A weekly podcast with the latest e-commerce news and events. Episode 249 an interview with Casey Armstrong, CMO at ShipBob. ShipBob is a third party logistics provider that offers e-commerce fulfillment for thousands of brands. They are able to see the carrier shipping performance for all those clients and provide aggregate data that gives us insight into holiday shipping performance, also known as #shipageddon.
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Casey Armstrong (@CaseyA) is CMO at ShipBob, a third party logistics provider that offers e-commerce fulfillment for thousands of brands. They are able to see the carrier shipping performance for all those clients and provide aggregate data that gives us insight into holiday shipping performance, also known as #shipageddon.
Episode 249 of the Jason & Scot show was recorded live on Monday, December 7th, 2020.
Transcript
Jason:
[0:24] Welcome to the Jason and Scot show this is episode 249 being recorded on Monday December 7th 2020 I’m your host Jason retailgeek Goldberg and as usual I’m here with your co-host Scot Wingo.
Scot:
[0:38] Hey Jason and welcome back Jason Scott show listeners.
Jason we are officially a week past Cyber Monday and reports of ship Augustine are pouring into the Jason and Scot show virtual mailbox our interns are working full time parsing through everything.
So we appreciate everyone feeling this in ship again is also picking up a lot of momentum with the Main Street Press we’ve seen Wall Street Journal Bloomberg New York Times,
women’s wear daily your favorite Jason payments and one of my personal favorites supply and demand chain executive magazine.
I’m going to put that one on the mantle so so a lot going on there and the Press,
sort of capture all these resources we’ve published a little document that kind of highlights all the different hits if you will that ship again is getting you can find that at Jason Scott.com,
or Link in the show notes.
So today’s show we are going to get a strategic update on ship again and we are excited to have the CMO the chief marketing officer of shipbob Casey Armstrong on the show Welcome Casey.
Casey:
[1:45] Hey guys thank you for having me.
Jason:
[1:48] Oh my gosh Casey we are really grateful it’s super early in the morning where you are well we’re recording this so we appreciate that and if I’m not mistaken I think I hear the sounds of data being calculated behind you.
Casey:
[2:02] It’s crunching in the background you know in the closets.
Jason:
[2:06] I love it that’s what we call a teaser because we’re not going to get to what that is just yet but as longtime listeners of the show we’ll know we always like to start by getting a little bit of background about our guests and have a kind of
came to this awesome Commerce space so could you tell us a little bit about your background and how you came to shipbob.
Casey:
[2:24] Yeah so I’m the CMOS you said over at shipbob
before shipbob I was actually the VP of marketing over at Bigcommerce who I’m sure your listeners are very familiar with and before that I helped run a company called watch master,
where we were a luxury watch brand primarily sold over in Europe and I’d say I’d say there is what really cemented,
my views of the pain of logistics and inventory management we were really good at we grew very quickly we got the tens of millions within our first year,
so we did a lot of things well shipping Logistics.
And inventory management were things that we didn’t necessarily do well and when your average order values you know five or six thousand Euros,
you need to do that while in so again really shed a light on that the Pains of logistics and was one of the many Catalyst to get me over to shipbob.
Scot:
[3:21] Speaking of shipbob let’s dig into that so first of all explain to folks I think Jason I have a pretty good handle on what shipbob is but who’s this Bob guy and what is he ship.
Casey:
[3:32] The bad guys remember when I was checking out ship I’m like who put that’s a pretty funny name over there,
um and actually if you hit any of our 404 pages to get really nerdy they it’s a nice play on Bob I should wear my Bob shirt right now so shipbob we bring you know Amazon level shipping and Logistics to,
small business you know e-commerce Brands we have 12 fulfillment centers around the world including one in Canada and one in Europe,
we can get into later the importance of having this this network of fulfillment centers and distributed inventory of helpful but long story short
it’s always nice to be closer to the end consumer because it’s faster for you it’s faster for them and it’s cheaper cheaper for both parties as well,
we’ll open up another three to five in q1 of next year as well.
We help support about 4,000 customers today and will ship well over 10 million orders this year.
Scot:
[4:31] Colton the numb tell us what what’s your typical client you know Jason I spend a ton of time talking about digitally native vertical Brands direct to Consumer Brands so I imagine that’s a pretty good slice of what you do but
yep maybe there’s retailers maybe there’s other folks I haven’t thought about in there.
Casey:
[4:46] Our focus is definitely direct-to-consumer and I think that’s that’s put us in a great position
as our company has a standalone company today and it’s also what’s really helped put our customers in a great position to you know navigate covid in 2020 and so it’s definitely a direct-to-consumer we are,
platform and channel agnostic so we have people selling across you know the shopify’s and Bigcommerce has and wix’s of the world you know even through Amazon and eBay and Facebook shop and everything.
Scot:
[5:20] Yeah just to make sure everyone kind of is clear here because we’re going to talk about all these different legs of things so let’s say Jason and I there’s this huge demand for our tumblers,
we manufacture them somewhere we come up with a manufacturing partner in China then we have them shipped in bulk to you and then you,
I’m going to say this you tell me if I get anything wrong then let’s say we send them to I don’t know a California facility then you guys distribute them through your network and then as the consumer in
main orders a Tumblr they get the closest fulfillment center the consumer in Seattle orders one they get a closer fulfillment center but you guys do not do the last mile delivery right you’re using carrier so you’re that fulfillment center Network in the middle is that
is that the right characterization.
Casey:
[6:06] Yes that’s a great characterization we don’t we’re not we’re not lost Mile right now for the most part for most of our customers they choose which fulfillment center they would like to utilize or fulfillment centers
and so before anybody starts with us you know we analyzed all of their shipping data
which of course learns over time as well but they can at the end of the day also just choose which fulfillment center they utilize,
you know we give them the data for the for a reason and then even within shipbob everyday can just in our analytics section you can just click a couple of buttons and and start seeing how much time and money you’d save by Distributing it to other select centers.
Scot:
[6:45] Yeah one another I’ve been poking around your site a lot and I do like
I’m gonna give you the unofficial Jason Scott show most awesome 404 page because there’s also a Star Wars tie-in and I don’t.
Look for folks but if you can just go to any random page like you can just do Scott or Jason or something shipbob.com and then you’ll find I recommend checking out the for one page.
Casey:
[7:06] I smell when I have to get a Jason and Scott page on there.
Jason:
[7:10] I was going to say wait Jason is that 404 are I feel like everyone should have a Json page.
Scot:
[7:14] When your shipbob you got to stick to the gotta stick to the bottom.
Jason:
[7:20] Well let’s speaking of the Bob one of the things that is very handy from my perspective about your company is so obviously you guys ship via a lot of the common carriers and you publish
data about how those carriers are performing like how did that come about.
Casey:
[7:41] So our CEO or I should say both of our Founders drips back saying then De Vega Lodi there they’re very open.
And just transparent with our new organization and I think that just really trickles down and some of that came with some of the carrier tracking data,
and so we were discussing this internally on our side and we get we were getting asked this all the time from different partners of ours and
and then one day Drew was like hey why don’t we just publish this,
which was honestly all the thumbs up that we needed you know it was a casual ask and it was a Friday I don’t know when this was probably sometime in early Q3,
and so a colleague of mine and I were like okay let’s jump all over this we pulled in somebody on the analytics team and later that day the V12 this was published and so we saw the.
[8:33] The thumbs up there and decided to get this out there and ever since we published it we knew that people would want to consume it but it’s just been great to see the reception of it how people are are often citing and referring to it,
it’s always interesting to see the people that sign up to get access to to our updates as well but in when we published I think it was,
like right when covid hit we published our Trends piece that Trends got shipbob.com which showed a breakdown of,
all the a lot of the main verticals and that did really well and starting getting shared a lot and so okay how can we continue to open up some of our data which of course we share with,
with our customers and with my fellow colleagues but just open this up for the masses.
[9:22] And so honestly I had some concern about what how would the carrier’s react and I don’t know maybe there’s some,
non-public conversations we can have about how they’ve reacted to some of the data we’ve put out there but you know we wanted to throw it out there and I really wanted to get some geodata live shortly as well it’s really cool to see like.
Which states and areas are order spiking especially as different covid news comes in and even,
you know which which states are spending the most on e-commerce and maybe the most per capita just just a lot of variation data out there.
Scot:
[9:59] Cool so the just so for listeners I think you said it but I’ll just re say it in case it’s carriers with a
plural does shipbob calm is the page one thing I find distracting about the pages you have this cool truck animation and sometimes I just get stuck watching the track animation I’m just kind of like.
I don’t know there’s something about that that I don’t forget to scroll I just watching the little trucks racing each other the so first of all if we so you said 10 million orders and that was annually right.
So if we kind of like a million orders a month kind of on average I guess and it you know I imagine you guys are growing pretty rapidly so there’s kind of a tilt to that line up into the right hopefully and you know so.
Can you tell us like a pie chart like who are the biggest shippers that you guys have just we can start there.
Casey:
[10:54] Yeah so it’s a lot of the the major carriers it’s FedEx USPS ups and DHL those are by far our top four we work with you know subsidiaries of those carriers and we also work with local carriers.
That’s something that we started in Q2 of this year or I should say accelerated especially with somebody just the carrier demands.
But those are by far our topic of strippers.
Scot:
[11:21] Okay and when your clients come to you like let’s say the Jason and Scott Tumblr store when we come to you do we say hey we have a relationship with FedEx and we’re going to you know go with them or do you guys have,
because you skip so much volume you can probably get a better rate than us individually do put put people kind of on their own like a shipbob shipping program that has a certain flavor or is it a hybrid so some have direct relationships some are kind of,
where you’re in the middle.
Casey:
[11:48] We’re always in the middle and so you’ll always use our account.
And so like you mentioned not only does that help you from like a pricing standpoint because obviously we’re shipping a lot more than.
Most people but also I mean there’s a lot of other benefits as well such as you know our negotiations on our behalf are also on your behalf and so great examples with as you guys keep sharing ship a get in.
And some of the carriers.
Limiting you know not just small businesses but you know I know there’s a big story in Wall Street Journal em ups limiting Nike Gap Macy’s.
Every single customer of ours would have to be negotiating their limits with the carrier or carriers of their choice.
And again so we’re doing that on their behalf and we have our Network to distribute and move these Goods around,
and so they get to take advantage of that as well and so that’s been that’s been I know another huge win that we don’t necessarily share with our customer base too much but you know that’s one of the things that people have been able to I’d say better navigate ship again over the last couple weeks.
Scot:
[12:59] Yes it’s so by aggregating all these kind of individual small folks you’re bigger than Nike or somebody so therefore you have a little bit more heft when it comes to carriers by saying you can’t turn us off because
if I do the math on your shipping like 30,000 things a day which is pretty material right.
Casey:
[13:17] Yeah and I mean in over the last couple weeks it’s a lot more than that and.
Scot:
[13:23] Spikes up double triple.
Casey:
[13:24] Yeah and you know of course so our leadership is talking to their leadership all the time and like you said with growing mean,
will double again next year and so they want to they want to continue to get that business and so that just I’d say put this in a favorable spot.
Scot:
[13:42] Absolute Okay so
the reason we’re recording this Monday morning is you are giving our listeners a little bit of an early Taste of what’s coming out here so so walk us through what you’re going to be revealing here on December 7th with the data.
Casey:
[13:58] Yeah so and and I appreciate your,
you guys want any to share this out there and how you guys love refreshing the carrier’s data like you and also like my six-year-old big fan of the the gift at the top as well,
remember he saw that he’s like I want that what are those cool trucks I want that thing.
And so yes I’m happy to share with the latest and greatest numbers are that we’re seeing this week I do want to give a caveat though something
the three of us briefly discussed before we jump up jumped on which I think is a pretty serious issue that not everybody is familiar with,
and that’s that’s on the carrier scans and so at each point within the supply chain,
your you know your supply chain vendors whether that’s your 3pl because we scan the orders throughout several points in the process on our end to when we put it let’s say into a gaylord to get picked up.
[15:00] And you can go Gaylords is this a know massive bucket if you will get picked up by the carriers.
Between the carriers pick it up from our facilities or supposed to scan it and as it goes through different sort facilities or I should say every single officer supposed to scan and then scan once it gets to your house,
and so something that a lot of people have seen and I’m sure a lot of everybody listening who were all consumers have seen as well as there’s no tracking on my order or hey my order hasn’t even been shipped yet that’s not necessarily the case,
and so again just one of the caveat some that there have been some you know the carrier’s can issues and Willie first scan,
the numbers there have dropped significantly since around Black Friday,
and so again we’re cleaning up some of the data on our end but it’s just been interesting to see that I know my wife was stressing out because she’s like I ordered your gift a while ago they haven’t even picked it yet and then the next day it was delivered.
And so she as well just they’re trying to move orders not necessarily scan all the time so that being said yeah I’m happy to walk through the data and tell you what we’re seeing this week.
Scot:
[16:13] Yes it feel free to forget the sequence on the page but you know there’s like obviously I think the big for FedEx UPS US Postal Service and detail what where we see in for this last week.
Casey:
[16:23] Yeah so we can start actually I’ll start start at the bottom and so start with USPS.
And we’re actually seeing them at around four point four point one five.
Days and that’s from order picked date to delivery date and that’s up from about 3.5 that is a 20% week over week jump,
and again this is I mentioned some of the carrier scan information.
[16:55] Um and so you know that’s that’s a pretty significant jump It’s a almost 65 percent above what their pre,
transit times were and again these are during aggregate like we mentioned you know will do.
You know we’re doing well over a million orders or the last you know Black Friday Cyber Monday weeks so this is some pretty strong volume that we’re basing this off of but this is across all different zones
so we could of course get more granular there but want to provide the aggregate data and so pretty significant jump,
I foresee that holding for at least probably another week just because a lot of these these carriers are are very stressed.
And stretched and so on DHL,
it actually did not jump as much as expected it actually just jumped from about 1% week over week.
[17:55] And which actually is pretty surprising to me which is still about 30 percent above the time in transit
DPS data we’re still cleaning up and so I can follow up with you guys shortly after that and I’d say the biggest jump in the most surprising and maybe this is because they’re often rather rather diligent on the scan tracking,
would be FedEx,
and so they they course-corrected very well after covid there was there about a three-month span where they were shipping well over there their pre covid levels and then it was really about August.
[18:30] Before they started getting back to.
The pre covid shipping the shipping times and then because they were hiring like crazy just like us just like Amazon just like Walmart,
they were actually able to get it.
Pretty significantly below their pre covid shipping levels and then this last week it just spiked like crazy and so went from less than the 3 Day average Transit time 23.6.
Which is which is a huge jump week over week,
and so I’d say FedEx definitely had the biggest jump you know I have a lot of confidence and how they execute and they’ll be able to get things back to normal but they definitely saw the biggest job.
Scot:
[19:11] What percentage does that.
Casey:
[19:13] I think that’s like a close to 25% week over week jump.
Scot:
[19:16] 25% okay yeah yeah and then you know another thing that’s interesting is if you refuse packages that’s one way of.
Not that they are doing that for you but overall their Network that’s one way of mitigating this right is and that’s what we’re hearing about in The Press is you know so so that’s.
That’s going on somewhere which is interesting to think about as well have they haven’t refused any packages from you guys something.
Casey:
[19:41] No we’ve been we’ve been pretty clear so far another thing that we have as well is in both the greater Chicago in Greater Dallas region we have multiple fulfillment centers.
So not only can we move inventory let’s say between.
You know Chicago and Dallas to help with Transit time but we can move them with in Chicago and with in Dallas just to take advantage of you know the different limits that we might have within specific facilities.
Scot:
[20:12] Yeah so let me just replay that for Wisner so so a carrier makes a to you,
man we’re just maxed out in Chicago you say okay we’re going to run our own 18 wheelers between Chicago and Dallas and load balance kind of within your system to react to the externalities of the other systems is that
is that what you’re saying.
Casey:
[20:32] Well I’m saying even more granular they might say that your building is maxed out and then you can move it from one Chicago building to another Chicago building.
Scot:
[20:43] Wow that’s interesting doesn’t make a ton of sense but I guess in their world it does.
And you know yeah and for listeners that haven’t been in a big fulfillment center you know usually there’s just 18 wheelers parked outside so the big carriers will just park those right out there and then when they’re full they’ll drive off is that is that kind of what what’s going on here.
Casey:
[21:03] Yeah we’ve got in most of our facilities I want to say 20 to 30 plus doctors and they just you know we’ve got dedicated lines on each of the major carriers and we’re just yeah film those things up all day every day.
Scot:
[21:18] Cool and then within that FedEx 3.6 lot of people not may not know about FedEx is actually several systems that the two that are the probably most relevant are the air and the ground you guys break that out is this like mostly in ground.
Casey:
[21:32] So this is all growz.
Scot:
[21:34] That’s all ground okay.
Casey:
[21:36] And that’s a big thing to love people don’t realize as well as are like well how can I offer to day fast shipping and they’ll often look at are.
Anybody can ship from one location,
you know two to three days or less via are it’s just exponentially more expensive and that’s why you know you want to get closer to the end consumer and and you offset that with are to the places you can’t get to Via ground and do as much ground as possible.
Scot:
[22:01] Anything else on FedEx or should we jump to UPS.
Casey:
[22:04] We can we can jump.
Scot:
[22:07] Right hit us with UPS how are they doing.
Casey:
[22:09] So the UPS one is the has lost one that all I can share with you guys after so still waiting on some of UPS data.
Scot:
[22:17] Well the reason that one’s interesting is if I remember if I go to my and I try not to get stuck on the gift,
look at the last data you guys dropped they were feeling the pain right so they were at like four point five days and they had been.
Up and to the right on the delays do you need anything directional you think they’re got some relief or.
Casey:
[22:39] I think they’ve got some relief I think they’ve been doing they’ve been doing a bit better.
Scot:
[22:44] Yeah and you know my.
Again just watching the data here it feels like they’ve been the most aggressive it kind of saying hey we’re kind of maxed out don’t give us any more packages right now which could be that that’s how you get some relief on this as you.
You have to increase the number of deliveries and the throughput and stop taking in as much stuff to give the system time to catch up.
Casey:
[23:06] That’s a great call out I’m glad you mentioned that because I think that’s where we’ve been fortunate and all our customers and our customers been fortunate is if we haven’t been hit by limits,
then they’re able to ship out you know more similarly than they did pre you know peak season.
Because they are limiting these these major brands are limiting Nike their limiting Gap delimiting Macy’s their lives their limiting small businesses that are shipping on their own.
All the time there’s just you know I feel for a lot of these brands are some pretty bad horror stories I know this.
Company house has been pretty public with it with their just getting slapped with limits of phenol 500 orders a day at the most
and if not you have to go take things too you know the post office yourself and so it’s it’s been tough for a lot of companies.
Scot:
[24:04] And ultimately it’s a bad customer experience right so the shipper is get to say so let’s use the house example because they’ve been so public the shippers get to say well it wasn’t our fault we didn’t ruin Christmas but house still has upset customers right and
the customers expectation is I press the the checkout button and.
I don’t really care who’s problem it is your mr. brand it’s your job to get me my product and so it’s gonna be really frustrating these brands.
They.
They to be DTC part of your DNA has to be super customer centricity and then to not be able to get your product to people is going to be just like you know wildly frustrating subside I feel that pain and.
I’m glad companies like you guys are able to have a solution for small Brands to solve this because,
sometimes you can use FBA for this kind of thing but Amazon hasn’t really done a ton around off Amazon FBA because they obviously pref.
Apply a preferential treatment to their in-network kind of stuff so,
I think it’s great that we’re seeing and you know to be clear there’s a lot of you guys have a lot of competitors out there I think it’s great we’re seeing these kind of independent fulfillment center networks that have an FBA kind of a flavor,
there is this whole 3pl thing but it’s generally not designed the way you guys are that’s friendly for smaller direct consumer type businesses so,
so I think I think it’s it’s going to be a really interesting Trend over time that businesses like yours are able to solve a pretty material problem out there.
Casey:
[25:34] It’s you know you mentioned Amazon I’ll get back to them and one sack and also just like the customers and their empathy levels.
It’ll be interesting to see how that all plays out you know of course 2020 has been an interesting year to say the lease or is not a lot of empathy for,
I think different companies at the started covid then things kind of is like all right this is the new normal but just how people,
I’d say act around the holidays which is often just a stressful time in general and then you know for many out there Christmas is really the deadline of trying to get gifts or I should say maybe even Christmas Eve
to get things under the tree I ordered this was one was this I think this was Thursday or Friday,
I ordered the typical silver iPad as a gift for somebody.
And this is Apple I don’t know what they’re at right now 1.5 trillion dollar valuation or Mark Gap I should say and,
it told me that it wasn’t going to get here until January 5th this was just your run-of-the-mill silver iPad it was probably Scott to be one of their top five top ten most sold items and it was over a month,
before we going to get to my house.
[26:47] And so you know a lot of other people are feeling this strain and then even Amazon I mean Amazon’s incentivizing people with with slow shipping,
and even if you order some rather common goods you know even on Prime it’s still showing 5 6 day delivery speeds.
Jason:
[27:07] I do want to differentiate a couple of things and I don’t know this to be the case but my suspicion is Apple’s biggest problem which we’ve heard from a number of people that like popular Apple products have.
Very long delivery times right now which are Beyond Christmas the likelihood is a significant portion of their their problem is,
inventory not just carrier capacity.
Casey:
[27:32] I don’t doubt that it’s inventory but.
And who am I to give any suggestions to Apple and how they run their business but they don’t give you that there’s no there’s no I’d say,
transparency or communication back to the the customer that it might be an inventory issue I know some of our merchants.
That have I’d say dun dun best and there are obviously a lot smaller than Apple
but then I’ve done best you know this year you just been very transparent and what’s going on in their operations and those happening in their business or maybe things are sold out and they’re using that to their benefit,
but you know at least to the end consumer this not you know reading the general or I should say like the deeper news on Apple you know they didn’t mention anything like an inventory issue it’s like we’ve got this.
Order it now and then you pee and then it tells you.
Jason:
[28:25] So a it clear best practice that I know you’d agree with is like surprises are absolutely the worst,
thing you can do to the customer right so you need you want to communicate this win up when will I get it information early in the shopping process not after they’ve entered a bunch of their payment information and then you go oh by the way when you click confirm
this isn’t going to get here in time for Christmas like that’s the absolute worst thing you can do,
and a lot of sellers we have a lot of opportunity on the table by not being transparent and not having good communication so pretty your point.
If for whatever good or bad reason apple has a bunch of 256 Meg or gig iPads in stock but not 512s in your ordering a 512 and it’s going to miss Christmas.
Early in that that shopping funnel you want to tell that customer by the way if you’re willing to accept a different memory configuration.
We can make it for Christmas right not just surprised them at the end of their cart.
By telling him you can’t I would say there are inventory issues this year like because of covid it disrupted a lot of Supply chains nine months ago that we pay the price for now.
[29:41] Brands got conservative about their cell through when they weren’t sure what covid-19 Ado demand and then their categories that Apple plays in a lot for example where.
There was just unanticipated demand like nobody forecasted in March that the majority of kids in America would be doing school from home and therefore need more technology at home right.
So all of those things play into it.
[30:10] And obviously the shipping is a very real problem but Casey I do want to talk for a minute about the.
Marker 03
[30:20] The shippers that are denying packages so let me tell you my understanding and see if this jives with yours a I feel like there’s two big buckets there are very big shippers.
For which this is not remotely a surprise like they they they had a conversation the carrier’s had a conversation with these very big shippers like Nike.
Back in.
June and said hey what kind of capacity are you guys looking to allocate for a holiday and they negotiated a capacity.
And the only thing that’s different about this year than previous years is in previous years what the carriers would say is and if you end up selling more and ship more than your negotiated capacity you’re going to pay a surcharge,
so those incremental shipping.
Parcels will be more expensive and this year they’re saying if you ship more than your allocated capacity we might not be able to accept the packages because we’re we’re worried about our overall capacity so so I just want to say for the Nikes and gaps of the world.
They knew exactly how many orders they could take and how many shipments they could they could make.
Maybe they hope the those those capacities wouldn’t be enforced but they they weren’t surprised at the last minute by UPS going by the way we’re not going to come by your office today.
Casey:
[31:38] I would say they were probably pretty accurate in their assumptions.
How many things how many items were actually sold into they have Smart teams and smart data scientist doing the forecasting I know that we.
Pretty far exceeded our Progressive forecasts of shipments,
let’s say over the last two weeks and I wouldn’t be surprised to see you know the Nikes of the world you know Nike is continuing to massively accelerate their e-commerce growth but I wouldn’t be surprised if they underestimated.
And underestimated from different locations and then also there’s one thing to be told that hey we’re not going to pick things up,
and you’ve heard this before and they’ve always picked it up it’s another thing for them to like not actually come and pick it up,
and so I think that that’s something that a lot of these big Brands especially these big brands that are not used to being told no.
Are actually seeing.
Jason:
[32:42] Yeah I would totally agree with that and then I wit you also alluded to one other thing which I think is a funny loophole in this whole thing the carriers are not in the business of denying packages,
so they don’t actually like that they don’t actually have a great infrastructure.
For enforcing these quotas so so for example if you’re a huge shipper and you deliver you know a container full of packages to a carrier Distribution Center.
They don’t scan every parcel on that truck before they unload the truck.
[33:13] They they unload the truck and then they disposition of those Parcels overtime right and so they actually don’t have my senses they don’t have software,
that says like oh deny that box don’t accept it,
what they do is they say oh you know what this shipper has exceeded their quota we’re not going to send a truck to that that fulfillment center to pick up their orders today,
and so that that’s their mechanism for denying it and so frankly a ton of big and small shippers I have heard of have bypassed this whole thing,
by dropping the packages off somewhere else in the in the carrier supply chain so per your point,
you get a pickup cancel that one fulfillment center you move the packages to the other fulfillment center or you drive the,
the package has two of FedEx distribution center and drop them off or even to a local FedEx office in some cases and drop them off and there’s there’s not someone in that store that like scans your shipper code and goes oh I can’t accept this package,
so that I think that is a funny way people are are bypassing some of these quotas for this year for For Better or Worse.
Casey:
[34:24] And also trying to bypass because another thing that is completely maxed out or trucks like go try to rent a truck in any major city and you’re not going to be able to.
Um you know there have been pictures of Amazon employees just delivering stuff from their car but it’s just pretty fascinating the creativity that
different brands are employing and again that’s just another part of the supply chain like go try to run a big truck you can’t.
Scot:
[34:52] Cool yeah we’ve we’ve been reporting on that on the ship again side and as a guy that has 200 trucks right now,
it’s a feels good that we have what we have,
that’s but that’s a podcast for Another Story Another Day so really appreciate you walking us through kind of the Tactical where we are right now I want to use our last kind of ten minutes here to to kind of go back up to 30,000 square feet and get out of,
kind of covid world and what we’re experiencing,
let’s talk about this this is probably a quick window so I think you have any perspective coming from Bigcommerce and then now being it shipbob shopify’s doing some things around fulfillment and whatnot.
I haven’t have to be honest have attracted a hundred percent my understanding is they may have one or two fulfillment centers and then kind of trying to Overlay something on top of stuff,
do you see a day where they’ll get more involved in either the Fulfillment center side or even last mile delivery.
Casey:
[35:51] I mean they are involved in the Fulfillment center side,
Last Mile I’m not the right person to ask there I mean that’s like a whole nother Beast I mean Amazon’s been a logistics company forever and you know they started getting into Last Mile just a couple of years ago.
And so you know my guess is they’ll continue to try to understand the Fulfillment center side better and you know as they learn that more you know maybe continue to expand I think that they’re their CEO and,
leadership team definitely think a long-term so you know who knows what they’ll eventually roll out.
Scot:
[36:27] It’s hard to be a you know high-margin software company and then say to Wall Street we’re going to open.
80 fulfillment centers it’s just it’s just a if you started fulfillment centers then that’s one thing and you kind of go from low margin high margin it’s very hard to go from high margin to the merchant,
companies have done it but this is a reason you haven’t seen Google or Ebay take that plunge as they’ve,
they’ve kind of got their business model pretty baked and it’s hard to mix in a lower margin asset heavy type thing into a asset light model so it’s gonna be interesting to see if they ultimately do that or not.
Casey:
[37:04] Yeah I mean Google launched the perfect business model with insane margins so it’s tough for them to change that Amazon on the other hand you know going from Shipping books to AWS it’s a nice story to tell.
Jason:
[37:17] To selling ads exactly.
Casey:
[37:19] Yes to selling ads.
Jason:
[37:21] Turns out the Google business model is better for everyone so I’m curious.
In the past there are a bunch of sellers that may be primarily relied on Amazon for demand
and so they primarily used Amazon for fulfillment and you alluded to you know in our current craziness even Amazon is having to make hard decisions about,
fulfillment priorities it seems like more than than there has been in recent times,
there’s a smart argument to having a diversification of your supply chain in your shipping options are you seeing a lot of new people come into your echo system and want to add you to their mix because they were,
single sourced on FBA and now realize that’s not the best place to.
Casey:
[38:05] We definitely are and I think it’s also I think that’s going to take honestly several years to fully play out or longer because somebody who makes a you know,
who runs their business on Amazon versus somebody who you know runs their business on their own site or on their own site and then a Marketplace like Amazon is complimentary
it’s just a very different business and it’s different skills that you have to learn over time and so you know we are a complement to Amazon we are partnered with Amazon.
[38:37] Um but I think that some of the things that have happened this year such as Amazon limiting,
what you can what they will receive multiple times,
Amazon limiting what you can ship out a friend of mine he’s a 10 million dollar plus a year seller on Amazon he’s been selling on Amazon for well over a decade he was getting told.
[39:05] Fuse getting told that they can’t ship certain items of his this is like early covid,
they could ship like let’s just say widget a the black widget,
they could ship that but widget would it be which was just like the white color they couldn’t ship that out and you know it’s just like there was there was no Rhyme or Reason there was nobody to talk to on the other end it was just,
this is the law and so we’ve just seen that play out a few times again from the types of inventory that you can receive they’ve been Turning Away product,
at their fulfillment centers and then you know brands are just left scrambling with no idea what to do that supply chain experts and even,
you know they’ve always increase their warehousing cost during Q4 but just seeing these the surcharges and their rules and because they’re running such a massive supply chain and a massive organization
they have to make these changes and I know they’ve been hiring like crazy to not have to make things too difficult.
But just when they when they make a change that’s the rule and there’s you know there’s there’s no gray area there’s no wiggle room.
Scot:
[40:10] Yet it’s a it’s interesting you say Amazon’s a partner I think a lot of people that aren’t as in the weeds as we are the three of us that kind of scratch their heads because.
You know they have this mental image of this kind of hierarchy of things and it’s actually more of kind of this overlapping graph right so,
so for example what I imagine you’re saying is if I’m a merchant and I have my product at shipbob you guys probably are able to have that
marked as prime using the program they’ve changed the name of this like a thousand times I call it Merchant fulfilled Prime sometimes they call it seller fulfilled Prime whichever one you want to call it,
is that you guys are you guys is that something that is part of what you do.
Casey:
[40:51] So we do fulfillment by merchants or fbm.
Scot:
[40:54] That’s the new name.
Casey:
[40:56] Yeah how they’re going to.
It’s going to be interesting to see how Amazon takes seller fulfilled Prime over time because you know they’ve been somewhat opaque with this but you know reading between the lines I wouldn’t be surprised if that changes considerably in 2021.
Scot:
[41:15] Yeah because it’s hard for everyone to live up to the prime promise right so what they’re doing is they’re kind of trying to extend the rings of the Prime promise and you guys can live up to that because you’re at a big scale,
which is a 12 or 14 fulfillment centers if I’m Joe Schmo and my garage is my fulfillment center,
it’s increasingly hard for me to live up to that Prime promise there’s this balance between flexibility out on the edge of the network but then living up to the prime promise.
Casey:
[41:42] Exactly,
enemy and that’s what they’re known for Amazon Amazon Prime and you know they did an amazing job two day shipping is you know they’ve made a thing and then they were really pushing towards one day the beginning of the year.
Scot:
[41:58] And in this fbm program that’s the one that set up for more like 3pls to offer prime prime eligible products has at Zara.
Casey:
[42:08] Prime or non Prime but yes.
Scot:
[42:09] Yeah okay so primer no problem so the user you can then your customer can say all right I want these skus to be marked as Prime within even going down to the Zone kind of thing but these I don’t really want to be prime is that how it works.
Casey:
[42:24] Yeah that’s that’s a good summary right there.
Scot:
[42:27] And then last question so so one Theory I have is Amazon’s kind of shown,
that you can go build a last mile delivery Network right and you know so what is it like 3 years old two and a half years old,
doesn’t feel like it’s that old to me so with their DSP program they’ve really scaled up this this very quickly do see is that something you guys would be interested in or do you see other people building a,
DSP like last mile delivery because that.
The one thing ship again has taught me is there there’s way more things that want to get to Consumers than there are trucks on the road right now.
Casey:
[43:04] We currently don’t have plans to get into Last Mile again you know we’re thinking long-term as well and so,
things could change over time that’s not on the shipbob roadmap for 2021,
I don’t see that on the road map for 2022 but you know who knows for us it’s really like.
How do we democratize fulfillment for brands of all sizes and so you know going deeper into what we can ship to new fulfillment centers to kidding to be to be more International our app store.
But yeah last Mile and actually running like a carrier service that’s you know it’s quite a bit of a different business.
Scot:
[43:48] Yeah one
One Stop Gap in there is we also over on the side we’ve developed you know all these interesting three-sided Marketplace has largely for delivering food or people
but those can also be used for delivering products so we’ve seen instacart for example known for groceries now working with I think it was Jason fact check me was at Sephora or Ulta one of those and a bunch of other.
Jason:
[44:09] Sephora for sure but actually dozens of retailers they’re doing Last Mile for now.
Scot:
[44:13] Yeah and you could you can see I’ve heard Uber and Lyft talk about this I was watching the door – IPO thing and they talked about you know they were pretty plainly saying food is just one of many if we can get ice cream to you we can get you anything,
do you see a world where maybe those guys slot in and they could be this last mile delivery Network.
Casey:
[44:32] Hey could I think they need to figure out like the sortation or Distribution Center side of the business because let’s take you know those into the companies you mentioned or like uber.
A company like us we want to you know fill up an entire truck.
And then send the truck off and then have them you know back in another truck,
we don’t want a bunch of sedans coming in and picking up five boxes.
So it’s going to be a shame to see how they navigate that because I think that there’s a lot of opportunity there
but again they need to figure out how they are sorting these packages and tracking these packages
and then also doing it in a cost-effective manner as well because sometimes you know they’ll try to enter the market because on paper looks great,
and it works in their Excel models but then when they roll it out there’s just it can be a logistical nightmare at times and then also Blake its it can be cost prohibitive to them because it’s
it’s involving people and people are expensive and there’s a lot of room for error and then what they want to charge maybe a company like shipbob is.
Much more expensive.
Then what we can pay the regular carriers and it’s not necessarily even more effective or faster and so if it’s not faster and cheaper I’m yeah it’s not faster and cheaper than you know why would we evaluate it.
Jason:
[45:53] That makes total sense Casey and that’s probably going to be a good place to leave it because
it has happened again we’ve used up all our allotted time for today’s show I really appreciate you taking time out early in the morning on what I know is a super busy day for you but if you like
Scot and I and our listeners benefited greatly from the chat so as usual if folks have any questions or comments feel free to hit us up on Twitter or Facebook page,
as always if you enjoyed the show we’d love it if you jump on iTunes and give us that five star review.
Scot:
[46:26] Thanks Casey if folks want to find obviously we’ve talked about the carrier’s. Shipbob but do you pontificate out on the interwebs and if so where should folks go to read your pontiff occations.
Casey:
[46:37] If you have any questions for me you can always hit me up see Armstrong at shipbob calm I’m on Twitter as well Casey a and like Jason and Scott mentioned go give them a five-star.
Jason:
[46:49] Awesome really appreciate that and until next time happy Commerceing!
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