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What happens when your customer clicks ‘order’ on your eCommerce site?
Do your systems have rules that look at the customer location and choose the nearest warehouse to fulfill that order? Or are you relying on one fulfillment center and allowing days or weeks to pass before it arrives to your customer?
The real-world logistics behind each digital order can be a complex process… but if you could set up the proper systems, what if you could then compete with the new industry standard of two-day shipping?
Understanding this logistical side of eCommerce is vital for any store owner or executive team looking to master this world.
Today, we’re exploring the logistics side of eCommerce with an industry expert.
Casey Armstrong, is the Chief Marketing Officer at ShipBob working hard to ensure that eCommerce shops are able to get products to their customers effectively and efficiently.
On this episode of Up Next in Commerce, Casey takes us behind the scenes of what makes for a good third-party logistics partner, or 3PL. Plus he explains when companies might want to start thinking about finding a 3PL partner, and why Amazon, which is seen as the gold standard in fulfillment, might not actually be the best choice for your Ecommerce shop.
Main Takeaways:
- Optimizing your 3PL Strategy: There are many options when it comes to choosing who to partner with as your 3PL partner. But making sure you ask the right questions is key. Do they help with creating a beautiful unboxing experience? Are they distributed? Can they grow and scale with your company? Tune in to hear all the things to consider when setting up your 3PL operations.
- Focus on The Product, Not The Fulfillment: So many entrepreneurs start off having to do everything themselves from marketing, to product development, to fulfillment. After a while, the fulfillment process will wind up taking up the majority of your time that should be spent on developing, talking to customers, and scaling the business.
- Utilizing the Data: When partnering with the right 3PL partner, brands get access to shipping and fulfillment data and recommendations they otherwise wouldn’t have access to that can directly impact ROI.
For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.
Key Quotes:
“We’re really enabling that entire Ecommerce experience regardless of how you are running or facilitating your business.”
“We have 10 facilities, eight in the US, one in Canada and one in Europe. Why that is important and why we’re making a huge bet on the distributed fulfillment model is because then you’re closer to the end consumer, that means that you can deliver your packages not only faster, but also much more cost-effectively.”
“Our warehouse management system or WNS technology, powers all the logic within the fulfillment centers. That’s from how should we receive your inventory when you send it to us? Where should we store it? When the order comes in, which person in the fulfillment center should pick it? What box should they put it in? Which label should they print it out? When should they prioritize that within their day? All of that is ShipBob technology. The reason why we think that is so important is that’s how we can create this unified fulfillment experience for our customers across all of our locations. That way, we can also be as cost-effective and efficient with our time, so that we can then pass on those savings to our customers.”
“A lot of people focus just on reducing their customer acquisition costs without understanding all the levers that they can pull. It’s just knowing your metrics extremely well. Then from there, identifying which are the biggest numbers and how can you start pulling levers to reduce those or increase those over time.”
“The biggest bet with us on the technology is owning the entire stack from what our customers are using to how those orders are being sent to the fulfillment centers and the technology in the fulfillment centers.
Mentions:
Bio:
Casey Armstrong is the CMO of ShipBob, a tech-enabled 3PL. Prior to joining ShipBob he led marketing and operations for BigCommerce. Throughout his career, Casey has acquired millions in net ARR and has generated page views in the millions.
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Transcript:
Stephanie:
Welcome back to Up Next In Commerce. This is your host, Stephanie Postles, co-founder of Mission.org. Today on the show, we have Casey Armstrong, the chief marketing officer at ShipBob. Casey, welcome.
Casey:
Hello. Thank you for having me.
Stephanie:
Yeah. Thanks for coming on the show. I am eager to have you on since we have not had anyone in your industry on yet. I think there’s a lot to learn.
Casey:
Perfect.
Stephanie:
I want to hear before we dive into ShipBob, a little bit about your background and how you got into your current role of CMO.
Casey:
Yes. Thank you for the intro. As you mentioned, chief marketing officer over here at ShipBob. Where at ShipBob, we are an Ecommerce fulfillment solution essentially bringing that Amazon level two-day, three-day shipping experience to direct to consumer brands. We can get more into the specifics of ShipBob later. I’m not here just to pitch that, but we do that through our distributed fulfillment network. We’ve got 10 facilities around the world.
Casey:
Then before ShipBob, I actually was the VP of marketing over at BigCommerce, one of the leading Ecommerce platforms who also happen to go public in IPO last week. Another huge congrats to the BigCommerce team over there, that was a huge accomplishment. I’m just very proud of what they have accomplished. I know that they’re just getting started. Then prior to that, I was the SVP at a company called Watchmaster. We were a luxury watch Ecommerce brand actually located over in Europe. Those were the last couple roles for me that brought me over to ShipBob.
Stephanie:
Tell me a little bit about ShipBob. What is it? How would you explain to someone who does not know even where to begin with that?
Casey:
Yeah. We ship off to really simplify it. Again, if I would really simplify it, we’re a tech enabled 3PL which again means we store and ship your products. If you’re a direct to consumer brand and you want to utilize ShipBob or let’s say another 3PL, you would send us your inventory. We would store your inventory. Then, as orders come in, we ship it out on your behalf. We are not a carrier. We are not like FedEx or USPS. We partner with them.
Casey:
Every day they send multiple trucks to our facilities and pack that truck to the brim. Then, take those orders out to deliver to the end consumer. Yeah. I think that covers most of it.
Stephanie:
Yeah. That’s good. You’re kind of like the behind the scenes operation that can help fulfill products and orders for an Ecommerce shop?
Casey:
Exactly. We really are pushing the envelope to do a lot more than that. I mean, we are platform agnostic. We can connect on all the marketplaces. We don’t really care how you are selling or where you are selling. We just ingest those orders. Then, we can ship the products to the end consumer. We’re really enabling that entire e commerce experience regardless of how you are running or facilitating your business.
Stephanie:
How does ShipBob differentiate itself from other 3PLs?
Casey:
One of the ways, the most obvious ways is our fulfillment network. We have 10 facilities, eight in the US, one in Canada and one in Europe. Why that is important and why we’re making a huge bet on the distributed fulfillment model is because then you’re closer to the end consumer, which means that you can deliver your packages not only faster, but also much more cost effectively. That’s a huge focus area of ours.
Casey:
Another very, let’s say, obvious item too is the technology. I’ll touch on two items there. One is we really are making our bet on controlling that entire stack. That goes from the merchant application, which should really be your go-to source for all inventory and order management. You don’t have to use another tool. You get all of that within ShipBob. Another is the ShipBob fulfillment engine, which is really the logic of what and where and how to ship all products. That’s what talks to our fulfillment centers. Then, it’s our warehouse management system or WNS technology, which powers all the logic within the fulfillment centers.
Casey:
That’s from how should we receive your inventory when you send it to us? Where should we store it? When the order comes in, which person in the fulfillment center should pick it? What box should they put it in? Which label should they print it out? When should they prioritize that within their day? All of that is ShipBob technology. The reason why we think that is so important is that’s how we can create this unified fulfillment experience for our customers across all of our locations. That way, we can also be as cost effective and efficient with our time, so that we can then pass on those savings to our customers.
Casey:
Then, another item with the technology as well is that allows us to, again, not just optimize what happens there but share this data more transparently with our customers. For example, all of our customers get … we’re we actually going to turn this into a paid product, we decided because of how much value it drove to our customers, we just decided to open it up to our analytics dashboards. Customers can come in and just get some pretty robust data and analytics on how their business is performing from like an inventory and fulfillment perspective.
Casey:
They can even see things like with a click of a button, let’s say they’re storing all of their product in our southern California location. They actually see they’re getting quite a few sales in the northeast. They can click one of our northeast locations and they can see, okay, this is the cost savings and the reduction in transit speed if I utilize two facilities. Sometimes, you’re like, why wouldn’t anybody use two or three or 10 facilities? You have to think through the business, which is it might cost incremental money to ship to multiple facilities or you might want to double up on inventory.
Casey:
There are pros and cons of both. That’s just one of many examples of with a click of a button, you can really dive down in your business and see where there are some cost savings and time saving opportunities.
Stephanie:
That seems very good, very helpful. I will point though, would someone know like, okay, now is the time that I should maybe outsource my fulfillment. How big should they be? Or when will they know it’s the right time to maybe hire or bring on a 3PL?
Casey:
Yeah. I think knowing the right time, I think that’s the easier one to answer. I get this question all the time. Is it 100 orders a month? Is it 1000? What is it? Just like most answers to things in life is it depends. I think it’s beneficial to pick and pack and ship products for maybe a little bit, maybe even just when you’re getting started, because one you kind of learn the mechanics of it and what goes into it and just even things to optimize yourself.
Casey:
An example there is sometimes people want this extremely robust unboxing experience. They’ll get these extremely customized boxes. Then they realize, oh, well it takes them 10 minutes to fold it all up together every time. That’s not efficient for them and that won’t be efficient for the 3PL. Also, I think it’s actually just extremely important to understand who your customers are and so as these orders come in, and you can do this after you outsource it as well, but as orders come in, look them up.
Casey:
Is it Casey Armstrong? Okay, he lives where? Okay, he has children, he’s into certain things. Who are these people? To really understand your customers. I’d say the time to outsource it is when you start getting close to a point where the fulfillment side of the business is eating into your time that can be better spent on sales and marketing and product development fulfillment is often a low leverage use of your time. There’s a reason why people utilize companies like ShipBob.
Casey:
You should be spending your time on growing the business, again, sales and marketing and product development, probably not picking and packing boxes, which also takes a lot of time.
Stephanie:
Yeah, that makes sense. How would I think about you guys versus maybe like Amazon fulfillment? What is the difference there?
Casey:
Yes …
Stephanie:
Would I pick you over Amazon? Or is it either or? Can I use both?
Casey:
You can use both. Sometimes, we’re a replacement. Sometimes, you would utilize us instead and sometimes we’re a compliment. With Amazon, it depends on what you’re looking for. With us, we often work with Ecommerce brands. I definitely stress brands, people that care about owning that customer relationship and owning that data and having full control over what and how products are getting sent to their customers.
Casey:
With Amazon, which really sets the gold standard in logistics, no question, with them, it’s really you ship stuff to their fulfillment centers, everything goes out in an Amazon box. You get extremely limited data if something goes wrong, or if they make changes. Like for example, they stopped shipping essentials or receiving essentials, early on in COVID. Most recently, they are limiting the amount of inventory you can store in their facilities. They’re the end all be all. They make that decision and there’s nothing you can do about it.
Casey:
You just have to conform your business to how they change. With us, you can include marketing inserts. You can include custom packaging. You get and own all of the data about your customers and about the fulfillment experience. If you want to pick up the phone and talk to somebody, you can. It’s really weighing what is right for your business.
Stephanie:
Yeah, that makes sense. The one thing I’ve always kind of struggled with when thinking about 3PLs is the cost aspect. Because at one point, I don’t remember what I was looking this up for but I was trying to find a good one here in California. They all use different metrics. I actually had to build a matrix in Google Sheets to be like, well, this person is quoting it based off of like, what are they called, partials or the big wooden blocks? Not blocks …
Casey:
Pallets?
Stephanie:
Yeah, pallets. Hey, there you go. Yeah, they’re quoting it based on pallets. Then, other people are talking about pieces. They all had different ways of talking about it. I felt like I didn’t fully understand what cost to even consider when looking for different 3PLs. What do you advise if someone’s going this route right now and thinking through it?
Casey:
Let’s say, before even getting into the pricing equation is understanding what’s important for you and that should hopefully allow you to whittle down your options because you probably are going to get handful of pricing agreements that are difficult to compare apples to apples. I mean, you could spend a little bit of time and get it to that point. Is connecting to certain technologies important? If so, you can probably cross a bunch of options off your list.
Casey:
Is having a location in a certain region or regions important? Do you want to split your inventory? Is certain things from a kidding or a packing or an unboxing experience important? If so, again, you can probably widdle some more off. With us, we really try to simplify it so you get billed off of receiving storage, and then what we call a total fulfillment cost. We try to simplify it some but again, even when you’re looking at us versus others, you can’t necessarily always get to this true apples to apples comparison but you can get pretty close.
Stephanie:
Yeah, that’s a good point. If someone is doing a lot of other things like you mentioned like unboxing or having distributed fulfillment centers, that is probably even more important than just like how much will it cost to ship certain pieces. When thinking about the distributed fulfillment centers, how does the reduction, maybe like shipping days increase purchase size or cart abandonment? Have you seen any metrics around that where a quicker shipping time, I’m assuming helps with higher purchases, purchase volume?
Casey:
Yeah. We actually have a couple of case studies that are pretty interesting on our site today. I’ll give two examples where one is with this one brand and they were utilizing our two-day express program. There, we split their inventory and we try to optimize everything or as much as possible to be shipped via ground, because we’re going to pay ground versus air is night and day. That’s why distributed fulfillment networks are important is because then you’re getting access to a larger footprint of the US.
Casey:
Let’s just say in this example, the continent of US for ground shipping because anybody can ship two day in air. That’s easy. You can ship it from one facility, it’s just going to be very expensive. Anyways, they were able to see slightly over 20% increase in their average order value by showcasing this two-day shipping experience. I think that’s because they were really showing off that Amazon level experience. Amazon had a lot of data on just the additional spend, granted this isn’t necessarily apples to apples but how much more the prime members spend versus a non-prime.
Casey:
Again, if somebody is using prime, they might have more … maybe they’re like in a higher income bracket or they put more emphasis on Ecommerce. We had another customer honestly that saw a 97% increase in average order value once they started showcasing this fast and free two-day shipping. I would not mark that as your baseline or your benchmark or target because doubling your average order value is pretty insane. It does go to show things that people, I think, think about a lot more now than they used to. That shipping and fulfillment experience both whether it be free for two days or free and two days can really move a lot of levers that will also help feed back into your ROI and your marketing.
Stephanie:
Yup. I think a lot of customers in the back their mind they know, if I don’t get this in probably a week, I’m going to forget about it or I won’t be as excited about it. I mean, that’s at least how I am when I see maybe like seven to 14 days. I’m like, what am I going to be doing in 14 days? I don’t even know if I want to wear that t-shirt in 14 days.
Casey:
Something that’s really tough to calculate is how does that improve … I mean, you can calculate like your net promoter score or NPS or your C-SAT or customer satisfaction score if you poll your customers. Maybe improvements in NPS improve word of mouth or improve customer retention as well. Something that I think about a lot is people always focus on email marketing or SMS or ads, but what is the number one place? Where do you get 100% open rate with your customers?
Casey:
That’s on the products that you ship them. Everybody’s going to open that box. From the speed and the experience and how they receive the package to maybe even the actual package to maybe what’s inside the package is extremely important. Focusing on that because there’s no better channel than word of mouth, but word of mouth is also the toughest to measure and also the toughest to grow.
Stephanie:
Yeah. I love that, especially the 100% open rate quote. How are you advising brands that you’re working with when it comes to creating a delightful unboxing experience?
Casey:
It often depends on what they’re selling.
Stephanie:
Yeah.
Casey:
I’d say it’s more on not trying to do things overly complex. I think, back to the first website that I guess commissioned to be built. The poor developer who’s actually the designer as well wanted to hang up the phone on me or delete my emails, because I just made what should have been so easy, so complicated, where I really just needed a homepage. Then, I needed a bunch of other let’s call them child pages, but they could follow the same design template over and over again. Essentially, I just needed to build out two different design templates. Even if my website was going to be let’s say, 50 pages.
Casey:
Where I came to him and I was like, I want the homepage to look like this. I want the blog to look like this. The about page to look like this. The service page to look like this. He’s like, we haven’t even got off the ground and you’re asking for 50 things. The same thing with that packaging and unboxing experience, which is, let’s say you’re shipping in just standard brown boxes today or poly mailers today. How can you make just like an incremental step up? Maybe it’s that brown box but it has your logo on it. Then, maybe make another incremental step forward from there.
Casey:
Because every time you add complexity, it’s going to cost more money most likely to create these custom boxes. Also, your 3PL might charge you for kidding fees. There’s a company that I’m a customer of, Lovevery, if you’re familiar with them, I know you have little ones.
Stephanie:
Yeah, I’ve heard of them. Their unboxing experiences, it’s beautiful. I know my wife and kids look forward to it every time it hits the door. You don’t …
Stephanie:
What does it look like? Tell me a little bit about it.
Casey:
From the box, and there’s another company called KiwiCo that does the same. It’s this beautiful box, you open it up, everything is laid out like in the order that you’re going to use it from the instructions to the toys or the products you’re going to use because they’re more like educational toys. It’s almost like this story or they’re like hand holding you through this experience. Let’s just put them at the far end of the spectrum of this amazing unboxing experience. You’re going to maybe even pull out your phone and Instagram it or something.
Casey:
Maybe that’s your future state goal. If right now, you’re just throwing things in a brown box, don’t try to do that overnight. Just try to make it like a little bit better and then just progress on that overtime.
Stephanie:
Yeah, that’s a really good point, not just for boxing, but I think this advice in general, sometimes it’s easy to want to go, let’s do 1,000 things and then it’s like you’re frozen and you can’t move forward. I’m sure you see a lot behind the scenes with a lot of new brands, probably approaching you and trying you guys out. What kind of trends are you seeing in the fulfillment world? Are there new things that have come up since the pandemic that maybe you weren’t anticipating before that you guys are kind of pivoting to help out with that maybe you just didn’t have customers asking for that prior to COVID?
Casey:
I don’t know about trends of things that they’re asking for that they weren’t prior, I’d say, their sense of urgency is increased. We knew that we were going to roll out a few international locations, but the demand for those capabilities and the speed at which customers are trying to close themselves. For our business, it’s actually rather welcoming, but it’s been pretty fascinating to see that really accelerate over time.
Casey:
We rolled out our European and Canadian fulfillment centers this year and people just kind of been banging on the door to leverage those because Ecommerce demand everywhere has spiked. I’d say another that’s been kind of interesting is while Amazon is still viewed very favorably, let’s just say across the US, how people are evaluating Amazon as a 3PL, depending on their business, again, whether they put all their eggs in the Amazon basket versus like just viewing it as a compliment.
Casey:
I think this has really shed a huge light on the importance of owning your business and owning your distribution channels as much as possible and owning your customer data and owning that supply chain like the example that I gave earlier. Again, I have so much respect for Amazon. They push our industry forward, not just Ecommerce, but logistics as well, is when they can start limiting which products you can ship to them and when they can start limiting which products that you can store with them, which therefore dictates which items you can ship out, which is how you make money.
Casey:
That’s a lot of power to give to a third party. They’re doing it because they need to do what’s best for them as a company. They need to do what’s best for all of their third party sellers and aggregate. No matter how big you are, you’re just one of those hundreds of thousands of businesses. Just making sure that you plan accordingly.
Stephanie:
Yeah, that makes sense. It seems like the shipping delays that happened with Amazon as well or when they started prioritizing essential stuff also gave a lot of DTC companies and people who aren’t relying on Amazon a chance because all the people on Amazon are maybe used to that two-day shipping, that started turning to five and seven and two weeks, started looking elsewhere and started being open to other ideas other than just like Amazon is my source.
Stephanie:
I know myself included, I have actually been okay ordering from brands directly. Because I’m like, this brand is maybe four days, Amazon might be two to three, not that much of a difference. Whereas before this, I don’t know, if I would have considered ordering directly from a brand if it was also on Amazon.
Casey:
You’re spot on. That’s what’s going to be so interesting as COVID hopefully starts to dissipate and then hopefully it’s in the rearview mirror, is the habits that we have formed over the last four to six months and which of those stick and people being comfortable with a slightly longer fulfillment time because they can buy directly from the brand or because whatever fear that they had has been reduced and so they’ll trust these other websites more.
Casey:
Even I know when I was at BigCommerce like we had a quarter that was super focused on digital wallets. As that’s evolved, digital wallets meaning like the PayPal buy button, the Amazon one click, I’m trying to think what else Visa and Apple Pay. Those also allow people to buy not just on desktop but also mobile so easily where you don’t even need to go and get your wallet. It’s just the ease of purchase is just so much easier now versus like on Amazon, they stored everything and it was very easy. Now, those digital wallets are also on a lot of these direct to consumer sites.
Stephanie:
Yeah. I think that’s so important. It’s like we have a Philz down the street and I used to always go in and order, use my credit card and whatnot. When they started doing only mobile ordering where you can only pick it up at their … like outside, instantly, I’m all of a sudden ordering like two Philz a week. I’m out and I walk my dog I’m like, oh, I’ve got my phone I can order it. Payment is already set up. Something I never would have done before. Now, I’m like, why did I ever wait in line? What was wrong with me? Why didn’t I get their app to begin with?
Casey:
Yeah. Great point. It’s like this forcing mechanism for us to try these slightly more innovative products. Even somebody like myself has been in Ecommerce forever and buying stuff on Amazon, I’m sure you’ve … since whenever you had a credit card, my wife and I, we never utilized like Whole Foods delivery or buying groceries on Amazon. Then, with this and with the little ones, we’ve just been very diligent on really living the quarantine life as fun as that is. We get multiple Whole Foods deliveries a week now.
Casey:
When before, we’re like, I’m not sure about how the produce will be. What about getting meat? It’s been great. I mean, the cons are usually you get about 85% of the things you put in your cart, because they don’t have everything but they deliver right to you. There’s just so many changes, just like your example, the coffee.
Stephanie:
Yeah, I’m starting to wonder too, if consumers will be … I think there’s going to be two sides of it, one where they’re going to have very high expectations for things like they want to have trust in the brand. They want transparency. They want to see what’s going on behind the scenes? Are they socially conscious? Then, I also think there’s another side of the consumer where they’re going to be okay with good enough. Like with your Whole Foods example, I was the same way like, I pick tomatoes out in a certain way or avocados and they just won’t know how to pick out my avocado.
Stephanie:
Now I’m like, if four out of five of the avocados are good enough, I’m happy with it. I kind of see two ends of the spectrum of what this push consumers to be, which would be kind of hard to meet.
Casey:
I agree. I might be slightly biased and we’re pushing ShipBob to deliver everything within, let’s say, one to three days. Sometimes, a merchant can only store all their inventory in one location. Let’s say, it’s on the east coast and I know you’re in California, as am I, and we order something, maybe it takes about four or five days to get to us. Am I willing to take that slightly longer delivery speed, because I know that I’m supporting entrepreneur that much more?
Casey:
I’ll be curious to see how that changes just as we do are more conscious about supporting SMBs. We know that if we buy it directly from their website versus Amazon or elsewhere, that we put more money in their pocket. I’m very interested to see how that evolves over time.
Stephanie:
Yeah, no, that’ll be really interesting. We’re just talking about putting more money in the merchant’s pocket. How do you advise or what best practices do you see when it comes to setting pricing? If I’m implementing a 3PL, should the retail price of something have like a 50% profit margin or 70? How do you advise someone to set their prices in a way that makes sense to make sure that their margins are good and not eaten up by 3PLs and returns and all that?
Casey:
I mean, every business will just be so different. I think what’s important that you’re getting at is, and something that not everybody fully carves off the time to understand off the top of their head, like all these numbers off the top of their head. What are their true costs of goods sold? How much does it cost for them to receive these products? As they scale over time is there opportunity to reduce those cogs so that they can improve their margins?
Casey:
You start with something like that. Then it’s like today and then as they forecast in the future, what are their customer acquisition costs or CAC? Then, understanding that, because then that tells you how much money you still have left over for fulfillment. What are your true shipping and your total shipping and fulfillment costs? I think a lot of people focus just on reducing their customer acquisition costs without understanding all the levers that they can pull.
Casey:
Again, it’s just knowing your metrics extremely well. Then from there, identifying which are the biggest numbers and how can you start pulling levers to reduce those or increase those over time?
Stephanie:
The other thing I’m thinking about when you’re talking about opening up fulfillment centers in Europe, what does a brand need to consider when they are thinking about using a fulfillment center overseas, if they are in a California or New York? Is there anything special that they have to take into consideration before utilizing fulfillment center overseas?
Casey:
Yeah. We’ll keep this relatively succinct because this can …
Stephanie:
Be a whole episode?
Casey:
Exactly. I guess, are there any regulatory issues with me getting my products into a certain country? For example, I know certain cosmetics, it’s actually more difficult to get into Canada and ship from there versus it is to get into Europe. It’s understanding that. Then, number two, which where you’ll spend most of your time is just that value added tax. What do you have to pay to get your products in? Then, how do you need to include that within your pricing?
Casey:
Every single country in Europe has their own batch structure. You can just spend a lot of time there. Or like what we’re working on is allowing people just to think of that as in Europe is like one country. Then, we do a lot of the heavy lifting on the, let’s say, peripheral or outside and so you really only need to think of that once versus that differently for every country.
Stephanie:
That’s a good thing to consider. You guys are kind of taking care of that for them in a way so they don’t have to do all the research on the different locales and what to charge and whatnot.
Casey:
Exactly. There are different types of that. With Watchmaster, for example, sometimes we would buy watches in the south in a country like Greece, where I think their VAT is like 22 or 23%. Then, we’d sell them in the north. Let’s say Germany, where I believe the VAT is 18%. There alone, let’s say in Greece it’s 23% and in Germany’s 18%, that’s a 5% delta. Even if we sold the watch, for the same exact price, we have 5% margin just because of the delta in the VAT.
Casey:
I’m simplifying this greatly. Just as an example of like there’s just so much complexity and that’s just one product in two different countries.
Stephanie:
That makes sense. Then, do you guys, I mean, I’m sure things get caught up in customs, do you also help keep track of that? Or is that something that they need to get it to the warehouse or center in Europe, and then you guys help take care of it from there?
Casey:
If we’re shipping things from the US internationally, that’s one thing. There’s duties you can pay in advance and then there’s also unpaid. Then, from getting the stuff into the country and into our facility, we will help some there, but it’s usually utilizing partners of ours. We’re not a freight forwarding company.
Stephanie:
Yup. Cool. That makes sense. With everything you guys are doing behind the scenes, I wanted to touch a bit on the technology because it just seems like you have a lot going on. Like you said, you guys are tech enabled. What kind of technology are you using to make the fulfillment process seamless? Any AI you’re implementing? Or new leading or cutting edge technologies that you’re implementing to make that process work?
Casey:
Yeah. We do use a lot of machine learning. Our bet also is building a lot of this stuff ourselves. That’s utilizing from connecting our solution and APIs to third party solutions, to then building all the logic and intelligence internally. Again, that’s utilized a lot of machine learning. Then, that’s driving the decision making. Really, I’d say the biggest bet with us on the technology is owning the entire stack from what our customers are using to how those orders are being sent to the fulfillment centers and the technology in the fulfillment centers.
Casey:
It’s not using let’s say like a third party warehouse management system.
Stephanie:
Got it. When you’re talking about integrating seamlessly and partners, what kind of partners are important to have integrated with your 3PL? Who are you guys making sure that you’re partnered with to make it a seamless experience?
Casey:
Yeah. Definitely, at the top, it’s the Ecommerce platforms. Then, on the output side, it is the carriers. It’s making sure that we’re able to get the best pricing within the right timeframe across FedEx and UPS and USPS and DHL and some of the local carriers so that we can make sure that we’re making the best cost efficient and time efficient decision on behalf of our customers.
Stephanie:
Cool. The one thing I always love is stories. I’d love to hear any mistakes that merchants have made where they come to you and you’re like, we’ve been doing it this way for 10 years, or like, this is how we do things now and you’re like, oh, that’s bad. Any stories like that that other people could learn from like don’t do this?
Casey:
One that sticks actually off the top of my head. This was something I thought about a lot when I decided to make the jump over to ShipBob was when I was at BigCommerce, we were doing this big film series and we were visiting a bunch of our merchants. I met this one merchant. This husband wife duo where … and I love their story and they’re doing really well. Certain businesses run their way for certain reason.
Casey:
I love their story because the wife, she started the business initially by herself. She ran it by herself for a couple years, where she signed up for the two-week trial. She literally hit the Launch button from a Starbucks. It’s like the American Dream version for Ecommerce.
Stephanie:
All the pictures show that you’re in a coffee shop and today is the day. I’m hitting go live website.
Casey:
Exactly and still free, you’re on the trial. Fast forward however long it had been, like five years from when I’m sitting in their “office”, which is essentially just a mini fulfillment center. The place was packed to the brim. Now, it was the husband and the wife and they were doing all things sales, all things marketing, all things website development. They were doing everything except for the storing the inventory, picking it, packing it, handling returns, putting the labels on the box, taping up the boxes.
Casey:
They had 18 employees so 90% of the workforce, including them, were doing fulfillment work. They were the only people focused on building the community and sales and marketing and product development. I knew at the time this is before honestly, they even knew about ShipBob, this is not right mix. When I left, they were actually going across the street to negotiate extending their warehousing space, so they can move across the street to store even more inventory.
Casey:
Now, you’re adding all these fixed costs, such as your rent and also fixed costs with all your employees. While you can maybe get rid of the employees, if things go bad, you’re most likely going to be stuck with the rents. Whereas if you utilize a third party logistics solution, you’re often paying them on performance. The more you sell, the more you pay them. The less you sell, the less you pay them. It’s more of this variable rate versus this fixed rate.
Casey:
I just was blown away because these people were going to do over 15 million that year. It was really just two people doing everything except for fulfillment.
Stephanie:
My gosh, I blame Shark Tank for that. You know all the ads they show where they’re like, we started in our basement and here we are with our whole family packaging everything. If you show that ad enough, people would be like, that’s how you do it.
Casey:
I’m not going to name names. We have customers and it’s kind of unfortunate. We have customers that will throw up their Instagram stories every week of them picking and packing boxes and storing a bunch of stuff in their spare bedroom and all this stuff because they’re selling the dream to their community. They get it to an extent. Then, all of their followers were trying to do things themselves. They’re replicating these false mistakes when I’m like, what?
Stephanie:
Oh, gosh, yeah, that’s really good, though. I mean, I think that’s an important lesson all around is like there’s a certain point when you can do that. Then, after that, you need to be focusing on the product. It can only get you so far when you’re doing everything on your own.
Casey:
Mm-hmm (affirmative).
Stephanie:
What kind of disruptions do you see coming to the world of fulfillment?
Casey:
Some news that just broke the other day that I think will be interesting to watch is a lot of these older retail spaces. A big question is what’s going to happen with these malls? I think a lot of that also comes down to … and with these retailers. It comes down to I think it was signing property but it was these large mall operators and owners, what are they going to do with the space?
Casey:
Amazon unsurprisingly is right in the mix. Are they going to start leveraging these now vacant or near vacant malls, where they can be very close to … because these malls are often in suburban areas, which are close to a lot of the end consumer. Can they start leveraging these mall facilities for their last mile operations? That’ll be interesting. It’s definitely something that we’ve looked at. We’re definitely building our technology in a way that individual store owners could possibly even utilize it at some point, people could start injecting it in the malls.
Casey:
I think that’s going to be pretty fascinating to watch. Then, another thing less on like the innovative side, just more of like the blocking and tackling stuff is like, with Q4 coming up, how big of upswing in sales are we going to see? Usually we see between let’s say 30 to 50% uptick in sales volume. With unemployment and everything, not in the best space, are we still going to see that? If so, these brands that are trying to get ahead of the curve and store all their products, now, Amazon’s already said that they’re not going to allow unlimited inventory like they had in the past.
Casey:
We’ve come out and taken the opposite stance where we’re not going to restrict because of COVID. How are a lot of these mom and pop 3PLs that really only have one facility are going to be able to do things and just how are a lot of people are going to be able to conform. That’s just the kind of boring work of I just need to literally store my product somewhere and then ship it out. I think it’d be interesting to see how a lot of brands navigate that.
Stephanie:
Yeah, completely agree. That’ll be a good area to watch. All right. We have a couple minutes left and we do something called a lightning round brought to you by Salesforce Commerce Cloud. This is where I will ask a question and you have a minute or less to answer. Casey, are you ready?
Casey:
I am ready.
Stephanie:
What’s up next on your reading list?
Casey:
My reading list. Oh, man, I’ve been buying way too many books lately. I actually bought this book. Here, let me grab it, I actually have it next to me.
Stephanie:
Yeah.
Casey:
I’ve been trying to get a lot more into finance and so I actually I bought Titan by Chernow and then I bought Reminiscence Of A Stock Operator. The one I’m reading right now is called How Finance Works. It’s by this Harvard PhD or Harvard professor that just really kind of uses some humor, but really gets you hands on and breaking down a lot of things from a finance perspective.
Casey:
I historically read a ton of fiction, but now I’m reading this and maybe that’s why I’m falling asleep faster at night.
Stephanie:
I’ll have to check that out. I mean, I love finance. I will be checking that out. What’s up next on your Netflix queue?
Casey:
Oh man. Because I have little ones probably like Rescue Bots or something.
Stephanie:
Yup. I feel you there.
Casey:
Yeah. I think I’ve exhausted the rest of Netflix.
Stephanie:
That’s all right. Kid stuff. I’m on the same page as you.
Casey:
There we go.
Stephanie:
If you were to have a podcast, what would it be about and who would your first guest be?
Casey:
Gosh. I’ve thought of this idea quite a bit. I mean, there’s a bunch on the business side, but I think it’d be … I just love sports. I’d say probably Shaq, Shaquille O’Neal. I want to understand what was the catalyst for him to get very business savvy for an example like he … I don’t think it was maybe like his rookie year, but very early on he never touched a paycheck because he was making so much money from endorsements.
Casey:
Basically, all of his NBA salary would go to his bank. From there, he’s just invested in … he owns like a ton of like Popeye’s and a bunch of car washes. He just very diversified the assets that he owns and where he makes money. It’s just fascinating to see how he was just so early in that. Then, you see people like James Harden and Steph Curry and others, and I think Kevin Durant recently did buying minor shares in MLS teams.
Casey:
I think that the athlete getting more business savvy is just a fascinating concept and would allow me to geek out about sports. I know that’s not a lightning answer, but it’s my long winded answer.
Stephanie:
All right. The last one is what app or piece of tech are you using right now that’s making the most efficient in life or business?
Casey:
I’d say an app that I have a love hate relationship with like most people will be Twitter, because sometimes I’m like, is this just an absolute waste of my time? I don’t necessarily tweet over too often, but using it as something I’ve actually been doing a lot more over email to is just cold email, cold outreach. The connections you can make with people to send direct messages. It’s fascinating.
Casey:
Then, as you evolve those relationships over time like there’s no way to even put an ROI on that. Just opening the doors in different business opportunities and partnerships and stuff, it’s just been fascinating and it’s free. It’s insane. Anyways, I’d say for now it’s Twitter.
Stephanie:
I need to try more of that. DMs make me nervous. I’m like, I don’t know if I should do it. I should just go for it. Start DMing everyone.
Casey:
You should. I mean, worst case, they don’t reply and that’s where you were in the first place.
Stephanie:
Yeah, so true. All right, Casey, well, thanks so much for coming on the podcast. Where can people find out more about you and ShipBob?
Casey:
Yeah, shipbob.com. Come check us out. As I mentioned, I’m on Twitter CaseyA. Come hit us up over at ShipBob. Let us know how we can help.
Stephanie:
Awesome. Thanks so much.
Casey:
Thank you.
