Part 1: Consumer Behavior’s Impact on Supply Chains

Details #

In part one of a two-part series on retail and eCommerce, Jason Trusley (SVP, Land O’Lakes) joins Karl to discuss how consumers think, behave and make purchases in an evolving economy. Learn how retailers build great experiential brands with new technologies—without creating complex supply chains. Then hear from Jacob Laufer (Head of Expansion, Ohi), Jordan Lawrence (Flexe Director of Logistics Strategy), and Ben Dean (Flexe Sr. Director of Network Strategy & Optimization).

Some of the topics explored:

• Changes in consumer behavior amid a rapidly evolving economy

• Consumer cravings, great brand experiences and the role of eCommerce

• What AI can reveal about consumer desires, expectations and experiences

• How to test and learn fast, build experiential brands and create a durable competitive advantage with new technologies

• How flexible infrastructure helps retailers quickly adapt to evolving consumer behaviors

Logistics Leadership Podcast legal disclaimer

Episode Transcript #

Jason Trusley 0:00

The consumer's not looking just for a thing, a product, a trip, a device. They're looking for something that brings experiential value to them.

Karl Siebrecht 0:11

I'm Karl Siebrecht.

Jordan Lawrence 0:12

I'm Jordan Lawrence.

Ben Dean 0:13

And I'm Ben Dean. This is the Logistics Leadership Podcast.

Karl Siebrecht 0:26

We are back again with the Logistics Leadership Podcast. Today, we're going to talk about consumer spending, which is 70% of GDP. We're not just going to talk about consumer spending, though, we're going to talk about consumer behavior. As supply chain leaders, we really need to understand as best we can, what consumers are up to, how they think, how they make purchase decisions, what matters to them, because they drive the economy. And as supply chain leaders, we are building the networks and infrastructure to deliver what it is they want. To do that today, I am speaking with Jason Trusley, who has spent his entire career thinking about analyzing and researching consumer behavior, in particular, with a lens towards supply chains and logistics. I'm super excited about this conversation. Ben and Jordan, are you ready to join me for this one?

Jordan Lawrence 1:24

Absolutely. Great to be with you guys again, Karl, Ben. I'm going to take some time and do a little research on what's top of the news in the consumer behavior, consumer economics headlines and circle back with you after the conversation. I'm looking forward to it.

Ben Dean 1:39

Guys, I think this is an interesting episode for us, because it's our first of a two parter on the consumer. So I love to get the chance for this deeper dive. I'm excited to talk this time with Jacob Laufer. He's Head of Expansion at an early stage company in the same day shipping space. It's going to be really interesting to hear how they're getting in front of shifting consumer expectations.

Karl Siebrecht 1:59

That's great. Let's jump in with Jason and I'll circle back with you guys shortly. So Jason, thank you for taking time out to have this conversation. As you know, we're having a number of conversations around how the logistics industry is changing. And you pretty much can't have that conversation without talking about how the retail landscape and broader retail market is changing as well. And I thought there was no one better than you to have this conversation. So I'm excited to have it.

Jason Trusley 2:33

Glad to be here.

Karl Siebrecht 2:34

I thought maybe we could start, if you could give us a quick snapshot of your esteemed career in retail. Do we still say esteemed these days?

Jason Trusley 2:45

I'll take that as a compliment. So sure, yeah. So I have spent the vast bulk of my career as a consumerist, whether consumer strategy, leading consumer transformation at places like Nordstrom and Nike, as a partner and working in consulting. So I've been kind of across the board with the consumer for the better part of the last 20 years, really with an emphasis on understanding how to better serve them, and how to meet their needs and their desires more effectively.

Karl Siebrecht 3:16

Awesome. So let me start with maybe an easy question. I don't know if it's easy. But how have you seen things change over the last two to three years in terms of the consumer's mindset?

Jason Trusley 3:31

Well, obviously, the pandemic is still revealing new changes in the consumer mindset almost daily. In fact, even this weekend, dealing with new realities of being a consumer, whether that's how they're thinking about prioritizing their spend in the context of this rapidly inflationary or, well, rapidly evolving marketplace, it's no longer inflationary, but it is rapidly evolving. But really, if you step back three years and start to look at what was driving the consumer, it was really about just trying to find a place to feel like they could reward themselves, right, this idea of these little micro events that allowed them to feel like something good was happening in their life. And a lot of those consumers continue to do that, right. Like there are a bunch of folks out there today that continue to spend, a lot of it on credit cards, rather than you know, from cash, just to reward themselves. On the other end of the equation are a lot of consumers that are beginning to really pull back. It's interesting as an economist, as somebody that thinks about the consumer behavior a lot, I've been expecting this pullback to happen for the better part of a year, and the fact that it didn't happen until beginning of October of last year, but really accelerating in the first quarter of 2023 is indicative of how the consumer is just trying to avoid a lot of reality. And we have so much happening to us. You're a consumer, I'm a consumer, we have so much happening to us every day, we're just trying to avoid some of those big things. And I think that's kind of what the mindset of the consumer is. And as you look at income and age, you know, work status, all those things are beginning to kind of reveal a different type of consumer that exists in the marketplace today.

Karl Siebrecht 5:18

Yes, that resonates. So, related question then, how have companies changed the way they measure consumer interests and behaviors? Or have they changed how to think about measuring these changes?

Jason Trusley 5:35

One of the really interesting things is the emergence of this consumer insights industry that's popped up in the past five, probably five to seven years. It used to be that you would do an annual brand health survey, and it would cover things like brand awareness, and it was all about looking at the consumer through the lens of the brand. And we've really inverted that. We started looking at the consumer, almost irrespective of brand to understand what it is that they need and want. And that's led into a much broader conversation around who the consumer is. Not just their interest and awareness of the brand, but they're interest and awareness of brand experiences, and products, and all of these things that manifests as a reason to connect with a brand. I'll give you a really simple example: at the beginning of that pandemic, everybody said that the digital transformation was accelerated by five years. And it probably was accelerated in those first two years by five years, but it has actually begun to kind of go backwards a little bit. And part of that is just the consumer behavior around wanting to connect. You go into REI, REI has transformed itself from a really deeply experiential place for top performing consumers to go, to a place where a lot of people new to the outdoors are going. And that means a lot to consumers, because their digital transformation is not just about the convenience of picking a product at a store. It's not just about being able to shop online, pick up in store, shop online, deliver to store, it's the experience of the brand, the retailer, that they're really looking for.

Karl Siebrecht 7:07

I love the way you said, you know, the beginning of the pandemic, or the first couple years, things probably accelerated by about five years. I remember reading articles from investment banks and such, some would argue and lay pretty compelling cases out that would say, Hey, this has been a shift in consumer behavior that we're never gonna go back from. Then there was the counter argument, which is like, ah, you know, once the pandemic is over, we're gonna see a reversion back to prior behaviors. And, you know, it feels like and I think, some of the best research I've seen suggests that there have been some fundamental differences and changes towards more of an ecommerce mindset. But we have shifted back towards, gosh, we like experiences too and we like stores, some of them. But we may have different expectations. So there's a macro issue here, which is, like, gosh, smart people on both sides of that argument. And, you know, there was not a clear answer. So okay, lots of changes. I think you'd said earlier, maybe an accelerating pace of change in terms of consumers' needs and wants. What are some of the primary challenges that this dynamic presents to retailers? And then the consumer products manufacturers as well?

Jason Trusley 8:21

I think, you know, stepping back to the first part of your question, your statement about the expectations we had, whether it was going to accelerate, and then we started to see, you know, a bit of a shift. This is just consumer behavior, like consumers are contradictions wrapped in paradoxes. And I think that's the biggest challenge for anybody that's facing transformation right now, whether you're a traditional brick and mortar retailer, like our, you know, Bed Bath and Beyond, which recently fell on the wrong end of that equation, or you're a digital first digitally native brand like Amazon. The reality is you can't build experiences after the fact, right, like, if you're always chasing the consumer, then you're not allowing the consumer to experience your brand and to engage with them on your terms. And I think part of this is beginning to think about what I've talked about strategically for the past 15 years is this idea of a punctuated equilibrium. So it's an evolutionary concept that takes long periods of stasis, of very little change, and then rapid periods of change that transform things and that's true, like if you look at the retail world, for the last you know, 300 years, you start at the beginning and say general stores, well this persisted as the dominant form of retail, like 150 years, and then you end up with big box stores and then you end up with the next version of it, which is you know, ecomm, and then you end up with this next version of it, which is I think, still being formed, which is what does the integrated omnichannel marketplace look like? And the beauty of your integrated marketplace, as I think about it, is that the consumer is fully in charge of deciding when, where and how they engage with brands. So then the problem that you have as a retailer that I deal with today that I, you know, mapped out for Nike years ago that I've worked with Nordstrom on is, what do we want those experiences to look like? And how are they meaningfully different to create distinction and differentiation in the marketplace? I think that's the question that everybody is trying to figure out and try to figure out how to build an agile, responsive, not reactive, operating model that allows us to really deliver on those experiences with increasing degrees of uncertainty.

Karl Siebrecht 10:43

Yeah. I love the way you said that and put it in an evolutionary context. So is there a way that you think about the kind of fundamental sources of potential competitive advantage if you're a retailer or a consumer products manufacturer? I'll plant some seeds here. Is it companies that can learn faster that can create durable competitive advantage, or companies that can build some type of infrastructure, or technical capability that could create durable competitive advantage? What are those foundational pieces of potential competitive advantage?

Jason Trusley 11:22

There's a few pieces to that. I think, number one, culture beats strategy every day. The ability to create a culture that is a learning based experience based experimental culture, means you're not going to pour a lot of things in concrete and steel that don't become useful in the near future. And I think that's maybe the number one thing that the cloud computing infrastructure world brought to us was this idea that you didn't have to build assets, and then just figure out how to optimize them over time. The number one question that I addressed in 2014 at Nike was, what is the cloud version of logistics? And I didn't know at that point. I think there was a lot of data that suggests that the next frontier is asset light, less likely to invest big dollars in infrastructure, more likely to invest in capability building, and that's going to really come through technology, but it doesn't work and it can't work unless you have an organization that can learn into that. And that to me is the the next frontier of strategic enablement and transformation is, how do you go from a workforce that is built on the concept of functional ownership to much more kind of nonlinear thinkers, people that are able to connect the dots across many different things, to power a flywheel that, especially for branded products, is anchored on the idea of experiences, whether it's brand experiences, product experiences, or marketplace experiences. Those things become the way that growth happens, not just Amazon's version of flywheel of more stuff, bigger things. But your competitive advantage coming from product from brand and from marketplace, that's delivered in a singularly simplified consumer friendly model that allows you to articulate who you are and why you matter.

Karl Siebrecht 13:21

Yeah. So well said. You know, one of the ways I thought about this a bit over the past couple of years, to take on your point of a culture that is driven by continuous test and learn or experimentation, to shorten those learning cycles, you know, I think about the front end of a retail business. By that I mean, sort of to simplify, just take the website. 20 years ago, a retailer or a consumer products company would say we're gonna put up a great website, we're gonna write a big spec, we're gonna get designers, we're going to have a consulting firm, a website dev firm, and it might take quarters to put up this beautiful, beautiful website based on all the latest consumer research. And we would build that sucker and it would just sit out there like that for quarters, or maybe a couple years, and then we do a version two on it. And that would take another couple quarters. And after not many years, technology was developed, where continual testing and learning could happen on pricing, on offers, on color, on you know, who knows, you know better than I do. But it was probably a business strategy driven need that created the invention of technologies and tools that could allow for continuous test and learn. That's on the front end, so to speak, of the business. We talk about distribution, logistics, the back end of the business, even the retail physical stores, are you starting to see tools and technologies and a mindset of, boy we should be continually testing and learning on the back end of our business, even just simplified down to distribution and logistics. Is that happening yet?

Jason Trusley 15:02

Yeah, I think in places it is. We're not doing a lot of that today. But a lot of that has to do with the realities of the retail marketplace, lots of excess inventory that's happening to show up at the wrong places at the wrong times, not by you know, any, any sort of mismanagement, just kind of as a function of how the supply chain broke, and then slowly repaired itself. And I think, if anything, evidenced in a post pandemic world, you have to get into a test and learn environment in order to be more responsive to that increasing uncertainty and unreliability of the global supply chain. So you think about something like Nike, which has, you know, their leather supply chain is nearly two years long, and they harvest leather in Brazil, and then they tan it in Eastern Europe, and then they move it to China or Indonesia to build it. And all of those things were impacted by the pandemic at different times and in different ways, with different government policy responses and different management responses as tier four, three, and two suppliers sort of reacted to what was happening to them. So that positions everything in the wrong place. But if you create a supply chain that can be responsive, then you can deal with some of those things differently than just waiting for them to happen to you. A lot of this is happening in planning, moving to consumer driven demand signal rather than a, you know, hey, we built this and we shipped this last year so let's take the forecast up by 3%, 8%, whatever the number is, but what actually sold through? And what sold through a full price? Because everything else is excess. And as we start to look at market share and how the the market is evolving, the brands that decided that the consumer's signal was more important than their production signal are the ones that are succeeding. And they're creating flow, and they're creating newness and they're creating that energy and you see a vast separation and taking share. Even as late as May, I can see a difference in brands that were responding to the consumer versus responding to their production signal. And that is a big change. You think about the bullwhip beer game that we've all played at some points in our life. And it was always about responding that consumer demand signal, but we didn't figure it out. And so we built efficient supply chains, not effective supply chains in many cases. And efficiency was what we were incentivized by and what we were organized by, but it doesn't create a very effective supply chain when things don't work perfectly. Now we have a lot more need to make sure we're responding to that consumer signal. And I think we're going through that very painful learning process across supply chains globally, right now.

Karl Siebrecht 18:00

Demand driven focus versus supply driven focus. Okay, so now, I'm going to ask you a question that there is no answer to, of course, but I'd love to know your thoughts and how you think about it is, change is going to continue to happen. I don't know that we'd find many people out there who would vote for a future outcome where consumers to stop changing their minds or their wants or their needs. Do you have one or two in mind as the things that you think are most likely to be drivers of change in terms of the consumer's mindset in the next couple, few years?

Jason Trusley 18:36

I think number one, which is, it's a consumer mindset, and it's an enterprise mindset that in the face of change, people will choose one of two paths. Either say that complexity is inevitable, and I'm going to choose to simplify the complexity. Or because complexity is inevitable, I'm going to make things more complicated. And we as businesses have a tendency to make things complicated. Consumers generally operate on a set of very simplified heuristics and behaviors that they fall back on and they say, I'm not going to make this harder. So for example, when consumers are going to a brand like Columbia, and they can look at any number of wholesale retailers: Dick's Sporting Goods, Academy Sports, Macy's, Kohl's, all these other places. And then they can look at columbia.com and they can look at stores and they can look at this vast universe of options to address Columbia, they're going to default to the thing that is easiest for them. In other words, not to say that is the least friction filled because it may actually have more friction to it. But in their mindset, what is the thing that is going to be easiest for me to achieve? So it could be shopping at the Kohl's that's a few blocks away from my house rather than at Dick's Sporting Goods where the actual product that I want is. And they're going to create this availability heuristic is what it's called. They're gonna go after and they're gonna see it and they're gonna buy it and then is going to be a varying degree of satisfaction and positive sentiment because they don't fully understand how product is distributed in the marketplace, good, better, best if you're, you know, our apparel retailer. So they're only seeing part of the assortment. We have created and curated this massive amount of complexity for the consumer. And we haven't given them a path to simplify that in a way that actually directs them to where their problem is best solved. So my thinking is that as we continue to create more and more complexity, and the response is more and more complicatedness, the consumer is going to push back really hard on that complicatedness in favor of simplicity. That's our obligation is to stop creating complicatedness and the number one thing that companies can do is quit excusing the behavior of complicatedness by creating a new metric to measure. So getting down to the thing that matters the most, measuring that thing obsessively. So marketing and ops should be involved in the beer game, because that should be the objective, demand by integration, not, I create demand, you create supply, and we figure out if it works in the middle, is a great way of resolving some of that inevitable complicatedness that we're all engaging and creating.

Karl Siebrecht 21:23

So I was going to ask you a general question about your thoughts on AI. But based on what you just said, I'm going to ask you a more specific question. Quick context out there, I was reading an article recently, from Bill Gates or a blog I guess it was, the guy who continues to be one of the smartest thinkers and writers on all things technology. But in his blog, he was talking about part of his vision or expectation for how AI will really disrupt things on the consumer side of the business, is these personal assistants. And he sort of went on to describe how that could very likely disrupt ecommerce, it could disrupt online travel, or just travel in general, where everybody has a smart assistant. And we could just give them very simple commands, and they can just go make stuff happen. When you think about AI and would love for you to share any of your thoughts on, is it real, is it not, is it soon, is it late? Particularly, is this something that's likely to make consumers' lives more simple?

Jason Trusley 22:22

What's interesting about AI in my world is capturing human emotion is very, very difficult. So I use AI for product review and sites today, we partner with a company that goes and scrapes all of these websites for us, and then they come back with positive, negative and neutral sentiment at the phrase level. What's interesting is people write in a similar way that they speak. This natural language doesn't always translate very effectively into deep understanding of sentiment. But that's how we all relate to each other. I'm a very sarcastic person, my mother in law doesn't pick up on my sarcasm. And so that's one of those things that is a deep limitation of any natural language model, is how do you actually understand emotion and sentiment in the context of unstructured language? So my guess is it's going to take us a little bit longer to get to a meaningful place in order for an AI assistant to be really effective in helping to curate experiences. The consumer is not looking just for a thing, a product, a trip, a device. They're looking for something that brings experiential value to them. ChatGPT and I are on BFF status right now. I asked ChatGPT and others what to think about product. And it's really good at capturing the product reviews that are written by professionals. It's not really good at capturing the 300 million phrase level insights that exist related just to Colombia, on product. So that I think is the limitation, right, like we have a lot of learning to do to understand how to build intelligence that can comprehend human emotion.

Karl Siebrecht 24:21

My wife and I have two teenage daughters and one who's 21. And I was asking them about, could you ever imagine going into ChatGPT and saying, hey, you know, buy me a new purse? Because I couldn't imagine that. Right? Because what drives you know, her decision in this brand versus that brand, size, color, everything else? We were talking about it and then I started sort of refining my question. Well, what if it knew which products you looked at on Instagram or what your friends were looking at? Or, you know, could aggregate what was trending in the people you care about, and styles, and what about that? This started to get her a bit more interested in that. And, you know, I'm the last person to speculate on if or when could that be possible. But I started to get more in the camp of actually, if an AI assistant had access to a lot more data, it could get a bit closer to, you know, just actually picking something that more likely than not, you might actually like.

Jason Trusley 25:22

Yeah, we use segmentation a lot to define our consumer targets, right? We do these big surveys, like tens of thousands of people take utilities and behaviors and values and then create clusters from this data to say, hey, this is a consumer that's called their premium shopper, and this consumer is mostly focused on price. And within that, we actually, we think that there's like five shopping segments that we can address. What's interesting about that is if you apply AI to the marketplace, generally, you're not going to get the right product for the right consumer. You're gonna end up with like, sort of everything funneling toward a subset of things. And I think that poses some challenges and some risks for brands that engage with AI until they understand how to use segmentation as a targeting mechanism, how to then apply behaviors and interest and passion and emotion to deliver on that because there's some consumers that, frankly, don't care about emotional things, they just want durability, they want quality, and that is it. And that consumer may very well benefit from a very structured, non emotional set of data that the engine, the AI algorithm can go look at and say, well, this product is very functional, it's very durable, it's high quality, solves your problem. When you get into the world that is bigger than that, your daughter, my kids have got, you know, an 11 year old and a six year old who bring emotion to every possible decision that they make, they're going to be looking for something different that's going to take quite a bit more data and quite a bit more insight into the underlying behavior in order to actually monetize.

Karl Siebrecht 27:12

Before we wrap today, I wanted to bring it back to a point we talked about just briefly in terms of the impact of all this on logistics. Okay. So in your crystal ball, how do you imagine logistics changing in the next, you know, three, four years? Or how do you think it needs to change in the next three or four years? Again, based on what you see happening on the consumer end of the spectrum in retail?

Jason Trusley 27:42

I think the number one change has to be moving away from efficiency. How many boxes can you fit in a box is not a consumer value proposition. And that's fundamentally what we do, right? We stuff little boxes inside bigger boxes, inside bigger boxes inside of trucks. And then we move those things around. And we hope that we get it right. I think a deeper understanding and connection to the consumer problem to be solved and the work to be done at a hyper regionalized level. So we know things like, you know, for 15 years, I've worked on the question like how do you get the right size of musical size run into San Diego versus into Chicago, because the body types are quite different in those two places. So you don't need as many extra larges in San Diego as you do in Chicago. That said, we still haven't really cracked that code effectively. There's still the need to interfere in the supply chain in order to make that work, which is just another, it's another touch. But I think what the consumer is demanding and asking for is a more effective experience. Efficiency is not something that those consumers are willing to pay for. And so there is going to be this compromise that happens inside of the C suite around who wins that battle? And how do we make a cost efficient, but more effective supply chain? And I've got to guess that a lot of that is going to come down to how do you leverage asset light infrastructure much more effectively? And how do you take more people out of the equation in order to move products with fewer touches? The consumer again, like they're not going to pay for that. But they will experience it through availability, they will experience it through a much more positive brand experience. And if our objective is to create advocacy for our brand, call it loyalty but I don't think about that as programmatic loyalty. I think, I want this brand to be part of my life. Advocacy is the objective and we can all work toward creating a brand that people want to be part of. And so I think that's where the future is and that's where we're going to start moving is much more focused on the sentiment, and it's that softer and it's harder to measure what the supply chain's impact on sentiment is versus the marketing versus brand versus product. But that's what the consumer is willing to pay for. And that's what they're going to be continuing to focus on.

Karl Siebrecht 30:08

That's fantastic. Jason, this has been enlightening, and really fun, too. I love the way, you have great insights and points but I also love the way you framed some of these concepts. So thank you very much. It's always a pleasure to chat with you. And look forward to catching up again, sooner than later.

Jason Trusley 30:27

Great. Thanks for having me.

Karl Siebrecht 30:32

You know, I've known Jason for several years, and every time I talk to him, I come away feeling a little bit smarter. So many good points to share about consumer behavior. Jordan, top takes, what did you think?

Jordan Lawrence 30:45

Yeah, I mean, like you, so much this resonated with me. I think it's just a really fascinating subject matter in general. Kind of right out of the gates there, though, the comment from Jason about the digital transformation accelerating by five years with the pandemic, I thought was so poignant. And a measure of that is ecommerce sales as a percentage of total retail sales. So if you look at total retail sales, X autos X gas, you get a really good idea of this type of retail sales and where we are. The acceleration during the pandemic basically went from 17% ecommerce penetration to 20 to 23%. So you're really talking about a 25% increase in the total share of ecommerce sales and retail. And so, you know, we had this large shift upwards, and now we've kind of stabilized. And I think we're at this kind of stasis period waiting to see what does that really mean, where we go next. And I will say, the last quarter of this data showed the first uptick since the pandemic. So it'll be interesting to see if we see a reacceleration at this point.

Karl Siebrecht 31:57

Yeah, for sure. And I wonder whether that reacceleration, in part, might depend on just the broader economic conditions, right? People have been talking about, you know, are we going to hit stagflation? Or is there going to be a recession? What's the latest that you've read on that front, Jordan?

Jordan Lawrence 32:13

Yeah, I mean, I think Jason articulated so well, the unpredictability of the consumer and predicting economic outcomes being just a factor of that. And so it's no surprise, if you look at the latest NAB data, as reported by Bloomberg, we're sitting basically at a 50-50 economist expectation of a recession. So it's the old adage, it's a coin toss, right? And so responding and reacting to that is not an easy task.

Karl Siebrecht 32:44

Yeah. So as a supply chain leader, you know, what do we do here if it's a coin flip? What's the play? And again, I love what Jason had to say, on this front, did you pick that up as well?

Jordan Lawrence 32:55

Certainly, I really like his clarifying to be responsive rather than reactive. The way you have to be prepared to change in the face of uncertainty rather than think you're going to develop a system that gives you perfect certainty of the future.

Karl Siebrecht 33:11

That's exactly right. So Ben, what really resonated with you?

Ben Dean 33:15

Yeah, Karl, I think Jason's point about supply chains needing to be efficient versus effective. And that's shifting more to effective that we're not just a cost center, that there is a value proposition and what we do in supply chain is really important. And we'd really be interested in that next step. So how do you do that? He started to really scratched the surface of it as he talked about cloud logistics. I think like military leaders, us and supply chain, our generals are fighting the last war using the last set of tools available. And one thing that supply chain leaders can really do is inform themselves about what's out there and what's next. So they can look for options for resiliency for supply chain effectiveness, that may not have existed 10 years ago.

Karl Siebrecht 34:01

I think the winning quote was when he said consumers are contradictions wrapped in paradoxes. Pretty much says it all. So what do you do about that? I think it's you tap into your inner curiosity and just keep driving better understanding how consumers are thinking, how their behaviors are changing. And then building infrastructure to try to create solutions that meet them where they're going, but also that are resilient enough and flexible enough to take scenarios that may still have a wide set of outcomes, right? There's just uncertainty. We don't know what's going to come next. So let's bake that uncertainty into our infrastructure.

Ben Dean 34:46

One of the logistics leaders I spoke with, Jacob Laufer, he's over at Ohi as their Head of Expansion. They're enabling direct consumer commerce for brands, providing technology and a nationwide network of partner micro fulfillment centers, an interesting concept. So their client brands turn on a number of capabilities to meet or even exceed expectations of their customers. Let's hear what he had to say.

Jacob Laufer 35:09

To our delivery really is unmatched out there from a, you know, ecommerce experience. Amazon isn't really doing that, as a total offering. Consumer expectations are only going to get faster around delivery. And so eventually, we believe two hour and faster, soon 30 minutes, is going to be an expectation of consumers.

Ben Dean 35:29

It's not just about speed of delivery, they're offering localized capabilities to enable some of these brand experiences that Jason was describing.

Jacob Laufer 35:37

A touch point there that is very close to the consumer that we think about not just in terms of the convenience offering, but also how do we make this a really unique, customized, almost magical experience for the consumer. And so there are campaigns that we can run with inserts, and different ways of packaging items that are really unique, customized experiences that brands can offer to consumers directly. And we have that kind of control right near where the consumer lives and is placing their orders.

Ben Dean 36:07

Jason also talked about complexity and how businesses need to make things simpler for the consumer. Jacob had an interesting take on that portion of it too. In their business, they're really trying to take that complexity out of the customers' hands and solve for it internally. I really want to share this last quote with you guys, because honestly, there is a huge amount of complexity here. But it's complexity in the service of simplicity. Delivering that in a simple way to consumers is what the Ohi team is trying to unlock.

Jacob Laufer 36:38

It is highly complex, it's really about having the technology that speaks to the different components. So to name a few, we have an order management system component, we plug in directly to a brand's D2C website. As you check out as a consumer, you're going to see that instant commerce option, via checkout. And that's all automated based on where you are, based on our stock levels for the nearest micro fulfillment center. All of that is being done in real time. And even before that, you know, you had to have accurate forecasting to make sure that each of your micro fulfillment centers has the item that consumers are shopping for. That's a lot of upfront machine learning and work so that we're getting as much volume as possible and consumers are able to get that to our offering, if that's what they desire, every single time that they shop. All for smaller warehouses, that requires being within the major metros of the United States. And in those areas, you're really looking at micro fulfillment versus looking at, you know, what would be a traditional warehouse and I feel like that piece of it is the obvious piece. What's really difficult is keeping that well stocked, that all comes back to the forecasting technology, right. So we need WMS technology in there that works for a micro fulfillment operation that needs to be best in class and fulfilling those orders for consumers. That all needs to be ready for a courier that needs to come pick up. So we're integrated into courier networks directly. Those are all being scheduled and then picked up so that the last mile can still all take place from the click from the consumer to the doorstep in that two hour time line.

Ben Dean 38:09

And the point here is, simple is hard. Uncomplicating things for the consumers and brands takes creative thinking, problem solving, a lot of work and a lot of complexity that they don't see on the back of service providers.

Karl Siebrecht 38:21

Again, really, really well said. So again, Jordan, Ben, as always, thank you both, and look forward to continuing this conversation.

Narrator 38:33

You've been listening to the Logistics Leadership Podcast presented by Flexe. If you'd like to learn more about the podcast or join the Logistics Leadership community, check out this episode's show notes and visit flexe.com/logistics-leadership-podcast. Keep the conversation going: Email us at leadershippodcast@flexe.com. The Logistics Leadership Podcast features original music by Dyaphonic. The show's producers are Robert Haskitt and Adam Kapel. Here's a quick pro tip: Instead of chasing down the next episode, why not just follow the show and have it appear in your feed automatically. Thanks for joining us!