Episode 13: How Walmart is Bridging The Physical and Digital Divide

“When you work together as a team, digital and brick-and-mortar, you can increase your value in the market, not only as a strong competitor, but also for the consumers.”

In Episode 13 of People in Places, Leticia Espinosa Vera shares lessons from her experience leading digital transformation at Walmart.com, Mexico. You’ll learn how Walmart teams work together to create a stellar customer experience, both online and in-store.

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Read the Transcript

John R.: Hi everyone, and welcome to another episode of People in Places, a podcast that’s all about helping you improve the visitor experience. I’m John Rougeux. Our guest for today is Leticia Espinosa who was recently the Head of E-commerce for Walmart Mexico. Now, Leticia has quite the background in retail. She’s not only spent time with Walmart but also with brands like Microsoft, Pepsi, and Sony. Today, Leticia is going to share her perspective on what retailers are doing to create a more seamless experience between the online and in-store spaces. So if you’re curious how retailers are bridging the physical and digital divide, listen in to our interview with Leticia Espinosa.

John R.: All right, Leticia, thanks for being on the show with me today.

Leticia E.: Thank you for having me.

John R.: Yeah, you bet. Now you’ve got a pretty interesting background with your experience at Walmart in Mexico, and then a few other brands such as Microsoft. So to kind of set the stage for today, can you just tell me a little bit more about your experience and what you just finished up at Walmart and where you’re headed now?

Leticia E.: Yeah sure. So, I consider myself to be a digital executive, a digital business executive. I’ve been in several industries, different companies, international and global companies. But for the last maybe 10 or 12 years, I’ve been very, very keen to do innovative and to try on digital stuff here in Mexico. So, my last role in Walmart was in Digital Transformation, where we were trying to embark this adventure of becoming an agile organization and adopting all these methodologies to be faster and simpler and going with a better offer for our customers.

Leticia E.: Before that, I ran walmart.com for groceries, home shopping, and for the general merchandising. So, very exciting stuff there too, and the digital arena is getting very complex and very competitive so a lot of challenges down there. And of course being a brick and mortar, which is trying to expand into the digital world, and the challenge is to converge the physical, and the digital becomes a challenge per se. So very, very … a lot of learnings a lot of stories to tell around that. Before that, I was at Microsoft managing LATAM, Latin American countries and here in Mexico as well and before that ANTA Chico, which is an exciting, exciting industry the CBG Companies are so exciting to work with. The consumer at the center of every decision and everything we do is to try to connect and engage with them. So, as a consumer at both, those brands need to evolve. So, digital was a very particular piece of that equation as well.

Leticia E.: So, yeah that’s me and right now I’m a founder of a digital startup and we are having different conversations and getting to go with different companies that are struggling or that have different digital challenges right now in Mexico. So, that’s where my new adventure is going forward from now.

John R.: Good deal. Well, given all of the success and variety of experience you’ve had I don’t doubt you’ll continue to see success in that new venture. Your experience at Walmart I think is really interesting for today’s conversation because as everyone knows Walmart’s origins are in the brick and mortar space and you lead the digital e-commerce effort for some years for Mexico. So, I’m curious, what that relationship was like within Walmart between the digital side of the business and the brick and mortar side of the business. Was there a lot of push and pull there, or were you guys operating as the same team? What was that relationship like?

Leticia E.: Well, at the beginning, and I think that’s normal, we tried to develop the business model from within, from within the digital arena. We thought that we needed to be faster and we needed to develop different processes that can enable an agile way of going to the market. But, as the time passed in that time we realized our real strengths is to capitalize on our physical blueprint. And, the convergence between the physical and the digital capabilities would not only make us faster, but it would make us stronger in a market like Mexico where we have very, very strong presence in the physical world. At the end of the day, what we were all trying to do is to provide a better service and a better ‘go to market’ to our customers. So, it was a little confusing for them when they went to the dot com other than going to the store and trying to have the same kind of service and they didn’t receive it. So, we took that into consideration, into our learning process, and we understood that we needed to work together to build this from the ground up. Together as a team.

John R.: Okay, so you kind of started off down separate paths but once you started to see that customer experience was a little bit inconsistent between digital and offline you started to bring those teams together and started to work more cohesively. Is that right?

Leticia E.: Yeah, totally and when you think about it it makes a lot of more sense. When you do your assortment strategy, for example, and you can consider both assortments and you can say :okay, these feeds our consumers can go and find them in the store, offline. But, maybe, in the dot com we can have complementary assortment of that same items or we can have exclusives and that can make a differentiator in the market. So, when you think about it and when you trussell this together as a team, you can see all of the opportunities to increase your value in the market, not only as a very strong competitor but also for the consumers, to make them have more reasons to go and shop with you.

John R.: So, have you seen e-commerce change customer expectations for what happens in-store?

Leticia E.: Yeah, totally. When our consumers, right now, when they go to the store they expect to have different digital enablers in the store. For example, we have kiosks where they go and they know they can to to the kiosk and ask. For example, they go and they don’t find an item that they were looking for so they go to the kiosk, which is a physical like a module, where there is a person there and we have all the digital capabilities over there. So, they go to a kiosk and they ask for the product, or for a substitute of the product that they were looking for, or something different that they don’t find in the store. So, at the end of the day we’re trying to deliver all the assortment that we have. We have online, we have a marketplace, we have different models, and different vendors. Just to make sure that they can have what they want.

Leticia E.: That’s one but as well, for example, in the digital stores we’ve implemented different capabilities. For example, the pickup, where you can buy online and you can schedule when you want to pickup all your groceries, or all your purchase in the store. So, in the Mexican territory, this is very convenient because not necessarily every home has a place for delivery. If you’re not home, you’re working, or you’re with your children, or whatever outside of your home, there is nobody to receive your item. So, this is a preferred novelty of delivery in some parts of Mexico. Where you go to the store, you schedule, but the store made the heavy lifting for you. So, maybe it takes like five minutes to go get groceries, the time that you know you’re going to be able to just check out your groceries and everything is there and that you’re happy with what you’re buying. You pay there, and you go home.

Leticia E.: That’s another novelty that we have. The other one, for example, we have in some store, we have self-checkouts so that you don’t have to go and do the traditional line for checkout in the store. You can checkout yourself, you can scan your items, and then you can pay and then you go. You leave. So this is something that in, for example, in markets like the United States this is very common, not in Mexico. So, we are developing all that physical capability inside the stores.

John R.: Sure.

Leticia E.: That, among a lot of other innovations, that are taking place right now in the stores.

John R.: Sure. So you mention three things there. You mentioned providing some more ways to access and purchase items in the store that kind of complemented the digital experience. You mentioned buying online then picking up in-store and then you mentioned self-checkout. Now, all of those initiatives, and I’m sure many others, required pretty massive investments in data and IT. How did you go about assessing the projected outcomes and returns on these huge initiatives before you, kind of, went down that path and rolled them out across all your stores?

Leticia E.: Yeah, that’s a very interesting question because when I first joined Walmart, everything we invested in we needed to provide a very consistent ROI. And then, we understood there were time where we needed to switch that view and we needed to understand our innovation as customer attraction, and customer stickiness, and customer engagement. We challenged us to see it in a different point of view. We were not going to receive and investment and return in money, let’s say, and revenues in the short term. But, we are going to make sure to engage with the consumers and have them have a very good experience with us. And, if we do that in a good way, in a consistent way, across the time, they will stick with us and that will represent eventually our revenue and lifetime value for our customers.

John R.: [crosstalk 00:11:31]Yeah, that’s so that’s so interesting. Okay, so initially you wanted a clear, financial, ROI and then it sounds like that shifted over time and you realize that the KPI that you wanted to measure was in effect was customer experience, customer sentiment directly knowing that if you affected those measurements, long term, the financial payoffs would come.

Leticia E.: That is exactly correct.

John R.: So, what are the some of the ways that you measured customer sentiment and satisfaction?

Leticia E.: Well, with different tools. Some of them are proprietary and some of them are third party but we have developed some different views of the customer. For me, for example, when I was leading Walmart.com for me data is the most accurate tool, or metric, and the NPS for me was the most, it’s like sales if I do everything right, that’s the key metric then it’s gonna be impacted. So, we had a tool that measured the NPS but in a very, very deep way. So, we knew, for example, if we had a purchase from a particular store and that purchase had an item from bakery, for example, we knew that that order had a 40% chance to get late to the customer in the delivery side.

John R.: Mm-hmm (affirmative)

Leticia E.: So, when know that, we can operate very accurately into :what are we doing wrong in that particular department that is making all of the orders come late to the consumer? So, for me, for example those are the key metrics that I was pursuing, all of the metrics that were impacting the NPS. But when you reverse engineer, understand the cost of the metric of that dissatisfaction of the customer you could unglue or unfold all of the operative issues we were having on delivering different kind of orders, or different kind of contextual orders. So that was very, very interesting to see.

John R.: So, you’re breaking it down, not just :do you like Walmart or are you willing to recommend Walmart in general? But, looking at, kind of, transactional level, department level satisfaction so you can drill down a little further. You mention that example of a bakery item being late, I think you said 40% of the time, were there examples of where you found it really, you were surprised by really positive feedback from something you guys had done?

Leticia E.: Yeah, for example, some of the positive feedback that we got was from one area, particularly our trade area that we had. We didn’t understand why and it was because of the [inaudible] delivery guys. And that was a particular supplier that it was not ours, it was a vendor and they did a spectacular job in the face-to-face interaction with the consumer. So, that last piece, nothing to do with the assortment the prize the online experience or that the order was complete or not the difference was those particular vendors, that delivered the item to the client and they have a very unique profile of vendors they didn’t accept, like, anybody. They had uniforms, they were super clean, they delivered in freezed packs where they have perishables or something that needed to go cold in the delivery. So, that particular piece represented 60% of satisfaction of the particular trade are.

John R.: Oh, really?

Leticia E.: It was very interesting and it was not even in our scope, we didn’t know that was happening.

John R.: Sure, so do you share that customer data to help them understand, kind of, their role in making that better or worse?

Leticia E.: Oh, absolutely! Because we want to replicate. We need to understand what we’re doing good, and not so good, and fix, and replicate wherever we can. So, of course, we did and we congratulate them and they get a lot of awards because they helped us develop these ignored trade areas that weren’t even in their scope but they helped us to understand how they did it so that we could replicate that. I have a lot of other examples that we understood very basic, and very operational, things, very tactical maybe, but it represented a lot in the full customer experience.

John R.: Sure, sure. So you talked about measuring experience within Walmart itself, measuring the experience that some of your partners provide. Do you guys also pay attention to sentiment and awareness of other competitors? The obvious one is going to be Amazon, do you look at what Amazon is doing? Do you look at satisfaction as sentiment on Walmart versus Amazon, or other competitors? Or do you guys tend to be more focused on just what happens within Walmart?

Leticia E.: You know, we know what’s happening and we know the regular competitive landscape. But, we’re more focused on focusing on our consumers and what kind of service we’re providing and what other services they need that we’re not developing right now in our own ecosystem. To whom should we be talking to? To deliver a complete end-to-end experience.

Leticia E.: I have an example for this. When I was leading Walmart.com, we knew we had a lot of problems delivering. All the refrigerators and all these big items, it’s very, very heavy to transport, to deliver. It’s costly and it’s very, very particular category. So, what we understood is that the consumers prefer to buy those items in the retailers that provide the full service of making the full installation, taking the old item back. They don’t want to deal with that. So we made a pilot and see if we can have some vendors and some additional services to deliver the full spectrum and the full experience for our consumers and it went pretty, pretty well. So, those are the things we are focusing more than competition. We’re focusing on how to exceed expectations, what are the little things that really matter to them, what are new [inaudible] that we should be developing that we’re not having in our scope right now. We’re very concerned about the new generation because we understand that those new generation’s behavior is radically different and they’re going to expect a lot more from us.

Leticia E.: We understand what are the strength of the competition, we understand what are our strengths, and we understand that we have a very good chance of winning this war being the best Walmart we can be.

John R.: Sure. So, it’s really about what’s best for the customer, what areas can you do a better job of serving them, what areas, maybe, are you not serving them that they need some help with. It sounds like that’s the primary focus, you’re aware of your competitors and what they’re doing but really it’s all about how you can create a better experience for your own customers and that, kind of, drives everything going forward.

Leticia E.: Yeah, totally.

John R.: I know you guys have changed quite a bit in the last few years but, Leticia, if you look out at the next, say, five years, what kinds of changes do you think we’ll see in the customer experience in that time period?

Leticia E.: I see a lot of changes, because right now the hot piece is not e-commerce anymore, it is the digital transformation at which is going to lead to a lot of innovation, a lot of disruption, and all of that is taking place right now. So, I would say that we’ll see a Walmart that is making their own physical platform. Let’s say, if we compare with the Amazon operating model, Amazon’s technological platform, I think that Walmart will develop a physical platform that will include third parties and will include a lot of different partners. I see a Walmart that is open to conversation with players in the market that can compete with Walmart in some arenas but can be suppliers in another arena and that can be competitors, partners, suppliers in another arena. So, for me this is a game-changing. Being Walmart, as a huge and important and relevant in the Mexican market as it is. With this new vision, with this new leadership, I think a lot of disruption is going to come with that. For the next five years for sure.

John R.: Good deal. Well, with the consulting venture that you’re embarking on I know you’re going to be at the forefront of that and Letitia, thank you so much for all the advice that you’ve shared today. If one of our listeners wants to get in touch with you, talk a little bit more about customer experience and digital transformation, what is the best way to get in touch?

Leticia E.: Yeah, of course. You can reach me at leticia@btcx.consulting, that’s my mail and I would be happy to share any thoughts or any any learning from this amazing process. So please contact me if you have any suggestions on whatever needs to be included as well.

John R.: Alright, sounds good. We’ll put your email in the blog post that goes with this episode as well. But, thanks again Leticia for being with us, it was a real pleasure having you on the show.

Leticia E.: Oh, thank you. Thank you for having me, it was amazing conversation. Thank you so much for the opportunity.

John R.: Alright take care.

Leticia E.: You too, bye bye.

John R.: Well that wraps up this episode of People in Places. This show is produced by our team Skyfii, where we’re helping physical venues measure, predict, and influence visitor behavior both offline and online. You can review People in Places on Apple Podcasts and to get notified of new episodes, just follow Skyfii on LinkedIn or subscribe to our newsletter at Skyfii.com. I’m John Rougeux, thanks for listening, we’ll see you next time.

People in Places is a podcast dedicated to helping today’s shopping centers, retail outlets, airports, museums, universities, and other physical locations optimize the experience of their visitors. Get in-touch: podcast@skyfii.com. See all current episodes on our website here.

Show Notes:

  1. To connect with Leticia, you can email her at leticia[at]btcx.consulting

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