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The Agile Brand with Greg Kihlström®: Expert Mode Marketing Technology, AI, & CX
#586: Winning E-commerce By Boosting Efficiency with Tobias Sjölin, Boozt
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- [00:01]
Greg Kilstrom
The agile brand.
- [00:09]
Greg Kilstrom (Podcast Host Intro/Outro)
Welcome to season six of the Agile Brand where we discuss marketing, technology and customer experience, trends, insights and ideas with enterprise and technology platform leaders. We focus on the people, processes, data and platforms that make brands successful, scalable, customer focused and sustainable. This is what makes an agile brand. I'm your host, Greg Kilstrom, advising Fortune 1000 brands on martech, marketing operations and CX best selling Author and speaker. The Agile Brand podcast is brought to you by Tech Systems, an industry leader in full stack technology services, talent services and real world application. For more information, go to teksystems.com now let's get on to the show.
- [00:53]
Greg Kilstrom
So it's not every day that I get to see over a thousand robots all in one place. So today is special in a few ways. First of all, I'm here in Engelholm, Sweden at the Boost Fulfillment center and just took a tour with Tobias of their facility and got some pictures, some video. We'll share that on the show as well. But now we're going to talk about creating amazing efficiencies while also delivering on an amazing customer experience in online retail. After all, why can't you have a lower cost per transaction while raising your net promoter score and your customer satisfaction? To help me discuss this topic, I'd like to welcome Tobias Holland, CTO of Boost Fulfillment and Logistics, a division of Boost Group. Tobias, welcome to the show.
- [01:39]
Tobias Holland
Thank you very much. Pleasure to be here.
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Greg Kilstrom
Yeah, I'm really excited to be able to be here in person. So why don't we get started with you giving a little background on yourself and your role at Boost.
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Tobias Holland
Great. So I've been at boost for 13 and a half years now, so I usually say it's me and the plastic flower still here. So we have a group of people that have been there for a very long time, but I've been part of the company where it was very, very small, we had very manual warehouses and processes around it. And now we're sitting in this fulfillment center with 86,000 square meters and robots all over the place. So my job and all things, as I said, I'm CTO for this specific booth fulfillment logistics company. So my responsibility is to make sure that all the software systems are working as efficiently as possible, but also in collaboration with all the hardware that we have as well. So as you mentioned, we have hardware from a company called Altostore, which is Norwegian. So then we try to make this as efficient as possible with software, basically. So you have three different teams with developers working with software.
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Greg Kilstrom
Great. And for Those that are not as familiar with Boost. Can you talk a little bit about what is Boost and what do you do?
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Tobias Holland
Sure. So Boost is an E commerce retailer in the Scandinavia. We have a Scandinavian focus. So what we do is we focus also on something called Nordic Department store. So we don't only have fashion, we also have the interior design, we have sports beauty and so on. So it's basically department store for the whole family. So what we do is I say we focus on Scandinavia. Our biggest markets is Sweden and Denmark. We have a European presence as well, but we try to focus on the markets that's close to heart. So that's why also the fulfillment center is here in the southern part of Sweden, because then we can reach all of our markets. Very, very efficient. So basically we do, we get items into warehouse and we send them out again. And then we have a whole headquarters in Malmo as well. So on our cell phone here, where we have our own marketing team, our commercial team, design team, customer service, financial team and so on. So what you see here now is the fulfillment process of the company. Now we have another 500 people in Malmo and then some other development centers as well.
- [03:42]
Greg Kilstrom
Great. I want to start by talking about the online retail customer experience. And so as I just saw taking a tour, you know, very efficient and just massive. Again, we'll have the video in the, in the show notes as well. But you know, just a lot of moving pieces here and a lot of customers that are expecting, you know, they have high expectations from, from their orders. So you're mostly online, right? So I know you have a couple of retail stores, but primarily online. So it's incredibly important that the E commerce experience is great. How does Boost approach that from a staffing and a team perspect?
- [04:19]
Tobias Holland
I mean, everything we do is from a customer point of view. So when we walked around here as well, I was mentioning that when we do different automations or different process changes, we always think about the customer first. So is this improving the customer experience? Is this making delivery faster for a customer or in any way better for the customer? Right. So it goes through all of the different teams. So when we do from a commercial point of view or different campaigns and stuff like that, we always focus on the customer first. So what we do when we do different prioritizations, for instance, so one thing is from business value, but mainly we discuss what is the best for the entire company. And that is usually what is best for the customer. So what is best for the end customer and that is what has the highest priority and then we work our way through into the whole. We have different roadmaps all over the place, but in a general strategy, that's how we work with so our customers, number one, that's how we make our money. I think you mentioned we have two different physical stores as well. I think those are less than 0.01% of the revenue. So what we live by is our revenue from our online store. So if the customers are not happy, then we don't get any money. Yeah.
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Greg Kilstrom
And so with that focus on the e commerce experience, how much of what you create is customized from a technology standpoint and how much is off the shelf, so to speak, from a technology perspective.
- [05:35]
Tobias Holland
So almost nothing is off the shelf. We have 210 developers working in different teams. So around four to six developers in each team. And each team has a responsibility. So we have one team responsible for checkout. We, one team is responsible for the robots, one team is responsible for listing page and so on. So you have all those systems are custom made. So we started with a web shop and then we've done our own content management system, we have our own CRM system, we have our own warehouse management system, warehouse control system, ERP system and so on. So the whole core universe of our E commerce is made by ourselves. That's also what makes it fast. We can do very, very fast changes and we talk about processes, how to improve them rather than different bottlenecks in a system. So we never say, oh, the system can't do that because of X. It's always like, oh, what is the most efficient way of doing this? And then we change.
- [06:27]
Greg Kilstrom
That also seems important because a lot of e commerce experience feels kind of cookie cutter. You know, like you go one store to the other, it's all, it all feels the same. So it seems like that's a differentiator as well, right?
- [06:40]
Tobias Holland
We hope so. I mean especially we try to. One of our main advantages is our fast deliveries. So we try to keep that so next day delivery, even when we were so 13 years ago when I started. So even then we focus on fast deliveries. And then the problem has been when you scale a very big E commerce, how do you keep the speed of the whole thing? As I said, we have 800,000 different items in the warehouse. Right. So now we need to find one of them. It takes way longer time than what was before. Right? Yeah. So that's a constant kind of evolution of, you know, how can we just make it faster and better and make sure that we reach a customer in Time.
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Greg Kilstrom
So what kind of measurements and methods do you use to make sure that your optimizing and having that optimal customer experience?
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Tobias Holland
I don't know if all of them is a good answer, but that's kind of how it feels like. Right. So I mean, of course, I mean we use Google Analytics to make sure that, you know, the website is working as it should. We do different A and B testing on that one. But then we have monitoring on all of our robots. For instance, we have, you know, we measure battery quality on every single robot, you know, and then we measure, you know, everyone who is out there picking and packing. We measure, you know, is something item going wrong, going out and so on and so on. So we try to be on a very, very low level of monitoring and gathering data. So one problem we had, we actually ran out of Google Analytics transactions. So we sent too many transactions to Google Analytics. Yes. So we had to find other technologies in order to keep up with the data amount that we're sending them. So we do that a lot.
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Greg Kilstrom
What role does self service play in the end customer experience? And I believe that self service also applies to internal teams as well.
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Tobias Holland
Yeah, so I mean we have something we call MyBoost for instance. So if you log into a site when you can see your orders, so you can see, okay, where's my refund or return or orders and so on, and then you can also see unpaid invoices and different things like that. So it's important for us that the customers should have their own tools to do stuff. So we have a saying in the platform team where I'm at is power to the people and the people changes sometimes. So people can be end customers, but it can also be internal business units. So like the commercial team, they don't, they shouldn't have to go to us to ask to change something if they can do it themselves. So that's a whole self service thinking that we try to do. And also from an internal development point of view so our developers, they shouldn't have to go to an engineering team to ask for database access or to deploy something. I think things like that to do changes. So they should have all the tools themselves and then we just trust the people to do the right stuff with that thing.
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Greg Kilstrom
Yeah, that's great.
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Tobias Holland
It's a cultural thing more than anything else, but it's important for us to give that responsibility.
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Greg Kilstrom
Yeah, I mean it seems like from that cultural perspective, I mean it seems like if people are more empowered to be able to do more, they're going to have more value in their jobs and give a little bit more.
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Tobias Holland
Yeah, we actually expect a new developer. We expect them to take down the site within the first week. So that's kind of, you know, it is expected that things will go wrong. So what we've done is, you know, enforce the whole thing. If something goes wrong, we can fix it very, very fast instead. So we're not trying to avoid mistakes. It's rather when something happens, we can fix them very, very fast instead. So we're trying to minimize the risk of mistakes rather than avoiding them completely.
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Greg Kilstrom
Yeah.
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Tobias Holland
Which is very important for us.
- [09:56]
Greg Kilstrom
So now I want to get to the robots. So, you know, as I mentioned, I got a tour here, got to take a look for myself. You mentioned Auto Store. So I had a guest from Auto Store on the show a few months back, which is actually why I'm here, how this whole thing came to be. So thank you, Auto Store. So, you know, he mentioned that they had this facility in Sweden with over a thousand robots and, you know, just had to see it for myself. So here, here I am. So I believe you started using AutoStore around 2016 or so as well. And to start, can you briefly describe what exactly is Autostore for those that didn't catch the previous episode?
- [10:34]
Tobias Holland
So basically, Autostore is like a matrix of different plastic bins. So it's like a cube of plastic bins standing on top of each other. And then you have robots riding on top of them and their robots are picking up bins and delivering them to an operator. And then you have an operator and they're taking the items out of the bins and making sure they're put in the right bag and so on. So it's a dense stock capacity system. You can fit a lot of items in a very small space and you still have a speed of delivery when it comes to items to an operator.
- [11:04]
Greg Kilstrom
So I mean, some of this I think you covered a little bit already. But how do you look at a system like Autostore being able to help you achieve that greater efficiency and customer experience?
- [11:15]
Tobias Holland
So I mean, when we look at a system, when we get hardware to play with, is it maybe a weird way of putting it, but that's how we see it. It should be something that we can incorporate in our processes. Right. So ours help in that sense that we can dive fairly deeply into how they're working in terms of technology. So from outsourced point of view, the way we use it, we try to keep up the speed as much as possible for the customers again. Right. And then we try to see how we can twe different things. So we have one solution. You get the out of the box. But then we try to see how can we incorporate more things around it, how can we build our processes, either change our processes around altostore or how can we make Altostore change according to what we want it to be. So a very, very tight connection with Autostore, with the collaboration to try to find out the best e commerce processes going forward. So we help them to spread different things, how we do it, and then they help us with different technology. So it's a very nice collaboration for us to do.
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Greg Kilstrom
And so you mentioned in another interview that you did about cost per transaction, and that's definitely a key way to look at efficiency. And it's a way that you look at efficiency. What are the factors that go into this?
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Tobias Holland
That's how we measured all of us from a fulfillment point of view. Right. So how much money do we pay per order going out? And then also you can add and we have returns coming back in and then inbound. So everything has a cost, Each transaction has a cost. So you try to either minimize that or optimize it so you have a robot doing it instead. But even if you have a robot doing it, you still want to make it as efficient as possible because it's still a resource game. So you can't just be complacent with it. You still need to be very, very accurate on how you're doing and how to make it more efficient. So it's a lot around. I mean, cost for us is the number of touches of an item. So if we would like to place an item in the perfect place in the first go. Yeah, if we have to move it seven times, that's a cost for us. So we measure, every time we move something, we measure, you know, how do we put it in a bag and things like that and how do we make it very, very efficient for, for all the people. So we work, we have some amazing warehouse people working here in the warehouse. And what we try to do is to make them as efficient as possible as well. So we, all the technology we have here is to make the human we have here more efficient and to do more efficient work.
- [13:38]
Greg Kilstrom
That's great. And that's a great way of looking at technology. With all the talk about AI and everything these days, I like to look at it as augmentation, not replacing humans. It's really not at all.
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Tobias Holland
We have the same thing. I mean, AI is A great tool. It's like a tactical tool for doing different things, but it's not a replacement of everything that is existing right now. So you have AI can do fantastic things. We would like to see that. That's one of the tools that we're using to make things more efficient. And then you have other things like database optimizations that no one asks you, oh, how many databases do you have? Because that's like a void question now because everyone's doing databases. So for me, that would be the same thing with AI, like 10 years from now. That's. AI is something that exists everywhere. This is a very, very powerful tool to use. But it's not everything. It's something to elevate humans.
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Greg Kilstrom
Yeah, absolutely. And so it's September right now when we're recording this. We are getting towards peak holiday shopping season. So, you know, we're talking a lot about efficiency, a lot about cost per transaction. You know, what does the system look like at its peak?
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Tobias Holland
Yeah. So I don't want to stress out any logistic colleagues. I have now we started planning in May for peak. So we're in the middle of our peak planning now. So now it's like game time. Now it starts to ramping up to the whole thing, which is. So I think it's 29th of November, which is Black Friday this year. So everything we do here now is. So usually what we do is Q1 and Q2, we do new products and in Q3 now, then we clean up all those products. Then we focus on performance, we focus on the bug fixing all of that. So all that, we're pressure testing the whole warehouse now to make sure we find all those things that will explode during peak. So we'd rather find them now than find them during peak.
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Greg Kilstrom
Okay, so you're planning the whole year basically for Black Friday.
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Tobias Holland
Yeah, that's our Super Bowl. That's in one go. Does everything is happening at one time. We also same thing with the web chart, for instance. We're actively trying to take that down with traffic now. So we're putting it as much traffic as we can until the web shop breaks. And then we roll back to traffic again and say what breaked? Oh, there was this one here. And then we can fix that one. And then we push more traffic. So we try to push it. We'd rather break it down now than during peak. That's the main plan of the whole thing. But during peak, if you're asking transactions. So we do 220,000 pieces in 24 hours from this it's like 70,000 orders, something like that, in one day. So 24 hours. And that kind of so problem from a fulfillment point of view is that peak is lingering on for another two weeks. So you have Black Friday where everyone is focused on, especially from a marketing and commercial point of view. But then you have fulfillment for two weeks. We need to get all the orders out. And after those two weeks, then you get the returns coming back in. So it's kind of a long process for the whole thing.
- [16:29]
Greg Kilstrom
Yeah, it's not like a day or a few days or something. It's like a month. Yes.
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Tobias Holland
So we usually. We see it more as a marathon rather than a sprint. It's like, okay, we need to just be consistent, sustainable in our operations.
- [16:41]
Greg Kilstrom
So last thing I want to talk about is a little bit more about the digital experience. And you know, we touched a little bit on AI and you know, the idea of augmentation and things. But, you know, what are some of the key ways that you're using AI
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Tobias Holland
from a fulfillment point of view or
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Greg Kilstrom
from general, from a customer perspective?
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Tobias Holland
So we have a data science team in Aarhus in. So they're doing everything with machine learning and AI and stuff like that. So they've given us some great tools around it. So one is that we have size recommendations, for instance, that we do. So when you're a new customer, especially going to the site, we can recommend you a good size of the different items. And then we have. We've just launched product descriptions now. So for certain categories. So more to elevate the description more than, you know, create it from scratch, but more like put some more flavor into the whole thing and maybe digest it from different other internal sources that we make have. So take a picture, for instance, to look at the picture and put some details on the whole thing into the products and so on. And then, I mean, from a fulfillment point of view, we also have different around resource planning and things like that that we try to do. So we try to. It's very complicated and have 470 people that you're trying to organize in a perfect way. Right. So you have too many people, then the cost increase. If you have too few people, then the delivery times increase. So you need to balance that every day. You need to balance it in a perfect way. Yeah, but then we also have some around image recognition again. So for categorizations on the site. So instead of having people sitting in categories, okay, so this is a shoe and this is a T shirt and so on, then we can, you know, Just take the picture and then we can categorize it based on AI. And then we can just do that and you have people approving it instead, which is way faster. So, yes, click. So they give you a suggestion and you.
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Greg Kilstrom
So there's like a human review process, but it's. But it massively speeds that up.
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Tobias Holland
Exactly.
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Greg Kilstrom
Yeah.
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Tobias Holland
Because you maybe do 100 instead of one.
- [18:33]
Greg Kilstrom
Yeah, yeah, that's great. What about internal use of AI?
- [18:38]
Tobias Holland
Well, I mean, our developers, they love Copilot, for instance. So when you're coding, right, Then you get this huge help from Copilot. So basically you have. When you're writing a code, you get the code segments suggested for you, and then of course, you look at it and see if you want to use it or not. But it helps in different. The simpler tasks. When you're just writing the basic code of the things, you can go that very, very fast instead of. So usually when we say that we don't do AI, in that sense, AI is ingrained in everything we're doing, and it comes mainly from the grassroots. Like, so I want to try and Copilot now, and that's spread across the whole development team. And then there are other things. Like from a content management point of view, when you look at the web shop, we have 800,000 different items, right. And then you want to run through different discount settings and things like that. So it's hard to go through all those 800,000 items. So then we'd run, you know, we run different scripts and stuff like that on it to see, okay, is this item on the right discount here or should be lower or higher, or can we automatically adjust the whole thing as we go forward?
- [19:41]
Greg Kilstrom
Well, Tobias, thanks so much for joining today. Got one last question before. Before we wrap up here. So you've given a lot of great insights and advice already for those companies out there. I mean, again, massive efficiency and operational things going on here. There's a lot to learn and share. For companies that are trying to be more efficient, what's a place that you'd recommend that they look first to make improvements?
- [20:07]
Tobias Holland
Yeah, I mean, there's a classic saying also there's something called walk the floor. So it's always very, very good to know your processes from a deep point of view. So we talked about it also when we're out with the robots. Right. Too. It's very good for. I have my developers, they're out picking and packing and they're doing inbo. Return something to us just to understand the process. So the more you understand the better you can identify bottlenecks and so on. But then you have. I mean from our point of view, I think from booze, we benefited a lot to have our own development team as well. And I'm not saying to hire 500 developers immediately, but start maybe one, two people, something like that and see you can do different tweaks and stuff like that. Not replacing your big third party systems, but start with small, different tools, maybe helpers just get the more efficiency and then you can expand as you go forward as well. So to be start small and then scale up, it's usually not a good idea to go big immediately.
- [21:05]
Greg Kilstrom
I'm definitely a fan of the agile iterative approach, so yeah, great. Well again I'd like to thank Tobias Holden, CTO of Boost Fulfillment and Logistics, a division of Boost Group, for joining the show and for inviting me to the fulfillment center here in Engelholm, Sweden and Toxamicit.
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Tobias Holland
Is that boss good? Yeah, perfect Swedish.
- [21:27]
Greg Kilstrom
I didn't butcher it too bad.
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Tobias Holland
No, no, that was excellent. Thank you so much. Very nice to have you here as well and get to show you the robots.
- [21:33]
Greg Kilstrom
Yeah, thanks so much. You can learn more about Tobias Boost and Autostore by following the links in the show notes.
- [21:40]
Greg Kilstrom (Podcast Host Intro/Outro)
Thanks again for listening to the Agile brand brought to you by Tech Systems. If you enjoyed the show, please take a minute to subscribe and leave us a rating so that others can find the show more easily. You can access more episodes of the show at www.greggkillstrom.com. that's G R E G K I H L S t r o m.com While you're there, check out my series of best selling Agile brand guides covering a wide variety of marketing technology topics. Or you can search for Greg Kilstrom on Amazon. The Agile brand is produced by Missing Link, a Latina owned, strategy driven, creatively fueled production co op. From ideation to creation, they craft human connections through intelligent, engaging and informative content. Until next time, stay Agile.
- [22:39]
Tobias Holland
To realize the future America needs. We understand what's needed from us to face each threat head on. We've earned our place in the fight for our nation's future. We are Marines. We were made for this.