How to Beat Amazon at It’s Own Game | Jeremy Bodenhamer

Matt Edmundson

Well hello, good evening and welcome to the eCommerce podcast with me, Matt Edmundson. Now if you are joining us on the live stream, you'll be watching this clip ahead of time. Just to let you know, this is a live recording of the eCommerce podcast. Oh yes, we are going to get into all things eCommerce. Now we've got a really cool guest. I'm really looking forward to this. We had our initial conversation a few months ago. And you will find out why anyway, we're gonna get into this whole thing about how to deal with Amazon, fulfilment and all kinds of great stuff. So do stay tuned. Now, this is a live recording of our podcast. So the way this is gonna work, just so you know, you are going to hear me play an introduction, an introduction. We're gonna play some music. And I'm then going to introduce the show, we're going to bring our guests on, and then I'm going to close out the show. So that is what's going to happen, you are more than welcome to join us in the comments to say hi to ask any questions that you may have that crop up and if the space becomes available, I will definitely put those to our guests. So, yeah, just enjoy the show. Make sure you've got some notebooks, make sure you like and subscribe and all those cool things. And I think that's basically a good introduction from me. So let's kick off the live recording of the eCommerce podcast. I'll be back again in a few seconds. But here we go.

Sadaf Beynon

Welcome to the eCommerce podcast with Matt Edmundson, a show that brings you regular interviews, tips and tools for building your business online.

Matt Edmundson

Well, hello, and welcome to the eCommerce podcast with me, your host, Matt Edmundson. Now whether you are just starting out, or whether you know you're like me, you're a bit sort of long in the tooth and have been around eCommerce for a while. The goal of this podcast is really straightforward to help you grow your eCommerce and digital businesses, regardless of where you're at, in that journey. Now every week I get to talk to amazing people from the world of eCommerce and get to ask them all kinds of amazing questions about what they know, and how it's going to help us with our own eCommerce businesses, our own online businesses. Oh, yes, that's what we're going to do, I try and have the conversation that you would have if you got to sit down and have a cup of coffee, or a cup of tea, if you're English with a guest, and just, you know, have a good good conversation for about 45 minutes. Now, I'm really keen to dig into their story and to learn the principles that can help us start and adapt and grow our own online businesses. So if you are listening to this episode, if you are a regular to the show, if you're watching this live, or if you're watching this on YouTube, then I would appreciate it if you would, like comments, you know, do all those amazing things that help us share the podcast and help us keep running and getting out there to more people. So please do that. That would be awesome. I'd really appreciate that. Now, as is put all that aside, on this week's podcast, on this week's eCommerce podcast, we are going to get into how to beat Amazon at its own game. I think, for me, this is probably one of the best titled podcast we've had for a while. And you know what I've spoken to my guest already, I think we're going to deliver on that promise we're going to get into how to beat Amazon at their own game. And to do that, we are going to be talking to Jeremy Bodenhamer. Now, here's his book, right. He's like a proper author. It's got like a whole bunch of pages in there and everything. And so you can see I've scribbled in it, you can't see that. But I've scribbled in it. I've made lots of notes. It's a fantastic book. Jeremy is the co founder of ShipHawk, the he's written this book, and he's a leading expert at the intersection of shipping and eCommerce. That's right shipping and eCommerce. We are going to get into this. There's no doubt about it. And actually, I think regardless of the size of your business, you're going to get something out of this tonight you really are. So make sure you grab your notebooks because you're going to want to take a lot of notes. But if you can't if you're running around the park, if you're driving your car, you'll be pleased to know that all of the notes from today's show will be available as a free download on our website. Just head on over to eCommercepodcast.net/65 to download them. This is episode number 65 excuse I'm five episodes get ahead of myself. This is forward slash 60. This is actually the first episode I've just realised the first episode of season six, we are on season six of the podcast. And Jeremy is our first guest. So you want to go to eCommercepodcast.net/60. And you can down download those. Okay, so without further ado, let's welcome Jeremy to the show, let me bring him on to the screen. Jeremy. Hey, how you doing?

Jeremy Bodenhamer

I'm doing well. How are you doing, Matt?

Matt Edmundson

Yeah, good. Thank you. Good. Now there is quite a bit of a time difference between us. It's, at the time of airing or the time of recording, it's quarter past seven in the evening for me but only quarter past 11 in the afternoon for you. Right?

Jeremy Bodenhamer

That's right.

Matt Edmundson

But not in the afternoon, in the morning?

Jeremy Bodenhamer

Yeah. in the morning. Yeah.

Matt Edmundson

So whereabouts in the world are you?

Jeremy Bodenhamer

I'm in Santa Barbara, California.

Matt Edmundson

Okay. Okay. And that's very this. Yeah. You can't get further away from us in the US and still be in the continental United States, right. So it's and what's the weather like for you?

Jeremy Bodenhamer

Santa Barbara is known for always having perfect weather, meaning we get no rain and all sunshine.

Matt Edmundson

Yeah. And I'm super envious of that fact. Although we've had a beautiful sunny day here in England. Let me tell you. It's been a rarity. But it's still really cold. Do you have you guys got snow? Are you warming up? Or are you always like perpetually hot in Santa Barbara?

Jeremy Bodenhamer

No, it's not hot. It's always in the 70s usually. But this year, I think we're heading into a drought year in California again. So very little snow in the mountains. Very little rain. Which means we got next few years, we got some coming for us. So usually works.

Matt Edmundson

Okay. You Have you always been there since

Jeremy Bodenhamer

I went to college here. So I've been here for I mean, about 20 years now.

Matt Edmundson

Okay.

Jeremy Bodenhamer

But I'm sixth generation from Southern California, just not from Santa Barbara.

Matt Edmundson

Oh, okay. So you've always lived in that region?

Jeremy Bodenhamer

Yeah, I was lucky enough to marry a woman that was born here and refuses to leave. So I'm stuck in an amazing place.

Matt Edmundson

Yeah, I'm feeling your pain bud, I'm feeling your pain for sure. So um college was 20 years ago, right? But here you are. 20 years later, you've written this book, Adapt or Die. You've got a company called ShipHawk. And we're going to get into all of the sort of the stuff which you've learned along the way, but how did you get from college 20 years ago to where you are now, sort of the quick version, what's your your background here?

Jeremy Bodenhamer

Yeah, the quick version. I had multiple jobs while I was in school. One of those jobs was at an executive services firm, we did little FedEx, UPS, postal service type work, nothing crazy. And after I graduated, I always met, I always monitored the local business for sale listings, trying to find the small businesses for sale. I learned early on, I could find more insight into what was going on in the market by seeing how many Dry Cleaners were for sale than by reading the Wall Street Journal each morning. And quite so, I noticed. Yeah, yeah. So long story short, I noticed this pack and ship store come up for sale. Think about it, like a UPS Store mailboxes, etc type place. And then the listing disappeared came up disappeared. After this happened four or five times I picked up the phone called the broker and I just said What's going on? Turns out this little business had fallen out of escrow with five consecutive buyers. So I looked at the I looked at the numbers and it was the business was essentially failing. I understood what was going on now. But I saw the opportunity in the place I had worked in in Montecito, I had helped the owner double the size of the business in a short amount of time, thought I could do something similar there. So I literally begged, borrowed and stole. I mean, I was a college student with a bunch of student debt and all that stuff, maxed out my credit card, got every dollar, I could put it in an envelope, walked into the office and set it in this guy's hand. And I, and he looks at the envelope, he looks at me, he goes, I assume this is your first offer. And I said, as of right now, that's my only offer. And I turned around and I walked out. So super risky. But I ended up successfully buying myself a failing business.

Matt Edmundson

I was such a great book.

Jeremy Bodenhamer

I was putting my wife through grad school. And so I couldn't quit my day job. But the day she graduated, I quit I went to work in this little store. And you know, this guy walks into the store with this life size, wooden rocking horse. I mean, you and I could both fit on this thing was huge, six feet tall, seven feet long. And I learned some hard lessons about freight and brokers and how the whole shipping game worked through this. Ended up successfully shipping that horse and it turned into more and more and more jobs until 2011 rolls around. And my phone is literally ringing off the hook with customers asking me one question, which is what is the shipping cost? And I'm seeing all this move to eCommerce, all this stuff going online. And nobody knows really what the cost of distribution is going to be. And so I figured I had two options. I could try to scale this little brick and mortar business, which sounded like a terrible idea. I mean, you can tell I already lost all my hair. Or I could try to solve the problem with software. And that's the path I opted for. So I put the business up for sale and started ShipHawk. And with ShipHawk, we have shipping software for scaling eCommerce companies. And that's really our focus today.

Matt Edmundson

Wow. So I mean, going back, did you, did you always want to run your own business? I mean, you were in college and you thought you know what, I'm gonna run my own businesses this way you were reading? You know, the the for sale ads in the newspaper?

Jeremy Bodenhamer

Absolutely. I started my first company when I was 12. You know, helping my parents pay the bills, we we didn't have much money. So that that that money went directly into utility payments and food for the table, that type of thing. And then just paid my way through school from there. One thing after the next so.

Matt Edmundson

Wow. Okay, so you've always had this sort of entrepreneurial flair, when you got into, you know, I can see I can have visions of you wrap, trying to wrap, you know, the six foot rocking horse, which I just I have no, no desire to ever do. I've got to be honest. And I sort of see you going from there. When you're thinking about ShipHawk, which I think is one of the coolest software names I've heard, by the way. And when I when I see you doing that, were you, were you experienced with software? Or did you just kind of think that we can make this work. Somehow, somebody knows how to write this? Surely?

Jeremy Bodenhamer

Yeah, absolutely not. I knew nothing about software. Let's, it's not really my, it's not really in my nature to think about the things that I don't know or don't understand. I actually sold my business to Mike, the guy that would become my co founder. And he fortunately for me, was a software Pro, and much smarter than I am. So he took the technical side of the business and I took more of the sales and operational side at the beginning. So that's how we got it, we got it started.

Matt Edmundson

So this was 2011, 2012, somewhere around there?

Jeremy Bodenhamer

Yeah, we really started officially, I mean, I was in my garage with those giant $11 Home Depot whiteboards, you know, like trying to draw up what we wanted to build, but we really started the company in 2012 at the end of 2012.

Matt Edmundson

Okay, and so what nine year we're here we are nine years later almost for you. And you've obviously seen the world change a lot during those nine years. I mean, especially in freight and shipping, right? I mean, it must have changed an awful lot over those nine years. Would that be fair?

Jeremy Bodenhamer

Absolutely. The The, the, the perspective of the the shipper, the seller, the the eCommerce merchant has changed radically. I mean, shipping was a complete back office problem, right? It was never a key differentiator for anyone until Amazon came in the scene. And to tell you, I mean, we think about Amazon is in, to a large degree, still this like rapidly expanding startup. But right Amazon IPO the year I graduated from high school, I mean, they've been at this for a long time and, and really making distribution a key differentiator of their brand. And so they've created that wave that everyone else is now being forced to ride.

Matt Edmundson

Yeah, yeah, it's interesting. I was I was talking to some guys about eCommerce in Australia, and New Zealand, you know, there's sort of the markets over there. And it was interesting to note that in the countries that had an absence of Amazon, the distribution setup of the of the countries was very different, say to the UK. And one of the things that I think I've noticed in the UK over recent years is, since Amazon has come in and done what it's done, all the other shipping companies have had to really up their game, do you know what I mean. And there's, there's more of them that that have sort of come out of the woodwork, and they've all sort of innovated in this space. So now in the UK next day shipping is just a given that it's going to happen, do you know what I mean, regardless of where you go and who you use. Whereas, I don't see that in New Zealand, for example. Australia, I mean, Amazon has recently gone into Australia. So I'm kind of curious to see what happens to their fulfilment industry over the next five years is, Amazon does what Amazon does in that country.

Jeremy Bodenhamer

Yeah, Amazon's really the, their the purveyor of the drug. But we're the problem, right? It's you and me, were the ones that are buying the stuff and saying, we have to have it now. Right? Yeah, I don't get my pimple cream, or my razors right now, like the world's gonna end. And so we're really driving that immediacy, in the distribution. If the buyers would change their expectations, well some of the brands have tried to do I mean, Amazon has the the Amazon day, they try to get you to opt into so you get your deliveries on the same day, so they can aggregate your orders, that type of thing. It would change things, but at the moment, the buyers are driving that that charge.

Matt Edmundson

And do you think that's going to change anytime soon? Or do you think that's going to? We're going to carry on demanding faster and faster shipping?

Jeremy Bodenhamer

Yeah, I mean, from an environmental and human perspective, I say, unfortunately, no. From a business perspective, I think it's hard to argue. I mean, it's, it's costly, but the the impact is evident. I mean, we've never seen capital markets support a company like Amazon, right, year after year after year of losses to build this massive network. And we've seen the same thing in China with Alibaba and JD and Walmart back in the more legacy way they built their supply chain to feed their stores, and how, how much they perfected that. I mean, it's a strategy that works, it works. If that is our end goal, is get my stuff now. It's successful.

Matt Edmundson

Yeah, yeah. So So what are some of the I mean, what are some of the key things that you've noticed over the last nine years? And you know, since doing ShipHawk, for not just necessarily with Amazon, we all know, I guess Amazon's story, but for the small ecommerce business owner, what are some of the things that have really changed there?

Jeremy Bodenhamer

Technology has changed. The availability of sales technology, I mean, you and I could start a store on Shopify today, and start selling products. Even if we didn't have products, we could drop ship and sell someone else's products. Right. So the availability for anyone to be this solopreneur, this instant business owner. The marketing software, I mean, one of my buddies, I write about his story in the book. His name is Michael Perry, he started a company called Kit, where you could do with text messaging, you could run ads on Facebook, and Instagram, and Shopify ended up buying them because what they found out was all their their early adopters, the the new customers, they would get would make sales right, right, right away if they were using this little bot that he he had built to automate advertising, right? I mean, the the barrier to entry is so low now that anybody can do it. And so it's really about what makes you unique, right? Because any of us can go sell the same thing as everyone else, the same thing that Amazon has the same thing that Walmart has access to, right, that marketplace environment is really flattened the access. So what else is there that makes you unique? And I think that we're starting to see those businesses rise in a significant way.

Matt Edmundson

Yeah, no, I think this is spot on. It's a really interesting differentiator now, isn't it that and you talk about beating Amazon their own game. This is something that Amazon can't do. They can ship faster than you, but they can't be you on the website, they can't bring that authenticity, they can't bring that unique selling proposition that only you can bring, right?

Jeremy Bodenhamer

Absolutely. In the book I call I call it authenticity, and just not just being unique, but proclaiming it from the mountaintops, right? Like getting out there and telling your customers and your prospects, even though you're going to piss off some of them, like saying: This is what we stand for. There was, I think it was Seth Godin, someone years ago did a had a speech that they were giving. And I got to see the presentation one time, and he was talking about how small or how big the planet is, and how connected it is. So you can have these ecosystems that are so small, but you can build a huge business in it. Yeah. And one of his examples was this guy that did backyard chicken farming. And he had a podcast for just backyard chicken farmers. And that even at the time, and this was a long time ago. Yeah, that was that business. That market was so huge, even though you and I think about that is like, probably a pretty tiny market. Because everything is so connected. So by being authentic, you will find your customers and you will serve them in a way that the Amazons of the world, it's impossible for them to do.

Matt Edmundson

Yeah, that's very, very true. That's very, very true. So you mentioned that in the book, I mean, you mentioned quite a lot of things in the book, what what caused you to? Because, I mean, you're talking in the book about the pandemic. So it's a fairly new book. Right, you recently published book, what what made you decide to write a book? Because, you know, that's, that's, that's baptism by fire? Right there is that I mean, that's not an easy task to do.

Jeremy Bodenhamer

There's two answers to your question. I mean, the first question is the pandemic hit, and all of a sudden, I didn't have to get on an aeroplane anymore. Like, I had time in my calendar that was already blocked out. And I can fill it with whatever I wanted. And the the other answer and the driver to doing the book is that if we look at the prospects that my sales team speaks to, if we look at the the eCommerce merchants, the people we're trying to help, right, these merchants, these, these retailers, manufacturers, and distributors, nine out of 10 of them, when they engage with our sales reps have have no operational goals in place, or metrics to measure them by. And if you think about this, I'm not sure you can imagine a sales org without a sales pipeline and very specific metrics about stages of customers and how they move through there. And when you're, you know, what your revenue is going to be by those efforts. And you walk into a bookstore and you see all these sales and marketing books, but no back of the house books, there's hardly any operations books. And so meanwhile, the industry giants like Amazon, and, and, and others, all their, their, their competitors, and their friends, to a certain degree, are making distribution a key differentiator, and they are extinguishing entire segments of business, not just individual businesses and mom and pops, and you know, but I mean, knocking off products and just taking whole industries out. And so I realised that what was missing was education. And there's just information that needs to be out there. And I and I don't see myself as the spreader of this gospel, as much as I hope that I'm the catalyst to everybody spreading this because I think the independent merchant is going to benefit by being just as well equipped on the operation side as they will on the sales and marketing side.

Matt Edmundson

Yeah, that's really good. So I mean, one of the things you mentioned in the book, which I thought was so very true, and, and quite profound, you talk about how the problem you have as an independent retailer, is if you have something that works, if you manufacture a product that's good, or your website starts to take off, you become a victim of your own success, because the big guys are going to see this and they're going to rip it off, or they're going to you know, do their own version of it, or they they're going to try and take that market as soon as you create something that's successful, they are going to take that market because they want that slice of the pie. And and you talked about, I can't remember that the company example you gave but there was an example of that the chap said basically, I've got to reinvent the wheel almost every year just to stay on on top because they come after you.

Jeremy Bodenhamer

Yeah, and there's different ways they do it. That's I think the story you're referencing is rain design and rain design makes the these laptop stands. And they started with this idesk this this back when the iMac was a little larger. They made this ergonomic desk for the iMac, it took off and then they made this laptop stand. And until I started researching it, I don't even realise I've got like dozens of these things. They are all over our office. We got I mean tonnes of them. And they were doing so well. Amazon just came in and said hey, we'll do it. And they knocked it off onto the Amazon basics label and dropped the price. I think the price was dropped almost in half. And what are you going to do? Your sales fall. I tell another story in the book about Birkenstock, so Amazon's not gonna manufacture Birkenstocks But they got up they acquired a bunch of Birkenstock inventory and we're depressing prices outside the bounds of what Birkenstock wanted to do and Birkenstock lost entire entire control of their supply chain and distribution to that product by that by that that move. Or you look at a story I don't tell in the book, Allbirds mean Allbirds is famous for their wool runner. Now the entire motivation of starting the business was to have an environmentally friendly product, right? This this this sneaker that's not made out of plastics and you know, petroleum products were made that made out of wool. And you go to Amazon, type in wool runner, and you'll see these knockoffs and I thought the founders of Allbirds that pulled a just genius move. They wrote an open letter to Amazon and to Bezos and said, Hey, copy us, we will introduce you to our manufacturers, we will give you all our tech and everything. But if you're going to copy us copy our approach to sustainability at the same time, don't make a shoddy product and say it's the same thing. Yeah, and so all this stuff is converging here. Right. But yeah, I mean, there's a huge risk, and you're you're right, their success is can be a detriment, depending on where you're selling, and who has access to those markets, if you're not controlling them other ways, like through an authentic relationship.

Matt Edmundson

Yeah. And you mentioned that in the book, right. And I, I've used this phrase before, this idea of, you know, with my eCommerce websites, I refer to myself often as a digital David, you know, the story of David and Goliath, a small guy taking on the big guys of Amazon. And you know, we've got stories of we've I think, if you've been in eCommerce for a while, you've all got stories of where you've been burned by Amazon, or some of the bigger companies, you know, where they just railroad you because they can and they genuinely don't care. And so this whole idea of you know, David taken on Goliath, the digital David's, I think it's a I think it's a real interesting problem that we now face, you know, that there are, there are very real threats in terms of these giants that we need to be aware of, but I think they are battles that we can win. And you talk, you've mentioned it a couple of times, you've talked about it in the book, right? So you've talked about authenticity. But what does authenticity look like to you, right? How does what if I'm, if I'm a small retail guy, I hear words like authenticity, but how do I? What does that mean practically? Does that make sense?

Jeremy Bodenhamer

It does. And I give you examples. I think first before I do that, I think it's important to to define the digital Dav or the digital Goliath in this example, to really emphasise what makes the digital David's able to compete. In the book. I call these giants, the five API's of the apocalypse. And there are these five global commerce API's. Right there. Amazon Walmart, Alibaba, JD, and Shopify. Shopify is a little unique, we can talk about that if you want, but they aren't trying to corner the market. They're trying to become the market. They want everybody on their infrastructure, they run closed ecosystems. And so the downside to that is if you don't participate, you're locked out and if you do participate, their effort is to extinguish you to a large degree right to not because they have anything against you. It's just they want that business. Yeah, it makes sense. So when you think about the digital David's like who is successfully competing against those a one of them I have a couple of favourite stories to tell one is a company in San Francisco, a startup that was an early ShipHawk customer a grove collaborative, and they make eco friendly home products cleaning products, they have a makeup line now all this this natural eco friendly good for the earth product line and the truth is that they really if you look at from the outside they're really competing head to head with Amazon right because Amazon's really the master and Walmart and those guys have the commodity sale right I can get Windex anywhere so they've got Myers you know Meyer soaps versus you know, whatever non Myers brand or non you know, natural brand. But what they've done is number one, they took a strategic perspective on their supply chain so instead of building products, packaging everything for a shelf they built it for shipping. So they started realising efficiencies that their competitors couldn't. They started internal initiatives, their current, one of their current initiatives that I love is they're beyond plastic campaign where they're saying that there's not going to be any plastic in their supply chain by 2025. You think about that, that's not that far from now to have some plastic completely out. And so what happens is those buyers end up building a relationship with that brand, like I'm not going to go buy my my quick wheat, that's the same products we use here at the house, right my wife isn't gonna let us bring in the old stuff. And so we're not going to buy that somewhere else groves the one leading that charge we give them credit for that. Another example that I love is Parker clay. Parker clay makes leather primarily leather handbags, they make leather products. They have him for men and women. Most of their their sales are like women's handbags travel bags, that type of thing really nice high quality luxury. The founders were missionaries in Ethiopia and and realise that most of the leather for the the high end bag market, you're talking Gucci, Louis Vuitton all these high end bags was coming out of Ethiopia, these guys are shipping containers of this stuff to Italy, and everyone in Ethiopia, these are farmers. And at the same time, why were they there as missionaries? Because there's a huge base of women that are vulnerable there. A lot of orphans because there's not jobs for those women. So they put two and two together and said, Hey, well, what if we start a manufacturing facility here in Ethiopia of all places, and they are now one of the largest, the largest employers in the country. And they said, what if we brought these women and gave them jobs, we train them to do this work, we keep this leather here that is either going to be discarded or shipped far away. So we're actually doing something good for the earth. And then we make this our mission. And we tell everyone, this is why we're doing it. So when you buy a handbag from us, even though I can buy a bag that looks almost identical on Amazon, if I buy it from Parker clay, I'm actually giving somebody in Ethiopia a job who otherwise would be on the street, right, starving, whose kids would be in an orphanage, I mean, terrible situations. And they're changing the world through that. Who's going to buy back from someone else after hearing that story? Yeah, and so Amazon, I mean, these guys cannot compete there. And I see time and time again. I mean, we have dozens and dozens of customers in this category, who meaning the ones that really get out there and say, This is why we're different.

Matt Edmundson

That's really powerful, isn't it? I mean, you know, with Parker clay, and the grove, colab thing that's super powerful, because what I hear you saying their authenticity is based around around their mission around finding people with the same value set that they're, they've got, right, we're doing this, we're eco we're good for the earth. And that's what we do. And if you like it great, if you don't go buy from Amazon, it's that kind of attitude, isn't it? And the same with, with the guys in Ethiopia, I think that's quite magical, really, really quite magical. And in terms of that, I remember reading about the grove kolab project in your in your book, there quite a new company as well. And they've they've grown quite rapidly from what I remember. Is that right?

Jeremy Bodenhamer

Oh, yeah, they're huge now, and it's been very rapid. You can look up their, their funding history online, but the last their last funding round there, I think they were worth multiple billions. And they were a little guys like us when when they started. So those guys have just they've done a great job that the that the process works. Yeah, that focus on distribution efficiencies and focus on authenticity and the relationship with the customer. It works in the market today.

Matt Edmundson

So I mean, I can understand from an authenticity point of view that the whole value sort of thing, but what sort of things. So you talk about distribution efficiencies. What do you mean by that? How can how can, I guess, how can we learn from that?

Jeremy Bodenhamer

Yeah, so in the book, I mean, the warehouse is so big these days, that it's an entire industry in in and of itself. Like if you just think about a modern warehouse, like a stat that I like to share, because it's just so shocking. Like if you and I started a company in our garage, and we're shipping onesie twosie is out of our garage, and we pick up steam and we're like, Okay, now we're shipping hundreds or 1000s, right? Hey, we gotta get a warehouse. We go down the street, we get you know, 510 1000 square feet, it seems big at the time, but we quickly fill it you up, upgrade upgrade upgrade, how many upgrades into your spending, like millions of dollars on a warehouse, I can I can connect those dots. Amazon spends north of $200 million on each new smart DC they open up, like the technology that they are employing, like we will never be able to compete in that league, right? Alibaba in 2019. On Singles Day, they change Singles Day this year. So it's like a week now it's multiple days, they shipped a billion packages in a single day. Like the this the the the difference between this Goliath and this David is so huge. So in the book, I break the distribution side down into six simple components, right, just trying to really make it accessible to the to the reader. So we got packing, shipping. We've got operations workers, warehousing, data, and analytics, and robotics. Those are the six sections. Okay, and my suggestion when we're talking about how to really tackle these things is start small. Don't try to boil the ocean. Don't try to do everything at once, right. And whether starting small means starting by analysing your tariffs, your shipping tiers your contracts with your carriers, getting some software to use those intelligently. Whether it means something like being smarter about your packaging. 40% or sorry, the average order is put in a box that is 40% too big for its contents that 40% puts 25 5 million truckloads of goods on us roads each year. We want to think about that from a climate change perspective. I mean, it is mental radical, subsequently saying, Hey, I'm gonna buy a box making machine, I'm gonna buy some packing software to make sure that I'm using the right box, right. Or we go all the way over to the data and analytics side, I'm going to set some supply chain goals. And I'm going to start measuring simple things, right, but starting small, and each of these categories can have profound results. And if you just do one at a time, you can conquer all six, and you can really make some progress for a business that otherwise would be at risk. Wow. So those six areas packaging, shipping operations, warehouse data and robotics. Yeah, operations workers. That's that's actually one of my favourite to talk about since we like to treat people in the in the warehouse so poorly.

Matt Edmundson

Let's, let's dive into that one, then. So what I mean, I kind of have, I have instantly in my head, what you're talking about, about treating operations workers so poorly. It's, in essence, unskilled work, and you, especially around Christmas, you normally see people that work for Amazon on TV complaining about the working conditions, you know, working for Amazon, it's that kind of thing. So what do you mean when you say we treat them poorly? And and what can we do there? Maybe to help ourselves?

Jeremy Bodenhamer

Yeah. So there's, there's so much to talk about here. So a lot of the work in the warehouse is terrible. It's hard. It's not fun, it's repetitive, leads to a lot of injuries. One of my buddies runs a robotics company called plus one robotics. And Eric, the CEO there he likes to he has a hashtag robot, or people robots work people rule, right? Like, we want robots to do the hard work. What do we want with people? The problem with people is number 160 5% of operating budgets, I'm gonna hit you with a bunch of numbers here, I apologise. It'll all make sense, though. 65% of these operating budgets are labour related. If we go ask warehouse managers what their top problem is, in a recent survey over 50% said labour scarcity, they can't get enough people to do the job that robots can't do. Right last, the most current data I have shows that the inventory in your average warehouse, only 43% can be handled robotically. So 57% of the majority has to have a human, they can't find the humans. Then there was another study that showed that 20% of the workforce that is in the warehouse is actively disengaged, and half of it says they're just doing enough to get to get by we pay these people pre COVID, you know, COVID, we had this moment where he called him heroes, it was amazing. For a second we saw rate, you know, hourly rates shoot up. But pre COVID, we paid them poorly minimum wage, or as close to it as we could, we tried to shave every penny penny off their work. Meanwhile, on the front of the house, we've got Awards, Best Places to Work, right? These tech companies, whoever's got the you know, the engineering job or the cushy marketing job, like they've got ping pong tables, and you know, snack rooms and in the in the warehouse is just a different environment. And so I'm really feel like, it's important to advocate for the warehouse workers and to say, hey, not only do we need to invest in these people, in terms of pay and benefits, it will reduce turnover, it will keep them there longer, but we really need to invest in training. Because the more automation that we put into these warehouses, the more important the few people we have are going to be. And if we can invest in their training, and make sure they keep up with the evolution of the business, the business will outperform those who haven't done it.

Matt Edmundson

Okay. So, um, so, what happens? I mean, what happens if you've got, I'm just thinking of my warehouse, for example, you know, where we distribute from, we don't actually have any robots picking and packing or doing that sort of stuff. I'm way down at the keynote a bit, do you know what I mean, before I start spending crazy money on robots. How would I invest in my people, you know, in terms of yes, in terms of pay, but in terms of what sort of training could I do? Or what sort of things could I do to help those guys?

Jeremy Bodenhamer

Yeah, so first, I would ask, like, do you offer any training today? Right. So when you think about your business, and where you're trying to take your business, are those operations workers included in that plan? Right? Are you training them to be prepared for the next generation? You're probably having, you probably have meetings with those on the sales and marketing side? Or if you have engineering on the engineering side, saying, Hey, this is where we want to get to, is are his operations even looped into those discussions? Have we studied the impact of that growth on the back of the house on the distribution, what what it's going to do to your costs? And what your competitors are going to do there and how those few people that are they're going to have to be able to handle that that influx of a business? Most most operations will say, No, they haven't. It's just whatever they produce. We're going to push it over there and you've got to figure out how to handle it. They don't get paid well, they don't really like it's hard work. So they say peace out and go get another job bounce from one warehouse to another to another.

Matt Edmundson

Yeah, that's really fascinating because I mean listening to you talk, I'm kind of thinking, you know what, the first half of any eCommerce journey is getting your prospective client to the website to buy the product. That's goal number one. Goal number two is then getting the product in the hands of that person, isn't it? And so, and this is a bit that no one ever talks about everybody talks about Facebook ads, and you know, Google ads and all these sorts of things. But it's the it's the bit after the the add to cart do you know what I mean, and I've paid for my order. And what I guess what the area that you're hitting really sweetly, with this whole conversation about distribution is that second half of eCommerce that whole buyers journey that's really, really good. I mean, it's in one of the things that we we realised quite early on as our business was growing was the the guys and the gals in the warehouse. They more than anybody else recognised customer names. So when you started to have a bunch of repeat customers, they they started to recognise them. And so we came up with this concept called smocs. And smocks to stood for sexy moments of customer service. It was some bizarre, I don't know why we came anyway, we call them smocs. And we just said to the guys in the warehouse, listen, if it costs under a certain amount of money, you never need to get my permission, just go ahead and do it. You know, we kind of took a leaf I think out of Zappos, I read his book and sort of you know, you get you give people a sort of an autonomy on money. And they started doing things like buying chocolates, or you know, Starbucks gift cards, or all kinds of things and started writing handwritten notes to the customer saying, Listen, I pick and pack your order, I see you've ordered from us a few times. Thanks, we're a family business really appreciate you being a part of what we're doing kind of thing. And here's a, you know, a gift from us. And, and the feedback from that was quite extraordinary from the customers. But I saw the change it made in the guys in the warehouse because they felt like they were contributing.

Jeremy Bodenhamer

Yep. And so it's a win on both sides. It's a win, absolutely. With the customers, it's quantifiable. And it's also quantifiable on the operation side, we just don't usually take the time to quantify it because turnover, workers comp insurance and injuries, all the things that go along with doing it the other way, also come at a cost. And all we do historically, what we've done is say hey, we just need to get the lowest cost possible on an hourly rate, right. And we don't look at this ballooning cost over here. And as labour is more scarce, and the job becomes more and more demanding. And it has to work side by side with robots. You know, robots are becoming the managers, they're, they're the ones dictating in these high volume operations, you know, the metrics that the human has to work by? Yeah, getting that right is just, it's gonna be more critical every day. So I, did you say, did you share any, or keep any data on the success on the sales side of that, that initiative?

Matt Edmundson

No, in hindsight, we totally should have done. But we yeah, we were just, we were young to the whole thing. We never measured anything, we were just let's just have a go and see what happens. And if people started complaining, we switched it off. You know, that was basically our motto. We, one of the one of one of the stories, I think, that we're most known for is we swapped out, you know, the plastic bubbles that go in the boxes, because the boxes are 40% bigger than the products that they you know, and I'm gonna take that on board tomorrow, let me tell you, but it's interesting what we did, we swapped that out. And we were like, you know, what, what's our company values what we like sustainability, we like Eco, we like, but we like having a bit of fun. And we like to, you know, doing things a little bit different. We swapped out the plastic bubbles for popcorn and we just I went and bought a stack load of popcorn machines there in the warehouse, constantly churning our warehouse smells of fresh cooked popcorn every day. We tried loads of different popcorn types to try and figure out what the best one was. And it was from a packaging point of view it it kind of met all of our criteria straightaway, you know, and I love what you're talking about. Because innovation here I think is probably it's one of those things that I can't give you any numbers on but if you were to say to me, what's been the biggest thing that has bought customers back to buy from you a second time, I would say something as simple as using popcorn rather than plastic balls.

Jeremy Bodenhamer

Absolutely. Absolutely. That's a great example. I've never heard that before. I love it.

Matt Edmundson

Yeah, it's, it's funny, isn't it? How this whole packaging thing and shipping thing - it makes a massive difference? It makes a huge difference to your organisation and getting it right. So let me go back. Jeremy, you talked about robotics, and this intrigues me because like, and I'm, I'm being totally selfish here. I'm just thinking from my point of view. We have a warehouse. We ship out 1000s of products from the warehouse, everything goes by people picking and packing, you know, we have people walking around, they pick and pack. The, you know, it was a revolution to us when we introduced scanners, you know, when you actually picked and packed the order, that was amazing, that saved us 1000s of pounds. Just because we weren't sending wrong orders out every order was now correct, because we scan barcode. Genius. And I know you talked about that in the book as well. But I kind of sit here and I think, robotics, if I'm honest with you, I've never thought about it for my warehouse. Because one, I don't think I'm too I don't think I'm big enough. And too, I think that is going to be crazy, crazy expensive. So what point should I start to think about? I mean, you've mentioned it in these six areas. At what point should I start to think about robotics?

Jeremy Bodenhamer

Yeah, so my perspective on this, as with everything in supply chain is start small. And I love that you give the example the scanner, because that'd be one of the first places I'd say to start. And then how effectively is your scanning working with your software, because you can add scanning and still have to require multiple scans or scans and data entry to make it work. And so if you can get it down, switch, just scan, scan print, you know, you put the music on and do a little dance to it like it's amazing. Yeah. And then you can add dimensioners, conveyors, right, and then you can slowly start building to it. I don't think that there's the way robotics are accessed today, which the vast majority, it's these big bulk upfront cash purchases. There are some companies that are offering robots as a service. There are some work just doing more simple utilisation. So just transporting goods throughout the warehouse, things like that, right. But if you go all in, I mean, it's there's a, it's a big cash outlay. And other ways that people can access robots is working with 3PLs. So if some of your stuff can be distributed by a third party that utilises robots, because they have a huge warehouse or multiple warehouses, you can get the access of that efficiency, and that throughput without having to put all that money out to begin with. But there is a point where it still makes sense. Eric in the book from Plus One talks a lot about how even the cost of the robots isn't really the barrier, but getting the integrations partners to help get it set up and, and working with your other systems, the systems integrators and how that's a big barrier to entry, because the big what he calls the big six, which includes FedEx and UPS. Those guys wrap up the best to class guys and gals, because it's just, there's so much work in it. Everybody is moving to as much automation as possible. So high level, I don't think everything I just said was super helpful other than start small. Yeah. Hardware first.

Matt Edmundson

A Scanner.

Jeremy Bodenhamer

Scanner. Yeah. Box dimensioning machines. Great. You know, those things are awesome.

Matt Edmundson

A box dimensioning machine?

Jeremy Bodenhamer

Yeah. So there's a dimensioner or which will just do like a scan of the box so that you don't have to someone have someone manually measure it. We at ShipHawk we do that with software. So we tell the picker which box to use in advance and then auto calculate packed weights and dims. So if you don't do that, you can use a dimension or or a third option is a box making machine. So you can spit the order to this machine like pack size is the company I referenced in the book. There's a bunch of companies that make these things, it will you buy the cardboard from them. So you don't have to put a big cash outlay for the machine. You just obligate yourself to buying the cardboard, and it will make perfect sized box for each order. Not one that's too big or standard or anything.

Matt Edmundson

That's clever technology. That Yeah, I like that. What are some of the what are some of the surprising innovations that you have seen in this whole area over recent months that you kind of look at that and go - that is really clever.

Jeremy Bodenhamer

Yeah, I mean, I'm not sure the stuff that excites me would be things that excite the listeners. I mean, one of the coolest ones I saw that that really woke me up recently was a software that reduced dwell time for inbound freight, because you got these guys bring in all your freight, and they sit there and have to wait till they can get a dock and wait till they unload. And so just software that was automating that. I think there's been more and more progress in visibility, just knowing where orders are, right, less just kind of gooey, kind of front end like splash page tracking pages. And real data is like this is where your shipment is and I'm going to update the customer. Yeah, I think we're moving to a world where everyone is going to have inventory insourced and outsourced, it's going to be closer to where we predict the final destination is going to be and the customer is going to have real time updates as to how the movement of that freight. And so those those are the things that excite me more than most because they also reduce workload for us with the work we're doing to help our customers.

Matt Edmundson

Yeah, that's really interesting. It's like I say the whole conversation just absolutely fascinates me. And I feel like We could talk about this for a really long time. But But what I do want to do is to circle back to your five API's of the Apocalypse, one of which you said was Shopify, which really intrigued me. Because that the others I can understand, but Shopify is kind of like, well hang on a minute. What why is that there? So can you dive into that a little bit?

Jeremy Bodenhamer

Yeah. So Shopify is, is one of the API's because truthfully, they're that powerful. And they have the infrastructure to support that power. They have enormous volume of customers and orders. Recently, they bought six river systems last year, that are expanding their fulfilment network to have a third party, you know, alternative to FBA and other sources like that. But Shopify is different than the other four of the Big Five, because they are actually out to empower the independent merchant. Their, they are authentic in that relationship with the customer, you know, Toby's red button, you know, push the button, get your store, and empowering these entrepreneurs to start that. And I think Shopify has done a really good job in the book, I think I call them the independent merchants only hope, because we need third parties to be that powerful. We need third parties that don't have closed ecosystems to remain open for everybody else. And one could argue that Shopify is still closed, but to them, but I don't see it that way. I think you can sell in multiple marketplaces, you can have a direct relationship with your customer, thanks to Shopify, you could keep unique items on your site that you don't sell on the marketplaces and drive relationships back that way, and have a really good strategy. And if we didn't have you know, brands like them, and big commerce and square, I would be even more fearful of the the other big five members.

Matt Edmundson

Yeah, yeah, I think you're right. I think it's a really interesting viewpoint. I mean, Shopify is such a brilliant concept and a brilliant idea, and it makes everything super accessible. But I, it's intriguing to me that they're going down a route of being able to want or wanting to compete with FBA, for example, you know, for the fulfilment by Amazon. And and do you think they're going to pull that off? Do you think they're going to be able to do that? Well.

Jeremy Bodenhamer

Um, I mean, that's just much to do with Amazon and how they evolved that programme, as as it is with Shopify and how they evolve there's. I've seen a lot of progress in the startup world with these dynamic warehousing, software companies like Flow Space, and Stored and Flex out of Seattle. Deliver who's offering Amazon like delivery times, from their fulfilment, warehouses, and connections to the marketplaces. Amazon has a lot of rules, and they're pushing as their merchants get bigger pushing for higher volume limits, and certain times a year prices spike, and it can be expensive for certain product types. So there are definitely holes in the market, where, like math is not on the side of someone trying to make all their money in distribution, if you if you're Amazon, right, because your money is coming from the marketplace, the ads, AWS, all that stuff, they need that they need that distribution to solidify us to the business. So I think there's a big opportunity for the the independence of third parties and Shopify, I don't know whether Shopify will pull it off. I think the more open it is to people, no matter where they're selling, the better chances it has.

Matt Edmundson

Wow. Wow. And do you think I mean, I'm sitting here and I you won't know this, but we distribute worldwide from our warehouse in the UK, right. And we have issues at the moment with say New Zealand and Australia. So we're now having conversations with you call them 3PLs right there the the fulfilment partners, that we could potentially use a New Zealand and Australia to ship products that we'd, I would guess probably 20 30% of our orders go to the States, and they're usually at someone's door within under a week. But if I was going to, and I'm asking this on behalf of all the UK guys are suppose thinking about export into places like the States. What What would your advice be, I guess, in terms of if I'm going to venture into finding a fulfilment partner, the 3PLs, what are some of the things that I need to think about and look at, if I was going to do that, say in the States, doesn't matter where I'm going to do it, but generally, what are some of the things that I need to think about in that whole area?

Jeremy Bodenhamer

Yeah, it's funny you asked that we just wrote our first Adapt or Die workbook, and it is how to select a 3PL. So any of your listeners want the workbook just have them at the end, we can get the contact information and I'll send it to them. But this is the we want to look at the simplest way to think about it. You have to look at the third party relationship exactly like look at your internal distribution. I would suggest having the same metrics, the same standards, the same SLA. So I actually, if I expect an order to be processed in a certain amount of time internally, I need to expect that externally. I have a bad habit that you could say, in some cases, as a good habit, when we sign a new customer, a lot of times I'll go to their website or their channels, and I'll order the same product from different places and just see what happens. And unfortunately, through the channels where they make the least amount of money, Amazon, right per order, not talking in aggregate, they get the best performance. I'll order I ordered from one of our customers a shirt on Amazon, it was I got consistent communication, I got the shirt in two days, and through their third party warehouse that came out of like the Midwest, it took over a week, communication was terrible. And that can be handled with the agreement well, and in the selection of the 3PL making sure you're working with someone that can meet those standards. So if you just document these are my expectations internally, and you shop that when you're selecting your partner, I think you're going to get results that are that are scalable, and it's good for you and for that 3PL partner.

Matt Edmundson

Well, that's really great advice. And so you've got a workbook. I that's that, I would class that as perfect timing, Jeremy.

Jeremy Bodenhamer

No one's ever asked that before. It literally was just done.

Matt Edmundson

Brilliant. Listen, I really appreciate you being with us. And as I said, I could go all day. And I would I would encourage viewers or listeners, if you haven't done so already do grab this book. If you're doing any kind of distribution, if you're an eCommerce Adapt or Die., that Jeremy's run is a fantastic book, you've got a lot of fab reviews on Amazon. Ironically, we're talking about Amazon, you've got some great reviews on your book on that platform. So it's a great book. I mean, you must be stoked with it, eh! You must be really proud of what you've done there. Because I felt good on you for doing that.

Jeremy Bodenhamer

Thank you. Yeah, I love it. And my boys love that there's a dinosaur on the cover. So it's a win for everybody.

Matt Edmundson

Did they choose the cover?

Jeremy Bodenhamer

No, no, my my publisher said don't when they sent me the cover art. They said don't show these to anybody. Just tell us what you think. And I'm sure there's some reason behind that. So I didn't show it to anybody. But I'm the father of three boys. So of course I picked the purple dinosaur.

Matt Edmundson

Why would you not, rght? Why would you know? Yeah, yeah, brilliant. Listen, Jeremy, how do people reach out to you? How do they connect with you? How do they get ahold of you?

Jeremy Bodenhamer

Yeah, so I'm on LinkedIn, they can reach me at ShipHawk.com. Also, I have a website for the book. It's at my name, Jeremybodenhamer.com The book is on Amazon. And if you're like me, and you want to buy it other places, then if you go to my book website, I have links to Barnes and Noble and even independent bookstores that they can buy the book from.

Matt Edmundson

Fantastic. And we will of course, link to your LinkedIn profile and your ShipHawk website, and your own personal website in the show notes. So if you are driving or whatever and can't remember that. Don't panic, just head on over to the show notes and pick them up. Jeremy, listen, it has been an absolute treat to chat with you today and I really appreciate you taking the time to be with us, sharing your wisdom and insight into this whole fulfilment thing. I feel like, if I'm honest, we have just started to scratch the surface. We could go into this in a whole lot more detail. But super generous of you. Thank you so much for being with us.

Jeremy Bodenhamer

Thank you. Appreciate it.

Matt Edmundson

It's been great. Thank you. Thank you. Wow, wasn't that fantastic? Jeremy wasn't a brilliant with his conversation. I just find that whole thing fascinating because honestly, we have seen some major gains in our own eCommerce business just by doing some of the things that he has talked about here. Now we are in season six, which means we are doing a few things new on the eCommerce podcast, one of which is we're gonna start doing giveaways in every episode. And today of course, we are going to be giving away Jeremy's book. Okay, so if you would like a free copy, we have got half a dozen copies of this book to give away, you would be more than welcome to grab that all you have to do to go get one of these books is obviously beat everybody else to it. So don't be slow. But head on over to the website, go to eCommercepodcast.net/60. There you'll see all the links or the show notes to Jeremy's talk to scroll down a little bit, putting your name and address, name and address name and email address, submit that form and we will be in touch to let you know if you have got one of the books. So you know, basically it's a policy of first come first serve. So if you're first there, chances are strong you're going to get a copy of the book but we will send that out to you. So just head on over to eCommercepodcast.net/60 to get a hold of that. That would be great. Now whilst you're at it, and whilst you're online, busy trying to get your copy of the book, or if you you know, if you want to pay for it feel the freedom like Jeremy said there's a whole bunch of places you can get it but do get it strongly recommend that. But whilst you are on the computer, make sure you head on over to wherever you get your podcast from. Or if you're watching YouTube or Facebook, make sure you like comment, subscribe, all of those good things, give us a review. It just helps us keep the show going and reach more people. And so I really appreciate that, because I'm hoping like me, you get a lot of value out of this show. I have my notes again, I'm going to have my conversation with the team tomorrow, as we get into all things distribution in our conversation. So do do that. Do do that, you know, and get your own notes, transcripts, they're all online, just go get them and give us a review. Like I say at the same time. Now I'm looking at the time. I think from my point of view, this show is a wrap as they say make sure you do join us next week as we have the next episode in season six. We have got some amazing guests coming up this season, let me tell you, I am so excited about these conversations. I think I learned more than most people on them to be fine. I don't know if they're more for you. Or if more for me. I don't I genuinely don't know I enjoy them and I hope you do too. So make sure you come back next week as we carry on conversations, all to do with eCommerce and how to grow and develop our own online businesses. Thanks for listening. Thanks for watching. That's all from me. Bye for now.