Transforming Retail: The Impact of Technology, Crises, and Consumer Expectations

Ever wondered how the retail industry has evolved in response to technological advancements and global crises? Join us as we explore these seismic shifts with Professors Travis Tokar from TCU and Henry Jin from Miami University of Ohio. Discover how the leap from 3G to 4G and the proliferation of smartphones have reshaped consumer expectations and driven traditional retailers to adopt omnichannel strategies initially pioneered by e-commerce giants like Amazon. Learn about the behind-the-scenes efforts required to make these omnichannel experiences seamless and efficient for today's discerning shoppers.

The pandemic has redefined retail distribution, pushing brick-and-mortar stores to innovate and embrace omni-channel models. Our guests discuss the surge in demand for rapid delivery, which has led to a boom in warehouse construction. Understand how the "Amazon effect" has set new standards for delivery expectations and how inflation and rising interest rates are impacting current spending trends. We also shed light on the competitive strategies employed by companies like Amazon and Timu, and how these moves are transforming consumer behavior and shipping preferences.

Finally, get an insider's look into the intricacies of retailer return policies and the challenges of managing returns without alienating customers. Explore the concept of omni-segment retailing, which focuses on personalized and sustainable approaches to meet diverse consumer needs. From real-time order tracking to integrated supply chain management, we cover it all, providing valuable insights into the interconnected world of retail operations. Tune in for a thought-provoking discussion that promises to enrich your understanding of the ever-evolving retail landscape.

Episode Transcript

Dr. Matt Waller (00:10):
Welcome to the Matt Waller podcast, where we
look at success at theintersection of technology,
logistics, supply chain, retailand CPG, also known as the
retail value chain.
I want to clarify that thispodcast is distinct from my
responsibilities as a professorin the Sam M Walton College of
Business.
Nonetheless, it aligns with myaspiration to provide practical

(00:31):
insights to professionals andbusiness by showcasing companies
and people that can enhanceyour ability to manage, lead and
strategize and marketeffectively in the retail value
chain.
Before we dive into today'sexciting episode, I'd like to
thank our sponsor, new RoadCapital Partners.
New Road invests in proventechnologies, services and

(00:53):
products that serve unmet needsin the marketplace.
They look for companies insupply chain and logistics, as
well as consumer-orientedcompanies.
For more information, go tonewroadcpcom.
I would also like to disclosethat I am a strategic advisor to
New Road.
I'd also like to recognizepodcastvideoscom for the

(01:18):
services they provide for thesepodcasts.
I'm very pleased with theirservices and now, without
further ado, let's get into theexciting episode.
I have with me today twoprofessors and we're talking
about Omnichannel.
We're talking about Omnichannelfrom a macroeconomic
perspective, from theperspective of supply chain

(01:39):
management, merchandising,operations and even marketing,
because all of these areintegrated.
The professors I have with metoday include Travis Tokar, who
started his career as a facultymember at Ohio State and he's
been at TCU for over a decadenow.

(02:00):
And I also have with me todayHenry Jin, who is at Miami
University of Ohio.
Both of these professors havedone extensive research on
supply chain management andrecently, in the past few years,
on Omnichannel.
So today we're going to betalking about Omnichannel.

(02:22):
I really encourage you.
If you're an investor intechnology that somehow affects
retail or consumer products orOmnichannel in general, you
should listen to this.
If you are maybe a practitionerworking for a retailer or a
consumer products company oreven a carrier, you might want

(02:45):
to listen to this as well.
We start out talking aboutphenomena associated with the
macroeconomic condition and howthat has affected e-commerce and
how e-commerce has affected themacroeconomic situation.
I think you'll find that quiteinteresting.

(03:06):
We also go into a cleardescription of what omnichannel
actually is, and we even talkabout maybe what the competitive
advantage, the levers ofcompetitive advantage, for
omnichannel retailers andsuppliers to the omni-channel

(03:27):
space are.
So I think you'll find thisvery interesting.
Enjoy, travis and Henry.
Thank you so much for joining metoday to talk about
omni-channel Absolutely Glad tobe here.
Thanks for having me.
I wanted to start out withtalking about the popularity of
Omnichannel, and here is a graphof Google searches from the

(03:54):
year 2004 to present so 20 yearsand it shows the relative
number of Google searches overthe years.
So the bottom of the axis isthe vertical axis is zero, the
top is 100.
And you can see it really tookoff around 2012.

(04:14):
And kind of it looks like itmight be leveling out, but it's
hard to know for sure.
So I'd like to start out withfirst of all just what do you
all think drove this interest inOmnichannel?

Henry Jin (04:52):
Omnichannel really became more popular right when
broadband became a lot moreaccessible and people, and also
smartphones, became a lot moreaccessible.
I think that was also when wewere on the verge of
transitioning from 3G to 4G.
So mobile devices, availabilityof laptops, just all of these
technologies converged and, ofcourse, amazon also became
really popular and a lot ofretailers started to think how

(05:12):
can we defend against thisbehemoth of an e-commerce
retailer?
And they thought you know what?
Maybe we can leverage ourphysical locations to fight back
.
And so then they decided tostart offering both brick and
mortar and online retailservices alongside each other.

Travis Tokar (05:37):
Yeah, I think Henry really nails it.
Technological advancements,changes in consumer preferences
and expectations is that peoplehave just gotten more and more
used to the convenience ofordering something from a device
and having it show up at theirhouse, as opposed to getting in
a car and going somewhere to getit.
It's just grown and grown andgrown over the years.

(06:01):
Of course, we all know, duringCOVID, the spike that occurred
in e-commerce, and then we'vejust seen a lot of investment
from retailers making thissomething that's just very easy
to do, and all of this, I think,has contributed to the growth.

Dr. Matt Waller (06:19):
Well, you know, of course the three of us have
done extensive literaturereviews on this topic and of
course we've also talked to alot of practitioners.
But you know, it's clear thatcompetition has also been one of
the key drivers of what's goingon.
There is so much going onbehind the scenes to make it

(06:51):
more effective, to make it lesscostly, more efficient and
productive, and you know,consumers of course don't really
see that.
But there's so much going onbehind the scenes.

Travis Tokar (07:02):
And most of that's driven by competition.
At this point it seems like,yeah, I should point out, matt,
when I said a second ago thatit's become so easy, I was
absolutely speaking from aconsumer perspective.
It's clear from just what we'veseen in the literature and what
we don't even know, the half ofas academics as opposed to
practitioners, is that there's awhole lot of work that's gone
into this over the years andindustry to make it so easy for

(07:23):
us as consumers to enjoy this Iwas just gonna say, you know,
thinking back, uh, back around2012, I was using an iphone 4.

Henry Jin (07:34):
It was one of one of the earlier models of iphone
that supported 3g because, ifyou guys remember, the very
first iphone did not evensupport 3G, and so the only time
you were able to do anythingwith the very first iPhone was
being connected to Wi-Fi and, ofcourse, around 2010 was really

(07:59):
when people were able to useiPhones with high-speed access
to use iPhones with high-speedaccess.

Dr. Matt Waller (08:06):
Okay, here is a US Census Bureau graph that
shows e-commerce retail sales asa percentage of total sales,
going back about 10 years or so,you know, about 10 years or so.
And then on the vertical axiswe have the percent percentage

(08:33):
of sales that e-commercerepresents.
Henry, what do you get fromthis?

Henry Jin (08:39):
So what you really see is just a picture of steady
growth right Going back to 2014and on.
You see a clear upwardtrajectory where the percent of
e-commerce retail salesincreased from roughly about 6%
up to close to 12%, until COVIDhit, which, of course,

(09:05):
everything shut down, storeswere closed, social distancing
and people were afraid of goingout, and that is when you see
the huge spike in terms ofpercentage.
Where we reached.
A portion of this is onlineorders made for in-home delivery

(09:33):
, and so, whereas so?
In-home delivery from brick andmortar stores.
So, whereas the traditionale-commerce that we think of is
somebody going on the website orusing their app to make a
purchase and then FedEx, ups,usps will deliver home, but that
particular spike included theInstacarts, the Shipt, the

(09:59):
DoorDash, a home delivery frombrick and mortar stores, right,
and there you see thatprecipitants drop, and now it
seems like we're back to ourlong-term trend and sitting
right around a hair below 16%.

Dr. Matt Waller (10:16):
Isn't that interesting.
Yeah, if you look at this andyou consider a line, it is like
it has gone back to thelong-term trend.
Travis, does that surprise you?

Travis Tokar (10:30):
It kind of does actually Just that something
would revert to an existingtrajectory like that almost so
perfectly.
I'm very curious what we'regoing to see here in the years
to come.
I mentioned earlier just howthe consumer becomes more and
more accustomed to shoppingcertain ways and also so much

(10:52):
innovation took place duringthat COVID period to the grocery
store and having the you know,you purchase on your smartphone
and you have it brought out toyour vehicle.
We're seeing other things.
I mean, we hear a lot aboutdrones and I think those are
being implemented in variousplaces that we've yet to see

(11:14):
that come into its fullcapability or use.
I just wonder if we're going tocontinue to see a linear
trajectory to this pattern or ifwe're going to see another
spike, an exponential curve,like we did during COVID, just
as we hit a tipping point withregard to the technology and
innovation that's implemented.

Dr. Matt Waller (11:34):
It's a good point.
Yeah, you know, I've evenwondered, looking at this, would
this have even?
I mean, obviously we're back tothis long-term trend but I
wonder if that would havehappened or if it would have
even decreased the slope alittle bit temporarily, but it's

(11:57):
hard to tell.
I mean, if you look at it, itlooks like the slope was
starting to pick up even beforeCOVID hit, and I know you know,

(12:18):
for example, buy online pick upat store, has you know?
They've been experimented withfor years, for several years.
But boy, during COVID it reallyspiked and it seemed to me that
the retailers were competing tosome degree on their ability to
ramp up capacity in that regard.

Henry Jin (12:35):
You know, I think one of the underappreciated aspects
of what happened during thepandemic was that it was really
a forced environment forretailers to basically adapt or
die right.
You need the revenue, you needthe cash flow, so you better
figure out ways to sell toconsumers.

(12:58):
And it's this forced evolutionthat basically forced retailers
to experiment with differentways of omni-channel retailing.
Or else online retailers weregoing to eat their lunch because
, you know, right around thattime you were seeing the rise of
these like grocery or meal kitsubscription services.

(13:22):
And for a while retailers had noidea how do we fight back.
And when the pandemic hit,people can no longer shop in
stores.
They really had to figure outhow can we continue to serve the
customers who otherwise wouldhave come into the store.
And as they figured out how toserve the customers, I think the

(13:44):
fact that we reverted back to along-term trend kind of shows
that a lot of brick-and-mortarretailers did figure it out.
And they're figuring out insuch a way that it is kind of
balancing the need fore-commerce along with being able
to entice consumers to keepcoming into the store to, if not

(14:05):
reverse the trend altogether,at least go back to the
long-term trend from before.

Dr. Matt Waller (14:13):
You know, one other thing that changed, of
course, during COVID a lot ofrestaurants started providing
outdoor seating, you know, andcities changed rules to allow
for that as well.
I prefer to eat outside,regardless of the temperature,

(14:37):
and so I'm grateful for thatchange.
You know, there clearly were alot of, I guess, innovations in
how services, and retail inparticular, were delivered
through COVID, through COVID.

(15:04):
So this next chart again coversabout the same time frame, but
you'll see here that the blueline represents the producer
price index by industry, andthis is new warehouse building
construction.
That's the left-hand column,it's an index, and then the

(15:32):
vertical axis on the right sideis e-commerce retail sales as a
percentage of total, which iswhat we were just looking at.
So the red line is now blue,it's the same thing we just
talked about, and what's beenadded in here is the producer
price index for new warehousebuilding construction.
So, henry, would you mindspeaking to this a little bit?

Henry Jin (15:54):
Yeah, so, henry would you mind speaking to this a
little bit?
Yeah, so what's the mostfascinating thing with this
graph is earlier in the previousslide, we kind of discussed how
brick and mortar retailers arefighting back.
What we see with the newwarehouse construction is how
online retailers are fightingback against the brick and
mortar retailers, because onlineretailers they may not

(16:15):
necessarily have the physicalfacilities, the physical
storefronts, and so, asomni-channel retailing continued
to take off, as consumer habitsstarted to change, they expect
a much more rapid fulfillmentspeed, and so we basically went

(16:36):
on this building boom forwarehouse space.
And I remember during thattimeframe I was talking to some
3PLs, some warehousing companies, and they said that warehousing
lease costs were through theroof and any warehouse space
close to the city is just notgoing to be able to justify most
of their shipment needs.

(16:58):
And so you have all these newwarehouses being built, in part
because online retailers orwarehouse service providers
they're trying to be locatedcloser to the customers so that
customers don't revert to theprevious habit of brick and

(17:20):
mortar shopping and try to get apiece of that omni-channel
retailing pie.

Travis Tokar (17:26):
Yeah, I'd say the Amazon effect is probably a big
piece of this.
To Henry's point, the standardin terms of what the consumer
expects for delivery lead timeshas been going down and down.
Well, the standard has beenincreasing in the mind of the
consumer.
The lead time has beendecreasing in terms of what the
consumer expects or demands, andso, to be able to keep up,

(17:51):
we've gone from where you know,years ago a four or five day
delivery time was really fast,to you know, within it was two
day, then it's one day and nowit's same day.
I mean, I just the other nightwas on my you know forget what
it was I needed, but it waspretty late in the evening.
With the click of a button itwas at my doorstep at 4 am, I

(18:13):
mean within hours, and I knowI'd live in a major metro or
pretty close to one.
So I know it's not quite thatextreme in all parts of the
country, but it's getting thereand I think this graph kind of
speaks to that.
To achieve that, they've had toput facilities in a lot of
different places, and so, yeah,I think that the competition is

(18:34):
driving this tremendously.

Dr. Matt Waller (18:36):
If you look how steep that blue line is
starting just before 2022, it isabsolutely unheard of how steep
that is and then it clearlylevels off.
I don't know to what degreethat leveling off is a factor is
affected by the interest ratesright, and maybe even just

(19:01):
capacity for building.
I don't know.

Travis Tokar (19:04):
Yeah, just economic conditions in general.
You know, if people aren'tbuying as much, then well, of
course the existing capacity issufficient, but so that might be
a piece of it as well.
I guess time will tell.

Dr. Matt Waller (19:18):
Well, you know, with inflation that's a good
point, travis, because withinflation consumers are spending
less on general merchandise.
They're still spending ongroceries because they have to,
but they're spending less ongeneral merchandise and a lot of

(19:38):
these e-tailers are sellinggeneral merchandise.
So I wonder it could be both ofthose factoring into it.

Henry Jin (19:48):
Well, I remember, obviously towards the end of the
year there were more and morearticles were coming out saying
that consumers are, they'rebasically run out of the
pandemic savings and, coupledwith the increased interest rate
, it becomes a price here toservice debt.
And I think a lot of it has todo to your point, guys.

(20:09):
Is the rising interest rateconsumers tapping out?
And, depending on who you ask,we've been also in a freight
recession and so lower inventory, lower freight needs translate
into less warehouse needs.
So I guess we'll see.

Travis Tokar (20:25):
Yeah, I saw an article it must have been a week
or two ago now about all theempty warehouse space in China,
so I think there was a boomthere, much like we're seeing
this graph here, in terms offacilities that were built and
handle demand for consumer goodsand talking a lot about these.

(20:45):
Places are vacant at the momentand you know what's that mean
for those who invested or builtthese, and so it's interesting
to see, yeah, what we observehere the years to come.

Dr. Matt Waller (20:57):
I also wonder about the location.
You know there's this migration.
You know, if you look at whenall this was being done, the
migration was starting to occurand I don't know how significant
it is in terms of numbers, butfrom what I've seen I think it's

(21:18):
pretty significant, like peoplemoving from New York and
Chicago and California to placeslike Texas and Florida, florida
in particular.
I've seen some graphs of it'sjust mind-boggling how many
people are moving to Florida.

Henry Jin (21:38):
Oh yeah, if you look at the price of shipping stuff
out of California, I mean, thecost of shipping stuff out of
California is more than fourtimes the price of shipping into
California, because companieswere trying to get their
equipment back to California sothey were willing to even take a
loss just to get theirequipment back to california.
So they were willing to eventake a loss just to get their

(21:58):
equipment back.
So, and they'll just make themake the money back on the
outbound freight.
But you know, of course I don'tknow with california and
they're uh with the new emissionstandard or their new
initiative for, uh, electrictrucks, uh, who knows well,
that's true.

Dr. Matt Waller (22:12):
I mean because California has some rule now
that says that any incrementalcapacity, transportation
capacity, trucks going intoports or intermodal facilities
have to be alternative energysources that would primarily be
electric and at the same timeprimarily be electric and at the

(22:41):
same time their electric gridis way under capacity.
So, yeah, I wonder how that'sgoing to affect things.
Well, moving on to the nextslide, here you see again.
The red line is what we talkedabout on the first slide, the
blue line is what we just talkedabout, and now the green line

(23:13):
is the inbound price index forintermodal services,
specifically air freight.

Henry Jin (23:16):
So, henry, what do you make of this?
So the most obvious thing is,if you look at the spike and the
fall in air freight, the fallin air freight really coincided
with the meteoric rise of Temuright, which, of course, if you
are familiar with what Temuright which, of course, if you

(23:36):
are familiar with what Temu does.
And Travis to your pointearlier about all the empty
warehouses in China.
I mean, there are so many emptywarehouses in China that a
company like Temu can basicallyget them warehouse space on the
cheap.
Now, if you see the falling airfreight price, that they're

(23:57):
able to take advantage of cheapair shipping, and so cheap
warehouse space plus cheap airfreight shipping plus cheap
supplier translates into one ofthe best disinflationary forces,
that is, temu, that they'reable to offer.
Basically something you wouldfind on Amazon for like 12 bucks

(24:18):
.
Temu can sell it for like twoand still make money on it.
It's mind boggling.

Travis Tokar (24:23):
Yeah, I have not been keeping up with air freight
, so this is actually prettyinteresting to me to see it, and
what Henry just kind of laidout in terms of the story makes
a lot of sense.
I actually asked my students inclass uh, last semester again,
I'm a little slow on some of thethis, the uh, these, these
retailers I guess it was aboutfall last year I'd heard of uh

(24:47):
Shannon T move for the firsttime and some articles that
asked my students about it andthey're like, oh yeah, this is,
this is awesome.
So to Henry's point things thatyou may have paid X for on
Amazon, you're now paying somefraction of that if you're
willing to wait a little bitlonger.
Now, the air freight I'm surehelps keep those lead times

(25:08):
competitive.
I was told that the lead timescould be between a week to two
weeks or more in some cases, andso if airight's cheap, I'm sure
that really does help theirbusiness model.
To me it raises interestingquestions and I'm not trying to
go off on tangents here, but myown interest is always in
individual consumerdecision-making and how people

(25:31):
think, and so it just raisesinteresting questions in my mind
about how people truly do valuelead time when it comes to
purchase decisions.
You know we all talk about wementioned earlier the Amazon
effect and the push towardsfaster and faster and faster,
but what the success of Timu hasshown is that people could be

(25:52):
okay with slower lead timesunder certain circumstances, and
so understanding that, I think,think, is really important for
retailers.
And I mean as a researcher, Ithink it's fascinating.

Henry Jin (26:02):
Although, if you think about Timu's slogan, shop
like a billionaire right Doesn'tit imply that billionaires are
willing to wait?
I don't think I know of anybillionaire that's willing to
wait.

Dr. Matt Waller (26:13):
Yeah, that's a good point, travis.
I'm glad you brought in theconsumer decision-making into
this, and I just think that thisis an unusual situation and I

(26:33):
wonder what would happen.
So, timo, you're right, henry,what a great point.
It's like a lot of macrofactors helped facilitate that.
And then there's the issueabout consumer behavior that
Travis brought up, how consumersare willing to wait, how long

(26:57):
they're willing to wait MaybeTravis too, I wonder.
Given that consumers now havesmaller budgets to work with
because of inflation and becauseof the interest rate, I wonder
if they're willing to wait morebecause of that.
What do you think?

Travis Tokar (27:18):
Yeah, it's a fair question For a discount.
The evidence that Timu providesus suggests that.
Yeah, absolutely.
The question is how deep doesthat discount need to be?
Does it only pertain to certaintypes of products or certain
purchase circumstances, right?

(27:40):
So, for example, if I'mshopping for some random gadget
or gizmo that maybe just for funor out of interest, no big deal
If it takes a week to get to meI didn't really need it that
bad anyway.
But for other types of products, or a gift, or maybe something
related to health, as opposed tojust consumption, maybe

(28:03):
consumers have a different setof preferences or they'll
tolerate, and maybe they won'tbe so accepting of these longer
lead times, even at a discount.
So I think there's someinteresting questions.
There's probably retailers outthere that already know the
answer to this, right.
They're always doinginteresting things and they have
all the data in the world towork with and academia.
We're always at the mercy ofwhat we can get our hands on.

(28:26):
But these are some questionsthat I have a lot of interest in
, right now.

Henry Jin (28:31):
Now, travis, I like that you mentioned how retailers
have access to data, because ifyou look at what Amazon has
been doing over the last fewyears, when you check out, they
oftentimes allow you to choose aslower shipping option.
Yeah, and in exchange, theywould previously give you
digital product credits andlately they've been giving you,

(28:54):
like additional percentage cashback if you're using amazon
credit card.
I suspect that amazon alreadyhas some idea in terms of what
is the demand elasticity or towhat extent are people willing
to wait in exchange for somekind of financial incentive?
And yeah, absolutely yeah.
I'm not sure if you guys sawthat, uh, amazon actually made

(29:15):
the announcement to a bunch ofchinese suppliers to say that,
hey, we're basically going toopen up the discount storefront,
just like Temu, where you guyscan sell directly and ship
directly.
So you know, amazon's followingTemu's footsteps by basically
doing the same thing becausethere is a market for the pair.
Basically doing the same thingbecause there is a market for
the pair.

Travis Tokar (29:36):
Yeah, I saw that as well, and it just goes to
show that Amazon's taking thisseriously.
So, while you were pointing outa minute ago, henry, that
there's some macro level factorsthat have really contributed to
the rise, that, if thosefactors weren't in place, may
not allow Tmoo to do what theydo, it looks like Amazon must be
forecasting that they'll beable to continue to do what

(29:57):
they're doing, at least for alittle while, because they're
investing in ways to compete.
So I found that interesting.

Dr. Matt Waller (30:05):
This is so amazing when you think about
again.
Competition's driving all thisand the main beneficiaries are
clearly the consumers.
And the main beneficiaries areclearly the consumers.
I mean, people are making a lotof money in the process, but
consumers are benefiting fromall of this competition
Absolutely.

(30:25):
And I noticed Travis.
I'd like to ask you, sincewe're talking about this, if you
are ordering something atcertain online retailers,
sometimes they'll say, look, ifyou wait a couple of you can.
Basically, if I'm orderingthree things and I wait and I

(30:49):
order them on the same deliverydate, it'll say that you know,
it'll combine, it'll have lesspackaging, and so forth.
I don't know how much people dothat, but I've done it.

Travis Tokar (31:03):
Yeah, absolutely so.
So Henry mentioned a little bitago that they'll offer
discounts.
In the past, amazon's offeredlike a free digital download
If'll bundle your purchases toone particular day of the week
for delivery.
And yeah, sometimes I've doneit too, usually out of a guilty

(31:25):
conscience in some form, I guessyou could call it.
Other times, you know, I justwant what I want and I want it
right now.
I had a chance to work on aproject actually very recently
with Rod Thomas, who's there atthe University of Arkansas, and
Rod had a really interestingidea.
He's published on this topic, Ithink, in some other areas, but

(31:45):
what he was interested in andwe started talking about was
using incentives of variousforms to get people to not
necessarily accept a longer leadtime.
I think he'd looked at that insome previous work, but what we
were interested in recently wasactually changing or shifting
their channel preference.
So there's been a lot of workthat have pointed out how

(32:09):
retailers really need peoplecoming into the store for
various reasons.
It just makes things so muchmore efficient fewer returns,
more opportunity for add-onpurchases and things if you can
get them to actually visit thestore.
So if we can't avoid peopleshopping online, can we at least
get them to come pick up at thestore as opposed to home

(32:30):
delivery?
So Rod and I looked at offeringsome various forms of
incentives a minor discount topick up in store as opposed to
have home delivery, or simplypresent some information, just a
note or a little message atcheckout saying, hey, if you'll

(32:50):
pick up in store, this reducescarbon emissions or has various
impacts along those lines.
And what we found is that thediscounts really didn't do much
of anything.
But the people responded prettyfavorably to just the simple
messaging.
And so a second ago I mentionedin the past, when I've selected
the bundling of purchases forAmazon, it's almost always

(33:14):
because oh yeah, I guess thismakes fewer packages and one van
trip as opposed to three orfour, so I can live with that.
I've never once shifted any ofmy Amazon purchases, for example
, for a dollar discount or for adigital download.
It just, it's just not going tomove the needle for me.
Henry, I don't know, have youhad similar shopping experiences

(33:38):
?

Henry Jin (33:38):
I'm the opposite, travis.
Really, I respond 100% todigital credits because, for a
simple reason when my kidsreally really want to watch
something, when they really wantto watch something, and we're
getting to the point where, evenif we own something on dvd,
like one of those leapfrog, youknow edutainment videos yeah

(34:00):
we're getting too lazy to popthe dvd and so we just like to
accumulate those, uh, digitalcredits just to buy them, to
have digital access this makesso much sense now.

Travis Tokar (34:11):
I've always wondered who, who, who wants a
digital download.
But I'm just at a differentstage in life.
Yeah, and my girls, my girls,you know we've got, of course,
apple Music or whatever.
They can just get whatever theywant.
Now their Blue's Clues is longpast their, their viewership, so
that makes a whole lot of sense.
I'm learning all kinds ofthings today.

(34:32):
So I said Amazon was crazy forthis, but clearly not.

Henry Jin (34:37):
I wouldn't be surprised if we're the biggest
reason for Amazon to not get ridof that option.
That's funny.
No, but on a more serious point, travis, if you think about
Amazon and all the digitalservices they offer, right?
I mean, they're charging on topof the basic Amazon Prime music
.
They're now charging for AmazonMusic Unlimited and they're

(35:00):
charging on top of your basicPrime.
They're charging for extraslike HBO Max channel or
additional channels.
All of those people can usedigital credits to pay for, and
so you have a certain percent ofpopulation who are subscribed
to, you know, amazon MusicUnlimited instead of Apple Music

(35:20):
, and instead of paying forsubscription, they just
accumulate these digital creditsto pay for their subscriptions.

Travis Tokar (35:28):
Yeah, it just shows how isolated I am as a
consumer in some respects then.
So that's, yeah, veryinteresting.

Dr. Matt Waller (35:37):
Okay.
So moving on to this next slide, once again you can see the
green line is the air freightand the purple line is the
delivery and warehouseindustries.

(35:58):
It's producer price index byindustry, but this is focused on
delivery and warehouse, and sothis data set goes all the way
back before the Great Recessionand see the gray area.
There is the Great Recessionand then COVID, the onslaught of

(36:22):
COVID, there is the second grayline and basically you see that
air freight goes way up andthen drops back down, and then
the delivering warehouseindustries is.
You know, it looks like it's anew trend line that has a
steeper slope.

(36:42):
Henry, would you speak to thisone?

Henry Jin (36:46):
Yeah, yeah.
So the story with this graph isreally simple.
In fact, matt, I'm glad youpicked up on the recession areas
and I included the GreatRecession on purpose, and that
is because what I want toillustrate is, if you look at
delivery and warehouseindustries, this really looks

(37:07):
almost like a smooth line of theomni-channel search term that
we saw in the beginning, rightWell, that's a good point Google
searchers.
This trend seems to be hardlyaffected by one of the greatest
recessions, the greatestrecession that we've experienced

(37:29):
in recent years.
So it goes to show thatomni-channel retailing, at least
in my view, it's strictlydriven by habit, as people form
habits, they don't change theirhabits.
Even if there's a recession,they still want omnichannel

(37:51):
retailing and it is going to bean enduring trend.
And, matt, to your point, itonly picked up since the
pandemic and that, with deliveryand warehouse industries,
people want more products closerto them to be delivered to
their homes.
And this, the purple line,captures all of it.

(38:11):
And it's juxtaposed with theair delivery which is more for
those speed-sensitive,i-want-it-now type of products
you can see, it's a lot moresensitive to recessions and

(38:33):
general economic trends.

Dr. Matt Waller (38:38):
Travis from a consumer decision-making
perspective.

Travis Tokar (38:39):
What do you think about this?
Yeah, I think Henry reallynailed it.
It just shows the robustness ofthis phenomenon overall.
It just keeps on ticking,regardless of the economic
conditions at any given point intime.
There's just growth.

Dr. Matt Waller (39:00):
Okay.
So this purple line, you knowit seemed very steady.
If you used regression, itwould have a very high R-square
before 2020.
And then, if you were to, itlooks like there's a new
regression line after 2020 thathas a lot higher slope, but
again, I would think that wouldhave a very higher square as

(39:23):
well.
But what would you think?
What was it about the pandemicthat caused the steepness of
that slope for deliveringwarehouse industries to increase
, especially considering theother graphs we saw about

(39:46):
e-commerce?
You see what I mean.

Henry Jin (39:48):
So I'm going to jump in here real quick.
I think it reflects two things.
One is the pandemic savingsPeople saved a lot of money.
They're buying more stuff.
But then secondly, it'sinflation that, as people have
more money to spend, demand forhome delivery, a warehouse space

(40:11):
also increases and as a resultyou just have all of those cost
factors getting priced in towhat we see here in the trend.

Dr. Matt Waller (40:23):
Yeah, that makes sense Going on to the next
slide.
Here this goes the horizontalaxis goes from 2019 to 2028, and
obviously 25, 26, 27, 28 areforecast.
But this is parcel volumes andit basically shows that US

(40:52):
actual parcel volumes versuspre-pandemic forecast in
billions.
And so the orange line with thewhite-blue dots is the forecast
, the blue line is the actualand the gray line is the
forecast past 2023.

(41:15):
Henry, would you like to speakto this?

Henry Jin (41:18):
Yeah.
So this is really kind ofillustration of what we just
talked about, that you know,with the PPI, a lot of folks are
going to think that, oh, it'sinflation, but if you look at
this, it's the Pitney Bowlesforecast of shipping volume from
2019, that there was an aboveaverage rather above expected,

(41:41):
growth in parcel shipping, andthat reflects increased
ship-to-home shopping amount.
Now, what this graph does notcapture, though, is to what
extent these are online ordersshipped from warehouses from
pure play online retailers, orwhat portion of it is shipped to

(42:02):
home by omni-channel physicalretailers.
But what, collectively, thisgraph tells you is that there
was a pandemic-drivenship-to-home habit that was
above the long-term trend line,and then we're reversing back

(42:23):
into our previous trend, and Ibelieve it's in part because
that consumers have realizedthat there is still value in
going to physical stores to makepurchases, and I can certainly
say that during the pandemic, Ihad my pandemic 10 pounds, and
without going into a physicalretailer to try on the clothes,

(42:46):
I just end up basically doublingthe parcel shipping every time
I make something or make apurchase.

Dr. Matt Waller (42:54):
Well, this also doesn't show how much of this
is returns.

Henry Jin (42:58):
Yeah, you're absolutely right.
It includes returns.
So maybe you had a bunch offolks that bought clothes based
on their pre-pandemic sizes andend up returning them.

Dr. Matt Waller (43:12):
Travis returns is a big problem with
omni-channel and e-commerce ingeneral.
Do you think that's improvingat all or what do you think
about that?

Travis Tokar (43:40):
published both academic and just in business
press about how costly they are,what retailers do with all this
merchandise that's sent back,and I feel like there's some
progress being made overall.
But the retailers, well,they've gotten the consumer
interested in e-commerce throughthe promise of easy returns
over time, and so how do youtake that back right?

(44:03):
How do you walk back thispromise feature that you use to
get people to actually engage?
And so there's been someinteresting papers.
There's some folks atUniversity of Tennessee and
Texas A&M that have done somereally interesting research on
this and been kind of gettinginto it myself a little bit in

(44:25):
various ways.
And you know there's.
You know when it looks, youlook at return policies that
retailers have put into placeover time.
There's been various changes.
I think they've been trying tofigure out how do we dial this
back without angering theconsumer and you know, cracking

(44:47):
down on things like the amountof time people have to make a
return or whether or not there'sa fee associated with the
return.
You know, I think, as long asthe consumer, there's some
evidence anyway that, as long asthe consumer feels that they're
getting a fair deal out of itor being treated fairly in the
process that they can live withsome stricter terms.

(45:09):
So, for example, when it comesto like a return fee, I know
returns are very expensive forretailers to process and they'd
love to be able to recoup someof that if they can.
Now, if you just implement ablanket return fee, no one likes
that.
In fact, the work that I'vedone and, matt, you've been
involved in some of theseprojects shows that a return fee

(45:31):
is just universally despised.
However, if you can, as aretailer, present some
justification for this so, forexample, if you return to the
store an online purchase free ofcharge, if you'd like to ship
it back to one of our facilities, then yeah, we're going to have
to implement a fee to handlethe processing.

(45:52):
Again, nobody really likes that, but it makes it more palatable
to the consumer.
Or, for example, limiting thingswith regard to store credit
right, everybody wants cash backfor a return.
If you've made a sale as aretailer, you'd like to hold on
to that, and issuing storecredit kind of keeps the

(46:13):
consumer captive, but it's not apopular thing.
If, however, you can put somepolicy in place that says okay,
if you have a receipt, noproblem, of course, cash back,
but if you don't have a receiptfor this item, well then, we're
going to give you store creditinstead.
That tends to go over muchbetter with consumers.
So you know there's some workthat's being done.

(46:33):
Like I said, that's, I think,shining some light on how
retailers can get away withdialing things back, but I think
it'll continue to be a problem.
To Henry's point a few minutesago when it comes to apparel,
you know people just have totouch and feel and try on and
see how a garment fits.
And you know, outside of some,you know major leaps in AI

(46:57):
technology which would happen,but you know, I think people are
always going to want to trysomething on physically in
person before they decide on apurchase.
How do you deal with that as anapparel retailer?
So returns are going to be amajor part of their business, I
think, for years to come, and sojust being smart with it and

(47:18):
finding ways to do things thataren't going to anger the
consumer is probably key.

Henry Jin (47:24):
You know, travis, since the topic is on
omni-channel retailing, a lot ofmanufacturers are doing
direct-to-consumers DTC channelright.
So you're talking about apparelmanufacturers like Nike, lumen,
and there was a recent industrywhite paper that came out that
said basically, the theoreticalsavings that, or rather margin

(48:10):
expansion that apparelmanufacturers could have enjoyed
by adopting a direct people tocome in or to make a DTC channel
purchase is through onlineadvertisements with massive
discounts are to providecustomer service ends up eating

(48:34):
away at all the margins thatthey could have gained by
selling at a higher price pointas compared to the lower price
point at wholesale.

Travis Tokar (48:39):
Yeah, that's very interesting.
I'd like to see those articles,henry, but that makes sense
given what I've been reading.
It's just, it's a veryexpensive problem for retailers.

Dr. Matt Waller (48:52):
Travis, I'm curious how heterogeneous or
homogeneous are the retailerreturn policies, especially from
an e-commerce perspective?

Travis Tokar (49:07):
Yeah, if you look at CPGs, for example that's
basically what I know bestthere's a lot of consistency and
I think that that speaks to thenature of the competition in
the industry.
Nobody wants to be way stricterthan the next door that someone
could shop with.
So I think that's driven somehomogeneity shop with.

(49:30):
So I think that's driven somehomogeneity.
And I think perhaps also toothat retailers, maybe through
trial and error, have dialed inon what consumers are okay with
and where they start to kind ofbalk a little bit.
But I'd say overall, matt, it'sfairly consistent actually and
again I'm speaking of consumerproduct retailers- you know that

(49:53):
topic.

Henry Jin (49:53):
It just reminds me of something I saw on TikTok that
people are abusing returnpolicies, right.
So it almost like, as aretailer, you don't necessarily
want to be known as the one withthe most lax return policy or
you're going to be subject toabuse, like you know.
For instance, I know for a longtime people were saying, like

(50:16):
Amazon is Amazon has a really,really generous online return
policy.
I mean, that's absolutely true.
But it got to the point where,you know me, I'm kind of cheap
by nature, so I would buy thoseAmazon warehouse deals.
But sometimes, when I buy thoseAmazon warehouse deals let's
say, I buy a pre-owned whatAmazon described as

(50:38):
quote-unquote like new vacuumcleaner, right.
And by the time I get it, what Idiscover is, you know, people
swapped out the new filter withan old filter because they
didn't want to pay for a filter,and so it looks new on the
outside, but I I end up havingto buy a new filter anyway,
right?
So, uh, you have all thesereturn frauds and during the

(50:59):
pandemic, I remember alsoreading about these, uh, walmart
returns of, uh, you know,people were lucky enough to buy
a playstation 5, um, and thenthey'd return it to walmart and
it wasn't checked properly.
So the next person to buy itdirectly from the store finds
out that it's just a mint boxinside a box and not a
PlayStation 5.

Travis Tokar (51:18):
Yeah, I've heard.
Yeah, the opportunity for fraudand the cost associated with it
is astronomical in somesituations, which is why there's
been such a crackdown, I think,on some of the historically uh
lenient return policies.
Uh, you see things, for example,uh, it's pretty common, matt,

(51:39):
you asked about some of thecommonality If you don't have a
receipt.
Well, there's the it systemsare good enough that, uh,
especially if you pay with acredit card, the retailer can
probably look it up and see whenthe purchase was made, how much
it was, and all that.
But if that's not possible,they still may choose to give

(52:07):
you a refund.
A lot of the policies stateit's at the discretion of the
manager and they require thatyou have some identification,
like a driver's license, so thatthey can keep record of how
often you're coming back andreturning things, particularly
kind of under maybe suspiciouscircumstances.
No receipt, no record, and so,yeah, I'm assuming it's so that
those handful of individualsthat are really abusing this,

(52:29):
well, they can keep tabs on itand say you know, no, sorry, cut
you off, but they can continueto be as lenient as possible
with the average person who,yeah, maybe just lost their
receipt or whatever.

Henry Jin (52:40):
So you, know, travis, this is.
This reminds me of a funnystory back back when I was still
at Walgreens, and I rememberdistinctly this one day I had
this one person that came intrying to return a bottle of
Equate branded product, which,of course, you know, equate is a
Walmart brand, right yeah?

Travis Tokar (53:03):
Different W retailer.

Henry Jin (53:05):
Yeah, so the customer tried to return it.
I said when did you buy this?
And the customer said somethinglike last year, but they no
longer need it.
And so I said well, you know,this is Equate, it's a Walmart
brand.
And the customer goes well,that's a wall, you're a wall,
what's the difference?
And this was before OmnichannelRetail ever took off, so

(53:31):
returns fraud has always beenthere, except you know, whereas
before you used to get thesefunny stories and now it's
becoming more and more difficultto catch.

Dr. Matt Waller (53:40):
Well, you know, we've been talking about
omni-channel in a very broadsense and talking about all
kinds of macroeconomic factorsthat are driving things shocks
to the system that are drivingthings, new competitors but we

(54:03):
really haven't definedomni-channel yet.
So I think maybe what we can donext is talk about the slide,
henry, that you created, thatdifferentiates between
multi-channel retailing,cross-channel retailing and

(54:25):
omni-channel retailing.
Would you mind explaining this?

Henry Jin (54:29):
Yeah, sure.
So this three column view.
It really depicts kind of likethe evolution of omni-channel
retail Way back in the day, whenit first got founded, it was
more or less like a brick andmortar retailer trying to fight
back, right, trying to fightback to say, hey, we want our

(54:52):
customers to be able to buystuff online and be able to buy
stuff in stores, which, ofcourse, back then you end up
with this kind of odd marriageof Target letting Amazon
managing their entire onlinechannel and I think Toys R Us
allow Amazon to manage theirentire online channel as well.
But then as they then over timethey saw that they were not

(55:16):
reaping much financial benefitfrom it at all, in fact, they
added extra costs because theyended up having to have two
different channels twoindividually managed by
different groups, differentteams, individually managed by
different groups, differentteams.
And on top of that Travis kindof to your point earlier that

(55:37):
you end up having all of thesereturn requests when their
systems can't even talk to eachother, right?
So, for instance, if someonebought, if a Target shopper
bought, something off of Amazonfrom Target store way back when
they could not have returningstores, so that was literally
multi-channel.
Retailing was just multiplechannels operating in parallel

(55:58):
in completely separate, almostlike universe, right?
And then they started to figureout how do we provide more
consumer convenience?
And so then they started to tryto integrate systems across
channels, but mostly to theconsumer convenience.
And so then they started to tryto integrate systems across
channels, but mostly to theconsumer end, so that online and
on-shelf inventories can beused to fulfill both e-commerce

(56:22):
and in-store orders.
But the problem with that isthey still have to keep two
separate pools of inventory.
And let's say that an in-storeshopper comes to the store only
to see that an on-shelfinventory is completely gone,
and then you need to get someonein-store to bring the online
inventory to fill an in-storetransaction.

(56:46):
And so they ended up adding awhole lot more logistic
complexity and logistic costs.
But at least from theconsumer's perspective, things
are becoming a little bit moreseamless.
And so, having taken care ofthe consumer side, that's when
retailers really got to work totry to figure out how do we

(57:08):
optimize our back-end process,to try to figure out how do we
optimize our backend process,how do we get more savings to
make this cross-channelretailing financially beneficial
, if not sustainable.
And so they started tointegrate on-shelf and online
inventory and eventually theystarted to have just one person

(57:28):
oversee both channels to makedecisions, all for the purpose
of providing consumers with aseamless shopping experience.

Dr. Matt Waller (57:37):
I think that's a good explanation and it would
be interesting to know.
And if anyone listening to thisknows, please tell us about it.
But I'd be curious to know.
Please tell us about it, butI'd be curious to know.

(58:04):
So the phenomena you mentioned,one particular one that is
interesting is most retailersstarted with a that were both
brick and mortar and e-commerce.
They started with a merchantthat focused on e-commerce and
then a merchant that focused onthe stores, and now they've
integrated those, as you'resaying, in the omnichannel space
.
It would be interesting to knowhow many retailers have
actually made that move and whenthey made it.

(58:25):
Maybe it's out there, maybeit's not, I don't know.
But even after they make thatmove, from an organizational
structure perspective, there'sstill other challenges.
Technology is a challenge,right.
Business process is a challenge, because you know there were

(58:51):
existing business processes forboth.
And then people trainingchallenges, right.
If you started off as amerchant in e-commerce, you
probably are going to behavedifferently than if you started
off in e-commerce as abrick-and-mortar merchant.

Henry Jin (59:13):
Yeah, you know what, man?
That's a great point.
I actually I think it extendsbeyond that, because let's say
that I'm an omni-channelmerchant or I'm an omni-channel
buyer and you know back beforewe don't know if the supplier
has just one single key accountmanager overseeing two different

(59:34):
people.
Or are there two different keyaccount managers, one overseeing
the e-commerce channel, theother seeing the brick and
mortar channel?
For me, if I'm the on-channelmerchant buyer, dealing with two
different key account managerswould be kind of a pain.

Dr. Matt Waller (59:52):
That's interesting.
So I'd love to see data on this.
But based on my experience andmy knowledge of this, it seems
to me like retailers might beahead of the suppliers to retail

(01:00:15):
in this regard.
I think they've been slower toadjust and of course, even
within retail, if you thinkabout it, there are some
retailers that may have amerchant that's really focused
on what would be considered avery narrow part of a category,
both online and in the store.

(01:00:35):
But if you don't have thevolume, you have to have a
bigger piece of that.
But you're right.
From a key account managerperspective, you would think if
you're dealing with anomnichannel merchant going to

(01:00:57):
them with data, that tells thepicture right, because the
merchant in some ways is like abusiness owner in a way,
managing this collection ofproducts, managing this, these
collection of products, and and.
So if the, if, the, if the keyaccount manager's coming with an

(01:01:18):
incomplete picture, or maybethere's two people that are
coming but they haven't reallycommunicated clearly with one
another or thought through itfrom an integrated perspective,
that could slow down theretailer.
I'm going to go to one lastslide here, and this slide looks
at omni-channel retailing.

(01:01:38):
This is the far right If youlook at the far left here where
it says omni-channel retailingthat comes from the previous
slide on the far right side,where it says Omni Channel
Retailing, that comes from theprevious slide on the far right
side.
And then Henry's got this blownup into two different pieces

(01:01:59):
here the Omni Network Media andthe Omni Segment Retailing.
Could you explain that, henry?

Henry Jin (01:02:09):
Yeah, yeah.
So really, this Omni NetworkMedia concept comes from the
retail media network, and if youguys go into stores these days,
for instance, all of those arecooler doors.
I mean, you already have glassthere, and the technology for a
semi-transparent TV is alreadythere.

(01:02:30):
So why not convert those intoadvertisement, right?
And when you go out, whenyou're shopping, when you're
checking out throughself-checkout, you're in front
of the screen, right, why notstart showing ads in there?
But at the same time, you alsohave a lot of folks who prefer
the legacy advertisement forms,like you know, uh, the circuit

(01:02:51):
printed circulars, that, uh, thecoupons, and also, uh,
increasingly, with parceldeliveries, that you have
advertisements printed on thetape that you use, right, and so
what it really shows is that,um, because OmniShadow Retailing
is really about interactingwith consumers at any way, shape

(01:03:14):
or form possible during thetransaction process, that you
have so many opportunities topresent messages to the consumer
.
So, travis to your pointearlier, travis to your point
earlier, how effective would itbe to incorporate these

(01:03:36):
advertisements to compelconsumers to make the
sustainable choice?
But in that case it's notnecessarily financial benefit,
but it would still uphold acompany's triple bottom line.
And then, so that's the mediaaspect.
The second portion itrepresents the omni-segment

(01:04:00):
retailing, and that is a moreadvanced, nuanced perspective on
how to better serve yourcustomers.
So, for instance, back in 2013,one of the most widely cited
omnichannel retail publicationstalked about how retailers are
able to augment their in-storeinventory with endless aisles of

(01:04:24):
virtual product assortment.
Right, but having endlessaisles of product assortment
options.
It's very much of a push format, but in supply chain management
, what we've learned that worksthe best is more of a pull
format that allows you tominimize waste, be lean, to be

(01:04:47):
more sustainable, and so thenext step in this omnichannel
evolution is the idea ofomni-segment retailing, that
understanding immediately whoyour consumer, who an individual
, one consumer is, to be able tomicro-segment down to that
level and be able to offerdifferent products based on

(01:05:12):
customized product selectionbased on these six dimensions
and the reason why so the pricespeed.
They're both very obvious.
But if you look at authenticity, there are services popping up
like the RealReal, and actuallyAmazon now offers a similar
authenticated services becausethey recognize that, along with

(01:05:36):
this e-commerce, you also haverising concerns with counterfeit
products.
I've purchased counterfeitproducts myself on Widow.
I was pretty angry.
And then you have these brandrelated.
You have these brand related.
I'm not sure if Matt and Travis, if you guys, shopped on Amazon
recently, but you have all ofthese brands that you can't even

(01:05:56):
pronounce.
It seems literally like my sonpicked up some letter blocks and
threw it up in the air to callit whatever that brand right?
And so you know, you have somecustomers who are very brand
conscious.
How do you make sure that youdon't for lack of a better term
you know junkify your product?
Assortment, presentation, right.

(01:06:18):
And then there are the countryof origin.
There's the transparency aspect, and country of origin is
becoming even more important.
It's precisely because, as wetalked about earlier, with air
freight becoming cheaper and youhave these cross-border
e-commerce warehouses set upoutside our country's border and

(01:06:42):
you can bet the carbonfootprint on these air freight,
like the Temu model.
It's huge.
So how do you help consumersmake the sustainable choice?
And for some consumers, certaincountries are associated with

(01:07:02):
higher likelihood of counterfeit.
And lastly, is the idea oftransparency when it comes to
e-commerce.
You have all of these back-endprocesses that consumers don't
necessarily see.
So how do you communicate toconsumers?
How do you let them know thatyou're working on their order,
that you're being responsiblewith their order.
Some consumers care more thanothers, and so being able to

(01:07:26):
have this omni-segmenting, to beable to instantly define a
consumer at the individual level, what their profile looks like,
to be able to present almostthis customized storefront, in
my view, is the next step inthis omni-channel evolution.

Travis Tokar (01:07:47):
Henry, there are a ton of things that you just
laid out that I personally findfascinating, and I think we
could spend multiple podcastsdigging into One of the things
that resonated in one of theprojects that we've worked on
together recently actually doingsome Litward View and looking

(01:08:08):
at specifically what are some ofthe capabilities that have been
identified in academicliterature as essential for
executing omni-channel and Ithink all of us intuitively knew
that there'd be a lot aboutlogistics and operations and
those types of things.
But getting to some of thethings that you pointed out just

(01:08:28):
a second ago, I was reallystruck by some of the research
and most of it's in the lastfour or five years that points
to the importance of informationsharing, trust to be able to
get the insight that's requiredto create these customized
experiences for consumers andnot just to try to sell us more

(01:08:49):
stuff necessarily although I'msure every retailer is happy to
do that A lot of it is so thatthey can operate as efficiently
as possible, like you're saying,they can keep costs down, they
can compete, they can continueto offer new innovation, and so
it was a surprise to me to seethat, yeah, it's not just about

(01:09:10):
where we put warehouses and howdo we structure our networks and
things.
There is a whole lot in thereabout, yeah, how do we make good
?
How do we get our hands, firstof all, on good information and
use it to make efficientdecisions?

Henry Jin (01:09:24):
Yeah, and you know, I know both of you have more kids
than me.
I can only handle two myself.
So props to you guys for havingmore than that.
But with my kids, if I buysomething online and they're
going to be bugging me saying,daddy, when am I getting this,
when am I getting this?
I would appreciate to be ableto log on to my account and be

(01:09:45):
able to tell my kids All right,guys, it is coming on this day
Just so that my kids can stopbugging me.
Until that day, show them themap.

Travis Tokar (01:09:55):
You know, hey, it's here.

Henry Jin (01:09:56):
Well, you know, pinky right now, it'll be a thumb in
two days.

Dr. Matt Waller (01:10:01):
There you go Well this shows, I think, that
one other phenomena associatedwith omni-channel.
I think that one otherphenomena associated with

(01:10:35):
omni-channel.
This slide really points to thefact that there has to be a lot
more integration of supplychain management operations,
merchandising and marketingmaybe than there's ever been
right, and I wonder to whatdegree mastering that can create
a competitive advantage.

Travis Tokar (01:10:41):
Well, matt, I think immediately of what our
good friends at Ohio State havebeen preaching for years, is
that supply chain management iseverybody's job.
You cannot effectively deliverproducts and services without
the involvement of everyfunctional area.
And so, to your point, I think,to compete, that's going to be
more important than it's everbeen before.

Dr. Matt Waller (01:11:00):
Because it's interesting, you know, I think.
So let's take retailers.
Retailers are spending a lot ofeffort to try to do really
specific operational thingsright, Like maybe having an
integrated inventory managementsolution, which we all agree is

(01:11:21):
very important, or maybe tryingto maximize revenue from retail
media networks, et cetera, etcetera.
There's all these things betterin-store experience when
there's pickers in the store,which now a lot of retailers are
trying to build fulfillmentcenters in the backs of their

(01:11:44):
stores, and also returnspolicies, et cetera, et cetera.
But maybe the competitiveadvantage really comes in
bringing all of this togetherand no one really has experience

(01:12:05):
with that.
And I wonder, if you look atsome retailers like maybe Amazon
as an example, if you look atsome retailers like maybe Amazon
as an example, they'reomni-channel to some degree, but
they really don't have the truefrickin' mortar footprint.
It is true, they've got WholeFoods, but that's not the same,

(01:12:30):
is it Henry?
What do you think about that?

Henry Jin (01:12:34):
No, what you just mentioned actually kind of
reminds me of Walgreens because,you know, unlike Amazon,
walgreens is literallyeverywhere, right, but
unfortunately, a lot ofWalgreens I think some 2,000
stores are not doing very welland they're on the verge of

(01:12:54):
being closed.
A lot of Walgreens I think some2,000 stores are not doing very
well and they're on the vergeof being closed.
And so what I'm wondering is,as far as Amazon is concerned,
is there room for Amazon toexpand their footprint by
partnering up with aneighborhood store it doesn't
have to be Walgreens, butsomeone with a footprint to
really expand their omnichannelnetwork?

(01:13:16):
They have Amazon Locker alreadyand they're experimenting with
Amazon Fresh, but Walgreens had,I think, a failed joint effort
with Kroger in bringing KrogerExpress into their stores.

(01:13:37):
So, you know, is there room forthis kind of coopetition setup
between a predominantly physicalretailer with a predominantly
online retailer to try to bringeach other's competencies
together to successfully compete?

Dr. Matt Waller (01:13:54):
Well, for those of you listening and I know
most of the listeners to thispodcast are actually
practitioners or investors, notso much academics.
You've heard this from a veryacademic perspective.
But the research that is goingon and there's a lot of research

(01:14:17):
going on on Omni Channel, notjust from the three of us, but
from hundreds of faculty membersaround the world is making
progress.
There's some really neatfindings out there that we
haven't had time to go into, butwe the three of us are

(01:14:38):
interested in continuing ourresearch and we need industry
partners for this, as Travismentioned earlier.
You know, academics can onlyget so much from archival data
and experiments with humansubjects.
You know a lot of times we needto engage with industry.

(01:15:02):
Travis, do you have anythingmore to add to that or any
specifics?

Travis Tokar (01:15:07):
Yeah, absolutely, matt, it's.
You know.
Certainly, the ability to getdata is one thing, but I would
say what I'm very interested inand hopefully getting some
feedback from your audienceabout, is just what questions
should we be asking?
Right as academics, you know,we see the world through certain

(01:15:29):
sets of lenses and we examineproblems in certain ways and,
while I believe we add value incertain areas, many times we
just don't have the insight tobe asking the precise right
questions at the right time.
That could truly be asimpactful as if we had that

(01:15:50):
insight could truly be asimpactful as if we had that
insight.
So I would love to hear fromyour audience more about what
are they interested in knowing,what types of problems are they
trying to solve and what typesof things keep them up at night
right now?
Where do they see things goingin the days to come?
I mean, I think all of you thethree of us all have ideas of

(01:16:11):
what comes next or what mayhappen next, but what are the
folks that are truly immersed inthis every day, thinking and
predicting?

Henry Jin (01:16:20):
Yeah, I think the nature of supply chain
management, what we do, it is soindustry focused already that
there's a very naturalpartnership between researchers
like us and industry members.
In fact, all of us have ourbackground in industry and a lot

(01:16:45):
of our research questions aremotivated by industry and
hopefully we can get someindustry members who are
interested in kind of findingout some of the questions that
we have, as well as may havequestions that we can help to
answer.

Travis Tokar (01:17:02):
Matt, if I may, I'll give one quick example and
I'll keep it to two minutes orless for the sake of time.
But several years ago I hadsome friends that were running a
small business, an apparelboutique, and they came to me
and said, well, you teach supplychain management and logistics
and stuff right?
And I'm like, yeah, why are youputting me on the spot like

(01:17:22):
this?
And so we have a question.
We are delivering a lot ofe-commerce orders In fact that
was a huge part of theirbusiness and shipping all of it
through the postal service,which wasn't performing so well.
They wanted to switch to abetter carrier UPS or FedEx and

(01:17:42):
had many offers from thosecarriers to handle their
business, but it would haverequired an increase in the
shipping costs.
So they asked me well, what doyou think?
Will people actually pay morefor the service they're
demanding?
Their customers wanted ordertracking, wanted the stuff to
show up on time and not get lost, and I said, well, that's an

(01:18:04):
interesting question.
So there'd been some reallygreat work done early by some.
Actually, terry Esper is a gradstudent and some of the other
faculty at Arkansas that lookedat the fact that people do
recognize some carriers arebetter than others.
They perceive that difference,but as far as we could tell in

(01:18:24):
the literature, nobody hadexplored whether they're willing
to pay for it or not, and so Ihad a chance to really work with
this practically motivatedresearch question and came up
with some experiments to testthis and found that most people
they say they want betterservice but they're not so

(01:18:46):
willing to pay for it whichthere was some nuance to it, but
that was the gist of it andthat's the kind of insight that
I really enjoyed having somebodyshare that A practitioner say
look, we've got a problem andhave a chance to then go do some
work to help address that.
I think it's one of the mostrewarding things about our

(01:19:07):
career.

Dr. Matt Waller (01:19:08):
Well, Henry and Travis, thank you so much for
joining me today.
I really appreciate it.

Travis Tokar (01:19:13):
Thank you, matt, thanks for having us.

Dr. Matt Waller (01:19:14):
If you're finding value in this podcast.
We greatly appreciate yoursupport by subscribing to our
YouTube channel.
Additionally, following us onApple and Spotify and leaving up
to a five-star review would beimmensely helpful.
We welcome any feedback orquestions related to the podcast
, as well as suggestions forfurther topics and guests.

(01:19:34):
You can leave your comments onour YouTube channel and rest
assured that I will read eachand every one of them.
Please also take a moment tocheck out our podcast sponsors,
as they play a critical role inkeeping this podcast running.
For more information onspecific topics, timestamps or
links to articles mentionedduring the podcast, head over to

(01:19:56):
mattwallerpodcastcom.