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00:00This is the issue. Everything is very very volatile right now. We don't know where the consumer is going. We don't know what the input story is going to look like. How are you managing it from your business's point of view. Yeah guy it's a pretty wild time in the industry today. The good thing about food industry it's not it's not discretionary spending. People have to spend. People have to have for the people if you will have to have food on the table every single day every single night. So with that said what you're seeing is actually puts and takes. So consumers trading up in terms of quantity potentially buying in bulk. You know I know it's self-serving but that's what we do. But also trading down as well to hard discounters the dollar stores. When you look traditionally at the data that's really what's happened during recessionary times or during inflationary times. Do you have a sense of if people are buying anything specifically differently. I understand kind of buying in bulk or buying on the cheap but in terms of what they're buying is that sifting. Yeah. Yeah. We're starting to see a little bit of a shift towards private brands. You're starting to see that. I guess industry wide. So that private brand that you might have skipped over when inflation wasn't so robust and also when the economy was potentially a little bit better. Now you're taking a second look to say hey you know what. If it's a commodity product can I say five dollars this week with this. I thought it. Why not. A lot of the private brand items that we sell and everyone sells are much better in quality these days. So what are you actually seeing. What is the consumer doing right now. We had some data out at the top of the ad that suggested that the consumer is feeling significantly less optimistic. What is happening already is this is this a kind of an idea for the future. The people are going to trade down and do and do that as they react to these these higher prices or are they doing it right now. I would say there's two data points I can give you guys. So one is we just announced earnings this past week when we showed actually A or B our average order value was up over 16 percent year over year. So that's not just on prices but that's on units sold as well. So folks coming in consolidating trips and actually buying up and buying a bigger basket potentially save on that transportation costs. The second thing that we're starting to see is actually the click through rates and actually how consumers are responding to I guess re-engagement advertising or re-engagement emails or re-engagement push notifications. It's going up when the messaging is right when you're talking about inflation when you're talking about gas. This is very much the zeitgeist for everyone today. And you're seeing that in the click the rates. That's quite interesting. I wonder how sticky you feel like these changes for consumers are. Let me just take the other side of this. Let's pretend that all of a sudden inflation actually comes down quickly or the Fed actually works in destroying inflation expectations to some extent. How quickly do you think consumers are going to go back to old spending habits. That's you know I can only speak on behalf of the data. Alex and so what we've been seeing throughout the pandemic is that of course there was a huge spike in twenty twenty twenty twenty one twenty twenty two. We saw a regression back to the mean. So folks are spending as if it was pre Covid days and we thought that was a good thing because we have a very sticky user base. What's interesting I know it's not the topic du jour today but our B2B business people are spending even more. So that's also something to keep an eye out on as the world opens up. Yes there's puts and takes up sometimes you know with inflation going up but also offices returning back to normal. That business was up over 65 percent for us last quarter. J Do you think as people buy bigger baskets the delivery time becomes less important. We've been for the last few years progressing towards faster and faster delivery. Does that now go in reverse. For certain categories I think you definitely won things if it's up you know a tiny pantry items that you needed yesterday. Yes definitely. You're going to see 20 minute delivery. That's that's a really great service for a certain amount of categories out there. I love that you ask the question guy because you know it's one of it's always it that you're in our kind of management meetings because we debate that all the time. And the reality is when we survey our customers 70 percent of whom are out in deep suburbs or rural America you know no one's saying I need a 48 pack of toilet paper in the next 10 minutes. You know these are folks that are planning these are folks that are stocking up their pantries. So there isn't that pressing of a need that they need it in 15 or 20 minutes. Also real estate is anything to say about it. If everyone moved out of cities and into big houses they actually have space. I can't imagine storing that in my New York City apartment. Well I was going to say say I have a question for you though about how you're running the business in terms of your visibility. There is so much uncertainty. Margins across the board are coming under pressure in general for four different industries. How do you how confident are you in your ability to make investment decisions right now. I would say confident in the sense that we know what we can control. So at the end of the day there's a lot of things out of our control but execution on the factors that we can control are really important. So again talking about data or actual action items. So one is definitely. We just announced yesterday are our brand new or extended partnership with FedEx. So being able to really leverage their network to provide seven days service and potentially even some margin gains. That's something we can control and that's something the management team here executed on. The second thing is actually when you look at kind of overall service level for service levels for the consumer and also the products that we sell. Keeping things on stock in stock and making sure that they're delivered in full. It's something well within our control. So investing in more fulfillment center capacity investing in relationships like FedEx give us a competence that I think we're investing in the right way. In terms of what's happening with labor just one final quick question. How much are you investing in robotics right now. Is is the increasing wage story that we're seeing right now encouraging you to do that more. And if you want to do that more is the capacity within the industrial side to be able to build the the robotics that you need. So I love that you ask that question because I think it highlights the fact that we build our own robotics so remember of course we sell toilet paper and Oreo cookies but we also sell software and the entire end to end technology that powers our entire business. So on the robotics side we actually have hardware engineers so that the newest fulfillment centers that we have those robotics are actually engineered built and manufactured by us. So we do have the capacity to build more. But a lot of the third party robotics providers there is a long backlog. If you want to automate your billions that are now you're going to get in line. So it's not just gonna be months sometimes it's years of a waiting list for the key technologies that.

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