DTC and the evolution of DTC in relation to how it’s been affected by Covid
Jackson Jeyanayagam, Vice President & General Manager @ The Clorox Company
Sales & Marketing Stage
Ascent Conference 2020
[00:00:02] Hey, guys, I am Jackson Jeyanayagam VP and general manager of Clorox is due to see group.
[00:00:09] I’ll give myself a quick intro and then jump right into my presentation. Been a clerk for about a year and a half now, running all things direct to consumer for the Clarks brand across wellness and all the retail brands.
[00:00:20] Prior to joining Clorox, I was its chief marketing officer of a startup called Boxed Boxes, essentially e-commerce business selling whole goods and CPG wholesale products due to within two days. So think of it like a Costco alternative, completely e-commerce. It was there for a little over two years. Prior to that, I was head of digital at Chipotle in New York, running all things digital, working closely with all the marketing and e-commerce folks. And I was there before, during and after the food crisis, which I feel like is a whole other presentation I could do. And then I started my career, an agency like 15 years between Portland, Seattle, New York, working with mostly tech and in some CPG brands and various categories. So very happy to be here. And I’m not exactly sure how many people are joining us. I can’t see. But hopefully you guys enjoy this. This is actually live, not taped, but I don’t think it’s and so feel free to reach out to me afterwards on LinkedIn or Twitter. I am active on both. So I’m going to go ahead and share my screen and hope that you guys can see it OK. And basically my topic is the rise of DC and its role in a post quarantine world. Now, a lot of this was relevant. I think of it. I think the biggest things we’ve seen covid was really an acceleration of DC adoption. If you think about reconsidering e commerce, especially if you live in certain markets and regions, in particular on the coast, the trends are high. Right? You are already on Amazon and Saccade to iJet and so forth. But a mass adoption had hadn’t got there, especially when it comes to grocery and fresh because of the obvious barriers is my producers, my vegetables are those things can get delivered to me in the right way, not damage and fresh and so forth. So we definitely saw those trends at box side of Tripoli that there were some hurdles to get over from a mass adoption standpoint. I always estimated three to five years before we really get there and covid completely accelerated that. What we’ve seen now is that that adoption that was probably, I think in twenty twenty four point twenty five is now here. And I think that’s been a very interesting thing. So you’ll hear this in my presentation, but I don’t think it’s about pure play D to see. I think Omni Channel is here to say and what that means means something different to any and all brands and we’ll talk about that a little bit. But even pre covid why has direct consumer thrived? In my opinion, focus groups are one to take with a grain of salt obsession with product market fit the idea that in old school startup VC mentality of like if you have a product and you have the right market, it doesn’t matter. You can actually get over a lot of issues, internal issues, employee staffing issues, all those things actually become mitigated if you have the right product market fit. Conversely, if you don’t have it or you’re too early and you have everything else going for your great people, great team, well, find it. It doesn’t matter. We’ve seen plenty of examples of both of those. DC is all about closed loop and the path to purchase. Right? So understanding when you get targeted with an ad you click through, you actually have a click and then you buy or you don’t buy that full pat. That has never generally been tracked by traditional retailers and definitely not CPG brand to sell to retailers. That’s what DC has become very powerful with. Amazon is the best of this. They understand exactly where you are in the funnel and when and what you’re doing and all those things that you’re volunteering to them. They can then retargeted re optimize not only their marketing efforts, but what products they put in front of you and then what products they create. Their private brand is a very fierce competitor to many out there, and it’s because of that data and that insight there. And as I mentioned, the ability to optimize the shopping behavior at any point, whether you’re loyal and you’re about to turn out your brand new or you’re in between understanding that is part of that path of purchase and ran to understand that are the ones who will thrive and continue to thrive ahead of the ones that cannot and do not own that relationship with the customer and multi touch attributions. MTA, for those in New York, it is not the train system. This is really just another way to measure things from a digital down funnel standpoint. Those of you who are familiar with models, medium mix model, where it’s essentially assesses the impact from a sales standpoint of your above the line efforts, TV out of home sponsorship and so forth does not the opposite, but is really further down funnel understanding the first click to the checkout. And I think the Holy Grail really will be both of those together. But that is one of the biggest benefits of disease, a full multi touch attribution with pure data, no assumptions. It’s all truly volunteered by the customer. And then finally, I would say in the last two, here is data see allows you to take risks and constantly test and iterate. So instead of two years or a year and a half and the research cycle before you go to market, you’re in market within months. But something that may or may not be in abundance, you might not even have the product of your testing and learning what consumers want or interested in what price points, what branding, what esthetics, what value props they want or don’t want. And then you’re iterating on that. And then finally you can bring it to market, which is wonderful. And then finally. Immigration, I tend to see big companies on the anti side and even in house, you can see a lot of silos between core functions, especially for a global company. You know, nice thing about Dissy Group is there is no way to get around that integration between creative technology partnerships, which is a big one. We’ll talk about that in a second. Media redefined media and product teams, which includes physical product and product experience, but is also changing at a rapid rate. There are a lot of threats and a lot of nuances to do to see that you didn’t see in that phase one. If you look at the Warby Parker’s and Caspers of the world, you have a box that was a different kind of point phase. Now you’re looking at a do you see the last two years? And it’s completely exploded. Right. And even more so now, anyone can launch a ban on Instagram. You could do it for a few bucks. And how many of us have been targeted with random brands we’ve never heard of because of some ad you clicked on, article you read and so forth. So it is extremely crowded and it is extremely easy to get to the point of entry. You don’t need to be able to code your own tech stack. You can go to Shopify and have it all there for 50, 60 bucks a month. So it has become much more crowded. And that has put pressure on DC Branch to think about what is the evolution. And a few of these other pillars that kind of go under that are obviously omni channel is here to stay. Anyone who thinks retail stores are going away is crazy. It’s just like saying cash is cash is not going away. It’s the way you use cash that’s changing. Same with retail. The footprint will change. The amount of stores you have will change, but retail stores won’t be here for a long, long time. And that is can be part of the DDC evolution and experience. But with that also comes a lot of lack of scale of predictability. With Facebook and Google, we’ve seen the rise of Amazon advertising stealing ad dollars from Google. We also see a lot of unpredictability of Facebook and Google and how brands are using it and actually a lot more competition from big brands with a lot of followers who are now playing. And to see Nike is one of the best examples of that. So now you have a little bit of a challenge and now you’re seeing do you see brands have to find other channels to go market and reach customers. And as such, you’re also starting to see the role of organic continue to be very, very important, whether it’s public relations or getting a story in a Huffington Post box and the daily being so critical from a search standpoint, from an SEO standpoint, from a credibility standpoint, that has become a critical component. If you’re not investing in organic from technical and content standpoint as well as PR, you’re really missing a huge opportunity. And that’s what’s going to break through, not just being able to spend on Facebook and Instagram. And then I’m not going to on all these, but I would say the need for a physical presence to complement digital. So whether or not you have your own store or you’re selling through in another retail store, a physical presence is very critical. And that’s why you’re starting to see changes a little bit. But the rise of Pop-Up store experiences where people can touch and feel a product, I would argue it’s not even about selling that product there. It’s about that lead. It’s about the interest. It’s about the consideration. So when we get back to whatever normal is, people will be out and about. There will be people at stores. And I think the idea that your brand is in a physical store will still be relevant. What that looks like and what kind of experience that is, if it’s permanent. That’s all, I think, up in the air. But do you see brands pure play to get to scale will need to have a physical presence in some form fashion beyond just marketing or selling in a retail store. And then finally, I mentioned earlier, traditional tactics still work, direct mail sponsorship above the line. We’re seeing that become a very relevant channel. And strategic partnerships obviously is one of them, like whether it’s partnering with another DC or e-commerce brand as a like minded audience, especially now as people are spending more time on social media, more time on email, they’re exposed to a lot more things and more engaged. So what a great opportunity to leverage another products, consumer set and audience. Assuming that you guys aren’t competitors but have a like minded kind of vision of people that you’re going after and that can also scale to bigger brands, doesn’t mean you can’t work with bigger brands unless they invest in your you. There’s a lot of ways to work with them without having to spend a lot of money. So getting very creative in those partnerships, I think is a big opportunity. What we’ve seen a big change in DC and then especially in the last few months, I should put this first, but grandstanding from much more than profit. Yes. If your publicly traded, you have to worry about your EPS earnings per share. You have to worry about giving shareholder return. But you also have to worry about being a leadership team. A board stands for something more than just that. Being transparent, honest, visible, standing up for what counts. Used to be like don’t talk about politics and religion. And I don’t know about religion has changed much. I think that’s still a tough one. But I would argue that politics is very much a play and it’s not about choosing a party line, but it’s about standing up for the things that your company cares about and values and that you know your customer values. And I would argue that is more important than anything else. And we’ll continue to be important. People want to align with the brands that share those values, even if that means spending a few more bucks with the brand. I think you’re going to start to see that just become precipitous for expectation for customers.
[00:09:51] I like to use two examples of companies. I worked at Chipotle and boxed Chipotle. I was driven by a singular value food with integrity, food you could trust, ingredients you understand and. Ingredients you can get at a grocery store or a Mexican grocery store, no more than 60 at one point, that was a really core part of what we were about boxing. Our hand was all about values being driven by values of our company, of our leadership, of our founders. And two best examples as here’s our CEO, my former boss, talking about a couple of initiatives he rolled out. One was he specifically was paying for college tuition of our employees, kids. And I think at 12 kids going to college, that didn’t matter where they went private or public. He was commit to paying for their kids. One guy, I think, had three kids that was paying for going to college. And really this is built on the idea that we have a lot of employees with all different economic kind of skills and pressures. And he realize that these are pain points. And he knew he was in a position to do something and he did it. And this is a big opportunity for him to kind of put his money where his mouth was literally almost and say, I’m going to support what matters most. And that was really about him being values driven, why he started a company instead of going to a law firm, which is what he was. He was a lawyer, actually passed the bar and was practicing law for a little bit. Another example is the Rethink Pink. For those who don’t know, there’s a pink tax that happens in several states where certain feminine hygiene products are taxed like a luxury, like tampons, which is crazy to really think about. So we actually refunded that tax back to anyone buying from us in those states. So I think Arizona is one of a few bought from us, from Arizona, one of those products. We would pay that at cost instead of you paying that tax that you would if you went to a local drugstore grocery store. This is incredibly powerful. And yes, it was a big hit to us. And we weren’t exactly a billion dollar company. Right. We weren’t one of those big, large retailers that can really afford to do things like this. But it was the right thing to do. It was an example of us being driven by values. Another thing that he did was also pay for people’s weddings up to twenty thousand dollars. So, again, the same kind of insight based on the College Education Fund was we’re going to take care of our employees because it’s the right thing to do. We can do it. And we know these pain points and we don’t want them to be suffering if we can help them. And I think this is doesn’t mean to say that every penny has to start paying for people’s college funds and wedding weddings, but this is a real opportunity for brands to step up and say, what do we care about employees is one of them, I would hope. And how are we going to show that back to them beyond a four one K match and into basic benefits?
[00:12:14] And I think this will continue to be a huge thing that every brand and every company, especially smaller companies, but arguably their companies have to think about what are their values, what are they going to stand behind? And it has to be transparent, has to be honest and has to be consistent. Arguably, the most important thing is consistent and what you do. So what does all this mean for the future omni channel? Everything. You know, I can’t stress this enough, whether you’re Walmart, Amazon, Costco, I mean, Amazon opening stores for a reason, right? A pure play D to see brand of two million dollars on Instagram Omni channel. Everything is going to be where the future goes and how people are thinking about shopping, whether they’re buying on their app and picking up buying, getting it delivered to the door or just having someone to shop for them at a grocery store. This is going to be the future. And then what that experience looks like will continue to evolve. But oftentimes people tend to think about when you get scammed, when you get growth, and you’ll start to see a lot of brands do this. Even now, after six months, I get startup founders coming to me saying I wish I expand my line to go into this other area. I’m like, why you don’t even saturated your first vertical? Your first focus and guilt is my best examples. This girl was a great brand. You could argue that there was an economic impact here, too, but they quickly lost sight of what they were initially and then started launching off Jetseta and all these other spin offs. That didn’t make sense from Brand from a standpoint, but I’d argue they didn’t really properly saturate, take advantage of the opportunity in front of them. And if you do that too quickly, you can quickly find yourself in a really big hole and losing kind of any idea who you really are and what you’re really good at. But don’t wait too long to embrace change, adapt. This might sound contradictory to I just said, but you have to see see the field right in Cuba at times that changed everything. Whatever category you in, you can’t tell me did change for you, good or bad, and maybe say the same. But the way you position yourself was different. But it didn’t matter. Everyone had to go through change individually, but especially on a brand standpoint. And I think one of my favorite examples is Blockbuster Video. And those of you I’m aging myself, but some of you may not remember them and which is crazy to think about. There’s one store left. I saw an article, but remember Blockbuster Video, you go there in the nineties. Forty two is in the early nineties. That was my my store every Friday. My dad I’m go get a video of you just one year, maybe two. And if we’re lucky, I have my friends over maybe a video game. That was the experience. And they had they were top, top dogs. I mean they had great earnings that Wall Street liked them a lot for a long time. And then the market change. Right. And everyone says Netflix was really the most innovative and Netflix arguably was actually behind. Right. Because they were on DVDs. They didn’t move to streaming a little bit late. They were actually streaming side, but they reinvented that category, but they were struggling. And if you know the story, Blockbuster had a chance to buy Netflix for pennies on the dollar and pass on. Didn’t even go through due diligence, just kind of wish them away as as a nothing afterthought. And we all know where that Netflix market cap is and where blockbusters at one store. So my point here is this. Not the only examples, plenty of this, so while you want to focus on what you’re really good at, you have to see the forest for the trees, so to speak, and really understand when it is time to change. And this comes from a good leadership team, a good leader, but also a great board who can kind of push and question you and and having that instinct, but as well as data to back it up, say, you know, maybe it’s time for us to adapt and pivot because the change is coming and you can test your way into this doesn’t mean to do overnight. But these two, while contradictory, seemingly actually go hand in hand, in my opinion. And then I’m not going again, not going in all these. I would say that the two ones I do want to speak to is I learned this from General Mills. They were one of our colleagues and did a lot with us, a box and one that goes over there. Tell me about when they acquired Ani’s and also ran. A lot of people don’t know it’s owned my General Mills, which is intentional. They knew that something very unique and Ani’s and they wanted to keep that uniqueness specific to any. So instead of just putting a lot of classic corporate CBG focus on the business, they went and found their misfits. And what I mean by misfits is they weren’t looking for people who are viruses. They weren’t looking for the people that were just just challenging for the sake of their finding. The people are challenging the business. The right reason, asking why or why not pushing the boundaries and sake of the business and doing the right thing, even if it meant going a different direction than everyone else normally would go. Those are your misfits. And I’d argue if you’re a big company, more so than if you’re a smaller company and you’re trying to figure out, well, how do we do all these things? Jackson like how do we think about this? I first find your misfits and reward them, acknowledge them, identify them and say, you know what, you bring a lot of value. You don’t think like the way we do. You do things a little differently, but you’re doing it for the right reasons. And we’re all of the same goal in mind. Let’s go find them. Let’s go. Let’s go empower them. And if you’re trying to figure out an incubator or you’re acquiring a company, whatever the thing is and you know, you want to go in this direction. This isn’t just a Disney thing, by the way, but I think it’s very relevant to anyone thinking about in a business, try to find the misfits who are going to challenge and think about things differently. If you’re like a five billion dollar company and go recruit and engage them and give them an opportunity to show that show themselves off. And that goes into my ask why over and over again? Like, that’s a pure quality, those great misfits. But finally, as I mentioned earlier, be opportunistic and embrace those new corporate realities, whether it’s about sustainability, vulnerability, diversity, leadership, ethnic and gender diversity, I think is at an all time high. And diversity comes in a lot of different ways. I have several tattoos, like I represent a different kind of opinion, perspective, not only being a person of color, but being someone who has visible tattoos. That’s a different kind of diversity. But the point is, I think you’re going to see more and more pressure, more than we’ve ever seen before from customers, not not Wall Street and board members, but customers first, which ultimately ladder up to Wall Street and your board to go seek out companies that value diversity of thought, experience, look, and all the things that come with that and really reward it. And it’s not just about hiring outside people, is about recruiting the group of internally who maybe haven’t felt looked after, haven’t felt like they have an opportunity to move up that ladder. And I think this is going to be continue to be a top priority. And again, I’m going to put this one first, arguably, and that also goes in with employee first mindset. I talk about boxes. You could argue that your employees come before your customer because if your employees aren’t happy taken care of, then your customers won’t be. I imagine every touchpoint your customer has with your employee, whether they need them or don’t, deep sea or retail doesn’t matter. We all know the experience. You have a bad Uber driver experience, even though that driver is a commodity to some extent working for Lyft and via. And you’re associating Uber with that customer, that driver experience and this that goes across every vertical. So if you’re not employed first with your mindset, then how can you be customer first? I’ll wrap everything up, and this, again, is specific to D.C., but I would actually think this is applicable to any business and we created this my last company, which I thought was a really way to keep things simple. No matter what you do, no matter what you sell SAS a service for a customer or a B2B enterprise, you’re selling a physical product, you’re selling watches on Canal Street. It doesn’t matter right at the end of the day. And you could argue that this is a person, a customer or an employee. That’s an interesting discussion. But these things have to work. Ease of use, easy use, no matter what. It is easy to get, easy to use, easy to experience. You have to be able to have great service and experience from end to end. For the moment, you’re exposed to it, to customer care, fulfillment, whatever that thing is. Obviously product market fit I talked about, but that’s like half the battle. At the end of the day, you have to execute consistently. So great execution isn’t doing once. It’s having ease of use a great service experience and have the right product fit over and over and over again. And that’s kind of like I wouldn’t even say like that’s a muscle that’s like you can’t do anything until you have these four. And yes, that also includes taking care of your employees, being visible and transparent, who you are as a company, having the right kind of leadership that represents different diverse thoughts, are challenging each other to say, hey, do we need more people of color in our creatives? For instance, are we thinking about black and brown communities in a way that we have thought about the mass, the majority white male over 40s, for instance? Really, you don’t get that thinking unless you have people around the table who reflect and represent those views, those people, those communities.
[00:20:04] So that above all else, I think is is going to continue be a trend to see or not to see. But I do think when it comes to the day to day tactical execution, this is a good way to frame up how people should think about their businesses and running a business or building a business from scratch.
[00:20:18] I know I flew through that because I think we only had twenty two minutes or twenty five minutes. So I hope you enjoyed that. I don’t think we could do a Q&A here, but if you do have questions, please do let me know. Feel free to email me or hit me up on LinkedIn or Twitter and we will hopefully connect soon. Thank you.
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