Future Proof Your Marketing Strategy: The Omnichannel Imperative

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Details:
The one thing certain in the face of uncertainty for the CPG industry is digital disruption. eCommerce is growing rapidly and is primed to hit 10% of industry sales by 2022. Major CPG manufacturers are lagging online versus in-store and need to readdress their marketing fundamentals. Giants like P&G and Coke are moving away from ad-hoc social advertising tactics as they work to redefine effective digital and marketing strategies.

Winning in 2017 and beyond requires manufacturers to recognize online as the fulcrum for growth and reinvent from a traditional push model to a new pull environment. Listen to IRI’s Sam Gagliardi and Clavis Insight’s Danny Silverman in this on-demand webinar to learn how to leverage a “build-drive-earn” strategy to win.

Download this on-demand webinar to explore how to:

      • BUILD a presence at key junctures along the online path to purchase
      • Use messaging and placement to DRIVE shoppers down the path to purchase
      • Integrate content, the value proposition and optimal product placement to EARN performance successes

Presenter Bios:

sam-gagliardiSam Gagliardi is Senior Vice President of E-commerce for Consumer & Shopper Marketing at IRI. Sam has more than 19 years of cross-functional sales, marketing and digital leadership experience with top FMCG manufacturers, including Johnson & Johnson, Colgate and Reckitt Benckiser. He is an expert in ecommerce strategy, digital marketing, search engine optimization, media management, shopper marketing and marketing management. Follow Sam: LinkedIn

 

danny-silverman

Danny Silverman is Head of Product Strategy at Clavis Insight where he is responsible to drive the company’s product vision. Danny is an established industry thought leader with extensive experience helping the world’s leading manufacturers grow their online presence and sales. Prior to joining Clavis, he spent eight years at Johnson & Johnson where he led their ecommerce strategy. Follow Danny: LinkedIn

 

 

 

 

Danny Silverman

I want to also welcome everybody today. A record-breaking webinar for us. We’re very excited everybody could join us today and excited to be joined by our new partners at IRI and my old friend Sam as well. Toward the end of the presentation we’ll have a chance to talk in more detail about what the IRI-Clavis partnership means. So please be sure to stay through to the end if you’re interested to learn more. But in the meantime let’s jump right into today’s topic. And Sam over to you to kick us off.

Sam Gagliardi

Sure, absolutely, thank you so much Danny. And getting right into the presentation. This shouldn’t be news to anyone on the call. As you all know we are in a major cross-roads when it comes to CPG industry in the context that more and more shoppers preferring to meet their needs and demands through the online marketplace. And it’s in that context that we’re experiencing substantial disruption — not only in the context of which retailers it is that we work with and we drive substantial growth with, but also with what’s happening with our own brand shares in the online market.

We’ve had the luxury and the advantage here at IRI of engaging and working with over 90 CPG industry leaders in the last 18 months to really understand not only what they’re doing in terms of eCommerce, but also how they’re thinking. And it’s through those engagements and those interactions — and then really learning from a lot of our partners — we are able to come to a very firm understanding of what it really takes to drive success. We’re marking that strategy to really drive success as a “Build, Drive, Earn” strategy. It’s a strategy that allows you to really remove yourself from only operating within the physical in-store world to really being able to operate across the omni-channel.

Now to jump into the conversation here. E-commerce absolutely is what’s on the tip of everyone’s tongue. And as you can see from these news clippings here: it’s what everyone’s talking about. Whether it’s Walmart buying Jet, whether it’s Unilever buying Dollar Shave Club, or Whole Foods investing in different retail platforms — it’s definitely what everyone is talking about in the industry. And they’re talking about it because it really is not only driving growth within the industry, but also allowing marketers to really be able to keep connect with consumers, to build awareness, and finally to build sales with each of those shoppers.

And there lies the point. Understand that we’re in the center of a consumer buying revolution. This year 77% of all purchases will be influenced from digital; 76% of all shopping trips are actually beginning online; and as many of you on the line know already, 71% of all product searches are beginning on different e-retail sites. What that amounts to is that we’re predicting here in the near future that over 50% of all CPG growth will be coming from the online space. So let’s pull this apart and go into detail.

IRI released a ground-breaking study in 2014 when we partnered with  PCG and also Google to really be able to project what the growth rate is — not only for CPG items but also CPG food and also non-food items. And as you can see from the chart here, we continue to track and we are projecting that by 2022 non-food eCommerce share within CPG will be over 18.2%. For the food, we’re looking at about 5.5%. Now what we’re going to get into here in the next couple of slides is really: what is it going to take for us to get to this tipping point? And the one thing that I want to get across to everyone on the line right here: that the makings are already here. Please understand that there is not a lack of consumer trends. In fact we’ve surveyed multiple consumers and there is no lack of desire for them to be able to really complete their needs and wants via the eCommerce interface. Nor is there any type of technology gap right now in terms of shoppers actually being able to do that. The biggest single opportunity that we see within the U.S.-based eCommerce ecosystem is actually the lack of material infrastructure that exists within the retailers today.

Now the good news here is that that is something that our retail partners are actually leveraged against substantially. And we’re going to go through the details of that right now. In fact let me begin with Amazon.

I was going to start this section off with the Amazon Go video, but at this point I imagine everyone on this call has seen the Amazon Go video. And really what does that mean for retail? But what I want to really focus this conversation on isn’t so much in terms of what shoppers are doing. But how are they doing it? And when you start understanding how that retailers are actually building, what you quickly understand is the how has everything to do with their margins and their free cash flow. If you take a look at this slide right here. I know there’s been quite a few different examples of this slide going cross-linked in the last couple of months. But this slide still speaks volumes to me. Understand that there is a new world order when it comes to retail. When Amazon is valued at 85% the value of Walmart, the street has already been able to project out who is going to win the retail battle. In addition to that, when you understand that Amazon’s market cap has increased 2.7 times since 2015, you start quickly understanding that actually this is the same growth trajectory that we saw in terms of market cap that Walmart went through in the late 1990s. And it’s in that context that you start to understand in the absence of Amazon actually having to pay out any type of dividends that Amazon has more money than anyone else to continue to be able to invest in their business going forward. But let’s just go through a couple other parts of their business to really define what type of cash that Amazon has to be able to build the future.

Well part of Amazon’s arsenal is Amazon Web Service. It was reported just recently that they are now up to $13 billion in terms of the Amazon Web Service business. As many of you know, there is very little overhead in terms of cost. So that’s largely, mostly going down to the bottom line to be able to help them perfect their business going forward.

In addition to that, Amazon continues to create not only stickiness with their different shopping programs, but also a very strong cash flow stream. What we’ve been able to calculate here is that while Amazon continues to collect about $82 billion in total revenue — and that’s not only purchasing a product, but also membership fees from Amazon Prime — what we quickly understand is that of that $82 billion, $6.2 billion immediately go right to the bottom line in the context of Prime memberships. Now obviously — and many of us on this line know this — that $6.2 billion is really used to help Amazon cover their costs. But the point is that that $6.2 billion comes in as free cash flow before a lot of those expenses are due in order for Amazon to continue to drive their business and continue to drive penetration. In addition to that, not only are they building in a base 7.6% gross margin, but also the shoppers who are buying from them via Prime are actually buying many more products with a $1200 on average versus only a $500 for their non-Prime members.

That’s the programs that they have for their consumers. Now let’s take a look at the programs that they have for the sellers. In this context I’m actually going to move away from sellers being CPG firms and actually look at third-party sellers.

Again, in the context of free cash flow, when you really start to understand that Amazon is collecting $9 billion per year in third-party fees to sell products online — and again you understand that the amount of effort and cost that Amazon puts forward in order for third-party sellers to sell on their platform is actually minimum — again you start understanding and start seeing and calculating the sheer cash flow opportunities, the sheer cash flow ability that Amazon has to not only continue to invest in their current business today and to cover their costs, but more importantly to continue to build for the business seven years out.

What we are adding up is that we were calculating here that Amazon will have the ability to invest at least $6 billion domestically for the next several quarters — not years, but quarters — in order to continue to build out their business model.

Again the purpose of us going through this is not just to make sure you know how important Amazon is — I figure at this point you all do — but to really give your internal conversations meat, to really make sure folks understand the sheer importance and the scale and the ability of growth that Amazon has going forward. Now with that said, Amazon is not the only retailer that you will work with. And nor is it the only retailer that consumers will shop eCommerce. And you can see that the level of investment across the industry has really stepped up. Walmart and Jet received a lot of press last year in terms of Walmart’s acquisition of Jet. And I don’t need to go through what’s been in the newspaper the last couple days in terms of management changes and so forth and so on. But also understand that food retailers such as Albertson’s continue to build out. Target continues to build out in putting specific spend requirements in terms of how they’re driving their omni-channel. In addition to that you know what Kroger is doing in terms of their acquisition. Delhaize with Peapod/Ahold. And then finally the investment that Whole Foods is now making in terms of different shopping tools and Instacart. But also understand firms like Walmart are now investing in technology platforms like OrderGroove to create a subscription program. Or how Target is leveraging not only their free shipping, but also 5% discounts, to really drive subscription. Or how Home Depot is actually using apps now to help shoppers shop around the store. You see the investment continues to be substantial and leveraged across the industry to help shoppers be able to go through that threshold.

Now hopefully at this point — we’re about 12 slides in — it is self-evident that the level of investment is coming. And that level of investment is really what’s going to drive a tipping point within the industry. It’s now really consumer demand — because they already demand it. It’s now the technology — because the technology exists. It’s really the infrastructure being built to allow shoppers to have a more frictionless shopping experience.

Let’s better understand now how this is impacting brands. We are definitely in a phase of disruption. If you take a look at this chart here: let me just organize it. Along the bottom here you have several different categories that we just randomly selected. The blue bar charts equal what the in-store shares are for multi-market and the gold is online share. And what we did here is we took the category leader as well as major challenger brands. And the point here is: across the board — with only one exception within personal care — there is now in-store share leader that’s actually winning online as well as winning offline. In addition to that, the personal care, the exception that I called out where the category leader is winning online better than they are in store, please understand that the challenging brand is actually outdoing them. So the point here is that the world that we are very comfortable with — the world with [???] and with preferred placement on the shelf and with slotting fees and so forth and so on — that world has moved away to where now the shopping experience is more democratic in terms of shoppers being able to search and find what they really want.

One way that I like to illustrate this change is really with how the demand creation has changed within the industry. Here in the blue line is a diagram we’ve put together where we like to describe how things were in the “traditional world,” where CPG firms go out and they innovate and they have skewed proliferation really to gain more presence on shelf and to gain more inventory within stores. Many of those items, especially tier I or class A type launches, they regularly receive $20-30 million worth of inventory build throughout the different retailers in the U.S.

The world now online is very different that what we’re used to. As many of you know already, when you work with different pure play e-retailers, they don’t really load up every DC. What they do is they take up to maybe 5 or 7 cases and they spread them out across the country. And what that causes is really a different approach to how mass-distributed brands really build awareness and consideration across the industry. Instead of a push model — where products and items are forced into retailers, where displays are set up, where shoppers can not only receive awareness on TV or on the radio and so forth and so on, but most importantly at the moment of purchase in the last 100 feet in store — now you have a model where people are actually just searching and finding products. And if you’re not in front of them, if you’re not helping them find you, they will never find you. Awareness will never be built.

And it’s in that context that we’ve taken the marketing and sales funnel — the funnel that you are all aware of, one of where you build awareness, you build interest, consideration, intent, evaluation, and finally purchase — and we mapped it against how things were previously within the physical store world to how they are now. And what we’re seeing now in terms of the levers that you need to pull — in terms of the skill sets that are needed in order to be able to really build consideration, intent, and finally purchase — they have really changed. They have changed substantially because of what we showed you on the previous slide. The world is very, very different than what we’re used to. We have to find a better way to take mass-distributed items and to find a way to really connect with the right shopper to build interest and build consideration and ultimately purchase. And it’s within that model that we present to you the “Build, Drive, Earn” case study, where you need to build your presence on specific e-retail sites so that your presence is as good if not better than what your web sites used to be. In addition to that you need to then take your digital media as well as on-site and off-site media to drive more and more shoppers to that brand presence that you just built. And when you do that you will win in search and you will win in sales and you will be able to earn sales online and also in the in-store environment.

I just described an environment, a very disruptive environment from what we’re used to, but the big benefit that we have here now is that we also have partners now with substantial capital to be able to drive this switch with consumer; they also have the capability and the pure traffic to really be a top tier media site. And unlike the other top tier media sites that you’re used to dealing with, people actually go to these sites to actually buy products. So in that context there’s no other best case scenario for you to really be able to shorten the path to purchase, to really be able to find the people that you matter most to, to make sure that you understand what you’re all about, and to really help them to be able to move forward and be able to purchase your items.

I’m going to hand this now over to Danny and he’ll walk you through the fundamentals of the eCommerce strategy.

Danny Silverman

Thanks Sam. So as we start diving into this and understand how to take what you’re doing in store, what you’re doing with your digital strategy, and how to bridge it with eCommerce and understand how to win through the “Build, Drive, Earn” strategy, we’ll dive into a little bit more depth into each of those three and have a case study here at the end.

So just diving in a little bit more depth as Sam just covered. Today is less about what you own and it’s about where you build your brand presence. We’re going to go into some detail about what it takes to build your presence online; how you actually drive shoppers down the path to purchase from online to offline; and finally, once you have that integrated messaging, that you earn that performance both online and in store.

So starting with the “Build” aspect: the most important thing — and we talk about this all the time — is internal alignment. We know that still today it’s the case in many organizations that we have eCommerce heroes, single people, maybe one or two, just starting an eCommerce strategy and approach, and trying figure out where to start. And it’s just so critical to build that internal alignment from the start to get a little bit of elbow room, to behave like a startup, put a test-and-learn plan in place. But really work across your functions. Really eCommerce touches every function. Supply chain is critical for example; finance is critical for example; and certainly having your executive leadership aligned as well. So the best place to start is to really understand how you’re going to push this out across your organization, what the strategy is, and fundamentally how you’re going to report on your progress, and what it’s contributing to the organization overall.

As you start to actually build the nuts and bolts of your actual brand presence, those who’ve been on calls like this before will know that there’s a lot of key elements to winning online. And it’s not as simple as “set it and forget it” — which is where we were probably five years ago. If you’re going to be competitive online, you have to give a lot of thought to: what’s the right assortment to have online? And it’s not just online but by retailer. The assortment for Peapod or Walmart is not going to be the same as Amazon for example. And it could be a difference of pack sizes; it could be a difference of eCommerce-specific packaging. It’s also a matter of understanding what marketplace sellers are selling and how they’re packaging their product because your competitive landscape — as Sam alluded to earlier — has really broadened from just your traditional competitors but to 3P sellers as well. And staying in stock, which is a very tricky game in eCommerce where inventory levels run much cleaner. And it requires a lot more proactive behavior to monitor your stock levels and help the retailer stay in stock and ahead of demand.

From a content standpoint, I get asked all the time: if we’re going to hire one more resource, where would you put that resource? And my first suggestion, particularly in the U.S.: as long as you already have somebody dedicated to Amazon, the next place to hire is around content. It’s very common to take digital content from web site from digital strategy from wherever and try and apply that to eCommerce. But the reality is it’s the difference of talking to a friend about your brand versus being in store and trying to sell your brand. You need to have that copy that that in-store seller would use to communicate the benefits of your product. It’s a different set of imagery. It’s a different set of eCommerce content. And having somebody who can really own the process of finding the content, building it, recreating it if needed, and then optimizing it to drive search and to drive discoverability is critical.  

To go into a little bit more detail — because again this is the hottest point and we always get many questions around content — think about this in terms of above the fold and below the fold. Above the fold is your basic content, your fundamentals or your beautiful basics. That your title is reflective and carries with it key words that shoppers are using to search for your product. Very often you will have a history of products being set up with what’s on the box. And what’s on the box doesn’t always carry keywords that are actually going to drive people to product. So we’ve seen cases where just adding a keyword to a title will bring an item from completely not in search results into the top 5 or top 10 and certainly onto page one.

Variation is a key strategy as well to understand how shoppers shop by form and by size. It’s not a one size fits all. Your variation strategy can really vary depending on your category and how shoppers shop and think about your products.

Bullet descriptions. Making sure you keep those bullets full and that your images and video positions are full as well. If you don’t have those fully filled out, there is potential for third-party content to creep in to fill that void. It’s been known to happen where Amazon will pull in the sellers’ central data and information where information vendor central isn’t complete. So having all those bullets complete, having all those image positions complete is really essential.

And then below the fold. We know that this really drives page views. And for those who are looking to educate themselves, those who are learning about a new product or they have a reason to discover a new category and they want to learn about these brands — whether they’re going to convert online or off — having that information available, having comparison grids available, that your claims and features are up to date. The really important thing here is this content is not static. We are just meeting with one of the leading providers of content in the space. And talking about five years ago, there was sort of this sense of: I put my content up there and, again, set it and forget it. The reality of it is is things change dynamically. Your brands are changing. Your shoppers are changing. The seasons are changing. And best in class looks like keeping a constant content strategy where you’re keeping it fresh and up to date and making sure that it is not only accurate, but it’s also current.

Finally, consumer reviews. You can’t understate the importance. We have, of course, the example here with Amazon. On a separate webinar recently I went into depth on this topic and the issues that Amazon and others are facing with confidence in reviews and the proliferation of different solutions to increase your number of reviews — in some cases artificially. So it’s something that requires a new level of care and monitoring to make sure that not only you have the right number of ratings, the minimum number of ratings and reviews and the recency, but that you’re also monitoring what the shoppers are saying — whether it’s complaints about the product, whether it’s compliments about the product — and putting that into action throughout your organization. Whether it’s marketing, whether it’s R&D, whether it’s regulatory, or maybe in customer service, where you want to file a new 1-star review for example as a customer complaint.

And then as we move toward the bottom of this, the build aspect of it, the data is essential. We’re going to go into more depth about the data in a couple of minutes. So I don’t want to steal too much thunder here. But the thing to know is that, while it often feels like there’s a lot of disparate, disconnected data out there, the reality is there’s more data in eCommerce than you’ve ever had in brick and mortar. The brands that are winning have understood that. They’ve embraced it. They’ve made sure that they have the right data, the right insight across the path to purchase, across to where the shopper engages with your brands. And they’re using it to drive and optimize their presence.

As we move into “Drive,” where we’re driving shoppers down the path to purchase, this is where you’re taking those digital assets that you already have — your brand owned media — and you’re translating it into eCommerce. That you’re paying it off with buy now buttons; you’re paying it off with where to buy; and really making sure that you are helping those shoppers who might have started in a digital property, be it web site or social, and helping drive them into the path to purchase, into purchase opportunity.

The media can really break up into a couple different pieces. There are certainly brand-owned media, which is where the brand is in control of it on social media, on your brand sites, on your digital properties; CRM programs are used to drive here, not only into the digital properties but also into eCommerce. Paid search is facilitating it here again. If this isn’t already commonplace in your organization, find where the digital strategy and plan exists and make sure that eCommerce is fully integrated through every step. You will have consumers who are online who are learning about products, and at the moment that they want to convert you want to have that buy button available to them.

And then there’s the e-retailer owned media. This is where you have plenty of opportunity. Again we have Amazon features here but every retailer has plenty of opportunity for on-site merchandising, pop-ups, retailer display ads, retailer CRM programs, new shopper acquisition programs. A solid business plan, a proper new launch plan, will always include a critical eCommerce pillar. You can get to market faster; you are able to iterate faster; and you’re able to get more of your message out versus the product sitting at shelf. You build your ACV and do it with quality content behind it. So if you’re part of an insights or a marketing plan and thinking about critical new product launches or product build plans, having that eCommerce pillar of that growth is essential.

And it follows through. Like when you start to get down into the category level where you have on-site paid search, where you’re merchandising down to the category and starting to get into really specific, category-specific tactics that merchandisers and vendor managers are happy to help with of course and insure that you’re reaching the right shoppers with your message.

And then finally we get into “Earn.” And this is where everything starts to pay off. You’re striving for number one bestseller. And on each of your online retailer sites you’re optimizing your search results with content both on retailer and on Google. You’re monitoring and tracking impressions and awareness. You have your referrals working around consumer reviews and through your CRM programs. You understand shopping lists and how those work with each different retailer. And you’re also monitoring the mix between subscriptions and one-off sales both online and when it’s driving into stores.

The case study that we wanted to quickly walk through here, as we wind down here, is around San Francisco Bay. It’s a really fascinating story and a brand that is really thinking eCommerce first. There’s a number of examples out there now, but this was a good one that we thought we’d bring forward. If you take a look at their assortment, it’s optimized for eCommerce. They have rich, engaging content throughout. They have 24,000 reviews that have built up over time. And this has been a long campaign for them. They’ve done it consistently through various strategies to engage their shoppers and drive them back to leave a review.

They’re using e-retailer campaigns; they’re using their own campaigns; and they’re using display ads. And the success speaks for itself. They are the number one coffee bestseller on Amazon. I mentioned they have 26,000 reviews, 4.6 star reviews, and have all of these different aspects really working hard for them on Amazon and on other eCommerce properties.

Where we really see the data here is look at share, when you look at performance. In-store San Francisco Bay doesn’t even show up. The top five coffee brands don’t include San Francisco Bay. When you go online, when you go onto Amazon’s bestsellers, they’re right there at number one. In fact, three of the brands that are in the top sellers for Amazon don’t even show up offline and vice versa. You only have Green Mountain and Starbucks showing up in both places. But it’s really a testament to the work that San Francisco Bay has done to optimize that online presence and carry their strategy through the path to purchase.

And with that I’m going to hand it back to Sam to take us through a bit of a recap here and start to talk a little bit more about how we bring data together and what the Clavis-IRI partnership means.

Sam Gagliardi

Absolutely, thank you so much Danny. You’re exactly correct. What we were trying to illustrate there with that last case study is not only how to win, but also what the risks are for developed in-store brands if they don’t do anything at all. And I think San Francisco Bay with their performance really do provide quite a bit of insight in terms of what the risks are. The best way to move forward within our industry is not only to have the right plans, but also to make sure you have the right KPIs, the right key performance indexes, that allow you to understand if you are tracking to the right goals.

To Danny’s point, what we’ve experienced over the last five, six, seven years within the eCommerce world when it comes to CPG is that eCommerce has moved away from being less of a data desert and more of a data scavenger hunt. And it’s in that context that we understand that it really is in the firm’s best interest for data to be consolidated into one place so that meaningful insights can be gained from the data. And that’s in essence the only way that you’ll be able to gain any meaningful insights. Gone are the days where you have two or three different providers that do two or three different things and it’s up to your team to try to piece it together. Where we are now is that there are platforms, including IRI’s, that allow you to really be able to pull in the multiple sources of data so that you have one single platform that engages the entire organization so that the entire organization can understand the opportunity when it comes to eCommerce.

This is where we talk about our two organizations. First and foremost I’ll talk about IRI and then Danny will finish up here.

IRI is an organization that’s been around for over 40 years where we’ve been working with our clients, both CPG manufacturers as well as retailers, to really help them gain the insights and analysis they need to really drive their business. I won’t go through all the key points here but you know who we are. We’ve been around forever. And we are either your core data provider or we’re still a partner that helps you gain the insights. Danny why don’t you over for Clavis.

Danny Silverman

Sure and on the Clavis insight side, we are the global hub of eCommerce intelligence. We leverage cutting edge, comprehensive digital shelf performance and analytics technology to bring data to our customers on a daily basis and, in some cases, real time data as frequently as every 10 minutes or even more, for those who are perhaps combating pricing issues, whatever it may be. We have a full value-creation and thought leadership model that follows behind this to help brands understand how to win in eCommerce and how to leverage our data to win. A fully global platform in more than 40 markets. A presence in London, Shanghai, and Paris in addition to Boston. And then finally really using that global hub as a point of ecosystem integration on behalf of our shared customers. Where we’re working with each of your partners to help drive more value out of the system, spend less time wrestling providers and data and spend more time taking action on it. When we put those two together, IRI plus Clavis, we offer full omni-channel coverage. On the IRI side — through their various properties, 250 million annual transactions, more than 500 merchants tracked, more than 2 million shoppers — you pair that with our eCommerce data in over 40 global markets, thousands of retailers and literally hundreds of millions of listings monitored daily. Together we bring a comprehensive omni-channel view of the world. And we’ll be able to bring a set of analytics that helps build that connection and understanding between what’s happening both with your retailers offline and online.

To explain a little bit more real briefly how that will work. We are partnering with IRI in a data exchange type of format. So within the IRI Liquid Data platform and Clavis, data will be made available to IRI Liquid Data users; within Clavis’s eCommerce solution, IRI share data will both online and off will be made available to shared customers. And the point here is really to democratize the data for both. Your offline or your insight teams, your IRI users who want access to the eCommerce shelf data, now have it built right in and can start to compare things like: my price online on Walmart versus offline; your power eCommerce users who are using Clavis who want their IRI share data in there will now be able to see it in there and start to build those correlations and understandings of what’s truly driving their business.

And with that, we’ll open it up to a little bit of Q&A.

Where do you think eCommerce is going in 2017 in terms of some innovations?

Sam Gagliardi

Sure absolutely. Well I expect first and foremost for Amazon to continue to test and learn and to scale. This is self-evident. That was the front part of this deck. With the amount of cash flow that they have, there really is no limitation for them to be able to test and to learn. The scaling piece will really be dependent on how successful they are. In addition to that, I do expect prominent retailers leaders like Kroger and Walmart to really ramp up their click-and-collect model, to really be able to leverage their capital investments of the physical store, to really connect more with shoppers so that they can fulfill those needs and wants via physical means — so buy online but pick up in store. We do expect that to ramp up especially within the heartland of the United States. Please understand still today, especially when it comes to CPG food, most of the activity is still along the coasts. It’s because of where those retailers are — Safeway, Peapod, Fresh Direct, specifically. And it’s really now time to leverage the platform that is Kroger and Walmart, especially with their core shopper which is more in the center part of the United States; to really allow those shoppers to meet their needs and wants of buying products online.

Danny Silverman

Yeah, I think that here in 2017 we’ll see probably reflecting a lot of what Sam said. But a continued blending of online to in store. For a long time I was saying that we are waiting to see the retailer that was going to challenge Amazon with a true, proper omni-channel integration because we really haven’t seen any retailer do a full and proper job integrating from online to in store and create a truly omni-channel shopper experience. Ironically it’s Amazon who themselves who came with the Amazon Go platform and have really brought an example of how to properly merge eCommerce and technology into a physical in store. So I think we’ll see an even more accelerated innovation in that space. We know Walmart’s working hard at it; we know Kroger’s working hard at it. And along those lines, as we see the click-and-collect aspect of it pick up, both trends will combine to only accelerate the importance of eCommerce.

Does IRI actually have a total eCommerce sales roll out? Perhaps you can go into a little bit more depth on that topic.

Sam Gagliardi

Yes, absolutely. The IRI E-Market Insights solution is a total U.S. panel-based solution that does allow us to understand what the sales are per category for 90 different categories in the U.S. today. We are working diligently to add not only a total U.S. poll, but also specific retailers like Amazon.com and Walmart.com. And as transactions continue to build, we are adding additional categories. That solution has been in the market since April of last year. And it is something that we could, depending on the category, that we can deliver immediately.

Danny Silverman

There’s a couple other questions that kind of follow up on that point that I’ve love to give a little bit more detail on what types of metrics will Clavis provide that will be available on Liquid IRI. Clavis metrics span the range of what you would want to know about what the shopper interacts with at shelf. So all of our data, when you about: Is the product in stock? What’s the price? Is it on promotion? Search rank. Ratings and reviews. And even going as far as content where it makes sense. Having that type of data mapped up. And the really important thing here is to go from scavenger hunt to a single source of data. It’s all about standardization and normalization. And the key thing here, and the key aspect of this, is normalizing the data from Clavis to IRI. So that if you’re in the Liquid Data platform and you’re looking down, you can see item level, that you also have that item level data from Clavis. So you can look at the combined data set in one.

Sam Gagliardi

And Danny, just to add to it, I hope it’s self-evident for the group here: this is not unlike any other type of causal information within the in-store world. It’s really when you’re able to layer on top [of] sales results causal information, are you able to really truly understand what is driving performance, or what his holding you back going forward.

What foundational capabilities — resources, structure, process, supply chain — need to be in place before manufactures partner with organizations like IRI or Clavis in this area?

Sam Gagliardi

The great question there is, not much, to be completely frank and honest with you. We have solutions here that not only can help you better understand your shopper or understand your metrics online, but also consulting services that actually help you understand several different approaches that help you ramp up to have your own business. So the answer is you don’t need to have much. We can actually come in and really help you understand what is required. And we do that in the context of the culture and the assets of your organization. So it’s just more of we customize our approach to who you are, as opposed to this is the only approach. Because what we have found is that that’s the best way for our clients to be successful.

As Amazon continues to test and learn, how do CPG firms coordinate and allocate their investment, which in many cases is limited compared to what Amazon usually expects? Essentially, how do they know which test-and-learn projects to invest in or align to?

Sam Gagliardi

Absolutely. The way that I would answer that question is that you need to understand — it goes back to, what are your key KPIs? If you understand what KPI goals your organization has that should help guide you in the context of what you do work well on with Amazon and what you don’t work on with Amazon. Or more importantly, what innovation can you bring to Amazon to really foster engagement from Amazon to really allow you to drive an agenda with Amazon going forward? Absolutely, in the context of what Amazon’s expectations are — and they are lofty and they are a little unreasonable. But when you have that leadership position that they do have, that’s what you can do. Your goal as a CPG firm is to find leverage between your dealings with Amazon where you can help them accomplish their goals and vice verse. So in that context, be very clear with your KPIs internally; understand your KPIs and really measure and track what Amazon is bringing you against your KPIs to understand what you should do. And that should be a guidance. In terms of tactically how to do that, this would take way too much time than we have on this call remaining. But it’s absolutely something that we could engage with your organization and have a meaningful conversation with.

With the acquisition of Jet by Walmart, do you see them using Jet as a way to close the gap with Amazon?

Danny Silverman

It is timely. We actually had a piece out on this this morning from Clavis — and I think it was in chain storage — about what the changes at Jet mean. There was a reorganization announced by Walmart last week and what those changes really mean about what it tells us about what Walmart is doing. So will it close the gap? Absolutely. They’ve acquired a pure play retailer that had created a bit of a pricing edge against Amazon — a supply chain understanding and capability. They have acquired phenomenal talent from Jet. So there’s no question that this is really going to push Walmart even further up the learning curve and understand how to close the gap with Amazon. But I would also say, as I do often, I would pose the question a different way, which is: Will the acquisition of Jet help Walmart win the shopper? Because as soon as any retailer — and Walmart has just been continuing to do this — as soon as they benchmark their own model and how they’re going to structure and how they’re going try and win against Amazon, they’re already losing. Because the best they can ever do is what Amazon is doing, which for them would be a fantastic gain. But at the same time, what it misses is: What does Walmart actually mean to the Walmart shopper? What do everyday low prices mean online to the Walmart shopper? And how do they really leverage the technology and the expertise that they got from Jet? Not to necessarily compete head-to-head with Amazon, but to retain and grow against the Walmart equity. And to win shoppers the way they have been for decades. And to continue to grow that base based on what shoppers are looking for from Walmart.

Can you provide timelines on the IRI integration with Clavis? When are you expecting the capabilities to go live?

Sam Gagliardi

Sure, absolutely. We are ramping up really quick. Please understand that the base platform is in market already. The full Clavis integration will likely be delivered here in the next three weeks or so — middle of February. But going forward, understand the this isn’t any type of a syndicated solution. It’s actually more of a custom solution. So what we look at is, with engagements with clients, that we have an approximately 90- to 120-day ramp up time to get up and running for those clients. The delta there between 90 and 120 really just depends on whether or not you’re a core IRI client or if you’re someone coming from somewhere else the extra days are needed.