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Peter: Welcome to Unpacking the Digital Shelf where we explore brand manufacturing in the digital age. The one on Peter Crosby coming to you from the digital shelf Institute studios in Boston with our weekly episode of quick takes on the industry news that you just might want to pay attention to. Molly Schonthal is here live in our studio. She's going to lay down some B2C brain power. Hey Molly. Hey Peter, welcome to the studio. Thank you. It's so nice to be back. Yeah. So Molly you are not, you are not only here you are a traveler cause you were in Vegas for CES. It was in Vegas. My first most important question was did you win?
Molly: I might've won had I played any.
Peter: Not a gambler?
Molly: In the airport, right before I was boarding my flight. I thought maybe I'll just play one of these slot machines, but I didn't even have a quarter. So…
Peter: I'm just waiting for them to get Slap Jack in Vegas cause that's about all I can handle. Not a math brain here. But besides slot machines or whatever, what else caught your eye while you were in CES? What, what should our audience be aware of?
Molly: So the major trends were bots, bots, bots and more bots. You know, little bots that roll around your house help you with things, assist you. They had bots that make your dinner. Yeah, it was, it was amazing. So robots, bots, AI were a big thing. We, there were exoskeletons galore. So this idea that a person could augment themselves with a sort of hydraulic shell and…
Peter: Iron man. You're talking about iron man.
Peter: Is there weaponry?
Molly: Yeah. The example they have on the show floor was a woman changing a blade in an airplane engine. And it's funny because I was mentioning that exact use case to Nate who works here. And I said, you know, they were using the exoskeleton to change out the blade in an airplane engine. And Nate was like, yeah, that makes a lot of sense. And I said something like, and you would know, being a little snarky. And he was like, no, I used to do that for Blackhawks.
Peter: I love Nate. Nate is one of our our sales engineers and is stellar.
Molly: I was like oops.
Peter: I was a rocket scientist. That's the equivalent of that. And so does the exoskeleton have the intelligence to guide the work or is it just making the work sort of achievable by the human? Do you know?
Molly: I don't know the exact answer to that question, but I would imagine there's some sort of precision built in intelligence built in. Smart homes and smart kitchens were a huge, huge thing. So homes with closets that steam your clothes. I'm not kidding. Yeah, not kidding. Also of course the ever present now for the past number of years, smart fridge that knows what's in it knows the expiration date of products can help you make a grocery list
Peter: That would be so embarrassing. My husband keeps things far longer than they ought to be kept. So the refrigerator would be yelling at us.
Molly: I know, ours would be saying most of this fridge needs to be thrown out.
Peter: This pork has passed.
Molly: Interestingly, GE appliances had a concept that they call shift. Now if you imagine this'll be easy for you in the middle of a play when the set changes and people wearing dark clothing come in and sort of move things around. And what used to be a store front becomes the interior of a living room. The kitchen shifts in that way, right? So shelves lower, things move over. And the whole idea is that the kitchen adapts to you.
Peter: Based on your activity.
Molly: Yeah. And so they show three different contacts. One was someone who uses a wheelchair preparing a dinner. Another one was an elderly person who is having some issues with remembering things. And the kitchen would sort of suggest maybe it's time to drink a glass of water or the fridge, you haven't opened me in three days. Or here's where you keep the salt kind of a thing. And then the third example was these kids making a snack. Like don't use the stove.
Molly: And I imagine, you know, I think it's really interesting, but then I start to imagine of course, the insidious side of it. Like my insurance policy knows that I've got high cholesterol and so the fridge locks down the butter and if I opened the butter, like my rates go up. But interestingly I think we wanted to talk about some of the stuff we saw that represented smart devices or commerce of the future. We were talking about this before the podcast began. L'oreal introduced this smart device called Perso. It's essentially what does it look like? They call it a skincare personalization device. There was an article in Gizmodo by Victoria Song about this. I saw, did you see it in person? Yes. So I saw someone holding it, it looks like. Okay. Do you know those fancy razorblades that have three splitting blades on the top? Like a Gilette sort of face shaver? It has a sort of cylinder bottom and then three spitting blades on the top and you kind of, those are the things that you hold up to your face. Okay. Yup. Okay. Well, it has that kind of a cylinder. Which when I showed it to someone else, they've said, you know, it looks like those like tiny desktop trashcans that you have that you can put on your desk to throw away. I don't know what like one piece of dental floss.
Peter: I have not seen those but keep going.
Molly: So you can imagine the cylinder and on top of inside the cylinder are cartridges. Okay. And we'll get to the cartridges. But at the top of the cylinder are these three different sort of areas where the, the skincare product can be pumped out and then you can actually take off the top, the very tippity top, cause you don't want to carry the whole thing with you. And that becomes a compact. Yeah. That goes with you. And the whole idea is it takes into account the environment. It takes into account pollen changes gender.
Peter: Saying, yeah, like weather and UV index. Like it's, and it, it's it also has an app that analyzes your, your own skin and sort of puts all of that information together kind of in the moment. And then how Victoria described it was with a push of a button, three globs of varying products like serum, antioxidant and moisturizer magically appeared at the top of the, of the device.
Molly: Yeah. It's, it's in your interest to attach it. It's a whole new level of personalization. You know, three years ago we thought personalization was sort of better segmentation, you know, that I'm showing you sweaters for men and not sweaters for women. And then we got into personalization that was based on, you know, behavior based and identity resolution. So I like sports stuff and I like cooking and I have a small dog and so I'm going to see stuff that is based on the behaviors that I exhibit online and, or the weather app that I have on my phone. This is like, I am getting stuff that is exactly for me, Molly,
Peter: In that moment in Arizona versus Maldives for my exact skin.
Molly: For trends they have in this video, I'm showing persona. They have someone scanning the color red on a sweater and then matching the color to the makeup being generated by the device.
Peter: Can it can it produce a bag? Because I'm pretty sure that when it read my skin, it would just say, just cover your head.
Molly: Oh no, no. It would say just moisturize, moisturize. You know. And the interesting thing is, you know, cause I can hear the skeptic saying, well ho ho how sustainable is that? Or you know, how many, how many of those are you going to sell? But the idea…
Peter: I love your skeptic voice.
Molly: Who talks like this. The idea is that it gives way because it's connected to an app and therefore connected to a community. So the broader L'Oreal community whatever I make I can share, right? And then I become inducted into this community of makers sharing things that I've created that I really like for my skin. Do you remember when like makers and bots were a big thing and sort of Etsy came out sort of like Etsy for makeup. You know, I book it's this community of people who make stuff. So it's not just the person anymore who has the Perso in their hands. It's the community's sort of observing and sharing and swapping around them.
Peter: I saw that one of the things that does they were talking about lipstick and it lipstick sort of creation on that device is coming soon, but that's personalized. But in the, in this case, the State they are right now it just takes you out to Instagram and does the scan and then PR and then proposes colors. And then as soon you should be able to then manufacture the color. Right. So, yeah. And now I don't, they haven't set a cost yet, right. It's how far do you get a sense of how far from the market
Molly: That I know of? I think it's within the year. And I also love how much amazing data and insight L'Oreal is going to get from this. Right. And one of the reasons when I listened to, I'm gonna mess up his name, Geve speak about Perso, he said that one of the reasons they started it is because foundation is the hardest thing to get, right. With people of varying skin tones. So there are other cosmetics that are probably more, and I hate to use the word fail safe in terms of creating different variations that a lot of people can use flawlessly. And he and his team wanted to focus on something that other types of innovation would dump. So, you know, all of the how to makeup guides, applications, even smart mirror technology cannot solve for a product that doesn't work with or match your skin. Exactly. And so his team felt that the only thing to do to solve for this problem, and there were some crazy stat, like at least 50% of women can't find a shade that is right for them. They had to turn to innovating the product, right. And they had to turn to a product innovation that put the innovation in the hand of the user.
Peter: Well, and also as speaking as a guy who I'm really intimidated by cosmetic counters in stores, like I just feel A, I don't really want to engage with the woman in the white lab coat,
Molly: Never go to Glossier. It's a pink mechanic suit.
Peter: No, that's my nightmare. So, so, I mean, I don't know if they're planning on doing this in the in stores experience at all, but I would walk up to a machine where I could just go and not have to talk to anyone, say, you know, whisper my skin needs help and then see, see what the machine came up with that I would never want because I wouldn't want to. This is just me. I mean, it could just be me, but I don't want to engage in a 20 minute conversation around all of my, you know, what, what autumn am I? Or something like that. So that to me would also lower the barrier for me actually doing something like that.
Molly: And my guess is you're likely to trust it more. So my anxiety at cosmetic counters is how much of what I'm hearing is real versus designed to create an upseller, cross sell opportunity.
Peter: Interesting. So the machine actually makes you trust it in a way that it's, it's actually evaluating versus is what my manager told me to sell.
Molly: Yeah. And they also have, she was wearing this little Geve on his I probably am now saying it for the fourth time. He had this device on his wrist that looked like a little pill attached to a string and it was a UV sensor that they've created that you wear on your body that can be paired with this device. So it, it tells you how much UV you're absorbing during the day. Yeah. Which is probably really scary for most of us, but useful. I mean, I would, I would kind of super useful. So the point being it's based on data that's being collected about you, about your environment. Yes. Mixed with an algorithm that of course has a L'Oreal formulations built in, but still based on sort of what exists for you and your environment.
Peter: Yeah and I love the diligence. And not that this is a S, I mean this is a huge innovation, but the way of thinking of from the customer, from the consumer, what is the problem that, what is the barrier to them feeling like they've had a great experience and how do we deconstruct what might be possible and, and come up with something. I just think it's a super good use of data and technology and yet also empathy for your consumer. I can't wait to see it hit market.
Molly: I showed this to several folks at Salsify and almost all the women in the room said, I really want to get that.
Peter: All right. And then, then without intending to, you've switched to L'Oreal. Cause once you have that you're not gonna. I mean you might, but I don't know. But to me I would default to that cause it's convenient and super easy and, and yeah. Wow.
Molly: Se Magnifique.
Peter: That's the only French I will ever do. So I, and I thought the, the hook into Instagram for product discovery was, was super smart. And you know, I one of the articles that that jumped out at me this week was from Jessica Dumont at retail dive and she was talking about the difficulty for, to have discovery happen in e-commerce grocery and, and so I thought that that it would be interesting to sort of talk about that. I mean, when I go, Oh, well, it was just my experience when I go Instacart or, or Amazon for whole foods, I am on a mission. I know what I want to cook for for the next period. I know what I want. I have my list of my F my things that I buy and I'm rarely distracted in the way that I always am when I'm walking down aisles. So I think that's a pretty common experience for people. And you know, as you read the article, did things jump out at you in terms of how to create discovery? Are any grocers doing it? Well, as you know, as, as recounted by Jessica.
Molly: So when I hear this, I sometimes roll my eyes way back in my head because I came from a company where this was top of mind for all of us all the time. So when you work for a confections company, I was at Mars, and the impulse moment in a store is not the same online, right? We don't have that Rob calls, gauntlet of stuff you have to get, through some of what you really enjoy before checking out the big concern becomes, well, how will discovery ever happen? And I've spent so many years of so many conversations and so many conversations trying to figure this out. I was worried when I looked at this article that they would just say more of the same, which is it's just really hard and everyone's going to have to observe con con consumer behavior and add value back in and blah, blah blah.
Molly: But they brought up a couple interesting arguments for discovery via personalization. One example they gave was thrive market, which is sort of Whole Foods at lower prices online. Thrive market was super noteworthy a few years back because it was one of the first digital grocery marketplaces to be launched almost exclusively by social media and influencers. This is a big, big deal, you know for especially the naysayers of grocery in commerce. The personalization aspect that, that they talked about was taking a survey and then having thrive suggest things that you might want or might want to add to your cart.
Peter: I was shocked to see that more than 85% of people who start the quiz that they offer completed it. And that to me is a remarkable number, which says people really want to discover things. Like that's part of the joy of going to grocery stores is that you want to be surprised. And do you think that's part of why people, cause most people, I mean you, you're lucky if you get 20% of people usually completing a quiz.
Molly: Yeah. I mean the other thing is that I was wondering when I read that was if I was shopping on another destination that was sort of a, what we call spear fishing destination or okay, I'm going to Amazon. I'm getting more bamboo toilet paper. Do I really want to take a quiz at that moment? No, I don't. I absolutely don't. But because thrive is situated itself as a lifestyle brand that has a relationship with me and my values, so all of their social media are like, I'm a busy person, but it don't want to compromise the integrity of my choices.
Peter: They've earned the right to ask them questions.
Molly: Yes. That's my point.
Peter: Yeah. Yeah. Yeah, that makes perfect sense. So I, I mean thrive, I know they've been around for a bit, but that is sort of the retail equivalent of digital upstart brands kind of coming in and, and being able to relatively quickly try new things and see how it shifts and they have, you know, they did claim benefits from that in terms of the, the growth of the, you know, people will buy 12 to 15 items put 12 to 15 items in their cart that they've seen results across, you know, loyalty and, and but. You seemed a little skeptical about whether those things are necessarily connected. The personalization piece is really connected to those results.
Molly: Yeah. I wonder if just the halo effect of all of the social equity they have is leading people to trust what's on the site more and therefore willing to pick up a box of something they haven't tried before because it's under the thrive.com umbrella. Yeah.
Peter: That’s social equity you've, you've earned with your people, make them more willing to, to increase that. So maybe in some ways the personalization comes from having a personalized conversation with them across multiple and, and then and then if you are lucky enough to have the stores, it'd be super interesting to think about how that could extend into the store, the combined store and digital experience. Something to keep our eye on.
Molly: Absolutely. They also pointed to Hungryroot, which is a meal service online. We were actually subscribed to Hungary route for a number of months, so I can speak to this firsthand. Hungary root used a similar mode of personalization, although it was more driven around algorithms on understanding your behaviors once you've taken the quiz and suggesting or surfacing things that are more likely to suit your lifestyle and your flavor preferences. Again, I think Hungryroot has some level of permission because it's a mission-based food service. It's started as I think mostly vegetarian and vegan. They have fish now I believe, or you can get smoked salmon. So I trust Hungary roots interpretation of what I think is healthy and good for me. And so I'm willing to experiment more.
Peter: Yeah. So I think this, this kind of thought around, is it a social conversation giving brands, more rights retailers more right, to engage on an ongoing basis with their consumers. And that really takes us to our final story, which was this, you brought this to into my attention, the a Ted talk that BCGs Angela Wang did recently on innovation in China, which is a kind of the frontier or they're always pushing the envelope on what it is to shop socially. And you know, they now they essentially it's the largest Petri dish in the world. There are 500 million Chinese consumers that, that regularly buy through mobile and even when they're in brick and mortar stores and that is going to make transformation happen. And Molly, what, what kind of leaped out to you from her Ted talk? And, and how did you, do you and how do you think that can translate to, you know, to a Western market?
Molly: The rate of consumption leapt out at me. Angela talks us through some part of a day in the life of a China netizen, which involves logging into a chat room with our friends after work. I'm clicking on a couple of snacks which are then delivered to her the next day. She talked about her ma, which is, has been for the past few years, the golden case of the modern grocery store. It is simultaneously a physical and digital grocery store. So you can go in there and have an experience and the emblematic experience is to sort of get this Alaskan King crab. And she talks about this out of a tank of water and they cook it for you right there and you can eat it there or you can take it home. She says they deliver live a fish to your house if you want it that fresh or you have it shipped.
Molly: It's like all the things are available to you and all of this stuff happens within 30 minutes. Okay. So convenience is a key factor and a key theme. And what Angela Wong was talking about. One of the things that enables this rate of consumption is the ability to get something, if not right then very close to right.
Peter: Then she talked about something which certainly hit home for me, which is you know, she and a friend walking up to a checkout aisle and if there are three to four people waiting, she'll just drop her items and go like, cause there are so many other options that is shorter than and more convenient than me waiting the 20 minutes is going to take for me to get through this line. And so she talked about that trend of ultra convenience. And the other thing about China digital commerce is you have these two big ecosystems.
Molly: So Alibaba and Tencent and inside of those ecosystems you have almost everything you need to live your life. So you can check on your kids daycare, you can renew your passport, you can renew your driver's license, get an airplane ticket, pay your parking fee, call a taxi cab, talk to your friends, you know, the equivalent of tweet something, buy something.
Peter: Yeah. They, she said she had the data that Alibaba and Tencent together own 90% of eCommerce, 85% of social media, 85% of inter internet payments. I mean when you've built that kind of of foundational ecosystem and you own all that, wow, the power of that must be both. I mean we see it playing out here as well, that the power of that over society is enormous, let alone the, the commerce it's generating.
Molly: Not to be missed is that bit about 85% of digital payments because the integration of the digital wallet and the two Chinese digital ecosystems is the key to allowing the seamless flow between experience in commerce. When I look at articles about social commerce in the U S specifically Google, Facebook, Instagram, Pinterest, house, Snapchat, TikTok, the digital wallet and the payment ecosystem become one of the biggest hurdles. Where is your credit card information stored? Once you log into Instagram commerce, it's stored there to make sort of the time between you viewing something and you buying something quite short. But we have several digital payment ecosystems and several social media ecosystems. So I don't get to sail in between an application for a passport and a social chat that leads to a buy.
Peter: Every time I am asked to enter my credit card number, it's a, it's, it's a time where I go, do I really want to do this? Just because it means I have to go pull out my card, read it. Very rarely do they have the take a picture of it option and, and it just, all those minutes, one I have, I'm doing it on a phone that has my credit card on it. And, but I know that the, I guess that when you own 85% of internet payments, then you can make that seamless across all of these experience.
Molly: And so what we can learn from them is how to connect some of these ecosystems in ways that make sense. In another podcast, there was a woman talking about the fact that you can in China by chapters of a book chapter by chapter, by chapter. So, you know,
Peter: I think of the number of books I haven't finished. If I could only pay for the ones that I started that would be great.
Molly: That involves digital payment systems and also micropayments and that those sorts of phenomena I believe are emblematic of what the future of digital in the rest of the world looks like. These connected ecosystems only, it remains to be seen where the connections are going to occur. When we were at CES, another thing we heard was about the launch of a new media offering. And I can't remember the name of it, but people listening probably do it was, it was big news and it was sort of bite size, digital video entertainment content. So imagine a movie chopped into 30 different pieces. Each sort of,
Peter: And I feel Martin Scorsese having a spasm right.
Molly: Monetized individually. And so there are these major sort of trends that we can look to these themes, right? Like interconnected ecosystems, micro payments, digital payments, convenience, you know, fulfillment is a huge thing for China. The fact that they have enough warehouses and fulfillment infrastructure to get things to you within 30 minutes. And we could say that's where we're headed. It's just when you get to the tactics of exactly how China executes it, that you start getting caught up in the differences between their ecosystem and ours.
Peter: Yeah. A couple of things that stood out to me that I wonder about its transit. So I, I totally agree with you that figuring that infrastructure out to enable that and there are so many people working on it, right? But in some ways that's the problem. There are so many people working on and how do you, you know, you see the, the, the singularity of this ecosystem versus what's going on here is, is I think a challenge. But she talked about the trend of spontaneity of shopping, sort of, and you know, that consumers there went from buying five to eight pairs of shoes a year to tripling to 25 pairs of shoes. And she talked about sort of the newness of the middle class and their desire to buy everything new. And I wonder whether that, I mean, clearly socialists have an impact on people buying things that they wouldn't normally have bought. But I wonder if it's really to the same scale.
Molly: Yeah. I think one of the key differences between US, Europe market, and China market is that China is still a developing market. It's still still, and there are tiers of cities. So generally when you're doing a business with China, you talk about tier one, tier two, tier three cities. And those are distinctions based on infrastructure. And in tier two and tier three cities often a mobile phone or a mobile device comes before any other laptop or certainly a TV set.
Molly: And, and so when communities are enabled with mobile devices and brought online, they're able to participate in shopping in a way with a number of choices they may not have had before if they didn't live in an urban area. And so the addressable market kind of goes up. It becomes less about saturating existing markets and more about expanding to new markets. And you know, if the number of choices living in a huge city weren't enough, you know, the digital marketplace is enabling even more.
Peter: The fashion example that she gave in this Ted talk. Oh yeah. So now listen everyone. There are now micro studios in fashion where they, these sort of digital upstarts and fashion are monitoring social conversations and, and seeing what sort of comes up. They come up with a design, they go right into production and these micro studios can produce like 30 garments at a time or so the, the time from trendspotting and social to delivering it to someone's house could be three to four days. Can you imagine the disruption to the major fashion houses that think in seasons? Like this is..
Molly: Super…it is super scary. I mean I would…
Peter: Is it scary or awesome? Like what, what do you think?
Molly: It's sort of terrifying if you're a fashion house because the principles upon which you've built your business, especially if you're a luxury brand and you're working off the concept of sort of shortage but sort of in accessibility or telling you what you should be wearing as opposed to you're telling us what you want to wear. Right? They've even, I would say luxury, bright, modern luxury brands have even made transition when you have these collections that are a collaboration between an up and coming designer who sort of, you know, designing stuff that it is more relevant to younger population and a procedure fashion house. Like Moncler is nailing this.
Molly: We've talked about this before, but it's more this concept of when they do that, there's a finite amount of those things available and the quality of engineering, right? Moncler adds additional resources and seamstresses to their sites to be able to make these things in the spirit of Moncler with a quality and integrity that are required to put the Moncler label on it. If I'm a China in Addison and I see something on an influencer and I take a picture of it and I get it done or completed and a fact in a micro fulfillment center, like what, what is the quality? Maybe it doesn't matter. Maybe it's just having, having that trend.
Peter: The impulse, you know, it's impulse. ETO creation.
Molly: Yeah. And I remember when I worked with a team from China, this woman that I worked with would come over and she sometimes would be wearing this clothing that I used to think was from the future. So she, four years ago was wearing these shoes with sort of loot clear Lucite heels and it looked like you know, those tall buildings when they have observation decks that like make you think that you're out over, over nothing over space. Well it looks like your heel, heels were suspended over the ground. Like the Lucite heels were so clear. Peter's eyes are just floating. Yeah. And I was thinking, where the heck do those shoes come from? They must be from the future. And you know, I, I chuckled when listening to Angela talk cause I was thinking flashing back to all of these outfits that I saw going to be like the Jetsons. And I used to think, Oh, you know, maybe that's just a quirky thing for people who live in Beijing. And then, you know, four years later people are walking the streets of New York and these things. And we used to look to, we used to look to Paris or my, you know, when I was little, my mom would say, Ooh I once saw someone in New York wearing this. And so in two years we’ll get it in the Midwest, if you can Just get a bunch of friends to agree on something that you want, someone will pick up on and make it and you can have it in three days.
Peter: So we've got to, we've got to close here, we're running out of time, but I think this across all three of these discussions that we had today, the, the idea of the ideas that actually came out of, of Angela's piece about ultra convenience, ultra flexible and ultra social, those are trends that are going to be rolling out across markets and paying attention to them is going to be a challenge. And I think a heck of a lot of fun for, for the brands that our loyal listeners. So Molly, thank you so much for talking about this. What did you do today?
Molly: Yeah, thank you.
Peter: I mean if any of these strategic challenges are on your mind in 2020 I do want to do a little bit of of what on the, as they call log rolling when you sort of plug your own thing. But we have the Digital Shelf Summit, I'm not wearing my, a swimsuit and my log rolling outfit. No, we'll have to do that next time. But we do have an upcoming Digital Shelf Summit in Boston on May 20th. It's directed, the agenda is directed entirely at brand manufacturer leaders that are trying to win on the digital shelf. We'll be talking more just in small amounts about some of the sessions that you can enjoy there, but go and check it out. It's a digitalshelfsummit.com/register. You don't have to register in that moment, but that'll give you access to the agenda and see who's coming there. But they are, we expect over 600 to 650 brand manufacturer leaders in town in Boston to have these kinds of conversations but live with actual feedback with your peers and with great experts. And great leaders that we're bringing in. So take a look. In the meantime, please follow us. The institutes LinkedIn page tweeted us at wind digital shelf. If our content is useful, we'd love a review wherever you get your podcast. And thanks for being part of our community.