Jared Ward: 0:07

Welcome to our most recent episode of Ops Unfiltered. Today we have a very special guest Fluin, no sorry. Drovin, yes, drovin, from Idaho, idaho Vault.

Anthony Armstrong: 0:17

Yeah.

Jared Ward: 0:18

One of those guys. I am one of those guys. Today we have Anthony from American Flat.

Anthony Armstrong: 0:23

Thank you, he is the senior Senior. Operations manager.

Jared Ward: 0:29

Senior, not junior, not director.

Brendon Beebe: 0:33

Yeah, clear distinction.

Jared Ward: 0:36

As we always do in Ops, unfiltered, we dive into the back-end operations, the boring stuff around operations. So can you please introduce yourself real fast. Which companies have you helped grow? What led you to American Flat to be the senior director?

Anthony Armstrong: 0:51

Yeah, no thanks for having me. I started out cutting my teeth in a really small e-commerce company called Teton Web Stores, going with that theme of Idaho strong, and we did e-commerce, fba, really kind of 3P models. From there I went to part owning another e-commerce company called Bruisa Distributing. That's kind of where I really got into the operations side of things and found that I liked operations more than I did the selling on Amazon. I liked the way things worked and how people had to come together to play and then, when things were bad, how you had to kind of drop what you're doing and solve them.

Anthony Armstrong: 1:34

I was there for about 10 years at Barusa Distributing. Holy crap. I recently I would say probably within the last year and a half I left Barusa Distributing Great relationship, great terms. Just was my time to go and I got into the remote work industry and that's where I tried doing a little Amazon consulting and realized that I still really liked operations and there was an opening in American Flat for a senior ops manager. I applied and immediately hit it off with the hiring crew, met my boss, kent nunez, and we really, really hit it off. We're like-minded. He's a genius at operations. He's a genius at a lot of things, but specifically operations, and I've been there for a little over a year now okay.

Jared Ward: 2:24

Well, so you're primarily an operator of amazon obviously american flat super omni channel we'll get into that later but primarily an amazon business, right?

Anthony Armstrong: 2:33

yeah, primarily um. A lot of operates uh in a 1p model of what it's called um does also have uh a 3p. When you say 1p or 3P, what does that mean? Nope, good call. 1p would be like the vendor central side, where Amazon buys the product from you, then sells them under your brand, but they are responsible for the distributing of it, the customer service of it, etc. And then a 3P model would be what I think more people are accustomed to the FBA sending it into the Amazon distribution centers and having Amazon fulfill it, but you are still the brand owner, you own the product, amazon takes a cut, et cetera, got it. That's the one P3P difference.

Jared Ward: 3:17

How long have you operated a sales channel on Amazon for?

Anthony Armstrong: 3:21

Personally, I have operated on Amazon. I feel like I'm one of the OGs of the amazon 3p. I feel like I've been there forever. I've been doing amazon for about 15 years. Uh, total um, mainly in the 3p model, the fba, fbm. Yeah, going to walmart clearance aisles, scanning on my phone so I can flip it.

Brendon Beebe: 3:44

You've been doing retail triage for 15 years.

Anthony Armstrong: 3:46

Yes, Now I will say the majority of my salary is paid from other people. I am not successful enough to support myself on that, but I do like the thrill of finding something on clearance and seeing it selling for $60 on Amazon and saying oh yeah, let's, let's roll that.

Jared Ward: 4:06

So and then your other brands uh, you've those have grown from six figures to seven figures.

Anthony Armstrong: 4:10

Yeah, so I've, I've helped.

Anthony Armstrong: 4:12

Uh, the two previous companies that I was with were starting small in the kind of the low sixes, and we groomed to seven and then operationally like I guess I didn't even know it, but the first company operationally I had to hire a marketing team and then train them.

Anthony Armstrong: 4:28

Then I had to hire a PR team and train them as customer service team and train them, and then we grew the business and even then, looking back at it, I liked the operations more then than I thought I did and really liked that. And then the next company, bruce of Distributing same kind of thing, was started off as two people and, uh, we called it a shopfus because it was a shop office but wasn't nice enough to be called an office, but not nice uh, not uh bad enough to be called a shop. So it was a shopfus. There were two of us in the attic of it and then we ended up growing it to a 6 000 square foot warehouse that we housed our own product in and had a team of quality control and, wow, a team of marketers and that's all right, my first question what, as somebody who's been as an og in the amazon game, what are some things that you could do back then that you can't do anymore?

Anthony Armstrong: 5:20

oh, my word um, probably for the better. I I will just disclaimer. There are the black hat things that we used to do that you can't do now are probably for the better Keyword stuffing, linking your competitors on the back end, asins right, capitalizing on those high traffic competitors I shouldn't do that. Um, listing a product in a uh, a category that you really weren't supposed to be in, but you wanted to be there anyway, and then trying to get around the restrictions yep yeah stuff in words, in white text and uh, you used to be able to do that a long time ago, okay, long time ago.

Anthony Armstrong: 6:04

Uh, now the, the bots, ai, they crawls everything, and but now they are crawlable and but, um, and then uh just feels bad to say out loud really this is almost like a confessional um, it's like a uh being so manipulative of the customer service agents. Uh, going through and just immediately going to like I want to chat or I want to call, and then not even paying attention to what the other person online was saying. Nope, I want a captive agent right now. Give me somebody that is stateside and fix my problems, because they don't want to be on the phone or whatever. And now the customer service is a little more intuitive to what people want and stuff, but still it's.

Anthony Armstrong: 6:48

I mean, it's a. You got to navigate it. It is a little crazy, but used to be able to get away with quite a bit Pricing that was another thing. You used to be able to go crazy on pricing and brand protection that exists now. That didn't before. Being able to sell on people's listings, I used to be able to sell whatever you wanted and really yeah, you just attach to somebody else's listing.

Anthony Armstrong: 7:13

Sometimes you would be able to like. Let's say, I found a pair of Nikes at Walmart and listed it on Amazon. They're 110 bucks. I got them at Walmart for 30. You used to be able to go in cause. There was no brand protection, there was no gates, a lot of things were ungated.

Jared Ward: 7:29

Yeah, some people would also sell a bunch of ripoffs.

Brendon Beebe: 7:33

All the time.

Jared Ward: 7:34

Counterfeits were crazy. I remember one big one was the Hatchimals one year. I mean those were exploding like crazy on eBay and Amazon, but they went out of stock everywhere. People were buying them for $1,000. And on eBay and Amazon, but they went out of stock everywhere. People were buying them for $1,000, and they were just getting one from Alibaba. That's nuts. That's nuts.

Anthony Armstrong: 7:49

Now Amazon's way better way, way strict. And I will say from sellers with a brand that you fought hard and did the trademark. You deserve that protection, you really do. But there were those of us that did try to take advantage.

Jared Ward: 8:05

What's the biggest difference between a six-figure amazon brand and a seven-figure I'll say 3p like just typical fba?

Anthony Armstrong: 8:13

I would say, uh, and I I might get a lot of hate for this I think it is easy to get your first million to go from you know six to seven. I think that's easy why? Because you don't at that point you don't know what you don't know right. But as soon as you get to that million and then you think, oh, all I need to do to get to two million is double what I did, that's not the case. All of your overhead isn't doubled. Your customer service representatives that you might need, or your, your tech you might need to get three or four of them versus the one that you had before. So I think getting to that one million is fairly I'll maybe retract and say it's fairly easy because your overhead is so low. You're so used to just, oh, an order came in, great, let's rush to do it. And now, when you have 100 orders that come in, it's like, oh, now I don't have enough time in the day to get these out.

Jared Ward: 9:10

Is it? Maybe you getting past seven figures forces you to figure out like the unit economics and if you're actually profitable, absolutely, your overhead is just like you and your friend.

Anthony Armstrong: 9:22

Oh, 100%, no, you're exactly right, just like you and your friend like oh, 100, no, you're exactly right. Especially like once you start doing ppc you might not have been doing that good of a ppc job before with advertising. And then you're like well, we've kind of reached our plateaued with where we're at. In order to get more, we have to start pumping money into it. But it's not as simple as oh, I want a double digit row as right, and oh, in order to do that, I'm going to give it twelve dollars and it's going to pump out a thirty dollars. It's not that way. And then it starts adding up. And now, on prime day, where you maybe only spent a hundred dollars in advertising and you did great, and now you did a thousand, but your, your sales are maybe the same. And al starts to think, oh, maybe now we got to really tweak it and dive into those per skew economics interesting.

Brendon Beebe: 10:18

So up to a million, it's like it's something you and your friend can do. Past that it's also you need to build the processes. You need better systems in place. Absolutely, you have to start focusing. You need more people. You just can't do it by yourself.

Anthony Armstrong: 10:28

You can't do it by yourself and it's not. It's not linear, right and uh, and I, I think you obviously have to have a good product, like I I don't think any any person could could get a million dollars on amazon. Right, you have to have a good product, you have to do your diligence, but I think if you focus on that, you can get it to a million. But then if you want to scale it and grow it, that's you really have to dig deep and find it.

Jared Ward: 10:53

How do you spot a good Amazon brand? So, let's say, you land on a listing and since you've had so much experience, now it's just like, ah, these guys suck, yeah. What do you look for for? Do you look for the, the, the rank on sour central? Or do you look at uh, look at the reviews? What do you look at?

Anthony Armstrong: 11:12

so my secret sauce I would call it so patent pending um, I actually look at the images, believe it or not. Why I look to see if they're AI generated, right, because I think we're still in that region of whether or not you can tell it's fake, or if it's AI generated right.

Anthony Armstrong: 11:31

I look to see if they are like a studio quality, and for me that means that they've taken the time to set their product up and really kind of understand what the consumer is looking for. If it's fake or AI generated, then it's like they are just keyword searching the internet for products that sell and then they're saying, okay, this is the scenario that consumers want to buy it in. I'm going to try to fake and create that Now. That can totally work. I mean, there's a lot of brands from overseas that are doing that and it can gain traction. But I think and my opinion would be, at that point you're at a race to the bottom. It's going to become okay, how can that product get cheaper and cheaper and cheaper and your value diminishes? People that take the time for their product, they're always looking to increase the value of it, the value add so it's.

Jared Ward: 12:23

It's the difference between brand building and, you know, like a private label product absolutely that term private label. There's actually somebody who's like he's gonna go on trial pretty soon, I think um, it was a ksl ad, but anyways, he was selling like give me ten thousand dollars and I'll give you 5% monthly return. I can't remember the exact numbers, but like X percent monthly returns because we get a private label. We can just print money and give you 5% return. Of course it didn't turn into anything.

Brendon Beebe: 12:55

Everybody lost their money.

Jared Ward: 12:57

Why do you think people fall for that private label? I know it can work. Sometimes I've done some and I it was probably about like 30 of the products actually.

Anthony Armstrong: 13:10

Yeah, would work and like be decent that's a great question, because the two brands that I worked for previously to american five, they were private label, um, and I think it can. The all I think is that you have that American dream of creating something that's yours, you own, it's part of you and somebody wants that. So that's what I think people latch on to, is that emotional connection to that. But I think where maybe some people fall short and this is a generalistic view, so you know they're my haters in the comments. This is a generalistic view, so you know they're the haters in the comments Some people just don't want to work hard for it. They see what's in it and they say, oh well, I don't know if I can dedicate 20 hours a week, I want something that will just. In fact, I joke with my friends and if my friends watch the video, you'll know this. I want something that just makes me three thousand dollars a month and they just want that to sit back and roll like an investment and just buy from Alibaba a thousand units.

Jared Ward: 14:15

Yeah, throw it into FBA for me.

Anthony Armstrong: 14:18

It'll be great. They hold Amazon. They'll do all the customer service, send me a replenish alerts yeah, all of those things are. There's a lot that aren't, and that's the what the requires the work. So I think that's where people fall short is laziness, is, I think, what it comes down to.

Jared Ward: 14:37

So so what about, um the difference between seven and eight figure?

Anthony Armstrong: 14:42

excellence that yeah, and I'm I'm really kind of dipping my toe in the water here. I think american flat, uh, specifically, has a great team of professionals that that works there in fact. All right, so stay with me here. There's a scene in the greatest Batman movie in my opinion Batman Begins. Okay, bruce Wayne, thomas Wayne, martha Wayne got the mom, are on the train, they're headed into Gotham to see the play where they eventually get killed.

Anthony Armstrong: 15:16

And little Bruce Wayne looks at Wayne Tower and says Dad, is that where you work? And he says, no, I work at the hospital. I leave the running of the company to Moore. What is he? He says, um, oh, I'm not forgetting, but I think he says like more important and more important men, yeah, and bruce looks at him and says important, like dude, you're my dad, how, who could be more important? And he says, well, more interested men and I think that that's the key to a great ceo is that you surround yourself with people where you realize you don't or you're not strong, not even that you're weak.

Anthony Armstrong: 15:55

I think it's where you're not strongest. You bring people on that are stronger than you in those areas, you surround it, they build up a team around them and that's what launches your brand. I think the products at that point do need to be tailored to your consumer right. There does need to be a good amount of research consumers, what do they want, what don't they like? You have to pay attention to that. But it is also key on who you bring onto your team and that's how you scale.

Jared Ward: 16:27

Explain real fast, like at American Flat, what are the departments that you?

Anthony Armstrong: 16:32

have? Yeah, flat, what are the? What are the departments that you have? Yeah, so we have our, our uh leadership team uh consists of um of our ceo, georgio piccoli, and then from there, uh, we have or I guess along with him is we have a vice president of finance, paul rogers, and then we have a vice president of operations, my boss, kent nunez. He's my favorite.

Brendon Beebe: 16:55

I'm just throwing it out there. Shout out, kent. Yep, shout out.

Anthony Armstrong: 16:57

Kent. Angela Owen is our VP of product development and merchandising, and then Johnny Picardo is our VP of product design, our creative, and so they are the team that really is like the leadership, strong leadership team. And we brought on a new great HR director, lacey Medina.

Jared Ward: 17:21

So that is the key team and then from there, how do you balance as an operations leader, staying really lean, but also you have to have these departments to succeed, like you guys have that is a great question and fortunately I have a great answer.

Anthony Armstrong: 17:44

We, our ceo, georgio uh, he came across um was introduced to a methodology, a lean methodology. It's two-second improvements by Paul Akers. Paul Akers teaches about being lean in companies where you are constantly looking to identify wastes, making two-second improvements and being better. We implemented that a year ago about this time and saw tremendous improvements just in the first eight months. What is a two-second improvement? I'm glad you asked.

Anthony Armstrong: 18:20

A two-second improvement is something that you do on, let's say, a daily basis, but maybe it bugs you. Example let's say I'm uh, I'm making a breakfast drink and my let's say, my coffee maker is over here on this shelf but my mugs are here. I go to grab a mug, then I gotta go over there pour, then maybe I have to go back to get a spoon. The two second improvement would be why don't I just move my coffee maker to be right under my mugs? So now I'm mug coffee, creamer, whatever, and then it's good. It's not a massive overhaul of the system you're doing. You just made that slight improvement and you saved yourself and maybe it's only like two seconds kind of like, kind of like an 846 document.

Jared Ward: 19:07

You know like absolutely manually push that instead of getting like a company that can do that for you.

Anthony Armstrong: 19:13

Yes, no, but that's the idea. That's the two-second improvement. It's something that is bugging you, but until you start looking for it, it's almost like you don't know what you don't know.

Jared Ward: 19:30

You don't know what bugs you until you're like wait a second, that does bug me. So the culture has to come from on top, absolutely yeah. So he instituted it. Wait a second, that does bug me.

Anthony Armstrong: 19:34

So the culture has to come from on top. Absolutely yeah, so he instituted it. We even revamped our morning meeting that we have, uh, every day everybody logs in to do. We call it the coffee morning meeting. Uh, we have one in the afternoon on mondays for those that are on the other side of the world, and then our other morning meetings. We've revamped the whole process of it. Now everyone takes a turn hosting that meeting. We go through flow disruptions of what's been happening that are kind of interrupting the daily processes and how we fix them. Or sometimes we don't have a fix and we're maybe collectively saying, hey, this is an issue, we're trying to fix it, and then people can help and chime in.

Brendon Beebe: 20:13

That's really cool.

Anthony Armstrong: 20:14

And then we take snippets from the books that Paul Akers have wrote and share why they're important, have people comment on them, and then we do an exercise in identifying the deadly wastes. They're called the eight deadly wastes. Here's the test it's downtime, so it's defects, overproduction, waiting, non-utilized talent, transportation, inventory, motion and extra processing. And so those are the things that we identify and try to in everyday situations and by doing that we've realized the waste of the company and where we can be better and and where we need to grow. And then the idea is also that by doing so, you still make your mistakes people learn from, and your mistakes then are, uh, less and less. They can still have great effect, but now your people are looking for how to not do those and it's been a big change for us and it's been really awesome.

Jared Ward: 21:14

So much of the success of a brand goes into the intersection of operations and finance. Like at a certain point between like seven and eight figures. A certain point a brand will turn a corner where it no longer feels like they're just like exchanging cash for inventory and then depleting it. And then like, were we a little bit profitable or did we lose money? Like, what have you done to help out with the intersection of operations and finance such that you're actually profitable in a scaling business?

Anthony Armstrong: 21:46

man, that's a great question. This would be the time that I get to pat myself on the back. Um, I think probably one of my greatest strengths that I've brought is kind of my attention to detail. Um, and so there's a. There's a process right now with our three pls, where they send us bills and then we validate them.

Anthony Armstrong: 22:08

Um, and so a lot of it is the uh, what's called the value, the value added services, where they are doing jobs for us. There's an admin fee, there's a storage fee and then there's, like the normal probably the biggest one that people are familiar with would be probably storage and then you're picking pack for your order. Right, those are your two big ones, those ones I'm able to look at and identify, and although they are automated in that the orders come through digitally and are processed digitally, that no one is going and saying, okay, one did it, one, two, three, and they're not counting line by line there still needs to be an accountability and a validation. So for myself, it's been, I feel, accountable for validating this process, to make sure that what is being billed to us is, one, accurate, and then, two, that it falls in line with what we think it needs to be.

Jared Ward: 23:00

Do you think a lot of operations people because they don't have to touch the inventory don't do this manual validating? Like, for example, I buy something for my factory, they just send me like a pro forma invoice, maybe like an inspection sheet, and then they'll send it to my 3PL. Then maybe you'll send something from 3pl to fba. Anyways you don't really ever touch the inventory it. Do you think most operators don't validate a lot of that?

Anthony Armstrong: 23:24

I would say it's a. It's probably one of those missing arts that uh, just like and I'm gonna go old school, but shoe shining I think it's one of those, those old tasks that we used to shine our shoes all the time and we lost that attention to detail because we got sweet kicks and we don't need to do that. Touching the inventory, I think, is one of those lost arts. Being physical with it, I would totally agree with that. That. I think to be a good operator you have to be hands-on, in a sense, of your product and know what you're looking at and it can't just be a set it and forget it mentality it's our most underrated feature in luminous, actually, because the brand has their concept of a shipment or a po, and then fba and your three field.

Jared Ward: 24:08

They'll have the shipment and never the two shall meet, except in Luminous. We make them actually like, match them together and reconcile them. Nice, but we agree. I want to dive a little bit into American Flats operations. We talked about, like, the makeup of the team. I want to talk a little bit about how do you purchase goods and then where? Where do you distribute them and what sales channels do you have? Okay, so let's start out with distribution points. What is american flats makeup of? Like, where are you sending product out of? How many three pills do you have? How many countries do you do?

Anthony Armstrong: 24:48

fba. So right now, currently we have um warehouses, three 3PLs in the United States. We are just about to open a 3PL in Canada and then looking at outside of the United States in the eastern side, so the EU and Australia, japan. Right now our distribution is an Amazon 1P model and so Amazon purchases the goods and then they get shipped out from there to different distribution centers, the DCs across the United States and so depending on where the product is and which DC is, closer is which warehouse it comes out of. But that's kind of how our operations work in the States Canada. We're very young in that and have yet to really see how that plays out and rolls out. But going back to an earlier concept of surrounding yourself with good people, our 3PL in Canada has been very good at telling us these are kind of the things that you should expect and it's been really great, as we've been getting into a new territory that we aren't as versed in, that we have somebody there with that expertise.

Jared Ward: 26:08

But next part of operations, your purchasing flow. Let's assume you, you purchase finished goods, right and they get routed to those warehouses. Now your sales channels. What channels does American Flat sell across right now? Yeah, so we can be found on Amazon.

Anthony Armstrong: 26:24

We have a big presence on Amazon, of course, as I mentioned, we're also in Target, michaels, macy's, kohl's, wayfair. I know.

Brendon Beebe: 26:36

I'm forgetting some, maybe Michaels's. I don't know if I ever say that you've got a bunch like you have 20 channels. We have.

Anthony Armstrong: 26:40

We have a lot, a lot of channels. We're in the, the home decor, uh model, so picture frames and we do some pillows, shower curtains, um, so really any marketplace that has that. That need we.

Jared Ward: 26:56

We are in so you have, you have three, three peels, multiple fba stores. Well, you sorry you might have one, but well you have to replenish a bunch of fba distribution centers. What is the biggest challenge of being omni-channel? Selling across all those channels? It must be difficult, right not wrong.

Anthony Armstrong: 27:17

In fact this is. This is a great lead-in as to why I'm I'm here and sitting in this chair. Inventory it that was probably the biggest.

Anthony Armstrong: 27:27

I would think operationally is the biggest struggle is making sure the product that needs to be bought is in those respective warehouses or 3PLs and that it's not in just one. If all of your inventory is in California per se, then getting that to the East Coast now your costs could be nuts to get it from West Coast to East Coast if that hub or DCs on the East Coast is what's wanting that product. So you have to be able to forecast the demand and with Amazon that can be hard because Amazon, as a lot of people in operations e-commerce know, amazon kind of goes to their own, their own rules, their own beat of their own drum, so to speak. So, uh, I think inventory has been probably our hardest thing of knowing if we have the inventory in these said locations and making sure that it's evenly distributed across all three and I guess a reason, because you guys aren't a thousand person company who can afford to roll out NetSuite and big ERP, absolutely Like how it's.

Brendon Beebe: 28:40

I guess the question is, like you guys have been tackling this how do you run this? You have a massive infrastructure, 15, 20 sales channels, orders coming in from everywhere, multiple distribution points and running that on a lean team. How have you guys is it?

Anthony Armstrong: 29:02

yes, yeah, not to be that like one word answer to that that question, but absolutely I think you get to a point where and I think a lot of small businesses are doing this you're running your stuff in google sheets google suite is your friend right? Excel sheets, um, and you get to that point where you're like, boy I, I feel like I need something more. And then you start looking right, you start Googling okay, how do I replace this? And those big dogs, the big names you mentioned NetSuite pops up and you're like, probably first, whoa, that I think might be a little more than what I need.

Anthony Armstrong: 29:37

Or you maybe have that false ideology of, oh, they're expensive, they're going to get me to the next level because they're expensive. You come into it and you're like, where do I go? And I think that that is why we have now have such a great partnership is because you are fulfilling a role for us. That is now, looking back at it, crucial to to where we, where we need to be, it's. We're in a good place because of that. But hindsight, you know, hindsight's 2020, and so not everybody is as fortunate as that to be able to look back and think, oh, I'm glad we chose this was there a breaking point that made you stop and be like?

Jared Ward: 30:22

we need a system for our inventory?

Anthony Armstrong: 30:23

Yes, Probably one of the biggest things, one of our horror stories would be that we're looking, for example, amazon places an order, a PO, for a couple of units of this particular SKU and it's great, it's an order's come in, we've the customer wants it. Then going to the 3pl and saying, hey, we need x units of this. It looks like in the inventory we have that and this is the order. Oh, we don't have that, or, or we can't find it. And it's this oh, are you sure? You sure you don't, because it says you do. Uh, and at that point it's when, once you start doing multiple 3pls, and maybe even if you're doing just one, but it's off-site and it's out of state or you know, you're not able to see it on the daily basis.

Anthony Armstrong: 31:24

I think that's that's the point for us.

Anthony Armstrong: 31:26

For me, that was the, the point where it's like, okay, something has to change because this is not sustainable.

Anthony Armstrong: 31:32

And it's very possible that the inventory exists, right, but it's also just as possible that it's been out for a long time and we've been promising this product. But we've actually been out for a while, and so it's also just as possible that it's been out for a long time and we've been promising this product, but we've actually been out for a while, and so it's not fair to the consumers, obviously, because now they've bought something that we can't fulfill, but then it's also not. It's not fair or reasonable to think that we would be able to grow or scale, because those orders that are onesies, twosies now are going to turn into double digits later, and then you're going to be in a big world of hurt. So I think, being able to realize at that point of, hey, maybe we should look to see if there's something else available, that's the point that when, when you get to that point, it's don't ignore that feeling Like, act on it and roll it out.

Brendon Beebe: 32:23

Yeah, I think I see a lot of brands who'd use a 3PL. That for a long time. The 3PL's WMS acts as like their system of record. They might log in every week export inventory. Maybe they're bringing down sales orders through some other way, Maybe they're exporting a weekly report and that's how they do everything. Everything else is just in a spreadsheet. But I think yet as soon as you get to two, three pls and all of a sudden you're reconciling data from two different systems, I mean now you're just exploding in excel spreadsheets yeah, exactly, and that's that's.

Anthony Armstrong: 32:56

I think the point we're at is that we're downloading inventory from three potential places and then then it is well if we get into Canada. What if we get into Canada East? What if we get into Canada West and then EU is it Sweden, Netherlands, Spain.

Jared Ward: 33:13

And then, specifically, the technical problem also is taking that inventory, consolidating it by warehouse, taking that inventory, consolidating it by warehouse and then pushing those numbers, or some of those numbers, to the 15 different channels.

Anthony Armstrong: 33:29

Yes, sharing those essentially, and then I think also in Miracle Flight doesn't have this, but some companies only sell certain SKUs on certain websites, sell certain SKUs on certain websites. And so not only are you, you're not sharing the inventory, but now your storage costs for only your target inventory could be dramatically pulling you down, because your cycle is just not as fast, your velocity is super slow.

Brendon Beebe: 34:00

I know one of your cool use cases is you have so many channels but some are way more profitable. How do you make sure to stay in stock for maybe your profitable channels while kind of deprioritizing others?

Anthony Armstrong: 34:12

That's. That's a great question. I would say our, our sales team is really good at finding that priority level and so, while we don't interact with them as much on that specific side, I will say, the in-stock capabilities we have are led to or driven from our sales team, and they do they do a really good job of of that so that your sales team is responsible for kind of predicting or forecasting sales and all these channels and they will tell you what to push where yeah, we, we get the, the, the orders from them.

Anthony Armstrong: 34:45

They say this is what's going to go into fba and then we are in charge of making sure that the warehouse uh finds it, locates it and ships it out in a timely manner.

Jared Ward: 34:55

Okay, so what technical problems has luminous solved for you so far?

Anthony Armstrong: 35:00

A big one is the EDI. That was probably. The thing that brought us together was the need to push EDI codes, and I'll be the first to admit barely no EDI myself.

Jared Ward: 35:16

Which is common A lot of company operators? They don't, and it's complicated.

Anthony Armstrong: 35:21

In fact, when I was first interviewed from the company, my boss, kent, asked me what integrations I was familiar with. And I went and said, oh, I've done a ship station I've done. And he was like no, no, no, no I was I was talking about like edi integrations and I was like I don't know, those like Like real stuff, anthony, yeah, listen, little man, catch you on the hinge.

Anthony Armstrong: 35:45

Yeah, oh, that's cute. So that was the biggest pain point that we had to solve is wanting to grow and scale, but use a platform that could grow with that and that was a big part. It was the EDI. Yeah.

Brendon Beebe: 36:02

I remember when you guys came on so paul at surpass he's been a fantastic partner, great guy um setting up. You guys had like 10 to 15 edi integrations. I felt like it was 10 to 15 api connections and it was like, hey guys, we have to migrate everything, yeah because it was.

Anthony Armstrong: 36:19

It was a bunch of outside noise going to different places. Uh, there wasn't. It was not one single pass through oh wait, how was it before so? Yeah, so, um, it was a lot of like patchwork, so not, uh, patchwork makes it sound like it was like a lot of different systems yeah exactly. It was just a lot of different systems doing the need of what Luminous has been able to provide. Now, instead of logging into this and that and this and that, it's one local source now versus.

Brendon Beebe: 36:55

So before you might have to log into Target, upload inventory, log into Michaels.

Anthony Armstrong: 36:58

here's the inventory First you have to download the inventory from all your warehouses, compile it into a new spreadsheet, then push it out, and some were multiple times a day. So, like uh, and and then some. The processing time, yeah, was quite long. Um, I think, uh, there was one in the beginning process of our lean revamp. One of the like, our big wins we call it was having a I think I want to say it was Shopify uploading Shopify. It used to take I think it was like three hours for the file to process and be done and it, once we were able to fix it, it was a 45 minute upload and so or no? No, I'm sorry, it went to a 45 minute upload and so or no. No, I'm sorry, it went to a three minute upload. It was that dramatic. It was a three minute upload and it was like, oh, my word, and that's kind of what started this all like, oh, we could be doing this a lot better there could be a seamless that's really cool right there because I think so many operators, they, they.

Jared Ward: 38:00

It's very difficult to see that like, oh, we could actually be doing this better, because it comes from a really good spot, which is just do it yourself. Like, sure, I could try to implement this big system, this big, massive erp, but like, honestly, we'll live, and this can scale to nine figures, what? What is the point where it's?

Anthony Armstrong: 38:23

it's like no, we should really be like trying to automate something, you know it's funny because, like you're saying, I don't know how many people actually realize where they're at in that situation, because it's almost like that, well, if it's not broke, don't fix it right. But then you don't realize that it's like, oh, this is broken, yeah, and I'm just kind of piecing it together. So, um, there's the. There's that story of, like, the cutting of the ham, where the, the daughter, is talking to the mom mom, uh, why did we cut the ham? And she says, oh, I don't know, my mom did it. And you go to grandma grandma, oh, you cut the ham.

Anthony Armstrong: 39:00

She says, oh, because I didn't have a pan that was big enough for a full ham, and that's essentially what you're doing and I think, um, to go to go to your point is that you don't realize sometimes why you're doing it and that it is broken. But I think you have to take that step back and think, okay, is there anything about this process that bugs me? And then it's a okay, how could it be improved? And I think that there has to be that kind of humble click in your mind of, okay, maybe I'm not the best at this process, is there a better way to do it? And so I? I think it's that, and I surround myself with people that help me do that. But it's not easy for everyone, I would say. Most people think, well, the way I'm doing it is fine.

Brendon Beebe: 39:51

Why would I improve? Was the efficiency focus from 12 months ago? Was that a big reason for this?

Anthony Armstrong: 39:56

Yeah, that was a big part. The lean process really kicked us off into how do we make things easier, faster and simpler? And instead of spending our time doing not to make it sound that it was insignificant, but instead of it just being this well, we're just going to survive mode, it was like why can't we thrive, why can't we do more than just survive? And again, that paradigm shift was a big key player and, oh, I think this is broken and it could. It could use a revamp. That's cool it's.

Jared Ward: 40:31

It's such a it's a really complex problem because, on one end, I've met a lot of operators nowadays who they fear over implementing a system like netsuite, like a ERP, because it can actually slow you down when you have this many channels or you have to pay millions of dollars to customize it so that it doesn't slow you down. Why do you think so many operators fear implementing a big ERP?

Anthony Armstrong: 40:56

I think there's two reasons. I think Again, haters bring it on Um, I think one it's the, it's the recognizing that maybe the process you're doing is broken and there's that initial admittance of fault or maybe not being good. I think we all as operators kind of have this. Like I've been in the industry a while, I know what's good and what's not right, and that's. I think that's a fallacy. I think you have to be willing to change.

Anthony Armstrong: 41:27

Two, I think um, I think cost. I think cost is one that they, uh, you're either intimidated by the price or, on the flip side, like I mentioned earlier, have that false notion that oh, if it's expensive it must be good. And then maybe that doubt rolls in of like, oh, am I good enough for an ERP? Am I big enough for an ERP? Do I really need it or could I get by? Because maybe I'm not, maybe I'm not as big or as important as I need to be. So, honestly, I think it comes down to doubt a lot. That's that inner naysayer in you and come down to it as maybe corny as that sounds, I do think that self-doubt is what holds a lot of people back.

Brendon Beebe: 42:15

You were saying earlier how, when you get these ERPs, you then have to hire the NetSuite admin, then you have to hire the contractor who's going to customize and build all your integrations, and then it's like the maintaining of those. When you're a company focused on efficiency, it doesn't scream efficiency to have to hire three or four people to maintain your system.

Anthony Armstrong: 42:38

No, you're not wrong. It's exactly that. I think you may not realize initially that it might just be like oh, it's, let's say it's a hundred grand a year, right. And you're like, oh, it's a hundred grand, cool, we can afford that, we can afford that. But then you don't realize, you get it and you, let's say, you open it up, all right, wwwfakierpcom. And you fake erpcom and you're like, oh, this has nothing in it, my product's not here. Oh, what do I do? Get on the phone right? Or yeah, hey, how do I do this? Oh, in order to that, you need this. And then you're like, oh, woof, now I gotta get somebody to do this. I don't have the time to do it.

Jared Ward: 43:17

Somebody has to learn this and it's like it scales from there you do you do your first like replenishment flow and it's like this is like nine steps. Can we trim this up like, yeah, for uh, three hundred dollars an hour?

Anthony Armstrong: 43:28

yeah, exactly cut that down, no problem, send you my invoice. So yeah, I just I. I would say that probably too is people just don't know what it takes to actually run it like it's advertised.

Brendon Beebe: 43:44

Have you heard the quote? Nobody ever got fired for buying IBM.

Anthony Armstrong: 43:48

I know, but that's so accurate.

Brendon Beebe: 43:51

You have these large, huge companies. They're the safe bet. You can safely choose it as your ERP and if it goes bad it's not your fault because you went with the safe bet.

Anthony Armstrong: 44:01

Yeah. It's not your fault. No, that's a good point. I see that.

Jared Ward: 44:06

But the thing is for 8-figure and lower 9-figure brands, I mean, this decision could literally put you out of business. I remember I was looking to NetSuite and I was an 8-figure operator and looking at what it was actually going to cost, it was just I don't want to be like draconian, but like, like, oh, like this could actually kill us if this goes wrong but it's, it was actually true. Like because at the time we were like we did probably like three million dollars in EBITDA. We had horrible debt structure with the firm that bought us, so we were paying like 200k a year or, excuse me, 200k a month to that to service the debt anyways. So I I was looking and it was like, yeah, this goes wrong. Like, yeah, is ops do?

Brendon Beebe: 45:04

you feel like it's a lot of people management or is it process management?

Anthony Armstrong: 45:08

I think it's both, it's a, it's a tandem of both. For sure. You have to empower your people. That's the one. You can't do it all yourself. That's what do you mean by empower how you have to let them know what decisions they can and can't make and feel comfortable by making those decisions. If they have to come to you every single time they need a decision, your process is broken and you won't have time for that and it's on. You can't scale it. So you're you're even your most junior level person should have some sort of ownership of a complex process, let's say to where they can give you the final say hey, is this okay? But they shouldn't have to come to you and say, oh, do I do this, do I do this, is this okay? Is this okay?

Brendon Beebe: 45:55

because you'll you'll go. When you bring on somebody new, do you set like if it falls within here.

Anthony Armstrong: 45:59

You just make the decision and act yeah, I'd say when you, when you bring on somebody new, you have like, uh, for us it's a 30, 60, 90 day plan, right, and there you're stepping with them so they feel comfortable every step of the way. But you are slowly, you know that that dad with the kid on the bike, right, we're like getting further and further away that they feel comfortable and to the point where they're pedaling and they look back and you're, you know, half a block back and they, oh, I can do this on my own so yeah, there is that hand holding in the beginning, but eventually and that's what I meant by empower is that you're giving them the confidence to make these decisions so that, a they make a decision and it goes well, but then also, b when it doesn't go well, they recognize that it's it was bad right.

Anthony Armstrong: 46:43

I think we all maybe feel that the guilt, oh crap. But two, okay, maybe it's not as bad as you think. You are your own worst critic, you are harshest on yourself. But then how do we grow from this? How do we learn from this? That empowering process is a part of ops, that you need to empower your people. And then, by empowering your people, your processes become more fine-tuned. They're able to say, oh, I recognize this fault, let me change this. And then it's the circle it just builds. It's like a flywheel that you empower your people, your processes improve, your processes improve. Now your people have more empowerment, they're gonna make better choices. As I think it's a harmonious relationship, that's really cool.

Jared Ward: 47:26

We we talk about this a lot at luminous. We say that we we serve the modern commerce brands. So modern commerce is ever evolving. So ever since you started selling on amazon 12 15 years ago, it's obviously it's changed so much. Yeah, what are? And it's changed so much over just the past five years? What are some of the new trends that you're seeing for modern brands in the next five years?

Anthony Armstrong: 47:52

oh, that, and that's crazy, because if you had asked me this question two years ago, my answer would have been a lot different. Um, I think, uh, a big change that we could see with brands is needing to have a brand movement really involving the customer in your brand. Um, and maybe that's like showcasing them, like lifestyle images of them using the product. I think that a big movement is going to be telling a story of that product on amazon, that it won't be good enough to just say here's the product, these are our features and benefits. I think it's going to be this is how it's actually, this is how it's going to improve your life, or this is the pain point that it's going to solve. And it's going to be specific. It's not going to be vague anymore of oh, this might do this. It's going to have to be this product will fix this, and I think, through like posts and interactions, that the sellers are going to hopefully get that data to say, oh, these are the pain points that our product solves, these are the terms that people are searching for. This is how we're gonna target them and help them fix their stuff.

Anthony Armstrong: 49:11

Now, that being said, that might be a little idealistic. That that's what I'd like it to see. I could also see it going the complete other way and it's a overseas buyers driving the market down. But I'm holding out hope. That's what I want. That's what I want it to be. I want it to be more consumer focused.

Jared Ward: 49:34

How have.

Anthony Armstrong: 49:35

Trump's tariffs affected American flat oh.

Brendon Beebe: 49:37

They're painful.

Anthony Armstrong: 49:41

It's not to get too political in it, but it's hard to see the rationale behind it when it could have the possibility of affecting so many people working that I'm not quite sure. In the famous words of my boss kent, the math is not mathing, so what?

Jared Ward: 50:02

it's not great. Why do you?

Anthony Armstrong: 50:03

why do you think people think that this is some like convoluted scheme to like get china to pay theirs and man that that's a great question, because I think, if you go back to your days of being a kid on the playground, right, what did a bully need? A bully needed the most they needed a punch to the face, right. But then, once the bully got punched in the face, those that did the punching got in trouble. So Trump is quote unquote punching the bully in the face and saying, no, we won't stand for it. There are still consequences for punching people in the face. So I I couldn't tell you why people think that it's a good idea. I think we we have this idea that we want it to be good, and maybe, looking at it now, it's like, oh, maybe, maybe it's not so great, um, but I don't know. I just know that as a, as a seller bringing products from from overseas, those tariffs hurt and the companies can't, uh, afford to eat it. It gets passed on.

Jared Ward: 51:14

It's a very painful process for anybody who's been involved and it's a painful discussion with you and your factory. I'm like, hey, is there any way you can help me? They're already pretty low margin as well. Yeah, you end up passing it on to the consumer.

Anthony Armstrong: 51:30

I think that's the hard part is that that awareness isn't really there, that maybe people don't realize and think, oh my gosh, what used to be $2 is now $6? That's crazy. People are just more greedy. Well, there's a little more to it than that.

Jared Ward: 51:48

Anthony, where this is your first podcast, so maybe you don't have an answer to this. Where can people find you? No great, only fans we're hot Americanflatcom.

Anthony Armstrong: 52:06

find us on Amazon thanks so much thanks for having me pleasure.

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