How to Build a Flexible Warehousing and Fulfillment Network for Your e-Commerce Brand
December 8, 2020
Here’s a glimpse of what you’ll learn:
- David Glick discusses how Amazon has helped slingshot brands into e-commerce during the COVID-19 pandemic
- David’s advice to brands looking to sell online and on Amazon
- How FLEXE helps brands with their e-commerce fulfillment needs
- How to decide between building your own logistics and fulfillment capabilities and outsourcing to other firms
- David talks about how brands using Amazon’s FBA can benefit from working with a warehousing or fulfillment company
- What Amazon can do to provide better logistics capacities
- David’s tips for managing inventory for Q4 using Amazon’s fulfillment centers
- Upcoming tech firms and solutions to incorporate into your e-commerce strategy
- David shares his recommendations to big brands looking to invest in direct-to-consumer selling on Amazon
- David’s transition out of Amazon and into the entrepreneurial e-commerce space
In this episode…
Product fulfillment is one of the most important processes to invest in when starting and growing your e-commerce brand. By improving delivery promises to customers and effectively managing your inventory, it can make a huge difference to the success of your online brand.
In addition to the built-in traffic of Amazon, one of the top benefits of using the e-commerce platform is that a brand can take advantage of FBA (Fulfillment by Amazon). However, relying on Amazon’s fulfillment centers is not enough to build and scale a successful e-commerce brand. This is where outside warehousing and fulfillment firms, such as FLEXE, come in handy.
David Glick, the Chief Technology Officer of FLEXE, joins James Thomson in this week’s episode of the Buy Box Experts podcast to discuss how brands can build an effective warehousing and fulfillment network when growing their businesses. David shares what he learned from working at Amazon for 20 years, how FLEXE helps brands with their fulfillment needs, and the unmatched benefits of working with both Amazon FBA and other fulfillment companies. Stay tuned.
Resources Mentioned in this episode
- Buy Box Experts
- Controlling Your Brand in the Age of Amazon: The Brand Executive’s Playbook For Winning Online by James Thomson and Whitney Gibson
- David Glick on LinkedIn
- Fulfillment by Amazon (FBA)
- The 4-Hour Workweek: Escape 9-5, Live Anywhere, and Join the New Rich by Timothy Ferriss
- Bobsled Marketing
- Disruptive Advertising
Sponsor for this episode…
Buy Box Experts applies decades of e-commerce experience to successfully manage their clients’ marketplace accounts. The Buy Box account managers specialize in combining an understanding of their clients’ business fundamentals and their in-depth expertise in the Amazon Marketplace.
The team works with marketplace technicians using a system of processes, proprietary software, and extensive channel experience to ensure your Amazon presence captures the opportunity in the marketplace–not only producing greater revenue and profits but also reducing or eliminating your business’ workload.
Buy Box Experts prides itself on being one of the few agencies with an SMB (small to medium-sized business) division and an Enterprise division. Buy Box does not commingle clients among divisions as each has unique needs and requirements for proper account management.
Learn more about Buy Box Experts at BuyBoxExperts.com.
Welcome to the Buy Box Experts Podcast we bring to light the unique opportunities brands face in today’s e-commerce world.
James Thomson 0:18
Hi, I’m James Thomson, one of the hosts of the Buy Box Experts Podcast. I’m a partner with Buy Box Experts and the former business head of the selling on Amazon team at Amazon, as well as the first account manager of the Fulfillment by Amazon program. I’m the co-author of a couple of books on Amazon including the recent book Controlling Your Brand in the Age of Amazon. Today’s episode is brought to you by Buy Box Experts. Buy Box Experts takes ambitious brands and makes them unbeatable. When you hire Buy Box Experts, you receive the strategy optimization and marketing performance to succeed on Amazon. Buy Box Experts combines executive level advisory services with expert performance management and execution of your Amazon channel strategy. Go to buyboxexperts.com to learn more.
Before I introduce our guests today, I want to send out a big shout out to the team at Disruptive Advertising. For off Amazon advertising. Disruptive Advertising offers the highest level of service in the digital marketing industry. Go to disruptiveadvertising.com to learn more. Our guest today is David Glick, Chief Technology Officer for FLEXE.com a nationwide firm that helps brands expand their warehousing and fulfillment capabilities. Prior to FLEXE.com. David held senior leadership roles at Amazon for nearly 20 years, including running the Amazon transportation and fulfillment technologies team. During my time working at Amazon, I had the good fortune of working with Dave on fulfillment related projects. I’m very pleased to have you on our podcast today as I pick your brain on the challenges that brands are facing with COVID accelerating the speed with which logistics and fulfillment investments are needing to be made. Dave, welcome. And thanks for joining us today on the Buy Box Experts Podcast.
David Glick 2:04
Thanks for having me. It’s a pleasure to be here.
James Thomson 2:07
So Dave, for the benefit of our audience, remind me how it is we first met many years back at Amazon.
David Glick 2:16
Yeah. You know, one of the roles I had was being the technical advisor to Diego Piacentini, who was in charge of retail for international everything but the US and one of my jobs was to grow FBA adoption. And so the first thing I did was look for people who are being successful. And John Whitham said, you know, sports were really taking off and talking to James Thomson. And that’s how I knocked on your door. And you’re like, Oh, yeah, well, I just do this, this and this and, and things grow. And it was like, I write a query looking for brands who are selling well as mfn. But there’s no FBA offers. And I was like, Hey, you know, can you write that down and send it to me? And I’ll scale it up? And you’re like, No, no, no, too busy. And so I like okay, let me get my notepad out. And, and you went through it again. He said, No, this is a query I do. This is what I do after that. And I took it to the FBA team. And I handed it to him and said, do this. And that became what we call the FBA cookbook, you know, getting from zero to one with FBA, when we use that internationally as well as in the US. So thanks, you know, you are a big part of growing FBA James.
James Thomson 3:24
It’s very, very kind words as with most things at Amazon, when you see a problem, you just figure out how to solve it, even if it’s not elegant. And hopefully, somebody else helps you make it elegant, and then you can scale the heck out of it. So let me let me start by asking you, because you just happen to have a PhD in physics, not something that most of my guests have. I’m going to start by asking you a physics question. If COVID has moved brands online faster and more extensively than they might otherwise plan for this year, is Amazon acting as the gravity assist helping slingshot a lot of these brands into e-commerce?
David Glick 4:03
Well, the answer is yes. I don’t know if it’s actually a physics question. But it’s a good analogy. You know, if you think about what brands need to do, first and foremost thing they need, well, they need product, but then they need traffic, traffic, traffic traffic, yes. And all the traffic online. Is that Amazon after that you need fulfillment capabilities. And oh, yeah, there’s a program called FBA, right? The ability to take money. Oh, yeah, checkout by Amazon or Amazon payments. And so you know, you think back, I don’t know was 10 or 15 years ago, even pre FBA, there was this guy, Tim Ferriss wrote a book called The Four Hour Workweek. And one of the things he talks about was, you call a manufacturer in China to make yoga mats. And you place an ad in the yoga mat, or in the yoga trade rag at the end of the month, again, you know, for $500 and then you figure out if you get demand and then you have them shipped directly to a fulfillment house and you want the fulfillment house to take care of customer service. But all of these things end up being something that FBA does and Amazon does for you, you know, they provide, you don’t have to put an ad in the trade rack anymore, you advertise on Amazon, you don’t have to send to a fulfillment house or a CS house, because Amazon does all that for you. So, when I was working in retail at Amazon, what we told our buyers, our vendor managers is your job is to source products and get better terms from vendors and of course, we will take care of the rest, right? The same is true with merchants, right? You can live on the Amazon ecosystem, and your job will be sourcing products. And, and you know, getting them to Long Beach where Amazon picks them up and sends them to FBA. So that you know you can build a business in the box for you. There are problems and I’m sure we’ll discuss some of those right? For the most part, it’s the single easiest way to get your product off the ground.
James Thomson 5:56
So for brands that aren’t selling on Amazon today, but want to be online, what advice would you give them in thinking about how Amazon might impact their brand’s online aspirations? To your point? Some things, some things will work, some things may not work? No. Where should Amazon fit into that idea that these brands now want to get online?
David Glick 6:21
Yeah, you know, and there’s, there’s, there’s brands are building their business from the ground up. And then there’s mega brands, like Procter and Gamble, and Kraft Heinz, let’s talk about the businesses who were building from the ground up. You know, there are Shopify and BigCommerce and some other shopping carts. And, you know, obviously Shopify has taken off, and everybody’s saying, you know, this is the end all be all, and they’re gonna kill Amazon, not everybody, a few, a few people are. But you know, in the end, if you go to Shopify, you have to create your own traffic. If you come to Amazon, you get to take advantage of Amazon’s traffic. Yeah, and, you know, I’ve been a tech technologist for all my career, but I’ve been very closely linked to retail, and then to operations at Amazon and elsewhere. And the number one thing that you need, you know, you need your product in stock, you need a good product, you need good reviews, you need pricing, but all that doesn’t matter if you don’t have traffic. So Amazon’s where the traffic is,
James Thomson 7:18
what’s fascinating for some of the brands that we work with is that they have a long history of decent products, they show up on Amazon, and all of a sudden, there’s all these companies they’ve never heard of, they’re competing against. And many of these companies know how to play the Amazon game a whole lot better than these national brands do. And so they’re having to learn Amazon, just as much as they’re having to learn new competitors that, you know, they play the game a little bit differently. In the conversations that you have with brands, people say, Oh, you worked at Amazon, you must know how this works? No, how do you give guidance to a brand that doesn’t understand that Amazon is playing the channel fleet a little bit differently than every other channel?
David Glick 8:02
Yeah, one of my friends named Kim Matheson is also ex Amazon. She had said, you need to think like an Amazonian. And I would amend that to say you need to think like the Amazon algorithms, because all of the you know, buy box winning, and search ranking, and all those things have nothing to do with amazonians. They have to do with the algorithms at Amazon. And so when we work together in FBA, what I found was that the people who succeeded well, are the people who are saying, you know, Amazon’s going to change the rules for us. They’re gonna give us crappy tools to work with, you know, but the people who are scrappy enough to jump over all those hurdles. did very well on Amazon. And it wasn’t the mega brands. It wasn’t Nordstrom and the gap. It was, you know, my favorite story is these guys from New York who had, you know, $20 in their pocket and bought some Atkins bars, they bought two boxes at $10 each and sold them for $2 a bar, and at the end, they had $30 in their pocket. So they bought three boxes, and they started from $20. They built a million dollar business. Yeah. But it was because they were scrappy. And they understood, this isn’t retail, this is Amazon, right. And you have to play by the rules of the Amazon, not by the rules of traditional retail.
James Thomson 9:21
So let’s let’s talk a little bit about the fulfillment side of the equation in the conversations that you’re having today at FLEXE with brands that are waking up to e-commerce, I suspect many aren’t really set up with the right kind of logistics and warehousing capabilities to support this rapid growth of e-commerce that they may be experiencing. To two part questions for you. How should brands be thinking about e-commerce as a rapidly developing channel? And when should brands be investing in logistics and fulfillment themselves versus potentially outsourcing it to firms that do it full time?
David Glick 9:57
Yeah, you know, if you think about it, We’ll switch from the little guys to the mega brands. Yep. And Kraft Heinz is the Procter and Gamble. And, you know, they several years ago said, Hey, we need an e-commerce strategy. And the e-commerce strategy was like well sold to Amazon. And you know, the full truckloads coming out of Procter and Gamble’s warehouse in Signet, Cincinnati, and going to Walmart stores or distribution centers going to Amazon’s fulfillment centers, those are well worn paths. Recently, as you know, the statistic we always like to cite is over the last 10 years e-commerce has gone to six to 16%, market segments share. And in the last 10 weeks, it’s 16% to 26%. So we’ve made about 10 years of progress in 10 weeks, and you know, now it’s kind of six months. But if you’re one of those companies, and you’re like, man, I think I need to get out of you know, Amazon’s turning in the dog, and I’m turning into the tail, you know, I need to have a direct relationship with my customers. How do I do that? And, you know, they’re staring down at, you know, a $10 million project, right? They’re like, Okay, well, I need to find, if I need to compete with Amazon and shipped promised, you know, if I need to have a one day promise, that means I need 910 12 nodes in my network, so that I’m close, my inventory is close to the customer. And I’ve never done that before. And you know, if I go to a three PL, traditionally, they’re going to want a five year contract, they’re going to want me to put some capital out to build a rack, you know, there’s lots of expenses, a warehouse management system, license fee, and so on. And so you know, by the time before you even ship a unit, you may have a $10 million project that you need to go get approved. What FLEXE is all about is d batch defying that process. So rather than having a five, five year contract, we work with three piles who already have existing space. And so you can have a month to month contract. And you can start with a single node, say if you’re Procter and Gamble, and you want to ship into Chicago, you can start with a single skew or a few skews, set up your website on Shopify or BigCommerce, or wherever, have Google Ads target, just just the just the zip codes you want to do same day or one day, have a warehouse that’s right there that can do that. And you can see if it works. And so instead of having a $10 million investment, to see if someone works, something works, you’re looking at $100,000 investment. And so that’s why we’re excited, and we think we can help big brands stick their toe, dip their toe in the water. Right, right. Yes. And then see the results before they have to scale up.
James Thomson 12:38
So what are some of Part A or Part B? Well, let me ask a follow up, and I’ll come back to part B in a sec. But if I’m a brand that’s dipping my toe in this, what are some of the things that I’m likely to learn about going direct to consumers that I’ve never learned before? Because you give brands that flexibility? They may have to course correct, when they say no, before I go to 10 other nodes? What are some of those learnings that you’re seeing brands? gaining? Because they are able to try something out?
David Glick 13:10
Yeah, I mean, at first, the first thing again, is how do I get traffic? Like, you know, you used to go James to OldSpice.com, right? To buy your deodorant. Now you go to Amazon, right? And so how do I drive traffic to this? And you know, can I have a consolidated PNG site or consolidated Kraft Heinz site where I’m selling all of my branded products? And, do people even know that those are my brands. So I think that’s the front end, the back end is expensive. So you know, we’ve calculated based on Amazon shipped units and their logistics cost, and they pay about five bucks, 30 per unit. That’s their fulfillment CPU. And you know, they’re the best in the world. And so if you’re, if you’re not Amazon, you’re going to be paying eight to $10, between inventory costs and fixed costs and variable costs. And so how do you get the right asp? How do you get enough gross margin to afford that, that logistic spend? And you know, the way I think about it is, if you’re paying Amazon 15%. And for sellers, this is a seller’s not brand, paying them 15% commission off the top and then you pay them another 10% 15%. For FBA services, you’re paying 25 to 30% of your revenue to Amazon. And so I would think about that as your budget to do your own direct to consumer. And so if you’re at a, you know, $30 ASP, maybe you can spend $9 on shipping. If you’re anything less than that, you’re not going to be able to do it.
James Thomson 14:44
Right, right. So let’s go back to I am a brand I am going direct to consumer, I recognize that I’m going to have to build some of these logistics and warehousing capabilities. What is the life cycle of a brand building its own logistics and fulfillment capabilities versus getting to the point where they decide that they best outsource that to somebody else.
David Glick 15:09
Yeah, I mean, I think there’s three ways to do this. The first is, I’m going to do this in my house. And most people do that in their garage. Until you know, a small brand will do that in the garage until they’re like, oh, man, I spent all my time shipping and my garage is full, and I can’t source products. And then they say, I need a third party, you know, three PL solution. And you know, you can go to Amazon, and that’s pay as you go. It has its own set of problems. But the most important one is that you’re part of the ecosystem, then, which is great, and which is horrible. You know, when I was at Amazon, we talked about the technology platform, you know, you’re screwed if you’re on it, you’re screwed if you’re not Yes. And so, you know, which devil Do you want to dance with? But that, you know, Your other option is go to a traditional three Pl. Traditionally, these have been high startup high fixed costs, again, what FLEXE our business is taking the fixed cost out of fulfillment. and allowing, allowing you to have month to month contracts with no startup costs, all variable costs. And from the technology side, I think of something similar to AWS, or Azure, who allows you to, to pay for your service servers as you go, rather than buying your own services. And then if you take that another layer, you can start with a three PL and you’re fulfilling out of one node, say in Ohio, and you have a three to five day or three to seven day shipping promise, which is fine to start. But lots of people want to do the experiment to see if faster shipping drives revenue. And it turns out Amazon already did that experiment over and over again. And every time they went from Super Saver Shipping, the two day shipping to one day shipping to two hours shipping, revenues went up. And customer service contacts have gone down. Because people don’t have time to ask where’s my stuff if it shows up that night? Yeah. So once you get through the I’m chipping from one note in Ohio. Sorry, I might have to keep going.
James Thomson 17:12
Yeah, please, please, please.
David Glick 17:13
Yeah. No, you start with your three to seven day promise. And you’re like, Okay, this is working, I have some more volume, you move to three node networks, and you have a New Jersey, Texas and California or something like that. And you can do two day shipping to most of the country. And you know that you can work 50 hours, or you can stand it, figure out how to get three nodes set up. And you know, that’s hard. And you can do manual inventory placement, but you can muscle through it. But if you want to get to one day, which is where you know, we believe the world’s going and Amazon’s going, you need like 12 nodes. So then you’re looking at how to do my inventory placement? You know, how do I contract for 12 different boxes, and so on and so on. And that’s where FLEXE can help you. And you know, we can help you do your inventory placement. And we can help you find these 12 different nodes that all look like one note like one network to you because it’s all run through the FLEXE technology platform.
James Thomson 18:10
So if I start off as if I’m a brand and I start off as an Amazon seller, that’s using FBA completely for my business, a very common situation, where might I still benefit from having a relationship with a warehousing or fulfillment company?
David Glick 18:27
Yeah, I think you know, FBA is great. By the way, don’t get me wrong. It is the single simplest way to do your fulfillment, you know, from low scale to medium scale, and even to large scale. And there’s some drawbacks to that. One is that they’re gonna charge you $90, a pallet during Q4 to store products there. And they’re having a big capacity shortage this year, just like everyone else. And so, you know, we’re working with them to do is to build, build staging nodes outside of Amazon’s inbound cross docks and outside of their fulfillment centers. So if you bring in six containers from China, instead of taking those six containers and dropping them off in Amazon’s building and paying $90 a pallet, you know, we have space, it’s right down the street within 25 miles. So you can store five of those containers worth of inventory in our node paying $11 a pallet? Yes. And when you deplete your inventory at Amazon, you know, you call your truckers and say you know, bring me another 10 pallets and so you’re paying only for what you need. And that saves you money as well as makes Amazon happier because they can use their expensive robotic outbound capacity to do expensive robotic outbound things, not to store your back catalogue and store your excess inventory. So I think that’s one one use case we’re having. Having some support from outside warehousing companies is Good. And the second is, you know, we saw in April, March and April, that Amazon shut its doors to non essentials. And again, Amazon gets to do what Amazon wants to do as the Amazon algorithm, right. And so if you are completely dependent on FBA, and they shut their doors, your revenue is zero because you don’t get revenue until it ships. Having a backup plan, you know, with a third party logistics firm is probably a good idea.
James Thomson 20:28
So when you think about, you know, what, what Amazon has had to go through in 2020, and building out more warehouses, but nowhere near as many warehouses as they could have filled? When you look at what you’ve seen in the past, through your experience directly at Amazon, what do you anticipate Amazon is going to be doing in the next year to continue to build out capacity? Is it just going to be build, build, build? Or is it going to continue to tweak the algorithms and limit people on what they can send in? You know, depending on what they do, there’s opportunity for a company like yours to be able to capitalize on the need for better warehousing or better logistics.
David Glick 21:08
Yeah, I mean, I think, of course, they will build, build, build, and like they are building, my first project in 1999, was building out warehouses, and we built five in a summer. And we thought that that was unheard of, we added 3 million square feet of warehouse space. In one summer, no one’s ever done that before. Yeah, and now that’s like Tuesday at Amazon. Yeah, they’ll stand up five nodes in a week. And so they’re going to continue to do that, and they’re going to continue moving closer to the customer, we’ve seen an announcement that they’re going to build 1000 for deployed nodes, you know, what I would expect is that, as their capacity is constrained, they’re going to start thinking more in a more sophisticated way about what they’ll bring into their warehouses. Because before it was an annoyance to have dead inventory in their warehouses or have, you know, more weeks of cover than was needed. Now, it’s, uh, you know, critical to the supply chain of the country, to keep those that keep that inventory light. And so I would expect that, you know, either through us, or, you know, they may insure it as well, they will have staging facilities, which are much, much lower capital, which are just a big box, and you can replenish out of them into the ISD. You know, if you think about Amazon’s warehouses 15 years ago, you know, receive and and ship were from the same warehouse with the inbound cross docks, I guess, they basically moved the received process out. And so they have specialized warehouses to do receive ship and cross dock. And then you have the FCS are optimized for fulfillment for outbound. And so you can imagine that you turn that into three different types, you know, you’ve got to receive, you’ve got storage, and you have outbound is the next evolution.
James Thomson 22:52
So you talked about FLEXE, basically co-locating warehouses near Amazon fulfillment centers, how does that process actually work? If I’m sending products into FLEXE? Do you have receiving slots already set up with Amazon to be able to deliver stuff on a very short term notice? How does that work, especially in Q4?
David Glick 23:15
Yeah, you know, so we think about how do we get it sort of from the Port of Long Beach, into our warehouses, and we’ve pre sourced warehouses, with capacity available that you can, you know, at relatively short, notice, stand up, you know, within a few weeks, you know, maybe even within within a few days, you can bring inventory there and cash it there. No overtime time, we may do something with Amazon transportation services. But today, the move from our warehouse into the ISD is, you know, traditionally called your favorite trucker, if they can pick up and have them negotiate a dock appointment with Amazon. So it would be super cool if we could get it all linked up, as you said, what, you know, pre source doc appointments and so on.
James Thomson 24:03
There’s not a lot of receiving slots available. And quite frankly, you could wait for two or three weeks for that to happen. So recommendations that you would make to brands, not just this q4, but any any q4 and an Amazon fulfillment center system where, you know, delays are in place and you that mean, as of this year, you can max out the amount of inventory you can send in based on Amazon’s algorithms. But if Amazon’s algorithms aren’t right, you’re going to run out of stock. And the delay is going to be Amazon actually letting you send more products. how do you circumvent that? How can FLEXE help with that if you’re fighting the same problems of receiving slots to be able to bring that new inventory back into the warehouse?
David Glick 24:49
That’s a great question. You know, I would go back to what we talked about at the beginning, like think like an Amazonian not even think like an Amazon think like an Amazon algorithm. And so you know what that means? You know, again, the people who do really well are super scrappy and understand the algorithms. So maybe you start reserving slots out into the future, because you know, you’re going to need them. Yeah, one of the things we think about is, no, it’s good to be, it’s good to be planful. Right, it’s good to plan ahead. But it’s super important to be agile as well. And so what FLEXE gives you is agility, which means, you know, when the slot opens up, I don’t know if it’s you or someone else who gave me this example of, on Tuesday, I could send 200 units in on Wednesday, I could send 200 units in. And then on Thursday, I could send 10,000 units in Yep, you know, because the algorithm flipped a bit, or there was capacity available. And so you better know that on Thursday, you better send freaking 10,000 units in because, you know, the algorithm is allowing you to do that. And so if you’re, you know, if you’re one hour away from the warehouse, 25 miles away, you’re much better place to get the agile and get those units into the warehouse, rather than having to haul them across the whole country. And by the time you get there, the warehouses fall.
James Thomson 26:07
So talk to me about agility as it relates to distance that you’re having to travel to the warehouse. When I am an Amazon FBA seller, when I set up an FBA shipment, I have to indicate where I’m shipping from Amazon will make the decision as to where they want you to ship it into. Just because I happen to be 25 miles away from a location doesn’t mean Amazon is going to pick that location. So based on your experience, both at Amazon and outside of Amazon, how do I actually be more agile? When I can’t anticipate exactly where Amazon is going to tell me to ship a product?
David Glick 26:43
You’re asking the hard questions now. One of the ways to do that is we have West Coast nodes and East Coast nodes that are outside of each of ISDS. Right now we have two of them. But we’re planning to scale that, yes, ideally, put one outside of each of Amazon’s nodes. The problem with that, of course is that you’re splitting your inventory, and you may raise your inventory cost, you know, instead of like guessing right or guessing wrong, where Amazon will want you to ship it to, you are sort of hedging your bets.
James Thomson 27:14
And so you’ll always be wrong in big quantities, you’ll just be you’ll always have, you’ll never be completely wrong, you’ll just always be a little bit wrong.
David Glick 27:24
Yep. And you know, and I tell the truth, I haven’t spent a ton of time thinking through, you know, what that algorithm should be? Yes. But I would expect that, between us, we should put our minds together, you know, and understand exactly what the algorithm does. And think about how we, you know, how we work, how we work the system.
James Thomson 27:44
We’ve had a number of clients this this fall, who, as they’ve been doing their planning, you know, we’ve been saying to them, you need to be in a position that you can do small package shipments on on a moment’s notice, just like you talked about your 200 units, 200 units, 10,000 units. And it’s extremely challenging for larger brands to have that ability, because they too, have to do inventory planning and be able to say, we may have another channel that needs 10,000 units. And so if it’s unsold today, and tomorrow, it is sold by you know, into walmart.com, or into some physical retailer, it’s hard to be in a position to accommodate Amazon when Amazon doesn’t smooth out the the levels with which they’re allowing you to send the product into the warehouse. And we all know what happens in terms of being penalized if you’re out of stock on Amazon. It’s a very hard problem to solve, especially this year, when demand for products on Amazon is likely to be sky high, much higher than anybody even anticipated. I’m looking at what’s going to happen when middle of December UPS and FedEx hit their cut offs for ground shipments arriving on time for Christmas, I would expect consumers are going to flock to Amazon because Amazon is in a better position to do last mile delivery by the 24th Oh my gosh, a whole bunch of very big brands are going to run out of stock and have absolutely no likelihood of being able to replenish in the week to two weeks before Christmas. So it’s not a question just sort of knowing where we go from here? Because it is, it’s kind of crazy. It doesn’t seem like a sustainable model every year. And hopefully, you know, next year, people can go back to physical stores because COVID is resolved. But there will always be something that creates that much more demand for Amazon. I remember, you know, eight, nine years ago when I was an Amazon, I was involved with Amazon having some of its warehouses completely full. And we were dishing out five units of inventory for you and 10 units of inventory for you and the seller saying but I have 1000 units to send in. Why are you giving me five units? What am I supposed to do with that?
David Glick 29:55
Yeah, maybe the answer is I always tell my friends like you always Want to get credit when you don’t need credit. So you can get a line of credit on your house or something, because, because when you need it, it will be too slow, or they won’t give it to you. And so, you know, it may mean that, like you change your strategy to instead of cashier inventory near Amazon’s warehouses or at your own, you have more safety stock at Amazon than you want, then you want to and it’s just gonna cost you some more money. The other thing you mentioned, maybe Walmart needs this inventory, or maybe Target needs this inventory. We talked about late binding, right, you know, dedicating any time you have to dedicate inventory to specific channels, you’re becoming less efficient. So the longer you can wait to make that decision, the better off you’re going to be. That, by the way, that’s sort of anti antithetical to what I just said, which is maybe cash more inventory in Amazon’s warehouse. But it may be that the cost of inventory, like the cost of lost sales is your biggest cost. Yep. And so if you have to spend some more money on having a little more inventory in stock, both at Amazon and near Amazon and away from Amazon, it’s probably a good choice right now.
James Thomson 31:13
So let me ask you to shift gears here a little bit. Are there any up and coming technology firms or solutions that you’ve recently seen that brands should be thinking about incorporating into their overall Amazon strategy? Or maybe it will be even more broad than their overall e-commerce strategy?
David Glick 31:33
Yeah, I mean, if you look around the Seattle ecosystem, and broadly around the worldwide ecosystem, but there’s a lot in Seattle, you have people like Buy Box Experts who can help you figure this out, or for one p products, there’s a pack for you. And then there’s Bobsled Marketing, and EcommerceIQ, which works with enterprise brands to do their ad optimization spend. So there’s a whole cottage industry of working Amazon algorithms. And you know, a lot of its ex amazonians live in Seattle, but a lot of its worldwide. And so those are the four that popped to mind for me.
James Thomson 32:07
Is there something other than logistics and fulfillment that you would recommend that big brands be thinking about investing in or at least researching, before they make that jump in direct to consumer on Amazon?
David Glick 32:23
on Amazon, or off Amazon?
James Thomson 32:25
Let’s talk about Amazon? I’m a brand that doesn’t sell on Amazon, I know I need to be on Amazon. We’ve talked about logistics, we’ve talked about warehousing. You just mentioned, you know, agencies to do account management, advertising and so on. Are there other types of services that you have seen brands forget to tackle, they get into Amazon and realize oops, no, I don’t have reverse logistics, or oops, I don’t have certain types of software integration. Now, are there big, big aha moments, where you realize, oh, gosh, I got to tell brands, you need to look at these things too. Before you before you jump in.
David Glick 33:04
Certainly the ad spend optimization and SEO on Amazon. Again, back to the beginning. We talked about traffic, traffic traffic. All of those are super important. Another one, again, my friend Kim mentioned this and I’m stealing this from her is data quality. Like if you have the right dimensions on your product is your Detail page pretty is what we call a plus Detail page, I’m sure you can hire someone to help you design an A plus Detail page or Amazon will probably sell you their SPS services to get a great detail page. But you know, what we found is when you’ve been shipping to the same people for many years, and you can’t get the same products, you’ve been sloppy on your item data quality and so that, you know, there’s probably 10% of all SKUs that we get that have one by one by one dimensions and weigh one pound. And yeah, it is. And so you know, we in our item master need the right dimensions because we need to pass that to FedEx or to ups Amazon needs the same because they need to manifest it and they need to keep up you know, they need to figure out what kind of cube it’s going to take. And so you know, I’ve asked the team to do a call to one by one by one audit where you run a script every day and look for all the all the items in our item master that has one by one by one dimensions and go back to the brand and say hey, you need to give us three dimensions or we’ll measure it ourselves. But and then obviously you know you have ugly pictures. You know Amazon is very stringent or used to have very stringent things. We have a white background and so on you know the nice pictures drive demand and more information and customer reviews. People trust products with more reviews, both high reviews, and then just any reviews. So it’s You know, think through yourself as a customer? What do you like? Well, I don’t want to buy from a seller who’s got who’s sold this a lot, right. And they don’t have 10 reviews who may be in by, you know, people from China who were hired to make them. They’ve got 10,000 reviews, yes. And you know, they’re four and a half stars. And you, you have some one star reviews, but most of them are five stars. And so managing, you know, managing your reviews, Managing Your feedback is super important as well.
James Thomson 35:27
I want to finish our discussion today by asking you a question about your transition out of Amazon. When I worked at Amazon, it was a never ending sprint for me. But working in an e-commerce focused startup has got to be another frying pan hot and full of excitement. What have been the changes that you’ve had to make, as you’ve moved out of an Amazon rat race, and into an entrepreneurial e-commerce rat race?
David Glick 35:57
Um, you know, I think people ask me this a lot. And my response is, usually it’s very much the same. And maybe it’s because I came in, in a high enough leadership role that I could bring my own culture with me. But like, you have to hire great people, you have to manage performance on people who aren’t so good. You have to invest in coaching and developing those people, you have to have high standards, we can actually get into Amazon leadership principles and say, yes, disagree. And commit is important. And bias for action is important. Yes, I would say that we need everybody to be Amazon. But one thing that working at Amazon did is it was very clear what is good and what is bad. And like what we like and what we didn’t like, and in fact, it probably, you know, it led to people very, very homogeneous set of people and characteristics did well there, and others didn’t do so well. And you know, whether that’s good or bad? Well, you won’t debate with the startup, you have a much more heterogeneous set of people. And, and we have a, you know, our culture, we want to be successful and grow fast, we want to have a very inclusive environment. And, you know, having people feel good about what one of my engineers said, is treating the whole person as opposed to just, you know, the fingers on the keyboard. And, you know, at Amazon, I feel like and stop me if I’m going too far. But I felt like we selected people who were very happy if they could achieve things. And mostly everything else didn’t matter that much. you achieve things, you get promoted, you get up and the stock went up, and everybody was more or less happy with that. When you have diversity of thought and diversity of ethnicity, and all those things and try to be inclusive. You do have to interact with people in a different way. And you have to think about your messaging, and it’s not like, Oh, I’m gonna yell at you, and you’re going to respond. Okay, how can I make the same points but do it in a kinder? I don’t know if it’s less aggressive. Is there a term but like, in a way that is super respectful and not mean spirited? Not that, not that Amazon was disrespectful or mean spirited, but there was a balance?
James Thomson 38:33
Yes. Well, it was a, it was a fast moving place. And I’m asked the question, also, you know, what was it like to work at Amazon, and my biggest, my biggest takeaway was, it wasn’t a place where people had a lot of time to stop. And and talk about the whole person, just as you said, you know, there’s, there’s no finish line to anything. And so you simply say, Well, I’m fine. But let’s keep moving. We got to keep moving. There’s another deadline, there’s another growth target we need to hit. It’s, it is what it is. And there’s a time and place to leave Amazon. But there’s also, you know, a wonderful experience that was left behind by having worked in a place like Amazon. So, Dave, I want to thank you for joining us today. For those of you interested in learning more about FLEXE, please visit flexe.com. That’s flexe.com as shown on Dave’s t-shirt. Dave, thank you again for joining us today on the Buy Box Experts Podcast.
David Glick 39:29
Yeah, thanks so much for having me. I appreciate it.
James Thomson 39:33
And now to finish today’s podcast, I’d like to share some final thoughts. For third party sellers to be successful on Amazon, a critical lever will be soliciting feedback from customers. We at Buy Box Experts are really big fans of the team at eComEngine and it’s tools that help Amazon sellers to simplify the process of messaging customers of Amazon orders. To learn more go to ecomengine.com. And with that, I want to thank you for listening today and I look forward to joining next time on the Buy Box Experts Podcast.
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