’s not a trend it’s a right. Other values we hold are collaboration, intellectual honesty, iteration and Innovation, and quality driven. These are all really important values that allow us to get on the same page as each other and be paddling in the right direction.
When I think about a particular value that stands out to me, it’s intellectual honesty. I believe that whenever we are looking at hiring folks and bringing people into the team, that’s the key value that I’m looking for. That ability to admit when you are wrong and to be brutally honest at times that’s the backbone, that’s the base that you need to be able to perform. We are not looking to just perform here. We are looking to change an industry. So we need folks who are able to get us there. That’s why I find that value particularly important.
Problem Solving is ‘Full of Massive Innovation,’ Says Label Insight Co-founder
Starbucks has dramatically increased the use of AI-powered customer insights to drive growth, says Starbucks CEO Kevin Johnson. During the most recent holiday season, Starbucks made data-driven decisions on a variety of items from the type of holiday cups they were offering to how they promoted gift cards, all designed to increase sales. Johnson credits these new customer insights for improving gift card sales by four percent over last years holiday period.
Kevin Johnson, CEO of Starbucks, discussed in an interview on CNBC how analytics, artificial intelligence, personalization, and technology are now driving marketing, sales, and business decisions:
AI is Making Us a Better Company
We have dramatically stepped up the focus on customer insight. We are using technology to help inform us of what customers want, what they need, and what they think of Starbucks. That informed our entire holiday plan this year, and we had a fantastic holiday.
We are driving much more use of analytics, artificial intelligence, personalization, and technology to help us be more informed and more connected to our customers. That is making us a better company.
Customer Insights Driving Starbucks Growth
I’ll frame it around customer insights. Coming out of last year’s holiday we used a number of tools and research to give us customer insights on what customers really appreciated and loved about Starbucks at the holiday. That informed everything from the design of our cups to utilizing the reusable red cup promotion that we launched. We saw gift card sales grow four percent year-on-year in the quarter.
That was a function of customer insight and research that we did. This holiday, in many ways, was informed by that insight. That’s just an example of what we’re doing. We’re using all kinds of data, customer focus groups, and things to help us be more informed and more front-footed on the trends and the things that customers really want to see from Starbucks.
