Watch: Webinar – Digital Disruption In Retail & How To Adapt Your Strategy For Success
For years, retail has been on a path of digital disruption which is being accelerated in the wake of the unexpected COVID-19 pandemic. Brands, distributors, and retailers that adapt will thrive while those that sit stagnant will face financial demise.
In this webinar, Travis Mariea, CEO of Flxpoint & Inventory Source, will share insights on mission critical changes in customer behavior, emerging new strategies, and shifts in demand that have surfaced in recent weeks.
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Below, you will find a transcript of the webinar.
I’ll go ahead and get started, guys. Thanks for joining, I’m actually going to go ahead and turn my video. We’ve been doing Zooms for the last couple of weeks and it’s a new normal where we’ve got video going. Everyone’s working from the house. We got the chat open. It looks like it’s going. If you guys do have any questions, feel free to chat. I can’t hear anything. I see we have one person saying that, definitely check. I think we’ve got most people who can hear from what I’m seeing.
Yeah, today is about digital disruption in retail. Really, it’s been, as people have been saying, these are strange times, and really, really odd kind of world that we live in right now. It’s been interesting to kind of see all the different opinions out there on what’s happening today versus what’s happening tomorrow. And just really kind of seeing the change in our industry has been interesting. So I want to share some of the stuff that we’ve seen from our customers, some of the stuff we see in the industry in general. And then hopefully provide some insights. We got a Q&A at the end. If you guys want, please feel free to put some QA or some questions in there for the Q&A. And we’ll address it towards the end.
I’m Travis Mariea. I’m the CEO of Flxpoint. We are a distributed order management platform, and we put this on today. So the agenda today is really talking about what we’ve seen from our customers on the inventory source side and our retailers and brands that we work with there, really kind of what we’ve learned as well, really just from the pandemic and just the reaction in the industry, what are some of the takeaways there.
We also want to give some sort of what you can do, what you can do today. There’s a new normal we’re going to talk about and some emerging themes in this that might pan out over a longer period of time, but we really do want to look at what’s actual today. We’re going to go into that new normal and what we think it might be, and then the impact in the long term. And so if that impact in the long term does play out, how do you prepare for that tomorrow? And like I said, and I posted this earlier today, but give some fun here, do a bold, biased and unfounded prediction side of things, just kind of talk about what could happen, nothing really backing it, but just kind of just mess around and seeing if anyone might agree or think it’s the stupidest idea there.
So the disclaimer is, obviously we don’t claim to have a crystal ball. We’re just kind of taking in what we’re seeing. We are going to make some predictions. We’re going to talk about some of the things that we’re seeing and hopefully we can have an open conversation about what we might think is facts that we’re seeing today versus what are some just more predictions.
So the new normal, I don’t think anything we’re going to talk about today is what we’re seeing today, as far as what we’re expecting. Everyone’s going to be living in this bubble in their house working remotely. I don’t think that the new normal is what we’re seeing today. I think it looks a lot more like we were living a couple weeks or a month or two ago. So I think a lot of what we’re going to talk about today is, what does that new normal look like? How long is it going to take us to get there and just get a better idea of how we can adapt for that no matter how long it might take?
What we are going to really kind of dig into is that, even though we might not be in this kind of pandemic type environment for forever, what we do feel is we’re going to see the acceleration of what we think is going to happen in the future, really which is the acceleration of this digital disruption that’s already happening in the retail world. Really, we’ve already seen retail store closures just start to skyrocket in the last couple of years. In the U.S. alone, we saw just under 6,000 two years ago, just last year, it almost doubled in 2019 of retail store closures, and they’re already calling for potentially 15, depending on how long this pandemic goes on, maybe even over 15,000 stores closing.
At the same time, retail spending online is increasing, I believe it’s over the last decade is up like 153% but with that said, it’s still only 10% of online retail. Online sales are only 10% of overall retail. So there’s a lot of room to grow there, as we all know, and it’s definitely trending that way. We feel that if anything, this new normal is anything just progressing that notion and accelerating this digital disruption.
So what we’ve seen, the short term pandemic behavior and strategy is what we’ve seen. So as many of you have probably been watching the news and kind of just seeing the behavior and being part of it yourself, you can kind of see on this left hand side the lockdown economy where fitness and apparel and surprisingly enough, even fast food is kind of, there’s less spending there. Obviously movie theaters and airlines, that has dropped significantly. From the more spending side, the supermarkets it’s funny because it’s right there in the middle where people are buying, it’s really kind of netting out. There was a push there for a little bit but it looks like it’s right in the positive by a couple percentage points.
General merchandise, e-commerce, I mean Amazon is doing, from the numbers that we’ve seen, Amazon is just doing a ton of business each day where I think I read a report where four times a day is the average, I’m sorry, four times a week is the average amount of time the U.S. citizen is actually visiting Amazon. Home improvement, interestingly enough, that picture of the guy with the noodle hat. You can tell it’s in Home Depot, a lot of people go in there, you’re outside, not much to do, you’re improving your house, even though we’re supposed to be social distancing. Obviously, video streaming, food delivery, we’ve all heard about that. Alcohol is up and online grocery and gaming are by far the biggest outliers here. So gaming, really picking up. You’re at the house, nothing to do, might as well play a video game and get some food delivered, is what it looks like.
Just to kind of bring it home, obviously online groceries have really picked up. We’re going to talk a lot more about that and the trends we’re seeing there. And then obviously, retail sales have plummeted with delivery services picking up kind of helping out and netting out to some extent, in what we’ve seen from restaurants and the fact that no one can actually go in and eat, buy a drink. At least we still got delivery services picking up their food and bringing up some revenue.
And lastly here, e-books, news media, streaming of music and videos and gaming all obviously up. So really, I want to show this is kind of obvious, but just show this shift that’s happening. Like I said earlier, we’re not saying that this is the new normal that we’re going to be in gaming every day and not going to movie theaters and things like that. But if anything, it’s accelerating this more distributed, more distant, more digital kind of environment that we’re going to live in even though it might scale back eventually, as we get to the end of this pandemic.
So a couple of the lockdown/pandemic strategies we’ve seen, an interesting and more bold and really risky one we’ve seen is Calvin Klein and a couple others have been reported doing this but the pack and hold retail strategy. So it’s a buyer’s market from what they’re reporting out there for discount retailers, so the TJ Maxxes of the world were buying last season’s brand line, seasonal line or whatever it might be. So Calvin Klein and a couple others are actually saying we’re not going to release any of our line this year for this season. And we’re going to keep it packed up in the warehouse and we’re going to release it next year. They’re not really trying to publicize this too much, but it has been picked up by a couple of the e-commerce and retail blogs.
Whisky, it’s not like wine. Apparel only gets, loses value. So it’s an interesting strategy so they don’t have to discount as much as those Ross and TJ Maxxes of the world. So that’s one interesting kind of bold strategy we’ve seen.
Manufacturer pivots, obviously you’ve all kind of seen the alcohol manufacturers doing sanitizers. Everyone I feel like is selling masks. I read an interesting article on domestic sourcing. U.S. spice market, a large portion of that market is moving to domestic sourcing, and a lot we feel from what we’ve seen, they actually feel that, from what they’re saying that they might not go back to China as much as they were in the past. Garlic I found was actually one of the spices that’s almost primarily sourced from China in the U.S., which is interesting. So that was interesting to kind of see.
One of my favorite ones, which I’ve kind of looked into for a while. And this is kind of a little bit of a newer concept when it comes to grocery but dark stores. You might have heard of cloud kitchens or ghost kitchens, but dark stores really, where you’re shutting down your store or you have inventory in a store where only employees are able to enter the store and then deliver and delivery contractors to pick up and then deliver. That’s one where obviously a lot of it’s impacted by pandemic and social distancing. But there’s a broader trend there that’s already been happening, which we’ll be talking about.
What we learned from this is really most businesses are not prepared for a pandemic. I mean, shocker. You really shouldn’t be. I mean, it’s not something that any business is going to be prepared for. You really shouldn’t be spending too much time preparing for a pandemic. What you should be doing is installing good business practices. And what we’re seeing is that those win out. So if you think about it, diversification in your supply chain and your sales channels are key here. That’s really what’s showing who’s sinking and who’s swimming in the retail world right now.
We have on the inventory side of our business, inventory source being our directory of suppliers that we’re connected to and automate the retail inventory and order management side of things. We’re seeing suppliers shut down that can’t accept orders, whether their warehouse is no longer able to fulfill in a timely fashion given that their warehouse workers are out or they have just seen an increase in orders because they are providing essential goods, whatever it might be, if you’ve got a single point of failure on the supply chain, then you’re going to be in trouble in these kinds of scenarios, but you’re going to be in trouble a lot in business in general. That’s just a bad business practice to have a single point of failure on the supply chain.
And the same goes with the channel side. And we’ve seen the exact same thing happen. Getting shut off from your supply chain is happening to a lot of our customers right now, especially in the grocery and essential kind of janitorial equipment space, which is a large portion of what we integrate from a distributor side. But we’re also seeing customers who have access to product and are ready to distribute it but getting shut off by companies like Amazon, which is no new thing. I mean, people hear about that all the time getting shut down by Amazon. Amazon is telling a couple of our customers out there, they have been reported as price gouging, which our customers are telling us that is not true. And they feel that Amazon is once again kind of not acting in their best interest and kind of taking more of a selfish approach and kind of making sure that they fulfill on the goods that are on the demand that they’re seeing.
That’s all hearsay, obviously. But it’s a single point of failure where if all your business is built off Amazon sales, you’re obviously not feeling great right now in this time if you’re no longer able to sell on Amazon. And then surprisingly enough, but this third one I think is worth mentioning. You need a runway. We’ve seen not specifically our customers, we’ve seen a couple customers kind of pause things, kind of slow it down and kind of try to wait things out. But just in general, seeing the amount of companies on the news or wherever it might be, going out of business really in the first 30 to 45 days, the good business practice of having runway not only just when you’re getting started, but at any given time is another thing that’s going to really help you get through this pandemic.
So one of my favorite parts of this whole presentation is the new normal, and obviously speculating and some of this, but kind of looking at some of the trends that we just talked about and talking about the themes that we see emerging. So I think the number one clear theme that we’re seeing is the future of x is accelerated. And so the future of work where people are distributed working via Zoom, on cloud technology, I think that is obviously a foregone conclusion of a more efficient model from the cloud and just having a distributed workforce and things like that. But there’s a lot of barriers to making that work and making it work as efficiently as you currently do. And I think this is accelerating that. It’s interesting to see the future of work really be pushed along healthcare.
Same thing, the teledoctor approach has been around for a while, but it’s really not mainstream. You’re seeing more and more people get introduced to that. And then fitness, fitness, whether it’s a Peloton or whether it’s these new, I think this one’s the Mirror. These new apps and physical devices out here for your home are really progressing the future of work, healthcare, fitness. I don’t have retail here because I’ll talk about it in a sec, but basically any industry where a digital medium can make sense to transact is being accelerated in that direction. That has a huge impact on retail.
Just a real quick Google trend to kind of drive this point home, Google trend analysis. So Zoom, you can see in blue, Zoom etiquette, which is not a very popular keyword to search or keyword phrase among phone etiquette, business etiquette and obviously wedding etiquette. You can see the spike there. So that’s kind of showing that similar to the graph earlier showing the difference in gaming versus going to movie theaters. This is just showing this push that’s happening. I’m sure it’s going to come back, and obviously it’s not going to outlast wedding etiquette because no one knows what to do in a wedding, where do you sit, when to eat, whatever might be. So I’m sure wedding etiquette is going to be much higher of an uptake here in the next couple of hopefully months, or at least in the next year. But it’s showing that push, that disruption that’s happening, and really accelerating, getting more towards this more digital interaction environment that we live in. So I thought that was an interesting graph.
And how that affects retail, really, I mean if you’re going to expect your doctor to jump online with you, your co-workers, your fitness buddies, you’re going to want retail to do the same. You’re going to expect what we’re already starting to see glimpses of where it’s online, kind of dressing room and showroom type approach, where you’re trying on clothes in a virtual way. You’re going to start having aka Zoom meetings I guess or whatever they’re going to call them through the live chat on your retail e-commerce stores.
Live chat in general, before we talk about video chat and voice mixed with text and all that, it’s already showing that the consumers are more likely to buy from it, that they’re more likely to return. There’s been a ton of stories around live chat and e-commerce that this is only the natural progression, where the more that you’re online shopping on an e-commerce store and now able to interact with a sales consultant or someone you would typically in a store that can provide you advice, it’s really going to slowly start putting more and more pressure on the brick and mortar retailers to add more value than what that is today, which a lot of it is that face to face interaction and discussion around the product.
So that’s one piece of the future of every industry going more digital is that retail will have to as well but I also think and I’ll talk about it more towards the end of this that with more digital interactions, I think the channels of where you’re buying products are obviously going to evolve.
So number two, the emerging theme I think we all know, probably been part of it, is the local delivery going mainstream. So this is a chart that I got earlier today showing the daily downloads of these grocery apps. There’s no doubt that more and more people given this current situation are ordering online, grocery especially. Once again, I’m sure that we’re going to pull back. People are going to start going back to the grocery store. But what does this do from changing our behavior and getting us more comfortable with this approach?
So one of my favorite themes that I’ve tracked for the last couple months, maybe a year plus is the idea of micro fulfillment, dark stores, ghost kitchens, or cloud kitchens. I really do think you’re going to gain traction with this. Not that we’re going to stop going to Publix and wherever you might go, but it’s really with an uptake in delivery, ghost kitchens are essentially with the rise of Uber Eats and Grubhub. And all those are, they’re a place where you have your cooks and you’ve got your delivery workers and there’s no actual seats, no one’s coming in and sitting down. And really in a micro fulfillment sense, you’re just kind of churning through a conveyor belt of to go orders.
And so, the micro fulfillment side not only works for food, but could work for other industries as well, where you have your normal pickup in store, brick and mortar, but then you also have your micro fulfillment warehouse attached or part of your larger online warehouse.
So I think one of the emerging themes from this is that as we see an uptick in grocery delivery and local delivery in general, is micro fulfillment and these different kinds of cloud or dark stores. Interesting to see, food makes a lot of sense. But how many times do you go back to Home Depot for one project? I know I’m probably three or four times a day, maybe five might be my max, I’m not proud of that one. But there’s no doubt that that’s one of those that you could see where if you had quick, cheap, maybe even free local delivery from Home Depot, and you could just while you’re sitting there putting in the back deck or fixing a door, whatever it might be, laying floor, if you can just order something and keep working and have that delivered in a cost effective manner, there’s no doubt that that’s going to happen.
And making it cost effective might seem like an impossible feat. But saying that you had two day free shipping 10 years ago sounds pretty crazy as well. And then, just seeing the rise of specialized/secure delivery services. So do we look, you don’t want an Uber Eats driver picking up, I don’t even know about the legalities around all this, to be honest, picking up prescriptions and things like that, but is there something there that we have more specialized delivery services of things like pharmaceuticals and things like that.
And then this third one really is, the best way to put it’s about time to set up that website. A lot of small businesses have kind of held out. You can see here on the right, that it doesn’t have an e-commerce presence. 74% from small business trends are reporting that 74% don’t have an e-commerce store. 42, even more shockingly, feel the web’s not important. And 20%, no site at all, not even just a website.
So there’s a lot of small businesses out there. You might feel like every business has a website, but it’s really not the case. And definitely not the case to have e-commerce enabled. So as we all know, in the left hand graph right here, with the COVID-19 pandemic, we’re seeing stores get shut down, You can see a drop of 90%. Obviously, a lot of these states are issuing a mandatory shutdown. So I think it’s about time to start working on it. And we’ve been seeing that. Anecdotally, we’ve been seeing customers come to us and say, “I want to get a store set up.” They were just an Amazon seller, and they did their brick and mortar or they didn’t have anything and they’re just coming to us for the first time. We actually have seen an uptick in our turnkey websites. So we do a turnkey Shopify store. We’ll get it set up really quickly for you and load products into it and kind of hand it over to you to kind of customize from there. We’ve definitely seen an uptick there. And so it’s been interesting to kind of see. So a lot of times, a lot of what we’ve heard as well is it’s time to kind of work on it. You’ve got less to do from a day to day operations perspective in store, so it’s about time to work on that website.
And it’s too early to tell. I couldn’t get any numbers on how many people are doing that. But we are seeing a lot of this. This is just from my Instagram feed. I have seen this from a couple different local businesses I follow where they’re opening up and starting to sell, whether it’s beer or their own food or whatever might be, local donut shops, stuff like that. Setting up a store, making it e-commerce enabled and then either locally working with a delivery service or just having their members or team members go and deliver it.
So I think those three themes, it’s pretty interesting to kind of think about what that means if those kinds of things come to fruition. They feel like it’s something that might scale back after we get past this, but not really go away and definitely pick up steam as we go. So what does that mean when we talk about having more time spent in digital communication, on a Peloton, interacting in a lot of cases live or with other groups, through a digital medium, something that’s really just been introduced to me in the last couple of months. And it feels like you’re part of a kind of a futuristic kind of movement and working and socializing more from a digital medium.
So how can we start doing that more, but then also, with more products being digitally cataloged, we just saw Green Room had never put their growlers and crawlers and cases up on a website. So they’d never had probably tracked it properly, never had the images and the pricing down, they never had it cataloged in a way that they could sell online. More and more businesses are doing that. They’re digitally cataloging their product and getting it up so it’s e-commerce enabled. So we got more of that picking up.
And then now on top of that, we’re seeing a surge in local delivery in this infrastructure being built out as micro fulfillment picks up and it’s very much a thing before this pandemic. It will be very much the thing after. So now we’ve got people spending time online, products going online and being digitally cataloged and now a local delivery network like what can happen from that is I think there’s a lot of different possibilities. Well, I’ll tell you one thing, it’s going to get complex, it’s going to get really complex for retailers. It’s not traditional, I’ve got a warehouse, I bring in goods to my warehouse, I sell it through my brick and mortar or I sell it online in my store.
It’s going to be a lot more of data management, a lot more of supply chain diversity, new channels showing up, so just to kind of start here on this left hand side and if you’ve ever seen any of my presentations, you know I had to get this graph in or this diagram where we kind of show the supply side here on the left, where you got your brick and mortar, most likely you’re going to get an order that’s going to be fulfilled by one of these ways. Your brick and mortar, we have pickup in store, you might have inventory in your warehouse that you’re shipping online, shipped to the actual residential door, and then now, micro fulfillment warehouse as well where it’s optimized to deliver locally.
That’s obviously going to be the more sophisticated retailers but that’s going to be kind of table stakes for that, that top 1% retailer. And then from the channel side where we’ve got the traditional online store platforms where you’re selling on your website via Shopify or big commerce where it might be, you’re selling via a third party marketplace traditionally, like Amazon or eBay. But now I really do think about what it would look like if Home Depot started offering local delivery and things like that. Are you as a small retailer going to offer local delivery to? Are you going to be part of Shipt’s network? Is there going to be a new local delivery marketplace outside of just grocery? And are you prepared for that?
And then in-app purchases. We’ll talk a bit more about it but is your data structure and do you have the ability to facilitate what we already see in Instagram where you can upload a catalog in Instagram and have shoppable posts, but does Peloton do other workout apps or these new group apps that are showing up as House Party app that people are using. There’s sort of traction in there where you’re selling physical goods there now that we know where everyone’s at from geo location, and you’ve got a local delivery network. So I think it’s pretty interesting. Either way, we know it’s going to be a lot more complex here in the near future.
So that’s obviously down the road. Let’s talk about the impact, what you can do today, and how to prepare for tomorrow. Today I got e-commerce enabled. You saw that post. If a brewery, a local brewery can do it, where I’m pretty sure the guy serves 90% of his day, anyone can do it. Go and get a Shopify store or a BigCommerce store that we recommend. Those are two that we see are very easy to get SAAS platforms up and running if you don’t have a store. I think most people who joined the webinar today probably have a store. But it’s worth saying, go get a store set up. It takes a week to two weeks at the most to get it fully configured. Use Shipstation as one of those for quick label printing, and do it yourself, at least for the first two weeks. Try to force yourself to learn how to use these tools at least at a high level. And then bring in someone if you need to, after the first two weeks to try to get it set up, if you can.
Revisit your site messaging. So like I said, most of you probably have a website already up, revisit your messaging. Can you proactively answer the current fears that we’re seeing, people are feeling that things might be out of stock, the ship times might be delayed, origin of items, where’s this coming from? I mean, that’s already kind of an issue. You buy something on Instagram, even I’ve been, we know a lot about the AliExpress and buying something and not realizing it’s coming from China. It’s not going to be here for 45 days and I’ve fallen victim to that, where origin of items is already an issue, but obviously a lot more now. So can you answer those in your industry where you need to be upfront about that?
Rotating your products. Based on the situation, that’s an obvious one. Shuffling promotions, really look at that, though some might have kind of fallen by the wayside to think about that. But definitely look at that and then start offering Zoom consultations. So kind of goes into the future of work and future of healthcare. The future of retail is a more rich medium online. Can you start offering more of that rich medium and interaction. So that’s the next boat as well, where if you don’t have live chat, set it up. You want to get people, they’re on your website more often now than they were. More people are shopping online in general, even if you just have an online store, but even more so if you had a brick and mortar and online store and your traditional shopper is now going online. Set up online chat. There’s free options and cheap options in Olark and LiveChat. I would look at your app store, so Shopify and BigCommerce both have an app store. Find the top rated free, cheap option and set it up. It should take a minute or two.
With that, it might not be easy to do right out of the gate. It might not sound like it’s easy to start doing live video consultations via your website, but it’s very much doable. You could set up a LiveChat app, and then as you’re talking, offer up a Zoom meeting. Let me talk you through, you know what, you’re not sure how large, is that shirt bigger than most or how does it fade or whatever it might be, is that in good condition, whatever it might be, you can literally start a Zoom chat, you can walk them through a product that you’ve got. If you’re in your store by yourself and you’re kind of taking that approach, you could even show the products off. If you’re in your warehouse, whatever it might be. I think it’s worth trying, worth kind of preparing for tomorrow where this is more of a requirement and something you could really start doing now and testing.
And it’s easy enough. It’s just saying, “Would you like to jump on a quick Zoom chat? I’ll share a link with you and I can show you exactly what the product looks like.”
And then lastly, ad spend is an interesting topic or how do you spend money on ads right now and each business is going to be very different. But I think it’s worth looking at one geographically is the kind of the low hanging fruit. Since the really the pandemic has pushed and really monitoring it in general, and seeing where has your traffic dropped, picked up, where has conversions increased or decreased. This is the time where geography can matter a lot for your business more so than it did in the past. And you can really start looking at reallocating ad spend to certain geographies that are performing well right now versus other ones that might have performed well in the past but are not. So, I think for some of the more savvy retailers, they probably realize that but I think that might be helpful if you hadn’t thought about that yet, to really dig into the geographical trends and reallocate ad spend based on increasing conversions and based on the current environment we’re in. And you’ll have to look at that, I think week by week.
So how to prepare for tomorrow. So tomorrow is, really here on the left, it’s the Shoppable app. The Shoppable posts, which Instagram is really one of the first to do this but there’s others out there as well. If someone is buying through the physical world that’s now being merged with the digital I think commerce is the only, the next logical step for a lot of these, whether it’s buying something through a fitness app, or whatever it might be. And then there’s local delivery network where everyone is more or less interacting in games and are doing kind of in-app purchases there, how does the physical world kind of meld together with the digital and I think local delivery and understanding where the local users are is going to be a piece of that, too.
So with that, let’s just kind of look back at this diagram, just let’s remember that it’s really kind of this quagmire of integrations and connections. That’s what you really you’re probably looking at here in the future, if you’re not already there. It’s the top 1% retailers are already kind of prepping for this, if not already prepared for it. But I think it’s going to expand more into the smaller and midsize retailers.
So with that in mind, here’s kind of a high level checklist. So the first thing you do, just like our local brewery here, you need to get inventory and product data centrally managed, not only just digitize in a catalog but centrally managed, where you know that you’re going to have these new avenues for sales, these new sales channels, you’re going to have new supply chain options, which there will be micro fulfillment, third party micro fulfillment warehouses that you won’t have to set up your own, you’ll just put your products there and they’ll take care of that.
So you think of yourself as that central. Going back here, you’re that central kind of those two cogs right there. Your data is what’s important now, and you’re going to be getting asked for data from any of your partners, whether it’s supply chain partners or distribution channel partners. So get it essentially managed in one spot and know that you’re going to need to modify that based on the channel or the supply source that you’re going to be working with. Pricing, pricing data, the actual data, whether it’s imagery or categorization, know that you’re going to have a central repository of this data in your inventory. But make sure you’re flexible enough to kind of work with other channels.
Provide an automated export or API of warehouse inventory. So obviously, as you work with more trading partners in this world, you’re going to be asked for data, you’re going to be asked for how much do you have in stock in your warehouse, you’ll be asked how much do you own stock in your third party warehouse that you don’t own, so how do you get access to that data. You’re going to be asked, this third one, this third bullet, how do I place orders with you? And it’s Grubhub or it’s the next version of that, that now wants to come into your industry and wants to place orders with you and they want to place five a second, or 10 a minute or whatever it might be. You’re not going to tell him, “Go to my Shopify store and place an order.”
So you need to have a way to accept orders in an automated fashion. You can pick a platform that has an open API or has connection with these channels that you’re going to be targeting. And that automatically integrates into your order management system, so you don’t have to do anything manual from that side. Because the other option is Grubhub or the next channel, big channel or whatever it might be, is going to ask you, “Okay, I can’t automatically integrate with you. Well then, you’re going to need to just manually accept these orders and manually update tracking and manually do a ton of stuff.”
So keep that in mind on how you evolve if you know that you’re not currently doing anything in an automated fashion today. And then, I kind of talked about assuming the multi channel fees and the different fulfillment requirements are going to happen. So make sure you’ve got that centrally managed system but also are flexible enough to work with your partners.
And then the big thing going back to the earlier slides, diversify your supply chain. If you don’t dropship today and you have warehouse inventory, be prepared to dropship. It is a growing supply chain fulfillment method and a supply chain need from larger retailers. Macy’s, 100% of what they do online is dropshipped. And that’s like an old school department store. There’s really a push here as more and more digital sales are happening, less need for people to actually purchase via brick and mortar as we’re seeing today. There’s less need to store that inventory and the actual end retailer, so being asked to dropship is only going to increase so if you are a brand or a wholesaler that stores inventory and/or retail really, mostly a brand or wholesaler. Be sure you can drop ship because you will be asked by someone you’re going to want to work with. And if you’re a retailer, you’re not dropshipping today, you’re going to want to look at it because as you expand more into different channels and needing to compete, we’ve got a whole nother presentation on this, but offering a catalog and offering the size, the color, the item that your customers want, is just table stakes now in the era of Amazon.
All right, now we’ll get to the fun part, some bold, biased and unfounded predictions. So the first one here, yeah, this one’s not too bold and not too crazy. But even though a good portion of America and across the world really is going to go back to working in offices at some point, more companies will be offering work from home. I think that’s a fair assessment of what might happen in the future. Even companies that said work from home would never happen, it’s not for us, I think we are going to be more open to it.
I’ve heard that, someone else mentioned that. I kind of stole that one, but I think that makes a lot of sense that really resonates. What I kind of, in my biased way, kind of thought, well, that’s probably going to lead to more online shopping. And so if you’re at the office, and you’re working versus you’re working at your desk in your own house, I think going and stopping and buying something online is going to happen more and more. So I think that’s only going to accelerate the online shopping world.
But then kind of be more out there, I don’t know, it’s probably going to be slow. The only way it would be slowed is if we saw more of that computer monitoring software. More people will go to work from their house. Companies are worried about them not doing their job or not staying focused. We may see computer monitoring software coming back and really tracking time or tracking browser interactions or websites you can visit, whatever it might be. Obviously, you can still shop on your phone, and that’s still going to happen. But it will be interesting to see as we go more towards a work from home kind of model for a lot of companies, do we bring back more of that computer monitoring software, even in this age of privacy and things like that. It will be interesting to kind of see how that pans out.
Number two, so a surge in government backed pandemic prepared or prepared warehouses, and then also government backed warehouse robotics grants. So that second one might be happening today, probably is already happening today. But the idea here is that being prepared for this again in the future to make sure that global e-commerce, at least national e-commerce does not get shut down. Amazon is under fire. They’ve really kind of done a great job of delivering on the demand that they’ve seen, but I think they just had their first death and I don’t know the details on that so don’t quote me. But what I did read was they did have their first death. They’ve had dozens of cases. They’re under fire for a lot of stuff like they always are.
But I think there’s probably an opportunity for someone to make a name for themselves in the government to really push for this and I’m sure there’s going to be lobbying for it as well from our industry, but I’d be interested to see if that happens. Who knows? It might not be a thing, it might already be a thing. I don’t know.
So the new wave of location based marketplaces. So I kind of touched on this earlier but UberEats meets Groupon. Local delivery for more than just food. I don’t know, there’s not a ton of industries. I gave that Home Depot example. When you’ve got Amazon with two days shipping, that one day shipping, how important is that? I think that’s one of those things where you just have to keep on watching. Is there value in local small brands who might not be in an Amazon warehouse being shipped to your door very quickly in a local fashion? Do you need something in 10 minutes or 20, let’s say half an hour or that same day that Amazon isn’t really prepared to do? Is there more of a local search across a network of small brick and mortars?
I mean, every brick and mortar is on a POS system now that if they’re tracking inventory properly, can be connected to a marketplace. It will be interesting to see. Who knows? Maybe not, maybe it’s a thing.
This one’s got long, but it’s kind of also about really the next generation of social media being more that physical and digital interaction, which I think we’re already seeing but then also the in-app purchases being accelerated, whether it’s a diet bet or a challenge group. You’re seeing more and more apps getting traction there where people are looking to kind of interact with each other and do it in a structured fashion, whether it’s like a challenge or I guess a diet bet. Group workouts, I’ve seen my wife is doing those. I’ve never even heard of those until this past week via Zoom. My mom’s doing them via Zoom. My wife’s doing them on the Peloton. So essentially see, I feel like kind of selfishly the logical next step of that is, all right, you just finished your Peloton ride. Here’s a smoothie or a discount for a smoothie from your local Smoothie King, and it’s delivered to your door by the time you’re done with the ride.
Once again, I don’t know. I could see that happening. I could see that taking a while. I could see a lot of things breaking down in between. But I think it’s interesting to kind of think about.
And then lastly, because everyone’s got to get blockchain in when you’re talking about the future, blockchain introduced to confirm the original or the origin is what I meant to write there, physical goods. So when I was looking into this, the U.S. domestic sourcing side of the pandemic and how that’s been affecting different industries, like I said, the spice industry. And seed to shelf was brought up a couple times where that was important and I could see that a lot with consumable products and grocery. But even just in other products in my example earlier, where I didn’t actually know where it originated from when I bought it, who was selling it, who is the original person who sold it, if it’s not a brand that you know, even when they are brands, Amazon faces that issue all the time on counterfeits and things like that. So blockchain or something in the future, really taking a stance on showing the origin of actual physical products and us being able to prove where it’s coming from, seed to shelf.
All right, that is it. That’s all my predictions, all the insights that we’ve gained from our customers and just the kind of research we’ve done on our side. So with that, if you do have any questions, I’m going to open it up in the Q&A. So there’s a Q&A section in the chat section. All right. Just some overall comments here, which is pretty cool. I haven’t had a chance to check them. What do you think about regional grocery distribution since dropshipping is really hard for supply chains and grocery?
Yeah, regional, so I’m not really sure what the question is specifically around regional grocery distribution. Yeah, I mean, I think there’s probably an uptick in that. I mean, I think that’s what companies like UNFI, trying to dropship and things like that are trying to accomplish. But yeah, you’re kind of taking it not just micro local distribution and last mile delivery, but really kind of focusing on distributing grocery in just regions. I don’t know too much about the space to really comment on how much of that is happening today already, but it’s interesting.
Someone asked me if I can repeat again what I said about local POSt track supply. So it’s kind of interesting to think as we integrate more and more POS systems, which we’ve been doing, that’s data of local inventory in a local brick and mortar down the road, and they’re tracking. They’re digitizing their catalog, like I was talking earlier.
And now we see, here’s a great example. And it’s already coming out with some apps but Green Room brewing just came on and started actually putting inventory up so they know that they can take online sales. So they’re already tracking these in their POS or whatever they’re doing. There’s nothing stopping me to ask a brick and mortar to allow me to connect via API into their POS system and just take the top four and say it’s nothing for you to do. You don’t have to upload anything. I just want to sell your stuff locally through my new app. That’s a local beer delivery app. And I just need to connect to your Clover POS system. So that was my point . It’s not too hard to do that. It really just takes, is that a viable business model in general, right? I mean, the technology part is simple. Do you have enough people putting in accurate inventory in there? Do you have a demand for that and is it viable past what like I said, there’s a lot of apps already doing it already.
Appreciate the nice words there. Get a recording. Yep, we’ll definitely send a recording to everyone that was here. Service provider. Yeah, service providers are A little bit tougher. I think it goes back to again this question is I’m a service provider of a sign shop. What do you think? I know, I think service is tough in a time where we’re social distancing. But you can still, like I said, as mediums like Zoom and things like that become richer and that you can talk through and have a face to face interaction to some extent on a Zoom meeting, and then show and kind of instruct, I think that you got to look to leverage what you have and get creative.
I don’t have much knowledge in the service industry, but I would say that looking and leveraging new technologies is going to be your best bet. What kind of closures do we see? So we’ve seen a good bit of closing of warehouses that just can’t keep up with the volume. So it’s kind of interesting. We’ve seen it on both sides where obviously, it’s called the grocery distributors we work with are not accepting orders currently because they just have such high volume. We’ve heard of some actually and they’re running out of stock and supply chains broke down because if you’re sourcing outside of the nation, it’s tough to get in products right now.
So we’ve seen that happen. We’ve also seen just really mass delays in other items that aren’t really essential like firearms is a big industry that we track and there’s been a huge increase in that. Anytime something like this happens, the firearm industry really spikes. So there’s delays there, but they have less of a supply chain issue, which is interesting to see. Obviously, grocery, there’s going to be supply chain constraints there just given frozen goods and perishable items. But it’s interesting to see even firearms, which has not as much of a supply chain issue. They just workers being out sick or social distancing, slowing down warehouse just movement has been interesting to kind of see.
All right, came through somewhere on chat, I’m trying to get to this Q&A. It’s showing as unread. I don’t know, Melanie, if you’re on there, unable to see the Q&A. Usually we do this. We’ve got the whole team kind of working it together. It’s been different, all being distributed. Let me see if I stop sharing it might help. I’ll pause. Yeah, that’s everything I got. If I missed your… I feel like there should be a Q&A section here that I’m just not seeing.
I’ve stopped sharing all together. All right. Well, it’s not letting me open the Q&A right now guys. I’m sorry if I missed a question. Yep, that’s it. Oh, we got a couple more coming through the chat at least. Yeah, if you can’t, I would just go through the chat if you can’t get one into the Q&A, because it’s not opening up like the chat is on my side. Okay, yes coming through chat. I’ve got a couple new ones.
We’ve got seven minutes left, might as well kind of hit some of these. So how as a retailer can I prevent oversells via allocating inventory for dropshipping? And how do you manage low inventory thresholds when multiple people are connected to the same feed during a high volume flash sale? That’s a great question. That teed me up. I do recognize a name I think, and I think this person might be in the space so appreciate that softball, kind of, but yeah so as a retailer, how you prevent oversells, right? So you’re talking about pooled inventory as you dropship that you don’t have a record of truth in your own system of. At any given time, you’d be selling the same Yeti cup as the next person. And they could go large sales real quick and the other retailer takes all the last 12 Yeti cups that are left. You still show 12 in your or managed system because you didn’t sell any, but they’re all gone. So it’s really about choosing the record of truth and the timing of that inventory data. So we obviously, you’re going to be pulling in inventory, how many of these are in stock when you’re dropshipping it from a supplier? You’re going to see 12.
That supplier you’re relying on is to be providing an updated inventory feed where they should be, at least, we’ve got some distributors that will do every five minutes, more commonly every hour. It can be tough during the flash sale kind of scenario if it’s only every hour. But in general, you’re going to ask every distributor to provide some kind of feed. Ideally, you’re connecting via API. It’s as real time as possible. But you’re going to rely on that and it’s really about your partners there.
With that said, you can do some things to kind of prevent it. You can pull the feed as often as they update it and have an optimized sync like we do with inventory source and Flxpoint. And every time it changes, and you get that, you’re going to automatically push that, that’s one or two, the quantity, if it gets low, you can set a quality filter. So if anything drops below, you know it’s going to be a flash sale, and you put it some super high like 40, or it’s just a normal day so you set it at some low at like five, you can automatically mark it out of stock to prevent stock outs. And then lastly, you can have, and I believe there’s a couple different software companies out here that do this, I think. Yeah, so there’s a couple of different software companies coming out to do this committed stock.
So it’s pulled inventory, yes, but say it’s not pooled by a ton of retailers. You’re one of five, your order is going to matter a ton or at least somewhat in that so you can add that as another layer where sure, you didn’t sell, you sold maybe five of those and your other competitor sold seven of the same that they had access to from that distributor. At least you can bring yours down five for the time being and then it may hit like a threshold to drop it to nothing because you set it like a low quality stock threshold. So that committed stocking, the idea that also tracking in inventory and mixing that in with just as often as you can updating inventory from the supplier is really the only thing you can do. But like I said, you rely a lot on your supplier to provide good data there.
I really can’t. I wish I could talk on blockchain and smart contracts as social distancing increases. I’m not going to try to touch that. Sorry, Joe. I just don’t know enough there.
Yeah, so Charlie writes here. Just open a Shopify store built mostly around dropship. But obviously, as I mentioned, a lot of these suppliers are on hold and not taking orders, which has to be the case here. Would you recommend building out inventory? I think having it distributed, it goes back to diversifying the supply chain. Yes, I do think that I’m a proponent of dropship in the model. I think it goes really well with the traditional wholesale model as well. And I think having both of those is really what we see the top 1% retail is doing and puts a good example out there. Dropship is a great way to identify products that you want to buy wholesale and make more margin on and bring in house at a discounted bulk rate. It also allows you to add more to your catalog and take on sales that you weren’t able to from non-stock items. There’s a lot of great reasons around dropshipping. I would say though, there’s a lot of great reasons to implement wholesale as well. And in this current time, yes for sure.
Just reading through this one. Okay, it’s more of a statement versus a question. I’m an Amazon, eBay seller, should I start doing dropshipping and can you recommend any good dropshipping channel? Dropshipping on Amazon, eBay. Dropshipping in general is all about your partner network. It’s all about how much you trust your partner. So we do recommend working with multiple dropshippers when you are dropshipping. And you’re not stocking in house inventory at all, at least not a ton of it to have overlap in those products because we are seeing large distributors go out of business or at least stop taking an order I should say, while their competitors are not. They’re not as big. They don’t have as large gross grocery contracts, whatever it might be, and they still have the same product that you have listed on Amazon and you have access to. So just like anything else, you gotta diversify, like I was saying earlier, but kind of adding layers, multiple layers and points of failure there that you can kind of rely on is going to be key there. So Amazon, eBay, I say that because you have to be really careful about orders you cannot fulfill on either one of those platforms, especially Amazon.
So dropshipping can be tough there and you need to be able to rely on your dropship partner to ship within that specific requirement that Amazon needs. I will look for one more. I do have to drop and go to another meeting here in a minute.
Okay, so it grows in many ways. I did have a request here to share the screen again for the diagram on different platforms, but I am going to send out, everyone’s going to get a recording of the webinar and you’ll also get, we’re going to put out a guide on this and kind of put it into more of a written format too. So you’ll be getting that as well at some point after the follow up here. So yeah, that’s it. I really appreciate it. This is probably our biggest webinar we’ve had. A lot of people stayed all the way through the end. I really am grateful for that. I mean, everyone’s just sitting at the house anyways, might as well watch your 400 webinar you’ve been invited to. So really appreciate it. Thanks again, guys. Yeah, I hope to see you on the next one.