Increasing Efficiency and Lowering Emissions at the Last Mile with Mike Robinson of The 8th Notch

Decarbonizing Commerce

In this episode, join Keith Anderson as he meets and learns from today's guest, Mike Robinson, who is part of the founding team of The 8th Notch, a software platform helping retailers and carriers essentially do what they already do, but more effectively and cost efficiently--incidentally, reducing emissions in profound ways. Together they discuss the outlook on the future of delivery in e-commerce, touching on a report by the WEF, and what The 8th Notch brings to the table in this area. With more than 25 years of leadership experience in the retail industry, Mike shares his thoughts and outlook in this episode of Decarbonizing Commerce.

Learn more about Mike Robinson:

• Link to The 8th Notch’s website
• Link to Mike’s LinkedIn

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Episode resources:

• https://www.weforum.org/publications/the-future-of-the-last-mile-ecosystem/

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TRANSCRIPT BELOW:
Keith Anderson: Welcome to Decarbonizing Commerce, where we explore what's new, interesting, and actionable at the intersection of climate innovation and commerce. I'm your host, Keith Anderson, and together we'll meet entrepreneurs and innovators reinventing retail, e-commerce, and consumer products through the lenses of low carbon and commercial viability.

Welcome to the Decarbonizing Commerce Podcast. I'm Keith Anderson. Logistics is one of the areas, one of the parts of the retail e-commerce and consumer products value chain, where things you do to lower emissions can often have a positive economic impact. That is, if you're able to eliminate waste or operate more efficiently, Not only do you reduce emissions, but you lower cost.

But it's also one of the most complex because the shopper has been conditioned over the last 10 or 15 years to expect first two day, and then next day, and increasingly same day delivery, often free delivery. And so we can already see with studies from folks like the World Economic Forum that, you know, the outlook, given the rising demand for e-commerce and urgent delivery, there's going to be a profound increase in emissions and road congestion driven by e-commerce.

And that's why I was so interested to meet and learn from today's guest, Mike Robinson, who is part of the founding team of The 8th Notch, a software platform focused on sustainable last mile deliveries. The headline on The 8th Notch is they are a software platform helping retailers and carriers essentially do what they already do, but more effectively and cost efficiently, which incidentally reduces emissions in ways that can be pretty profound. And Mike has more than 25 years of leadership experience in the retail industry. He has expertise in digital retail growth, product management, and technology delivery.

He's held these roles at companies like Macy's and The Gap. As well as IBM and PwC. And these days, he's a strategic advisor to several early stage startups, and an independent board member of Vista Outdoors. So, I'm very excited for you to meet Mike and learn about The 8th Notch, who's working to decarbonize the last mile of e-commerce delivery.

Mike, welcome to the Decarbonizing Commerce podcast. Good to see you.

Mike Robinson: Good to see you as well, Keith. Happy to be here.

Keith Anderson: You know, I, I often start the show by getting to know the guests a little bit, but in this case, I actually would love to start with, your company's name. Tell us about The 8th Notch and what that means.

Mike Robinson: Yeah. The 8th Notch is not, is not a name that you would think of, but, but it's an homage to the founder's father who was in the railroad industry. And the 8th notch is the most powerful setting on the engine itself, and it identifies efficiency and it identifies power. So it's a little bit of a, you know, homage to his dad, but, but also the notion of, you know, "how do you take advantage of the things that we already have and make them better?"

Which is really what we're attempting to do at The 8th Notch.

Keith Anderson: Super interesting. Well, maybe we can start then with, what you are doing at The 8th Notch and it would be great to better understand your background and how you got involved with the HNOT, with The 8th Notch, once we've given folks a sense of what it does.

Mike Robinson: Yeah, I'll give you, I'll give you the nickel tour of my background, right? So, for the better part of the last 25 years, I've been focused on retail. I, I often describe myself as an accidental retailer because it's not what I intended to be, right? I came out of college with the intent of going to Wall Street and one thing led to another and I ended up in consumer products.

Then I ended up in consulting. And then I stumbled into retail and, and especially it was at the beginning, pretty much at the beginning of the dawn of the e-commerce boom, right? In the, in the, in the late nineties, it was with a, a consulting firm here, here in the Bay Area. And we were really, you know, building the first generation e-commerce sites for a lot of the large companies in America.

After that, I, I recognize that I like the nature of retail. I like the immediacy of it. I like the, you know, the understanding of the customer. I like the psychology of how do you help people, you know, either buy things that they need more effectively, or how do you turn, you know, you know, wants into needs to actually get them to consume, right?

Which is the great, you know, retailer dilemma in many cases and the calculus that most retailers go through. So, after that consulting agency, I ended up going back to the PricewaterhouseCoopers where I'd been before and I operated in biotech and high tech for a period of time, but always had this longing to get back into retail and had an opportunity to go into it from an industry background.

Joined the GAP in the mid 2000s, helped them rebuild their e-commerce business from a technology standpoint and a process standpoint. Spent some other, spent a few additional years at the GAP, you know, helping a large retailer kind of turn the ship a little bit. And then I got tapped on the shoulder to go to Macy's to do the same thing.

And it was, you know, Macy's was a, $700, so 700 million e-commerce channel by the, when I got there, it was 7 billion by the time I left. Now I'd like to believe that I had a positive effect on it over those, you know, eight years. I've been told I had a positive effect, but I know it was also, it was, we timed the market perfectly and we timed the investment strategy perfectly.

And we, and also timed the consumer as well, who was having a changing behavior set. as they moved away from stores to e-commerce to omni-channel. And, and then I left there, in 2018. It was, you know, that was the completion of my journey. And in 2018, I started, I had this notion of "should I keep going down the large operator role, or should I do what I really love, which is advisory roles?"

And I've done a series of advisories for smaller startups in the retail industry area. From a consumer experience standpoint, cetera, with, with some successful exits associated with it, sit on a public board company for a company that is, you know, primarily consumer products, but transitioning to being much more direct to consumer.

And then my buddy tapped me on the shoulder and said, "I got this idea for a company." And the origin story really goes as simple as this. The founder, Jamie Sapp, who's been a long time friend of mine and a very smart person on the logistics side, looked at me and he said, "how often does a delivery truck come down your street?"

And I said, "every day. In fact, they all come down my street. You know, the Amazons, the UPSs, the FedExes, the OnTracks of the world." He goes, he goes, "does it seem like it's too much?" I said, "sure. Every time that, you know, the fact that I'm getting five deliveries a week and they're coming all on different days feels like a lot" and he goes, "I want to fix that. I want to build a business around that. I want to fix that. I want to unlock value associated with that."

And that was the beginning of what we wanted to do, which was "how do we, you know, minimize the number of times that a delivery truck comes to your house, but still maximizes the number of deliveries that are intended for you?"

It's just the combination is different and we use time differently. So it's not happening five times a week. It could be happening three times a week or two times a week.

Keith Anderson: Got it. Yeah, I mean, that, that general problem area has become a bigger focus for a lot of the industry that I think is grappling with rising demand among consumers, but acknowledging that the growth of omni-channel and e-commerce is adding to congestion, increasing emissions. There's a World Economic Forum study on last mile logistics that opened my eyes, sort of show something like, if by 2030, we stay on the trajectory we're on, you're going to see a roughly 25 or 30 percent increase in both road congestion and emissions, unless we do something differently. So, it seems clear to me there's a compelling backdrop to work on this area.

Mike Robinson: Yeah, I think there's a compelling backdrop on both sides, right? I mean, I think if you look at it through the consumer lens, I mean, you know, I've seen studies as well that talk about, you know, so, you know, three quarters of consumers would say, "I'd do something differently if it was offered to me," right?

If, if I, if I had the opportunity to have things delivered, and it's specifically around delivery. If you gave me something and made me feel like I was making a conscious, eco-friendly choice, I'm all in, right? And we're seeing Amazon do it, right? I mean, anytime you check out at Amazon right now, you have the opportunity of being able to say, you know, instead of delivering, you know, Monday and Tuesday, deliver it all on Tuesday.

And there's, you know, because it's better for the environment. So, you know, I, I like to say we are attempting to bring to the rest of the retail industry and the carriers that support it what Amazon is doing for themselves. And Amazon is conditioning the customer just like they conditioned them that free and fast was important which they no longer, you know for I I think it's a myth.

It's a mythos at this point What they're trying to do is saying coordinated and sustainable is a better option.

Keith Anderson: Yeah, I, I, that Amazon day option, I, I find one of the sort of canaries in the coal mine in the last mile logistics space, you know. I don't view it as the only thing Amazon is doing, but they are trying to nudge shoppers with both the option and the incentive. I mean, I think if I'm not mistaken, I get Amazon digital credit every time I choose a, Amazon day shipment or a slower shipping speed.

You know, you, you, you mentioned the, the consumer response to surveys, I, I wonder whether those kind of incentives are going to be necessary to really change the behavior because so often I see sort of a gap between what the consumers intend to do or say they're going to do and what they actually seem to do.

Mike Robinson: Yeah well, we asked that question of ourselves too when we started The company and said, you know, where is the best place to inject ourselves? And we took the path of least resistance, which is after the consumer is already involved, right? It's when that, that implicit contract has been set up between the consumer and the, and the retailer in terms of "you bought it and I said, I'm going to get it to you in the next 5 to 7 days," right? We take that window of time and just use it more effectively. Instead of what retailers are doing is they're trying to use the front end of that to do surprise and delight, which I'm not sure anybody is surprised and delighted on it because they're surprised, right, in some cases.

And we're trying to use the back end of that to say, "can I create value out of it by connecting another package and having two items delivered at the same time?" And it could be from, from another retailer. I mean, that's the beauty of this. It's not just, it's not just split shipments of the same retailer.

But it's everything that's coming to every address in America, right? Because we are primarily North America based. We are, we are looking at everything that's in motion and trying to connect this purchase to one of those things just because of the sheer volume of what Americans buy and have delivered to them.

And so using the, using the full time frame, you know, it, it's already been committed by, by the retailer. Right? And the surprise and delight piece, look, for your most loyal customers, absolutely find a way to do that. But, but for the ones that aren't loyal to you, or don't purchase from you frequently, then, then there's a real opportunity to create, to unlock value and unlock the carbon savings as we've talked about.

Keith Anderson: Well, I, I wonder if it also varies by item. I think, as you mentioned, Amazon helped condition consumers to expect everything. You know, in two days, then the next day, if not same day, a huge percentage of what you might choose to order online is not for immediate consumption or usage. You really don't, if you take a moment to pause and reflect, need it with much urgency.

And so, I can also imagine this being effective if you maybe prompt shoppers to think about, you know, when do you really need this?

Mike Robinson: Yeah. And, and that's why we started post checkout. Our goal is to go in to checkout, right? And actually give that opportunity and, and we've got, one or two retailers that are contemplating it as, as an alternative to how they, how they position free shipping, right? "Right. I'll give it to you free, but you got to give me more time to look for opportunity, right?

To be more eco friendly. If you need it faster, I'm going to charge you a surcharge. I'm not going to charge you the full amount, but I'm going to charge you a surcharge." And so they're contemplating some A/B experiments around that with that, which I think is really smart. You know, because my, my thesis is Amazon's making it very, very clear to people that you should start thinking about this. There's no reason why the rest of the retailers can't start thinking this way as well. If they got conditioned to go free and fast, they can go, that they can be conditioned, if their customers are being conditioned to think about coordinated and synchronized.

Keith Anderson: So maybe it's worth taking a step back and just unpacking for listeners in a little more detail how you do what you do. So we, we know now you're inserted after the checkout, you sit between the carriers and the retailer.

Mike Robinson: I, I

we sit in between and from the carrier, we have a view into their network of everything that's in motion over the next eight days, right, going to every address in America. For, from the retailer, I now have the orders that are being created in that day and now I can analyze them to understand I can find a match, or I can't find it.

If I can't find a match, I do no harm and I just will let, let the order go and it, and it's processed the way that the retailer would. If I can find a match where something is going to, you know, connect with another package to be delivered on the same day as another package that's already in motion, and it still lives within that commitment that the retailer has made to that customer, then I schedule when that order should be pick, packed, and shipped. And that's the change. What usually happens right now is retailers get orders and figure out how to process them as quickly as possible because speed is king. And what we're saying is there is a percentage, 15 to 20 percent of your orders, that have an opportunity that if you waited a day, maybe at max two days on a couple of those, you can connect it with a package that's already in motion and unlock dollar savings and we'll talk about the carbon savings as well.

But, but we're talking about scheduling when orders start their journey instead of what is really a FIFO or first in, first out model that most retailers follow right now.

Keith Anderson: Well, maybe we start with the dollar savings and just talk about the, the operational considerations here. So, I would imagine if we're starting a little bit later and consolidating orders at scale, does this mean fewer trucks on the road or how does this sort of cascade into dollar savings?

Mike Robinson: Yeah, yeah, you've, you've really hit the nail on the head and it's, and it's, and it's, lowest unit of measure is a delivery stop, right? If the truck used, used to come to my house five times a week and now it comes three times, it doesn't have to stop here twice, right? And each time and, and the carrier that we have the strategic relationship with, they've done the analysis that says that every time that that truck doesn't need to stop, the driver get out, drop something off, get back in, move to the next stop, there's a, there's a multi dollar savings associated with it.

And, and what we what we, convinced the, the carrier to do was if you can, you know, and if that's important to you, and they said, "absolutely, delivery density is absolutely crucially important to us for us to be able to manage our network more effectively over time. If you can do that, we will share those savings with the retailer. And we'll share them with you because you've changed the behavior."

So the retailer ships on the date that we tell them to. We told them the date that they needed to ship on. And as long as those two things happen, both of us benefit. The carrier benefits because they, they don't have that stuff. Now, you fast forwarded, right?

Doing that at scale, right? Ultimately takes trucks off the road. And back to your original comment around, you know, the impact by 2030 is that it's about route compression, right? It's maybe my driver doesn't drive down my street five days a week. He drives down three days a week, right? Because his route has become so, so synchronized that it's Monday and Wednesday he comes down my street.

Or he only drives on Monday and Wednesday, right? And they, and they change their entire approach to it, which is right now, they're just keeping up. We're talking about giving capacity back in a more intelligent way.

Keith Anderson: You said earlier that somewhere between 15 and 20 percent of your orders on average might fit this profile. Are you seeing patterns in what types of orders or what types of items meet those conditions? Or is it purely about where the item is and where it's headed?

Mike Robinson: Yeah, I think the pattern that we're seeing more is around at, is around the address level. There are clearly, you know, households in America that consume more than others, right? It, it, it's just the nature of the beast. I, I, I would put my, I mean, I, based on the addresses that we've seen, I know I'm pretty high on that list myself, right?

You know, as, as I, as I, you know, adopted that obviously as an e-commerce, individual, but also someone that went through the pandemic when there was the permanent step function up, right? I think the piece that we haven't unlocked and the one that we're trying to is subscription models. Right.

Right. When it's, when it's drugs or coffee or dog food or something of that nature, where there's a clearly defined set date that they, that they know, but it, but it has the wiggle room. What can we do around that? Right. And in terms of being able to find things, but I'm going to go on, you know, I'm going to do the Pareto analysis and say that there's probably 20 percent of the addresses that get 80 percent of the deliveries.

I don't think we're, I don't think we're as refined on that right now as we'd like to be. But it's clearly trending in that direction. And to your point, but it's category agnostic, right? I mean, I don't, I don't personally care. I mean, it's got, it has to be, you know, it has to fall into a specific service level for the carrier to do it.

And so, you know, it's part of their ground delivery service. And so there's package types, right? There are other package types that fall out of that. But actually, one of those options is we're thinking about, bringing some of those package types back into it because the truck is already headed there instead of handing it off to the postal service for that final mile, which many of the carriers have done.

It's, you can keep that in your network and actually have it ride along for free at that point.

Keith Anderson: Two things you said, have sort of prompted some follow up questions. One, on the subscription side, one of the things that I really I think it's notable about subscribe and save type models, you know, the reason that you're able to pass the savings on to the consumer is with the advanced notice of when the item needs to get to the doorstep, you can basically always use ground transport.

So your cost of logistics is lower, and you can pass some fraction of your lower cost on to the consumer. And it had me thinking a little bit about the extra day or two you referenced as you're working to consolidate these orders, does that in any case ever lead to a mode shift here also? You know, that is an item that would have been delivered, from the point of origin to at least the last mile by air transit.

Does it in any case end up on a train or a truck instead?

Mike Robinson: Yeah, I don't think we've run into that yet, right? Right. I think the, I think the, I think it's more the other way of it's a small enough package that it's hand, you know, the final, the final mile is handed off to the Postal Service to deliver. Just because of size and weight, right? And because, you know, I don't, you know, I can add that day associated with it.

Now it becomes something that becomes more predictable and also the traceability of that. And the, because once it leaves the carrier network and it goes into the Postal Service it's kind of lost in there for a bit and you, you know, it's very, very hard to track. That would be the mode change, I would think, rather than the other option.

But, you know, I also look at it and think that we're still at the beginning of the, of the journey on this, right? And, and it's because I, I think the final mile is the one, it's the one node where, you know, trying to optimize and synchronize hasn't gone all the way to the address level. And I think that's the piece that we are looking to change more than anything else.

You optimize the truck, right, you stack it out based on the route, but you don't base it on the address. And so we're bringing that unit of measure down one level lower.

Keith Anderson: So I know you're, you're early in the journey. You're working with a, a major carrier and I imagine you've got retailers engaged also. Are you seeing patterns in terms of the types of retailers that are engaging?

Mike Robinson: Yeah, I mean, the beauty of being with a strategic carrier that carries, you know, roughly half of the package delivery in the US, you know, gives us weight, right? It's positioned through their accounts with, you know, top 40 retailers in the US. We're seeing traction with them because they're looking at it through that dual lens.

I need operational savings, right, because this becomes pennies of EPS if done right. And I need carbon savings as I think about it, because I haven't really thought about the delivery component as a place where I can drive sustainability and answer ESG questions. I think the other is, they're all public companies.

Right? And so they all have ESG commitments, and they all have boards to answer to, and they all have programs that they need to bring forward, whether it's for the 2030 or 2040 or 2050 you know, timing, whether it's the type 2 or type 3 emission, you know, issues. There's a lot of complexity out there. This is a simple thing.

That is a simple change that says if you allow us to schedule, and which means use time more effectively still inside your customer promise window, and we can unlock value, and that stop that I mentioned, that delivery stop, that 800 grams of carbon, right? You start to multiply that, right? That becomes, you know, hundreds of thousands, if not millions of metric tons of carbon that just are never created.

That's why I call it carbon avoidance instead of carbon reduction. It's just the carbon creation event never happened, which is that delivery stuff.

Keith Anderson: Yeah, I, I think one of the pieces of sort of conventional wisdom that I encounter all the time in sustainability is, "boy, it, it just doesn't pay back. It's... Almost everything we want to do is going to be cost prohibitive." I think logistics is one of the areas where the fruit hangs pretty low because so many of the things you can do to avoid or reduce carbon tend to move in close connection to lower costs.

Mike Robinson: Well, and that was really the, you know, we have, we have some really smart investors, but the one VC,

the first VC that we accepted money from, is one that is focused on, you know, climate tech, right, or sustainable practices. And the thing that the principle said that, that really struck with me is like, "you deserve to be in business because you're creating efficiency out of inefficiency. You're not asking anyone to do anything dramatically different. Just do it better."

Which is what we really need in many cases. All the answers are in front of us, right? From a sustainability standpoint, especially on the logistics side. It's just how do you take advantage of the information that's available to you, assemble it differently, and make better choices?

That, to me, I think is the difference of what we are offering versus, but I think every retailer has to figure out whether it's, you know, a change in the, a change in the energy they use, a change in the materials they use, a change in the manufacturing process, et cetera. This is something they're doing already, just make this very simple change of use time more strategically.

Keith Anderson: So, in that sense, what do you think is going to accelerate adoption across the industry? And I guess the flip side of that is, what's holding it back?

Mike Robinson: Yeah. I, I would love to believe it's a foregone conclusion. I know it's not, right? Right. These are, these are tough choices. And, you know, after spending 25 years in retail, I know it's very much a, you know, "show me" type of industry, but it's also a, "I don't want to fall behind my competitors" type of industry as well.

Right. And, and the, and the margin of difference is usually pretty small. I think adoption solves all problems. And, and the, and the adoption curve that we're on right now is a pretty good one. It needs to be better. It needs to be better. And that's Mike Robinson not only talking as a business person, but Mike Robinson talking as a, as a citizen of the world.

It needs to be better because I think we need to impact what that metric, what the study showed about 2030. I think that we have a real chance of being able to impact that. I don't, I don't believe it's going to be regulatory at this point. I think there's going to need to be choice, but I think what need, what, what, what retailers are starting to see is "my customers are asking for this," you know, every, you know, that they're, that they're, they're starting to, you know, they're, they're clearly voicing their opinion in these surveys. "At some point, they're going to choose with their wallet. And if I'm not there, right, if I'm not showing action, if I'm not taking advantage of everything that I do from the moment I conceive a product to the moment I deliver a product, then I'm probably going to lose in that," right?

For those that are conscious and, and the consciousness level is raising. Now, my generation, you know, I'm 58 years old. We're probably not going to change a significant amount, but the generations, you know, younger than us are already, already doing this, right? I mean, this is the, I think that is what is driving these metrics of that's that three quarters of consumers want to see something and 50 percent of companies are saying, "I want to do it, but I don't know how."

And so what we're offering is a simple path in. Adoption will help, but I think it's just, you know, consumer consciousness and the, and, and the, and the eco-conscious consumer will force this to happen in some way, shape, or form.

Keith Anderson: Yeah, a couple of quick thoughts. I mean, I, I know in most, retailing consumer product businesses, we think of the consumer as king. The one thing in my roughly 20 years of experience I've noticed motivates a lot of retailers even more than the consumer is one of their major competitors. And so I think it's helpful in the sense that Amazon is setting an example and raising the bar and, you know, they're iterating.

I can see them iterating, you know, over time, but if, if any of what they're doing to nudge behavior sticks, I can see that being a motivator for competition.

Mike Robinson: Yeah. I think it's going to be more and that's competition with both the carrier and the retailer, right? If you think about Amazon, they're both, right? I mean, you know, that they're, that they've effectively developed their own. And, and those, and those services on the fulfillment side, they're offering to other retailers. And so at some point it becomes something where they offer it through an eco lens as well.

Right. And so I think, you know, I think the voice of the consumer, I think the number one competitor for, for both and the behavioral changes that they're showing and just how loudly they shouted, right? And, and they haven't shouted it yet. I mean, what was it just seven or eight months ago that all of Amazon's advertising was around their commitment to 2030, right, and what they're doing, but it was more vehicle-driven, right? It was more facility-driven, right? It wasn't necessarily this conversation, but I sense it coming. And as soon as they start shouting it, Everybody's going to perk up and say, "well, I better be there too. How do I get there?" That's where we come in.

Keith Anderson: Hey folks, this is the part of the show where we say thank you and see you soon to the general audience, plus and higher tier members of Decarbonize.co, stay tuned for the rest of the episode.

Well, Mike, if people want to learn more about The 8th Notch or get in touch with you, where would you direct them?

Mike Robinson: Sure I would. Yeah, our website is out there. It's, it's not the most information. It's intended to be an informational website. It's www.t8notch.com. We're on LinkedIn as well under The 8th Notch. You can contact me directly at, M Robinson, R-O-B-I-N-S-O-N, at t8notch.com but, but we're open for business.

We're looking to onboard retailers. And, you know, if you are a customer of the carrier that I have not mentioned, we will help to make, you know, help, help to get the introduction moving forward. Or if you're not a wannabe, we'll definitely make the introduction for you. But, you know, this is a call to action as clearly as I can make it as, and we started in the preamble, Keith, about a one man megaphone.

I want others shouting this as well. And that's, and that's the push that I'm on.

Keith Anderson: Well, Mike, thanks so much for joining us.

Mike Robinson: Absolutely my pleasure. Thank you, Keith.

Keith Anderson: Thanks for listening. I'm Keith Anderson, the executive producer and host of Decarbonizing Commerce. Sonic Futures handles audio, music, and video production. If you enjoyed the show, we'd really appreciate it if you took a moment to subscribe and leave a review or share it with a colleague. For the full episode and more member exclusive insight and analysis, join the Decarbonizing Commerce community at Decarbonize.co. Thanks for listening and we'll see you on the next episode of Decarbonizing Commerce.

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