Ep. 4 - The Omnichannel Reality: A 15-Year Journey from Brick-and-Mortar to Digital Dominance

The biggest changes in retail rarely look dramatic while you’re living through them. They look like a new checkout lane, a new website flow, a new metric your merchant won’t stop talking about. Our first guest, Dallas Counts, spent 18 years inside Walmart and Sam’s Club across food, impulse, and entertainment e-commerce, and he connects those “small” shifts into a clear story of how Walmart became a true omnichannel retailer.

We talk through the behind-the-scenes evolution from speedy checkouts to self-checkout merchandising, what that taught Walmart about customer behavior, and how those same lessons now show up online as digital impulse and user experience design. Dallas also breaks down the early days of separate grocery and general merchandise sites, why unifying the platforms mattered, and how pickup and delivery turned stores into fulfillment engines.

If you’re a brand, agency, or Walmart Marketplace seller, the supplier insights hit hard: why some categories resisted e-commerce, what the real “cost to play” looks like (from fulfillment to content optimization), and why partnership beats hesitation when merchants are trying to drive company initiatives. We also get practical about the fundamentals, including digital penetration, in-stock, ship speed, and the content basics that make your items discoverable on the digital shelf.

If this helped you think differently about Walmart e-commerce strategy, subscribe to Marketplace Code, share the episode with a teammate, and leave a review with the biggest shift you’re seeing in your category.

Transcript

Welcome And Dallas’ Retail Path

SPEAKER_01 0:08

Hello everyone. Welcome back to the Marketplace Code. I am your co-host over here today, David. Very excited to have our first guest of the show. This is this is a big stuff for us. I know we've been doing just me and Michael for the past few episodes. Today we have what a what a what a way to kick off our guest list over here. We have amazing Dallas counts. I his reputation precedes him, and I'll let him just go ahead and speak for himself, give him a little bit of an intro, and then we'll talk about it.

SPEAKER_00 0:36

Thanks, David. Excited to be here and did not know I was the first guest, so honored to have that. Um but uh excited to be here. Background for me is you know, I'm a longtime guy retail. 18 years in retail. Most of those were at Walmart, 15 years there. Um, starting in operations for the first year and a half before moving into merchandising, uh, which I really appreciated. I don't know that we're gonna get into that too much today, but uh having that operational mindset and background when you're becoming a merchant, understanding how stores work was really important to be able to be a good merchant. Um, but was able to move into merchandising, a bunch of different roles there across mostly food, uh, where I worked in, you know, department 82, which is your impulse merchandise, candy, gum, mitt, snacks, all the fun things. Oh, so fun. You know, always trying to figure out how to get the kids to buy the things so that you know while they're standing in the queue, you know, very different today because most people don't do queuing anymore. Uh, you go straight to the self-checkout and you're out. Um, which I got to do that while I was there too. That was a little fun. But uh went into ice cream, frozen desserts. Oh, wow. That's a delicious. You know, it was it was tough to go from candy to ice cream back to back. Um, my pant size definitely increased a good bit uh from those five, six years of sugar. But, you know, if I had been told as a kid that this was a potential job, I'd have been trying to get that my whole life. Like you can buy candy for the world, you can buy ice cream for the world. This is the best. So it was a ton of fun. Um, definitely had to get the waste back in check afterwards, though. Uh so spent some time there, got to go over to Sam's Club, um, understand the wholesale model, the club model, and uh really enjoyed that. Ran the Cat 40 beverage business at Sam's Club, and then um made made my migration back to Walmart at quite an interesting time, and we probably, I'm sure, will get into that a little bit, but ran the entertainment toys and seasonal e-commerce team. Um, and that was during COVID and some big transitions that Walmart was undergoing. So that was uh a pretty fun time. Yeah. And then I've then I made the journey outside of Walmart. Um, you know, I'd done corporate for a long time. I had been uh there's this guy named Eric Howerton in the area. I'm sure a lot of people may know him in the the northwest Arkansas area. And he had been uh talking to me quite a bit about a startup that he had called White Spider. And, you know, I'd I'd had the entrepreneurial idea for quite a while, but finally he wore me down and had a weak moment. And I made the decision to go join Eric. And I I'm really glad that I did, though. It's been an incredible journey. Um, he's still a dear friend, and uh, you know, now I'm onto my own entrepreneurship.

SPEAKER_01 3:15

Super exciting. I love the the full the full experience, you know, the Walmart for so long, really learning all the different models over there, then agency and now your own, your own gig, you know, taking taking all those experiences, relationships, just smart, smart moves, you know, smart moves.

SPEAKER_00 3:32

Well, I it's definitely a blessing to be in Northwest Arkansas. And I know a lot of people that may be listening to this may not understand. Some have probably been here and totally understand, but the ability to pivot your career and have everything that you want at your fingertips in Northwest Arkansas, and the amount of opportunity here is immense. And so very fortunate to be in a spot where I can make those decisions and it uh be pretty easy to make those changes.

SPEAKER_01 3:58

Yeah, it's it's also pretty crazy. I mean, I haven't been here that long. Like, you know, I haven't been here for like the earlier the first time I was here was I don't know, like about say a year or so ago, which is very recent and things, but like, you know, you've been here forever, you know, and it's like just seeing that that

Northwest Arkansas And Sam Walton

SPEAKER_01 4:15

evolution over time just within the city over here, it's like not all right.

SPEAKER_00 4:19

I'll I'll tell a quick little story. Um, definitely totally off script, not that we have a script, but um so I was actually born in Fayetteville. Uh so most people don't necessarily know, but northwest Arkansas is made up of a number of cities. So you have Fayetteville kind of in the south, Springdale, Lowell, then you have Rogers and Bentonville. And that kind of makes up Northwest Arkansas. You also have Bellavista and some other smaller places, but that's what we commonly hear in the area referred to as Northwest Arkansas. It's kind of its own metropolitan area. If if you were to put them all together, it might feel like a reasonable size city. Um, each one individually is pretty small. But because I grew up in Fayetteville, was born in the 80s, I actually had the very fortunate opportunity to uh meet Sam Walton, um, which is not normal for someone of my age, uh, because you know, Sam did pass away in the early 90s. Um I was pretty young, but uh my grandfather had a car dealership in Fayetteville, and uh in the I think it was actually in 90s, so I would have been like seven years old or so at the time. And he he came in to pick up a car from my grandfather. I didn't know this till way later in in life, but apparently my grandfather and Sam actually knew each other pretty well because they were both early entrepreneurs in Northwest Arkansas. Um, so I feel like I've had that entrepreneur spirit for quite a while. So pretty excited, you know, to not be doing that on my own. But I never really thought about that experience being meaningful until I spent my time at Walmart. Um, and if anybody is listening to this from Walmart, they all know like Sam probably built the most impressive company culture of any company, like has been studied and continuing to be studied, and his everything that he really stood for is still to this day really um shown in the the values and the ethics and how they do business, which is really cool.

SPEAKER_01 6:09

Yeah. I mean, you see the people that have been uh MR for a while and just their mentality and just you know, you see so many of them, you know, branching off, like you're saying, to these to these different companies and the success they've had there just because of that that culture, that personality that they that they strive for definitely very, very apparent. That's crazy. Did you did your did your dad sell him his truck?

SPEAKER_00 6:29

Is that like so? My grandfather actually was selling a car to Alice, uh and his so Sam's daughter at the time, and they had come to pick it up. And uh I again I was like seven years old, so memory's a little fuzzy on exactly how it went down. So my grandfather had multiple sclerosis. Um, so for those and all that, it's a deterrent deterrent degenerative disease that really impacts your nervous system, et cetera. And so you lose motor functionality. And at at this point in his life, my grandfather had moved to a motorized cart, which in like the 90s was a big deal, right? Like it was not that wasn't really a big thing in the medical industry then. Um now obviously it's very prevalent, but um, I do remember, so I was in the conference room watching cartoons or something after school's like three, four o'clock in the afternoon. My mom worked for my grandfather, and um, so she came and got me out of the conference room and was like, hey, you need to come meet this man, and I need you to remember this moment in time because this person you're gonna meet is gonna be in history books. If she hadn't given me that cue, I honestly don't know if I would have even remembered this moment. But she would talk about it all the time as I was growing up. Um, so I went out to meet, it was ended up being Sam, right? So Sam Walton and Alice. And um, one of the things I do remember is that so my grandfather was in the motorized wheelchair, is that when I went out to meet him, he was on his knee talking face to face with my grandfather. Instead of standing above him, talking down to him because he was like motorized, he got down on a knee. And at this time, he was well into I think his, I can't remember exactly how old Sam was when he passed away, but it had to be in those like late 70s, 80s. Um, and he was this courteous individual. And my grandfather at the time was probably like in his 50s. So there was definitely an age gap, but the respect that I had to remember from this was pretty, pretty cool. That's that's that's so I remember that and I remember the hat. He definitely had a Walmart hat on, and that's about all I really kind of remember that. And I just remember him shaking my hand and talking to me and probably asking me a few questions, but I can't remember what they were. Dang, those were like, are you ready to take over Walmart? You know, do you want a job? I don't know. I'll leave that to the the people that are really good at it. That's definitely not my vorte. So it's cool. Sorry, total sidetracked.

SPEAKER_01 8:39

No, I love that. I I think it's like it's great to get a little bit of that culture, you know. People, people tuning in, they want to understand like not just the technical pieces on that, but like get a little bit of a glimpse, you know, especially those who haven't been here, highly recommend just like the trip down here, just to see or left here, right or whatever direction it is for you. But just coming out here and just seeing what it's like. It's it's fascinating for me. Like you think Arkansas, you think, you know, just nothing, right? But then it's like I'm here, I'm like, I feel like I'm like a really like cool part of town.

SPEAKER_00 9:08

I'm like, well, even when you hit the ground on off the airport, you're still probably kind of going, ooh, where am I? Because the airport is kind of still out in a cow field.

SPEAKER_01 9:15

But then you get to downtown Beth and well, it's like, whoa, this is this is like not, it's not just like nice, it's cool, it's it's got modern, it's like got not just forget the people culture, but the just like our culture and everything is just like very uh I guess unexpected, but just what you know, especially what Walmart with the Waltons are just brought to this city is just it's really um I think a couple things you you mentioned there, like the Waltons have done an incredible job um really taking some of the benefit that they've been able to enjoy with Walmart's success and spreading that back into the community.

SPEAKER_00 9:47

Uh the world-class bike trails, Alice's art museum in Northwest Arkansas. I think when she first announced that, people were like, What in the world? Why is this incredible art going to be in Arkansas? They're like, this should be in, you know, the Met or somewhere really fancy, not in Arkansas. Then they come here and they see the museum and they're like, okay, like this is incredible. So uh definitely a lot to to appreciate uh in that regard. But um, yeah, so you haven't been here, definitely make the trip, definitely worth it.

SPEAKER_01 10:13

Most definitely, most definitely.

From Fixtures To Self-Checkout Merchandising

SPEAKER_01 10:15

So I guess in the same vein, what do we what do we want to talk about today? I want to chat about the evolution of you know Walmart, especially you know, being there for that amount of time, seeing it really transition into the digital. I don't know, the digital age is the right word to put it, but really their evolution into e-commerce, you know, touching on marketplace, touching on, you know, where things are today. You mentioned COVID being a major factor. And what's cool is like you don't just have experience within a one niche. You we're working in many different categories. Uh sounds like a lot of CPG, which is, you know, obviously, you know, very big business, and but as well as an ETS. So very good dynamic, very good uh understanding. So I'd like to kind of hear a little bit like what was, you know, give us like an overview of like how things, how things started. When did you feel like it was going from just we're just a store business to the e-com piece just kind of kicking in, that evolution over time? I'd love to hear a little bit about that story.

SPEAKER_00 11:11

Yeah, absolutely. You know, um I never really thought about it at the time or any of the jobs that I was in, but in reflecting, I mean I was fortunate to be in some intersections to really experience some major changes. Uh and I think that began when so before I moved into merchandising, I spent a year in our real estate division. And in real estate, there's a division called the Project Management Office PMO. I don't know if they still have it or if it's still called the same thing. But essentially, this PMO would manage all of the store fixture or new remodel requests. So if you need to uh if you wanted to switch out refrigeration units or you needed new uh refrigerators to go inline within the the belts or the check lanes, or if you needed a new fixture that would go for your makeup within like Maybelline's rolling out something new, and they wanted like all that would roll through this project management office. And that project management office would coordinate between the buying team called Goods Not for Reseller, Department 99, and the store design, store layout, store print. Basically, they would have to get all this added so that it was there was a good record. We knew that it would sit, we did all the fire testing, all that kind of stuff. So that PMO was a pretty interesting intersection. I got to meet a ton of people, worked across all these different departments from merchandising to ISD to all the store layout, transportation logistics, goods enough for resale. Well, one of the projects that I got to start while I was on that team was self-checkout merchandising.

SPEAKER_01 12:40

Wow.

SPEAKER_00 12:40

Uh I'm sorry, actually, speedy checkout merchandising. So before self-checkouts, you might guys might remember, Walmart used to have something called 10 or 20 items or less. So it was for small basket, express checkout, right? And they were usually on the ends by the either the food entrance or the you know home entrance. Uh and you would have a few of those where it's just I got a small basket just trying to get in out. So they were called speedy checkouts. Well, historically, there was no merchandise on those speedy checkouts. It was just a cash wrap with a cashier and you go out. Well, there's a lot of opportunity to engage with the customer while they're in that speedy checkout. You think gas stations for forever have been merchandising in their similar model. Quick, click, click. Yeah. Um, so I got to start a project in real estate to uh merchandise the speedy checkouts, which was really cool. Uh and then evolve from there, I went to become the buyer for that desk and I got to finalize that uh that um speedy checkout merchandise, and we evolved it. But then when I was the buyer of Impulse, so D82, we also rolled out self-checkouts. And then as soon as we rolled those out, I was like, well, we just learned we should have put merchandise in front of speedy checkouts, which by the way was an insane project. We spent, I think, like $15 million on fixtures or something like that for the speedy checkouts. And in the first year, we had an incremental like $400 million in sales. Wow. Like, wow, incredible. So we definitely knew that as soon as uh self-checkouts rolled around, we needed to also merchandise those. So I had this cool evolution evolution, not even just from a digital perspective, but from a physical perspective of how are customers shopping? Customer behavior, when they have someone that's doing the interacting for them versus their interacting with a device. So as I've gotten older and kind of looked back in my career, I'm like, man, I've really gotten to kind of be engaged in every step of the way as the customer has evolved how they shop. So that uh, you know, went on to um when I was in ice cream, we rolled out the very first grocery Walmart website. So if you'll remember, they didn't used to be integrated. Right. There was a web page for grocery, grocery.walmart.com, and there was a regular Walmart.com. All food was on grocery, all general merchandise uh consumables, et cetera, was on the regular. Uh and so when we did that, like we we were asked to help build the taxonomy. All we were merchants, we knew nothing at this time about really about digital. So that was pretty cool getting to like help them do that. When I went to Sam's Club, got to learn different uh and how the customer engages in a club model. And then I got to come back uh from Sam's Club to Walmart during a really pivotal time. When I came back to Walmart was during COVID, and it was right when Walmart decided they were gonna merge the buying team for digital and the buying team for physical. So they used to have two completely different buying teams. The buying team for digital used to sit in uh San Bruno, Sunnyvale area in California, and obviously the physical in-store was here in Bentville, Arkansas. Um so that was pretty Yeah, that's that's major.

SPEAKER_01 15:49

It's huge. Yeah.

SPEAKER_00 15:50

Um, and then obviously the evolution of the Walmart website to the new platform where they integrate both the what we call the grocery. We used to call them the blue and the orange hallway. That's probably just for the internal people. I don't know that everybody external would know that. Um, but we merged the food and the general merchandise website into one. That was a big change. And then we had COVID during all this as well. So a lot of different things. And within those website evolutions, obviously, we had store pickup, we had delivery from store, and then this evolution of how does a customer shop online but still get their product. I said a lot.

SPEAKER_01 16:22

Yeah. I'm gonna take a breath and drink. For sure. Yeah. I mean, so many, so many different points there. I want to like kind of dig into a little bit. You mentioned like just the merchants now, you know, can be on top of both the digital and the in-store and how much that has impacted things, right? Because now they're responsible for not just like how their store store apps are doing, but also like how their categories are doing within the digital realm, which you know, eventually now even marketplace, like third party, like it's crazy. Like, but like the merchant has a they they matter, like the market, the marketplace sellers matter to them in a degree because their categories need to improve on both realms. It's not just about a specific supplier, it's not just about a specific shelf, it's this full digital shelf and physical shelf under one. So it's it's pretty interesting, and that kind of is what's led to what I believe today a lot of these digital native brands having a little bit more of a streamlined process to get in store because it's not they're a bit they're factoring in a big part of the the the merchant's PL because hey, check it out. This guy just came to Walmart a few years ago, got the opportunity through marketplace, they're killing it. They're not just they don't even know what 1P is or whatever, they're not even talking about, they're just 3P, 3P, but building these major businesses. I was like, wait, let's talk to these guys, let's see if there's opportunity then and that's like a classic, you know, like online to shelf story just because of this change. And just again, like Walmart,

Omnichannel Pressure And Amazon’s Scale

SPEAKER_01 17:45

I guess, recognizing the direction, right? I'm just curious, like, were there a lot of conversations of let's say, you know, Amazon or just e-commerce as a whole that was kind of leading in. How was that like was that a big conversation internally, or like that you were getting that pressure, like, oh, we gotta do e-commerce?

SPEAKER_00 18:04

Well, I mean, and I can't believe we haven't said this two-letter word yet, but no different than AI is active in today's conversation and how we're evolving. E-commerce was a big part of that conversation. And I think the burse word we used to use then that was really hot wasn't e-commerce, it was omnichannel. It is how do we become this omnichannel retailer? And one of the facets of omnichannel is you have to be good at e-commerce. Uh, and so obviously Amazon was a big part. Uh, you know, they went from when I first started not even being on the radar, we we talked about, you know, Target back then or um Kroger, Dollar General, some of these other companies that weren't that much smaller uh than Walmart um in the scale of things, right? Now they're significantly smaller, right? Especially when you look at uh stock market and you look at market caps like Target is now I think like one-tenth the size uh of what what Walmart is from a market cap perspective. But back then we weren't that far apart. Um it's crazy. And so we we went from the evolution of talking about our brick and mortar competitors to no longer really talking about brick and mortar competitors in with with exceptions, right? So price was a big deal when Aldi came into the US. Um that was a big deal, right? I'd always worked in food. Price has always been the forefront. So no matter what, that has always been what Walmart stood for, uh and still does to this day. Uh so I would say like that that kind of helped facilitate things. But then as Amazon and e-commerce grew, Walmart went from this place that you could get everything to oh, there's more things in the world than just what a super center can hold. And a super center can hold roughly 140 to 150,000 gams. But when you get on Amazon and they they started hitting that critical mass and they've got 500 million items that you can pick from, then you can start to feel the difference between your assortment and what you can get in a store and what you can get online. Uh, and then as that evolution of ship speed really ramped up, you know, sure placed, they did a great job opening up uh you know fulfillment centers across the United States, strategic locations, being able to try to get that ship speed really down. Um, I still don't, I still remember, you know, one of the first times I ever ordered from online and I got my package in like a day. Like that was a big deal. It's like, what did you do? Now it's now we need it. Yeah. Now like I, you know, my I still been to Arkansas store, order everything from Walmart. I have the ability to express to I can get stuff in 30 minutes or less. Insane. 30 minutes or less. So if I'm just grilling out and I don't have something, or you know, maybe I'm I got a home project, and instead of like stopping my project and having to run to the store to pick up some nail screws, whatever tool, something going on, I can just have it delivered and not miss a beat in my project. It's good and it's it doesn't really cost like the cost is minimal. Yeah. Uh and there are already low prices. So like if I pay for the extra convenience, like I'm probably just paying the same price I would if I'd gone somewhere else.

SPEAKER_01 21:03

Yeah, you've been driving to the store, forget about it, you know. Yeah, it's time waste plus the gas, like for sure, for sure. But then they can't hit you with that impulse, the impulse merchandise, you know, like fair, yeah, fair. No, no, but they I I mean that's I that was an interesting thing. I was uh sidetracked on this conversation, but like impulse merchandise within e-com. Like there is that, like, you know, you know, cat, what do they call it when you like just at the end of your car? There's like stock up.

SPEAKER_00 21:29

I think they call stock up. They also have the my items, um, which is a big piece, right? So anytime you're purchasing something, they now can be like, hey, remember, you haven't bought this in a while and you used to, like, do you need this again? Well, it's more of the impulse that you're getting nowadays. Like getting some of those true impulse items like sugary candy is a little bit harder. I think the retailers are still doing their best to put those items in the right place. And I think the consumers still would be in you know open to engaging with though that product as long as it's not intrusive, right? So Trying to find the ways to add that into the experience, which I was obviously trying to do when I was in e-commerce. Right. Without it being intrusive and being uh, you know, they're got permissibility by the customer that you can put this into my user experience. Because above all, user experience is most definitely from the retailer perspective, you need that to be easy, flawless uh for that customer. Otherwise, they're not gonna come back.

SPEAKER_01 22:21

No, for sure. And it's definitely it's like seeing seeing the evolution in the e-commerce space for that customer experience, just like you're saying, just the having the two websites, realizing this is not a long-term solution. We need uh, we see what's going on on the you know, on the other side of the fence. Like let's let's tighten this all up. And I don't know, the proof is in the pudding, right? What was it? Just what did it cost? 700 billion? Yeah, 716 or something. Oh my god, that's great. Like that's gotta on top, you know, long way on top, baby. It's it's it's really crazy. And yeah, just you know, being that competitor to in the e-com world and just their growth over there is just it just it just shows it just shows the cutting edge. I'm just curious, you know, like going back to you know, working

Supplier Resistance And The Cost To Play

SPEAKER_01 23:05

with these suppliers in these different in these different uh departments, what was their take on it? Like these people didn't, I don't know, what did they understand e-com? Like what was kind of the were getting a lot of pushback from them, like, oh, forget that online stuff. We're just trying to sell our products retail.

SPEAKER_00 23:18

It's a good question. And um, I'm gonna answer this a little bit different. I think it depends on the supplier. So I worked in two different divisions and had two very different understandings with my supply base on e-com. When I was in food, that was not a heavy e-comm item in the beginning, right? There just not a lot of people bought food online. Yeah. And so, and back then ship speeds weren't what they are today. And so there was a resistance to really want to lean in. Um, on the flip side, when I worked with you know, entertainment toys and seasonal, where TVs and other electronic items or toys have been ordered online for years because you didn't have that immediate need. Like food, typically, there's a more immediate need. If you are buying a toy or something, you're probably thinking further out there's an event at Christmas, a birthday, uh, you know, baby shower, something that's happening that's causing you to want to go purchase something so it's more planned, you have more time. So there's been that ease of use in like that in the general merchandise section where you could order online further out. Uh the supply base received it very different, kind of depending on the history of their category. Uh, so the food I definitely saw resistance at first. And, you know, there is an expense to being able to play um meaningfully in those spaces. And so if you wanted to play in that space, there typically was a cost associated to some degree. And I'm not saying like the retailers asking for money, but whether that's in your fulfillment chain, how you're structured, how you're set up, are you DS?

SPEAKER_01 24:45

Advertising, listing optimization, just time, you know, it's like yeah.

SPEAKER_00 24:49

And and even just in the beginning, it's like, are you in the FC? Do you have to ship a different truck to a different location? There was this added complexity that, you know, was a cost. Um, and so there was some resistance there. Like, we don't need it. It's it's not meaningful to our business because back then it was probably a a point of their total sales um nowadays, right? Like you've got probably 30 plus percent penetration on your digital purchasing within that category. In fact, you probably have a higher penetration um growth in food now than you do even in your merchandise because there is the convenience of speed. Yeah, I transparently have in a store to buy my own groceries in probably a year. It's just so easy to do all the blurring online now. You can get it within, again, 30 minutes, same day, whatever it might be.

SPEAKER_01 25:36

It's so good.

SPEAKER_00 25:37

But um uh definitely different resistance from different ones. And so I think nowadays, no, but there was in the beginning. And I think you've seen that across other things beyond just e-commerce. There's there's not just been, hey, we want you to sell online. There's been hey, we want to sell, we want you to sell online, but we also want your extended assortment on marketplace. We also want you to advertise. Hey, we want you to lean into Centeledata. Like there's these other things where there's an this initial resistance. But I think um I'm gonna go maybe a little off on this. Please, I this is so insightful. Uh, I think one of the things I would like, depending on like if you're in that supply community and you're listening to this, that I would encourage you to is partnership is important. And what do I mean by that? I mean partnership with the retailer in your company. The more you're willing to lean in with the retailer, the more they're gonna be willing to lean in with you. Uh, as a merchant, if I had a supplier that was willing to test and learn with me, I'm giving them opportunities I might not give somebody else. Because guess what? On my eval, there's also things where I'm supposed to be driving company initiatives and I've got to find the way to do it. And maybe I don't know the answer out of the gate, but if I have someone that's willing to test with me, they're gonna be rewarded for that because once I learn from that, I am gonna roll out those practices to the rest of the suppliers. And they're gonna have to do it anyway if they want to continue to be a meaningful player.

SPEAKER_01 26:59

So I think opportunity to new new programs.

SPEAKER_00 27:02

How you really lean in on those programs, whether you know it was back in the day, like getting your extended assortment on marketplace, you might not want to do that. It does complete, it does uh create some complexities, like having to manage your price differently. You gotta understand like more of your Amazon play, your Walmart play, your Walmart One P play, your Amazon One P play, your Kroger play. Yeah, it adds complexity, but it also adds opportunity if you really go for it. Um and I'm I'm sure we'll probably get there. But that evolution of how do you get in store, right? Like holy grail, Walmart for forever has been like, I want my item on the shelf in the store. There's still a lot of reasons you want that. Like it's still very meaningful and it can produce the the most revenue for your company, but the path to get there is not the same it used to be.

SPEAKER_01 27:45

And those even like the extreme of that is those suppliers who don't adopt and they resist, and then even when it does become standard, they're so behind in it, they end up losing their shelf space to to that digital guy who did care and that guy who maybe was just a just a marketplace player and suddenly it's like, what the heck? I've been doing this. And I was like, No, you did you're not, you gotta keep up. Things start changing.

SPEAKER_00 28:08

That's a that's an example I actually used to use when I was uh running entertainment toys in Season. So one of the things that I I appreciated about getting to be an e-comm, but having a merchant background is I would still get to sit in on the big supplier meetings and I would try to help offer other perspectives. And so one of the perspectives I used to offer is look, just because what you might think is store traffic may be declining because there's this transition to online, that doesn't mean that the number of units moving through that building are declining. Because as Walmart has built, they have built a very good uh fulfillment network with their stores to ship from the store, deliver from the store, do pickup and delivery. And so just because the people walking in that store may, and actually I don't think they have declined. I think it's been, it's still growing surprisingly, even with all the e-commerce traffic. Uh, if and if it's not growing, it's probably flat. Um I think there's still more than 140 or 50 million people every week going through a Walmart in the US, which is just mind-bottling.

SPEAKER_02 29:06

Worth.

SPEAKER_00 29:07

Uh, but the units through that store are are going up. Yeah. I mean, four out of five channels are so as we think about that, a traditional basic of merchandising is pack and a half. What is pack and a half? That means you need an up shelf space that you can fit a full case and then some on the shelf. And if you that's so that's step one. Step two is days of supply. You need at least three days of supply to make weaken days of supply, even to make sure that you don't go out of stock on the shelf.

unknown 29:36

Okay.

SPEAKER_00 29:36

Well, that was just foot traffic. Well, now it's foot traffic plus e-com traffic because they're using those shelves to pick. Everybody I'm sure has been in the store, has seen the Walmart pickers picking orders off the shelf. Sometimes they can do some high volume items through special setups in the back room, or maybe they've, you know, done some of the tests like we have over at Store 100, where they have a little micro fulfillment center that they can use for some of the high volume stuff, but they're picking on the floor. So the higher volume your item is online that is fulfilled for store means you need more shelf space in store. So if you lean into that online piece, you're driving up your velocity on an actual shelf. Well, guess what? The more velocity you go, the more shelf space you need. The more shelf space you need, the less competition shelf space is gonna be there. So there's this it makes some there's this uh aspect of like the more the better you can do online as a one P player, the better you're gonna have uh space in store.

SPEAKER_01 30:31

I I I mean, I think a lot of suppliers are definitely feeling that now. I think some of them maybe it took a little bit of the negative, maybe I don't know, a lot. There's definitely those that took a negative piece at seeing the ones who did lean in and not seeing that success. Um, but definitely those who have seen the success who did lean in earlier definitely a lot of a lot of proof. And this just it just makes so much more sense now when you understand the merchants dealing with both digital and and store. It just make that's it. It's the same, it's the same products, the same, same shelf. It all impacts each other. There is an omni market, you know.

SPEAKER_00 31:08

I think the cool thing about it too is there were definitely a lot of big players in the space that were resistant, but it gave way to some of the smaller up-and-coming brands. And when they were willing to lean in, they are now big brands and have probably done well and been purchased by some of these CPGs. Right. Like if they leaned into the e-commerce and the uh spending on Walmart Connect, they gained the sales velocity, they then needed the shelf space. Well, then guess what? As you as your main items do well, then you want the line extensions. I want the extra, you know, flavors or colors

Digital Velocity Drives Shelf Space

SPEAKER_00 31:40

or sense, whatever it might be, depending on the category you're in. So then your shelf space just continues to grow and grow and grow. Uh so big big opportunity for suppliers to really understand how do you partner in a way that you can maximize your your opportunity.

SPEAKER_01 31:55

Really, really amazing. Um I'm curious as maybe like once pickup and delivery like rolled out, once that became something, was that did that like have a little bit more of a push? Like, oh, this I understand it a little bit more now.

SPEAKER_00 32:09

Well, I don't know the pickup and delivery or pickup specifically. Like, I think that one, like they saw some increase in base volume, but it it wasn't anything that they needed to necessarily do that different because we still had those separate hallways. Your items were were still kind of limited to like what's in the store was what was online to some degree. But as the websites came together and the assortment online really started to expand, there definitely became this need for um improvement in how do you find my item, right? Because in the beginning, when you just had the grocery website, again, like when I go to look at my ice cream, I only had essentially the ice cream items that were in the store. Well, now though, I can see the ice cream items available everywhere, not just there in my store. And from running ice cream, I can tell you that there's a lot of different brands and opportunities to buy from other areas. More expensive, not easy to ship. Still need to probably figure that out. But you have the ability to see all the different Ben and Jerry's flavors and all this other things. And you stand in assortments. And so now you got to be more thoughtful about like, well, how do I make sure I am in front of the customer? In other categories, obviously, this is more prolific. You know, ice cream is still somewhat limited because cold chain and shipping, but um, you know, like barbecue sauce, probably a great example. Shelf stable. There is regional barbecue sauce, I feel like, in every city. So if you look at the nation of barbecue sauces, and people are very prone to like here in Northwest Arkansas, we have rights, uh, which is really big. Obviously, I think it is getting a little bit bigger nationally. But if I'm in Kansas City or Florida or somewhere else, I may not know anything about rights, but I do know the local barbecue chain probably has a sauce that I really want, and Walmart's gonna carry it. So as you start to think about the national assortment coming together, in my one store, I may have had 50 items, but now when I look across the nation, I may have 50,000.

SPEAKER_01 34:03

Right. That's such an interesting, interesting piece. I mean, the grocery specific angle is obviously, I mean, that's you know, obviously Walmart's bread and butter. Uh also that's yeah, uh that's also funny because I don't know.

SPEAKER_00 34:16

That's always very um I I think is is the the big piece on the e-com though, and I've heard, you know, I've I've seen some of the the material that you guys have put out from the cell court side, and I think it's really good material. And if people aren't listening to it, they definitely should. And I honestly wish I had some of those you know insights when I had taken over e-com at Walmart. But um uh I I think the thing that still strikes me that I continue to have conversations on that I thought people would have fully figured out by now is how important basics are. Um I often get asked, like, what is the thing that makes you good at retail, at e-comm, at whatever? And it's not a complicated answer, honestly. Um the execution of it might be difficult, but the philosophy of it is is pretty simple. And that is basics and everything. No different than if you're running a professional or school sports team or any any sport. If you can't do basics, you will not be competitive.

SPEAKER_01 35:20

For sure.

SPEAKER_00 35:20

Fundamentals are it's everything.

SPEAKER_01 35:23

It's everything.

SPEAKER_00 35:24

You know, and so very similar to in-store price, in stock, availability, ship speed. You get those basics down, that's fundamentals, those are table stakes. If you can't nail that, you're in trouble. And then for e-com, you have to get your basics of content so that you're discoverable.

SPEAKER_01 35:43

Um couldn't couldn't be said, couldn't be said better. And what's what's interesting is now like that shift, you know, like understanding that yeah, these things are all super important, but now that shift from from I would say like a lot of brands, a lot of suppliers we work with, and they're getting these digital penetration goals is like it's it's pretty crazy, like from going from again this super strong store, like that's what it is, to now it's that's the number one metric for so many suppliers today, which again it makes sense within this full picture, within the direction Walmart's going, you know, to be this e-commerce behemoth, which it is already, you know, competing at competing this space, continue to dominate Amazon and total and total retail. And that's now the metric. That's now the metric that these merchants are pushing for. It's not just about you know all these other pieces. It's like, what's your content score? What's your digital penetration?

SPEAKER_00 36:38

If we back up a little bit and we say why digital penetration, I think is important, right? If I'm I'm a merchant and I'm thinking about I have this goal, hopefully they're understanding why they have that goal. And if you're the supplier, you should be thinking about, well, why is digital penetration important? The importance to this is isn't that I hit this penetration number. It's that I'm being intentional about meeting the customer where they want to be met. And so typically, when there's a goal and maybe you're well under it, there is data that shows in that category that's where the customer wants to be met. And so if you're trying to achieve that, that means Walmart likely is saying, hey, you know, let's take sports nutrition or something, there's picking up a RAM category. If in the industry 60% of all sports nutrition is purchased online, then Walmart should be trying to get to 60% of DV of digital penetration. And if they're only at 10%, you're way under. You're way under. And so, like, why is there a gap? And how do you start to close that gap? And so I think once you mindset shift a bit of just like, hey, I have a metric, and you really understand why do I have this metric and what's driving that metric, then I can start to say, how do I approach this in the right way? Um, and so that's when you start getting into, okay, if it's 60% nationwide, let me understand, let me break that down. How much of that's, you know, direct to consumer, how much of that is within the retail space, and you can start to understand what makes sense for me to try to achieve. But then also if you know that a big part of it's direct to consumer, if Walmart's trying to play into that space to some degree, like how do you help them know more about that direct-to-consumer individual? Um, and then you can put strategies in place, whether you're working with Walmart Connect, you're doing more upper funnel advertising all the way down to your lower funnel just search ads, et cetera. So I think really understanding the reason behind a metric and not just hearing the metric is important.

SPEAKER_01 38:33

I mean, it just it also just makes sense just from a customer perspective, right? Everyone is online, right? Like you're saying, foot traffic definitely, uh even if it's staying, if it's staying the same. Yeah.

SPEAKER_00 38:44

You know, um, I think it was John when he was CEO of Walmart US and Tom uh used to say, what's the closest store to you? Nice. And in the beginning, people would be like, ah, store 100, it's a mile down the road. And they pull their phone and be like, no, it's right here. This is the closest store. And it's to everybody. Yeah. And it's not just to Walmart, it's to all stores. This is the closest store, and it's in your pocket.

SPEAKER_02 39:10

Yeah.

SPEAKER_00 39:11

And so that digital penetration piece, it just you think about it, you can have this on you at all times. I can't always be in the store.

SPEAKER_01 39:18

Yeah. And so it's like people look at like, oh, I'm getting pushed for 12%. It's like, just think about it for a second here. You know, like it should be, it should be a hundred percent, you know, like it should be, it should be very high comparatively, obviously on category specifics. But if that's where everyone's shopping, and again, if you look at e-commerce versus retail as obviously a whole hell, it's the shift is is insane. The shift is insane in the direction that e-commerce is going and has gone. And just thinking, just thinking market share percentage-wise, just it's it just makes so much sense that digital penetration is going to be that metric that all these merchants are are really are really pushing for. It's it's just funny, like, you know, like oh 30% is like is like a high digital penetration. Like, is it? Think of, I don't know, obviously every every generation is different, but think I just think for myself, right? You mentioned how often you are you going to the store for myself, right? Especially if you're busy or you're you're the whole day, you're just you're just out, like you don't have time, just go to hit a store for do this. Everything is being purchased through your phone. Everything is going there. My my digital penetration is probably 90%, you know, of everything I buy. So that makes sense that you know a lot of a lot of products today should be like 30% seems seems low. Obviously, you have an expanded assortment, and that's where now you leveraging marketplace and you leveraging, you know, let's say onep.com just to continuously bring more digital. And maybe overall, if you look, maybe your share within a category could be higher. But that makes it makes so much sense now for an individual item or subset of items that you should have that higher metric. It just very, yeah, very common sense.

Basics, Digital Penetration, And Closing

SPEAKER_01 40:55

Absolutely. Really great. I think this is no, this has been been really solid. Some really I love the history. We got the history piece. Yeah, probably a little too deep there. Sorry. No, it's uh I love I think it just gives us so much more of that authenticity to like it's not just we're not just here, just like information, information. Like, no, here's here's a little bit about the reality, here's what it's like over here. And you know, I don't know how many people listening have have been here in the first place, or maybe just been in and out for a quick line review. Didn't really get a chance to do anything like check out down to downtown Bentonville, like get out, go to a bar, and like see like what the heck, like this is this major. I don't know. I was somewhere last time, I was like a 20-foot piece of art on the wall. I'm like, what the heck?

SPEAKER_00 41:33

It was like this is yeah, there's um there's an incredible food scene that has developed in the last five years here um with some really talented chefs in the area. And there's again, like keep leaning into the the culture and the the art, like everywhere you turn, there's new things going up that are just incredible. You got that momentary, which is part of um the museum, and it has a six-floor, you know, uh bar that you can go to. But down below, there's a bunch of other art installations that you can see while you're there. It's just really cool history everywhere here in Northwest Arkansas. And I, you know, I do think that in a way that all is getting pulled into Walmart, and Walmart is a culture and their new campus. You gotta come see the new campus. It's incredible.

SPEAKER_01 42:16

Oh man, it's it's beautiful. And it's also uh one last piece, which I I think is it's fascinating. It's like the on the culture piece. One last time I was in a we're in a just getting getting out of LA last night at uh at one of these bars. And it was like eight, nine o'clock. I walk in, there's like people on their laptops working out here. I'm like, what I like, you know, obviously work-life balance, yada, yada, yada. But like just seeing that like people are out here just they're sitting down, they're working, they're they're drinking, they're having a good time, but they're also like, it's a very, it's like a very, it's got that hustle mentality while also appreciation of the of the modern and and you know, taking it easy lifestyle. So it's really cool balance that exists here. It's really, it's not something you would expect outside of, you know, maybe maybe a major metropolitan like New York or even LA. Like I just felt like I was like, oh, I'm in a really cool part of downtown right now. And I'm like, if I sent you my location in the US, you'd be like, what are you talking about? You know, I'll be.

SPEAKER_00 43:12

And the cool thing is for now, everything's totally about 15 minutes away.

SPEAKER_01 43:16

You could yeah, you could even like just just within certain areas, just walking around, but just yeah, the the amount of yeah, the amount of stores, bars, just in a short restaurant, just in a short walk. And it's right from the office. So you don't even have to use, you know.

SPEAKER_00 43:30

Yeah, I mean, you could have some pretty cool office spaces around here that it's great for the associates because they're so close to activities or they're close to great lunch locations. Like it's close to home. Yeah. It's it's a nice place to live and get to work.

SPEAKER_01 43:45

Yeah, can't wait to see it evolve. All right, Dallas. Thank you so much for appreciating it. Thanks for having me. This has been super informative. Can't wait to do more left Ivy again on in the future. That'd be great. Still can't believe I was number one. Yeah, what a surprise. Hopefully, we release it in the right order. You know, is that what it is?

SPEAKER_00 44:00

Yeah, it would be interesting, right? Maybe you would release a different one uh first. You said number or first guest, not necessarily first episode.

SPEAKER_02 44:06

No, no, no, no. That's a leeway. Yeah, first guess. Well, thanks, David. I appreciate you having me. Thanks so much, Zach. Alrighty.