Grocery delivery marketplace dominance with Rick Watson – Grocery Podcast S4 E9

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Grocery delivery marketplace dominance with Rick Watson – Grocery Podcast S4 E9

Mark and Sylvain start by covering the latest news in grocery. Canadian grocer Sobeys’ acquired regional grocer Longo’s in another move by this fast-growing retailer. And in the US, the NGA urges investigation of large US grocers for “illegal and anticompetitive business practices.”

 

As we consider how the market continues to evolve each month, Mark quotes David Bishop from Brick Meets Click who noted the two key success factors for regional grocers.

 

“Why is it that a shopper goes to a local regional grocery as opposed to a large mass merchant chain?…It’s two things. It’s their product assortment, and their customer experience. If you can’t deliver on your product promise, you’re going to have a challenge. And it’s just, your shoppers are going to bleed to those chains that can deliver.”

grocery delivery marketplace

So what does that mean for regional grocers on the Instacart grocery delivery marketplace?

Rick explains the value for grocers in balancing their own website with other channels like Instacart, instead of offering only their website or outsourcing completely to the marketplace.

 

“Walmart, maybe Kroger can shut off Instacart, everyone else, I’m not sure you want to shut off Instacart. I think for the optimized retailer that really understands their customer, that has great product, if you can, long-term, get Instacart to 30% of your online volume, to me, that’s your target. Any more than that, you’re too beholden, any less than that, I think you’re missing opportunity.”

 

And for regional grocers looking to balance and grow both channels, Sylvain notes the success one of our grocery retail clients Smart & Final has had with this strategy.

 

“I find this really smart, is the product that they’re seating on those marketplaces is also a little bit different than what they’re selling online in their own website. So they’re getting people hooked, there’s the convenience and they’re using it to drive more traffic to their own .com as well.”

 

As the discussion continues around Instacart’s advertising capabilities, Rick estimates that Instacart will become the fourth largest advertising platform in North America. As CPGs continue to move advertising spend online, how can grocers capture that spend? How will Instacart’s dominance in the advertising space impact grocery retailer trade dollars, and in turn their business overall? 

 

Tune in to the full podcast to dig into what impact Instacart will have in the grocery advertising space, and how the industry might shift and evolve with it.

 

Did you like this podcast? Check out these other great shows and subscribe for notifications on upcoming shows!

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  3. Rick Watson on why Walmart joined the Instacart Marketplace

Rick Watson, CEO and Founder, RMW Commerce Consulting

Rick Watson is the CEO and Founder of RMW Commerce Consulting. He’s a world leading expert in marketplaces, and offering key insights on the industry. He launched the third-party marketplace at Barnes & Noble.com, expanding the company’s product catalog by over 1M items. Most recently, Rick directed the cross-border product strategy of Pitney Bowes, comprised of Borderfree and the eBay Global Shipping Program.

Photo of Rick Watson

Sylvain Perrier:

Welcome ladies and gentlemen to Digital Grocer, Season Four, Episode Nine. I can’t believe we’ve made it this far. Today, I’m your host, Sylvain Perrier, president and CEO of Mercatus Technologies. And joining me as always is a co-host, sidekick, Mark Fairhurst, VP of Marketing, Mark?

Mark Fairhurst:

Hello, hello. It’s been awhile.

Sylvain Perrier:

It’s been a while, mark.

Mark Fairhurst:

I had no beard.

Sylvain Perrier:

You had hair and no beard, and it migrated.

Mark Fairhurst:

It’d shift itself.

Sylvain Perrier:

And you replaced your fireplace in the back to a beautiful aquarium.

Mark Fairhurst:

Yeah, I’m anticipating the summer months, hopefully soon.

Sylvain Perrier:

Weather here in Canada can be strange, especially if you’re in Toronto or in the surrounding suburbs. Who knew, right? It’s snowing one day. The next day, you’re water skiing.

Mark Fairhurst:

That’s right.

Sylvain Perrier:

I have just no clue anymore.

Mark Fairhurst:

Tell that to our friends in Texas.

Sylvain Perrier:

Yes, that was just so terrible what they went through. And what we learned from that is their own power grid is actually not connected to the national system. It’s been deregulated. And just reality is they’re not equipped to handle the weather, right?

Mark Fairhurst:

Yeah, right.

Sylvain Perrier:

Now, my understanding is this is the second time they’ve had such an event occur. The first time would have been in 2003, I believe, that it happened.

Mark Fairhurst:

But just, I didn’t know they had a disconnected grid. Really, really tragic what happened. And I think not to get political, it just speaks to the unpredictability in terms of weather patterns going forward.

Sylvain Perrier:

Yeah, yeah. Well, and we were experiencing it here. I mean, we’re starting to experience two seasons in a week, in some cases, and even in the middle of winter, which is … and it talks about global warming and so on. So, there’s a lot of things that are happening in grocery retail, specifically, this coming week, or this past week, I should say. So first and foremost, when we all got the news, Mark was Slacking me at like 5:00 in the morning to let me know that Longo’s-

Mark Fairhurst:

Because I got nothing better to do.

Sylvain Perrier:

Because you got nothing better to do, and that’s what we do all day is just, we’re Slacking that Longo’s was acquired by Sobeys.

Mark Fairhurst:

Yeah, that was big news, at least in the Canadian grocery retail market.

Sylvain Perrier:

Yeah, it’s interesting because I’m curious to see how Sobeys is going to manage having a Farm Boy and a Longo’s, two retailers that have traditionally … Well, I wouldn’t say traditionally competed, but were starting to compete in the Greater Toronto area, and how Michael, the CEO of Sobeys is going to manage that. Because they’re similar in a sense, but I find private label much stronger over at Farm Boy. The experience is different. I look at Longo’s, all about entertaining. I’m a loyal Sobeys shopper. So when I go to Sobeys, they get my complete share of wallet. So I’m kind of curious to see how they’re going to balance this out, specifically on real estate and growth of the Longo’s brand. Also, sorry Mark, but I was astonished, only 70,000 users for Grocery Gateway?

Mark Fairhurst:

Yeah. I thought it would be a lot more, to be honest.

Sylvain Perrier:

Yeah, I thought it was.

Mark Fairhurst:

Yeah, for those who don’t … So Sobeys is one of … In the Canadian market, dare I say, is very oligopolistic. So we have maybe five large grocery chains, and it’s very hard to be an independent, and continue to invest and compete. Sobeys part has partnered with Ocado to bring to market their robotics CFC, and they’ve been doing really well. And I guess Longo’s just figured it would be a long, hard road ahead to compete against that kind of momentum. And you got to think, did Sobeys have this in the back of their mind three, four years ago when they had started to contemplate what the next iteration of grocery commerce would be? And even where they had situated the robotics center, and it’s close to where Longo’s office is. If that was the case, it was a brilliant long game play for Sobeys.

Sylvain Perrier:

Yeah, absolutely, absolutely. So, it will be interesting to see what kind of developments are going to occur. But we wish the Longo’s team, and their associates, and the family, best of luck. And I think it’s … I mean, it’s great to see a Canadian success continue in the hands of another Canadian organization. I think the … I was talking to some independents the day of the announcement and the day after, and they were shocked. And shocked, but somewhat not surprised. It’s kind of challenging right now. I mean, if you look at … I don’t know, Mark, if you saw in the news that was put out there by NGA a few days ago, but you have small retailers asking the US government to investigate large retailers. So that fight between big retailers and smaller retailers, as much as we like to say, there’s been this period of detente, that’s certainly not the case.

Mark Fairhurst:

Yeah, I think coming out of the pandemic, hopefully knock on wood, soon, the fact that the big fish have gotten bigger and are using their supply chain dominance to get preferential pricing from suppliers is hurting independence. At least, that’s the contention of the NGA.

Sylvain Perrier:

Yeah, well, there’s also the fact that they can use their capital to do so much more. I mean, an not just on pushing the CPGs around, but innovation is another one. But also turning the ship out of Walmart, if on innovation, it’s not easy for it to have a major impact, it’s got to be fairly large, and the advantage of smaller retailer has, if they can get past the fear of innovation and the desire to innovate.

Sylvain Perrier:

And you know what I didn’t do? I didn’t turn off my cell phone, which is so rude of me to my poor, our listeners. And so here’s what I’m going to do. I’m going to lead by example, and turning it off. But the challenge becomes, to move the needle, it’s got to be so big. So like I was saying for the smaller retailers, if you can get past that fear of innovation, and think iteratively, and try, you somewhat have a bit of an advantage. Because any little thing can have such a major impact on business. We recently published some important numbers. So this is in partnership with Brick Meets Click, David Bishop, who we love working with. We published our February numbers from our national survey. Mark, top of your head, can you share some of those numbers?

Mark Fairhurst:

Yeah, the February numbers came in at about $8 billion down from the $9.3 in January. So in some respects a significant drop, but not unexpected. And I think David is projecting a little more settling coming into March. What’s what’s clear though, is that curbside is continuing to be the dominant fulfillment method for the vast majority of grocery shoppers.

Mark Fairhurst:

The downside though, is that the customer experience still lags what respondents are saying that the experience is like with delivery. So when you think … One of the questions that we asked David was, “Why is it that a shopper goes to a local regional grocery as opposed to a large mass merchant chain?” And he says, “It’s two things. It’s their product assortment, and their customer experience. If you can’t deliver on your product promise, you’re going to have a challenge. And it’s just, your shoppers are going to bleed to those chains that can deliver.”

Sylvain Perrier:

Yeah, it’s interesting, what came out, I saw, of that report that we just started to circulate is that for the month of February, 95 million American households bought groceries online.

Mark Fairhurst:

Yeah, a sounding number.

Sylvain Perrier:

It’s amazing, and that’s still, I believe, higher than January. And you said something really interesting around customer satisfaction. I mean, we are seeing, and I shared a report out on the internet from the American Customer Satisfaction Index. It’s a report that’s done annually, and it goes through multiple verticals in retail, specifically in grocery. I think in this instance, satisfaction, depending on the type of retailer dropped close to 30%.

Mark Fairhurst:

Yeah, yeah.

Sylvain Perrier:

It’s very significant.

Mark Fairhurst:

Yeah, yeah. And it’s definitely something that a lot of the traditional brick and mortar chains really have to take a look at. Because it’s a leading indicator for a customer lifetime value.

Sylvain Perrier:

It is and it’s interesting you say that and everything you’re going to say is going to be interesting.

Mark Fairhurst:

Not everything.

Sylvain Perrier:

Not everything.

Mark Fairhurst:

Not everything.

Sylvain Perrier:

But what I have found more often than not that a lot of retailers are just doing these mini pulse surveys throughout the year and what they’re not, and so they’re using satisfaction, I don’t want to call it a lagging indicator, but it’s too late when you’ve measured it throughout the year. What they’re not doing is making sure that when the digital receipt is sent out post submission of the order, they’re not including a link to capture a quick survey. When the order is delivered or when the orders picked up, they’re not including a follow-up survey.

Sylvain Perrier:

I know we can get survey fatigue, but we’re not talking about 50 questions here. We’re talking about three questions, a loyalty question, a satisfaction question, and “Would you return?” Those are the three main drivers of true loyalty in, specifically in retail or in research. You can ask those questions repeatedly. I think that the beauty is you can develop this customer rescue program where you can deal, and as Mark was just saying, “It being a leading indicator, if you’re starting to see a dip, you have an operational issue that you need to deal with.” Don’t wait when it’s too late to find out because retailers don’t yet know, like in the SaaS industry, you need to take customer churn extremely seriously, and that’s not necessarily happening in the grocery e-commerce space.

Sylvain Perrier:

Other news, Kroger is temporarily closing stores in California. I don’t know if you saw that Mark.

Mark Fairhurst:

I saw the headline. I didn’t dig into the story, so-

Sylvain Perrier:

It’s-

Mark Fairhurst:

Is it temporary?

Sylvain Perrier:

I don’t know. It seems to be in response to the minimum wage increase and I think it’s to force the hand of the government, but the reality, depends where in California, but certain locations, other retailers are going to reap the rewards. I don’t know if Kroger is doing this just to put pressure, but at the same time, customers will go to the next available, an Albertsons, a Safeway, a Walmart, a Smart and Final, a Grocery Outlet. I mean, they have choice in a lot of those markets. Stay tuned on that.

Sylvain Perrier:

The other thing that we’re seeing that’s quite interesting out there in the press, we’re seeing Instacart really bolster their executive ranks as well as their board of directors. I mean, the big addition to their board is the CEO of Snowflake. Snowflake is a large virtual database provider online. I believe they are a vendor to Instacart, in any case, from my understanding from reading some of the press that’s out there.

Sylvain Perrier:

I’m often perplexed and I wonder, and I know our phone has been ringing off the hook with regional retailers that are at a point saying, “I need to own my own curbside experience. I’m locked into an exclusive agreement. It’s coming to term. I want to get out of this. I need to do something different.” The question I’m asked a lot from these retailers is, “Has Instacart become too big for a Walmart and an Amazon to catch up to, and where does that leave me as a Tier 1, Tier 2, and even Tier 3 retailer caught up in this brouhaha?”

Sylvain Perrier:

It’s an interesting subject. We figured, so Mark and I figured the best way to tackle this is we bring back an old guest and a good friend to Mercatus.

Mark Fairhurst:

He doesn’t look old.

Sylvain Perrier:

No, he doesn’t look old. He looks like a rockstar.

Mark Fairhurst:

He does.

Sylvain Perrier:

He does look like a rockstar, and that’s Rick Watson, the CEO and founder of RMW Commerce Consulting. Rick, welcome to the show.

Rick Watson:

Thanks a lot, guys. Great to be back. We do look like an old rock band now [inaudible] the three of us together.

Sylvain Perrier:

Well, two of us look like we’re from the Grateful Dead and you look like you’re from, maybe, Mötley Crüe.

Mark Fairhurst:

We’ll make you the lead singer.

Rick Watson:

I’ll be honest with you. A CEO of a major retailer about a month ago said I looked like I was in a boy band.

Sylvain Perrier:

What?

Rick Watson:

It wasn’t confidence inspiring in a sales pitch.

Sylvain Perrier:

No, no, no. Oh, my God. That’s amazing. Wow. Rick want to get your thoughts. Much like the rest of us, you’re reading the headlines of what’s happening with Instacart, so market growth during the pandemic, the bench strength that they’re creating internally at the executive level, at the board level, capital that they’re raising. I mean, are they too big to catch up even for a Walmart or an Amazon?

Rick Watson:

It’s a good question. I think Walmart, no, I’m starting to wonder about Amazon, to be honest, just because of their density and the number of stores. Walmart, they’re such a monster. They’re so good at logistics. If they just focus, I think they have a shot. I think Amazon, I’m a little worried about them. Whole Foods isn’t enough by itself. To me, that’s where you start the conversation. 500 stores in the US is not enough, not enough availability, not enough selection. Even within a single Whole Food store, the selection isn’t that great. That means they either need to acquire someone else, which I don’t think they’ll do, or they’ll continue with their Fresh strategy.

Rick Watson:

I think online, I’m not seeing someone who’s catching them at the moment, because Walmart is still experimenting with microfulfillment or hyperlocal, whatever you want to call it now and they have a little bit different approach than Kroger to that, who’s partnered with Ocado. I think it’s a legitimate topic because to understand if you really unpack what Instacart is, particularly online, I think that they definitely may be too big to catch.

Sylvain Perrier:

The small regional chain that has literally put all their eggs in the same basket, where does that leave them, and are they beholden so much to Instacart, if Instacart switches strategy and does something, where does that put that retailer?

Rick Watson:

Well, it doesn’t put them in a great place, but I think the alternatives are worse almost. If you are a retailer, it’s almost like, let’s look at the US e-commerce market. What percentage of retailers can shut off Amazon? Like three, Nike and you can’t name four others. You can’t, it’s not possible. Walmart, maybe Kroger can shut off Instacart, everyone else, I’m not sure you want to shut off Instacart. I mean, I think for the optimized retailer that really understands their customer, that has great product, if you can, long-term, get Instacart to 30% of your online volume, to me, that’s your target. Any more than that, you’re too beholden, any less than that, I think you’re missing opportunity.

Sylvain Perrier:

Right-

Mark Fairhurst:

So [crosstalk]-

Sylvain Perrier:

Go ahead Mark.

Mark Fairhurst:

So, you’re suggesting is have a best of both worlds type strategy when it comes to the Instacart marketplace?

Rick Watson:

I think so, because I think most other online digital marketing channels have played out that way. You can have your own website and be on a marketplace and have different approaches. One of them by themselves, I think, is insufficient. You’re not going to reach the whole market. You’re not going to be introduced. I mean, most people were like, “Oh, I shouldn’t be on Amazon, it’s to cannibalize me.” Well, the reality is there a lot of people that aren’t shopping on your website, and there are a lot of people that haven’t walked into your store and you can expand your reach and attract a lot of new shoppers and you’re going to pick up some of those, but if you don’t have your own strategy, then these are Instacart customers. Let’s be honest. These aren’t your customers, if you don’t have a second prong to your strategy [crosstalk]-

Sylvain Perrier:

It’s like one of our retailers that does this quite well, Smart and Final out in Commerce, California. What they’ve done is they’ve created their own ecosystem, so their own website, B2C, B2B, and then they’ve gone further out and leveraged the marketplaces. Shipt and Instacart, and both, I wouldn’t say they cater to the same customer, but the reality is what they’re also doing, and I find this really smart, is the product that they’re seating on those marketplaces is also a little bit different than what they’re selling online in their own website. So they’re getting people hooked, there’s the convenience and they’re using it to drive more traffic to their own .com as well.

Rick Watson:

Yeah, I think that makes sense. And again, I think the analogy actually plays out pretty well with the rest of online retailer. And if you look at Wayfair, how does Wayfair compete with Amazon when they have all the same suppliers? Well, one of the big ways is that it’s become like the mattress industry. You can’t price compare anything, all the brands are different. If you search and hunt, any savvy consumer can figure out this product on overstock.com is the same as Amazon, is the same as Wayfair. But they also have quite a number of their own unique brands that they buy or drop ship. So I think the notion of unique differentiated selection, it’s a must. Right. To give up, for instance, all your private label to Instacart is probably not the best move.

Sylvain Perrier:

That’s not good. No, it’s not. No, it’s absolutely not. And the business model is counterintuitive because if there’s a markup on private label of 10%, 12%, 15%, it defeats the purpose of private label, quite frankly. So you’re watching and you’re reading the trades like the rest of us and you’re working with a lot of executives in the retail space. What’s your crystal ball telling you what’s going to happen around innovation and technology?

Rick Watson:

Look, I think Instacart is on the path to becoming the fourth largest ad network, at least in North America, which is a pretty massive business. Obviously, it’s going to be hard for them to beat Amazon and Facebook and Google, so I think number four is a reasonable target. And I think because it’s a little bit more niche, I think it’s a realistic target for them. So I think their ad network innovation will be pretty tremendous. I think Instacart’s innovation around their machine learning models, what things are in stock versus out of stock, how [inaudible] replacement.

Rick Watson:

The two biggest complaints I hear from, I would say the Instacart naysayers, they’re like, “Oh, this is a flash in the pan. It’s going to go back to normal, no one’s going to want to do it. Number one is the price is too high and second is the replacement situation. So I can’t get what I ordered. And I think the ad dollars are going to solve problem number one and I think machine learning is going to solve problem number two. So I think those people, if you wait three years, they’re dead because they’re not investing enough and faster than Instacart.

Sylvain Perrier:

Well, they’re not raising capital to do it.

Rick Watson:

Yeah.

Mark Fairhurst:

You raise an interesting notion and Instacart has said, “We’re not a grocery retailer.” We’ve always said, “Well, not yet,” but now they’re branching into other verticals and the way I’ve described it is they’re more a media company than a retailer, and that’s where I think their focus is. It’s the consumer eyeballs that they need and that’s how they monetize their growth going forward.

Rick Watson:

Yeah, it’s so interesting. Any internet scale industry that becomes a verb, let’s say almost, it’s all the internet markets are almost all winner takes most. And usually there’s a number one that has figured out what the number one thing consumers want and they’ve optimized for that. For Amazon, it’s been convenience. Instacart is actually making the same bet that the consumers are going to care number one about convenience, not about price or anything else or loyalty to a brand or anything. And I think it’s so hard for people to switch apps. Just the cognitive load of having five grocery apps on your phone. Yes, there are people that do that, but it’s extremely rare. I know there have been studies all over that support that. And I 100% agree with you that they’re a media company.

Rick Watson:

If you look at their executive team, 100% of their executives are almost ad network executives and I think that’s how they solve the price problem. And I think retailers ignore Instacart, frankly, at their own peril because the brands want to pour… Where is a brand going to spend their money? Are they going to spend their money on the end cap at a supermarket no one’s walking into anymore?

Sylvain Perrier:

No.

Rick Watson:

Or are they’re going to spend it online? And where can you concentrate most of your dollars if Instacart is winning? I don’t know. I haven’t seen a number since last June, which is a little bit dangerous, for obvious reasons. But that number showed online grocery, Instacart had already crossed 50%. Even if they come down to 30%, that’s a massive business. Particularly if 10 years from now, online grocery is half the market, let’s say.

Sylvain Perrier:

And that’s the challenge at the end of the day, if you’re a CPG. You can get distribution quite quickly with your ad dollars. Problem is where do you go and get a vehicle that creates conversion for you? And end caps are never guarantee because… And I think we all know that challenge and I’ve talked to a lot of CPGs. They spend so much money just making sure that their end caps get installed and the product actually makes it to the end cap. And at the end of the day, it’s so frictionless to go with an ad network that guarantees you conversion. It just makes good sense. And then suddenly, that’s a challenge for a retailer that survives on trade dollars. There’re tons of retailers that if you were to take away the trade dollars, they wouldn’t be in business.

Rick Watson:

Yeah. And look, it’s an interesting point you raise. And so the question is in the US, even before the pandemic, many years before the pandemic, it’s been known to have been over-stored in the department store space, the middle is being squeezed out. Will that happen in grocery as digital keeps eating share? Will it be a few big guys, maybe a couple of regional players in each space, like an H-E-B in Texas or something like that, and then Instacart?

Sylvain Perrier:

Yeah, I’m going to say yes and here’s why I’m going to say yes. I think there are still retailers reeling from the ’08 decline in the economy, that’s 12 years ago, that are hanging by a thread. And so you take this, I don’t want to call it an artificial moment in time, but this moment in time where your sales are through the roof but your expenditures are the same. So investments in PPE, investments in cleaning, stocking the shelf. And then you have this moment where dollars on the CPG side are going to the digital side and the growth of grocery e-commerce. If we hit a recession in the next… No mind you, we haven’t had a recession since ’08.

Sylvain Perrier:

If we hit a decline in the economy that lasts for more than six months in the coming future, you will see some regional retailers disappear or have to be acquired. Because if the dollars are leaving and you can’t fall back on your trade in co-op or you can’t fall back on something and you don’t have a strong private label brand, because people trade down in the brands they buy or they trade out, they go to a discount retailer. If they don’t go to a discount retailer, they have to go to a food bank. And so if we have another event like this in the tail end of this situation, I don’t think you’ll see the same number of retailers out there in the market. I just don’t. So I would agree. Man, this conversation got somber really quick.

Rick Watson:

Right? What happened?

Mark Fairhurst:

We just dealt with one economic downturn, now we’re just anticipating the next.

Rick Watson:

We just destroyed half the industry in a few minutes of conversation.

Sylvain Perrier:

It’s like a really bad game of risk.

Mark Fairhurst:

So is there something uplifting we can talk about as far as e-commerce in general and grocery e-commerce in particular?

Sylvain Perrier:

Yeah, listen. Yeah, here’s the beauty about this? Not withstanding Instacart’s success, I think you have a lot of retailers that are realizing that this is the real deal, that on their doorsteps is the opportunity to do something. What that is, I think they’re starting to figure this out and that’s why they should call Rick because Rick can help them understand… And the strategy behind how you leverage these marketplaces to your benefit and create your own ecosystem. That’s great. Also, we’re seeing retailers starting to invest in proper operational procedures and processes and technology just to push out costs.

Mark Fairhurst:

I would agree. And not to steal any thunder from Rick, but I see this as a wake-up call to a lot of retailers who for the longest time had their head in the sand or didn’t see the significance of the shift to online, particularly in grocery, because it’s the laggard vertical and I’m optimistic. I’m optimistic that they’re going to reclaim the strategy from some of the larger players in the market. And by the way, contact Rick.

Rick Watson:

Yeah. So thank you, first of all. And I think one of the most interesting trends to watch, I think, we’re spending a lot of time talking about the retailers, what we’re not doing is spending a lot of time talking about the brands. And so I think it’s such an interesting scenario to play out. Grocery is already like a super innovative category, it has been an explosion of brands, not only in grocery, but in pharmacy, in CPG. And I think the biggest threat to these regional grocers may not come from Instacart directly. It may come from the brands who are like, why do I want to go sell wholesales to these dying supermarkets? Instacart, please house my inventory and I just want to be in all your major markets. If we get a direct to consumer revolution in grocery similar to what we saw in like apparel and clothing and all of these DTC online categories, which I think very well you could. Especially if you make these easy, just look at it, there’s like three million Amazon sellers. What percentage of them are only on Amazon? A decent percentage, are not multi-channel.

Rick Watson:

So I think they, Instacart, could fuel a wave of online only brands that you can’t find in a store. And I think that means Instacart would have to solve a lot of logistics challenges. But it wouldn’t be because Instacart is trying to destroy the grocery market, it’d be because of the brand. See it as like this boon for them.

Mark Fairhurst:

I think if you marry what you just said there with what the Financial Times has reported Instacart’s investment in robotic distribution centers. You see paint a very interesting picture.

Sylvain Perrier:

Well, this also goes back to, we just attended this spring meetup of grocery shop, which was all virtual, which kind of interesting. And out of all the CPGs that were attending, all of them were looking for commerce platforms, all of them. And we’re also seeing a big surge in B2B commerce coming from the retail side. So retailers trying to position themselves to go after the B2B side of the house. I think you’re right rick. Parting comments for our audience, any key words of wisdom and advice?

Rick Watson:

Yeah. I think your, your notion of wake-up call is a good one, because I think we’re at an inflection point in the market where we’ve just made a huge jump from, let’s say 2% online penetration of grocery to 10, 8 to 10, something like that in the US, North America. So the question is, what are you going to do about that really? Is the kind of the question I would leave most watchers with. And if you keep things on autopilot, you have to invest ahead of the market if you’re going to get outsized returns from the growth that’s ahead of you, because the big players are investing tens of billions of dollars. And so if you think you can invest in another 2% and CapEx next year and capture the opportunity, I think you’re wrong. And so I think the investment levels need to go up, the pace of innovation needs to go up. It’s not going to be about just the platform, it’s going to be about culture. It’s going to be about how you innovate faster as an organization.

Sylvain Perrier:

Absolutely. Listen. Great to have you on the show as always. So how do people get ahold of you?

Rick Watson:

Yeah. So the easiest way to get ahold of me is check on my website, RMWcommerce.com or look for me on LinkedIn, just type in Rick Watson and e-commerce and you’ll find me there.

Sylvain Perrier:

Awesome. It’s been great having you on the show and thank you. Mark, another show in the can.

Mark Fairhurst:

It was a great one. Great guests, great topics. We’ve got some other shows coming up, I think people are going to be really interested in.

Sylvain Perrier:

I know they’re going to be interested. Absolutely. Folks, thank you so much. And don’t forget to keep your ear to the ground. And when you hear our next episode of Digital Grocer drop. And peace out.

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