Latest / Outside the Box with Asendia USA: The International e-Commerce Podcast / 32: A Retailer's Perspective on Logistics: A Conversation with Nathan Goodrich

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32: A Retailer's Perspective on Logistics: A Conversation with Nathan Goodrich · Outside the Box with Asendia USA: The International e-Commerce Podcast

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  When we find someone that needs that complex kidding.
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  That there really is no one else that does what we do.
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  Like you wouldn't want to step into.
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  The future with shipping.
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  Smart.
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  Outside the box is where the journey starts.
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  From borders to buyers, we break it down fast.
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  Go outside the box with Asendia USA hey, everybody.
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  backtoOutsidetheBoxwith Asendia USApodcastwithmycohost, JasonRowland.
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  Hey, Nick.
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  Welcome back.
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  Hey.
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  Okay, we've got a special guest here today.
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  We've got Nathan Goodrich from FabFitFun who's the Senior Director of Inventory and Logistics.
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  Thanks for joining, Nathan.
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  Not a problem.
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  Thanks for having me.
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  You're very welcome.
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  Okay, so the topic today we are talking about is a retailer's perspective on logistics.
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  Yeah, it's really exciting.
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  This is, this is the.
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  The years that this podcast has been going on.
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  It's not really a perspective we've been able to capture not at all effectively.
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  So I think it's, it's, it's great and welcome and we're glad to have you and we're excited to get into it.
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  Okay, so, Nathan, could you introduce yourself to viewers and listeners and then a little bit about your history maybe, and what's going on with FabFitFun?
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  Yeah.
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  Okay.
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  I've been with the company about seven years, worked in a variety of firm roles.
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  As earlier stated, inventory and logistics.
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  So warehouse operations, inbound logistics from our Asian supply chain, outbound parcel, domestic, and rest of the world, Canada.
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  Um, FabFitFun is a subscription business targeting women.
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  We primarily focus on consumer products, anything from beauty to home tech, supplements, et cetera.
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  The box is a quarterly subscription that has six questions that the customer can work through.
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  Each question has a value proposition, starting with hero items in question one, through a variety of accessory items in question six.
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  So infinitely customizable.
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  Essentially, in winter, we had 2.2 billion possible variations and we've built our supply chain.
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  Is it a B?
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  B?
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  Yeah, 2.2 billion.
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  So not complicated at all.
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  Not complicated.
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  That's an interesting part of our business is taking that amount of choice that we provide our members and being able to harmonize that and produce it into something that our supply chain teams can execute on very easily.
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  And we've been able to do that with refining our processing and fulfillment processes over the course of the seven years that I've been There with the team that I work with and we're able to take in, for example,
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  two weeks ago we received 450,000 orders in one day.
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  And we spread that out over the next 10 to 12 days processing, producing anywhere from 50 to 60,000 shipments per day in the bulk of it.
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  We'll get some orders tomorrow actually is our window two of our process and working with a variety of domestic partners, 12 in our domestic network.
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  And we also offer a 3 PL business for clients that have similar needs to what we offer our own members.
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  So you're self fulfilling but you also have a 3PL?
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  Yes, we do business.
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  Okay, yeah, interesting.
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  All right.
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  Yeah, it's 1.2 million shipments or 3PL business as well on top of the four or four and a half that we do for ourselves.
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  And that, that really is a situation that makes you unique for you.
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  Right.
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  So as if from that perspective, from a retailer's perspective, who also dabbles in the 3PL space, what does logistics look like to you?
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  Like what are the important parts?
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  And obviously being here at Manifest, there's companies here that touch all aspects of that, that process.
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  So from your perspective, what does that logistics industry look like?
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  Right now it's balancing my brand focus, which is through a subscription lens.
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  And what that means to us is that we need to reduce cost.
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  Primarily our subscription box has an SLA on it that's very forgiving.
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  And the purpose of the cost focus is that we want to put as much money into the box and the product as possible.
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  And we've educated our members and kind of worked on making sure that they understand the reasons why we stretch out some of that work the way we do.
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  Whereas our 3PL business, which is primarily d2c ecom, in a traditional environment, speed and service are a little bit more forward for a lot of our brands.
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  They're definitely cost conscious, everyone is.
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  But they have a committed service level of shipment that is a little bit different than what we do.
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  So focusing on how we orchestrate the network for both of those perspectives and is somewhat dichotomous.
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  And fortunately we have a lot of good partners that have allowed us to be successful in that environment.
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  But it is not typical in the way that you don't solve for X.
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  It's a little bit more multivariable.
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  So kind of a two parter here.
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  You had mentioned you have some leeway on your SLAs with the box.
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  Yes.
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  What does that mean?
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  If you're able to share and then when I'm looking at.
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  So I'VE been heavily involved in the subscription box space for a decade.
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  Let's say what's the hardest part of, especially for you guys, of aligning inventory planning with logistics execution.
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  The, the inventory planning portion of it is just really the e commerce area of our business is traditional kind of a 30 to 90 day advanced purchasing cycle.
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  But the box portion is nine months in advance.
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  Because we had a lot of depth.
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  You know, we're placing hundreds of thousands of units for the Hero items.
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  And you know, questions one and two, you know, we may have a 200, 250,000 unit depth item.
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  And in order to get that manufactured to our standards against the timeline that we need with raw materials and factoring and a variety of other things that go into that type of depth of a buy, it takes a
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  little bit of time.
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  So the merchandising cycle is significantly longer.
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  The vendor relationships are a little different on the box side.
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  comm side, the vendor cycle is very short.
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  We may see see a vendor in the box for one season and they may not come back for two years or at all because of the nature of the trend versus the product categories that we're trying to serve
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  in any one season.
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  That's interesting.
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  It is.
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  So as you're kind of balancing that dynamic between your suppliers and the demand from your customers, where in your experience do things most often unravel?
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  Where do they go wrong?
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  Well, I think operations and supply chain, you know, is.
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  Is strategically easy to understand from a distance, but it's really making sure that all those points connect.
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  Right.
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  Like, everyone understands we, we make a product, we ingest it on, on a ocean vessel and we receive it.
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  But when you have 150 items in the box that are coming from all over the world and domestically, making sure they arrive, that they're compliant, product quality is prepared because we have that huge spike in volume.
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  You know, it's really like getting ready to run, you know, and every week is a different campaign.
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  So the magnitude of getting ready to run is a little bit different.
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  And that's where things don't always line up.
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  You know, with a short vendor life cycle that we were talking about, you know, people don't really understand that this isn't just a typical e commerce environment where we can just put it up for sale next week.
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  It's very eventized.
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  And if we miss that now we have an inventory issue that, that we might not be able to introduce that again for three to six months.
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  Because the freshness aspect of the box, highly seasonal in some areas.
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  For Example, Christmas.
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  So if a vendor misses a Christmas delivery, you know, we have to sit on that inventory for a year and there's, there's a.
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  Yeah.
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  So you're never talking to them again?
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  Well, you know, I don't want to go that far down the road, but it does create a lot of difficulty, as you can imagine.
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  I mean, everything you just said sounds like it's super easy to handle.
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  Absolutely.
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  Yeah.
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  So when you're choosing or evaluating a carrier, you know, what signals kind of tell you a little early on that a partner will perform or maybe won't perform, you know, based on what they've committed.
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  So I think we're very open to trying new partners.
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  I think the barrier to entry or the pretension about what type of carrier we deal with is something that we have broken down because a lot of our successes have been taking a different angle maybe than a traditional
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  approach.
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  But it does require us as we have a really fragmented fabric of how we deliver domestically.
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  We need to have a lot of logistics or, excuse me, analytics jobs.
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  Right.
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  We need to really understand not just wsmo, where is the package, but what type of service is that carrier providing at each step.
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  Is there a dwell time, you know, what are all of the things that would happen when we get to a Christmas launch?
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  For the most part, we have four Christmases because of the peak of our season.
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  So we test out a lot of these carriers before we get to a fourth quarter peak period.
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  And we, we understand going in there that these people have an inflection point like they do really good until things get maybe beyond this.
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  And we're working on balancing that and working with them throughout the year to kind of coach them up and get ready and you know, everybody who's been through a logistics peak, you know, it's all everyone has a plan
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  until you get punched, right.
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  So to speak, and, and say the.
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  Whole thing, it's okay.
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  Yeah, yeah, it's okay.
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  So it's really just making sure that we don't get surprised.
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  That's how we evaluate the different carrier partners based on the education steps that we have throughout the year.
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  Surprises are no good.
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  They're not good.
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  So as you guys are navigating those peaks right, throughout the year, there's, I guess as a result of just being a subscription box type service, you have long term relationships with customers as opposed to one off buy and
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  delivery events.
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  Right.
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  So how does, how does that kind of business model change the way you guys think about trade offs between cost and speed and all that stuff in Terms of the logistics carriers.
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  It is an element of customer education because in order to really get as much value into the box, we have to reduce the cost of the processing and handling as much as possible.
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  We don't want to not serve.
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  We have a high service expectation.
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  Everyone that buys our box or anything else online, you know, ultimately uses the word Amazon at some point.
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  So educating people that if you want the most volume, the value in your product, that we have to have some trade off somewhere.
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  It's a zero sum game.
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  And what we're doing is creating that diversity in how we deliver service.
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  Part of that is rate shopping.
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  It's, it's not a new concept, but we employ it with our, our domestic network to ensure that our cost trajectory is down.
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  And in the face of rising labor, rising real estate, especially over the last four years, you know, we've been able to take out millions of dollars, double digit percentages out of how we contribute to the business based on
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  those types of strategies.
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  So it's been very beneficial.
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  And a lot of that I would imagine is there's.
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  By dabbling in that three pl space, you're able to kind of put a cap on those peaks or a little bit, or at least raise the valleys a little.
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  Right.
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  So that's definitely from a real estate standpoint.
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  Idle capacity from a storage standpoint definitely helps contribute accounting wise contribution margin to all the things that we're doing, finding the right partner.
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  I think what we do is relatively unique in terms of the kitting.
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  So you know what we're, what we're interested in and what we really do very well across all markets is that bundling kind of very complex kitting.
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  We do have some relationships with traditional D2C retail flow as well and I think we do very well there.
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  But when we find someone that needs that complex.
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  Kidding.
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  There really is no one else that does what we do.
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  Like you wouldn't want to.
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  And we've had to develop, we've had to develop that muscle to survive and I think we've done a really good job of it.
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  Good.
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  Okay, so top secret question I'm going to add in that's not on here.
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  What's the big product going to be for 2026?
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  Come on, Nathan.
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  Yeah, I'd love to spoil you with some great and wonderful extravagant description of good things, but I think the merchandising team that we have is always striving to do great things.
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  But.
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  All right, so maybe not as hardball as that, but still not, you know, in just as we Explore this topic from a retail perspective.
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  What would you say is the biggest misconceptions that logistic providers have about what retailers need?
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  I think the changing element of my perspective and how, you know, my team upline and downline look at carrier partners is we need the focus to not only be how the package gets there, but we need very, very
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  high skill digital services that surround that.
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  Whether it's billing, whether it's tracking events, but also kind of preparations that like how are you, how are you building your network?
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  And not as a conversation, but what does the package flow look like and where are your peaks and valleys and processing so that we can understand how that works.
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  You know, we are not the largest shipper in the country in any, any means, but we have on multiple occasions taken on a new carrier and they're like, yes, we can do it, we can do it.
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  And then we overrun their facility because of the density that we have.
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  And the information then is highlighted.
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  It's very fragmented, it's hard to catch up.
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  Where do things go because people are putting packages in an annex or they're trying to figure out how to get space and they induct and all of that.
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  You know, we don't need you to be perfect, we're not going to hold you to a unicorn status, but we want to know where the package is at a very precise level and then also understand how to file
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  claims and work with you.
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  Things happen, but your business needs to not only focus on one area, it has to bring all of those services digitally and easily so that we can scale that interaction.
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  So I mean in a lot of ways then it's, you'd almost.
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  What I'm hearing is you'd rather deal with one partner that does a little bit of everything as opposed to somebody that just does one thing well.
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  I think the disruption in the parcel market now means that anybody that's in it needs to do everything, but not just the minimum point of entry.
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  You need to deliver at a very high level with all of those things because everyone is really competing for the same sub 10 pound packages.
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  And if you're new to that market, great.
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  And we'll take on a gig worker, we'll look at a different delivery model compared to some of the traditional ones.
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  But you can't not do the other things well as well.
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  And that means that we have to be able to communicate to your business very effectively.
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  You need the post purchase support.
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  Exactly.
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  You know, every day.
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  Yes.
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  Okay, awesome.
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  Thanks so much Nathan.
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  Love having you on and thanks everybody for watching Outside the Box with Asendia USA podcast and we'll talk soon.
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  So long.
• 14:41
  Share, subscribe and down podcast to learn more about today's topic or for a free consultation, email us at ecommerce.usa@asendia.com.
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  Come back for more insightful discussions.
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