Customerland

The Intersection of Speed and Sustainability in Retail

• Mike Robinson • Season 2 • Episode 31

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Have you ever wondered why a simple purchase can turn into a logistical puzzle? Imagine buying five identical t-shirts only to receive them in multiple shipments from different locations. In today's episode, Mike Robinson, a self-proclaimed "accidental retailer," reveals how this seemingly minor inconvenience is a window into the complexities of modern e-commerce. We discuss their intriguing journey from aspiring Wall Street professional to pioneering sustainable last-mile delivery solutions with their venture, the Eighth Notch. By synchronizing package deliveries and reducing the number of delivery trucks, this innovative approach not only cuts costs but also significantly minimizes carbon footprints.

Tune in as we challenge conventional consumer delivery preferences and explore the rising demand for sustainability in retail. Discover how major players like Amazon are setting new industry standards, making shoppers value eco-friendly practices alongside rapid delivery. We'll delve into the gain-share program, which rewards retailers for adopting sustainable methods without compromising customer satisfaction. Finally, we explore the scalability of these groundbreaking solutions and extend an invitation to retailers and software partners eager to join this transformative movement. Don't miss this enlightening conversation that promises to reshape your understanding of sustainable e-commerce.

Mike Robinson:

I bought five white t-shirts from Macy's saying it'd be the simplest transaction in the world. It was shipped to me from four different locations and came to me over three different days. Five white t-shirts, right. And it was because they were using stores and they're doing all the right things right, which is what you're taught to do in an omni-channel world is get to you know, ship it as quickly as possible because the customer needs it. It was coming from the four corners of the US, right.

Mike Giambattista:

And there was one that came from the local store here in San Francisco. So what's the best way to describe you? Yeah, that's a loaded question, isn't it?

Mike Robinson:

Nevermind, no, no, no, no. I mean, I think that I describe myself as the accidental retailer. I didn't plan on going into retail, but I ended up in retail. What?

Mike Giambattista:

was the intended direction the intended.

Mike Robinson:

I wanted to go to Wall Street, right, and I wanted to go to Wall Street, and one thing led to another, and all of a sudden I find myself in uh corporate america doing uh finance and accounting, and then I ended up in consulting and doing large system implementations. And one thing led to another, and all of a sudden it was e-commerce and and I grafted to it.

Mike Giambattista:

And 25 years later, I'm still grafted to it which which leads directly and obviously over to the eighth notch. Yeah Right, it's a clear path.

Mike Robinson:

Yeah, it's right, it's I, as, as I've as I've talked to different people at different time and and they often talk about how did you get to where you were?

Mike Robinson:

And it was, like I, it was not a straight shot and it wasn't uh, it wasn't completely planned out, but but yet everything that I'm doing right now is using something that I've learned in the past and some experiences been helping for it.

Mike Robinson:

And the eighth notch came about because I've been a retailer for the better part of the last 25 years, focused on convincing people like you to buy things that they probably don't need but you probably want, and so, you know, focused on consumption, and I think in this second phase of my career, I wanted to focus on I never want to change that because I think that that drives the engine of American, it drives the engine of commerce, et cetera. But I wanted to see is there a more, is there a more sustainable approach to it? And, and when my friend approached me about this idea of the eighth notch, which really was, how do you change the, how do you reconstitute and reinvent the way that the last mile is thought of and do it in a way that that that saves everybody involved money and saves carbon at the same time. I had to really think about it because it changed the nature of consumption.

Mike Robinson:

And that was something that was really interesting to me.

Mike Giambattista:

So did it really just start with that question? You know what are the solutions, how do we solve for that, and I'd be presumptive a little bit here, but did your friend kind of have a solution in mind? You know what? In fact, to reframe that just a little bit, what was your personal journey to kind of recognizing the need and what has, it looks like, become your clear passion?

Mike Robinson:

Yeah, it was. It was it was based on. He and I were walking in his suburban neighborhood outside of San Francisco, here, and a delivery truck went by. And then another delivery truck went by and he said do you see a lot of different trucks go by in your neighborhood? Mike and I live in the city and so you know, even though this is a not a well traffic street, there's, there's delivery trucks every single day, across all the brands. And I said, yeah, it happened, he goes, he goes.

Mike Robinson:

Do you think that's sustainable? And meaning it meaning can't? Is it going to reach a breaking point at some point? And I said no, I mean, I, I can't believe, given the fact that everybody was, had had been conditioned before to have things brought to them and then the pandemic and the lockdown caused us to be super conditioned to have everything brought to us that that, that it's just exacerbating. And even though people have moved back to going into stores and stuff, there's still this wall of boxes that are coming at most of us on a daily basis.

Mike Robinson:

And he said I want to change that. I want to change, I want to change the calculus of that, I want to change the economics of that. He said I think I think we can build a business about this. He has a background in that space and it was something that, as Jamie and I kept talking about, I said I think he got something here and I can walk you through it in as much gory detail as you want, but the basic nature of it was how do we find ways that every time a delivery truck stops at your house, that they're not delivering just one package, they're delivering multiple packages, and whether it's from the same retailer or across retailers, it's a more synchronized way of having everything brought to you.

Mike Giambattista:

It either shortens routes minimizes the number of times that a truck comes down your street on a weekly basis or even starts to eliminate days and takes trucks off the road. I'm already thinking of the complexities involved there because you know, even if you just stuck with one delivery service provider, you know figuring out route efficiencies is a lot of complex math right now, and that's just with that one provider. But if what you're talking about is trying to create efficiencies across multiple providers, you've got to aggregate, you've got to figure out a way to convince them to let you aggregate all that data and then deliver something back. That's actually going to drive some incremental value and you know my mind can't conceive of the math it would take to pull that off.

Mike Robinson:

Well, I will tell you that we haven't gotten to that version of it yet. The version that we are on is a single carrier, but it is one of the two major carriers in the United States. Fortunately I can't mention their name, but you could flip a coin and you'd be right half the time and wrong half the time. But all of their volume being shipped to a residential address, which is approaching 3 billion packages a year, so there's a lot of volume to work with and it's every retailer or every shipper that they support as well is a candidate for what we do. So the math becomes around and if the carrier and that was kind of the unlock for me is, I wanted to have a carrier partner. I think doing it independently was very, very hard, but having a carrier partner this carrier partner had tried to do this on their own and hadn't quite cracked the code, but they build an asset that allows them to be able to keep track of everything that's going to be delivered to every address in America over the next eight days. So I know everything that's in flight right, and what I'm trying to connect to it is this new package based on a new order that's coming in, when to start its journey, to connect to something else that's coming to Mike's house, that might be coming to Mike's house next Tuesday, that the journey needs to start on Thursday this week, right.

Mike Robinson:

And instead of the retailer saying I'm going to pick back and ship it today, I'm going to hold it until Thursday and ship it then because it'll connect to another package, the other thing that we did is we said, okay, well, how do we incent the behavioral change at the retailer? Because they've been conditioned to think that speed is the only thing necessary, right? And so what we said is you know, are you willing to take those dollar savings associated with every time that truck doesn't need to stop the driver, get out, get back in, move the tires and start the process again multi-dollar savings and share it. They said we would love to do a gain share program, and so we created this gain share model where the retailer gets a piece if they ship it on the date that we tell them to. We get a piece if the retailer ships it on that and the carrier benefits because they're delivering multiple packages at the same time.

Mike Robinson:

The carbon savings that came along with that was really, in a retail term, the gift with purchase Because they had done the analysis that said again every time they stop, get out, move the truck, 800 grams of CO2, never created. And then that becomes a measurable number that both the carrier and the retailer can report. So that's how we felt that, given that we had access to the data, we needed the data from the retailer, which was really 12 pieces of information around every e-commerce order that they have. So it's a minimal amount and we can create magic out of it by being able to connect packages it's ambitious.

Mike Giambattista:

It's, um, you know, thankfully you're working with a, with one of the large providers who has probably every you know possible kind of data you could ever want to pull something like this off. Do you, uh, do you foresee that the eighth notch would be selling its services to other providers at some point? Is your ambition to kind of globalize this idea into, you know, other channels?

Mike Robinson:

Yeah, it's. I mean, when you think about synchronizing when things should be delivered by changing when they start their journey, it pretty much connects just across the board. I mean, we're with the one major carrier. The other major carrier could do this as well, Regional carriers could be part of this, International carriers could do this as well. And we're just talking about residential e-commerce delivery, right could do this as well. And we're just talking about residential e-commerce delivery, right. You start to backtrack through the network and start to realize could this be done at the container level? Could this be done all the way through?

Mike Robinson:

We believe that there is inherent inefficiency across the board because speed is the only thing that people are focused on.

Mike Robinson:

If they thought differently about it and said speed is not the only factor, but synchronization and cost savings and oh, by the way, carbon savings, as well as being a secondary component to it, it causes people to stop and think and at least say I have to consider this, but they've got to get past the speed thing first, and so there is no reason why we couldn't take the metaphor all the way through.

Mike Robinson:

I mean, I had another podcast about four or five months ago where we started to riff on and he's in Europe and he was like this is exactly what is needed in Europe because we want to get to smart cities. Right, how do we figure out and he was focused on the delivery trucks in terms of there's only two days a week that they could deliver on the delivery trucks, in terms of there's only two days a week that they could deliver, so have everything brought in on those two days, or it's one company's day on Thursdays and another day on Wednesday. But become much more coordinated and synchronized when you share data, and I think that's where you were headed on this. When you share data, it's amazing what you can possibly do, but people have to start recognizing the importance of sharing data to create common outcomes and common, common benefits.

Mike Giambattista:

So, you know, educating people and kind of in order to shift some well-entrenched paradigms, like it's really about speed, is not easy. It's it's, you know, it's very difficult, which translates to it's pretty expensive to do that. I mean you have to do some serious convincing. But, like you said, once you introduce the dollar figures, look, there's, there's a cost savings here as well. And then there's the altruistic side of it and I that that kind of comes in as a almost a by-product.

Mike Giambattista:

It sounds like, um, and I wanted to talk about that a little bit because you know there are, there are a lot of smart people right now putting a lot of effort into uh, sustainability and and uh products and services that are going to, uh, to minimize the destruction of the planet and, again, be smart about that. I know a handful of them that appear to be very successful. I know a handful of them that are really struggling because they have not quite devised a system, an efficient system, that convinces their customer base that this is the right thing to do, because it's expensive, because who really wants to change when your entire incentive system is built around speed? So how does that conversation go in your world, I mean?

Mike Robinson:

So how does that conversation go in your world? I mean, you've got one of the two largest carriers, but the more cost efficient way of leveraging their network was to make their network work better. Right, and by doing that, they had to go upstream to figure out how to get cooperation from the retailer. In terms of you can't shove everything in at the same time and assume that we're going to be able to figure this out, because we can't build enough. You know, we can't have enough trucks, enough planes, enough buildings in order to be able to handle what was the 33% jump that we had during COVID. And so they said you know, look, delivery density is the term right and it's something that they talk about openly. It's something that they mentioned in their earnings calls. It's something that they talk about openly. It's something that they mention in their earnings calls. It's something that they talk about the potential cost savings associated hundreds of millions of dollars. So they've drank the Kool-Aid. They're using that now as an incentive, as I mentioned in this gain share program at the retailer level. So it becomes financial, as every retailer is looking for pennies of EPS. This becomes pennies of EPS, this becomes pennies of EPS and the sustainability piece. I think will become a much more important message as we go through this.

Mike Robinson:

But then there's the other trend that's happening. I think it's on the consumer side. A lot of the research out there shows that consumers are saying if you gave me an option, I'd take it. If you gave me something that said you were trying to be more sustainable, I'm willing to wait. Up to 75% to 80% of consumers, in a series of surveys that I've seen, have said I get a wall of boxes all the time. I don't need everything fast, you know, I just I just need and in some cases I don't want to feel bad about my consumption pattern. Help me feel better about it, Right? So so I think there's that piece. And then I think there's the uh, the last piece, which is the smartest well, I don't want to say the smartest retailer in the world, the one that gets to the answer fastest Amazon. Um, because I think everybody is just as smart. They just don't make decisions as fast as Amazon or they don't test their way into it.

Mike Robinson:

Just as they condition the entire industry to believe that speed was the most important thing, they're now conditioning their customers to say the sustainability is a component as well, Right, and I would suggest to you, if you haven't seen it already, the next time you check out, right, it's a series of options, you, if you haven't seen it already, the next time you check out, right, it's a series of options, and some of them are you know, I'll have them delivered, all of them, next Tuesday for you.

Mike Robinson:

And guess what? It's better for the planet when you do that, right? And so that there's this conditioning of the consumer base that sits there and says, well, if Amazon can do it, why can't you? And I think that's the series of waves that we're riding, which is there's the cost savings that the carrier is using as an incentive, there's a sustainability component that they have. There's a conditioning of the consumer set as well to be able to say there's a change here, Take advantage of it and don't be as slow as you were the last time, because the speed one is they're still trying to catch up on that and they're several years behind on that.

Mike Giambattista:

I'm I'm kind of making this up, but based on the way you just articulated that, it seems like what what you're doing is at eighth notch is leading with the, the financial benefits for the carrier, and then you know, secondarily, almost ancillary, these other benefits kind of trail along. Yes, but I think to me the most innovative thing I've heard here and to give credit to the entire process because that's phenomenal is the Gainshare program that incentivizes the retailers to join the fund, because without that you know what the heck that incentivizes the retailers to join the fund, because without that you know what the heck.

Mike Robinson:

There had to be a reason, right. If I'm going to tell you to do something that is counter to your business strategy, there has to be a benefit associated with it. And if it's something that can influence your business strategy, to say, ultimately, this is a benefit that I'm going to elevate to the consumer and tell them that we're doing this right. And I think the other thing that I want to make sure that you and the audience knows is we never violate the commitment that the retailer has made to their customer. If they said five days, it'll be there in five days, right, it's just, it's not focused on the front end of that part, it's focused on middle to back end of that part. It's using time more strategically.

Mike Robinson:

If you've said five days, use five days and if you can find value, do that. If you can't go ahead and ship it early, do whatever you want, right. And we're talking about 15 to 20% is kind of the sweet spot for us. About 15 to 20% of the time for most retailers we can find a way to connect their package to another retailer's package or connect multiple packages in a split shipment mode, right? I tell this story that it was the last order that I made at Macy's before I left, and it's the five white t-shirt story.

Mike Giambattista:

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Mike Robinson:

I bought five white t-shirts from Macy's, thinking it'd be the simplest transaction in the world. It was shipped to me from four different locations and came to me over three different days. Five white t-shirts, right. And it was because they were using stores and they're doing all the right things, right, which is what you're taught to do in an omni-channel world is get to you know, ship it as quickly as possible because the customer needs it. It was coming from the four corners of the US, right, and there was one that came from the local store here in San Francisco.

Mike Robinson:

In the world that we live in and the work that we would do with Macy's, it would be those five white t-shirts would still come from those four locations. I'm not trying to fix the inventory problem, but they'd all show up on one day. So as a customer, I'd be like, hey, all my t-shirts are here, they're in multiple boxes, but I'm okay with that, but they all showed up at the same time and I'm not going. I got one on Tuesday, where are the other four? I get another one on Wednesday, where are the other three? Et cetera. So I think that there's a third benefit, which is the customer experience side, and because we live in a post-checkout world. It's after the decision has been made. Right now, which we thought was the easiest way. The customer isn't involved in the conversation, except it never violates that customer promise window that the retailer has made to the customer.

Mike Giambattista:

It'd be really interesting to try and track consumer sentiment on this kind of a delivery chain, partially because so much of this is invisible to the customer. They don't care, they don't see it, they't care. But, um, you know, like you said, if you're getting your five t-shirts and four different boxes over three different days, you're gonna questions will arise. You know, there's some sort of uh kind of brand resistance that probably starts to form up like you know what the heck?

Mike Robinson:

at least it's a question well, the the other thing that was happening on those three days. I got two Amazon deliveries on those days as well. Amazon was the only retailer that the carrier that we're working with was working with at that point, so they were already piggybacking right On top of it. Right, they're already benefiting from it, right, because they're maybe not the smartest retailer in the world, but definitely get to the right decision faster than anyone else.

Mike Giambattista:

Yeah, yeah, we've had on this podcast, we've had a handful of companies that are working to bring sustainable solutions to various sectors, and I'm thinking of one in particular that does a lot of work in travel, travel and hospitality, or mostly travel, and they're behind this little thing for a couple of airlines and honestly I just don't recall which airlines right now. But as you are buying your ticket, a little box appears and says you can choose this option for a more sustainable you know sustainable outcome. And and that could mean, um, you know it's a, it's a jet that uses a different fuel type, different engine. That saves. You know there's a fuel savings, there's some sort of exhaust calculation that is better for the planet, whatever those are, and it kind of gives you, you know, choose the more sustainable option or choose the regular full price. You know, get you there quick kind of option.

Mike Giambattista:

And the people behind this project very smart, very passionate, but what they found out was that to the average consumer, it wasn't a huge deal. I mean, if it was going to cost them a little bit of money, even just a couple of bucks, they would probably not choose it. If it saved them a couple of bucks, demonstrably, even just a tiny little slice, they would take advantage of it. So it just shows how shallow we are as consumers.

Mike Robinson:

You know, I would use the analogy of and ultimately, once we get up into checkout and allow consumers to make the choice it becomes, am I willing to use time differently? Am I looking for convenience? Right, Because it really should be. You know, in checkout, every time that you're ordering something, Mike, I see that there's something coming to your house next Tuesday from so-and-so. Maybe not mention the retailer. Would you like this delivered at the same time? Now, that's effectively what Amazon does, so what we're looking to do is across the retailers. I mean, I think it's a really interesting question of the paying more to feel better versus. Am I willing to give something that doesn't cost me anything and time? Right now, I'm not sure it costs people a great deal if it's Wednesday versus Tuesday or Thursday versus Tuesday, Especially if there is something that they get back which is convenience.

Mike Giambattista:

Yeah, it's an interesting conversation that'll clearly take us into some serious dog-like territory. But had some conversations here recently on the time value of money. It's a known concept versus the money value of time and for both the organization, the enterprise and the consumer, you know what those valuations look like and how you can play with levers to try, and you know reposition those, those paradigms.

Mike Robinson:

And I would. I would go down the. I would go down the route in terms of, you know, the the true impact of free shipping, right. Right, in terms of what that really means is that a time value of money or is that a money value of time? Right. And and the fact that you know there are so many retailers now that are being asked to question the validity of the channel just because of the cost of shipping and delivery, right, and can you change the economics of it and can you change the calculus of it? And that's what we're really trying to do is take time and money and customer convenience and sentiment and strategy and try to fit them together in a different combination. It does mean that people have to have a little courage, right, to be able to try it and then to see if that the unlocks become what we think are the outsized value creators.

Mike Giambattista:

Yeah, I'm already starting to think of how you could create a storyline narrative, if you will, for the consumer. That kind of changes this from a, you know, just do the right thing, kind of a notion to do the right thing for yourself, you know, somehow.

Mike Robinson:

Yeah, and it's, and it's something that we talk to a lot of retailers on and saying look, you have an opportunity to message differently. You have an opportunity to communicate with your consumer differently. You could even put this in checkout in the current mode that you have. That basically says give us a little extra time that we'll find the most sustainable way of delivering it to you. Right, and we've talked to a number of retailers that have said yeah, or they've said, maybe this is our version of free shipping and if you need it a little bit faster, you're willing to defray a part of the cost, but you pay a couple of bucks. It gives them another tool in the tool belt to think about.

Mike Robinson:

And, as we're talking about customer experience, it's that notion of checkout which is you try and get people through as quickly as possible because you don't want to create any friction. But I do think you want to create thought, right, and I do think you want and people think about you know, do I pay for shipping or do I not pay for shipping? And they look at how long is it going to take? Back to the time value of money or the money value of time, right? That's the question that people are going to start. Now you throw the, you throw the sustainability piece into this. It's another factor for for I think, a growing part of our population, we're going to say I need that for me to have trust in the brand.

Mike Giambattista:

Interesting. I would love to be a part of, or at least look at, some of the data that you're going to end up compiling and seeing on the consumer side as to how they respond to these kinds of new messages and sustainability. You know sustainability options and how they're positioned and you know what the uptake and adoption really are. Um, I, I think that, uh, I should be kind to your schedule and and wrap up this podcast, because I I think there are so many different directions we could explore. But there goes the day and, by the way, I'm perfectly willing to do that, but we should probably reschedule that conversation. Sure, anytime you want, mike, but this is wonderful. Let me just give us a little wrap up here. Let me just give us a little wrap up here. No-transcript. It's an ambitious project that's working and it's actually changing people's minds and the way this entire supply chain, at least the last mile portions of it, are functioning. So congratulations on the big thinking, the great idea and what looks like amazing execution.

Mike Robinson:

Great. Well, thank you, mike, and anybody that's interested reach out. We are always looking to sign up more retailers on this, and we're looking for software partners as well that may want to embed this feature as part of their standard software, especially on the backend side of this. So you know we I mean our goal obviously is to get to as many people and affect as many packages as possible, because this creates significant environmental value at scale and definitely financial value at scale.

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