Webinar: Set the Right Distribution Priorities, with Lauren Livak, Director of the Digital Shelf Institute and Todd Hassenfelt, Ecommerce Director at Colgate Palmolive

Transcript:

Peter Crosby
Welcome to Unpacking the Digital Shelf, where we explore brand manufacturing in the digital age.

Peter Crosby:
Hey everyone, Peter Crosby here from the Digital Shelf Institute. The assortment strategy you use for brick and mortar cannot just be pasted onto the digital shelf. In order to drive maximum growth and profitability, you need to deploy the right analysis, strategies, and tactics to select and promote the right assortment at the right time. This is a podcast presentation of a recent Digital Shelf Playbook series webinar, featuring two experts who are deeply experienced in driving this process across multiple organizations. Lauren Livak is the director of the Digital Shelf Institute and the driving force behind the Playbook series and Todd Hassenfelt, e-commerce director at Colgate Palmolive, joined us in a really thoughtful examination of how to set the right distribution priorities for your products.

Peter Crosby:
Todd, welcome. So happy to have you here.

Todd Hassenfelt:
Thank you. This has been a great series and I'm so happy to be part of it. So excited for today's conversation.

Peter Crosby:
And Lauren, are you ready for the next one?

Lauren Livak:
I am so ready. I am very excited about this webinar because I think it follows really well with the past pillar that we talked about, which was content strategy. Now we're talking about distribution priorities and we're going to cover prioritization, how to think about your product assortment, and also give you some frameworks that you might be able to, hopefully, lift and shift for your organization and customize as needed.

Lauren Livak:
So I always start with why does it matter? It matters because you can't take your brick and border strategy and apply it to e-commerce. It is not the same. It is a very, very different strategy, with very different levers that you need to pull, and when you're thinking about the digital shelf, you have to think about balancing supply chain, temperature, weather, location. It all is factored in when you're thinking about the profitability of selling your products online, and that's what Todd and I are going to get into today.

Lauren Livak:
So I mentioned that other webinar we were talking about. That was the content strategy piece, where when you're looking at profitability, you have to think about the content completeness of all of your SKUs, but also your distribution priorities. So we're going to be focusing on the left side here and talking about how you are shipping your products, how you're packaging them, how you're sending them, what kind of temperature control is needed, how to think about price scraping.

Lauren Livak:
All of those things come together when you're thinking about your overall strategy and I really just want to emphasize that because distribution is so important. What is impactful in store versus what is impactful online is not the same and so making sure you're thinking about all of those different elements, when you're thinking about your overall strategy is really, really critical.

Lauren Livak:
So first we wanted to kick off with a poll. So we wanted to see from everyone's perspective on the webinar right now, do you have e-commerce specific SKUs? So it can be yes, you do, no, you don't, or maybe you're currently defining them or thinking about them.

Peter Crosby:
The results are flying in, Lauren. Let's see. I am going to end the poll in three, two, one. And there we are.

Lauren Livak:
All right. Oh, awesome.

Peter Crosby:
That's a really good percentage of e-commerce specific SKUs.

Lauren Livak:
Yeah, I am [inaudible 00:03:46]

Peter Crosby:
Todd, does that surprise you?

Todd Hassenfelt:
It does to a degree. I mean, I'm happy to see it, but I think a lot of times when you're asked, "Hey, go find some examples," it's not as easy. So great to see this, that 72% are either yes or currently defining them.

Peter Crosby:
Awesome. So that bodes well for the rest of this content. So Lauren, take it away.

Lauren Livak:
Yes, exactly. Thank you, Peter, and thank you everyone for participating in the poll. So we wanted to kick off by just mentioning some of the factors that you need to think about when you're thinking about your e-commerce SKUs. This is not all inclusive. There are so many different elements, but these are some of the ones that we're going to talk about today.

Lauren Livak:
E-commerce ready packaging. When you're shipping something across the country, it's very different than driving to the store, picking it up, and putting it in your car. So what does that packaging look like? How are you looking at the label? How is it being shipped? The weight, heavier, more expensive. How does that factor into profitability? Should you sell with a multipack or is it a single item? Is it a popular item you should be focusing on? Do you have retail media behind it? Is it profitable? How big is it? What is the price?

Lauren Livak:
We can go into so many of these different details, but I highlight these to show that there's so many different factors you need to think about when you're identifying which SKUs should be prioritized on e-commerce and how they should be looked at. So I'm going to pass it over to Todd now to dive into some of those types of products.

Todd Hassenfelt:
Oh, thank you, Lauren, and yeah, this is just one slide to kind of show the things you need to be thinking about, right? That is not a one size fits all. And why is that? Well, SKUs are looked at from a profitability standpoint by SKU and price scraping can hurt you if you're just in the stack it high, let it fly mentality.

Todd Hassenfelt:
So what are some of those examples that brands should be thinking of? Well, one is a gift pack and this is more thinking, getting that mindset in your organization of thinking of the consumer or people more so than a channel necessarily, but how can you figure out a use case? This is a fun one here for a movie night. Who doesn't want to stream something on OTT or connected TV and have this kind of one stop pack here of a gift pack, or even anything from a gifting perspective, from the diaper category and a lot of different ones, but how do you think about how can we make a regimen of our products?

Todd Hassenfelt:
Another thing is SIOC, or ships in their own container, and when you think about SIOC, there's a couple different things here, especially from the Amazon perspective. There's three different levels, but is it frustration free packaging? Is it a SIOC where there's no outer box and why is that important? Well, you think about it if you have sustainability goals, right? Kind of reducing that, it can impact your relevancy from your digital shelf, right? Especially on the frustration free perspective. Ideally it would start lowering costs and then there's also those fun things called chargebacks at some places where if you have too big of a product or it's hard for them to handle at an FC or distribution center, these are things you need to think of from a SIOC perspective.

Todd Hassenfelt:
Another one is club, right? Much different perspective. Usually our friends at Costco, BJs, and Sams will have requirements, but how do you now talk internally really to your organization on why this is important? The volume is obviously a key piece, but how is it unique for the club offering? And especially when you're thinking from a price scrape perspective.

Todd Hassenfelt:
Last one, which maybe it's gotten some love in the snack world, but maybe some more is variety packs, right? What are some reasons why variety packs are important? It's not only to help with the price scraping piece that we're talking about, but how do you kind of mix and match your top sellers with maybe some of your new innovation or your second tier products? How, again, do you think about people, or AKA the consumer, and what do they need and different tastes and different preferences. Also, when you think about variety packs, it's a great way to get trial. Who wants one flavor, 12 bars, let's say, if you're in the bar category, if you've never had it before? Maybe a variety pack encourages that trial.

Todd Hassenfelt:
So these are just some of the things as thought starters or ways to look at this, but it's one, help avoid the price scraping, think of it from a people's perspective. And then, again, think about it from a club, what the benefit is and sell that internally to your organization.

Peter Crosby:
Hey Todd, it's Peter. John asked a question. I think it goes to, maybe to the price scraping thing that you're talking about, but he asked if e-commerce SKUs have been created to help alleviate channel conflict. Then he said, "Thinking about the club channel with bulk packs." Is that part of what you're seeing is sort of trying to make channels not be jealous of each other, essentially?

Todd Hassenfelt:
Yeah. Yeah, I mean, channel conflict is a fun one, right? And yes, I think it's part of it. I mean, if you're talking specifically about clubs, there's been club sizes before, let's say, the explosion of price scraping, and to be clear, there is no silver bullet on this, right? And pricing is at the discretion of the retailer. Let's remember this, but can you help make it not as easy for the system to find it, right? And so those variations in sizes, whether it's a club size, whether it's even just different sizes by channel can help with that at least. Are there examples out there of price scraping by the sheet of toilet paper, by the ounce of a liquid, by the number of cookies inside a bag? Yes, we can all speak to those, but again, it's how much time can you buy yourself and how surgical can you be with this versus a sameness across all channels.

Peter Crosby:
And I love the reminder of when you were talking about the gift pack, you said, "Start with the user, start with the use case, the customer, the consumer." I mean, not that you wouldn't think about the channel, but start with that and then that creates the most creative ideas that then which channel does that work best in? Is that [inaudible 00:10:13]

Todd Hassenfelt:
Yeah. I mean, yeah, and it's not that you can't not think about the channel, because let's talk about this gift pack piece, where you're thinking of the user first and what would they get out of it, right? But now you may have a better solution, let's say, for quick commerce, right? Maybe it's not as easy to get as many SKUs on there, but if they have, like [inaudible 00:10:33] has, right, where they have these theme boxes or different things, now that's a great example of a way to get in there, test and learn within a quick commerce site, or a different channel maybe that you want to slowly invest in. Yes, is there a cost to putting these together? Of course, but think of the user or people first and then that'll help accelerate the sales and think about the channel from there.

Lauren Livak:
And the one thing I want to talk about is we are going to talk about prioritization a lot and all of this means that you also need to understand the data that you have behind your products. So a lot of these examples right here are fantastic options for things that are lower price, smaller, aren't really bought just as a single item and you can group them with others, but it really starts with digging into your portfolio and your SKUs and gathering the data to then make these decisions.

Todd Hassenfelt:
Absolutely. So talking about packaging, and I think you should never be happy with where you're at, necessarily. You should always be looking at continuous packaging improvement and making sure that the organization knows that this is constantly going to be evaluated again, looking at that data. And this does take cross-functional alignment, right? This isn't just an e-com thing. This isn't just a brand thing. This isn't just a supply chain. It's every one of those. It's finance, it's legal, et cetera, sales team, right? This should be a collaborative effort.

Todd Hassenfelt:
And what are some things you kind of want to think about? We've talked about the user or people, but that customer experience. One of the things we haven't talked about yet is unboxing, right? It's a little different seeing something on a brick and mortar shelf and we're all used to why we've had things on shelf, how we've picked packaging for that experience in store. Now it is very different when you think about it online. So from a customer experience standpoint in this, how can you make that not just a transaction, but now an experience? How can that unboxing be something that they write a review about, they post on social media for you, right? There's halo effects of this if you do this well. It's not just the cost going into that.

Todd Hassenfelt:
I think another one we've talked about, Lauren was mentioning, temperature control. Well, what does that mean? Well, think about summer or any of our hotter climates, if you're lucky enough to live in those, and let's say you sell chocolate or you sell bars. That is a terrible customer experience if you're not thinking temperature controlled, right? That bar is going to be chocolate syrup and the candy companies have had to deal with this.

Todd Hassenfelt:
But what does that mean when you're thinking about it from a brand perspective? Well, one, you have to figure out, okay, how will that be temperature controlled? Is that going to be an ice pack? Is that going to be a frozen water bottle that we've seen Amazon Fresh even do back in the day? How much is that going to cost? How are we going to protect the packaging if that melting mechanism, whether it's dry, an ice pack, or whatever it may be starts to melt a little bit. You don't want it to get wet and you have to think about your packaging inside. So do you have a divider in there?

Todd Hassenfelt:
We talked about the costs there, but then because these costs are going to increase, and we start looking at your profitability, you have to start thinking about is this only one unit than we sell or do you have maybe a minimum of two units, three units? So you change your unit of measure requirement on sites, depending, just during the summer months, let's say, or for those hotter climates. How granular can you be on what needs temperature controlled or not? Sometimes we have accounts out there that may just say, "Okay, through these seven months, this is the summer months that we're going to ship everything with an ice pack or something to keep it temperature controlled." Maybe four of those months, it wasn't even necessary. So how do you have a way, process in place to pay for only what you need there.

Todd Hassenfelt:
The sold separately one, moving on to the bottom left here, when you think about pumps and caps and is it prep free or not, do you have to tape your pump down so it doesn't spread all over the rest of the box, right? We've probably all seen reviews from, let's say, a soap, a liquid soap in a box with their books and some other things, and clothes, and the liquid soap got over everything. You have to think about these things from a packaging improvement, one, to hopefully make it less prep for whatever account you're selling to, or for your three PL, but then also again from that customer experience. So how do you think about different ways, whether it's packaging or even innovation, right? I'm happy, here at Colgate, some of our liquid hand soap is not shipped with liquid. It's a tablet that you pour water in with a container once you get it so it reduces the shipping cost significantly, but how can you think about things like that?

Todd Hassenfelt:
And then weight, right? I mean, this comes down to the ounce, when you're looking, wherever method you're using to ship or whoever retailer you're looking at, one ounce can make a difference in how you look at this and the heavier it is, the worse it is for your P and L. So what can you do to reduce your weight? One of the things is that kind of side that we talked about, reducing outer boxes, but how can you take the air out of it? How you take the space out of it that isn't needed and make it as efficient as possible. Again, cross-functional, make this a team effort. There's a lot of great ideas within your organization. Think about it, not in what we can't do, but what we could do, because it's going to help your P and L so significantly as well as the customer experience.

Lauren Livak:
And to bring in the content perspective when we're thinking about e-commerce packaging as well, what someone sees on a shelf in a store on a label is going to catch someone's eye differently than them scrolling on their phone. So you also have to anticipate whether it's just content and images that you're showing on e-commerce versus what you're showing in store. You need to anticipate how consumers are going to be looking at that information when they're going to buy your product.

Todd Hassenfelt:
Yeah. You want to connect with the consumer, right? Not confuse them because ideally then that leads to a conversion, but all these things on here make it obvious, right? Look in the summer and look at some of the candy companies or bar companies. The good ones will show literal images of how it will come and it will mention, it'll have either some snowflakes or some kind of indication that it's temperature controlled so the consumer doesn't have to assume, right? Because they may assume the opposite. Even though you're paying all this money for shipping temperature controlled, if they don't think it is, they're going to be like, "I'm not going to order candy in the summer."

Todd Hassenfelt:
Or even from the customer experience, if someone does post something, "UGC is great," put that into your alternate images, your B plus images, and show that unboxing and the excitement of it or highlight it as a review within your image. But yes, make it easy, connect with consumers so that you convert them, not confuse them. So love this one, is thinking about this, if you want an analogy, it's to move from a buffet to the preferred wedding menu when you look at this, when you're thinking about SKUs and what do we mean by that?

Lauren Livak:
Such a great analogy, Todd. I just have to say. Very relevant for me right now, but just the perfect analogy.

Todd Hassenfelt:
Yes. Exactly, yes. I'll let you share your news, but yes, absolutely. What does this mean? So from where we are, or a lot of us have been, and based on the poll, maybe not as many as we would anticipate, but all SKUs have the same approach, right? And this chart on the left, or the stat on the left, comes from damon.com and friend of DSI, Chris Perry, had this on one of his presentations recently as well, but 98% of retailers' national brand assortment is the same.

Todd Hassenfelt:
So this is where the price scraping becomes very easy for the algorithm that finds all those deals going on and then applies them to all the accounts or all the ones with price scraping technology and it just becomes a race to the bottom. And as a brand, you're looking at this going, "Oh my goodness, one, my price is getting degraded." Probably those retailers, now that it wasn't a plan promotion, are going to be asking you for profitability so you have a P and L issue. And then if you're thinking about this, depending where you are in your overall distribution, if you're trying to get a new distribution and you're going to a retailer and saying, "I would like to get these four SKUs in." if they go look, whether online or wherever and see that the price is lower than maybe the cost, you're not going to get that distribution and now you have a lot of issues across multiple teams.

Todd Hassenfelt:
So how can we address some of these, and those are just some of the issues? It's really moving to a specialized approach for every SKU. Now, if you're on the call right now from a supply chain perspective, you're like, "Oh my goodness, how do we do this?" So is it a unique SKU for every retailer? No, not necessarily. This is where you have to have something in between. So you prioritize the retailers and based on either their unique strategy, again, always keeping the customer or people first, but if you can figure out, well, who is price scraping who? They're not price scraping everyone, but they usually have these price scrape pen pals, right? Can you figure that out and then mix and match, or mismatch, in essence, the SKUs there that you have different sizes so it's not as easy?

Todd Hassenfelt:
Again, nothing is a silver bullet, but can you work on something there? Collaborate with your retailer. This is all about finding win, win, wins, right? The consumer being the third one, but how do you make sure that profitability isn't hurt for both sides? How do you make sure it's a great experience? And a lot of times retailers will want some uniqueness, right? What does that look like so you can have this conversation around a packaging standpoint and take an opportunity and make it a benefit in essence? Test and learn.

Peter Crosby:
Hey, Todd, if I can...

Todd Hassenfelt:
Yeah.

Peter Crosby:
Forgive me. I was going to just jump in with a question from Ashley.

Todd Hassenfelt:
Yeah.

Peter Crosby:
When customizing assortment by retailer, how should we approach the item not hitting traditional MOQs?

Todd Hassenfelt:
Yeah. So you have to look at the cost of doing nothing in that example, because, yes, when you look at unique packaging or retailer specific packaging, there are challenges from MOQs, from line shift changes, from the amount of packaging in different, whether it's raw materials or packaging from MOQ standpoint. I think if you look at it from a cost of doing nothing perspective, again, looking at this price scrape issue, the profitability piece, or even we'll talk about innovation here in a second. If you're not doing anything and you continue down this path, it's probably going to cost you more in the long run of doing nothing and especially from an innovation standpoint, if you're not testing, and I don't want to get too much into it, if you're not testing with this, with unique ones, you might end up then acquiring the digitally native brand that did anyways for a two, three, four, or five X, multiple.

Todd Hassenfelt:
So I think you have to have that conversation on the MOQs and say, "Yes, there is a little bit of a pain point to us." Again, we're not doing it for every account necessarily, but here are the reasons on how it can help our profitability. Here's how it can help the conversations with the retailer about bringing a unique SKU or SKU set to them and then it's that trade off that you have to have, why it's a collaborative effort, if that helps answer the question.

Peter Crosby:
Thanks, Todd.

Todd Hassenfelt:
Yeah, of course. I think a couple other things, and this doesn't have to be only on packaging or content, but the mentality of test and learn, constantly be iterating, constantly be thinking, again, of how can we do things better versus why can't we do things, right? So embrace this test and learn mentality, knowing that, listen, not everything is going to work and that is okay, but we want to make sure that we are not falling behind as a brand if other brands start embracing a test and learn mentality faster.

Todd Hassenfelt:
And then, listen, not saying never run sales, right? Your sales team would probably not, your customer development team would not be thrilled to have that as your strategy. Just never run a sale, a price promotion, and we'll be fine. We don't have to worry about price scraping. Not something we're recommending here, but how do you think about it, whether it's flash deals, whether it's a four, six hour one that it's maybe less likely to get scraped necessarily. What do you think about cart limiters so there's not a retail arbitrage situation and just being a little bit more surgical about it and level of discounts are all things that we need to think about, but again, it's not this cookie cutter buffet approach. It should be like a preferred wedding menu where there's different options and guardrails for you to have discussions with internally.

Todd Hassenfelt:
And we've talked about profitability here and this is a whole nother probably session, so we're not going to get real deep on profitability, but the key thing here is I think the mentality, again, of mindset shifts. Maybe in the brick and mortar you're used to is your brand as a whole profitable online, right? You're talking to your buyer and you get the benefit of the full family of your SKUs and even if some of your family is not performing at that level, well, you got everything, it's okay, and it's not as big of a conversation.

Todd Hassenfelt:
As we've learned with online retailers, it's one on your own, right? Are your SKUs profitable? It doesn't matter how your brand is doing necessarily, but each SKU is going to be looked at from a profitability standpoint. And how does that impact you? Well, you think that for some sites you'll become ineligible if your SKUs are not profitable, and so now your search campaigns may not be as effective if those are some of your top sellers, which are most likely going to be the ones most often scrapped. We know the acronym of CRAP, right? Can't realize a profit. And so you go from search ineligible to crap out. So now people can't even buy it.

Todd Hassenfelt:
From a profitability standpoint, you could even kind of talk about, to a degree, lost buy boxes for the sites that have that. So you really need to look at this. There's net PPM calculators out there, but you have to get your organization understanding we don't get the benefit of the whole brand like we may be used to. We have to look at this at a SKU level, which again, then can lead to the conversations of specific packaging, changing, testing and learning, different things like that. But this profitability piece is a deep one, but these are just some of the things that relate to this webinar here. Cross-functional alignment is definitely needed so that everyone is on the same page. They may not like every decision, but you have to make sure everyone is aware of what's going on.

Lauren Livak:
And I'm just going to give a quick plug, and Peter put it in the chat, but we do have some research that goes deep on profitability through the DSI. So you can check out that link. This could be a five hour session on profitability so we just wanted to touch on it a bit, but please do check out the rest of that research.

Peter Crosby:
And so while we're here, I did want to ask, there was a question that came in, because price is obviously a very important part of profitability. So they were asking, this is sort of a software question, what software do you suggest for vendors to use as a price scraping tool to understand who is driving prices down and when they are lowered?

Todd Hassenfelt:
Yeah, I won't recommend any on the webinar here, but I would say definitely look at what works best for your organization. So what kind of things you should be vetting is you're going to look at, okay, well, what is the accuracy, which accounts or retailers are they most focused on depending on it, the software partner, whatever it may be, and then what are you going to, whoever you pick, I think this is always the key with a lot of SAS partners, then what are you going to do with the information, right?

Todd Hassenfelt:
Don't sign up for a partner before you know what you're going to do with it necessarily, unless you need to build that case. But I think you want to make sure that as you get the information, what are the action plans, why you're watching this webinar, but what are the action plans to make sure you can take action on it. But I would say, as you look at the software, make sure it's just aligned with your overall goals on this and it's easy to use, for not only you, maybe in the e-com team, but for others to either see the report, get a dashboard, or use it themselves as well.

Peter Crosby:
Great advice. Thanks, Todd.

Todd Hassenfelt:
Yeah. So we go from profitability to incrementality. We're just covering a lot of the fun ones here, but these are important ones to talk about because in boardroom and C-suite conversations, as an ecom leader, these are questions that we all are getting, right? So what are some of the ways you can think about those mindset shifts with incrementality? Well, one is expand from the internal vacuum conversations and focus on the consumer and what the retailer asked for. It really should be, not what the brand is necessarily saying, kind of that brand speak, as we all speak, or used to, but again, how is this helping the consumer? How is this helping the retailer in tailoring your story to that first and then bringing the brand side of it.

Todd Hassenfelt:
I think understanding, share a voice, and this goes from a paid search perspective, from an organic search perspective, your relevancy, this is not an easy one to figure out, but there are ways and I know there are partners out there that can do this, it's not common yet, but how can you show that you're not paying for the sun to come up. On a paid search, let's say, a sponsored product that they weren't going to do that anyways. There are some ways you can take a look at where you started before, let's say, page search, where you have been since then, but you can see the incrementality of it and using both paid and organic is a good way to compare and contrast that.

Todd Hassenfelt:
I think a lot of times we get caught on impressions, right? And you need those, whether it's impressions, glance, views, however you want to look at it, but not every impression is a good impression, right? Sometimes there's bad impressions. So get the conversation around in addition to that, it shouldn't be or but and, the conversion rate, and what's a big part of the conversion rate? Your content, right? So search and other advertising and marketing will probably earn you the impression or glance view. It doesn't earn you the conversion, that's where your content comes into play. So now you can say, "We're getting a lot of this traffic, make sure that you're measuring it and you're showing what it means and differences and how spikes or declines."

Todd Hassenfelt:
Let's say it's a prime day. You're not going to have that kind of traffic every day. So you have to explain these nuances, but if you focus on the conversion rate consistently, it'll really help your content conversation to have some AB testing going on, but have content that is nine words or less, if you have to have in there lifestyle images. But do things that help the consumer once you get them there, however much money you've paid or efforts or time to get them there, that you are converting. Again, not confusing them, make it easy for them to understand what your value prop is.

Todd Hassenfelt:
And then going back to the first one about not being in a vacuum, understand your competitor trends, right? You focus on your race and what you're doing, and that is important, but you have to see what's going on outside your company, right? See what your competitors are doing, whether they're big or whether they're small. If it's a digitally native brand coming in, how many digitally native brands now have we seen start off with their own D to C, move to Amazon, and then move into Target, Costco, Walmart, right?

Todd Hassenfelt:
This pattern is happening more and more often. How are you getting ahead as a brand to make sure it is a competitive thing, of course, but more, what is the consumer seeing? What are people seeing, right? Is their content saying something better than yours or are they looking at ratings and reviews or looking at the reviews and saying, "Oh, there's an opportunity. They don't like that about brand X. So I'm going to write that as a benefit of mine, right?"

Todd Hassenfelt:
Getting more granular and more outside looking with these competitor trends can make you adjust quicker so that you can be the ones changing your content bullet points to looking at other competitor reviews and saying, "Oh, here's something that's really resonating in a wrong way for consumers. This is one of our benefits. We just haven't talked about it. Let's go with it." Or looking at search terms, right? What are consumers searching for? Look at those top search terms and see what are the top SKUs that they're clicking on. It's not yours, you got some benchmarking to do, right? Go figure that out. So there's a lot of ways to kind of show incrementality that maybe are not the norm overall.

Lauren Livak:
And I think the important part, too, is you're sitting on a lot of data with your company and on the internet. You can read other people's reviews. You can see what people are saying. If you have a customer care center or even a phone number that you can call on the back of your products, use the data that they're collecting, too, to provide insight to you on how you should be talking about your product. So I think the data's out there, right Todd, but it's about tying it all together in the right place.

Todd Hassenfelt:
If you are not talking to your consumer affairs or customer service, whoever is talking to the consumers, to people, start. Consistent meetings, right? Learn from them. They are going to be the best source of information on this. I would encourage you to sit in on calls, take some calls yourself, or at least listen or look at the emails or the social interactions. You're right, Lauren, there is so much information to glean there. I just think sometimes it's not thought of as a priority or something that we do normally. It's such a great source of information and timely.

Todd Hassenfelt:
So some other questions to dig into, right? You're thinking about, we have a lot of them here, I'll kind of touch on these, as well, which SKUs have the most online sales? It's a starting point, but if you're thinking about where do I want to expand to either other retailers, other channels, but also which ones do we want to prioritize if we are going to make changes for price scraping piece or invest the time because of the MOQs and all the challenges with doing retailer specific SKUs, where are we going to have the most impact?

Todd Hassenfelt:
The easiest way to convince people is to show the upside. Here's the sales, here's the upside. So that's the easy way, kind of the common language no matter what department you're in. You have to think about what that sweet spot is for Amazon pricing, right? To kind of avoid crap, but not too high from an ASP perspective for consumers to try. There's a rumor out there it's around $14. So what does that mean? If you have a single unit that's $5, it probably means that maybe you don't sell that single, but maybe you look at kitting costs now and make it a three pack, right?

Todd Hassenfelt:
And is that physically done that way through, let's say, a three PL potentially, or is there a way of doing a three pack or whatever size from a virtual bundle standpoint, but how can you get to that sweet spot on pricing so that you're not having as many conversations. Again, none of this is going to be perfect, but there are many conversations about profitability, so you keep your SKUs or ASINs eligible for search. They're not crapping out and it's truly a win, win, win for everyone.

Todd Hassenfelt:
You do have to think about this. It's not just which products would not ship well. It is not just getting shipped to the store shelf and then taking home from the shopper necessarily, but how is that packaging going to, how many touchpoints can it survive? Are there going to be tears, bending, getting crush boxes, depending what it's shipped with. You have to think about these things, because it's not maybe just your product in that box now coming from a fulfillment center, from a store, from a distribution center. So think about those questions as well.

Todd Hassenfelt:
This is one, this is a little bit harder to do because you're not going to have maybe the high online sales right off the bat, but does it make sense to launch a set of SKUs online only? Depends where you are in your organization. That question may be blasphemy, like, "What? Why would we put any resources online only? No, we need all the brick and mortar stores." Again, use the examples depending on where you are. Maybe you are a digitally native brand, but you'll use these examples of how many brands have started online only, or maybe you do have a couple within your organization that you can point to, but what is the benefit of launching online only?

Todd Hassenfelt:
Well, if it doesn't work, not as many returns, necessarily like you have to do at a brick and mortar. So it's a limited scope, but if you do launch online, you can get the actual sales data, right? You can have conversion rate data and that's probably going to resonate more with a buyer than, let's say, focus group questions and feedback that you may have gotten done in the past. So launching online can help those things, but even when you think about it from an omnichannel perspective, maybe launching on retailer.com is going to help you get into a brick and mortar store on their set, because now your consumers online are buying this SKU or SKUs. We think it would make a lot of sense based on the data to bring it now into the store, right? And now you're defending against a SKU rat or adding to your set during a review, a POG review. So there are a lot of reasons to think about launching something online.

Todd Hassenfelt:
And then again, I think we're going to mention this a few times, test and learn, right? This is not about staying stagnant. This is about doing tests with SKUs, with content, with just thought processes, but how are you set up to do that, right? And a lot of part of that is going to be measurement and data.

Peter Crosby:
Hey, Todd, I know we're running up against time. I just wanted to quickly get to this question. What would be the incremental benefit of launching multi-packs which have co-packing costs associated with it versus the virtual bundles you mentioned? Is there a quick answer to that?

Todd Hassenfelt:
I mean, the virtual bundles will reduce, obviously, your co-packing costs, but depending on the retailer site, it's not sometimes as great of an experience, right? You may have multiple bullet points or the pictures may be off. So you have to think about that CX from the virtual bundle, but a huge advantage in terms of the lack of kitting costs or a three PL.

Peter Crosby:
Great. Thank you.

Todd Hassenfelt:
Yeah.

Lauren Livak:
And now we're going to talk about some frameworks. I know we're getting close on time, so I definitely want to make sure we cover this one and the next slide. These are some frameworks that you might be able to use when you're thinking about developing your strategy. So go ahead, Todd.

Todd Hassenfelt:
Yeah, real quick. I mean, some of these you can look at, but some that we haven't talked about is, again, thinking of innovation, additionally maybe starting on the D to C site. Seasonal one, you think about pumpkin everything now, right? But these are high risk, high reward SKUs. So the sales story must be really strong with retailers as well as the forecasting.

Todd Hassenfelt:
Samples are something we shouldn't forget when you think about packaging, right? Great way of giving trial, great way of surprise and delight, whether it's a curbside or shift to home type of piece and it can also be used for trade shows as they come back on. And then one other one that we haven't touched on is robot ready, right? When you think about micro fulfillment centers and MFCs, there is probably a lot of work to be done, but there are a lot of different moving parts there and touch points and how can your packaging survive or not, but thinking about those kinds of conversations as well.

Lauren Livak:
Perfect, thanks Todd. And then another one to think about is how can you matrix the content and the SKUs that you do have, right? So how can you prioritize based on what makes sense? So you can think about it as growth and profitability, and that creates a couple of different panels for you where you take your entire portfolio and see where they fit.

Lauren Livak:
So the ones that are high growth, high profitability, you're ready to scale. They have the best content, you're focused on them, you know they're important online, you have user generated content, paid search. Everything is revolving around those SKUs that you know will be successful online. Then on the complete opposite side, you have low profitability, low growth. Should those be on e-commerce? Should they be sold online? Are they a focus? It's a conversation to talk about.

Lauren Livak:
Then you can think about high growth, low profitability. If there is high growth, can you test and learn a strategy to try and drive that to be more profitable? So that's where you can experiment and figure out, should we do a SIOC? Should we do a different type of distribution strategy with this retailer or that retailer? It's a strategy to think about how you can move those to the farthest right box. And then you might also have high profitability, low growth, but those are your tried and true products. Those are the ones that you know are going to drive that profitability online. So again, making sure they have built out content, making sure you have a strategy behind them, making sure you're focusing on organic search.

Lauren Livak:
So this is just another way to potentially think about prioritizing your SKUs. You can use this matrix, you can change the axises if that makes sense for your business, but think about breaking up your entire portfolio by SKU so you know what you're focusing on when, and then you can take a lot of what we talked about in the last webinar with your content strategy and apply it to those specific SKUs.

Lauren Livak:
So I know we're a little tight on time, so we're going to go through a couple more slides just to make sure that we focus on the topics that Todd and I had walked through. But when you think about a 1P versus 3P, again, this slide is not inclusive. There's a lot of differences between the two, but you do need to think about a couple of things that you may or may not have control over when you're thinking about whether you should be selling 1P versus 3P.

Lauren Livak:
So on 1P, like Todd said, price is set by the retailer, but on 3P the price is set by the seller. So you do have some control. Also when it comes to data, the retailer provides the data on 1P and they can choose what they'd like to provide to you. The seller can collect more data from a 3P perspective. On the 1P side, a retailer can determine the quantity. So if you wanted to sell a product as a single item, they could decide to sell it as a 36 pack, and you might not find out about it until you see it on the product page. Everybody knows that's a typical Amazon type of example. With a 3P, you can determine the quantity, so you have a little bit more control over that.

Lauren Livak:
And then communication, it's very controlled and determined by the 1P seller. From a 3P perspective, you can potentially customize it a little bit, be able to communicate with them a little bit differently so you have a bit more control. And Todd talked about this as a theme on a lot of different slides. You need to bring the business along with you. I'm not going to read through all of these, but it's really about de-silo the entire organization from every perspective. When you think about e-commerce packaging, everyone needs to be involved in the conversation, forecasting, budgeting. All of that needs to be put into account across the business when you're planning for distribution overall.

Lauren Livak:
And then in terms of where you should place your bets. Again, these are really some areas to think about. Think about the halo effect, right? Incrementality, when we're thinking about profitability as a whole, it's not just one lever, its multiple levers, and it's thinking about that omnichannel distribution approach, making sure that you're using the data you have, you're gathering the data that you need to from the sources that you can, and you're really taking that holistic picture in terms of your overall strategy.

Lauren Livak:
So I like to end on this. This was a Todd quote. "Plan for pivots, not for perfection." I think that should be applied to every single webinar, anything e-commerce related, you just have to be ready to pivot as needed. And that's why it's important to have the data. It's important to work with all of your teams cross-functionally so that if you need to make that pivot, you can.

Peter Crosby:
Thanks so much to Lauren and Todd for allowing us this crossover episode of the Digital Shelf Playbook series. If you'd like to see or share the original source webinar, we have the link in the show notes, or go to digitalshelfinstitute.org/digital-shelf-playbook. All the webinars of the Digital Shelf Playbook series are posted there. If you have questions about any of this or hate using show notes, you can reach out to Lauren Livak anytime at LinkedIn or at lauren@digitalshelfinstitute.org. Thanks for being part of our community.