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Transcript:
Speaker 1:
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. In this environment, every brand is evaluating the channels they use in the investments they make to ensure they're getting the most out of their resources. This is certainly true for D2C, whether you're considering beginning a journey there or for those brands who are in the journey and evaluating their strategy. This is an audio version of a webinar featuring, of course, Lauren Livak, director of the Digital Shelf Institute. And Carter Jensen, senior manager of global e-Commerce at General Mills.
Carter and General Mills have been on a three-year journey from D2C is a threat to our traditional business, to now running more than 35 sites a year. He generously shares the learnings and advice from that journey.
Lauren Livak:
So, thank you everyone and welcome to our webinar today. I'm really excited about this one. I know D2C was a hot topic for a while and then it wasn't really talked about. Now it's being talked about again and a lot of the conversation around D2C is about how it could solve all of your problems, but at the end of the day, it's really another channel and it's a solution to really help you get to a place where you can get more data, you can test and learn, you can experiment. And Carter Jensen here is here today to talk about some of the amazing things that they've done at General Mills and some of the cool experiments that they've done with D2C and how they have used it. So Carter, I am going to hand it over to you. Thanks so much for joining us today.
Carter Jensen:
Yeah, thanks Lauren for having me. And I think, you know, hit it right on the nose when we started putting this type of work together was three years ago when we sat on our D2C journey and the hype cycle of D2C, I feel has had a couple coming in, coming out, coming in, coming out. And I think what's interesting is it's still one of the most requested topics, one of the most requested stories we have here at Mills. And I think it's because people are still trying to figure it out, what's the purpose of it? Especially when you think about it in a large CPG sense.
So today, I'm hoping to dive into that and talk a little bit about too, about how the learnings that we've taken and kind of really grasped from our D2C journey have been able to be applied to all of our overarching digital strategy for our brands here.
Lauren Livak:
Great. Thanks so much, Carter. And a friendly reminder to everyone who's logging in, we are taking questions, so feel free to put them in the chat, or the Q and A and we will talk about them during the session and then also at the end. So, feel free to jot those in and then Carter, take it away.
Carter Jensen:
Awesome, thank you so much again, Lauren. Yeah, so as we mentioned, I really want to talk about some of what we've done here at General Mills and I've titled this experience or this presentation delivering a digital first experience using D2C. And we're going to talk a little bit about my journey, about how we've interpreted it, the ups and downs, the lefts rights, of how we've come to where we are today and then what we see in the future. How are we really taking the foundational elements of what we've built for D2C and applying it to our broader digital strategy across the board? So, we'll dive in.
Again, as I mentioned, we're going to talk about the friction that D2C has, especially when it comes to big CPGs. So, if anyone is listing here who represents a large CPG, I'm sure you understand firsthand the contention between direct to consumer and your core customer group. And I think that we are in the dead center of that. We didn't have have a pass in that and that was something we had to take on headfirst.
Secondly, we'll start to shift into ... from the strategy we put into place from what we're executing today, to how we're evolving that to benefit the larger organization. So, those are the two sections we're excited to cover today.
So, first of all, D2C in the big brand world, taking a step back. So, as Lauren mentioned, my name's Carter Jensen, I work here at General Mills, taking on global e-commerce strategy specifically in new and emerging channels. So, as you can imagine, D2C falls right into this focus. And we're a global team, we're small, we're lean, we're mean, we're about five individuals of strategy leaders, but D2C falls into that and we had to figure out what D2C meant, for not only North America, but also our European business, our Asian business, our Latam business, et cetera. So, it was a really, really big task to ask.
So, I joined General Mills in June of 2020 from my basement, which is a really interesting time, not only for D2C but for e-commerce in general, and I couldn't have landed in a better spot, at a better time. As you'll see, D2C had some really interesting momentum but was met by a lot of questions. I want to dive into a little bit of the story behind that and then what we did to react to that.
So, first of all, we were met with a problem. As I joined, again, as I mentioned in June of 2020, D2C was top of the list of things for me to quote unquote, figure out. And we knew that DSC was a contentious topic, not only at General Mills, but CPGs across the board. It was a very well-documented kind of pushback.
And these were some of the things that we were hearing from executives. So, when I joined, you do the normal tour, you talk to all the C-suite, you talk to the directors, you talk to everyone and understand just what the heck is going on. And this is what we started to hear. The business perception of D2C was really unique.
D2C is a complex route to market. It is incredibly complex route to market. How are we actually gaining consumers' attention? How are we bringing them in and driving through the entire purchase funnel without relying on a retailer, like a big CPG like ourselves usually does?
D2C will disrupt existing retailer relationships. How would we start actually selling products ourselves without interrupting or interfering with business and customer relationships or retail relationships that we've spent 150 years lining up and ensuring are solid? So, why would we even take this risk?
Secondly, we lacked really the tools and capabilities to run D2C effectively. As anyone knows, if you think about D2C, not only are you doing all the marketing and all the consumer input and customer acquisition, et cetera, but you're now starting to take on actual transactions, individual transactions to consumers, shipping, fulfillment, individual boxes. Now, yes, of course, we are one of the best fulfillment companies in the world. However, shipping individual boxes of Cheerios to the Johnson family in Tennessee is very different than shipping train loads of grain or pallet loads to Walmart, something that we had a lot of pushback against because we simply didn't have the capabilities in-house to even invest into this.
Secondly, the value of D2C for my business isn't clear. We started looking at really high entry cost, understanding the profit margins that we were going to see, especially in grocery and started realizing that hey, even if we were to bring this down with our efficient shipping rates, even if we were to find the most efficient customer acquisition strategies, we still have incredibly small margins. So, how would this be even profitable for the business?
So, as you can see, we had a challenge in front of us, with the executives pushing back on this, at least questioning it. We knew D2C was something that we had to, as I mentioned, figure out, but we had a very large uphill battle in front of us, based on some of the pushback that was very real at the time.
Lauren Livak:
And Carter, can I just ask a question around that because I feel like-
Carter Jensen:
Of course.
Lauren Livak:
... sometimes in larger CPG organizations also, they don't have the teams. I know you were hired to do this right?
Carter Jensen:
Right.
Lauren Livak:
But was D2C a separate team than the e-commerce or sales side of things, or was it incorporated into the existing teams?
Carter Jensen:
Well, that's a great question because the next slide, what we talk about is what was actually happening, which is fascinating. So, if we look at this, the reality was if we look at the executive pushback, that was the perception. That's what we viewed the strategy as. That's what we viewed our approach going up against. But the reality was is that activations on D2C were happening in the trenches of the business. And so to your point, Lauren, what we saw is we didn't have a D2C center of excellence, we didn't have a D2C team, but we saw brand leaders, marketing leaders, starting to look at D2C as a really interesting way to get to market in a few interesting categories. So, for example, Doolies from our G-Works category, G-Works being our founders groups, incubating brands from zero to a first a hundred thousand dollars, found that D2C was the fastest route to market to start testing new flavors and new assortments and even product variations.
We knew that our Wheaties brand was bringing out these gold foil, special edition boxes with people like Michael Jordan, Muhammad Ali, Simone Biles, and they found that there were fanatics of this brand who really wanted to get their hands on a collection item and that people were flocking to our website and to our customer service channels looking for that special edition box.
And then in 2016, we acquired one of our largest D2C businesses, Epic Provisions, who was doing millions of dollars in D2C, and we didn't even think twice about how that integrates in and they were operating on an island.
So Lauren, to your point, we had D2C hotbeds happening around the organization, but as you can imagine, they weren't scaled, they weren't compliant. We were looking at unique ways to do one-off type activations. And so, we knew that even though there was pushback, we saw a ton of energy in the organization, we knew that there was something happening and we needed to find a way around it. So the activations were happening in individual brand teams, mostly on the marketing side. So, I hope that answers your question?
Lauren Livak:
Yes, definitely. Thank you.
Carter Jensen:
Awesome. Yeah, for sure. So, it comes to our first poll. And I would love to understand from the audience perspective before we start diving into what the heck we did with this gnarly problem. Again, understanding that there was really valid skepticism coming from the top down, trying to figure out how do we go about this? We don't have resources. It potentially disrupts our customer relationships that we've worked 150 years on. It's potentially really expensive and ultimately, we don't see a clear path forward to actually benefiting the business. So, what the heck are you going to do? So, super curious on asking the audience this question. I'll throw it over to Lauren.
Lauren Livak:
Yeah, so everyone should see a poll pop up on their screen, so feel free to vote. We're going to keep it up for a couple of seconds. I see some votes coming in now. Oh wow, awesome. Influx of votes. All right, let's keep going. And I'm going to close the poll in five, four, three, two, one.
All right, so what do we have here? So, in terms of results, Molly, if you could pull those up for us, that would be great. It looks like we have about 60% who said they're moving forward with the plan and testing it out. 24%, they've started but are confused on where to focus. And then 8% were tied for haven't started or were experts in this space. So, looks like a majority of people are moving forward with a plan and they're really testing it out.
Carter Jensen:
Yeah, that's awesome. And hey, kudos to the 8%, the two people who are experts in this space. I think, would love to hear how that's working from those individuals because I think though the plan that we're about to unveil and continue have been running with for the last couple years is solid in our opinion, I wouldn't say we're experts yet either. So, it's a constant moving space. I would love to understand how that's playing out for those individuals. So, we'll keep pressing forward here talking a little bit more about what we did with the sticky situation we found ourselves in.
So, we knew again, that there was huge pushback from the top down. We knew that there was activations happening in the trenches that we needed to get our arms around to figure out how to support and get them into compliance and find ways for that success to scale across the org. And so, what we came up with was this really unique 3X strategy. The 3X strategy goes like as follows.
So, we decided that there were three core reasons why General Mills should go direct to consumer. The first one is talking about learning and experimentation. How do we leverage D2C strategies to learn more about our audience and marketing and products? So for example, when we look back at the Doolies case study, and I'm going to go into case studies for each one of these to really tear this apart, but we look back at Doolies, how do we find the fastest route to market to test product variations, flavors, marketing taglines, logos, those types of things?
We started realizing that D2C was the fastest way to get our products in front of consumers and get real life feedback. And so we wanted to create a system that from everyone from our biggest brands to those incubator brands could easily put experiments into market and actually hear real world feedback from the people that were going to use them every day. And so, that's our learning experimentation model.
Secondly, we knew that there was brand experiences that were being elevated with the D2C. I mentioned the Wheaties example, and we'll tear that one apart a little bit more. But we knew that there were fanatics of our brands. We think the brands that General Mills holds, you think Cheerios, Reese's Puff, Wheaties, I could continue to go on. We knew that people wanted to actually have a piece of this nostalgia and they wanted to take part in some of these digital experiences or promotions that were happening. And we wanted to make sure that there was a way to actually fulfill these items and provide those fanatics the actual products that they demanded in an interesting way. And so, we knew that there was a capability need here.
And then thirdly, we did know that there was a spot, though limited maybe, for sales and marketing. We talked about Epic in this example, where we acquired a company that was built on D2C and we never wanted to discount that though it might not apply to a lot of our products for various reasons that we'll talk about. We knew that hey, if we're going to build the infrastructure, we have to have the muscle to be able to actually go for a strategic sales and marketing focused objective.
Now, when you look at these three examples here, one thing that I think makes us very different than I think the traditional strategies is ultimately, the KPIs that we're holding each one of these against. So, when you look at learning experimentation, we start looking at the KPIs of this being acquiring data from our consumers who are actually using it. How do we use that data to then validate new product variations or new marketing tactics? How do we empower our consumer to potentially have a hand in what we create and what goes mainstream next from General Mills? And then how are we creating the shortest, most friction-free path to purchase, which is aligned, you'll hear me say throughout this entire slideshow, to make sure that any experience is really positive?
What I'd love to do is actually compare this to traditional product market research examples, where you normally go through a company, you give them a hundred products, they'd find these groups of people to try to test them out with. And I always felt canned and not necessarily authentic. Here with D2C, we found interesting ways to use agile tools to get this in front of thousands of consumers and actually get real-time feedback on what they thought of the product and I think that's really, really interesting for this category. And we continue to see a lot of energy being deployed, not only for our small incubator brands, but even for some of our largest brands, figuring out what's their next product variation or what's the market really looking for and testing that in nearly unique ways.
So, moving on to brand experience, what are the KPIs that we look for that. We look at connected experiences, again. How are you going from this incredible digital experience that might come to life on a social platform or really kind of the campaigns that our brands are punching out every single day into an actual physical, tangible object showing up at your front door? And we think that our D2C tools allow that perfect bridge, to create that friction-free path to actually holding a product in your hands from a remarkable digital experience.
We also love to collect first party data throughout these applications. As you know, we have huge first party data troves, that allow us to not only be more efficient in marketing, but give us mass consumer insight into the kind of products that are coming in the future. We'd love to empower our consumers to provide feedback and to shape campaigns that are to come. And then ultimately, you remember the pushback, there's a lot of concern about retailer customer partners. We've actually seen a ton of success by piloting early promotions or piloting early partnerships within D2C and then bringing those numbers back to our retailers to say, "Hey, Target, Walmart, Kroger, et cetera. What if we deployed this with you exclusively? Look at the numbers we saw with this early deployment. What if we turned that off and went with you exclusively to really take it to that next level?"
And we found really unique ways that we can leverage the data that we get from our brand experiences, not only to optimize marketing, but to also expand the retailer relationships that we were worried were at odds or worried we're at risk in the first place of deploying this.
And then finally, from a third perspective, and this is where we get a little bit more traditional. From a sales and marketing perspective at the end of the day, and I'll dive further into the consumer experience perspective, which you can see throughout all three of these strategies. Again, how are we intersecting consumer in the place where they are, whether that's on social or through other promotions, and provide this most friction-free path to purchase possible. Often, we found that retailers and some different laws that are around that provide some barriers to actually purchasing.
And so, we found that D2C sometimes is the best path to purchase. And so how do we provide that? How do we collect first party data? How do we empower our consumer? Very similar to what you saw in the past sections. And then finally, we do look at profitability. The interesting thing, if you look at all of these kind of KPIs, the one thing that I think most people on the call and most people I've talked to, focus exclusively on is a thing that we care least about. And I think that when I talk to other D2C operators, everyone is very envious of the fact that profitability is a very low priority for us within this D2C world. And we knew launching this, as I mentioned, not only the kind of qualitative pushback that we saw from executive leadership, but when you look at the reality of our products, when you look at the reality of our margins, we are mass grocery, we sell into retailers, we make money on truckloads of Cheerios to Walmart, not selling individual Cheerios to people across the country. And that's because of the relationships that we've built with our retailers.
And so, when we look at D2C, we try to figure out how do we bolster, how do we accelerate the stuff that we do the best? And that's working with our customer partners to get products in the hands of Americans across the country. And how do we support that effort rather than try to go in a different route that's ultimately really uphill? And that's why you see profitability in the far right corner here, ultimately not being a major KPI that I'm responsible for, that any brand team is responsible for, that's running our D2C activations.
Lauren Livak:
And Carter, a question around that, only because the DSI has been talking a lot about profitability. So, when you think about D2C as a channel and another way that your entire brand can get products to customers, how do you use D2C in conjunction with other channels? Because profitability, on an Amazon, or a Walmart, or a Target, that is top of mind-
Carter Jensen:
Of course.
Lauren Livak:
... and the overarching e-commerce number is top of mind.
Carter Jensen:
Of course.
Lauren Livak:
So how does D2C connect into that broader, strategic e-commerce goal?
Carter Jensen:
Yeah, it's a great question. It's actually a question that we're going to address here in about three slides specifically because at the end of the day, we're spending money on these types of things. And at the end of the day, our profitability number matters and that's what drives value for our shareholders. That's what drives value for this company. And anything that we're investing in has to ladder up to that.
So, though it's great that we can launch some interesting promotional items to get some first party data, the challenge was, is how are we learning from this and how are we driving the insights and the connected commerce experiences in order to drive the profitability? So, I'll tell you here just in a couple slides, Lauren, the really true tie that we are really excited about.
I do want to dive into a couple quick case studies to articulate each one of these strategies in a little bit of an interesting way. You saw Doolies mentioned earlier, another really interesting product that came from our incubator team was Good Measure and Good Measure really is this blood sugar conscious snack bar and they can make a couple other different product variations. But Good Measure and I can cruise through here because I have an example of their site, good measure was one of the first kind of incubator brands that really took hold and gained scale. And yes, they were working with our retail relationships, but early on in their journey they found that D2C was the best way to drive product validation and also understand what product lines they should be investing in.
So, if you can imagine these teams are working in our test plants, they're working in our incubator space trying to figure out how do you reach a unique target consumer to solve a unique problem. And though they can do hundreds of hours of research and invest in all these consumer case studies, the whole point is the sales numbers don't lie.
And so, they tested everything from marketing tactics to product variations, to logos, to colors, ultimately to figure out what's going to work for them. And today, Good Measure continues to be successful, not only on D2C like you see here on the website, but also in the retail partners as they continue to expand. So, that's a little bit about Good Measure.
As we move to the brand experience side of things, Reese's Puffs recently partnered with KAWS, the artist. And of course, there was a huge digital push around this. They had a whole digital experience, using augmented reality, they're throwing all of the bells and whistles you could imagine, would come with a promotion like this.
But what's interesting is, is that we knew that there was a brand fanatic category. We knew there was a huge cult following of this artist and we knew there was a huge following for a lot of our family favorite cereal and we wanted to figure out a way to really double down and provide that audience with really a unique experience that was tangible.
And so, we launched this program, we actually sold out of these types of things and just under 10 seconds, actually. And we allowed our consumers to not only interact in a digital way, but actually go through a D2C channel to actually get a blue special edition box and an acrylic case sent to their door within a matter of 48 hours from actually experiencing the launch, which is really interesting. What we loved about this is we saw the program leak on Reddit, we saw a lot of different pieces of momentum come around and ultimately, we were able then to get all of the consumer's first party data.
And though it's not a huge number compared to some of the other third-party data sets that we look to, we have to remember the value and the quality of this data. We're looking at let's say, the thousands and thousands of users that are most fanatics about our brands, so we can start to really understand how do we serve them better in the future? I also love to think that there are thousands of blue box Reese's Puffs now sitting on the shelf of consumers across the world. And I think it's a really interesting testament to how we're morphing and connecting digital promotions into actual physical experiences for our consumer.
And finally, last but not least, when we look at Epic, we talked about this as an acquisition. So, in 2016, we acquired Epic and their D2C business continues to roll on. If you look at Epic, it's a protein products. So they do jerkies or pork grinds as you see here in the photo. It's a little different than a lot of our core categories.
And so, when we look at how do we maintain this unique user group, we find D2C is a really surgical way to go acquire consumers that's different than some of our mainstream methods. And so, D2C continues to be a really great business for Epic. They continue to also scale in parallel with retailers across the board after the General Mill's acquisition, leveraging those relationships in interesting ways. So, these are all things that are being leveraged by brands who are focused on sales.
And we're going to actually dive into another version of this. So, talk really about Lauren's question of how do we really tie the benefits that outlined the KPIs I outlined, to the KPI that ultimately matters to our business, that's profitability? So let's dive in.
We started this 20 minutes ago with this line that basically said D2C was like an unknown threat to traditional business. The path in front of us was friction-filled, uphill. There was a lot of really pushback from the executive level and at the baseline, the numbers didn't make sense. So, how the heck did I get here with a title that still manages D2C three years later?
Well, as I told you, we looked at figuring out a right size multifaceted approach to really elevate this world of connected commerce experiences, which is something with General Mills, and I think the rest of the industry has talked about a ton.
It's that 3X strategy, it's moving away from profitability, it's really dialing in the swim lanes. So, we've used this 3X strategy, and in addition to one of Lauren's questions earlier, we built an entirely new tech stack that's agile and could be deployed in ways that we've never seen before. So, this year, we've launched basically programs and mostly in average under 30 days we can get a D2C from concept to actually launch and shipping products, which if anyone's worked for a large CPG company, it's an incredible feat in order to get that done.
Lauren Livak:
Incredible feat, I can attest.
Carter Jensen:
Usually the cost of actually deploying this is under $50,000, which is also really interesting as well. So when we look at profitability as not being issue, we also tried to figure out how do we get the cost incredibly low for teams to actually deploy and enable this toolset and so that we don't have to have really hard conversations about the investment?
We can say, "Yeah, let's do a test and learn," because it's feasible for the brand. Let's do a brand promotion no matter the size of it because you know what? We've made the cost so low, the barriers to entry so low that it's justified, which is a really interesting tool to success.
As Lauren mentioned earlier too, it's scalable. So, we've brought in really incredible agency partners. As I mentioned, we're still just a team of four and so, to say that we have our hands on each one of these experiences isn't accurate, but we've brought in this bench of incredible agency and consultants, that we can instantly pair with any new request and they can get this done in a turnkey way, regardless of the prowess or education or expertise of the teams who are actually activating it. So, we get our marketing team paired in, we get our enterprise team paired in and this team is built specifically to do D2C activations.
And because of all this, we're starting to see an acceleration. And this year alone, we'll launch 35 D2C sites across the globe using this 3X strategy matched with our agile tools and tech. So as you can see, coming from three years ago where we had a couple peppering of activations, three, four across the globe, once we've enabled this both, from the strategy and clear direction and also paired that with the agile toolset and support, we've seen mass acceleration and success launching over 35 sites here this last year. So, excited for us to come in the new year.
Lauren Livak:
Carter, two questions about that real quick. From a tools and technology perspective, is that something that you built in-house, or did you tack a bunch of different solutions from your tech stack to work?
Carter Jensen:
It's a great question. It's actually the latter more than the first point. What we knew, is we knew we needed to get speed and cost down and really promote the agility that D2C brings. Because if we came to programs that use with 3X strategy and say, "Hey, it's going to be six months and millions of dollars," well, it's going to be very hard to justify that, especially knowing the profitability is such a hard thing and knowing that these are smaller type activations of an experimentation or the icing on the cake for promotions. So, we needed that. So, instead of looking to traditional enterprise tools, we looked to startups to figure out what tools were they using, what tools were they using in order to maintain speed. Often they're under tight budget and tight timelines. And so we started implementing tools like Shopify, like Klaviyo, those types of things, where we were able to bring in agile tech stack and then integrate it within our central systems.
Now, that was no easy feat, as you could imagine. The ability to bring those types of things in, I got dismissed by sourcing many of times because the actual cost was too low for them to care about. But what's really interesting about those tools is that they are incredible. They have supported some of the largest D2C companies that we all know and love. And so, the perception is that the tools aren't good enough, that they're not good enough to be in an enterprise building, not built for enterprise.
The reality is, is that they can support some pretty incredible feats. And I mentioned with the Reese's example, we moved through thousands of products in a matter of seconds and we had no delay in shipping. Nearly 100$ of those shipments were at consumers' front door in under two days. And that's thanks to these agile tools. And now like I said, we've made the investment into integrating them indoor central systems to make sure first-party data, all the insights and everything are not only integrated but also compliant with our strict security standards. So, everything is locked and loaded and it's ready to go and ready to scale.
Lauren Livak:
That's great. And I think it speaks to how you have to figure out what's right for your business to be successful.
Carter Jensen:
100%, 100%.
Lauren Livak:
And that actually brings me to my second question around cost. So, when I think about cost and I think about D2C and content and the content that's needed, I think about all the content that you need to create for the digital shelf. Were you able to incorporate the content that you built for D2C to use across all of your other channels, so you also found cost savings? To use maybe the same image on an Amazon or a Walmart.
Carter Jensen:
Of course, yeah. So, what's interesting is I mentioned the integration into systems and I don't want to get too technical, but I think this is the audience probably to get technical with. Shopify, anyone can buy Shopify. Actually, we had people buying Shopify licenses on their corporate credit cards. That was the core of the issue, but actually integrating it into the systems, to your point Lauren, of understanding how do we take all this work and make sure it benefits the whole? And I'll talk a little bit more driving profitability.
When you look at content specifically, we launched direct integration with PAM to Shopify, so that we are able to have a sync between the two. Now, that makes building a Shopify site a lot easier when you're using content. But also the other way around, where all of a sudden these systems though agile, fast and rogue, especially for the experiment experimentation side of things benefit the whole because of the integration work we did in the upfront.
And that obviously makes our systems teams very happy as well, to know that everything is above board, that it also makes sure that we have ingredients compliance, that we're always up to speed with the most accurate information, even though we're moving fast and using these non-traditional tools, behind the scenes since everything's completely integrated, specifically within PAM.
Lauren Livak:
Thank you, Carter. That's great. Appreciate it.
Carter Jensen:
100%, yeah. So Lauren asked the question like four slides earlier, which won't give her too hard of a time on, but I want to talk a little bit about how the learnings that we gain from this, and I think if anyone's gone on a DSC journey, which based upon the poll is a plenty of you, it's easy to look and say, "Wow, 35 sites, that must be easy when you're not looking at profitability." And I fully admit we have found a way to drive scale and repetition in a really unique way. But what have we learned? What has this set us up for and how are we driving profitability with these learnings and these integrations? Before we get to that, I know we have one more poll question, which I don't know was answered in the last time, but I'll just dive in and throw it to Lauren to navigate this one.
Lauren Livak:
Thanks Carter. So, I think they were both launched at the same time. So, the question was why did you start D2C in your organization? So, it looks like 40% of the attendees said to get first-party data.
Carter Jensen:
True.
Lauren Livak:
So, that was the number one response. The number two response was to increase profitability in a particular brand. So, really interesting that we're tackling profitability. Then third was as a test and learn, and fourth was because our competitors were doing it.
Carter Jensen:
Yeah, for sure.
Lauren Livak:
So, definitely people are more in the first party data profitability realm.
Carter Jensen:
100%, and I would love to ... If there's any questions, or poking and prodding at first party data, it's something that we've thought a lot about and what is the value of it and what is the strategy we put into place and before we launch the site? So, if there's any questions I would love to discuss and learn from the audience or just answer any questions you might have around that. So, happy to dive in further. So let's keep pressing on.
All right, so offline, online. I'm going to run through a couple things that are not going to be anything new to this audience, but if we look at like D2C darlings across the US, I think everyone knows Lollipop. And if anyone has experience with D2C shipping beverages, if you think low margins are on cereal, imagine shipping a 24 pack of soda, I don't know how ... It's a challenge.
But what's interesting about these kind of D2C native startups is their ambition is to get into retail. They're shooting to try to get on that target shelf, they're shooting to try to do that and just as much, so we even saw some of the historic shops actually opening up cool New York stores to try to get in front of people, to try to gain that distribution. And that's ultimately the gold standard. That's when really profitability at lock.
But the reality is here within General Mills is we have no problem with distribution. That's one of the things that we've worked hardest on. And ultimately, you can find our products nearly every store across the globe and it's something that we wanted to understand further.
So, how do we take this benefits of D2C without completely alienating the fact that we have what every D2C native company wants and that's distribution. And so, we looked at how do we use that optimized user experience to talk about how do we use that data that drives performance media in an interesting way and how do we use all the consumer control we're enabling, to ultimately double down with our distribution, our power of our pricing, and ultimately availability. So, how do we bring those things together in order to have better user experience than the ultimate profit as we talked about here just a couple minutes ago.
So, I want to talk about ratio and ratio is actually the product you see behind me here, that's the Ratio brownie. But Ratio was a keto brand that we specifically launched DDC about a year and a half ago now. And the reality with ratio was the fact that they wanted to go D2C for a variety of cases, but the point being is, is that some of them did not have the ability to do D2C because it was yogurt, it was chilled product, it just didn't makes sense with their current fulfillment structure.
And so, what we quickly found is we found, hey, let's do D2C, but let's make it a hybrid model. What if we use our advantage within distribution? What if we use the advantage within that to ultimately give consumers control of how they consume the product?
So, here's a little journey. You're cruising Instagram, facebook.com, whatever. And you've recently embedded or recently embarked on a keto diet. You're targeted with a unique ad that's all about keto and you're brought to this really incredible site that talks all about how this is a really unique solution for keto, especially on the go.
Well, it's a D2C site. So, how do we really double down on the brand objective, which is new household penetration? We ultimately want trial and we want people to buy it over and over and over again. Well here's the thing, why would we get in the way of the best option for fulfillment? Why would we get in the way of the best option to get that bar in the consumer's hands? So, what we did is we said, "All right, let's use the D2C tools. Let's start with this." So hey, if you want an eight pack of the new bar delivered in a brown box on your front door, great, we can take care of that. Maybe it's a to-do item on your list, you're searching on your lunch break to try to find keto solutions for next week. We'll take care of that if you want it quickly and you're jonesing for a snack that afternoon, well we can integrate Gopuff so that we can instantly Gopuff you a pack of bars, great.
If you want it on subscription, which unlocks an interesting one cause now we have that first party data to understand when you're running out for different flavors you like, we can start doing subscription, we can do subscribe and save. So we make sure that you're getting it every couple weeks.
But the reality is that the product is probably down the street at Target. The reality is the product's probably at your local Walmart. And who are we? If we're driving household penetration, if we had the distribution, who are we to get in the way of saying, "Oh yeah, well don't look over there." So, what we embodied was this whole transparent nature of we want to create the most friction-free path to purchase possible for the consumer regardless of your preference.
Again, if you want that brown box, check it off your list. But if you're just driving home from work, I drive by a Target every day. We want to show you where this product is, we want to show you the price of that product so that you can make a decision that's appropriate for you. If you want that brown box convenience or that subscription convenience, maybe you're going to pay a little bit more because our margins aren't great, but hey, if you want to drive down and maybe just add it to your target cart for a Sunday afternoon pickup and you can spend a dollar or two less, well, then why are we going to get in the way of that?
And so, that's the new strategy that we've started to look at is to say, "How do we double down on the convenience and the ultimate user experience of B2C while still providing really that awesome connection into our retail stores?" And you're going to see that across the board.
We ultimately bundled this together and we're calling it PDP Plus, which is an entirely new product that we're rolling out here at General Mills, but it's this D2C inspired shopping solution. It's understanding how do we take the best of D2C, how do we take those great experiences, the first party data, the intersecting and performance media aspects of it, but then double down and leverage the distribution that we have? And so ultimately, we're finding PDP Plus a really unique solution.
So, we just talked a little bit about what this is, but it's a new shoppable kind of experience. I just highlighted it on ratio looking at how do we leverage D2C and our retail partners in unique ways? Ultimately, it proves to be a better user experience. We can do new personalization efforts because we're bringing that performance marketing mix into brands that have never seen it before. I can go through SEO and full fund analytics if we need.
And we're really excited where we've rolled this out into North America over the last few months. And then we have pilots scheduled for Europe, Australia, and the rest of the world here coming in the next new year. So, a little bit about how we've taken D2C and said, "All right, let's make this the real thing. Let's figure out how do we take the best of this and actually help drive profitability across our entire digital spend here at General Mills."
So, we covered a couple things in the last half hour. We've talked a little bit about specifically the challenges of DDC in the big brand world. We've talked about all the pushback, especially from the top. We talked about the energy that was coming from the teams and we talked about how we met them in the middle to not only quell some of the concerns, but also support the organization to where we're at today where, we're launching 35 very compliant, very fast, very efficient sites a year.
Then we moved into figuring out, well what does that mean for the broader organization? Sure, you can experiment, sure, you can look first party data, but how is that improving overall profitability? And we looked at how we took the best of D2C and ultimately crossed it with our distribution and what we do best, to figure out new digital experiences that drive a friction-free path to purchase for our consumers, regardless of where they are online.
So, a little bit of some takeaways on each one of them. So DSC in a big brand world, I think there's probably experts on this webinar that have done this in a really interesting way and I'm excited to hear some feedback. But ultimately, disprove skeptics via unique defined strategy. How do you address each one of those very real concerns? How are you addressing that in a way that keeps the value of D2C but also addresses the core business challenge that's at hand?
And then ultimately, I guess easy for me to say, we've worked really hard on being able to do this, but move beyond profitability as a singular KPI. What are the other benefits? And it looks like just based on the poll, first party data is already coming to life, but what are some of the other things that you can do within the D2C platform?
And then from an online, offline world, what are the strengths that you have that you can flex and integrate? How do we not become blind to maybe distribution or price dominance, or whatever that might be? How do we really cross the two? How do we maybe take a little bit away from the D2C experience to really double down on what your business is built on? And you're seeing that with PDP Plus, we're taking advantage of the distribution, the ability that our costs are actually cheaper when they're at retailers and ultimately using the best of D2C to bring customers into, or consumers into, our retail stores ultimately drive a new household penetration, repeat purchase and ultimately better relationships with our retailers because now all of a sudden, we're a great traffic driver to their sites. So, that's a little bit about really what we took on in D2C.
Would love to pause. I know we have some time here at the end to really kind of dive into questions, et cetera. So, would love to understand some questions and feedback. But I'll turn it over to Lauren to help navigate that.
Lauren Livak:
Great, thanks so much Carter. We actually have a lot of great questions, so I'm going to kick it off here. So first question, D2C works if the consumer genuinely feels like they get something special stand out by coming directly to the brand site, becoming part of a brand community instead of lazy shopping for the product within a retail site. In your opinion, what is the best example of a community that you've seen a CPG brand create?
Carter Jensen:
That's awesome. So, well there's a lot of different versions of this. Selfishly, I want to give an internal case study because I'm very proud of what our team has done. So I gave an example of Reese's in the cause cross section. If anyone is into breakfast cereal, you'll know that that is not the first big partnership that we've launched. Reese's alone will launch two or three major partnership initiatives a year right now. Maybe I'm being generous, but they're launching them constantly.
The same thing's happening with Lucky Charms, the same thing's happening with Trix, the same thing's happening across the board with our partnerships and our unique promotion strategies. And so, if you go on Instagram, you can search Cereal Society, which is a really interesting kind of cult following of these family favorite brands. And what Cereal Society has done is they took a corporate General Mills handle, which was called General Mills Cereal, which actually had this huge following and it found that it was being followed by just these cult followers of breakfast cereal, who loved it.
And it's funny because one of my favorite activities is actually connecting with some of these cereal fanatics on LinkedIn. And I've made some really good friends over the years in terms of people who are just obsessed over cereal. And so, what we've done is we've said, "Hey, from a Cereal Society perspective, how do we not only bring that community life on Instagram, but what's the future hold for that community?" How do we maybe align exclusive drops for them? Maybe they get an hour head start on some of the upcoming products, maybe they get unique releases. And then how do we play them back into our benefit? How do we use that community to give feedback on what they'd like to see? How do we use that community in order to understand how to grow that following of breakfast cereal?
And so, it's fascinating. If you're on Instagram, definitely look up Cereal Society. It's just the start and we're excited to kind of bring that together with all the different D2C activations that you'll see in the feed.
Lauren Livak:
I love that. I'm definitely going to check that out because I do enjoy my own cereal in the morning and in the afternoon.
Carter Jensen:
There you go.
Lauren Livak:
So, next question. How do you overcome the problem of consumers looking for more of a market approach to buying? How many consumers actually want to go to multiple places to purchase FM CPG? Also, there are a lot of consumers who are concerned with the increase of packaging these solutions bring.
Carter Jensen:
100%, yeah. So, two really good points in there. So the first presentation, I can actually visualize a slide that I gave about D2C, and this is a really core issue is that even with a hundred plus brands that General Mills represents the consumer habit of grocery shopping does not include only General Mills brands. So, to think that they are going to go from General Mills to Mondelez, to Kraft Heinz, and get all of their groceries every week is not a reality. And you're seeing that.
So, do I believe that Cheerios is ever going to go D2C in terms of sales and profitability? Never say never, I guess, but I don't think that would match the strategy. I don't think you're seeing from these basic items like Pillsbury Crescent, those types of things working within the D2C strategy simply because of that barrier of consumer habits. They're not going there. They're not going to pick up their basics.
When you look across the case studies, yes, experimentation's one thing. Yes, brand promotions, you understand it. But when you look at the sales world, you look at Ratio had a really unique need is to intersect keto dieters as they're looking for solutions online. They were looking for that solution. And that's why D2C still works for them because we can cross that thing off for them. They're looking for that unique one purchase solution.
Same with Epic. When we look at a little bit of a higher price point, you're starting to get into the category of performance bars and protein supplements, et cetera. And I think what we see is that the consumer behavior around some of these products is a little bit more one-off, right? I think you can see that across the board with food and bev.
The Bev stuff still confuses me. I mean, I guess I'd just subscribe to Spindrift, but if you're dancing on a knife's edge there, of what's a normal purchase that you do actually want to just buy in your grocery run on Sunday afternoon, and what's something that you want to actually do to D2C, and you think of hot sauces or some of those more specialty items, fall into that category.
But I think what's interesting is that we have the ability now through that PDP Plus product to dance between the two. And so hey, if you want to check that box and you want to buy it as a specialty product to try with your new keto diet, great, we will be there. We'll send you a brown box and we'll email you when it's about to run out.
But if you just want to add it to your Target list and buy with all your other stuff, well that's even better. We make, it's a better profit margin for us. We can get it in a repeat purchase. And a huge win for us would be if that's part of your every Sunday afternoon stock up purchase, and it's part of your everyday buy. So, that's how we think about dancing between the two. And I think you see that strategy come to life in some of the case studies that we outlined in the 3X strategy.
Lauren Livak:
Great. Got a lot of questions. We're going to try and get through them all before we-
Carter Jensen:
Yeah, it's all good.
Lauren Livak:
... end. So would love to know about your data path into whatever type of CDP you bought, licensed or built, and how are you distributing the learning back to the brand or product managers through the same CDP?
Carter Jensen:
Yep. So I'm not going to get into our specific tech stack. I don't want to kind of dive into our tech stack strategy because I think it's really interesting what we've built and what the D and T teams here have built.
I will say this. So, one thing that we've transitioned to and we're in process of transitioning to is moving from an all out focus on just collecting whatever consumer data is needed, to ultimately starting with a data strategy. So ultimately, before we launch a D2C program, we should and are starting to, have the conversation of what is the end goal of the data that we're collecting?
And once we identify that, then we can start tailoring the programs, tailoring the experiences, tailoring the ingestion methods to ultimately figure out what do we want to collect, who do we want to collect it from, where's it going to be stored and where's it going to be used? And there's a couple other things, but that's the core four things.
What we can then do is we can then go to everyone who's involved, whether it's our insights team, our marketing organization, or even our technical team and say, "Okay ... " and legal and all the other stuff to say, "Here's what we want to do, we're going to build this promotion, we're going to collect it through this technical system. We need it stored here within the CDP. Eventually it's going to be the here." And we start figuring out not only the boring stuff of what permissions do we need, where is it stored, how do we tag it, all that stuff. But then the marketing teams can start building experiences in order to get that data from that type of individual.
And so, we're trying our best to not just collect data for the sake of it. We're trying our best to go beyond just whatever first party data we can get. And that has ripple effects, specifically the technology side of things because now we actually know how to store and then ultimately utilize it across the organization.
Lauren Livak:
I think with the plethora of data on every channel, it's very important to have a strategy because it can become very overwhelming, very quickly.
Carter Jensen:
100%, yeah. And I will just double down the fact to say Shopify was a contentious point, not by any individual, but just the fact that it's not really viewed as an enterprise grade system that's easily integrated into a core stack. But that was something that we built to basically say how do we collect data compliantly and integrate it into our CDP just as easy as any other input?
Lauren Livak:
The next question to drive people to your site, other than you are the brand owner, what are you doing to keep consumers on your site? What is the unique offering or service to be offered on your site you have been finding, working to keep consumers coming back?
Carter Jensen:
So, I'll give a cheat answer and then a real answer. The cheat answer is for a lot of the promotions and experiments we've been able to make these sites so cost-effective and launch so quickly that we're actually trashing sites that don't work or promotion sites are only up for 30 days, let's say.
So sometimes, it's not even part of the objective is to get people coming back or to stay on the brand. And so, that's a cheat answer. It's easy for me to say that. I think one thing, and this is going to sound really simple to the group, but it's really interesting for traditional big CPG marketers to think this way, is that the ratio set up, we actually had what we called the 30 Day Keto Pack, which is a variety of different things.
And what was interesting is that we now know who bought it, what their preferences when they started their diet and when they're going to run out, which is something that we didn't normally have a ton of access to or access to actually activate. But for anyone to use these agile tools, that's a quick little email flow that you put into Klaviyo and it hits them with a personalized email reminding them to reorder.
And so, we all of a sudden started to be able to take advantage of some of the tools that only really these digitally native brands were experts at and bring them into the fold here to say how do we get people coming back and how do we get people to repurchase, which I think is really interesting.
The other thing that we can do now is even if they're purchasing a target, well now we know that consumer in a differentiated way and we can start figuring out are they buying at Target? Is that continuing? We can ask them for feedback. We can provide discounts all through that first party data and that relationship that we've collected, through that initial relationship on the D2C site. And so, that's how we're thinking about it and I think we have a lot of more tools now and it's up for the marketing kind of representation on each one of those brands to figure out what's going to make the most sense.
Cereal Society is going to be very different than ratio. Different consumer, different channel preferences, different needs states. And I think it's ultimately we look to the people who are the experts in the brands in order to answer that question.
Lauren Livak:
Carter, someone is taking you up on your question about first party data.
Carter Jensen:
Oh, perfect.
Lauren Livak:
So, they'd like to better understand your strategy and they asked, especially as it relates to feeding that into marketing automation and email SMS campaigns. You did mention Klaviyo. So just curious, how are you optimizing ROI via D2C with related tech platforms?
Carter Jensen:
Yeah, for sure. So, Klaviyo's one part of a bigger tech stack. I'm not getting into specifics of the whole thing. And I think the thing I was mentioning earlier about starting with the data strategy versus just collecting all first party data has been really key. What I think has also been interesting, and I know that we're able to ... We do this a lot on a large scale, but it's been really interesting how tangible some of the data is for our teams on a smaller scale with D2C.
But to see ultimately, the ROI and an email blast is something that just has, hasn't been a reality for our teams in past. To ultimately say, "Hey, we spent X amount of dollars on this email blast based on this text stack and it drove X amount in sales," is a pretty incredible number to see.
And I think that yes, of course that type of insight is available on some of our major channels as well, but the idea that our teams were so close into it, that they were in the dashboards figuring out what content works, figuring out how to run these campaigns, working hand-in-hand with these agency partners to actually see what content is working and not was incredibly valuable to say.
So, I would say of course, we're starting with that data strategy that dictates everything. So that's kind of the big point. Secondly, I think we started to ultimately take advantage of some of the benefits of D2C to actually show true ROI in the moment based on some of the SMS, email type campaigns that we are running.
Lauren Livak:
Now. I think this goes to a part of the question that I asked during the presentation, but I love how this attendee phrased it. Not to add another level of complexity, but how does this fantastic, and they capitalize fantastic-
Carter Jensen:
Oh, great.
Lauren Livak:
... program integrate with your Amazon strategy and data learning?
Carter Jensen:
Yeah, totally. I don't have a perfect answer for that. I think we are really close to our Amazon team here and it's someone we rely on a lot. I will say that for some of the incubator brands, like we look at our Amazon 3P businesses in another incredible channel, we could look at Walmart 3P, we're not dead set on D2C for experimentation. We're lucky to have a couple tools in front of us to help our strategy, especially in a 3P perspective.
From a 1P perspective, we can start listing Amazon as a retailer of choice if that's what you want to do. If we have a 1P relationship with that product, who are we to say, "Hey, you're a Prime member and you just want it, you're going to get next day shipping anyways and you're probably going to get a better shipping rate through that because you've already paid for it." Well, who are we to get in the way of that? So from our 1P relationship, Amazon is included within that retailer list.
From a 3P relationship, we look at Amazon as being a potential alternative and also, we have done some really interesting pilots with Amazon around fulfillment as well, to try to figure out how do we get our fulfillment more integrated in our costs down and how do we maybe leverage Amazon's fulfillment network in more of our D2C strategy. So it's a blurry line, but we're definitely bringing all tools to the table. And what's great is that we're not precious about our D2C activation, though we're very proud of it.
If Amazon's a better solution for you, both from a consumer perspective as I mentioned, but even from a team perspective here we have Amazon agencies on board that we love to have, get ultimate alternative pitches for. Maybe it's easier just to get going on Amazon 3P to drive experimentation and you can turn on profitability when you're ready for it.
Lauren Livak:
I think it's an important element to say that this is one piece of the puzzle, right?
Carter Jensen:
Totally.
Lauren Livak:
There's so many other aspects of the flywheel that you need to consider-
Carter Jensen:
100%.
Lauren Livak:
... when you're thinking about commerce as a whole. So we have one other question, but Carter, can I ask you to go to the slide where they can grab the queue?
Carter Jensen:
And I didn't put the QR code in. I'm sorry. So, I'll have to follow up if that's okay?
Lauren Livak:
That's okay. No, that's okay. So we will be sending this recording out so everyone will be able to see the recording and then if you want the slides, I encourage you to reach out to Carter on LinkedIn or myself. You can connect with-
Carter Jensen:
Of course.
Lauren Livak:
... both of us, either of us. So, looks like we have two more questions to get through and Carter, feel free to answer whatever you're comfortable with for this question.
Carter Jensen:
Of course, yeah.
Lauren Livak:
Do you have any in-house merchandising creative or email marketing for D2C brands at General Mills or is it all outsourced to agency and your team only focuses on strategy?
Carter Jensen:
So, if you look at my team specifically, we're four people internationally. So, we are not hands on keyboard for building emails. I've built my fair share of Klaviyo campaigns in the past, but that's not something that we do currently, especially because of the scale that this is at.
Our teams can choose what they want to do. One of the really awesome things about the tool set that I've mentioned throughout this presentation is the fact that it's built for founders and marketers to go in and actually build and deploy, which has been fascinating to see what happens when you give the Wheaties marketing team the power to build their own emails, not rely on D2C in a black box, which is really interesting.
Teams ultimately have the choice. So, we do have experts in-house that are specialized in email marketing. We do have experts in-house who specialize in these types of design assets. With that said though, again, agile tools, you can call up your AOR just as easy and have them build it. Or you can use one of our benched experts to come in and do it really easily as well.
And we're seeing that also be incredibly efficient because everyone knows Klaviyo, everyone knows Shopify. Finding devs for that type of stuff [inaudible 00:52:48], it's usually pretty quick, agile, it's cost-effective. And so, the whole point is our teams have options based on timeline, level of investment and of how they want to play the rules, all this type of thing. So, the answer is yes, yes and yes. We're just trying to constantly keep that bench full of options for our brand teams.
Lauren Livak:
So Carter, you have a lot of internal customers. I really like this question because I feel like half of a job of an e-commerce professional is working internally within the organization.
Carter Jensen:
Of course, yeah, yeah.
Lauren Livak:
What is the internal communications path? I can imagine at General Mills a hundred or more people across several organization or functions might be interested in your data. And you mentioned creating a data strategy.
Carter Jensen:
Of course.
Lauren Livak:
Is there a pre or post element to that? And if so, what are the conference calls when you're having those conversations?
Carter Jensen:
Yeah. Well if for anyone who's worked in a large CPG or large company in general, you know that a lot of my work is simply making sure that those paths are good and everyone feels connected and ready to take this on. So, no that it's a huge part of my job and the story I tell, which is easy to tell in 10 slides, but know that it involved committees and focus groups and summits and everyone getting around asking a lot of questions. It took us a lot of this type of work to even get to where we are.
One of the things that we like to talk about is how we are a great bridge between our marketing and our technology team and our digital teams. How we can start to try to figure out what does that conduit, what does that look like? To say it's perfect as far from the truth.
But what we're starting to see is we're seeing clusters of individuals who are really leading each one of those 3X strategies across the board. Now, I will speak at a supply chain meeting probably later this week that starts to look at what are we doing from a D2C perspective? Which makes me feel about this big. These are experts in supply chain who are the best at what they do in the world, and we're shipping a few thousand boxes via some fulfillment networks across the org, where they're shipping millions of units a day. But they still find it interesting and we try to look to them as much as possible to give us some input and some insight, and we're starting to reach some numbers where it might make sense to actually start integrating the two strategies together.
But point being is, is that most of my day-to-day work on D2C is making sure that we're connected and the data's connected, the strategies are connected, and it's really helped to have this 3X strategy put into place, to make sure that we're clear on all fronts and that we have the blessing from the leadership to make sure that this can all happen.
Lauren Livak:
Well Carter, we got a lot of great questions on this webinar.
Carter Jensen:
That was great, that's perfect.
Lauren Livak:
I'm so excited because you had such great content.
Carter Jensen:
Awesome.
Lauren Livak:
Can you jump to the last slide for me as I close out?
Carter Jensen:
Sure.
Lauren Livak:
So, just a huge thank you for all of these fantastic questions and the engagement in this webinar. And for everyone who attended, if you are not a member of the DSI, please do scan the QR code and become a member. If you registered for this, so you're on here and you signed up, you'll get the recordings so you can watch and view the slides. If you have additional questions, please feel free to reach out to Carter or myself.
But thank you all so much for joining today and thank you for those that are members of the DSI and for being a part of our community. And Carter, huge thank you for sharing some of these incredible learnings and some of the amazing stuff that you're doing at General Mills. Really appreciate it.
Carter Jensen:
Yeah, thanks for having me.
Peter Crosby:
Thanks to Carter and Lauren for this stupendous content. Don't miss any of our future events. Run on over to digitalshelfinstitute.org and become a member. Thanks for being part of our community.
