Unlocking Sustainable Shipping With The Eighth Notch's Game - Changing Technology with Mike Robinson

Andy Splichal:

Welcome to another episode of the Make Each Click Count podcast, where we bring actionable insights and expert advice to help grow your e commerce business. I'm your host, Andy Splichal, and today we have a guest who's at the forefront of transitioning e commerce and retail logistics with sustainability in mind. Joining us today is Mike Robinson, board executive, Vista Outdoor and former EVP of Macy's Dot, where he led their e commerce operations. He is also a founding member of the 8th Notch, a groundbreaking platform that synchronizes deliveries to reduce unnecessary truck stops, tackling one of the biggest challenges in e commerce logistics today, Mike has been deeply involved in helping retail brands adapt their customer experience to meet the growing demand for sustainability. Today, he'll share some key strategies leading e commerce and retail players are using to implement sustainable practices and how this resonates with eco conscious consumers and investors. All right, welcome to the show Mike.

Mike Robinson:

Thank you, Andy. And I really probably need to take you along as my hype man. That's one of the best intros I've ever had.

Andy Splichal:

Well good. Glad to hear it. Glad you like it. And we're excited to have you on the show.

Mike Robinson:

Looking forward to it.

Andy Splichal:

Now, first, let's start with your journey from leading an e commerce at Macy's to founding or being a founding member, excuse me, of the 8th Notch. What inspired you to tackle sustainability in retail logistics?

Mike Robinson:

Yeah, I appreciate the question because I think the origin story is an interesting one, or at least I think it's interesting. And we'll see if the people listening find it interesting as well. I had a really nice career in e commerce. I worked with a series of large brands with the pinnacle being Macy's where I led the e commerce business. There. We timed it perfectly where we were able to grow at ten x in a seven year period from $700 million to $7 billion. But I got to the point where I was like, im not sure I want to do this anymore. So I decided to leave Macy's downshift a little bit and focus more on startup advisories, which is where I started my journey.

Mike Robinson:

I really was intrigued being here in San Francisco at the tip of Silicon Valley, where lots of smart startups would come through, chance to meet these people who were just passionate about these incredible products and services that they were offering, but they didn't know how to grow a business. And that's what I knew. So I wanted to offer those services. Have had some nice success with that, have generated the ability to then work into a board position for a publicly traded company, consumer products company that wants to be much more direct to consumer, so able to leverage that experience. And yet I knew that there was something missing, but I didn't want to go back and do a big operating role. And my friend Jamie Sapp, who is the founder of the 8th Notch, he and I were walking in his neighborhood, which is a suburb of San Francisco, and we're watching these delivery trucks go by, and he goes, does that happen in your neighborhood? And I go, yeah, it happens all the time. I'm in the city, there's delivery trucks everywhere. And he goes, do you think that's sustainable? And from him that meant sustainable can, is the system going to break? And I said, I also think it may not be sustainable from a carbon creation standpoint.

Mike Robinson:

He goes, let's go build a business around this. And his point was, he goes, I think there's a smarter way of being able to organize the activities and the data and the information and the choices to be able to minimize the number of trucks that actually come down your street every day. And that became the beginning of it. And then when we married it with something that said, I can have operational savings, but I can also take carbon out of the system. It became a home run for me, especially in the latter part of my life, where I'm starting to feel guilty about some of the choices I've made and trying to be a much smarter consumer. And this just hit on both of those. How do you build and operate a business, and how do you get more efficient? And then also how do you take carbon out of the system? Because we all need to be better participants of the world.

Andy Splichal:

How are consumers and investors responding to sustainability efforts? Does it help grow a brand? If a brand, you can say, I'm doing this to be sustainable and to reduce carbon footprint. How does it affect the bottom line?

Mike Robinson:

Yeah, I think sustainability has always equaled higher costs. Up until this point, choices I make mean I need to move to alternative fuels. I need to go solar, I need to go electric. And so I'm swapping out capital. It means that. And I wear this hoodie to remind myself it's made of bamboo fibers. So it's a renewable item, but it's more costly than carbon or excuse me, than cotton in some ways. So I think everybody has tried to figure out how can I be more sustainable as a business but also not go bankrupt at the same time.

Mike Robinson:

And that's really the challenge I think what we offer, and we'll talk about it a little bit, flips the switch on that a little bit differently and flips the narrative a little bit differently to allow people to say I can save money by making a choice, but I can also save carbon at the same time without having to invest more money to do that.

Andy Splichal:

So let's talk about how the 8th notch technology works and how it helps reduce unnecessary truck stops.

Mike Robinson:

Yeah, and this is where that, that we talk about this all the time. And it's usually one or two times before the light bulb goes off in people's head. But when it does, it's a magical thing. It took me a little bit as well. What it came down to was saying if I could understand everything that is in motion from a package carrier coming to your address as a consumer and now you shop at a retailer and want it shipped to that same address, could I do something to start this package's journey? To be able to connect with something that's already in motion? Because it's coming from the east coast and you live on the west coast or it's the west coast and you live on the east coast. So that they, that they, that they end up in the final sort hub and in the back of the truck and in the delivery driver's hands at the same time. So they could both be dropped off instead of one coming on Tuesday, one coming on Wednesday, they both come on Wednesday. That's what we're looking for is those matches of everything that's in flight and that's shared information from the package carrier.

Mike Robinson:

And when we start the journey of the new packages going into play from a retailer, it also works when you think about you buy a bunch of things from a retailer, multiple line items, you don't know where they're being shipped from. But most retailers have broken inventory all over the place, right? I mean I work for Macy's, we had inventory everywhere, right? And I tell this story of the five white t shirts, right. Five white t shirts, right. Came over four days from three different locations. Right. And it made absolutely no sense because it's a basic item, but because of the broken nature of inventory and that retailers desiree to ship it to me as fast as possible. They just said, shove everything in the network at the same time and the customer will be happy when one shows up and then another shows up and then another one shows up. In reality, the customer me was, should I call customer service? Right.

Mike Robinson:

Because I got one and I ordered five, then I got a second one, still needed three more. So what we're doing is we're taking the information from the retailer, we're taking the information from the carrier, marrying it together through a series of, through, through math, and then also predictive AI to be able to understand what are the best opportunities that we can have to create matches at your doorstep.

Andy Splichal:

So the matches are those, and forgive me if I'm a little slow, are they coming from different orders, from different retailers or from the same retailer?

Mike Robinson:

Yes and yes. Right. That's the beauty of it, is that it's retailer agnostic. It's based on the carrier delivering to your home. Right. And it could be both, you know, multiple items coming from multiple locations and the same retailer. And multiple items coming from multiple retailers to your address as well.

Andy Splichal:

Do you sync with Amazon?

Mike Robinson:

I'm sorry?

Andy Splichal:

Do you sync with Amazon? Does it include Amazon packages?

Mike Robinson:

We do not. The way that I look at this is we are bringing what Amazon is doing for their customers to everyone else.

Andy Splichal:

Yeah. So I know Amazon does the same thing where it says, do you want it delivered on Tuesday or Wednesday, or do you want them all delivered on Wednesday?

Mike Robinson:

That is correct. Right. And yet no retailer has figured out how to do that on their own and they haven't figured out to do that at the carrier level to be able to say, I'm allowing a Nordstrom package to be delivered at the same time as a Macy's package. Right. When you make it blind to the retailer that they're just looking at it through, am I getting operational savings? Am I getting carbon savings? It's not. I'm having my package delivered at the same time as another retailer. That's what we're looking for, is a different level of collaboration and cooperation. And by the work that we're doing at the carrier level, it allows us to kind of break through that level of distrust that most retailers have of each other.

Andy Splichal:

So how does it coordinate, how does your system coordinate between retailers?

Mike Robinson:

Yeah, we have information coming from different retailers. We also, as I mentioned before, know everything that's currently in the UPS network that's in flight going to your address, and that doesn't matter. I can connect to any of those packages at all? Well, when I'm looking at multiple retailers, it's, I'm just looking at the times and transit associated with it and say, when should I start the journey? Because the carrier network is very, very predictable. It's high, 98, 99% predictable, unless there's major weather issues or we've got holidays where they tend to slow down, but they're very predictable that if it says it's from the DC to your house, it's three days, it's going to take three days to get there. And so we use that predictable nature of it to be able to look at it. We also know, we're also learning many things around the behaviors of every address in America on the frequency of how often they buy to determine could there be other packages moving in that direction as well. And so the whole point is it's about asking people to make a small change, not in how they buy, but in how they have things delivered.

Andy Splichal:

So do you integrate with cart for. So I assume a retailer would sign up with you guys?

Mike Robinson:

Yeah. So our primary customer is the package carrier. We go to market through them. They are positioning us in all of their major accounts, which are the top retailers in America, but also small and medium sized businesses. The place that we integrate, and we've got that integration, and that is standard integration where we're just ingesting all the information on the carrier side. The new integration each time is at the retailer side, and it could be at the order management level or at the warehouse management level. It's all about determining the when of when something ships. We will get into checkout at some point, but we took the path of least resistance of not asking a retailer to change that part of their business, but to say that you've already made the commitment, you've determined the window that you can deliver it in three to five to seven days based on the retailer.

Mike Robinson:

And we use that time to be able to say, can we move it accordingly to be able to deliver it with something else.

Andy Splichal:

Got it. Now, do customers even know that this is happening, or is this all going.

Mike Robinson:

On in the background and customers don't? They could. Right? Because now the retailer knows a committed delivery date because of when it starts its journey. They choose not to. Some are contemplating using that information, and I think this is part of the evolution of it. Right. And I'm glad you brought up Amazon as well, because I think everybody tends to evolve quicker when they understand that their number one competitor is already ahead of them. This is exactly what Amazon has been doing. And we've said, look, we're bringing this capability to you.

Mike Robinson:

How you use it is a little bit up to you. But that's why we decided to go in a post checkout world, post inventory commitment world, to be able to say, you've determined where it's going to ship from. We're going to tell you the when.

Andy Splichal:

And so a retailer signs up with you guys, how does it work? I guess they fulfill an order, it says three to five days, and then it goes to your system. I mean, how does that all come together?

Mike Robinson:

And trust me, you are right on board with this one. Yeah. I mean, we analyze every single one of their committed orders and understand where it's shipping from. Do the analysis to understand, can we connect it to something else that the retailer is shipping or something that's already in motion from another retailer or where? We are being predictive about something that we think that will ship at some point just because of the velocity of things that are coming to your address. So one of those three things we will look for, if we find it, we will determine when it should ship from that retailer and give them a pick pack ship date. Right. Which they have to ingest into their system. If we don't find anything, we just give it back and say, operate as normal, no harm done.

Mike Robinson:

Somewhere between twelve and 20% of the time, we can find a match. We can find a match or a merge, as we call it, to be able to say, if you change the date, if you don't ship it today, but ship it tomorrow, worst case, two days out, we will ensure that it delivers with something else. And when you do that, you unlock value that the carrier is willing to give you financially. And you can also participate in the carbon savings as well.

Andy Splichal:

Yeah, I mean, that's really what I wanted to get to. What is the kind of value that a retailer can save by doing this?

Mike Robinson:

Yeah. And that to me was the hook, Andy. That's why when Jamie and I started talking about this, it was, I got to get to a financial hook, I got to get to a savings hook, I got to get to a value creation. What it came down to is every time, remember the example that I gave you around the two packages coming to your house? They both get delivered on Wednesday instead of one on Tuesday and one on Wednesday. Well, that stopped. That didn't happen on Tuesday is worth quite a bit of money that the carrier is willing to share in a gain share model. We get a piece, the carrier keeps the piece, and they incent the retailer to change that shipment date. It's impactful enough that every retailer that is on the program right now is benefiting financially from it.

Mike Robinson:

It's also 800 grams of CO2 that every time that that truck doesn't need to stop, the driver get out, get back in and move, that becomes a shareable carbon savings metric that the carrier and the retailer can, can both measure and report on.

Andy Splichal:

Do you think customers care? I mean, I want to say my own shopping thing and we talk about Amazon and maybe I'm just a bad person, but it says, do you want it Tuesday and Wednesday and Thursday or do you want it all on Thursday? I don't think I've ever said, give it to me all on Thursday.

Mike Robinson:

Yeah. I would say you and I may be of a generation that isn't necessarily the target of this. And actually a lot of the research shows that 75% of the time that when somebody is offered something that is sustainable, they will lean into it and accept it. They will also wait longer for it, up to one to two days. So there is a swath of the population. I also think that there's a conditioning that's happening at this point. And you brought up the right example. Amazon has conditioned it, conditioned everybody to free shipping.

Mike Robinson:

It conditioned everyone to the value of prime. And now I believe it's conditioning everyone to what it means to be not only free shipping, but free and sustainable because of that option. And you ask the right question. Do people care? I think there's a convenience component as well. I have an endless wall of boxes that come to my house. I would prefer if they came on one or two days. If they came Tuesday and Thursday, I'm probably better prepared. And then I don't get worried that somebody might be walking by and pulls it off my porch on the Wednesday that I happen to go groceries.

Mike Robinson:

So I think there's a convenience component on this as well. I think it's an evolution. Right. So do you ask about the moment in time? There is a percentage that will, that percentage will grow over time.

Andy Splichal:

Is there a particular platform that you guys integrate with? Is it like Shopify only stores? Is it platform agnostic? How does the integration work?

Mike Robinson:

We are platform agnostic at this point. We have thought through the conversation of what it would mean to integrate to the big commerces of the world, the sales forces of the world, the Shopifys of the world. We're definitely direct integration to the retailer right now, and I can tell you that we're definitely agnostic because we're on multiple versions of order management systems and multiple versions of warehouse management systems. I want to move away from every retailer to Snowflake and try to get to that and be a plugin at the Shopify level. That requires some additional cooperation from the carrier as well because they like to negotiate the financial impact with each of these retailers. If it was a rate structure difference, then I think that we unlock the next generation. I believe that's phase two of where we're headed.

Andy Splichal:

And what shippers do you integrate with? Is this ups? Is this ups, Fedex? Is it all of them?

Mike Robinson:

It's one of the ones that you just mentioned. Unfortunately, I am under an NDA where I can't use their name. But you could flip a coin and you'd be right half the time and wrong half the time. Right. It's 3.8 billion packages a year.

Andy Splichal:

And so does a retailer to participate, have to be using that carrier?

Mike Robinson:

They do. And so this is why the carrier likes to use it as a strategic weapon. Right. I can go in and win business, keep business, win back business, steal, steal share, because I'm offering something unique and innovative. Our goal was to be multi carrier, but we decided to go down the path of one carrier because it was the path of least truth. We talked to both of them, one of them took the second call. So that's why we are unique with them and exclusive with them at this point. But it gives us access to, excuse me, a large, large swath of the largest retailers in the US.

Mike Robinson:

Even if it's not 100% of their volume, it's an impactful amount of volume.

Andy Splichal:

How long has the 8th notch been?

Mike Robinson:

Around four and a half years.

Andy Splichal:

And how many merchants are using your guys's service?

Mike Robinson:

We are live with three. We are close to implementing with another three. We've got a pretty stacked. Here's the thing. Nobody wanted to be first, but everybody wanted to be first, right. Which is the classic case when you've got something innovative we believe in. I spent enough time in retail to understand it's a me too industry. It's a follow me industry.

Mike Robinson:

I expect once the large folks start to understand it and promote it, it becomes something that others flock to as well.

Andy Splichal:

And how large of a retailer do you need to be to incorporate this and what are the costs involved?

Mike Robinson:

Yeah, I'll talk costs first and I'll talk size second. We don't charge the retailer anything for this. It is access to some of their it folks to be able to do the implementation just because of the knowledge that they have of the systems. It's a simple integration, it's a simple testing pattern. It's a few weeks. It could maybe extend to a couple of months based on how aggressive they want to do that and also if they want to roll it out warehouse by warehouse. But we don't charge the retailer for that size. We've talked to anywhere from the largest retailers in the US to people who are single product focused.

Mike Robinson:

And it really comes down to the volume that they do with the carrier that I can't mention at this point. Is it interesting enough for them to be able to renegotiate the contract to be able to give them value? I think we are much more focused on the larger retailers. I do like proving this out on small and medium size as well. Actually at 11:00 today we are meeting with a smaller retailer who is in the subscription space. And subscription is a perfect metaphor for this because you really don't know what day it's supposed to come. You just know once a month. And so we can play around with time there. But we're definitely focused on the larger over time that this is something that goes across everyone.

Mike Robinson:

Yeah.

Andy Splichal:

And so it doesn't cost a retailer. But what could it save it, I guess. What is that financial carrot to get them moving?

Mike Robinson:

Yeah, and this is where, I don't mean to be cagey, Andy. It's just that this is the part that we don't own, that, that this is the value. This is one of the tricks associated with being part, being in business with a large, large carrier. They own the contract and so they own the financials associated with it. But it can be, you know, fifty cents to one dollar. Fifty cents per package. Right. That they're saving, you know, and.

Mike Robinson:

Or it could be you don't get a surcharge, right. You don't pay for anything extra at holiday. Right. You get a strategic allocation of volume in high volume periods. I mean there's different ways that they're using it as an incentive because it's massive value at the carrier side. It's potentially hundreds of millions of dollars have gone network wide. Which is why they want to incent the retailers to say the more you collaborate and cooperate, the better off we'll all be. Because gives to the service level.

Mike Robinson:

But also the cost structure changes as well. But I think the listener should listen, should, should hear. There is financial savings. Fifty cents to a buck fifty. All that is negotiated. The 800 grams of CO2 is 100%. Regardless.

Andy Splichal:

When they come on board, when do they find out what the savings will be? I mean, is that something that you bring in that third party carrier and they discuss it with them, or is it just kind of savings as you go?

Mike Robinson:

Yeah, I mean, if I was on the other side, if I was on the retailer side of the table, I wouldn't do anything until I knew the quality of the business case. And so that's what happens, is we develop the business case collaboratively across the three of us, and the negotiation is done or the offer is made from the carrier, from the financial savings, and then the retailer says, it's either worth it to me or it's not worth it to me. Right. That's the model. Now, where I want to get it to and where we're trying to push the carrier to is it's just, it's a different rate structure. Right? If. If you don't have a match, this is the rate you have. And if you do have a match, you get a lower rate associated with it, and they give an automatic discount associated with that.

Mike Robinson:

That's where we want to take it to. That's where it becomes truly viral and then takes over at that point. And we're not far away from that.

Andy Splichal:

Yeah, well, I got to say, you know, I mean, it sounds like a great idea, and it sounds like a no lose situation for, for retailers to join. How can they find more information about working with you guys in the 8th notch?

Mike Robinson:

Yeah, well, I am a one man megaphone right now because we are a small and mighty company of ten. You can reach out to me directly, and I think all the links will be in the show notes. But mrobinsonoch.com, you can find me on LinkedIn as well, and you can go to our website and see what we have there. It's an informational website at this point, and it gives you a perspective on what we're attempting to do and why.

Andy Splichal:

The 8th notch, where did that name come from?

Mike Robinson:

I appreciate you asking that question, because I had to ask Jamie as well, because it was conversation one was, I want to build a company. Conversation two is I've already come up with a name and a logo. And I was like, wow, okay, tell me about the name. The 8th notch is the most powerful setting on a train engine, and Jamie's dad was a railroad man. And so this is a bit of an homage to his father, but also shows that a lot of what we do today can be re engineered in some way, shape, or form to actually find the inefficiencies. And that 8th Notch is the most powerful and most efficient setting on the engine of a train.

Andy Splichal:

I like that you learn something every day, that's for sure.

Mike Robinson:

Yeah, I didn't know it either. And I love telling that origin story.

Andy Splichal:

Well, this has been great. Is there anything else you'd like to add before we wrap it up today?

Mike Robinson:

No. I think the question that we hinted around was this notion of that people have to get away from focused on speed of delivery in order to take advantage of this. And the way I look at it is speed isn't necessarily the only value creator in a conversation. If somebody wants speed that they're willing to pay for next day, two day, same day. But when you're talking about free shipping, all of a shop, and I don't know if you do it or not, but I'll buy from one retailer because it's free shipping and I won't buy from the other one because they're going to charge me something for it. What I want people to get comfortable with is that free and sustainable is where we're going to move this towards, and it should be something that we're all comfortable doing. And frankly, as we talked about, many of us have this wall of boxes coming at us. If there was a way where you were able to control those, this is the path to them.

Mike Robinson:

Not just your Amazon packages, but every other retailer as well. But consumers have to ask for it and retailers have to think about it differently. And that's really the challenge.

Andy Splichal:

Yeah. And I think you're right. I mean, Amazon, they conditioned everybody to get free shipping and to get it next day, get it quick. And as they're backing off getting it quick, I think it'll catch on. Where all of a sudden, three days isn't outrageous, four days isn't outrageous to get your free package. So I wish you the best of luck. I think it's a great idea. And I think for retailers, it seems it would be definitely worth an idea of exploring and having a conversation with you.

Andy Splichal:

So, yeah, thanks for joining us today.

Mike Robinson:

Thank Andy. I truly enjoyed the conversation.

Andy Splichal:

All right, for listeners, remember, if you like this episode, please go to Apple Podcast and leave us an honest review. And if you would like more information on the 8th notch or connecting with Mike, you're going to find the links in the show notes below. In addition, if you're looking for more information on growing your business, check out our podcast resource center, available at podcast dot. Make eachclickcount.com. we have compiled all of our different past guests by show topic and included each of their contact information. In case you would like more information mentioned on any of the previous episodes. Well, that's it for today. Remember to stay safe, keep healthy and happy marketing and I'll talk to you in the next episode.