We’re onto the fourth edition of Merchantry! This episode turned out to be a treasure trove of insider insights thanks to Jason Murray, Co-founder, and CEO of Shipium, a supply chain platform that offers a customer-centric alternative built on optimization. Jason gives us the run-down on today’s logistics industry and the key to unlocking your eCommerce operations journey in this riveting episode.
The Building Blocks
Jason’s vantage point in the industry is one that many founders can only dream of. He was a key decision-maker in arguably the greatest success story of the retail world in the last 25 years — Amazon. From an online bookshop to a behemoth of commerce, the story of Amazon needs no telling. The story that needs to be told, however, is Jason’s role in this meteoric rise.
Jason spent 19 years at Amazon, at the very intersection of logistics and technology. From his early days defining the fulfillment processes in Amazon’s warehouses to duking it out with an established big name like eBay, to his crown achievement of retooling the supply chain to make Prime a sustainable model, he has seen and done it all. He is the brains behind much of what makes Prime and Subscribe & Save what they are today.
Fast forward to 2018, ready for a new challenge, Jason left Amazon and reconnected with co-founder Mac Brown, another Amazon stalwart, to start Shipium. Thanks to their combined experience, they were able to quickly identify just what the market needed — “operations and logistics technology that makes eCommerce hum to the rest of the market”.
Shipium aims to do just that.
The Costs Add Up
With the supply chain being at the heart of any D2C brand, it is no surprise that a considerable amount of the revenue goes towards optimizing the chain. The good news is that eCommerce brands get certain buffers that brick and mortar chains simply can’t replicate. For example, inventory – while a brick and mortar brand needs to have the required stock of the same products in each of its locations, this is not an issue for an eCommerce/D2C brand. The challenge here comes in getting that product to the customer in the most efficient and cheapest way possible.
According to Jason, outbound shipping costs are “by far the biggest expense” and eat up as much as 12% of the revenue. A fact that many early-stage D2C brands are confronted with on a regular basis. It is no surprise then that improvements to the shipping structure can have a massive impact on the bottom line. Things such as placements, how you manage shipping out of your warehouses, and the outbound routes you choose all quickly add up. Optimization goes a long way in preserving your profits.
Experimenting For Optimization
Unlike in a purely digital playground where experimenting comes at low costs with some straightforward A/B testing, the logistics world is a different beast altogether. The first and foremost problem being that any changes to the process can take months to unfold. The physical nature of the industry makes it hard to predict it with any sort of model.
A point that Jason brings up here with emphasis is the idea of “global vs. local’. One needs to be careful when trying to tinker with the supply chain lest it improves things in the macro but becomes a problem in the larger picture. He offers a piece of advice that has worked for him – “be very thorough about measuring what you’re trying to improve”.
The framework to follow here seems to be:
- Define your metrics.
- Identify what needs to be done.
- See if you get the intended results in the metrics you defined.
A model that he followed in Amazon to great success. Jason preaches being systematic and surgical when problem-solving.
“You don’t want to solve the wrong thing,” he says, “and change something that doesn’t need changing only to have it blow up on your face.”
Customer Experience Is Everything
While saving costs on shipping is a good enough driving force for delivery optimization, making the customer experience better is by far the most important aspect. An optimized shipping model means a more fluid delivery experience for the customer. Which means they’re more likely to come back for more. This is the cherry on top. Not only does optimization save you money in the long run, but it fuels further growth.
Something that the good folks at Shipium can help you with.
But before you head on over there, stop by and listen to the full conversation with Jason. This essay barely scratches the surface on what he had to offer in our sit-down, making it a must-listen for anyone in the vicinity of eCommerce. You will definitely come out learning a thing or two.
The fourth episode of Merchantry is now streaming on all major platforms including Spotify, Apple, and Google Podcasts.
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