Stay up to date on the digital shelf.



    We'll keep you up to date!


    Interview: Profitability Month Q&A, with Chris Perry, Chief Learning Officer at firstmovr

    As we bring Profitability Month to a close, we wanted to hear what was on your mind. Our DSI members threw a bunch of toughies our way! So we brought Chris Perry, Chief Learning Officer at firstmovr, back on the pod to dive into the mindshift and metrics shift required to achieve both efficiency and effectiveness across the entire business on the road to increased profitability. 


    ​​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. As we bring profitability month to a close, we wanted to hear what was on your mind. Our DSI members threw a bunch of toughy questions our way. So Lauren Livak and I brought Chris Perry, Chief Learning Officer at Firstmovr back on the pod to dive into the mind shift and metric shift required to achieve both efficiency and effectiveness across the entire business on the road to increase profitability. So Chris, welcome back to the podcast. We're always thrilled to have you share your knowledge with our members, our listeners. Thank you so much.
    Chris Perry:
    Thank you. I'm excited to be here.
    Peter Crosby:
    As I'm sure you already know, because everyone knows, April is profitability month here on the podcast.
    Chris Perry:
    Yes, definitely.
    Peter Crosby:
    Yes, I mean. And so we asked the DSI membership what their burning questions were around profitability. So first of all, thank you all listeners for your great questions. We're just going to dive right in. So the first question we got was, "What are the key areas organizations should be looking at to improve efficiency and profitability?"
    Chris Perry:
    So that is an awesome and also extremely loaded question.
    Peter Crosby:
    Exactly. Of course.
    Chris Perry:
    And I know some of the questions that people sent in go in deeper. So there are definitely some specific strategic areas or functional areas like media and retail media in this growing space. And I know that's one of our questions that we'll dive in a little deeper, that we could definitely, because it feels incremental to a lot of spends and so that is going against efficiency and potentially against profitability.
    So there's definitely areas like retail media or supply chain or analytics, anything that's tacking on what seems to be incremental capabilities to a base business that didn't need them but is arguably a base business in transition to a new business or a future business of a very hybrid online and offline go-to-market strategy. But I don't want to say that's micro, but that's the next level down from the macro.
    What's interesting is it's not that companies shouldn't be pursuing profitability or efficiency, but having been in CPG for many years myself and then being asked to take the baton of something new, most CPGs up until the last several years, and I mean I think some may still be in this mindset, are almost in brick-and-mortar maturity, "How do I extract every dollar of value from what has already started to slow?" There's still growth in brick-and-mortar and was even before e-com, but we were in a calmer sea, it was easier to manage, and it was easier to get down to, "How do I rationalize my portfolio?" Fewer, bigger, better.
    "How do I do fewer, bigger, better investments? How do I have fewer, bigger, better partners?" There was a lot of agency consolidation and those who are bigger might be able to give me better rates or those who are smaller and challengers might be able to give me better rates even if they weren't going with someone bigger. So the last 15 plus years have been a lot of brick-and-mortar maturity management. And then on top of that came this e-comm thing, which was not mature, was a very volatile sea that we had to sail, and was going to add lots of incremental things because no, the data for e-comm wasn't already available in the data for brick-and-mortar in the past from third party partners.
    Retail media was a whole new set of retailers adding capabilities and "asking" for money, supply chain capabilities, new go-to-market models, not to mention direct to consumer at becoming your own. So there's all these net new things that right now have been attack on, but obviously knowing that there is a channel shift of dollars, it'll also be an infrastructure shift and a resource shift. And so we can dive into this a little bit, but I don't want to sound like academic because we can get very practitioner oriented here, but there's a mindset shift that has to happen because we went back into startup mode and most of our companies have had 30 years of non-startup mode.
    Most people live their entire careers, I don't want to use the word babysitting, it diminishes the awesome work we're all doing, but babysitting a mature business and looking for ways to optimize as opposed to create from scratch. Some of us have had those experience, but most of the time big companies are buying little companies and then usually undoing some of what made the little company worth buying, right? Because they, they're trying to add the efficiency when actually it was maybe the inefficiency that let that company be so successful and grow from scratch.
    So there's a number of elements here and we can unpack these a little bit, but don't look for efficiency or profitability, but not all sales are created equal. We're kind of starting a new startup cycle at the same time, I don't want to say ending the old cycle, but parent you're slowing down the traditional cycle. And we have to invest ahead of the curve or we won't be around to use what we already had. What got us here, got us here and won't get us there. We will only be able to use what got us here if we do the new thing to get us there. Visually if you can imagine that-
    Lauren Livak:
    Spend money to make money is what I'm hearing you say.
    Chris Perry:
    Exactly. And that's easy to say when you like, "Well yeah, but you're on the e-com team." I get that, but this is a future where we've said winning an e-commerce is the leading indicator of whether you win in commerce. A, because winning an e-commerce means you've won where the growth is happening, but we're already seeing shoppers heavily influenced per forester data. Obviously validating that 70% of all sales will be in e-com or influenced in the store by 2027, but we're only a few years away and it's already 60 something percent, 62% influence. But even retailers are arguably transforming their planograms based on who's winning online. And if it's not the big brands, they're bringing in the digitally native brands.
    And they're asking brands to test online first before bringing in store, meaning you'd have to know how to win online and have digital capabilities. So, again, to use the skills we already know how to win with, we have to have a totally new set of skills and resources and capabilities that may have to be invested upfront to earn us the efficiency later of getting the broader distribution. So it's a mindset shift in almost we have to look at the life cycle a little bit longer for the return because we all live on this monthly, quarterly, annual return cycle, it may have to be a two to three years return cycle, but the glide path will get you there because you've done all the right things upfront.
    Peter Crosby:
    All right. So because what I just heard was, all right, you're going to need to spend more money to be profitable. And I'm trying to nail all this down because I believe that our folks are out there getting pressure right now to make this thing work and think about it not only in terms of e-com, but as the omnichannel thing. And so when you think of the pressure that people are under in this period to really narrow down where are you investing versus you invested a lot in a lot of places and now it's about rationalizing and deciding which of those you're going to carry forward and make mature. Is that a fair statement?
    Chris Perry:
    No, for sure. And don't get me wrong, as Lauren said, you do have to spend money to make money because not all the monies are fixed spends or even variable spends that never get more efficient. I mean, ultimately in the market when you gain a leadership position, there's a halo impact on that that obviously carries forward. Some of these are hard to measure, but they've happened in the past and we've all benefited from them. So we know they happen. It's just a matter of, in the sense of today there's a lot of maybe hard to quantify, but there's a lot of qualified effort that goes into selling into a brick-and-mortar store especially when we think of people, talent, meetings, time, all of the historic investment that got us to where we could go to a Walmart and work with a buyer to own the planogram in a category.
    But arguably some of the new capabilities, and we can talk about some of these, I know with some of the questions are coming that may address some of these, but if a retailer like a Walmart or a Target says, {"Hey, Mr. And Mrs. Manufacturer, I need you to test your new innovation online to earn the right to come in store." Arguably I may need a third party model or a brand drop shipping capability or something that would allow me to sell outside of the in-store inventory online so that I can prove it out, not to mention all the other retail media content analytics, maybe new types of assortment that fit online. I mean, there's so many elements that would go in just to earn the right, to get the in-store shipments.
    But once I got those in-store shipments, that would be millions and millions of dollars of filling out 4,000 supercenters or 2,000 Target locations or whatnot, which would then pay back arguably some of that upfront investment that earned me in. So it's just a matter of right now I almost would say we've been desensitized to the costs that go into earning my way into store today where the bulk of the scale is, but it's going to shift over time. There may not be a relationship, there will be performance. So right now we're doing both, but eventually the dollars will shift and it won't be paying twice. You'll be paying once to get into the store where then you get the return.
    Lauren Livak:
    And what I'm hearing as a theme of what you just said, Chris, is that we need to look at things holistically from a profitability standpoint.
    Chris Perry:
    Lauren Livak:
    You can't look at what I've done on e-commerce is it profitable? Because it might not be because of that halo effect and all of the other things that you're talking about. You need to look at commerce holistically, especially from a profitability perspective. Did I summarize that? Okay.
    Chris Perry:
    You did. And I like the analogy, and I say this when I talk especially about retail media measurement, if a tree falls in the woods and you're not around to hear it, did it make a sound, well, yeah, it did make a sound. You just didn't hear it. So the problem is, I don't say this having been a leader who had to defend my investment requests and our performance and the lack thereof of data or measurement or whatever at the time, but my point is just because I don't have a way to measure it doesn't mean it didn't happen.
    I don't know how much happened and so I'm open to being wrong about, oh my gosh, this was so profitable, oh my gosh, the halo effect with 10x, what I initially thought it was, but it was probably two x or three x, I'm just making up numbers. There was something, I don't know what it is, but unfortunately it's almost like see no evil, hear no evil. It's like, well, I can't see it, so it must not have happened. Well, no one would say that, but that's how they act. And so arguably in my mind that would set me into, well, how do I hear that tree? Because I know it happened, right? I'm going to have to invest in some sort of microphone out in the woods so that I can hear them when they fall or video cameras or whatever.
    I need to invest in that as opposed to just avoid the topic altogether. So there definitely needs to be profitability, there definitely needs to be efficiency, but I do believe most companies are still trying to apply and resourced entire teams and then measure them on trying to find the profitability and efficiency of a brick-and-mortar business with a brick-and-mortar go-to-market human relationship model versus they're imposing that on an e-com model with fewer humans, lots of new costs to get going, that is eventually going to be the main way you go to market and they're just not ready for that yet. But thus we are the one that does not belong. And actually we do because we're the only thing that's going to allow you to belong in the future, which sounds dramatic, but it's happening.
    Lauren Livak:
    And Chris, you mentioned retail media. So the second question that we got was, how can we use retail media to drive profitability without adding additional budget each year for investment? Because we know that there's always new channels popping up.
    Chris Perry:
    So obviously retail media is not new to anyone at this point, but it is new in the pain and/or the benefit it can bring for all parties involved if we do it the right way. If you do not manage it, and that's why my point is, anyone wearing an efficiency maturity profitability hat gets two points, two kudos from me. You should. And this isn't just like, "Oh, Walmart asked me for money. Here you go." This isn't charity, right? We don't just give it out just because people ask or "need it." But the problem is, again, retail media may be that demand generation investment required to earn the right to be in store, and not to mention its influence on the broader space.
    And we know retail media in many cases is almost the slotting fee and the display cost of the future because without it, because of how much the retailer sites are monetized and how little of the shelf a shop receives, if you're not at the top either earned or paid, you paid being a huge way to get up there, you don't exist to the shopper. And if you don't exist to the shopper today, you won't be in their carts tomorrow when they go back to their past purchases and you won't earn your way into the future models that may embed themselves in our homes and there are a lot of different models emerging that may make us help the winners be in smaller physical shelves available to shoppers.
    But there's a couple things with retail media that may help with some efficiency. Some may seem like cheap shots here, but they really are low hanging fruit. So one that I've seen that still see today, it's P&L geography. Where does the retail media sit on your P&L? So the first thing is, and again, no accounting or finance team should sue Chris Perry because I told you a different thing than what you do internally, but to be fair, about half of the industry does one thing and the other half does the other one all legally. So I don't think there's a legal issue here.
    It's a matter of there are some companies who are still putting retail media or at a minimum paid search above net sales in what would be trade spend or merch spend as part of... Because technically it is a retailer specific spend. That's not wrong. To be fair it deflates the net sales because if I had $5 million in paid search for Walmart Connect, maybe that's a lot, who knows? But I put that above net sales. I've just lowered net sales by $5 million. Now profit was always lower by $5 million because I spent that money. So the bottom of the P&L doesn't change, but it's where it sits at the top or at the bottom that impacts other KPIs.
    And knowing that a lot of sales teams at a minimum are being measured heavily on net sales and other executives and brand teams are looking at the, it's the trade spend to net sales ratios, and they're looking at how much they're... That can actually cause brands to say, "Oh, see, you're investing too much. You've got the lowest net sale. You've got the highest spend of the company." Well, yeah, because it's where it's sitting on the P&L. So not to mention that we had to invest more for e-commerce. Even before that. It's where it sits there. The other geography issue is on whose P&L does it sit?
    And I've seen this even up in the last two years from a number of companies, and I won't call out names because it's not like a lot of times the e-comm leader can't make them change it, but I've had a couple companies where they said, "Oh, but that Walmart connect spend and retail media is making it P&L completely upside down." And you're like, "What?" So my spend only affects my business. There's no chance someone actually going to is not a Walmart shopper or a shopper somewhere else. All of us who influenced by a touchpoint online, but by offline.
    So it's not again that you shouldn't have a slice where you can look at that, but a Walmart investment is a Walmart investment. It goes back to your point, Lauren, about holistic view, just a view holistically before making decisions. Amazon spend, to be fair, and there are a number of studies, not to mention internal company anecdotes of doing this analysis. Amazon is the number one product search engine. It's one of the top five most traffic sites in the US alone, not to mention in other markets that it exist in. So the challenge is Amazon's spend could arguably be even more efficient because of how targeted it could be to your actual behavior, your purchases, what you've searched before versus some of the traditional consumer media.
    But at the same time though, it's got a halo effect beyond Amazon. So if I only put Amazon spend on an Amazon P&L, it actually works because Amazon's so big for most companies, but it would still look upside down compared to my Walmart spend, where my much bigger Walmart business is getting a much smaller Walmart only media investment. So really what we have to do is, in a perfect world, there are some companies who've done what you would say MMM media mix modeling, where they've gotten some view as to what the halo impact is off of Google and Meta and Amazon and a few others.
    And then they actually, arguably, if you really want an apples to apples you'd say, "Okay, Walmart is 30% of my business, and they get..." I'm making up just easy numbers. "So they get the 30% halo of my national spend. My Amazon's..." If you could actually show that influence on Walmart sales from Amazon advertising, you should give them appropriate credit. And even if you're wrong, you'd be apples to apples because you'd be looking at it appropriately across the weight of your business. So the first one is definitely geography, and we can dive into some other ones, but I don't know if you had some thoughts too from what you've seen in the space.
    Lauren Livak:
    I was just going to say from my perspective, the call to action that I'm hearing from you is that they need to get their finance teams in the room with their e-commerce teams, their sales teams, and their marketing teams to have these kind of conversations because from what I'm seeing, this is happening everywhere. There's conversations about creating shadow P&Ls, about rethinking the P&L, about bringing teams together to have joint conversations.
    Because to your point, Chris, in the beginning, brick-and-mortar has operated the same way for the past hundreds of years, and most large companies are using that mindset to report on the P&L, which is then reported to the street, which is also very, very different when you're adding in that commerce element. So I really think for anyone listening to this, the call to action is bring your finance teams in together with your sales teams, your e-commerce teams, your marketing teams, anyone who touches commerce, and have a conversation about where the spend is falling, who's responsible for which spend, and how you are going to be metricing yourself because it's not the same and you can do it different ways and be successful doing it.
    Chris Perry:
    Well, 100%. And to your point, as long as everyone says, "Hey, internally, we're going to put retail media above the line, above net sales so all of us now know why net sales looks lower on these P&Ls than others, because this is where that media sits." If we want to be fair though, if you're metriced on net sales and it's not illegal to move it down, you might want to move it down because that would pop your net sales back up. It still hits your profitability, but it doesn't just visually ding a different part of the P&L.
    Same thing, to your point though, let's make sure we're looking at, I just remember e-com P&Ls were looked at by retailer, and yet then a lot of my fellow, and this is in my own past experience, but even recently, some of the actual traditional account teams don't even have a P&L. When you say, "Well, what is your P&L?" "Oh, well, we don't have one of those. We don't look at it that way." Oh, so you look at it that way for me, but not for anyone else in the company. That's really weird. So right there that's one of those. Again, if it falls into Sesame Street rules I think we have an immediate let's get together. Which one does not belong or which one is being treated differently than the others? It is different, but the principles aren't different. The practices might be different, the touchpoints might be different.
    Peter Crosby:
    Well, and that's the thing, Chris, I think so much of what's happening right now is that move from e-com as a test and learn experiment on the side. It's got a little bit going on, oh, that's kind of interesting to a core part of driving the overall business of the company. And when you do that, you have to kind of re-look at stuff and say when it was a little kid, you could sort of run around there and it wouldn't hurt much, but now, like Lauren's puppy who's now 35 pounds instead of 10 and on his way to 100-
    Lauren Livak:
    And I can no longer carry.
    Peter Crosby:
    ... you have to rethink how you live in that house, right? So that's what I think we're talking about, is just it's time for that conversation, particularly if you're being held accountable to metrics that don't actually work for the overall business.
    Chris Perry:
    No, 100%. So there's this geography opportunity, and again, a holistic view of the let's look at the whole map together as opposed to you're coming at it from the one hemisphere and I'm coming at it from the other hemisphere. Then within that there's obviously opportunities to make things more efficient. Historically, there are a lot of retailers who were "asking" again, I use in air quotes for a lot of money and some of it, again, because a lot of times the first touchpoint before the media teams were involved were the sales teams, they weren't media experts, so weren't asking for all the things that a media team would scrutinize and partner on.
    And so unfortunately, there has been this conditioned like invest, invest, invest in every year it's more and more and more. I mean, I won't name retailers, but they're retailers that literally are going from, we asked for one million year first year and then it was two and a half million the next year, and then it was five million the next year, and then it was 10 because only good partners double every year. But my business didn't double, your performance ability didn't double, your capabilities didn't double. Actually, I don't know if I'm actually getting anything from the first million, which is maybe a little dramatic.
    I know I'm getting some. But so there's a negotiation opportunity, a value exchange opportunity, and we could obviously have an entire discussion just around how you negotiate, but retail media, again, going back to this whole maybe the theme of today is holistic, which is a nice word to that means many things here, but retail media in a vacuum isn't the only value you have to trade, but it is a value because as a manufacturer, you are the customer of the retailer versus the other way around before.
    So you actually do get to evaluate them and go, "Not so fast. I have a crawl, walk, run, tiering of how I evaluate and it's not an emotional thing of I don't want to invest, you don't meet these criteria or you don't do these things for me, and until you do or it proves out incremental or whatnot, you don't unlock that next level of money." Now, there may be some instances where, "Hey, but for some other values." But see right there that becomes very concrete and it becomes an easy bartering system of value. Not to mention other values that, again, we can talk about omnichannel, joint value creation.
    There's a lot of things that brands don't take credit for that they are doing that add value to the retailer, and that may actually enable more in retail media investment or less thereof because you're the kind of partner doing all these other things. So negotiation is definitely an opportunity and will continue to be as everybody gets a little more mature in that. The other thing too, and this is a little bit about how you view it, but it's not just how you view the P&L, it's how you view the value of retail media. So again, in straight value, a lot of companies are kind of in this mix of well, I'm looking at this versus my other media spend.
    Well, it's a little different because I mean, you're definitely getting direct performance from it versus maybe indirect performance you might be getting from Google and Facebook. It's a different part of the funnel in some cases in your investment, but we've got to look at the right metrics, and that may be both the impressions and reach and engagement metrics, but also then the sales performance metrics and the loyalty metrics and then the return on partnership because you did give money to the retailer, so maybe there's something you could trade that's more than you would've if you gave it to Google, or I'm not picking on Google or another media partner and said, "Hey retailers, I've invested in my brand, hope you'll lean in with me."
    The retailer now says, "Well, how much did you give to me?" "Well, I did. Here it is." And what can we get out of that? There's more value there. There's also a value on the digital shelf too because the more effective I am in driving conversion on the digital shelf the more my retail media can do for me in itself. So the immediate return is there, but then as we've seen from Prime Day or any amazingly big activation, if I'm really effective at driving a return in an event, I can have a post-event visibility bump on the digital shelf that other people who didn't see my campaign will benefit from and that I'll benefit from as well.
    So there's a whole set of additional values, like a halo effect beyond the obvious one of there was an online and an offline halo effect, but there's a longer term halo effect that comes from in partnership with the retailer and in partnership with the shopper that we don't weigh into the investment unless it's really obvious. And so that could be a way of getting everybody together and laying this all out and then trying to figure out how do we measure this or quantify this so we are giving credit to it.
    Peter Crosby:
    So retail media, one aspect. Another question that we got which is the other side of the process is, how do you think about profitability from a supply chain standpoint and where would you prioritize being in the seat or certain the clients you advise about what they should be thinking about and how that can ultimately lead to a more profitable outcome?
    Chris Perry:
    So great question. So I've always been on the sales in the marketing side, so I will never claim to be a supply chain guru, but you have to get really dangerous when you're in e-com because you have to find new routes to market and new ways to develop assortment that fits the different models that you're being charged to own and drive and grow. So again, supply chain similarly has been in that efficiency mode for a long time. Obviously, how do we get the maximum productivity from our capital expenditures, from all of our lines, production lines?
    You have fewer, bigger, better partners that potentially do some of those one-off things for big programs where we don't have the capabilities internally. A lot of SKU rationalization, trying to get down to fewer materials, fewer extra components, all good things. Not to mention the whole trend and maybe the right thing to do, obviously around sustainability as well. There's a lot that manufacturers have been doing to get more efficient also because there were still maturity pressures being put on brands to lower costs as well over the last 15 to 20 years amidst recessions and inflations and other things.
    So there's been a lot of scrutiny on making supply chain really efficient. And then here comes e-comm with six or seven new models that require different pack sizes, maybe exclusive items, onto rationalizing the SKU count, lots of test and learning, small minimum order quantities, just in time delivery and fulfillment to retailers, not to mention maybe become a seller yourself or be a pseudo seller because your brand drop shipping for a retailer or you're selling yourself with a D to C.
    And not to mention all these other Amazon led models like Amazon Flex, where you have vendor flex where you might allocate part of your warehouse to Amazon, which sounds kind of interesting at first and then you're like, "Wow, this is really different." Different ways of thinking about your space and how you allocate that, but that's been a big pushback from supply chain who's been measured on efficiency and productivity and fewer, bigger, better. But again, this goes back to cross-functional holistic viewing internally too, supply chain, that investment you may make in a brand drop shipping capability.
    It's not just supply chain, it'd be multiple functions, but your capabilities or a partnership to enable this in our name or a 3P model where we may have to actually carry the inventory of the retailer and they don't, but then we're selling at their scale just to sell. That may be the investment model that then earns us 1P first party distribution at scale across many major retailers. And I almost look at this too as think of Costco as an example. Historically, Costco or Sam's Club or BJ's want proven items in the market and we got all this extra volume from being the winner, the top seller brand, the top seller SKU in a category and earning our way, obviously testing our way into a Costco maybe in a region and then getting into a full distribution.
    And that takes a lot of effort. Well, what happens if the only way you get into Walmart and Target in a mass and grocery is through online to earn the right to get in Costco? So actually Costco and Sam's Club may be the double benefit of that's another halo effect. You won't even earn your way into club if you haven't earned your way into mass. Well, how would you earn your way into mass? By investing in new supply chain capabilities. Being open to testing and learning multiple bundle sizes and pack sizes and testing and learning in real time. Constantly revising those, right? "Hey, I have three winners and two duds, kick the duds." But instead of getting rid of the SKU count, save the two duds SKU count for the next two tests that earn your way in.
    So again, it goes back to that. I don't want to sound fluffy because this has all been done and I've been a part of teams that made this happen. It's just in different stages in the journey, but we've got to look at the supply chain, the retail media, the content among many others as the right to play investment and then later it pays back because if you won, you got the growth in the test and then you got the growth in the broader omnichannel presence that you would've earned.
    Lauren Livak:
    And I kind of take it as it's a, you need to learn, evaluate, and then adapt because let's say one of your SKUs didn't work, you don't have to stop selling it online. Maybe you do a bundle pack and maybe you see how that works and see what you can learn from it or now move that to your D two C side if you have one. So I think also what I'm hearing from you in a lot of the themes of this, Chris, is there's no real standard of what you should or shouldn't do. You really need to understand your consumer, understand what's happening, get the data and then figure out what's the right way of working through it and how to evaluate your success from a profitability standpoint.
    Chris Perry:
    No, 100%. And to build on that because when somebody says, "Hey, we may need exclusive e-com packs." I've seen executives faces, I've seen the supply chain. You see them in the room and there's like half of them are angry and half of them are defensive, they're going through their grief cycle and it's like, "No, no, no, I didn't say 1,000 new SKUs." No one even put a number on this yet. Actually we would be very strategic because we wouldn't go and just throw 100 new ones up. We would say, "Hey, which brands? What are our strategic brands? What are our top selling SKUs? Where do we see the biggest opportunity? What is our objective? Which key retailers matter?" And then suddenly you might go, "Actually, we only needed 12." All in. Maybe in the future it'd be 30 or 100 or whatever, but only because you tested and learned and earned a new way route to market.
    But it's almost like this all or nothing reaction approach. No one's saying 1,000 new SKUs, no one's saying 100% of our business is going 3P. No one is saying all of your sales are forever through brand drop shipping. But the earlier we get doing those, as always, the first time you do it's going to be the least efficient you could have made it internally because I had to partner with an outside partner, they were extra costly or we had to try it internally and we had to retrofit, it was very manual, it was very complex. But if you start going, "Well, hey, actually I see how this might have to be an ongoing route to market or a way that we test and learn."
    As you said Lauren, and evaluate lots of options so that the best options go forward and win or have a chance to win, suddenly I'm going to have to make all those things more efficient. So then all of our scrutiny hats come back on and they actually start benefiting us. But the problem is scrutiny happens before we get to do anything to scrutinize. We scrutinize the whole idea, not the candidates for growth. I guess basically we scrutinized the why we need even new to do this, not what we would do if we did this, if that makes sense. We get overwhelmed by all the possibility of what if before we even figured out that the what if wasn't actually that proliferated there was a few select things you were trying to go do.
    Lauren Livak:
    And Chris, last but not least, our last question. So when we think about impulse driven categories, how do brands survive and remain profitable in the new economy, especially with change me changing consumer behavior?
    Chris Perry:
    So that that's a great one, and I've been in a couple impulse driven categories myself. And to be fair, every category could technically be impulse in the sense. And when I say that, it depends on how you define impulse. If we're thinking like confection and snacks and beverages and things that would be truly like expandable consumption, I didn't need it, but yeah, I want to indulge. That's one type of impulse. But anything unplanned, a TV could be impulse. It's a bigger expense as an impulse, but anything could be an impulse.
    But if we're thinking about the categories that are sitting in that bucket of they're not really things you have to have consistently, but may want to have, it's really more the emotional or indulgent categories in brands maybe at the lowest common denominator. In general, one challenge that's going to be present is as we're learning from Amazon, but increasingly other retailers, the SKU itself has to survive.
    So from a retailer perspective, the manufacturer will have to figure out a way to make the retailer hole on that SKU which may mean because the retailer is not going to want to sell anything, even if it's incremental, if it loses the money, if I was going to make money on the basket and you add to the basket that actually loses me money then I lost something on the basket, it doesn't mean anything to me. So we have to think about the SKU in general we have to think about profitability in any category, but for impulse, the SKU by itself for the retailer has to be a winning SKU.
    But then that doesn't necessarily mean because it's profitable within them that it's actually profitable for us, but that's where we may have to look at too. Maybe because of that profitability preservation for the retailer, it's not profitable for us or maybe it is profitable until we add in all of the extra supply chain costs in the retail media to make people aware of this impulse opportunity, this new occasion to use my products. But I think we have to look at in that same vein of not all sales are created equal, and we need to look at this at different cycles.
    If I'm a snack category, if I'm Kellogg's or Kellanova or Mondelez or Campbell's, and I'm driving an expandable consumption opportunity, is it because I prompted you on that first one? It's almost acting like a sampling opportunity. It's a trial driver. So it's an impulse, but because I prompted you to try Oreos or goldfish or something the first time you bought more of it in the future and maybe you actually bought I could design it so that maybe that it is almost a trial driving product with a stock up one as a follow-up promo or a bounce back offer, or again, the ones that are really offered online outside of promotions are the larger packs that are profitable.
    So I get you in an impulse mindset, but then I get you to plan for those future impulses later. That could be a way, depending on the product and its usage cycle. I mean, there's a number of ways, again, it may be the way I have to look at that initial sale is to jumpstart a longtime shopper or, "Hey, I sold this online, but I know there's a halo effect everywhere else that will pay it back." It could be something where you're driving trial, but then it builds into a bigger basket that cross sells so you may have to look at across categories because that one impulse was the gift with purchase that brought someone into something bigger.
    The other interesting thing I'll just throw out too, and I know these sound futuristic, but they're already in market, it's just a matter of time before they really roll out in full force, but future models led by retailers or third party partners, even like an Instacart who might do this for retailers, will arguably lower some additional costs and maybe make some of those impulse trial driving SKUs more profitable by nature of vending machines, whether they are like CVS and Best Buy and Subway was testing one recently, which is kind of interesting, but being at the corner of happy and healthy from a Walgreens perspective, but with lowering the cost of actually serving shoppers and being conveniently located.
    Walmart in-home management where they actually bring in your stuff and put it away, what happens when they don't just put it away, but they manage it for you? It's not there yet, but what happens when... You know what? Wouldn't it be awesome if all your stuff in your pantry and your fridge and maybe even your other personal care items were on consignment and you only use them when you... I was at a hotel where if you take the item off for more than 30 seconds, it charges your room from the tray. So there's already technology that enables almost like an Amazon Go in your house.
    And so what happens then when maybe the product it's already solved the last mile, it's already profitably sitting in your... And then the impulse is literally there, and actually you get more impulse because I don't have to go somewhere to get my delight. My delight is a few feet away. Not to mention predictive and subscription based models that kind of already know your behavior and plant things in your pantry ahead of you needing it or wanting it, but then if you did you'd be able to buy it.
    So I know those are a few years away, not to mention drones and other things that lower the cost of delivery, but right now in the short term, we may have to look at it more of a I'm driving a long-term loyalty even in impulse that I'm getting into your cart, I'm getting into your mindset, into your physical or digital cart for a long-term purchase history kind of replenishment opportunity. The same way we look at sampling, where we lost money on the sampling, but we got money on the trial and the frequency later.
    Peter Crosby:
    So just what I'm hearing, I'm just thinking of closing this out, to me, so much of what we're talking about is the need for ever closer cross-functional collaboration on these issues of what is profitable? How do we manage towards that? How do we account for the whole business back to that holistic in a way that allows us to do these experiments that are necessary in order to create the full business opportunity?
    But therefore we have to make it worth people's while in their career and in their compensation and their incentives to be able to do those experiments that to mature this business, you have to mature and across the whole business. And I feel like that's a lot of what you've been talking about today, Chris, is kind of aligning on what the overall objective is and finding the right measurements to test and learn against to see whether or not these things are working. Is that a fair kind of summary?
    Chris Perry:
    It is. I mean, it sounds silly, but you are what you measure, and we've got a lot of different views out there because everybody's measured rather differently. And I'm not saying it's easy when you've got 10,000 people in an organization or more, let alone 100 people in a startup, but to be fair, the smaller companies that end up earning their way over time, obviously they have to have the right proposition and do the right things over time. It's not all a one hit wonder, but they earn the equity building themselves going to market in e-com because the smaller organization is able to measure themselves on more singular objectives and B cross-functional because as soon as they see the right opportunity light up, they pivot and move in that direction.
    Whereas internally, I hate to say it, but there's a lot of egos unfortunately because of maybe the metrics in place at any given point don't measure. Again, effectiveness, it's more about efficiency. And there is a place for efficiency, but effectiveness helps you earn efficiency later. You have to be effective first to be efficient arguably. If you're efficient first, you may never be effective because you're not going to take that risk or take that test and learn opportunity. So I think you summed that up nicely. And like I said, this is not a pitch to spend as much as you can. Right now it's just the issue is brick-and-mortar people have not seen that brick-and-mortar's opportunity will be earned because it's only just starting to be true.
    I mean, it was probably true, but it's starting to seep in now. I'll have to invest here to get the thing I used to almost just bank on that I already had here. And because again, it was a little bit of inertia. I was already in brick-and-mortar, I already had placements, so they weren't going to de-list me unless I was totally dying on the shelf. But now to stay on that shelf, no matter how well you're doing, you're going to have to have shown that you can do it digitally and test and learn your way in and give them exclusives and proliferate quote-unquote "strategically" by retailer, by audience, by objective, by category. But it's an exciting time, it's just we have to retrofit ourselves to that.
    Peter Crosby:
    Yeah. So I would encourage everyone, Chris and Lauren together worked on some great content around the new P&L for e-commerce and beyond, and that plus all the other parts of profitability month are at So I would encourage folks to go there. Thank you so much for your questions. Chris and Lauren, thank you so much for your answers. And we are always grateful that you come, Chris, and share your brain with us. Thank you.
    Chris Perry:
    Thank you both for having me.
    Peter Crosby:
    Thanks again to Chris for joining us. Again, for all the resources the DSI has on this topic, head on over to Thanks for being part of our community.