Logan Ensign:
Joel welcome to Shelf Life.
Joel Beal:
Thanks, Logan. It's exciting to be on Little different than normal.
Logan Ensign:
Excited to put you in the questioning chair here. We found, as we've worked with so many of our customers, a really hot topic today is what is going on over at Walmart and POS data, but even more generally, data sharing from the largest retailer in North America. You've been caught up to speed and really interested in this topic. Maybe you can start us with what is Walmart Luminate and maybe even more importantly, why folks should care.
Joel Beal:
I mean, as you mentioned, Walmart and Amazon obviously dominate the retail landscape, at least, certainly in North America and some cases beyond that. Walmart's been the 500-pound gorilla for decades really in retail. At this point in time, I think it's helpful to understand, Luminate, to go back a little bit in history with Walmart. Walmart has been sharing data with its suppliers for decades. At this point In the 1990s, they released a system called Retail Link. This is a method where any supplier into Walmart can log into this system and essentially query information about how their products are performing at Walmart stores, inventory, distribution centers, fulfillment centers, etc. And Walmart's really a leader in this regard. As with so many other things, walmart has really led the charge when it comes to a lot of supply chain and retail innovation. You know, once Walmart started this, other retailers started to share data as well, realizing that, hey, if we can share data with our suppliers, if we can make them smarter, they're going to be better suppliers for us and ultimately, we can drive down the prices for consumers, which Walmart is very, very focused on. Retail Link has now been out there for decades. It certainly evolves, but it hasn't initially evolved in the most predictable or directed way. During my time in this space, you're constantly hearing rumors, you're hearing ideas about what is happening with Retail Link. Is Walmart going to start sharing more data? Are they going to be more liberal with what they share and who they share it with? Are they going to start restricting access more? Are they going to start charging for that data? I think Luminate reflects, finally, some very real changes that appear to be on the horizon. Now there's still a lot of unknowns. I'm not always sure how much Walmart even knows the answer to some of these. We hear mixed messages. But Walmart Luminate is a new data system that is going to be the next generation that appears Retail Link. There are some very important differences, things I think their suppliers are going to be very excited about and some things that might cause some maybe some hesitation or some questions with those suppliers. But I think from my perspective, from what we've learned, it does feel as though Retail Supply Chain is finally moving into the 21st century, which is very exciting.
Logan Ensign:
What I'm hearing is, given the long-time horizon, not surprising because these rumors have come up again and again, but also it's a developing story where there's still a lot of potential unknowns about this transition and what's going on.
Joel Beal:
Yes, more details are coming through. That's what I know we're going to be talking about today, what we know. I'm sure there are things we don't know yet, but, yeah, information is starting to come back. I think the exciting thing is it's something that's real. For a long time, it was a lot of oh, this may be happening, or we hear later this year Walmart's going to make this big change. This is out there. Luminate's real. We have customers that are signing up for it and they're using it. We've met with them about it. It shows a ton of promise about just the way this works because, let's be real, the way that data is being shared is archaic in good situations. In some cases, it feels like you've entered the Twilight Zone. This is a modern API. This is a lot more data. Walmart's pushing the envelope, I think, on a couple things that are very interesting. We'll see how the adoption works.
Logan Ensign:
We'll see how this works with Retail Link A big chunk of our users at Alloy live in Bentonville and there's developed a cottage industry around Retail Link because, you'd mentioned, retail Link has been around for decades. I think in some ways it's provided a level of detail and insight that has really helped transform the space. But, as you also mentioned, it's maybe not the most modern high-tech feeling experience. What is the future of Retail Link? I'll bet is a question a lot of those folks sitting in Bentonville who work really closely with Walmart are asking.
Joel Beal:
Unfortunately, I don't know the answer to that question. It is the big one, because what we're seeing is among our customers, Walmart is starting to say we'd like you to sign up for Luminate. What does that mean? Well, there's a price associated with it. That's one of the big differences here. Luminate is no longer a it's not Retail Link, it's not a free data service for those suppliers. They want to move people over to Luminate. They are applying some pressure to do so. Customers are feeling that it's not a cheap product, but while there might be some pressure, there's also a lot of incentive too. Is they're saying this is modern? What do I mean by modern? Well, they're fixing a ton of the data issues that have been associated with Retail Link for decades restatements, fulfillment methods, making sure the data that you're getting is consistent with what Walmart has internally, so that you are on the exact same page when you're speaking with them, and they're doing that through a modern API. That's one of the elements that is very exciting about this. This is no longer I'm downloading massive amounts of data, retail links crashing because it can't handle that. There's the promise of a modern API, so a lot more data delivered in a better way, data that's more accurate and again.
Logan Ensign:
So modern software should work. That's right. That's right. You've been in this space for quite a while. Could you just talk a little bit more about some of the challenges people have had with retail link in the past and maybe how Luminate can help resolve those?
Joel Beal:
The number one thing you probably hear about retail link is it's just, it's not the easiest tool to use. There's a lot of data in there. There's a lot of different ways you can query it and we just see it by people who come to us and just say, hey, I'm trying to manually download this data once a week. I'm not even quite sure what I should be getting. I know kind of the basics, but there's just so much in here it's like an overabundance. The interfaces they've cleaned it up a little bit, but it's still dated. If you're a really high volume seller, if you've got a lot of SKUs, volume becomes an issue if you want to get the level of detail that retail link can provide. So you have to batch jobs to be able to download sufficient amount of data. When you're talking about the quality of that data, you also find gaps aligning the different fulfillment methods and, hey, the numbers don't quite add up. A huge one is around restatements. This is something that, for people who don't spend a lot of time in this space, it might not be the first thing that comes to mind. You're like well, I downloaded my report on Monday morning, I get it, I get my sales in my inventory. Okay, I at least have the basics. Well, what happens the next day when those numbers all change by a couple per cent? You don't even realize that. And how do you deal with restatements right now? Well, you just have to repoll all the data and get an idea over time about how far back is Walmart generally restating Luminate. I mean A it doesn't necessarily solve making everything easier, but it's switching the paradigm to say you're not going to come query an API that should be automated. You should have a system that's doing that. And so let's kind of pull the manual person out of this process. And as part of that, when it comes to things like restatements, I mean Walmart Luminate specifically handles that. So they will identify any specific data points that need to be inserted or updated or deleted after the fact. As I look at it, those are some of the big ones that come to mind.
Logan Ensign:
For me, Well, a lot of people who are familiar with Retail Link in Walmart. I think some of those are going to really resonate around restatements and e-commerce reporting and fulfillment methods and general accuracy. Could you tell us kind of what you know or understand that distinction between what you have from a Retail Link perspective in regards to data versus maybe what Luminate may add on top of that?
Joel Beal:
You know what we're hearing is. You know, I think, over a thousand different measures that they're providing, which is a lot. I don't know how that exactly compares to Retail Link. Some of the specific areas that I think are notable is, as I mentioned, fulfillment methods, and that's been an issue we've experienced with our customers. I mean, this wasn't an issue a decade ago. People weren't worried about how something was being fulfilled. Now there are many different ways a consumer can buy a product and making sure that the way that that's reported is consistent and works, and you can get some of that information from Retail Link, but it doesn't really tie out. It creates all sorts of reconciliation issues, depending on how you want to look at it. So that's an area I know they're emphasizing. They talk a lot about that and I think again reflects where commerce is going. We've seen this with other retailers as well. You know, for these retailers, they're trying to jam new ways of people buying products into old data models, and so there's lots of hacks that happen. My favorite when I got into this space was realizing how would people report e-commerce? Well, they just create a new store, that's just e-commerce, and you know they would report that way. That's fine when things are getting started, but over time you've got to adjust and, you know, build it the right way, and I think that's what Walmart's doing a lot here. We know there's a lot around additional, you know, data points. One of the favorite ones that I heard about were and I might get the name wrong here, I think they're Nolpix or Nilpix. Essentially, somebody in store, you know an employee, goes to get an item that's been ordered and they can't find it and they're going to flag that. They probably already have been flagging it but it hasn't been shared. Well, that allows you to help with things like phantom inventory. Okay, this was a product we're showing that we have 12 units, but somebody can't go find it. I mean, as you know, logan, that's something we help a lot of our customers with. You know, running algorithms trying to identify where there isn't. You know, the inventory that that the systems claim. So this is just extra data that will that we'll get that more accurate. All that said, the number one thing that blew my mind when I was hearing, you know, with the information we're hearing about Luminate, is what they're going to be doing on the category in the competitive side. I've always heard, you know Walmart's relationship with the syndicated data providers. I don't think Walmart likes the idea of other people monetizing their data, which I think is great. They don't want someone to go just resell their data and kind of make money off that. If someone's going to make money off their data, walmart should and, and so I think that's always been. You know, one of these questions how? How does Walmart work on the competitive side? They are going to be exposing that to people that sign up for Luminate and you're going to be able to see the competitive performance of other SKUs in the categories you sell in. It appears at an extremely granular level. You know, when I first heard it I said, wow, that's, that's kind of wild, um, but it makes a lot of sense to me. I mean, you know it's a chance for Walmart to really say this is a valuable data set. We're providing you more than just the basics and we're providing you more than even just about your performance. We're going to help you understand how you're doing in the category. You know it's in their best interest to say, yeah, go, doke it out with your competitors. You guys bring us the lowest prices, you give us the best service, and those are the the suppliers we want to work with, so I think it's a really smart move on their part. Very curious how other retailers respond to that.
Logan Ensign:
Well it makes sense, why maybe Walmart wants to one, monetize the data and two, why it might be in their best interest to expose those insights. But kind of flipping the script, um, if you were a supplier of Walmart and kind of starting to get these, these new indications of new data sets and lumenate coming, what, what risks might you have in mind and what would you be doing to kind of prepare for, um, shifting from kind of a more standard retail link environment to maybe more modern data sharing but also a much richer data set you're going to have available?
Joel Beal:
Yeah, I think I think for suppliers it's a confusing time right now. Uh, I think we're seeing that, as I mentioned, walmart appears to be putting quite a bit of pressure. Um, I think it's starting with the larger suppliers saying hey, we really want you to sign up for lumenate. And going back to what I mentioned earlier, you know there's been a history of Walmart. You know Sam's club moved to a model of charging for data a number of years ago, extremely expensive. Um, I think for a lot of suppliers they just said that's, that's not worth it for us, it's too much for the value that we're getting. I think Walmart's learned some lessons from that, you know. But it's a it's a large price tag. I mean, we hear that these are not small numbers and so, as a supplier, you're saying, okay, well, is retail links still going to be around? A lot of suppliers still aren't fully taking advantage of retailing. I mean, there's so much information in there, it's it's pretty cumbersome to use, you know. But now I'm being asked to spend a lot more money and I'm going to get more. So I think that's a tricky calculus that everyone is thinking through right now and probably there's an element of well, how much longer can I stick on retailing. So there's there's going to be that, you know, kind of pure costs analysis that companies are doing. I think, though, you do want to think on the other side here. There's a lot that this is going to open up, and there, especially when you talk about the competitive information I mean, think how much companies are paying already for that information from the Nielsen's, the Syracana's now millions and millions of dollars a year to get data that is often weeks late, aggregated, nowhere near as detailed as what Walmart is going to be providing through Luminate, and so I think there's a real chance to say if I can get ahead of this curve, if I can get that data, I'm going to be able to compete better and I'm going to be able to get market share from my competitors. Now you got to be able to make sure you can utilize that. So you need to work. You know, either invest a lot internally and have the right tooling, the right systems, the right know-how to make use of that, or, you know, partner with someone who can help you there, but I get again that's a large investment, that's a large bet to do it, and then I think there's, you know, for a lot of people. They're sitting there saying, well, what's the timeline, how long do I have to make this decision? And we just don't know the answer to that question. And again, I'm not sure Walmart even has that exactly outlined. At least it hasn't been shared from anything I've seen.
Logan Ensign:
As you kind of emphasized even earlier in the conversation, this may be the biggest development in kind of learning about Luminate, that this category data is going to become readily available. Could you elaborate a little bit more on the types of decisions and insights suppliers may expect to get from getting access to, if they can harness this data and they can kind of take advantage of it, how it can help them better manage their business?
Joel Beal:
My understanding is that you will be able to see competitive SKU level data down to the store level or presumably, fulfillment center as well. So you're going to get a very granular view of what is selling and at what price for every competitive skew in a category that you're doing a meaningful amount of business in. So I mean, what does that open up? I think, historically, how people have often thought about market share, the overall size of the category, those types of questions that every company is trying to answer, those tend to be much more of a long term view that companies are taking of that, and I think this opens up that ability to say, well, I should be able to see exactly when my competitor is promoting. I'm going to be able to see those price changes. I'm going to be able to see a very timely take then on how those promotions are happening and think of all the work companies are doing trying to disentangle. How are my promotions working? How does that interplay with competitive promotional activity, my inventory levels? Being able to really bring that all together and something that you can act on because it's happening so in essentially real time, I think is just kind of phenomenal and I'm very excited for what that can mean and again, I think it means things are going to get more competitive, and that's in Walmart's best interest. They can say great, let's fight over this. Let's have suppliers who are working hard to make sure that they're getting customers the best product at the lower price, which is what Walmart's always been about, and I think this aligns with that goal for them. Really, really as a supplier, though it means that you got to be ready for war a little bit here.
Logan Ensign:
I like leading with hey. Here are the insights and innovations you can make with this data, but also recognizing this is going to probably become an imperative, as the whole competitive landscape is now going to get a much richer data set to work with.
Joel Beal:
Yeah, and as I said earlier, I mean what's this going to mean for other retailers? Over time? Walmart has constantly been an innovator. Here they're pushing the envelope. Are we going to see the other major players kind of follow suit and say, okay, instead of having to work with Nielsen, I'll provide this directly back. I'll even give better data to my suppliers because maybe they monetize it as well, but this could be kind of a win a little bit for everyone.
Logan Ensign:
Yeah, no, I do get the sense. They have a much better understanding of how this data helps their suppliers, and so there's a lot more around being able to feed this data into other systems, but also even being much more open in sharing data with third parties that can help these suppliers get value out of the data. So that is the sense that the focus has been less on the querying and the visualization and more on just embracing that this data can help suppliers in a lot of different capacities and that Walmart's comfortable with that and in support of that.
Joel Beal:
One of the things you know. Ever since I've been in this space, you've seen this divide between how you know the e-commerce world works. Where everything is built on APIs, tons of information is shared. Obviously, e-commerce depending on you know how things are being fulfilled. It was a necessity, right? There's still concern around who owns the customer contact, how that can be used. You know, nobody wants the customer to be quote unquote, stolen, but it's just been so much more modern. And then you look at the more traditional in-store, retail, wholesale side of the business and it's just been so much more archaic, even though it's still doing the vast majority of the volume I mean including, you know, stuff that's shipped in wholesale and then sold online. And so I'm kind of hopeful that this just reflects seeing more consistency across those two big channels and, you know, hopefully we'll see it kind of catch up with where e-commerce has been now for many, many years. That's the hope.
Logan Ensign:
Absolutely, Absolutely Alright. Well, Joel, really appreciate all your insight on the emerging story that's Luminate at Walmart.
Joel Beal:
Emerging story it is. I'm sure in the next couple months we will learn more. This is evolving, but overall something I think that's really exciting for the industry. Kudos to Walmart for developing something that looks really, really strong. You know this is not easy problems to solve and excited for where I think it's going to take take the space not just for Walmart and its suppliers, but again I think it's going to. I think we're going to see it impact a lot of the way that other retailers are working with their suppliers as well.
Logan Ensign:
Absolutely. Well, that's all for this week. See you next time on shelf life.