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Sree Rajagopalan
Chain Drug Review's focus is on reaching the key decision makers across all retail channels, delivering comprehensive coverage of the latest shopping trends and in depth category analysis on health, beauty, over the counter products and wellness. Whether it's the latest trends, emerging technologies, or strategies for adapting to new consumer behaviors, Mass Market retailers deliver the critical information retailers need to navigate this dynamic environment. To subscribe to the newsletters of CDR and mmr, simply follow the hyperlinks in the digital liner notes of this episode. Chain Drug Review and Mass Market Retailers are published by Retail Media iq.
Daniel Van Gogh
Hello, my name is Daniel Van Gogh. I am the VP of Fulfillment Strategy and Solutions at Adusa and you're listening to the CPG Guys Podcast.
Sree Rajagopalan
Welcome to the CPG Guys Podcast. Your host, Sree Rajagopalan and Peter Vs. Bond explore how brands and retailers engage consumers in an increasingly digitally driven world. And now, here are the CPG Guys.
Peter Vs. Bond
Hello and welcome to this episode of the CPG Guys. Of course sri, your co host and co founder of the CPG Guys and also co founder of Think Blue Consulting. As builders, connectors and amplifiers, we're here to advance your business growth. Get in touch with me at sri@thinkblueconsulting co that's again sree@thinkblueconsulting co not able to join me today is of course my fellow co founder and co host of the CPG Guys, Peter Vs. Bond. And he's of course at Flywheel Digital leading their external communications and he's not able to make it today because he's of course with his beloved daughter Nadia. Before we get to our guests, we want to ask you to consider following us in your preferred podcast listening app if you already don't do so. And of course to leave us a rating and a review on the Apple Podcast platform. The rating helps tell us how we're doing and the review tells us whether we're having the right conversations with the right people. And that's what helps us get to know you. You get to know us and so you can continue to keep shaping the show. Please do listen to my older daughter Rhea Raj's music www.riaraj.com R H E R A J and y' all know at the time of this recording number one on the Billboard charts baby. Her song written. She is co songwriter for priceless by maroon5 and guess what song is number two? My Other Daughter, Gnarly by Cat's Eye Lara Raj she just came back from Korea with and they're doing a world tour at the time of this Recording. I get to see both kids perform live on the Kiss FM iheartradio Music Festival stage at Vango Tango on Huntington beach tomorrow. It's the first time I get to see them both at the same venue. You can bet there'll be pictures on LinkedIn and every social media platform. All right, now let me get over to our guest. Our topic today will be how supply chain contributes to omnichannel growth in the industry. I thought I was the OG of E commerce, you know, 2012 early Amazon on day one, working with several grocery retailers on day one. And then I met this guy and he said, I've been doing this 20 years. And I'm like, holy cow, got to get him on the show. So that's what we'll be discussing and somebody who's actually shaped fulfillment from way, way, way back in the grocery industry. So please join us in welcoming adusa's VP of supply chain fulfillment strategy, Daniel Van Gould to the show. Daniel, how you doing, man?
Daniel Van Gogh
I'm great, sri. Happy to be here.
Peter Vs. Bond
Thank you so much for joining me. So in the digital liner notes of this episode, we'll of course include links to Daniel's LinkedIn profile, Edusa's corporate websites and LinkedIn profile for our listeners to access on the go while we go on with the conversation. So let me kick it off. You're the O.G. let's be clear. You've done this longer than me and I rarely meet anybody who's done that, in fact as early as the early 2000s, which means you've had your hand in shaping supply chain fulfillment for sure in our industry. So 25 years in, 20 plus years in. What are the big changes you've seen over the years?
Daniel Van Gogh
Yeah, it's been a really fun journey. I started in grocery E Commerce back in 2005 and that was with with Albert Hein. Aldo has his Dutch grocery chain. And back then we were a tiny little task force within the the big company. And we were able to try things and test and pilot and tweak and learn. And obviously the biggest thing since we did that 20 years ago has been growth. And you know, the pendulum has swung from grow, grow, grow to cost, cost, cost, back and forth, sometimes within the same year, sometimes with a between. And then obviously when Covid came, that was a massive accelerant. So growth has been a constant factor in grocery E comm and figuring out how to deal with that growth, the challenges it's bringing and how it affects the overall mix and bottom line. P L those are just really Fun puzzles to work on and to figure out. And I think inside of that growth, the other really big change, especially here in the been the growth of high immediacy fulfillment. AL and ALD have been doing ecom for a very long time, going back 30 years with Peapod here in the US and for a very long stretch of those 30 years, that has been next day delivery. And that landscape has completely changed. So just the immediacy of customers wanting their groceries in an hour or two hours has really changed the landscape and changed how we do things and has brought a lot of great opportunities to become more efficient.
Peter Vs. Bond
What about the customer themselves? I mean, when you started this, I can't imagine that there were that many customers thinking of click and collect or home delivery. And it must have been early phase and you must be swamped these days.
Daniel Van Gogh
Yes, it's certainly become a very normal staple of doing grocery shopping. Right. I think at some point people were part of almost an elite group. And I know that in the early days that's how people sometimes felt too, is like, oh, I don't know how I feel about ordering my groceries because my neighbors will see the truck in front of my house and I don't know what that says about me. And I think that stigma has certainly gone and it's become much more mainstream. It's not just for those. I mean, in the early days it was for people who had a modem and or even people who had a computer, which wasn't, you know, all that common 30 years ago. So yeah, a lot has happened to make it very mainstream.
Peter Vs. Bond
Hey, I actually remember those days when if I was going to order something to come home, people would see the truck and for some strange reason it felt embarrassing. Now it's actually cool to have grocery delivery come home and also cool to do click and collect. In fact, later today my wife has commanded me to go to the local store here at 2:30pm Pacific Time and pick up a click and collect order. And because I come from the industry, Daniel, you'll be proud of me. I don't do $35 orders. I make sure to do a full basket so that the grocer actually doesn't. The retailer doesn't lose money.
Daniel Van Gogh
But your store will appreciate that.
Peter Vs. Bond
Absolutely. And you know what's changed over Covid like last 5 years? I'm sure it's like click and collect, Click and collect, Click and collect. Is that a myth? Is that true?
Daniel Van Gogh
I would say so. You know, the Adusa brands have been doing E Comm for a long Time and for a very long time that was purely focused on delivery. So we have a really healthy base of customers who've always done delivery and who really appreciate that. For some other brands who had mostly focused on click and collect, that delivery growth is happening now, I think in the overall industry we still see really healthy growth in delivery as well. So it's certainly not just click and collect. I think it's both channels that still have growing interest and growing appreciation. And they're both forms of convenience and they're. And they're different conveniences and both are appreciated.
Peter Vs. Bond
So the latest buzz in the industry now is everything is back in store and that's where the action is. In fact, I keep hearing the word back to basics. Back to basics. Everything is in store. Given volume challenges generally in the industry, are you seeing less pressure as a result? Are you being, are you taking your hands off the fulfillment from a E Comm standpoint or is life as hard as it used to be a year ago or three years ago during COVID and you're just working longer hours?
Daniel Van Gogh
No. Well, we certainly still see really healthy growth both in the industry and for us specifically, which is really great. And I completely agree that the focus is on back to basics. It's just that those basics now include E Comm. And so we are really focused on how can we grow capacity within our stores, how can we assure that we don't negatively impact the in store experience for those customers who still do come into the store, which is still, you know, by far the majority. How can we grow at an acceptable cost level? But, but that growth is coming and if, if, if we don't anticipate and plan for it, that growth will, will go to our competitors. So we, we absolutely are doing a lot of work to make sure that we can meet the customer where they.
Peter Vs. Bond
Want to be met for our audience's benefit. Daniel, could you help explain when you say, hey, so that the customer experience is not interrupted in store with E Commerce, what does that actually mean?
Daniel Van Gogh
So we obviously have a full gamut of high volume stores and low volume stores. And it depends on the urbanicity of the store and it depends on the maturity of the individual markets. And so we have stores where we have low volume, where it's, where it's easily doable. And then we have stores where there's high volume, especially in highly dense urban areas where there's a lot more demand, demand for, for delivery. So we do think a lot about how do we expand capacity in our stores in a way that we can keep growing and, and we don't fill our stores up with carts and pickers. And, and so, you know, that that comes with things like batching in a smart way, comes with, you know, at some point you may want to take some of that fulfillment out of the way of the customer and, and do it behind the scene. And we have a pretty good strategy in place that for each of those different stores and different places in the journey of volume growth, we know what we can do to, to drive that and to support that without the store customers being impeded.
Peter Vs. Bond
Yeah, no doubt about it. You know, the customer should be king or queen, and that should always be at the center of it. So let's bust another myth. Another common myth is that e commerce of any sort, including click and collect, is a profit negative proposition. If so, why is it such a focus and also growing nationwide? And how are you helping that it doesn't stay like profit negative?
Daniel Van Gogh
Yeah, there's a lot of different ways you can look at that. So, you know, on a fully allocated basis, it might be less profitable than our overall business, but multiple elements of selling groceries are either more or less profitable than the average. And I think the mix of all of those is still what makes us, what makes us successful. I also think it's a really good way for us leverage the existing assets of our stores to continue to have that volume flow through our stores. But in addition to that, we see that the share of digitally engaged and omnichannel customers is extremely important for our business. Those customers tend to spend more, spend more frequently, and they are, you know, 2x the value often of non digitally engaged customers. And so we always focus on improving the digital experience. We focus on improving the e Comm experience because we can stick our head in the sand and ignore it and think that those customers will be brick and mortar customers instead. But it's highly likely that those customers will just find other digital experiences that they like. And we obviously wouldn't want that.
Peter Vs. Bond
You bet, Daniel. Of course. So thanks for dispelling that myth. So, let's talk about data. So I have to imagine you're in the midst of all kinds of analysis algorithms, because a lot of picking is happening from the shelf and you got to make sure that the out of stock doesn't run up. Can you give us an overview the types of data that matter? What are you looking at on a daily basis? Am I misassuming that you're working on analysis and algorithms. Algorithms all this time? And then specifically how does POS sales Data inform your decision making.
Daniel Van Gogh
Yeah, that's the cool thing about grocery, right? It's a business where there's just so much data and we do use that to our advantage for sure. And there's all sorts of things that you can think about in terms of improving the customer experience. And we have a lot of people that are much smarter than me who work on stuff like building personalized offers, getting the right substitutions to the customer, or substitution suggestions, enabling cross sell opportunities, making the right assortment decisions. All of those things are based on data, especially POS data. If you look at, in my area specifically, we also use that to optimize our efficiency as well as optimize the customer order experience. So think about how can we most effectively batch orders together, how can we optimize path finding throughout the store, how do we do workload balancing for stores and all of those kinds of things that, that drive the efficiency as well as get customers what they ordered as much as possible. Those two things are both important for us and data absolutely is key in achieving that.
Peter Vs. Bond
Does loyalty play any specific role like customer loyalty? Do you look at that to kind of in the warehouse group product a certain way or is it more done at a macro scale?
Daniel Van Gogh
I would say it's more macro scale, but there's fun things like I mentioned workload balancing. So as, as you know, the grocery business in general comes with, you know, volume peaks throughout the week, volume peaks throughout the day, and valleys in between those peaks. And that's always challenging to deal with. So if, if we can kind of smooth out our volume as best as possible, that is very beneficial to us. And we do look at loyalty but past purchase data. And, and if we can project whether a customer is going to go add more items to their order, we might hold off on that order. And if we know with a certain degree of certainty that a customer will not, we may pull that order forward and use that for load balancing purposes. So those things do play into fulfillment decisions for sure.
Peter Vs. Bond
Awesome. And then I'm tempted to ask you click and collect. Clearly, when I'm in store, I see pickers all the time. I see people fulfilling orders all the time. But, but let's talk about the word that we started this conversation with, which is home delivery. Right? There was a time when people were embarrassed to get trucks. Now you're cool if you get trucks. And you also talked about micro fast delivery. 2 hours, less than 2 hours. Is home delivery dead, alive, growing about the same as five years ago.
Daniel Van Gogh
From my perspective, it's certainly not Dead. And it is certainly growing. So I already mentioned we have different brands that have different backgrounds. Some started with delivery only, some started with pickup only. Especially those brands are still catching up in the delivery share. And, and then there's a, a real difference between more suburban and rural stores where pickup is definitely the preferred channel and the more urban stores where delivery is, is very much alive and growing. So that's, that's, it's definitely growth across. And an example of where we have seen delivery really grow is our recent partnership with DoorDash, which a different segment of customers, an opportunity to grab some of our groceries, smaller baskets and even more focused on immediacy, maybe adding some groceries onto the food order. You already placed that kind of stuff. And there's definitely high demand from customers for those kinds of propositions.
Peter Vs. Bond
Awesome. So are the home delivery baskets in general growing as an industry or shrinking or they're staying about the same?
Daniel Van Gogh
I think so. If you, if you take our DoorDash partnership in the mix, they're, they're shrinking on average. But that's just because we add, we've added a channel that is more focused on the, on the high pace kind of ad hoc convenience. And, and you'll always see that customers have smaller baskets in those, in those channels.
Peter Vs. Bond
But we also still have higher frequency of trips, but much smaller baskets. Kind of what am I cooking tonight? Kind of things.
Daniel Van Gogh
Yes. Yeah. Or what am I cooking, you know, in an hour from now? Or I'm missing some ingredients. Yeah, for sure.
Peter Vs. Bond
That's how I started with my wife's order tonight. I'm like, hey, here's what I'd like to cook tonight. Can we order? Blah, blah, blah. But she said, no, let's just order for the next three days and just have it because it's the weekend kind of thing. So a quick reminder to audience. I'm speaking to Daniel Van Gogh, vice president at Ahold Delhais usa. Now let's get into some sausage making or some fun stuff over here, which is take us behind the scenes of what it takes to actually build a retail fulfillment network. Are there like 100 people sitting over computers? Like, how does this work? What's involved? Are they DCs, lots of cross docking? What are the challenges that you face every day to keep it running?
Daniel Van Gogh
Yeah, you know, like I said, in some way or form, we've, we've done this for 30 years through Peapod. And there was a time where we had a focus on building fulfillment centers and using those specifically for E Comm. But our Focus is really on a store first fulfillment strategy, leveraging the assets that we already have. If there is a shift from brick and mortar to E Comm, the store would still be leveraged to fulfill that volume and to fulfill that demand. And it's, it's also a really good way to grow the bottom line of a store by adding digital volume. So for us now it's really about leveraging those stores not just for financial reasons, but also because it's how we can get the closest possible to the customer. And that allows us to do that one to two hour delivery versus maybe the old approach in the next day delivery area being fulfillment centers that sit in the suburbs where it might be easier to get a hold of data, to get a hold of labor, where real estate costs aren't as high, etc. And that was a great strategy for next day delivery. But it's really about being close to the customer now and being able to deliver that high convenience and that curbside pickup proposition that's definitely interesting to customers and that has shown a lot of.
Peter Vs. Bond
Demand with a store first strategy, as it probably should be. How do you intersect with the store planning then? Because is there a peer of yours who handles that aspect and you'll talk routinely or are you pretty much following the store first strategy and drawing your fulfillment strategy from that?
Daniel Van Gogh
Yeah, there's a lot of interaction with our retail teams as well as our macro and micro space planning teams. All those processes. The more you think Omnichannel, the better it is for both the store and for E commerce. So there's obviously a lot of alignment and integration to store processes as well as adaptation of those processes to E Comm and Omnichannel.
Peter Vs. Bond
So since you're adapting to a fast growing channel, you're working with the store first strategy. What are metrics that matter? Like what are you personally measured on or what? What do you look at? Are you looking at something every hour, every day, once a week, at a leadership team? And then what would you say is your number one metric?
Daniel Van Gogh
It's hard to boil it down to one, but there's a handful. Right. So we've already talked about profitability. Obviously it's important to us because we want to make sure that we are the best for our bottom line that we can be. And so to keep an eye on that, we track things like productivity and pick rate and those kind of things. But I would say more importantly, we track customer order experience, metrics, things like are we delivering on time? How complete are the orders that we're delivering? How many out of stocks do we have? What is our substitution rate? What is the satisfaction rate with those substitutions? Because we really need to understand how customers experience the orders that they receive and to be able to grow and improve on those fronts. So I would say that's kind of the critical set of metrics that we would look at on a weekly basis. But in stores, that's the sets that our operators look at on an hourly basis. Almost.
Peter Vs. Bond
Wow. And then going back to looking at metrics, if profitability rises to the top, where does volume, sales, basket size, number of trips, frequency, loyalty. You're looking across the board at all those as well. That's why you said there's no one, there's no one hardcore metric as such, correct?
Daniel Van Gogh
Yes. All of those things play into what the P and L looks like eventually, yes, you bet.
Peter Vs. Bond
And then as you start digging into those metrics, are you noticing trips again? Larger, Smaller as a overall macro versus just looking at click and collect Overall E Comm.
Daniel Van Gogh
It's really hard to say. I think it varies across the board. It varies by brand, it varies by region, it varies by urbanicity. So I wouldn't say that there's one trend to call out there.
Peter Vs. Bond
How awesome. So you refer to working with other teams as you rightfully have to. You said micro, macro, space, planning, etc. So let's talk about that. How do you actually work with merchandising? How do you work with space planning teams? You guys share data with each other. Does one decision from you or them impact what either of you have to do to deliver for your customers?
Daniel Van Gogh
Yeah, it's, it's just really great to collaborate with those teams. And you know, there's lots of different angles that this plays out whenever there's conversations about like what should the store of the future look like? I'm always the boring guy to the party because I, I tend to talk about things like I, I just want everything planogrammed and digitized and if we just know exactly where to track every last single unit, our life would be easier. Our customers lives would be easier. So implementing shared practices around having as many items as possible. Being planogrammed was just a really, a great change over the past several years. There's things like off shelf merchandising and promotional displays that we want to be able to track as best as possible. Because if you have seasonal items or promotional items that you have to go search for, that can add so much time and therefore cost to an order. Right. So those things are important to help navigation and even just in stock rate. And then there's things like store mapping, there's things like collaborating with our merchandising support teams on tagging shelves so that our shoppers can find items more easily because we can send them to a location. And there's customer facing benefits to that as well. Because now you can also have a customer look in their app and say, oh, I'm looking for this specific item. And the app can tell them it's not just in this aisle, but it's in this section and maybe even on that shelf. So those things are really beneficial. And the more digitized a store can get, the better it is for us in terms of efficiency as well as getting as complete an order as possible.
Peter Vs. Bond
I tell every CPG industry person who starts their career at a brand, everything starts with the planogram in store. And whether that's today, tomorrow, or about 50 years from now. While I'm not the one best qualified to discuss how the store. The store layout may look radically different, might be highly digitized, but yet it has to be planned for and that will dictate a lot. So you're just reconfirming my bias on that one, that that's where the action starts at the end of the day. What about decisions by each other? One of the things I did want to ask you, I think I know the answer to this one.
Daniel Van Gogh
But.
Peter Vs. Bond
But that means if you're following the in store planogram and that's guiding a lot of the traffic and you have to plan smartly around that, you're not doing crazy like online only offers or trying to combine like four categories into one basket and things of that nature. Correct?
Daniel Van Gogh
Correct. Yes. We think the best way to leverage the store is to leverage the strength of the store. And we don't go out of our ways to create all sorts of e comm specific crazy things because, you know, typically exceptions are also not that great for efficiency. And. And so we have really great stores, we have really great merchandising mixes in those stores and leveraging those I think is best for the customer as well as best for. For an efficient process.
Peter Vs. Bond
Yeah, there's no doubt about it. So I'm assuming then the weekly circulars are actually digitized and that's what's available online as well. Is that a fair assumption?
Daniel Van Gogh
Correct.
Peter Vs. Bond
How hard is that to do?
Daniel Van Gogh
I think this goes back to, you know, it's all back to basics and this needs to be part of those basics. So yes, that's. That's just become a basic process for us that we have built into how we work and how we operate and how we align across teams and what the output needs to be.
Peter Vs. Bond
Yeah, I can't imagine that's easy. It's probably easier said than done. But another thing that's intriguing with our whole dealers USA is you actually have five banners that operate as five separate banners or fairly independent? Independently is what I'd say. Both promotional assortment, planogramming. And so how do you actually go back and forth? Are you giving guidance? Are you involved in day to day decision making and in what the store layout will look like? Are you constantly feeding them data? Are you asking back for data? Like how does this network of five different chains work for you?
Daniel Van Gogh
Yeah, it's just a really important element to how we operate is that the brands have this kind of independence because they know their customer, they have strong connections to the market markets that they operate in and they know best how to serve those markets. So we don't try to tell them how to design or lay out their stores. Obviously we have conversations around what things would be beneficial for E Com and how that plays out. Might be slightly different for each brand, but we aim to have the best possible balance between that local focus and kind of a central view on efficiency. And one of the ways that we do get synergy between the brands is we have one E Commerce platform, one platform that allows brands to pick their orders efficiently, that integrates with each of the brand's merchandising systems and ecosystem. And it's built with a certain flexibility to allow for that local, local kind of flair that the brands definitely add.
Peter Vs. Bond
That's awesome, man. And then how often are you meeting with each banner?
Daniel Van Gogh
I imagine that they would probably say too often because that can be the downside of an organization like this, is there's just a lot of alignment that you go through. But you know, we have operational meetings on a weekly basis on various topics. We have leadership alignment obviously less frequently, but we do make sure that we stay connected and that we stay on top of challenges that might arise or opportunities that either the brands or our teams see or really cool innovations or ambitions that we have that we would want to work into roadmaps and plans. So there's, there's plenty of time for alignment for sure.
Peter Vs. Bond
Gotcha. Now let me ask my favorite question, usually the last question on the podcast. So let me close it out by asking you, Daniel, what trends are important to you in the industry? Are you using AI? And then I'll Ask you one after you answer that, what concerns you the most? But let's go with trends first. What's top of mind? Are they two or three?
Daniel Van Gogh
Yeah. I very well know that AI is pretty much what everyone has on top of mind. And obviously we are following what's happening in that space and we're experimenting and we're looking at opportunities to apply it. I would say, though, and this might be just a boring answer, we are very much focused on trends around how can we best account for future growth. Part of what my team does is very operational and in the day to day. But we also look three, five years out and predict what, what volumes we'd be at, what that means for our store fleet, where we may need to tweak and constantly find better ways and innovative ways to account for that volume. So whether that's trends around automation, AI plays into it, store layouts, new equipment, it's really all of those things to make sure that we stay on top of how can we be most efficient, how can we grow capacity? How can we make sure that our stores don't turn into fulfillment centers but stay the great places to shop that they are?
Peter Vs. Bond
How awesome. Then if I flip that to the other side of the fence and said, what keeps you up at night?
Daniel Van Gogh
I sleep pretty well. But that's not to say that there aren't all sorts of fun puzzles that we still need to solve for. Right? So that piece of how do we grow capacity? Is certainly a challenging puzzle. How do we do that today? How do we do that in three or five years? It's also how do we best leverage things like the gig economy for our last mile? How do we optimize for that? How do we play with the various parties in that space and get the most out of that? Those are, I wouldn't call them dilemmas maybe, but they're definitely the puzzles that aren't fully figured out yet and that we work on on a daily basis, pretty much.
Peter Vs. Bond
I love the use of the word puzzle because the gig economy one as an example can be very useful, but at the same time it could get very complicated just because of the changing nature, who comes in and out of the store and their lack of ability to know what a store layout is going to. But it's certainly a puzzle, but it's definitely one to lean on probably in, you know, way out there into the future. So let me remind our audience, you can find all of our content by simply going to a web browser and typing cpg guys.com as the URL if you know someone or you something to contribute to this ongoing discussion on the CPG guys, please drop us a line at contact cpg guys.com again that email address contact@cppg guys to our contact cpg guys.com to our audience. Thank you for the clicks, likes, comments, direct messages, meeting us at trade shows, coming to our events, recording episodes with us and our sponsors. We're always grateful for you for listening to us and for continuing to champion us and keeping the show way up top. And a big announcement episode 500 to be released June 21st. We've had some of the greatest leaders of our industry across the board week after week week. Special guest coming up June 21st will be announced shortly, so do look up for that. Hard to believe some days that we'll be 500 episodes in in just about a month from now to all our sponsors. The show doesn't exist without you. So I want to say thank you to us. You work with us all year and we're grateful to have you. Daniel, kind of you to make time on a late on a Friday afternoon. Thank you for joining us on the CPG Guys.
Daniel Van Gogh
Thank you very much for having me.
Peter Vs. Bond
That's a wrap of this episode of the CPG Guys.
Sree Rajagopalan
The content in this podcast episode is provided for general informational purposes only. By listening to our episode, you understand that no information contained in this episode should be construed as advice from CPGuys LLC where the individual author, hosts or guests, nor is it intended to be a substitute for research on any subject matter. Reference to any specific product or entity does not constitute an endorsement or recommendation by CPGuys LLC. The views expressed by guests are their own and their appearance on the program does not imply an endorsement of them or any entity they represent. The views expressed by CPGuys LLC do not represent the views of their employers or the entity they represent. CPT Guys LLC expressly disclaims any and all liability or responsibility for any direct, indirect, incidental, special, consequential or other damages arising out of any individual's use of, reference to, or inability to use this podcast or the information we present in this podcast.
Podcast Summary: The CPG Guys - Episode on eCommerce Fulfillment Strategy with Ahold Delhaize USA’s Daniël van Gogh
Podcast Information:
In this insightful episode of The CPG Guys, hosts Peter V.S. Bond and Sree Rajagopalan welcome Daniël van Gogh, the Vice President of Fulfillment Strategy and Solutions at Ahold Delhaize USA (Adusa). The conversation delves into the evolution of eCommerce fulfillment in the grocery industry, the integration of in-store and online strategies, and the future trends shaping the sector.
Daniël van Gogh begins by sharing his extensive experience in the grocery eCommerce sector, highlighting significant changes over the past two decades.
Daniël van Gogh [04:17]: "The pendulum has swung from grow, grow, grow to cost, cost, cost, back and forth... The biggest change since we started 20 years ago has been growth and how to handle it."
He reflects on the shift from next-day delivery to high immediacy fulfillment, emphasizing the increasing customer demand for faster delivery times.
Daniël van Gogh [06:02]: "Customers now expect their groceries in an hour or two, which has fundamentally changed our operations and efficiency strategies."
The hosts discuss how customer perceptions of grocery delivery have transformed from a niche service to a mainstream expectation.
Daniël van Gogh [06:14]: "What was once seen as elitist or even embarrassing is now a norm. The stigma around ordering groceries online has completely dissipated."
Peter Bond adds a personal anecdote to illustrate this shift.
Peter V.S. Bond [07:34]: "I used to feel embarrassed about ordering groceries online, but now it's a convenient and widely accepted practice."
A critical aspect of the discussion focuses on maintaining the in-store shopping experience while scaling eCommerce operations.
Daniël van Gogh [09:53]: "We're focused on growing our eCommerce capacity without impacting the in-store experience. This includes smart batching and strategic order fulfillment."
He explains the strategies employed to ensure that both in-store and online customers receive optimal service.
Daniël van Gogh [10:03]: "We tailor our fulfillment strategies based on store volume and urban density to maintain efficiency and customer satisfaction."
The conversation addresses the common myth that eCommerce is inherently less profitable than traditional retail.
Daniël van Gogh [11:42]: "While eCommerce might appear less profitable on a fully allocated basis, omnichannel customers tend to spend more and shop more frequently, enhancing overall profitability."
Peter Bond reinforces this by emphasizing the importance of digital engagement for sustained business growth.
Peter V.S. Bond [22:55]: "All metrics, including volume, sales, and loyalty, contribute to the overall profitability, making eCommerce a vital component of our strategy."
Daniël highlights the pivotal role of data analytics in optimizing fulfillment operations.
Daniël van Gogh [13:38]: "We leverage POS data to enhance personalized offers, optimize order batching, and improve pathfinding within stores to boost efficiency and order accuracy."
He elaborates on how loyalty and past purchase data are utilized for workload balancing and order management.
Daniël van Gogh [15:01]: "By analyzing loyalty data, we can predict order sizes and adjust fulfillment processes accordingly, ensuring balanced workloads and minimizing out-of-stock scenarios."
The discussion moves to the collaboration between fulfillment operations and store planning.
Daniël van Gogh [20:47]: "We work closely with retail and space planning teams to ensure that store layouts support both in-store shopping and online order fulfillment."
He emphasizes the importance of digitizing planograms and store mapping to streamline operations.
Daniël van Gogh [25:38]: "Digitizing store layouts and ensuring accurate planogramming are essential for efficient order picking and enhancing the customer’s shopping experience."
Daniël discusses the complexities of managing a network of independent banners within Adusa.
Daniël van Gogh [27:58]: "Each banner maintains its independence to cater to local markets, but we unify our eCommerce platform to ensure consistency and efficiency across all brands."
He explains the balance between local autonomy and centralized operational efficiency.
Daniël van Gogh [29:10]: "Our single eCommerce platform allows for efficient order picking while accommodating the unique needs of each brand, fostering both local relevance and operational synergy."
Towards the end of the episode, Daniël shares his insights on emerging trends and the challenges ahead.
Daniël van Gogh [30:23]: "AI is a major focus, as we explore its applications in forecasting, automation, and enhancing the customer experience. Additionally, planning for future growth and integrating new technologies are top priorities."
When asked about concerns, he highlights the ongoing challenges in scaling fulfillment capacity and optimizing the gig economy for last-mile delivery.
Daniël van Gogh [31:39]: "The primary puzzles we face are managing capacity growth and effectively utilizing the gig economy for last-mile delivery, ensuring we meet customer demands without compromising efficiency."
The episode concludes with the hosts thanking Daniël for his valuable insights and discussing upcoming milestones for The CPG Guys. Daniel's expertise provides a comprehensive overview of the strategies and considerations essential for successful eCommerce fulfillment in the grocery industry.
Peter V.S. Bond [33:57]: "Thank you, Daniel, for sharing your knowledge and experiences with us today."
This episode provides a deep dive into the complexities and strategies of eCommerce fulfillment in the grocery industry, offering valuable insights for professionals looking to enhance their operations and customer engagement in a digitally driven marketplace.