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eCommerce All Star (00:26):
welcome to e-commerce all stars brought to you by[inaudible] dot com where we help e-commerce entrepreneurs accelerate growththrough modern technology and innovative thinking.
Brendan Moscow (00:37):
Everyone stay straight. Stay show with your host BrendanMoscow of course. And today I'm excited. We have Jason Chan on the line. He'sfrom Rakuten, he's the VP of sales there at super logistics side of thebusiness. Um, and we're going to be talking a lot about fulfillment, um, and alot of ways that you can benefit from outsourcing that end of your business. Sothanks for joining us today. Jason.
Jason Chan (01:03):
Thank you for having me. Greetings from sunny Las Vegas.
Brendan Moscow (01:07):
Uh, I've been there a few times, um, every time on aconference, so I had to behave myself, but uh, it's quite a conference town,that's for sure.
Jason Chan (01:18):
Uh, don't ask, don't tell. I won't ask you any questionsabout it and it didn't happen.
Brendan Moscow (01:22):
All right. But that's it. I do want to ask a lot ofquestions, need to tell a lot of stuff. So on that topic, um, why don't I letyou just introduce yourself a little bit more and give a bit more of a backhoeand on, on Rakuten super logistics and that sort of thing.
Jason Chan (01:41):
Absolutely. So as he said, yeah, my name is Jason Chan.I'm the VP of sales and marketing over, it's over Axton super logistics andlike many of your listeners, our company started about 20 years ago, uh, justas a small mom and pop business and uh, you know, at that time they built up tofour warehouses, uh, racked and ended up buying that company, used to be calledWebgistix and uh, about five years ago. And now it's been a matter of scaling,scaling, scaling. Uh, so we've gone from that originally four warehouses now toare 15 and probably give us another two to three years and we'll probably be inthe 25 warehouse range. So we're very much on a growth trajectory, much likethe industry. I mean, obviously a online shopping site going anywhere. Uh, theKobe, Kobe 19, obviously shown us, you know, the resilience of the networksand, uh, how much people are reliant on online shopping. So the fulfillmentbusiness is here. Uh, logistics in general has been here for hundreds of years.Uh, but we just trying to make it easier for eCommerce sellers to focus ontheir business. Uh, you know, you got in the business to sell market, makemoney and uh, but most people don't say the first thing you want to do isoptimize their shipping or warehouse locations or any of that. And so insteadof trying to be a Jack of all trades, we say, you know what, become masters insales, marketing your product, outsource the to us and let us handle it. We doit every day, literally with millions of packages a year. So just happy toshare that expertise in this industry.
Brendan Moscow (03:08):
That's kind of interesting. What you just said is becauseof I'm a fan of outsourcing, um, different entities of your business,especially in the eCommerce world. Um, and pretty much what you've just said iswhat I really stabbed behind. And that is be honest with you, outsourceeverything except for your sales and marketing. Um, and really just hammer thatside of your business down. Now that said, I mean, I, I will, we're track mystatements slightly and say customer service has to be big on your list. Um, butthat said, we are talking about fulfillment. Um, and so I would love it if youcould kind of, you know, obviously this is what you do. Um, and we talkedbefore the show a little bit about, you know, having, you know, in order tocompete with Amazon, same day shipping and those types of things. What likethe, I guess what the store owners and uh, sites need to do, um, from alogistics perspective as well as hoping to kind of share a little bit more ofthat with us.
Jason Chan (04:13):
Yeah, I mean, you gotta give credit where credit's due andyou gotta think, you know, what, five years ago, everyone was really impressed.You know, once, uh, Amazon was really pushing the two day prime and now we'vejust become more and more impatient, you know, now we're wanting next day, ifnot same day delivery. And the only way to do that is literally just tominimize that distance. And of course by minimizing distance, you minimizecosts because you have less fuel costs, less drive time, et cetera. Um, so oneof the big benefits of using a good size three PL is that they've got locationsthat are closer to your end user. So, you know, in the, in the past, you know,we're based in Las Vegas, that's where our headquarters is. And you know, I'mbasically a day ground to LA, but if you want wouldn't, same day LA, that meansyou've gotta be in LA. Uh, which, which is why you're seeing such growth in ournetwork and our competitors. Because, uh, you know, deliver in LA the same dayyou've gotta be in LA. Uh, because we know that your clients, as soon as theyhit, uh, by, uh, the sooner they get it, the less chance there is for an ordercancellation for return. Uh, it also gives them that instant gratification thatthey're getting, especially do you have some sort of like impulse buy product,you know, the faster they have in their hands, they already take a kind of anownership and, uh, build that bond or tie with your product. So much lesschance of, you know, any chargebacks, et cetera, uh, from, from that order orthe returns. So, yeah, between the range of locations, between a great clientservice experience. And then the last thing I'd probably add to that really isthe cost savings. At the end of the day, we ship more packages than then mostobviously one, but two, especially against any single eCommerce retailer. Ifyou happen to be shipping on your own or food with the smallest repeal and, youknow, due to our volume, we're actually able to go to those carriers. Ups hasFedEx, USP S of the world, uh, and negotiate on your behalf. And we pass thosesavings on to you. So we really think we've got this great trifecta of a greattemp work, uh, that allows you to scale your business, that allows you to savemoney and ensure a great client experience the entire time. So it's, it's, it'sa great business to be in. It's a great, uh, it's a great time to be in this business.
Brendan Moscow (06:21):
Well, one of the things that I find in the, in thisindustry is a lot of people, companies out there, um, don't necessarily havethe infrastructure in place for the fulfillment, uh, the online. So, uh, it'skind of interesting because they may have stores in multiple locationsthroughout many of the different cities, but they don't have that productnecessarily in that store. Um, and that said, those, those stores shouldn't befulfilling orders. Um, I mean, unless it's going to be the Omnicare, the Omnichannel approach where they're picking, buying online and picking up in store.But yeah, uh, we're not talking about that. I'm talking more specifically five,for example, want to order something online. Um, and I make that purchase andthen I have to wait multiple days when I was thinking, well, I could just rundown the door to pick it up or to buy it there. Um, you know, you just startto, they don't have that infrastructure in place. And so if you have, if you'reable to, you know, basically tie into an existing infrastructure logistically,then you, you're looking at so much better fulfillment rates than, and you alsotalked about the impulse buy. Um, and that's one of the reasons in e-commercethat you have such a high cart abandonment rate to begin with is because a lotof people have that impulse, they put it in their cart and then they just can'tquite pull the trigger. Um, and then there's all this effort now in thedevelopment perspective of things where I see it, uh, as people putting all theeffort into getting, increasing those conversion rates. And so they're workingso hard on getting that conversion rate up, which includes getting those peopleto make those impulse purchases a little more often.
Brendan Moscow (08:13):
But what happens is if, if you don't have the, uh, thecomponents in place like we've talked about and what ends up happening is youlose those impulse buys again because they haven't, they cancel that orderright away because they didn't quite, you know, once they placed it, they havethat second thought and they don't want it anymore or that sort of thing.Whereas if you can get that same day or even next day delivery, um, at areasonable rate, cause that's the other side of, of eCommerce is trying to keepthose shipping costs down. Um, then next thing you know, you end up in asituation where you're, you're meeting or exceeding that customer's, you'retaking on an era actually, you're actually Mmm. Hitting the nail on the head ongetting that impulse purchase made online and then fulfilling that order intime to keep that impulse purchase, uh, that momentum going.
Brendan Moscow (09:12):
And then they get that product in their hands. They'reexcited about it. Um, and they have it started second guessing themselves oranything like that, which that's the last thing you want as a seller online isto have somebody how buyer's remorse. So the second part is, are more sets inthe whole experience is impacted in a negative way. And I always suggest weintegrate with, with a service like yours. Now that said, actually that leadsme to another question. Um, when their integration, um, and, and what type, howdoes all that look from, uh, from the perspective of the, the store itself?Like you have, um, open API APIs that tie into your, um, their websites or dothey have, do you have a backend you're able to track their, their, uh,packages or how does that
Jason Chan (10:07):
we have both. So we integrate with all major marketplaces,so the Amazon's marketplace, eBay, and then as well as the shopping cart. Sowhether using Shopify, WooCommerce, Magento, something like that, um, as wellas if you might have a third party, uh, you know, uh, you know, sort of OMS,you know, whether it's a ship stations entail, et cetera. Uh, we also have anopen API, which we're able to send the orders to us that way. Uh, we really tryto keep that door as open as possible. So as long as the order comes into a waythat we can read it and know that we're supposed to ship out widget, would itbe, which you'd see? Yep. Then we're happy to handle it for you. Uh, whicheversystem you use. We really try to cater to that. And then if it's something, youknow, kind of custom or whatnot, that's what we have the API for.
Jason Chan (10:51):
So, uh, usually integration is no problem and you know, wecan do it. Uh, a quick integration for us is probably a week. Uh, really welike to say more like 30 days and really that has to do more with just themotivation of the client as opposed to us. I mean, we do integrations everyday. Uh, it's whether, you know, can you get your inventory twice in time? Arethere any manufacturer delays? Uh, is your programmer or whoever handles yourstore available? We're on vacation. And that's actually probably one of thefunniest things about our business in that, you know, a lot of our clients havebeen doing it on their own. They figured out some widget and you know, hit the,hit the jackpot and unfortunately they couldn't go on vacation because they'rehaving to pack boxes or having to track inventory. And so when they signed withus, they're so excited that they finally go take their vacation before doingthe integration. You gotta do the integration first and then we'll take over.But any delays that happen really is dependent on the Burchett becauseotherwise our system's pretty cut and dry. It's, you know, do you have your, doyou have your skews, et cetera. And as long as we're reading the data properly,uh, it's just a widget to us. So we don't know whether it's socks versusunderwear versus, uh, you know, bear food, right? It's a, it's just a productgoing in a box and get shipped out.
Brendan Moscow (12:08):
Great. You make it sound so simple. It's just the productgoing in a box and shipping out.
Jason Chan (12:14):
I think that's, that's what we try to make it. I meanliterally that that's how you're able to build this at scale and you know, todo it in a, the other thing is if you visited any of our 15 facilities, they'rethe same, um, such that if, unfortunately if someone were to get sick in onefacility, no problem. We have enough labor that we can actually transferemployees between warehouses and they can hit the ground running becausethere's no learning curve. They already know the setup, they know where thesupplies are. Um, and so our business is very much built on, you know,efficiency and scale and which is why our warehouses all around the country aregenerally the same size.
Brendan Moscow (12:51):
Oh, that's fantastic. Actually, I'm just going to, I'mgoing to use just a couple of examples in the retail world just to helplisteners kind of put that in perspective too. There's some things as well andMmm. I guess a couple things is, you know, I used to work retail and many, manyyears ago, but I could go from one store location to another store location tofill in for somebody if they were short on staff or what have you, because theback stock room look the same. So if I needed to get a pair of size twelves fora Michael Jordan size twelves for somebody, I knew exactly where those weregoing to be because each of the bag for like the back rooms look the same andthey were all laid out the same. Uh, so it was really simple to do your jobfrom one store to the other. And it's also from a, you know, from a customer'sperspective, it's similar to walking into any Costco. Uh, Costco has tried totry to, and I think they've deviated from this a little bit over time, butinitially when they started anyway, every store looked the same. The layout wasthe same. Um, and that's how Costco scaled their business as well. Um, so Ithink it's interesting to hear it from the logistics side of that all of yourlocations are laid out the same and that sort of thing cause it's, it'sabsolutely imperative that things be the same when you're going to scale.
Jason Chan (14:16):
Um, as much as I talked about sales scale, I should alsomention that we also were able to do some customization. So you know, if you'vegot custom packaging or you know, a lot of our subscription box customers, youknow, have a special box, special tissue paper. Um, again, we're still tryingto always do it at scale so that it's repeatable and that anyone that anywhereelse could do it, uh, but we are still able, you know, we're a machine. We wereabsolutely able to incorporate some of those changes if you liked them. Sothat's another thing to look for in your retail provider if they've got thatflexibility.
Brendan Moscow (14:46):
That was actually my next question for you was on thecustomization side of things. If you custom boxes or you had like what level ofcustomization do you go to? Like if they have a specific, you know, like a setletter that they want to have included in each of their packages,
Jason Chan (15:01):
but it always comes down to cost, like all boils down tomoney. You know, we had one client that was a very expensive perfume, thatliteral use six different types of paper. Okay. You know, as a soap paper witha crinkle paper with an additional paper and a note from the CEO. So, you know,as a eCommerce retailer merchant, you know, inevitably when you're looking atthe bottom line, uh, most likely you're trying to cut down that as much aspossible. So, you know, the typical customization we'll do, we will do a lot ofcustom boxes, maybe one layer of tissue paper, but that's six different typesof paper was an extreme. So I mentioned it just because we're capable of doingit well. But, uh, it also depends on what type of product you have. You have a$200 product, you spend what's called $10 on fulfillment or whatever it is. Uh,that's much different than a $20 item where you just don't have that margin toget. So you just have to be smart about managing your business and yourproduct.
Brendan Moscow (15:55):
Yeah, no, no, I think that's an excellent example because,um, I mean there are high end products that, you know, maybe their margins arefairly significant and they're going to put some of that margin is there theway it's going to look when it arrives at their door, whereas they may not havethat same affordability to be able to do that. And so they have to keep thingssimpler. And then in those cases they're just using the standard fulfillmentprocess. So,
Jason Chan (16:22):
yeah. Yeah. Yeah. And I will say one other thing thatpeople appreciate about our services. We're really behind the scenes. You know,if we were, if we were working for Brandon's tee shirts, for instance, no onewould have any idea that it came from a Rexton warehouse. Uh, you know, thepacking slip, et cetera, would look as if it was from, you know, Brandon'st-shirts as opposed to Rakuten. Uh, the boxes are unbranded. It's all meant tobe, you know, really a third party experience so that no one's coming to us orknows that Braxton does even, uh, contracted to handle your fulfillment foryou. So I like to think of us as kind of like elves in the background.
Brendan Moscow (16:56):
I'm afraid on, I just was wondering if you had any finalthoughts and things that I haven't allowed you the opportunity to, to talkabout. Um, and also then we'll just end with some final words of wisdom.
Jason Chan (17:09):
Yeah, I'll tell you, um, you know, one of our biggestselling points at least initially, and don't even think of it as a sellingpoint, is we're experts in this. We've been at it 20 years. So we know pick,pack and ship and eCommerce fulfillment, uh, soup to nuts, uh, further. We alsohave a freight department. So we'll help you with bringing the, your productall the way from the manufacturer, usually overseas into the States and thentrucking it across the country, whatever where it needs to be. Great. Well, thenext problem that people usually have in that is knowing which warehouses doyou use, uh, which is why whether you're a customer or not, we're happy to do afree shipping analysis. Uh, give us three months of data, show us where yourclients are at, scrub the names we don't need. We're not trying, we're notcompeting against you. We don't need to know who your clients are. We need toknow the zip codes and what you're shipping. And we'll do a free shippinganalysis, which we're able to show you one where your clients are at to whereyou should be located in three, ideally some savings that we can show you bybeing a part of her network. So, uh, feel free to go on our website Rextonsl.com. Uh, fill out the quote form and a member of my team. Uh, we'll getright back to you. Uh, happy to do that quoting process and that shippinganalysis absolutely free. We know that you're, we're an extension of your brandand for you to outsource your fulfillment, we really are representing you. Sowe take that responsibility to a high, high degree. And as, as as a result, weobviously don't want to mess that up. So we stand behind that. We're seriousand we're really excited about the prospects overall for the eCommerceindustry. So just wanted to thank you again, Brandon, for letting me share alittle about this company, this company, and if there's any questions, whetherit's about Rex or not, a happy to feel them from your listeners about it. It'snot a hard sell at all.
Brendan Moscow (18:51):
Yeah, no, actually I have two questions that came up fromthe last comment there. Um, one is, is a simple one and you mentioned Brandont-shirts for as an example. Um, so then my first question there is, do you haveminimums? And in your case it sounds like you'd want to have a maximum, but doyou have a minimum size, um, like monthly order sizes and fulfillment obligations?
Jason Chan (19:17):
Yeah, so the gist of it is, is we're, we're in thebusiness of shipping and not storage. So as long as you're shipping, uh, we'dbe very interested in talking to you. Uh, as kind of a floor, I'm thinking kindof 500 a month is a nice place to start, but, uh, we've taken some startupswith you, no, no shipping. Uh, as long as we think that there's a reasonable,uh, reason that you're going to be able to build a market for yourself next toget product shipping right, then, you know, I'm in a position to take a lot ofchances on these. Uh, but inevitably, you know, be in my shoes. We're knowingthat we're in the business and the way we make money is shipping products, uh,not, not real estate and just storing it. Right? That's really what we'retrying to look at.
Brendan Moscow (19:58):
I mean, from a entrepreneur's perspective and that sort ofthing. I mean, I'll be honest, you don't want to be holding on inventoryanyway. And the quicker it moves better, your cash flow is so, I mean, fromevery perspective, you don't want to sit on inventory and neither do you guyswant to be sitting on that inventory. So, I mean, that's the whole goal ineCommerce is keep the product moving. Um, and then my other question was, I've,I have, I've had some clients in the past and customers in my own as well aspeople I've talked to the industry that, you know, find that they can findsome, um, cost savings from, from, you know, maybe changing their packagingsizes of the box sizes that they're putting their products in and those typesof things. Is that an area you, you help these companies with at all?
Jason Chan (20:50):
Yeah, that's free advice. So if we notice, obviously it'ssomething, uh, we have a video game client that does a lot of a swag, so thinkt-shirts as well as like stuffed animals, that sort of stuff. Well, they werevery big on trying to shift the stuffed animal and it's an a full box that fitit. But unfortunately, of course it dims out. So we all know stuffed animalsare very light, but they're big. Um, so we showed them actually basically howto vacuum pack that, uh, the stuffed animal to benefit in a much smaller pouchand were able to eliminate the box altogether, putting her Polly save them aton of money. Mmm [inaudible] they're happy. The clients are still happy. Youknow, as soon as it comes out of the vacuum, uh, it, it pops right back intospace. Uh, but that's, that's the kind of stuff that you just need to know by beingin the industry, knowing little dim out, knowing how to repackage. Perhapsthere's different packaging, the material we use. Uh, but again, we buy, youknow, literally millions of poly bags, millions of boxes. We know this stuffday in and day out. If we see something that's not right, we'll advise it toyou, but at the end of the day, you're the client and we'll do what you wish.
Brendan Moscow (21:55):
Yeah. Well, and that's the thing, right? I mean, the truthis, like we said at the very beginning is outsource this side of things andthings that you don't know and focused on what you're good at. And that is knowit was promoting and selling your product. And so this is one of the manyreasons and that's why I asked that question is because it's not somethingsomeone thinks about necessarily. They're like, well, I'll just put it in thestandard size that FedEx wants it. I'll ship it out. And then they find outthat selling a $20 item carries a $20 shipping charge and now all of a suddenthey can't sell it. Uh, whereas if they add, you know, they looked at it as adifferent perspective or through the eyes of a professional who's shippedmillions and millions of products, they might've had a different solution.Cool.
Jason Chan (22:40):
Absolutely. Our business is built on volume, so it's nottrying to, you know, make a bunch of money on per package. Uh, we want you tohave the best price on shipping, best price on packaging material, et cetera,and to ship a bunch of them for you. That, that's what keeps our teams busy.That's what helps pay the rent and the facilities, et cetera. Um, so it's not amatter of, you know, trying to charge you as much as possible per package getstrying to do a bunch of packages with a little bit of margin, keep thefacilities going and continue to grow that footprint.
Brendan Moscow (23:09):
Right on. Well, thanks Jason. In, uh, in parting words, Ialways like to ask someone if they have any final words of wisdom or anybody onthere
Jason Chan (23:19):
Final words of wisdom. Uh, you know, especially in thistime, I think there's a lot of entrepreneurs that are scared and uh, andrightfully so, uh, you know, a health epidemic or pandemic obviously is a scarything. Uh, what I can tell you is that our phones are ringing off the hook. Weare busier then know we've ever been, at least in recent memory. Uh, there'sopportunity everywhere and as long as you continue to wake up, brush yourteeth, uh, you know, pick up the phone and keep going, you'll find other peoplewanting to answer that phone and make business happen. And, uh, we're an eCommercesense, you know, putting that listing out, you're going to continue to seepeople buy. And so despite everything that's going on, you've got gotta stayoptimistic and you got to choose partners that can ensure that you have tobusiness continue even when funny stuff like this happens. Uh, which is why somany of our clients, even if they're hunkered down at their houses, stillworking, are still continuing to ship tons of products. Uh, so we're veryconfident one about the prospects of e-commerce to the prospects of being ableto outsource this element, you know, from your clients to a provider like us.And three, you know, just, uh, what an amazing world we live and you don'tthink 20 years ago, uh, your job and my job, you know, we're, we're in their infancyand looked at how sophisticated it's become and you look at another five, 10,15 years in the future. Whoa. You know, what is it going to be?
Brendan Moscow (24:43):
I've had that conversation a few times and I get a littlebit way out there, but anyhow. All right, well thanks for your thoughts andyour positive words of wisdom.
New Speaker (24:53):
Absolutely. Thanks so much for time Brendan. Appreciateit.
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