Ep. 604 Jeff Nadeau | Get US Market Ready With Italian Wine People

Thanks for tuning into my new show. Get US Market Ready with Italian wine people. I'm Steve Ray, author of the book how to get US Market Ready. And in my previous podcast, I shared some of the lessons I've learned from thirty years in wine and spirits business helping brands enter and grow in the US market. This series will be dedicated to the personalities who have been working in the Italian wine sector in the US, their experiences, challenges, and personal stories. I'll uncover the roads that they walked, shedding light on current trends, business strategies, and their unique brands. So thanks for listening in, and let's get to the interview. Hi. This is Steve Ray, and welcome to this week's edition of get US market ready with Italian wine people. This week, I'm pleased to have, as a guest, Jeff Nadeau, who is the strategic business development director at three by three, and three by three is a a fascinating company we're gonna explore it in in detail. Now. But just, say give a quick hello, introduce Jeff. And, why don't you give us a quick bio of how you got where we are to be talking today and particularly your background experience and, customer facing roles? Yeah, Steve. Thank you. It goes all the way back to the mid nineties when I started working, in retail, in wine shops, in Boston. When I was a a grad school member, And I didn't know anything about wine. I took the job as a driver just to her while I was getting my master's degree. And one thing went to the next. I started learning more about wines. Started working more with consumers. Life goes on. You get married with kids, we started a store in the suburbs of Boston. And we've been running that currently for the last, fourteen years. And a lot of customer facing duties with that. So I've built not only, you know, relationships face to face with people as individuals as human beings, but also through wine and the enjoyment of wine and the education of wine. So, I took that, and then there was an opportunity that came up that I noticed about three by three, a burgeoning startup, in the in this field. And I felt like I wanted to be a part of something larger in the industry and how I could impact impact it nationally or even globally. So that's that's what leads me to the three by three. And we started, early twenty eighteen, and I was brought on board for Massachusetts. Well, let's before you get into that, let's start off with what what is the concept of three by three and that what is that attracted you to it? What what I what attracted me the most to it was they had a need to connect with retailers to pitch them on a portal where we would connect through their POS and capture shopper data insights about their store that they may not know is happening. I mean, every all of most of them have POS. There's not many left with with cash registers. So And we're talking about what I would call independent retailers. Certainly could be changed, but dedicated wine and spirit stores package stores as we might say. Exactly. Independent local one or two store chains, one store, multiple larger chains, and we've grown across the country. A lot of it started here in the Northeast in Massachusetts and in New York and New Jersey was where we we began in in connecting with, independence. So Can you share with us the names of, some of your recognizable, participating Retailers? Yeah. In the northeast, we've got a lot of the the the older guard stores like Gordon's, Julius, which has been around. He is a very good member of ours. Yankee, And in New York, New Jersey, we've worked with bottle king. We've worked in New York with, Vicount, which is in upstate, New York, wine and spirits discount warehouse. Some of the more progressive, larger stores like that, but also smaller, stores, smaller, like, just for example, in Massachusetts, we work with, the Spirit Shop, which is in Greenfield, Gil and Sonderland, some of those more rural areas. So pretty much runs the gamut. So the concept here is connecting with the retailer POS system. To what end? So tell us all all about three by three. Yeah. So in the beginning, twenty eighteen, twenty nineteen, we built up a member base a thousand plus stores that are connected through their POS to our data warehouse where we build a portal for each retailer that gives them insights into what's selling in their store, what it's selling with, So portal meaning a dashboard that they can see that takes their POS information and presents it graphically graphic form that they can then turn data into information and information into insight. Exactly. The idea was we'd be providing them with information that their POS didn't necessarily give them. So it wasn't intended to be a mirror, of their POS. We wanted to be able to show them insights that were taking place in their store through that portal, such as which products sell with what, and give them the power to use that data to to make changes in their store and how they promote how they set up their store, things like that. Okay. Keep keep keep going with the, description. I I as a listener here, I wanna find what what is this thing? How how you know, is is it something I subscribe to? How do I Yeah. So they they they would subscribe to this by agreeing to to come on board with us. In the beginning, we we offered it as a free service, and then there was a cost associated with it once we had grown it out. But they could log in at any time, look at the trends that are happening in their store, and also on the network, meaning in their market area. So in Massachusetts, a retailer could could click on mass and see what's trending in the entire state with aggregated anonymized information. And then with their own store, they could see specifically the products that were trending or selling and how they sold in terms of quantity, price, and better and more, more powerfully, the market basket analysis that we did in terms of how products sell with each other, the patterns that we see. So if someone came to the counter with a group of items, we are analyzing that every time and laying it out for them. Cool. So can you can you give us, a top line example of a retailer that, had a had a benefit from the the core function of this and how that worked. Yeah. So we would have specific retailers, throughout the country that would use this data you know, primarily in their marketing. So they they would look at that. And in some cases, we could walk them through seeing the patterns and use that actionably either with themselves or even with their distributorship and say, you know, I don't wanna take a certain product on because I've been I have this analysis tool that tells me that I haven't done that well with that product for some time now, you know, and they can look back year to year. So Those are those are a couple things that specific shops would do. Now there there's other ones that would have it running in the background, and I don't know if they necessarily would use it on a daily basis the way some others would. So there were varying levels of of use among the retailers that did it. But all the while, we are capturing this as well on our end, and we can we can be able to to report back to them to what we're seeing on our end. And also it leads into the next phase of where three by three went. And so late twenty nineteen late twenty nineteen head into twenty twenty. We had amassed all of the shopper data. We're providing portal for retailers. And the research we did on the feedback we'd get is that many retailers used it, like I was saying, and some didn't because there was a lot of information, and they didn't necessarily know how to use it. So it was this very valuable portal that they had just with all this great information that was coming to them directly from the shopper, and we felt like we needed to build something to help them guide guide them along to make the connections that they needed to make. And that's when we started using the the data that we had to start driving digital media and localize it around their store to capture new consumers and try. Yeah. And that, to me, that's the key to what you had used the phrase when we were, initially talking about account specific programming on steroids. So, expand on that if you would. Yeah. So the the information you're getting from your POS is one thing. It's not very actionable for anybody else third party most of the time. Know what I mean? With with us having you there, you have a portal as a retailer, but you also have us in the background amassing all this information that we can put to good use for you. So that's kind of the if you're alluding to the that's the steroid aspect of it. It's more powerful, more built up than you ordinarily would get from just a static old style. Most of the time, a lot of retailers were using just file based systems that were, you know, out of the eighties or nineties. So there was not a lot you could do with connectivity with a with a POS system like that with a data that you would capture alone with the POS. So using us is like getting an injection. If you wanna use that analogy in terms of, growth, you know, I mean, if you're growing something, the growth, is more is is more, palpable using us than standing in front of your old POS noticing the customers that are coming in, but have no idea how to grow your business from that. Right. And that's the insights part of it, that in it's not only just your store. You can compare yourself against norms of, not just your competitive set, but your peers in the industry by state or by region or, you know, nationally. And I I think that the big value there that struck me was it's enabling independent retailers to compete at a higher level and choose the products and inventory and offerings that they have and provide better service to consumers by better understanding not only what their customers do, but what other customers do in stores like them. Exactly. It just gives them a win it gave it gives them now, but this is like the beginning stages of where we were at. It was giving them that, a more direct line into what's happening with their peers anonymously, like you were saying, and then with their their customers directly. But it was more raw data. Do you think about it that way that they had to a to assimilate or assess too and assimilate to other actions that made them money, so to speak. So that connection wasn't there yet. You know, you know what I mean, Steve? So we we had the raw beginnings of something that was that's very powerful at that point. How this actually then works is you're really empowering the merchant to be able to do a better job to know their customers, if not individually, collectively, and be able to provide better service to them with guided selections, or other insights from behavior. Can you give us an example of how that helps an individual retailer? Not in terms of a lift of of volume necessarily. But in terms of helping them to compete with everything that's out there, particularly third party delivery and, e commerce. Yeah. So with if you think about just the basis of what we are capturing and the raw data, and aggregated information that we are giving a retailer. That's the start. So with that, you could be able to understand your market, like you're saying, understand your store to a certain extent. But then it's, like, and then the next step is, what do I choose to stock on the shelf? What do I choose from a distributor that's asking me to buy certain products? It gives me more leverage with them. And then the next step leading into this is how can we connect the data to, marketing tools that could capture the consumer and then drive them to the store or drive them to e commerce platforms that have been proliferating for the last three or four years. And, of course, last year, blew up with COVID. And so there'll be certain third party companies, e commerce companies that are out there that retailers have use of. And they don't really have active ways of being able to drive people to it. So you can have it, but it's how do I get the word out there about my business and what I'm offering locally and be able to drive it to either my store, which is the old way, and still pertinent, or to the new world of e commerce. So we con we filled a a real need during the you know, going into twenty twenty when everything stopped and retailers were scrambling for ways to sell their products because people couldn't come into stores and it kind of coalesced at a great time where we were transitioning into into using digital media, using our data. That's where it goes back to Steve. That step one is the data. Step two is now we're using this data to help retailers more proactively for them. Instead of just giving it to them and having them figure out how to use it, or to consult with them on general topics of how to use it, we're gonna use it without having to consult with them in terms of making it productive to drive local consumers and hit them on the dev on the on the platforms that they're on Facebook, Instagram, mobile app browser. So it's an ad, it's an ad driven medium. That the way I look at it is so you're really allowing a producer slash importer, domestic producer imported brand to connect with retailers through this portal or platform without bypassing the three tier system without alienating, distributor sales, and providing value. So everybody wins. And I think from a a supplier perspective, that's what particularly interested me. We don't usually have a way to communicate with retailers efficiently beyond sending people in there, and that's pretty expensive. Exactly, Steve. That was the next leap. Beyond retailer, we brought the brands in maybe mid twenty twenty. We started working directly with brands with solutions like this. And we've seen it's been very powerful in terms of being able to reach consumers through the distribution points that brands already have. And, like, with with Cappy, so to speak, in Massachusetts, we work with them, on their own adds to locally around three stores to drive traffic. And like I was saying, and now they're working with brands that we're bringing to them where we can lift ads funded by, by a brand. And run it around the same platform that they're running locally, as a retailer, and do the job pretty quickly in terms of assisting the brand and showing how many people engage with the ad. How many people, share the share the the ad on on Facebook or Instagram, give them some idea of who clicked through, give them some idea of purchase volume through the e commerce, or through the data that we already captured for Capies, because Capies came on very early with us with, the data bar platform, which is the portal, which I didn't say before. They have that. So we have access to that. So we can see the sales left. For a brand, or we can connect to Google Analytics and really dive deep into how that particular product moved during that month long campaign or three months long campaign or however long we're running with a brand to promote it This is a very easy channel with us being the conduit connecting those two things. And I think that's when you think about three by three with the three tier system, that's where the name comes from. We're we're really trying to connect Those three tiers, but mostly if you think about three as well. That other three could be consumer, brand, and retailer. Those are the those those are the three components that make this whole engine work And as you know, it ends with the retails. It's a it's a it's a journey. Right? It start starts in the vineyard. Let's say, if it's wine if the if it's we're talking about wine. And it ends with the the wine being poured in the glass. And how we can impact that journey in this industry with the data that we have and the media that we run and the programs that we can provide, brands, retailers to engage the consumer with the products that they really want and get them into the stores that are near them locally. It's very much about local. So you have a retail shop. It's local. We wanna see look into who are the people around those stores. But are currently looking for products that they love and how can we engage them and get them to the retailer, and then they're happy. And the consumer's happy because they got what they want. And then the brand is getting all these insights into that localized area. So it's it's very, very powerful when you connect all those sorts of those three dots. Okay. Can you can you share some, experiences and maybe some numbers with us to, get a better understanding of have it all works? On the the data side? Use copies, as an example. So you're running ads on Facebook and Instagram to drive traffic into the stores that are specifically directed to, in this case, directing them to Capi's stores. How does this work from a regulatory view where, generally, as suppliers, we go by the guideline of if you're gonna do any promotions of any given store, you have to do Well, you can't. That you have to at least mention in advertising and those kinds of things, three stores. And yet, in this case, you're working with one store. How does that fit in the whole regulatory environment? Yeah. With Capies, we we're we're running media with many different stores in Massachusetts for to promote lot of lot of similar products perhaps, but just in different areas. We're also doing it through three by three, which is a third party that's outside the three tier system. So No store is directly doing that on their own. Of course, they can advertise on their own through Facebook as well. If if they so chose to build ads and run them through the Facebook, audience platform on their own. So legislatively or it it regulatory, it fits it fits within the the the the regulations that that we have set forth across the country. And so what kind of adoption have you seen on the part of, retailers on one side and then also suppliers on the other? I mean, how many people are using this? Do you have how receptive have flyer's been in working with this program, in terms of number of accounts you've got and, number of brands that you're working with and that kind of thing. Yeah. We have, we have a multitude of brands that are working with us now. And a multitude of retailers that are working with us now. And, many of the retailers are are doing this at a higher spend level than when we first started because we saw the the benefit of being able to run more ads for them, provide more service for them, to be able to customize some of the media that we run, and to report in on it and optimize the ads much better and show some some attribution. That's always been the key with, with marketing is trying to use. Connect results, the ROI. Right? I this is the input, and this is what I I got out of it. So how many stores, are in the system now and what's your goal and where are you on that path? If you wanna combine, all of the products that we're working with, thousand to well, anything, like, I would say, thousand plus probably closer to twelve hundred stores. That are working either with the data bar package that we work with, the data piece, data and marketing together. So there's many stores that are using all the products. There's some stores that are just using data right now. So, yeah, Steve, to answer your question on that, it's two thousand thousand to, to, maybe, fourteen hundred, somewhere in that range. So our goal is is to get to five thousand retailers. We just launched a new initiative of free membership with retailers where they can get insights, network insights into their local market, get information about the industry from us. And then we're we have other partnerships that we've made as an offer to them that they can use within this membership. So we wanna get five thousand stores by the end of the year onto that. And then we're we're developing a new product that will, capture more direct marketing to consumer type of a strategy, with the new regulations that are coming forth with the end of cookies and location services being ended. Explain that because I'm I'm sure a lot of people know about this cookie thing in this pixels and all that kind of stuff. But what what is the implication of of all that? Yeah. I can't delve too deep into that because we're just developing that. We don't really wanna release it yet. But it's, It's based on, the the regulations that are UC happening with, cookies ultimately gonna be disabled. So the old marketing the old ways of marketing to the third party IP addresses people that visit sites, the old the old ways of of, ads being run to those third party sources will be, you know, phased out. And then location services, not being enabled or not being chose to be enabled will not allow us to track any in store activity through third party sources. So, we're we're developing a way that we can address, consumers directly with the marketing initiatives that we're we're gonna be working with in the future. So it it seems to me that, I imagine there's a, a dashboard as part of this. How, difficult is it for a retailer who, to to use the tool and to understand it and to draw the conclusions and, what kind of support do you guys offer to help, you know, onboard them so that they can do the analysis themselves. Yeah. For for the retailer, it's a very the way it is now, it's very high touch. We work one on one with many of our, you know, top retailers that we we work with that are at a higher spending level with the media. To customize some of the ads to meet with them and and evaluate on how the progress is going, what we're reaching, what we're capturing, and what we're, what we can attribute, things like that. So, There's no dashboard for that. We we're looking into bringing back, a dashboard that will incorporate the marketing that we're doing in the future. So right now, it's, it it's a very high service oriented So if a if a retailer was looking to work with us with media, today, we would we would set it up so that there's a there's a strategy in place of what we'd wanna accomplish. It's not, just just pick a bunch of ads, have them running, and we don't communicate with you, and you just get a basic report. This is a little bit more more of a a high a higher service program. And, presuming that, so it works for wines. It works for spirits. It works for domestic products, and it also works for imported products. That's kind of anything that's coming through the POS system, Pier two, I suppose. And RTD's insiders and all the amazing things that seem to be exploding in the marketplace. Yes. Yes, Steve. The way this is set up right now in its current form is that, we work primarily through e commerce platforms to drive engagements and hopefully sales for them. There's no guarantee that we can do that, but we're giving them more of a window into that through using the technology that's available through e commerce platforms where you can have a pixel on there that can give you insights. Yeah. So that's the real value of that. Store, traffic with this system is because of the location services that were changed with the update of the iOS fourteen. Is just not as reliable to report on. So, at this present time, e commerce, if you have a viable one, one that you, update all the time, the product is correct, you have, you know, it looks like you're, a, you know, a burgeoning business that's you're not just leaving it there. You're not building a site and just having it sit there with nothing on it. It's a it's a lot of these third party ecommerce platforms that are actively updated all the time, where we match up what's going on there with the ads that we're running. And we've seen very good results in that, and if in that way. And with different calls to action, with delivery curbside was big when we when that was happening. So we would we would be able to measure and see where the traffic's coming from, where they're getting the best results and advise them that we should do more of this. So so Steve, it was more of a of a min it's like a mini, not to say an agency because we're not like that, but just a little bit of higher service to be able to give to to prescribe to the retailer are knowledge of the situation as it's unfolding. Cool. Okay. I'm, coming to the end of, time allotment here, but one of the things I like to, ask my guests at the end of the show is What's a big takeaway that, that they can take away from, what they've heard today? Is there anything that they can do that, can be used immediately to benefit their businesses, whether they're, you know, a lot of listeners or distributors, brands, and, retailers, of course. Is there anything that we talked about that you said? No. Here's something that everybody can use right away. Yeah. Right away, we can give you the connection if you're a retailer to the consumer. And if you're a brand, we can give you the connection to the retailer that, of course, has the consumer. So what I mean by that is the brand needs assistance in either opening up new district distribution or supporting the distribution that they already have at certain retailers. Our relationships help in all of when we built up his networks to give a thousand plus stores, those relationships are there, and we can use them as we do today with brands to help them make that connection through that shop to run media to gain awareness to the consumer through that store. And if I'm brand wants to run general awareness. That's an easy lift too, where we don't need to have, store branded information on an ad to run it in a market. We can we can run media for brand and measure, the engagements through their own, website and their own Facebook account. Okay. Thanks. So we're talking today with, Jeff Nadeau, who is the strategic business development director for three by three. That's three by three dot com. Is that correct? Yeah. No. It's three by three, dot u s. So w w w dot three by three dot u s. Okay. Mea culpa. Three by three. Yep. Sorry. Dot u s. Okay. Cool. So once again, thanks to Jeff Nadeau of three by three. This is Steve Ray, and I look forward to having you join us next week on, get US market ready with Italian wine people. Thank you for listening. This is Steve Ray. Thanks again for listening on behalf of the Italian wine podcast.