Aaron Conant 0:18

Happy Friday everybody. My name is Aaron Conant. I am the co founder and chief digital strategist here at BWG Connect two giant networking and knowledge sharing group, we're going to do close to 100 in-person events in a couple 100 webinars this year, all educational informational format. We want as many questions that you have answered as possible, feel free along the way to drop any questions you have in this space in the chat. I will open that up right now. You can always use the q&a as well. And then anytime you have a question, Aaron@bwgconnect.com. That's my email, shoot me an email, we'll get you an answer as quickly as we can. We've got you know, close to 9000 brands in the network now. So we can ping a bunch of people really quick to get you an answer, if we don't already know it ourselves. So that while I'm talking to brands, I'm looking for the biggest issues they're trying to solve for and the same ones come up over and over again, we get a topic like this, which is just joking with Corey that you go back four or five years, this was not a topic that everybody was thinking about. But now a large portion of people in the network are optimizing Supply Chain Management setting and achieving strategic KPIs for optimal performance. And basically, this is over the past few years as people have just scrambled to find a three PL to help out. Now we have a lot of people taking a breather, taking a step back and say, Okay, we got it now. Is it the best one? And how do we hold them accountable? And what are we asking for? And so we got a great friend partner supporting the network working with a ton of brands in the network, Corey Apirian from Davinci Micro Fulfillment. But Corey I don't mind you taking, you know, a minute or so just a brief intro on yourself and, and Davinci. And then we'll jump into the conversation. Sounds good.

Corey Apirian 2:06

Yeah, that's great. Thanks for having me. Love. These webinars are great. I've been doing them with you for a couple years now. And I always get to learn something from you and others in your network. So thank you for that. I've been in the eCommerce space for about 1819 years operating with some of the largest retailers for one of their first or the first integration partner from Amazon in 2004, Macy's, Walgreens, Walmart, Target, etc. been helping brands build pick and pack operations, whether it's through my background or consulting with them to help build that internally as well. Building integrations managing brands, eCommerce strategies for executing content and assortment plans. And one thing that we know is that brands are asked to do the heavy lifting. And really, the SLA that exists today is a precise same day with one to two day delivery cadence whether that's put on the brand and merchant themselves. If they're in a DTC environment or in a dropship environment, Amazon, Walmart, Target Kohl's, whoever it may be, they have service levels of getting things out the door within 24 hours and getting them delivered within two days in most cases, and you need to have a physical location network to really be able to support that that's what Davinci is. We're a network of micro fulfillment centers that uses smaller footprint fulfillment centers around 50,000 square feet and in space to enable fast forward deployed inventory. So that we can get goods to consumers in a same day, one day two day format with an agnostic set of carriers integrations channels, categories that we service, can we do it through the use of technology that we developed with our order management, and network optimization technology, so we're able to integrate with any marketplace and channel as well as suggest where inventory needs to be placed. So you can enable this faster deployment of inventory.

Aaron Conant 3:53

Awesome, awesome. And now, I've got just questions from that work. So I'm talking to 20 or 30 brands a week. But anybody if you have questions, we want to get those answered today. And so it was a kind of it was, you know, the precipice for this call was around, people trying to do either either in an RFP or they're trying to do that evaluation of the current three PL, like when we think about, like strategic KPIs that people are doing an evaluation right now of a new three PL or the current three PL. And I'm thinking from the Drop Shipping standpoint, right? So not the traditional full truckload and maybe we can go there but in a lot of cases, it's it's the individual pick Pack Ship for either a direct consumer site or another, you know, a marketplace or even, you know, backup, you know, fulfillment for, you know, one p on Amazon. But like, what should people be asking? Their three PL or in the RFP because I think there's a lot of times, you know, that was my issue on the brand side was, I didn't know the questions to ask. So how should people be looking at, you know, KPIs,

Corey Apirian 5:00

Yeah, there's a few major things. I think the biggest thing is, you know, service levels on inbound and outbound, how do you receive inventory? How do you fulfill orders? I think brands need to ask themselves, what's the problem that we're trying to solve? And I think, you know, the three PL on the other side of the conversation needs to ask the brand, you know, what are you trying to solve for today and tomorrow, and do these assets go against our grain, right, and those are two equally important things. I don't think that the industry is ever going to see one fulfillment partner own 100% of the inventory, or 50% of the order fulfillment out there. There's so many fulfillment companies in the market. And there's different reasons why a brand would go to a specific one, whether it's very DTC focus, and they only operate in DTC or they're agnostic, and they can do marketplace dropship and DTC or they just focus on marketplace or they only want Amazon FBA and need someone to do that they need somebody to inbound from China and, and translated inventories and get them broken down into fulfillment centers, like there's all these different reasons of why you would pick a outsource partner in the supply chain arena. And I think brands need to first identify what are the problems that I'm solving? What are the channels that I'm fulfilling within? How do I go integrate with those channels. And I think that's, that's maybe one of the biggest things out there is the integration, you know, the, the old adage of garbage in, garbage out, that's a real thing for eCommerce. And it's one of the reasons Davinci has focused so much time and resources and dollars into an order management technology, because it's probably one of the most important things that you can have is controlling the flow of orders and how those pipes and business rules affect the outbound side. I mean, in the early days with Amazon, you know, they changed their infrastructure when they went from an original warehouse management system to the one that they built. And that was from a peak season that went really bad, where they had a massive outage based on an overflow of orders, and it shut them down. And they kind of you know, said in the early days of Amazon, like the customer experience is everything. Those are the principles that they've lived on. We need to control our own destiny, and we need to figure out a better way to get orders down to the floor. I think that's been one of their single biggest strengths. And I think there there's a lot of reason why that is, but when you're talking about an agnostic environment where brands need to be present in a DTC arena, a marketplace arena, and a dropship arena, in my opinion, because that's, that's where growth and sustainability of your brand comes and you need to fish where the fish are, so to speak. So if you're if you're operating within multi channel fulfillment, you need to be able to integrate with those channels in the in the right way.

Aaron Conant 7:52

Awesome. The next question that comes up quite a bit is I have a lot of three PLS, like the traditional three PLS, right? So full truckload LTL you know, maybe it's in store, restock, whatever it might be. And they're trying to branch into the individual pick Pack Ship space, right? Kidding, bundling. And, you know, what do you find? You know, so people want to know, to my current three PL, should I? Is it worth splitting it off to somebody else? Or have you found that that's too disruptive? That's what they want to know, because I'm gonna have inventory over here. And then I'm gonna have inventory over here, you know, and one of them's going to restock in store and one of them is, you know, going to do all the fulfillment from you know, individual pick Pack Ship. So it's a marketplace order, it's a direct to consumer order. How should people be thinking about the three PL in that aspect?

Corey Apirian 8:47

I think that is very category and channel specific again, and it comes back down to the thesis of inventory control. But what I will say and we can double click into that in a moment. One of the reasons that I built Davinci additionally, again, is because I noticed that complexity equals cost. And if you're a brand, when you're looking at breaking out fulfillment of Aegis and single piece picks, across a multitude of categories and channels. It's really important from a service level agreement and an inventory accuracy and order accuracy to have a very focused environment. And part of that includes the technology that you're deploying for order management. The other part of it includes what happens within those four walls and when you look at a traditional three PL a wholesale distribution environment, a distribution center, there's a lot of complexity there with Director store direct consumer direct to FC, independent retail channels, brick and mortar channels. There's all these things that are opportunities to go wrong and they're really expensive for that operator. manage all that type of complexity and it looks really, really good on paper to be able to check off every box on an RFP. I think the reality is it's it's it's really hard to do. I mean, I think you can point at this most recent case with Shopify fulfillment network like Shopify went out and acquired, deliver. And, you know, say what you will about, you know, that acquisition that the press has talked about over and over again, but like, Shopify ultimately divested that and six river systems or automation arm because it wasn't their core competency. And I give him credit for acknowledging that and trying it. And I, you know, obviously stockholders did as well, because their stock went up after that news. But at the same time, like complexity equals cost. And the customer experience is really, really important. And the marketing arms of brands really work really hard to go get those orders, whether it's one PD to see your marketplace, and it could really be blown up very quickly with the wrong fulfillment operation on the back end. So I personally believe that experts in a specific arena are really important in understanding where you draw that line. And where you outsource or INSOURCE certain components of your business is really critical today. There's a lot of smart people in the industry, solving a lot of components of the problems and technology and open API's enable a lot of interoperability. Yeah.

Aaron Conant 11:26

What are the so another question that comes up pretty routinely is what should delivery time expectations be? And so you know, Amazon, you know, it's gotten a lot of people down to one day now. And so sometimes it seems like almost a burden, in in the RFP stage with three PLS, right? Or your current one, and maybe you're pushing them to do it is that is one day. Is that realistic? Like as a KPI, it's

Corey Apirian 11:55

absolutely realistic. I mean, 90 over 90% of Amazon shoppers, purchase the amazon prime opportunities so that they can get next day deliveries, not same day. Not today. But But next day deliveries and there's a lot of conversation in the marketplace right now, about, you know, is same day, next day to day delivery is a real thing, like do consumers really want that. And I think there's there is data that suggests they don't that they're okay with three to five or five to seven day delivery. I don't I don't agree with that at all. I think that's ultimately a byproduct of where the markets been. And customers haven't had choices for that. I believe that there's more data that actually shows and we've seen this, and I've seen this in my own business. We've seen this on Amazon, we've seen this many other channels outside of Da Vinci's network that customers do convert higher with same day next day to day offerings. And it's really more about a precise offering than it is about a 15 minute delivery. Right. And I do think that we're we're further away from same day than we are one to two day. But I can tell you as a consumer, I'm sure we've all experienced this one day to day deliveries are important. But more importantly, when given the option and having inventory plays closer to the end customer, a customer is going to typically choose a faster delivery, as long as the cost of that is not prohibitive. And having the right operating expense for your domestic intra Logistics is what brands really need to focus on, and how they can enable that. So they need to have an understanding of the right partners that can help show them what carrier optimization looks like how inventory placement affects their top line and bottom line. If you're in a one P setting, there is a service level agreement that you have with these retailers of shipping products at the precise times they want Amazon is that same day shipment and delivering within one to two days or setting the right expectation on the front end at shopping cart to the end customer that having prime availability if you're in Target and Walmart, there are details within their API and EDI segmentations that actually show early and late delivery time. So you have to be extremely precise for certain reasons, reasons of how they're promising to customers. So there is such thing as too early there's such thing as too late. So it's really more about precision and it's about service level and understanding the categories that you're operating in. If you're selling frozen foods online, or ice cream, you probably want to get that delivered within an hour or two hours at most if you have the right you know capability within your your personal environment or your trucking environment, keep something frozen. If you're selling, you know, towels and sheets or shoes, you know you probably can get away with a longer lead time. But you have to be upfront with the customer about that precise offering and you need to be able to deliver it and I think the benefit to brands getting closer to the customer is on that increase in sale and conversion. but it's also really more about about your cost of fulfillment. And that is a really critical thing. And that is the only way to do it is by getting closer to

Aaron Conant 15:07

the customer. So I mean, so a couple of things here. So number one, be clear on what you're trying to solve for two, I would say, make sure that the three PL that you're working with understands what you're trying to solve for, and they can do it. Right. The next thing is they have to have one to two day delivery. I think maybe in some cases like furniture, okay, maybe it's three to five days, like, I'm sure there's some carve outs there. But hey, do you have I agree with you?

Corey Apirian 15:34

I would disagree with that on furniture only because like the cost of that is so expensive to move, and you have to get closer to the customer, especially if it's a white glove delivery. You can't ship a sofa from California to New Jersey profitably.

Aaron Conant 15:48

You just can't. Yeah, no. So yeah, I mean, it makes sense. And that's kind of I think, whereas going it's like a perfect segue, which is the next one, then is if it has to be closer to the end consumer, then is that is there a question in there? How many fulfillment centers do you have? Right, like I know, you know, warehouses I amusing the Amazon term fulfillment centers, is it? How many? How many warehouses? Do you have? A because you can't just have one in New Jersey, or one in Atlanta? Or, you know what I mean? Like?

Corey Apirian 16:23

No, I'm very aware of that. Is

Aaron Conant 16:26

that a question that people should ask? Warehouses Do you have? Yeah,

Corey Apirian 16:30

you know, how do you get goods to customers? What's your service level? What's your cut off time? I mean, that's almost an equally important conversation is what is your cut off time of when a carrier picks up? Like if somebody stops, they're cut off time at 10am. So only orders ship that same day by 10am. And they have one or two buildings across the US. It's really challenging for the carriers who pick up from their buildings to go deliver. Do they inject into the carrier hubs, that's another thing, because then they can control the movement and extend a radius of next day deliveries or two day deliveries outside of their, their, their singular locations? That's another really important question. You know, how are you tracking that? What type of visibility Do you provide? I think those are really important things to understand on the delivery aspect in the end, the, you know, post fulfillment aspect.

Aaron Conant 17:25

Awesome. I don't. Yeah, we'll have to get the transcripts from this and break it down and capture all these individual ones because they're, they're questions I think a lot of people like I would never think to ask, right, they're the people are the questions that BYU who live in the space no to ask.

Corey Apirian 17:44

The lanes are changing, right? The shipping lanes are changing. There's new carriers out there for certain channels. If you're shipping on Amazon, one p or Walmart one p or target one p you have to use UPS and FedEx you have to have post office in some of those instances. Also. Amazon transportation now

Aaron Conant 18:01

is always it how many carrier networks do you plug into? Is that Is that enough? How

Corey Apirian 18:06

many carrier networks do you plug into? You know, there's some traditional three peels that only want to manage your business because they're making money off the postage. So they only want to be able to force you into the carriers that they're working with. You know, are you agnostic? Do you work with any local carriers? Have you vetted those local carriers? What are their service level commitments? How do you handle returns? Right with some of those if there's something undeliverable? What happens when UPS strikes? And you're using just ups? You know, that's a hot topic right now, how are you agnostic so that you can support my volume? If that does happen? You know, I think the other piece of like, just being in one area of the country is that, you know, if you happen to be in LA, right, there's a lot of Port congestion there, there was at least but you know, obviously, that's a very important place to inbound containers and freight, you know, so if there's a lot of Port congestion, there's probably a lot of parcel congestion, congestion, because things are being jammed into buildings and you know, getting shipped out just from that one area. So, you know, where, where are your West Coast facilities? Is there Seattle? Is there Fresnos are Sacramento is a Reno, you know, things that get you out of that congested areas that you have redundancy thing, you know, what are your redundancy plans? What are your you know, that that is another thing, right, I think very, very, very important to vet today is what do you do on on data and privacy? What are your disaster recovery plans? How do you have redundancy in your model? You know, there's a lot of strict rules with Amazon and Walmart specifically, we're kind of leading this charge right now. And a lot of the big brands I see are gearing up for this in a big way. Where you know, you have to be able to purge personal identifiable information. You can't ship a product on a parcel label. You don't have John Smith at 123 Main Street in whatever, you know, area of the country. But you can't hold that information because of all the data breaches that exists out there. And you have to be able to purge that information in the right way. So you're compliant with these retailers data, data privacy laws and rules.

Aaron Conant 20:14

It's one I never would have come up with. But yeah, how are you handling PII information on a retailer by retailer basis? So that's another question that does come up is, you know, is it how many different marketplaces or you know, sales channels do you plug into is that?

Corey Apirian 20:31

Yeah, I mean, I think that's, that's a Do you have the business rules to work with all these different channels is the more appropriate question, there might be a new retailer that comes up that has a new integration point that you can go, anyone can go integrate with theoretically. But you know, have you done it in the past is an important question. And, you know, can your can your technology and physical operation support the service level and business rules and integration capabilities needed? If we pass you the orders? Or if you go integrate? I, you know, I had a call with a brand this morning that had asked, you know, how do you integrate? You know, can we just ask you the orders through EDI, and you know, it was on a, it was on a Shopify channel. And that's a very common API integration, where we happen to go pull the API's right out of Shopify, and route, we do some unique things there on that front, but I think it is very traditional for three pls to take a shipping instruction from a brand, the brands don't really have a lot of the technologies nor want to have the order management capabilities, to enable all the business rules for all these channels and the middleware that's needed to be able to ingest API's and EDI and flat files, and an integration agnostic format. However, they do need to understand inventory control, they do need to understand cash application, they do need to have data come back into their system. So it's it's matching Unit of Measures, appropriately from an each to a case back, right, a lot of big brands that are in SAP or Oracle, they don't break things out of cases out of their systems. So how do you go into great and sell, you know, one pen, when you're used to selling a case of pens, or whatever it may be? Right. And those are things that you need to be able to do if you want to be successful in the fulfillment arena.

Aaron Conant 22:22

It's a year, so you're able to then batch to a case level. He says, because when I was you know, I Perego it was a massive SAP, you know, a ton of user exits and workarounds to get to the point where I could sell an individual unit. So that's uh,

Corey Apirian 22:36

that's pretty cool. Yeah, that's a big unlock that Where

Aaron Conant 22:39

are you back in the day, Corey? Oh, you was it was it literally, it was a big one. It was because we had to go through and update SAP. Because we were, you know, a $14 billion market cap company. We sold case quantities period.

Corey Apirian 22:55

But I was doing this but I didn't know you that but we knew all the people

Aaron Conant 23:01

are their What if we missed the data of others? If you have questions you can drop into the chat or the q&a. What What have we missed? Like we this has been a rapid fire. You know, conversation. You know what anything we've missed today? I mean, I'm sure we missed it. Yeah, there's a lot

Corey Apirian 23:18

right. Item Set up, right? How's your item setup affect integrations cross references, I think back to the service level conversation of asking that of like inbound and outbound, you know, understanding inventory control at lot at serial number. Can you know Unit of Measure conversions at a receipt level? kitting and bundling capabilities and how that gets managed systematically? You know, when you look at the outbound side, I think the the cut off time is really important. But how are you measuring? failures, right, it's a logistics environment, things are going to happen. You have the right customer operations team, and support teams to manage tracking and order inquiries. And, you know, how do you see what goes on inside of the four walls? So you can understand was the right item put into the box? Was it packed correctly, according to the SOP, because the customer very well could have received something damaged. They also very well could have not and been trying to get a free credit or a refund. Unfortunately, that does happen in a big way and how brands handle that and deal with that reverse logistics or that post purchase deal is really important. And understanding what's going on at the packing at the packing stations themselves is really critical. And there's a lot of really cool technologies that can enable that today. Yeah. Awesome.

Aaron Conant 24:41

Any as we kind of get to the end here. You know, any, any questions for me? I have been picking your brain for a while. And again, I'd like to anybody that's on the line today. More than happy to connect you over to Corey and his team at Davinci Micro Fulfillment. They're dealing with a ton of brands in the network. They're all around great people straightforward gonna answer all the questions and they're gonna do a lot of editing as well to see if you're a right fit for them. But it's worth that follow up conversation. They're leaders in this space across the board, if you're looking for any help across the board in, in fulfillment at all Amazon direct consumer marketplaces whatever it might be worth that follow up conversation. Yeah, Kirsten said yes, please for sure. But yeah, Corey, I don't mind like throwing it back to you. I've been picking your brain. I got a couple minutes left here. Anything top of mine, I can help you out with with as we get to the end,

Corey Apirian 25:33

what is the single biggest pain point that brands asked you for? When they asked for a new fulfillment partner? That's I'm curious to hear that. Solve for speed? Are they trying to solve for costs? Are they is somebody a retailer telling them they have to find a fulfillment partner?

Aaron Conant 25:52

The biggest one ends up being cost at the end of the day, well, right now at this point in time. Yeah, it's, you know, and that might have been the same a year ago, it was just give me anybody that can actually get the product to the end consumer. That's what we need. And at this point in time, because saying there's a B in pure taking a step back, say, Okay, I got something in place, but is it the right fit? Because it's really expensive. Right, and maybe that's one thing we didn't get to is what is the cost model the structure look like? Because if it's the storage fees, the INS the outs, all of a sudden, I've got to kidding, fee of bundling pheo, I have an insert fee, you know, all of a sudden, it's $9. And they haven't paid the eight bucks and shipping and they got a $30 item and they made no money. Right? That's

Corey Apirian 26:40

No, I totally agree with that. I think looking at your this is so important. Looking at your total percent of revenue for your eCommerce operation, ultimately becomes the most important metric outside of on time and accuracy. And you know, that's inbound and outbound, that you can really look at. And you know, Davinci's model is built around incentivizing brands to be forward deployed, and get closer to the customer, and have a total low cost of revenue in a traditional three PL model. And no disrespect to those companies, because they are amazing companies, all of them. But the pricing model moving pallets and master cartons, and then applying that each is for storage and pick and pack and every little touch in the warehouse. It's really hard for brands make money. And when you add that to only one location in the US shipping everywhere, your cost of fulfillment is going to be be elevated. There's no question.

Aaron Conant 27:35

It's funny, because the biggest feedback I get around your model is the cost and how an unexpectedly low it is. That's thanks. Yeah. I mean, I'm sure that you're nice people. Fantastic job.

Corey Apirian 27:48

One pricing model is the beauty the beauty of it, like we have one pricing model and it the data is going to speak for itself. And typically it's going to be such a lower cost as a percent of revenue. Because of that, and people just note it is

Aaron Conant 28:01

awesome. Well, we're right here at 1230. I want to wrap up on time. You know, Corey, thanks so much for being a great friend, partner supporter, the network being open to sharing across the board really love the opportunity to pick your brain here today. And again, we'll connect anybody on the call with Corey It's worth the follow up conversation, especially if you're doing any any direct consumer fulfillment, and look for a follow up email for me as well. I'd love to have a conversation. We don't sell anything here at BWG Connect. We're just a giant networking knowledge sharing group but I'd love to pick your brain on other topics we could have. With that. We're going to wrap up hope everybody has a fantastic Friday, everybody. Take care, stay safe and look forward to having you at a future event. Thanks again. Corey. See my friend.