Panic Buying Prep: A Case Study in Customer Centricity

Reaching customers during the pandemic to ensure they can easily get products is the No. 1 priority for consumer goods brands and retailers, and it was a task put to an extreme test this spring. In the face of another prospective round of panic buying, we spoke with a leading pet care and supply company to learn how they worked backwards in order to implement new business decisions fueling agility. Read on for an edited transcript of the conversation, which demonstrates how CGs can laser-in on the customer experience in order to alleviate stress on their supply chains and inventory levels. Tim Denman: Welcome everyone to “How Customer Centricity is Fueling Global Business Decisions.” I'm Tim Denman, editor-in-chief of CGT and RIS, and I thank you for taking some time to join us today. As we all know, reaching customers during the pandemic and ensuring they're able to easily get products, the top priority for CG brands and retailers, and as the pandemic numbers continue to spike across the country, CGs and retailers could be facing another round of panic buying, putting additional stress on supply chains and inventory levels. Today we'll hear from Felipe Tamburus, head of product and technology at Cobasi, a leading Brazilian pet care and supply retailer. They were among the first to implement curbside pickup in Brazil when the pandemic hit. Felipe will discuss how he and his team had been focusing on customer experience and working backwards to make business decisions and technology investments that fuel digital agility. Joining Felipe to help frame the Cobasi story, are Ana Milevskaja from VTEX and David Ahuja from AWS. Ana is an experienced digital transformation leader, who excels at developing and driving go-to-market strategies in the e-commerce space. Her skills and expertise were instrumental in guiding market positioning and demand generation at a number of leading companies, including SAP, Newstore and Elastic Path. As the VP of marketing at VTEX, Ana overseas market positioning, public relations, analyst relations and demand generation for the company's North American region. David Ahuja is an IT executive with proven experience in digital enterprise transformation. He has more than 25 years of experience with brands, such as P&G and Walmart, where he developed enterprise analytic platforms in retail and CPG, creating solutions that enable faster, smarter, data driven decisions in merchandising, marketing, supply chain, real estate, finance and more. He's currently the head of worldwide business development CPG, with AWS. Welcome, Ana. Ana Milevskaja: Thank you, Tim. Hi everyone, good morning, good afternoon and good evening wherever you are in the world. I'm so thrilled to be your moderator today, and I want to thank each and every one of you for taking the time out of your very busy day to join us. We are going to cover a topic that's on the mind of many business leaders today, it's all about putting the customer at the center of everything you do. And so, to talk about this topic, I have invited a couple of fantastic speakers. Let's begin with today's discussion. Felipe, I'm going to come to you, could you please tell a little bit about Cobasi brand. We're thrilled that Cobasi is VTEX customer, and I hope that you could tell a little bit of a story and talk about customer centricity, that what it means for Cobasi, especially in light of COVID. Felipe Tamburus: Thanks for the invitation. I'm glad to be here to share what we've done during this journey. Cobasi is a pet supplier retailer in Brazil, we are a brick-and-mortar retailer, a 35-year-old company that has almost more than 100 stores spread all over the country, and we have a very strong e-commerce channel working here and actually, the change of transforming a traditional company to a customer centric company is a very difficult thing to do. But before I answer this question, I would like to give you some background about Cobasi, because Cobasi is a pet supply retailer. But we sell almost commodities, because we sell pet food, vaccines and all of the other players sell the same thing as we do. So, we don't have different sessions based on our products. The second, we have a very emotional thing related to all products which we sell here, because the customer is buying something to their pets, and there is something emotional related to that. It's quite different to buy a t-shirt online and buy a pet food online, is something emotional related. And also, we are almost a recurring business because, you buy one t-shirt and you going to buy another t-shirt when you need, but here you have to buy every single month, or every period that you need the food, or the mats in future. So, Cobasi is kind of forced to move in that way, because we need to provide a very good experience to our customers. So, this kind of discussion, it started to get more intense, two and a half years ago, that we need to implement the journey. The customer centric journey started by us talking about more the customer lifetime value, and other things that we didn't discuss before that. And it changed the way we organize our teams, the way we listen to the customers, the way we hire people. It changed everything here at the company and the pandemic didn't change it a lot, but it speeded up a lot, because we understood that we need to hurry up doing the things we are planning to do next year. We became instructed to implement it now, in this year. And that was the main change that customer centric and the pandemic, it brings to us. Milevskaja: So Felipe, just as I was listening to you, one question that popped in my mind, when it comes to customer centricity, are you looking at it from channel point of view? You have different approach in stores versus online, or is it a unified approach when you look at the business overall? Tamburus: Actually, we are working on defining everything because the customer buys online and buys in physical stores. And we are starting to look the customer as a person independent of the channel. It's a big change that we made because before that, we looked into products, the profit, the margin that the product makes to us. And nowadays we are looking to cohorts, we are looking to lifetime value, how we make the customer return to our platforms, even physical stores or our digital channels. This is the main change. Milevskaja: Got it. So, David could you share your perspective on what you are seeing on a broader scale among AWS customers? What role does customer centricity play, especially in light of COVID and how COVID may have changed some of the decision-making among the customers that AWS has? David Ahuja: Sure. Ana, the core of the changes we've seen over the last nine months, it's consumer driven, right? I mean, consumers have gone through significant change. And I think that the best benchmark of that is just looking at ourselves first, right? We are those consumers. So, what changes we make at home in terms of value, for some folks and looking at price a whole lot more, changes in terms of convenience is probably one of the most obvious ones, choices. I was shocked when I first walked into the store nine months ago and saw an empty shelf; if I had a preference on brand, it changed right at that moment. I took whatever I could find. So, companies with that sort of at the core, a lot of the customers that we're working with, first of all, many of them are scrambling to, how do I adjust to make sure I'm listening, hearing, understanding, and reacting to the consumers? And, that's a whole different set of solutions, I'll say, in terms of being able to serve the consumers in the right way. We've had situations where a retailer closed all stores and shifted entirely the e-commerce. So, that's a completely different way to run the business, and making sure I'm connecting with the consumers. Before they were able to even get to customer centricity, they had to get to their own internal, making sure I'm doing what's right in terms of my business continuity, my safety, of my employees. Because all of those things were critical to being able to serve the consumers where that means, increasing production on certain products, decreasing production, SKU optimization, etc. So, it's pretty broad, I would say in CPG and retail, there's a massive disruption. And if there's one that I can just single out — and I'm stating the obvious here to everyone — is the digital and the e-commerce growth. We've accelerated in the last nine months, 10 years of e-commerce. And you can read into that, what that means to companies as they're trying to be more consumer focused and what things they need to do in that digital space. There's lots of changes that I can talk about in terms of supply chain and manufacturing, etc., in the core business, but for sure, e-commerce is one big area and direct to consumer big areas, as companies are thinking differently about their business in the context of what consumers are expecting now. Milevskaja: David, makes perfect sense, I think the audience here and Felipe will agree with you, as well. That's the scene we're seeing across VTEX customers, even though we feel that they're really not prepare to handle the pandemic, we've seen a tremendous growth across many of our customers. So with that, Felipe, I'm going to come back to you. I know that in order to really keep up with the changing expectations that consumers have and really be top of mind for customers, you're going to innovate, and I know you're heading up innovation labs at Cobasi. Could you please share what you encounter during the innovation process? What was it like? Not only in the past nine months, but ever since you stepped into this role and embraced the innovation. Tamburus: All right, sure. Actually, the most challenging thing is change the company's mindset because we are, as I said, we are a traditional company going through a transformation. So all we do, we're basing on established method and on established way to do the things. And nowadays we have to change everything, we change how we invest, how you decide to invest one thing, set up for other things. So, the biggest challenge was, change this mindset. And during this process, we decided to start very small, running as more experiments and try to learn from that. And I think is the most brilliant thing that we can do is learn from the small things, and show the company the value of that. So when we started Cobasi like this, we got one problem to solve, you get as little employees on that product. We started to work the problem with the customer, and find solutions for their problems and show the company they're aware of that. We started very small, and with very little investment and it was painful. So, when we run through this transformation process, we have to make sure that we know that not everything is going to be easy, but we have to keep learning and increase the bigger of the challenges. And also, one of the biggest... I think the second big challenge that we have here is to build a very good team, and when I say a very good team, is not good people that have experience with some product or some technology. But, start of that, we are looking for people who want to learn with us, that's the most important thing that you use when we hire people to our team. Understand that there is a mindset changing in progress, and we have to build teams, people want that, willing to learn with us, those things. Milevskaja: Right, it doesn't sound easy. Not only do you need to have a team within a company, that's something really challenging, and at the same time, there's room to fail, and there has to be a culture that accepts failure and it's never easy. But, it sounds like it's really paid off for Cobasi and you guys are tackling really new, innovative projects for the company. Was this the team that handled curbside pick up, managing that? I know that you were one of the first ones in Brazil to implement the solution? Tamburus: Was that team that build and implemented that solution, I used to say that innovation is the process to fail until success, so we have to embrace the failures. And if you don't fail, we're not success. If you're not able to fail today, you are going to fail some point in the future. So it's better to fail small here, and learn from that, and fail here and start off fellow entire businesses in the future. Because now other companies working like that, we need to transform Cobasi as well with... based on that, when the pandemic had started, we didn't close our stores here, because we sell essential products and the laws here in Brazil allowed us to be open. So, it was a very good thing to us, but the customer was not willing to leave homes. So they were afraid to leave but they need to buy that supply, the pet food or something. And in lasting three days, we looked at that, we understood the problem because the customers was needing to buy, but didn't want to leave home. So we, in less than three days, we have implemented the curbside pick up. Based on the VTEX APIs, we could implement very fast, hold on production, learn from that, receive feedbacks. We have implemented API surveys, receive the feedbacks. And in one month, the product was stable and running in all of our stores, this is the way we think it's the better way to go, to transform the whole organization. Milevskaja: Thank you for sharing that experience Felipe, I'm sure there's a lot of stress today to take on a risk when it comes to technology, or making like a big decision that will have an impact on the business, it is challenging. So David, maybe I'll come to you now. Could you share a little bit of your perspective and insights on building a winning digital strategy? Is it starting an innovation lab, a team, or it's just making a decision and running with it? We'd love to hear it from you. David Ahuja: If I can comment just one quick thing on innovation, what Felipe said, because I think it's... he said it very quickly, but the last nine months and the innovation transformation that's happened in CPG is pretty drastic and good. I mean, he just described the ability to do quick APIs and try something quickly. I would submit that last year, the ability to do that kind of piloting and testing in innovation required a ton of decision-making. We've got something at Amazon that we call the one-way door and the two-way door, when you're making a decision in areas of like innovation. If you're going through a one-way door, you better think really hard about your decision because you can't come back. If you're going through a two-way door, we make decisions fast and that's how we innovate with speed because we have the systems designed around us to allow that, like can go in and out if something doesn't work. What we've seen is innovation that's happened in the last, and it may not sound like the big innovation that we're used to talking about. The companies have done a ton of innovative things at speed of forecasting, changing completely away from forecasting as an example. And that's all driven by necessity and need. New product, I've been amazed, new products, speed, the market, et cetera. So, just want to say, I think that sort of innovation, culture of innovation and the flexibility and openness of risk-taking has been huge. Ana, to your question on the way I think of... first of all, I think every company, CPG company for sure has a digital presence, a digital strategy. So the question really is, how do you go from where you're at to really a transformational digital strategy that's customer centric? That's a little bit of a different thing in terms of how you design that. And it just depends on where you're at in your journey to make that leap to the next level, right? And that requires, I think, couple things, one people. And Felipe, you touched on this, you have to have the right talent. And that's not something you just in a crisis go higher, right? You have to build that. And so some companies have had that and they've got the right mindset to really drive digital. Some companies are doing that now, right? The platform, the technology, the ability to do again, Felipe, you paused past it saying we connected to these APIs. You don't just do that, right? You have to have the right platforms in your ecosystem, the right technology to enable you to do that. I'm a little bit bias obviously on cloud, but I guarantee you, you will see a lot more companies if they haven't been more open or risk-taking to that, we'll look at that as platform for, how do I do that? What are my solutions or running in that environment that allows for me to make decisions and do things faster? Consumers are changing fast. And so to have a digital strategy that's customer-consumer centric, you have to be very well connected to the consumer, so that when he or she changes trends, right? That you know what, I'll give you just a quick example of... there's a product that I track that's a haircare product, number one seller on Amazon, it's a very tiny brand but it uses, it benefited or leveraged the Apple cider vinegar trend. I didn't know about an Apple cider vinegar trend. But, if you're not paying attention to it, and catching that, and switching, and making the switch from vitamins to haircare products, and became number one, because they did it fast, because they did it with a completely different marketing strategy with consumers, that was different. And if one data point, if you look at the number of reviews in the thousands versus in the hundreds, that's customer centric, that's a digital strategy. It allows you to pivot and make decisions, quickly and be able to adapt to what's changing. The changes are going to continue, COVID just caught our attention, this is not new, we've been on this journey of change in CPG for five, 10 years. This just got our attention, now what do we do? So anyway, hopefully that gets to what you're asking me Ana. Milevskaja: Yes, absolutely. So Felipe, could you touch base on systems and technologies and what it's like to set up an architecture that's really future proof, and allows you to pivot, and make those changes and test new initiatives? Could you share your insights and expertise on this topic? Tamburus: For sure. Actually, we have a microservices architecture …. we are building our own microservices here and using a lot VTEX platform as well, so these two products or two things combining with each other is helping us to make rapid development and rapid implementation of things, because we connect to the parts, the microservices, and we have things done much faster than if we had a monalytic, or something like that, or all the architecture. We’re running on cloud, we have VTEX by the side and we combine those things, those microservices to implement that, that's the base of our technology and of course, the cloud is giving us a lot of possibilities to scale and something like that. But also, a very good stack, combine it with a very good team and have a good culture, makes us to go to market very quickly. Milevskaja: Thank you for exploring VTEX for your business. We are really thrilled that you're able to do well during the pandemic. If you were to give advice to someone going for digital transformation right now, being challenged, even if they're thriving, what advice would you give to business leaders today in your seat and trying to figure out how to put customer at the center of everything they do? Tamburus: It's nice because, when you talk about customer centricity, we maybe think about something complex, but the technologies are becoming easier to implement, the culture is something that we can do very slowly, very cheaper. I would say to anyone that asks me, if you make a call to one customer, there you have a lot of feedback, you don't need a very complex strategy to gather customer feedback. There is a lot of tools that are free on internet, to make the EDPR surveys. And you just need you to start doing that. If I could give some advice to someone, start right now. Stop doing: "Next year, we have to be more customer centric, we have to start to listen them." Start. Get out, go to your physical stores, talk to the customer or make a phone call to them. It's wonderful that, when you talk to a customer and you receive a very good feedback when you receive something that you need to improve, to understand their problems. Right now we are working here, but we forget, we make a lot of the assumptions that's not really true about the problem of the customer. So, if you make a call, you understand the real problem and then bring the problem to the table, and discuss with colleagues and your partners how to solve the problem. Maybe, sometimes we start to review to very good solutions and forget to understand that the real problem, that is the solution there, but no one is using that. So, my main advice here is start very cheap. Start right now. Don't let it hit tomorrow — do it right now. Pick up your phone and make one call, two calls a day, and you're going to see a lot of things happening. Milevskaja: Makes perfect sense, Felipe. Thank you for that. David, you've got nearly three decades of transformation experience within large and small organizations; could you give your advice what someone would do today to survive and thrive in the midst of pandemic? Ahuja: Yeah, I think where you began with the consumer at the center is really important. Again and CPG, they're the ones that were serving and designing for. So, I like to think of it in the context of the consumer journey, know what he or she experiences across our digital presence. And think of that in the journey of marketing terms, they'll talk about zero moment of truth or first moment of truth, which is that first stage where the consumer is exploring my product that may be research, looking at reviews, what is your strategy around that? How are you connecting with the consumers and enabling them to get to introduce them know your brand? What's your brand story, right? So, that's sort of one area that's super important. The second moment of truth, is when that consumer is on your e-commerce platform and they're close to buy, right? You always say, "Consumers don't like..." And we can put on our own hat and assesses. We don't like to run into any kind of problems. So, I will drop, leave a basket. And I've just done that multiple times just this week, because of something that I experienced in that state. So you really need to make sure it's seamless, it's flawless, right? And the ability to test, experiment and do things in that e-commerce stage. That second moment of truth is super important. Clearly, VTEX is an enabler in that space, but create the transaction experience for the consumer in the right way. And then the third, which is this third moment of truth is, usage and loyalty, right? When that consumer then gets the product, did it show up on time? What was the packaging like? Obviously the product itself, what was my experience? Did it taste? Did it smell the way I expected it? And then what's the follow-up, right? Do you have some...? Again, your strategy around, how do I connect with that consumer? Because there's a feedback loop that's super important back into your R&D organization say, especially if you're testing new product, we are seeing an incredible increase in new-to-the-world products. And partly because of speed of innovation, the capabilities and technology that's available now, that I can put things out there, right? So you want to know? How did that work? And so, thinking through your strategy across those three elements is super important because that's the consumer journey, that's how a consumer, that's how you and I shop, and what we expect from an experience. So, if you don't have that figured out and have your strategy aligned around that, and again, obviously we can talk, people, and processes, and technology, and things like that, super important. And having the right platform, goes without saying, right? VTEX and again Felipe buzzed through this and being able to quickly do testing and experiment. Sure, that's not easy to do, as you all know. And kudos to VTEX. VTEX, if folks don't know, is built on the same design as Amazon.com microservices and API interfaces, that sounds like just a little, a hand-wavy kind of comment, it's not, it allows for you to change and run thousands of changes on short time period on your platform, right? That's not typical. So, being able to have that ability to iterate, I just think that's going to be table stakes and an expected requirement for companies to be able to do what I just described across the consumer journey, because it will continue to change. Things will happen in the marketplace, that if you don't have a signal to pick up on, some consumer complaint or comments that's starting to increase, you're going to miss the boat and you're going to be in trouble. So, design it in a way that you truly take advantage of digital, real-time, fast interactions, speed, and create that closed loop in your consumer journey. Milevskaja: David, I can't agree more and thank you for the shout out about the VTEX platform. With that, I'd like to open up the floor to Q&A, and Tim, I'm going to pass it to you to take over from here. Felipe, thank you again for sharing all your insights and experience. Denman: Hey guys, great presentation. I will ask a few questions that we got here. We're all hearing about the second wave of COVID and it's obviously happening. Numbers are peaking. Retailers and CG-ers had a bit of a hard time back in March and April. There was obviously a lot of inventory issues, and I think we all know why, and we've pinpointed the reasons, but the real question is — and maybe we do know how to prevent it — but have we put the steps in place? Do you think the steps are in place now that if we do have this mad rush of panic buying again, are we prepared? Ahuja: I can just jump in because it's a great question and a question that obviously we're asking as a company, where do we need to systemically implement changes, help companies implement changes. What has happened Tim, I'll just use one area, forecasting. What used to happen in six months, they've had to accelerate the monthly forecast, what happened in monthly, happened in weekly and daily, right? And I would submit that, a lot of companies are telling us they're doing the demand sensing, so we're not even doing forecasting anymore; we're getting more data from retailers, more reading and seeing what consumers are buying at the retail levels. Pretty much across the board, they're telling us, and that's more accurate to what we've been doing for the last 20 years, how do we turn that into a normal or a standard way of doing things, right? And that's across the board, I think there's a lot of really, as I said, innovation, that came out of this. How you make it stick, is when I would tell you... first of all, I don't think all companies have figured that out on things like forecasting and demand sensing. They're working to make that more systemic, for sure. Someone told me that they were able to do a new product launch in a CPG company in one to two months during COVID — blows my mind. It's typically what? 12 to 18 months, right? They didn't know how to keep that, right? That was forced and driven by a central product in a specific need, but I guarantee you, they're going to look at the components that worked, that allowed that to shorten up that new product life cycles. So, what I'm saying Tim is, they're better prepared for wave two, but there's a lot of work to make it systemic, and to put the platforms in place for it to stay long-term. Denman: David, you mentioned a key point note, stickiness. And we do have one question here for Felipe about stickiness. Obviously, you guys moved quickly, you implemented this buy-online-pickup-in-store. Are you forecasting that this is going to be something that's going to be popular beyond the pandemic? And I guess one way to judge it would be, how did you guys trend with those orders when COVID numbers dipped? When COVID numbers dipped, did you see that buy-online-pickup-in-store dip, or did it stay steady? Tamburus: Actually, before the pandemic we already have pick-up in stores; during the pandemic we implemented the curbside pickup, and it's still at the same level before the pandemic, during the pandemic, the pickup, but the curbside is going down, because we have a beautiful and big stores here in Brazil. So people like to go. We call our stores like the shopping mall of your pet. So, you have a lot of spaces, so people starting to getting off the car and getting in the store. So, I don't see the product that we made to be forever, just to some people that are in a hurry or something like that. But the pickup-in-store is something very flat, it's still growing, because the customer can grab the products as soon as possible, in 45 minutes it's ready to pick up. Denman: David, we have a question directed towards you. It says, in working with CPG companies, what are some of the challenges in helping companies identify and leverage the right platform and technologies for their organization? Ahuja: I always say it depends, It begins with the problem, right? The approach that we use at Amazon is, begin with the customer web back page, right? So, what is the problem? We never come in with, "Here's the platform." That platform could very well be something bespoke that we need to build, because it's a new innovation idea that is required that doesn't exist, or it could be... we have a very large set of partners that we go, "We've done this, thousands of times with this company. And here's how you might go, go do that." Or it's a combination, right? We're working on solving this by partnering with this partner. There's a component of it to solve your specific business problem. That requires, again, some professional services, some bespoke solutioning around it. Just, there is no prescriptive solution or platform that, "Here's what I recommend the CPG." I would tell you the way I think of it, I've got a framework I call, Make, Move, Market. How do you help them make stuff which is in the manufacturing space? How do you help them move stuff which is in the supply chain space? And how do you help them market which is in the media and consumer space? So, there're more, I'll say, relevant partners and relevant solutions we have in each one of those, but it's still driven by the problem. Denman: Got you, thank you. Those are the end of the questions that were submitted. Ana, Felipe and David, thank you for taking the time. I really appreciate it.

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