In times of crisis, new and profitable business models can rise out of necessity. That was the case when Vitamin Shoppe wanted to make sure they could continue to serve their customers’ needs during the pandemic.
Quartz Network Executive Correspondent Britt Erler sat down with Andrew Laudato, COO at Vitamin Shoppe to discuss the strategy and planning behind Vitamin Shoppe’s transition into shipping directly from store to customer.
Andrew shares ways to:
- Get started on your own digital transformation
- Implement Buy Online, Store Ships (BOSS) model
- How to implement small changes for big results
Quartz Network: Can you share some context around your current role?
Andrew Laudato: Of course. COO means a lot of different things in a lot of different companies. The Vitamin Shoppe is a health and wellness retailer. We run over 700 stores in the U.S. We have a website—VitaminShoppe.com, which sells direct to customers. We have international partnerships and wholesale agreements with many customers. So we’re a brick and mortar plus digital omni channel retailer.
As COO at the Vitamin Shoppe, I oversee our Supply Chain. I have the revenue line for Vitamin Shoppe.comm as well as technology. So those three things work really well together to make sure that we’re delivering to the consumer. I also oversee our quality and commercialization group and our strategic sourcing team.
Quartz Network: Tell me about the digital transformation that is at the center of what you’re working on at the Vitamin Shoppe?
Andrew Laudato: The pandemic was a great accelerator. Things that were already happening are happening much faster. Also, more and more people are interested in health and wellness, which has also helped our business positively.
The word “digital” gets thrown around a lot by retailers and marketers. The Vitamin Shoppe digital is not just about ecommerce. Digital is about marketing. It’s about how we talk to consumers. We’re sending digital receipts.
Digital also is really important for us in our retail stores. So how we’re engaging with the customers, product information. We just read a study from Retail Dive that said over 87% of consumers do research online before they shop in a store. So at the Vitamin Shoppe, more than 75% of our customers are shopping in store, but they’re being influenced and doing their research before they get there.
Quartz Network: With a digital transformation, how do you ensure that your team and your retail stores are current with new practices and strategies?
Andrew Laudato: We run an agile shop. It’s about iterative, small improvements that add up over time. So we’re never having a big bang, we’re always just adding more and more capabilities. But you have to have a really big investment in education and training, both for product information. Expertise is one of our pillars at the Vitamin Shoppe on product, but also on the tools, the technology. We spend time, energy and money making sure that we’re constantly educating our employees, which we call health enthusiasts.
Quartz Network: Digital transformation covers a lot of different areas. How did you pinpoint your focus?
Andrew Laudato: Start with what the customer needs and what the customer is looking for or customer pain points. A lot of innovation is about solving problems. So if it’s difficult to shop online, if people don’t want to wait, then you do, buy online pick up in store. That’s solving a customer need, and you keep track.
The nice thing about a retail environment is with 700 stores, we can try things in a small fashion. So we can do something in one store, and if it works, we can go to 10. If it works in 10, we can go to 100. If it works in 100, we can go to 700. I always say I never screw up 700 times, but I screw up once or twice a lot.
It’s really similar online. We want A/B testing. We have a new feature, maybe a new way to check out or a cart. We’ll just show that to a small percentage of customers and evaluate how it does. So, if we have a new feature, it usually works fine. But when we’ve developed something, tested it, and it didn’t perform – then we never rolled that out any further. You reduce risk, and you’re able to move more quickly by listening to the customer. Then testing, learning from that test, and reacting to it.
Quartz Network: Can you explain this new program you have in place called BOSS, which stands for Buy Online Store Ships.
Andrew Laudato: This project was not in our plans going into 2020. But when COVID hit, there were a lot of struggles with parcel carriers in delivering to the customer. Frankly, we were very worried about what happens if we had to close one of our distribution facilities. We have two distribution centers, basically an East Coast, West Coast model.
We sat and had risk planning, and said, “What happens if there’s an outbreak, and we had to close?” It would be detrimental to our business, and we had inventory constraints. If you think about stores that are either closed on reduced hours or holding inventory, the customers want, but they can’t get to it, because it’s not available.
So the idea was, let’s build the capability to ship from our stores. That’ll reduce our risk, because now we can spread it out over the chain, and it’ll go and get that inventory. So that really was the impetus to kick the project off.
Some of the other benefits are speed to the customer. So even when the parcel network is running perfectly, I’m talking about FedEx and UPS and those carriers, retailers that have a nationwide store network have a huge advantage, because we’re within one to two days from everybody in the U.S.
We sell products that have expiration dates. So the idea that if something’s in the life, and we could ship that to a customer. I mean, it’s popular in apparel, where something’s at the end of the season, and someone wants the last size, small yellow sweater. For Macy’s, they can ship it to them.
So that model, although we’re not as fashionable as, say, apparel, our products do have a life. Some of our products come in and out. So getting it to the customer, selling that last bottle, and fulfilling every order. These are all the reasons that we took on this BOSS program.
Quartz Network: Do you have any new processes or IT structures that you’re looking to implement with these changes?
Andrew Laudato: We have a three-year roadmap and a long list of things to do. I think there’s more in front of us than behind us. Our program is only in 42 stores right now. So 42 stores doing 25 orders a day will be over 1000 orders a day, but we’re starting to think big and say, “Could this be in 200, 300, 400, 500 stores?” There’s a chance to grow that program.
We’re now live with Instacart, which is another pandemic project that was a big success. That worked for us. Just building more and more capabilities on VitaminShoppe.com, bringing mobile point of sale into our stores. Later in the year, we’re going to keep looking at other ways to expand our assortment, and expand the places where we sell our products as well.
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