Operations in E-Commerce: Can One Man Do It All?

Transcript:

JARED WARD: Hey guys, Jared here, CEO and founder of Luminous. This is the Ops Unfiltered podcast. I started Ops Unfiltered because I know what it feels like to be in operations in e-commerce. You're handling every single part of the business. It's easy to feel siloed in. It's easy to feel like you have to find a solution for everything.

 

I hope that by bringing raw conversations from other operators in e-commerce, you can extract some value and not feel alone. Many of the operations leaders in e-commerce are running into the same problems that you're running into. So I hope that maybe their solutions can be your solutions. Maybe you can feel not so alone in the warehouse, in purchasing, in your supply chain.

 

So, that's my hope. I hope this can be valuable for all of you. Let's dive in to have some raw conversations.  

 

MITCH SANDERS: The company was still pretty small, like sub 1 million in revenue or so. About that before I came on. Not saying that I was a reason for the growth, but it was still fairly small. So after I came on, just yeah, operations. Yeah, that's the reason I'm here. Nepotism is strong. No, but I quit a sales job that I hated and they were hiring for this. I came on and just little by little started taking on more projects. When was that next level past this one million-dollar mark? I mean, we started growing pretty quick after that. I think we had like, we jumped up from a million to four and then to eight and just kind of started ramping up. I'd been there six months. So middle of 2018, Colby was like, hey, do you want to be the COO?  And I was like, I don't even know what that is. Like, let me Google it. But that was kind of when it all happened. 

 

JARED WARD: What were struggles that you faced when you were young in your operations career? How did you handle it? And then give me an example of something now. 

 

MITCH SANDERS: Always feeling like I was the reason we weren't. 

 

JARED WARD: Here to my right, our guest today is Mitch Sanders. He's the COO of Thread. 

 

MITCH SANDERS: Happy to be here. 

 

JARED WARD: I'm super excited to have Mitch here. Mitch, like I said, is the COO of Thread. Thread is a local Utah company.  I think that they represent perfectly the type of company and the type of operations that I want to have conversations around. Mitch, luckily enough, you, you were at Thread since the beginning, right? 

 

MITCH SANDERS: Not quite. So, well, Kenzie and McColby Bauer, Kenzie and McColby, McKenzie and McColby Bauer, McColby, I kind of like that. There's the couple name. Um, they started a company in 2015. I came on like January 2018. So there were a few years in there where they, I mean, company was still pretty small.

 

JARED WARD: Like sub one million in revenue or so. 

 

MITCH SANDERS: About that, before I came on. Not saying that I was a reason for the growth, but it was still fairly small. So after I came on, just, yeah, operations.  Yeah, but still was on pretty, uh, pretty early. 

 

JARED WARD: Okay, so, because this is not about the founding story of Threads, so let's just, real quick, two sentences, catch us up to the point that, that you got in, like, what, what were they doing? They were just hand-sewing wallets and stuff. 

 

MITCH SANDERS: Yeah, so, the idea stemmed from, I believe it was like an entrepreneurship class that BYU, or that Colby was at at BYU Hawaii. It was a, hey, you've got a semester, build a product, try and make some money, so Colby figured out that he could sublimate on a piece of elastic. The first elastic wallet was a poop emoji, I think. So Colby sublimated that on there and then they figured out they could get a ring, sew it on. And there you go. So they were doing that for, even before 2015. And they were in Hawaii selling at farmers markets, doing different things like that. And then came to Provo. Company started growing. They were still making them themselves for a really long time. And then a little bit before I came on, they had started outsourcing the manufacturing. 

 

JARED WARD: You came on post hacky entrepreneur phase where you just kind of do stuff. Like, now when you came on, what did their technology look like? Let's get behind the business. Like, how were they fulfilling orders? What were they selling through when you came on? 

 

MITCH SANDERS: Yeah, so in a little more context too, I came on like beginning of 2018 and I actually just came on to be customer service rep, pretty much. Head of customer relations, actually. I was kind of trying to doctor it up for LinkedIn there. I was the head of one person.  Uh,  but so actually Mackenzie's my cousin. And so that's how I knew about Thread when it was a little bit smaller. And I just quit a sales job that I – Oh, Thread has lots of nepotism.  Yeah, that's the reason I'm here. Nepotism is strong. But I quit a sales job that I hated and they were hiring for this. Kenzie wanted to stop doing the customer service herself because she was doing it herself at the time. There were a couple other employees as well. So she wanted to stop doing that. I came on and just little by little started taking on more projects. I remember doing a focus group at one point, first focus group ever, leading that. I was learning about focus groups in school at the time, so it was like, okay, well, let's just try and  apply what I'm learning here. And then Colby wanted to start slowly stepping away from the day to day stuff.  So he would slowly feed me different responsibilities until I've been there for four or five months or so.

 

JARED WARD: How many people were involved in the business? So you got Kenzie, Colby, and then …

 

MITCH SANDERS: At the time, there was probably six  to eight, seven or eight, I think, people. 

 

JARED WARD: Okay. 

 

MITCH SANDERS: That were there. So Kenz, Colby, myself, a couple people doing marketing, finance. 

 

JARED WARD: Okay, so marketing, finance, and Colby was still making them and also fulfilling them?

 

MITCH SANDERS: Colby wasn't making them. 

 

JARED WARD: Okay. 

 

MITCH SANDERS: They were working with overseas manufacturers. Oh yeah, so they had just, sorry, they had just started to buy overseas. Yeah, they had started before I got there. But Colby started wanting to step away a little bit, have me help manage some of the supply chain stuff, and then get into the operations. So, pretty quickly it evolved from, I'm not just answering emails, I am working in, so, ship station to begin with, we were with. And then  Stitch Labs. Yep, we were waiting for a little while. 

 

JARED WARD: Who is gone now. 

 

MITCH SANDERS: Okay, oh wait, there's so much to talk about here. 

 

JARED WARD: Okay, so, alright,  let's get a really good idea. At Luminous, we're obsessed with like,  what are the actual attributes of the company at a specific point. So, this point in time, you've come on. You're sourcing from China. Where are you fulfilling out of? A garage? Or? 

 

MITCH SANDERS: At that point, we were fulfilling out of a 3PL who we still fulfill with. 

 

JARED WARD: No way! Who? 

 

MITCH SANDERS: Evobox is their name. So they're in Lehigh, Utah.  And we've been with them for even a little bit before I got there. So it's been 5 to 6 years now. 

 

JARED WARD: Wow! 

 

MITCH SANDERS: And they have moved.  We've worked with them in 3 different warehouses. So they have slowly upgraded their square footage, and they've really stepped up their game and scaled. So we've kind of grown together. 

 

JARED WARD: That's so cool. 

 

MITCH SANDERS: Which has been really nice, and there's a loyalty there between the two of us. That you're not gonna, we don't feel like we could get elsewhere. I mean, they treat us very well. We treat them well, we helped each other get where we are.  And so it's been a really beneficial partnership. 

 

JARED WARD: This is interesting. So something that I always harp on at Luminous is there's a difference between the evolution of a brand that goes with a 3PL very early on like Thread.

 

MITCH SANDERS: Yeah. 

 

JARED WARD: So like, basically you, Colby and Kinsey chose to forego the complexity of fulfillment, which there's positives and negatives that we'll get into that. So at that time, 1 million in revenue, you're coming in head of customer relations. When you start handling purchasing, and then also I guess, walk us through that, like, at that point, you're, you're just handling orders that are coming, uh, orders that have issues coming in through Shopify, and you're also just purchasing, like, what systems are you using for all those things right there?

 

MITCH SANDERS: Yeah, at the time,  I'm trying to think back here, so ShipStation is what we were using with EvoBox. So Shopify was connected there, pushing orders into ShipStation. 

 

JARED WARD: And that's, you would just log in to like pull reports and stuff, I assume, from ShipStation? 

 

MITCH SANDERS: Uh, yeah. They just gave you a login. I wasn't doing a ton. It was like mainly pulling reports from Shopify. We had Stitch Labs in there. That was a software that was that we were using before I came on, and so I do remember using that to manage our purchasing primarily,  but I think we were way over our head, like we were buying something. We were using something that we weren't not even fully utilizing.

 

JARED WARD: Do you remember what it was at the time? 

 

MITCH SANDERS: No, no stitch labs 

 

JARED WARD: Oh, sorry. 

 

MITCH SANDERS: That's what I'm saying. Like yeah, we had Stitch Labs, but I was probably using 10 percent, maybe 25 percent of the capabilities of it. 

 

JARED WARD: Just, for reference, I do know a little bit about, so Stitch Labs, they were, they, it was actually interesting, like very similar to Luminous. They, they tried to service the multi channel brand. They just expanded way too fast. Like a classic example.  For a little while. And they, 

 

MITCH SANDERS: Yeah, they went out of business, they couldn't fulfill their product was built too fast, go to market was too fast, and they just sort of imploded, so. Which is wild, but we got out of Stitch Labs before they went under. So it was working for us. It was pretty expensive if I remember correctly. After a little while, I remember we switched to Finale Inventory. 

 

JARED WARD: So the, okay, here we go, so,  you come on, it's just like.  You're doing basically the least amount of work like it's not, not in a bad way. Like you choose the least amount of friction. Like you have a 3PL, you're about a million dollars in revenue. You're using Stitch Labs to help purchase and forecast. And you're just reactive. Like you're just reactively handling the issues that come in on Shopify. If there's an issue at stitch labs, they go into ShipStation, look at it. And then you're using 10 percent of stitch labs. Maybe something like that. 

 

MITCH SANDERS: Yeah. That's so long ago. And I was so new to that. It was like, I don't even know what I'm supposed to be looking at here. Like inventories here. I can purchase them, and you can keep track of POs. 

 

JARED WARD: But what do you remember about that? Like, that time period right there when you started to get more into purchasing, what are some of the fires you remember that you had to continually put out? 

 

MITCH SANDERS: I just remember always being behind on not having enough inventory.  And being like, every time we'd place a PO, uh, frequently we'd place a PO and it would be like 

 

JARED WARD: Okay, so with that tech stack right there. Yeah. Stitch Labs, which you weren't using it to its fullest capabilities, Shopify, ShipStation. And by the way, what channels were you selling through?

 

MITCH SANDERS: At that time, we were D2C on our own website, and then I think we had a little bit of wholesale. Okay, little wholesale. Pretty small. All right. And I think that's what the introduction of wholesale is why Colby may have onboarded Stitch Labs to begin with. Again, I'm not even sure  because I think it was, hey, we're going multi channel, we have different things going on. And then we, I think had a little bit of Amazon going on, just FBA. 

 

JARED WARD: Okay. So with that tech stack mix right there, you said the big, your biggest problem was always behind in inventory. How did you forecast back then? We'll get to the present, how you forecast now, but give me the newbie forecasting.

 

MITCH SANDERS: I mean, it was just pretty much pulling data into spreadsheets,  parsing, it was what do we have available? What do we have incoming?  What have our sales been the last 7, 14, 30, 60 days?  And then just extrapolating from there based on this is our sales velocity per day.  I wasn't that great at the seasonality piece of things that had yet to click. 

 

JARED WARD: Right. 

 

MITCH SANDERS: But like there was a lot of time where that didn't quite get reflected in the numbers. So it'd be like, hey, I want inventory for 90 days. And we have this many days on hand, not accounting for growth or any fluctuation. And in Colby and Kenzie, they're gunslinging entrepreneurs. Like, they didn't have formal experience forecasting. 

 

JARED WARD: Okay, so you would just take all the data from all your inputs, like, Okay, I have this much on hand, this much incoming. I'm projected to run out on this date. We ordered this much last year. So, it's basically like a basic top down forecast and, stitch labs,  was it aggregating all of the data effectively or.

 

MITCH SANDERS: I remember being pretty good at aggregating it, but I was still just exporting the data to Excel.  

 

JARED WARD: Yeah, okay, and that's what we find is like most, most brands, these tools have like their native forecasting tools, but everybody chooses just to export it and just play around with on their own.

 

MITCH SANDERS: Yeah, I mean, it's hard to always trust that everything's going to be there. There's a lot of external factors that aren't going to be native, just in the forecast, unless you're putting it in there unless you know how to use the tools very well, which I didn't at the time. So I wasn't able to go in and say, hey, this is our sales forecast. 

 

JARED WARD: At this phase, it has to be mixed with your tribal knowledge or Colby's like, hey, so like, how much did we sell from that one customer last, did they say that like, it's. I feel like so much of forecasting at smaller companies is like that, especially if you're like a million dollars.

 

MITCH SANDERS: Yeah, it's a lot of just tribal knowledge. Yeah, that's a good way of putting it. 

 

JARED WARD: When do you think the next big jump in operations happens, like if you had to quantify like a moment or like, what was it when you hired a director of ops? Was it when you expanded to a channel? Was it you had an explosion of sales? When was that next level past this 1 million mark?  

 

MITCH SANDERS: That's tough. I feel like everything blurs together at some point. I mean, we started growing pretty quick after that. I think we had jumped up from a million to four and then to eight.  And just kind of started ramping up, and 

 

JARED WARD: When did you kind of become, I know you're COO, but like when did Colby like officially hand over like your ops, dude?

 

MITCH SANDERS: It was six months, I'd been there six months, so middle of 2018, Colby was like, hey, do you want to be the COO?  And I was like, I don't even know what that is, like, let me Google it. And then I kind of, you know, pieced that together, but that was when it all happened and I was like, okay, I don't know what qualifies me for this, but also just kind of hacking it.  I'm going through business school right now, I'm kind of learning some of these things, let's just,  I'll try my best and, you know, I have pretty smart people around me and we'll problem solve. So that's kind of when that happened. And then we, yeah, as far as like the next operational jump,  it's really hard to find a point in time. 

JARED WARD: This is where I'm super curious because there is such a difference between a brand that outsources fulfillment through a 3PL, the evolution of a brand that does a 3PL versus somebody who doesn't. What hires were like, what are the next hires? Cause for me, like at Qualtree, I used to be CEO of Qualtree. At Qualtree, it's all warehouse like that. That's, that's like all my brain goes to. So for somebody who doesn't use,  or somebody who uses a 3PL, what are those hires that you make?

 

MITCH SANDERS: I did not hire my ops team until January, 2022.  

 

JARED WARD: Whoa. 

 

MITCH SANDERS: So it was just me until then,  until like a year and a half ago. 

 

JARED WARD: You soloed? Yeah. You soloed. Okay. From $1 million all the way. I guess you don't have to share financials, but like …

 

MITCH SANDERS: We were, when we hired between like 15 and 20 million, I think, I wanna say.  

 

JARED WARD: You were the sole operator from 1 million to 15. Wow. 

 

MITCH SANDERS: Yeah, we were around. It was a lot. Again, though, I will say, we had our 3PL, and we still work with them. We were working with a supply chain management company that helped us with sourcing. 

 

JARED WARD: Shift, right. Great company, great people as well.

 

MITCH SANDERS: And so,  a lot of stuff we outsourced as opposed to hiring ourselves. So, yeah, I was the one on the Thread team, but I also had really good partners that we were working with, EvoBox and Shift.  And, I mean,  we made it work. They're great partners. We found a lot of just really good ways to work together efficiently. And so I didn't hire our now director of supply chain and ops until January 2022 when I was sort of forced to do it because I was having a baby that February. So I was like, okay, I got it. We were kind of getting to that point anyway. But it was like, if I don't get this guy hired early January, I'm not going to be able to take any time off to be with my wife and my new baby. That was when it happened. And that's been transformative. 

 

JARED WARD: Okay, so this is, this is where it's really interesting to me, because I have, I have no experience on,  our brand went the fulfillment in house route. So you were, your problems, or Your learnings and experience came from interfacing with the 3PL and interfacing with SHIFT, the supply chain management group. So,  and then your tasks from 1 to 15 million,  your tasks, it's really purchasing, forecasting, logistics, and project management of, of the, 

 

MITCH SANDERS: The people like the 3PL and the supply chain management group. Yeah, and  there were a lot of things to learn. Things look different, really different from 1 to 15 million. 

 

JARED WARD: I'm curious about the 3PL side first. The 3PL choice was sort of out of a happenstance, and ended up being really good for you guys. That, phew, congrats on that, because normally it doesn't work out. 

 

MITCH SANDERS: From what I've heard, we are very fortunate that we've been able to work with the same 3PL for like six years. 

 

JARED WARD: So happily married.  

 

MITCH SANDERS: It is like a marriage, that's for sure.  

 

JARED WARD: Go over some of the struggles that you've, like, what were struggles that you, you faced when you were young in your operations career? How did you handle it? And then give me an example of something now, like, an issue happens, like, I don't know, defective rates, or like, something goes out bad to the customer. How do you handle it now? 

 

MITCH SANDERS: So at the beginning, like, honestly, the first thing that comes to mind is just from the beginning, always feeling like I was the reason we weren't growing at the pace that we could, that we could have, that was difficult because it usually felt like our marketing team was just blowing it up. We were selling a ton and I felt like I was always trying to keep up. So that was a big stressor for me. I mean, it still is when that does happen. We're a lot better now, but back in the day, that really felt like it happened a ton, but like looking back at it, there were years that we were like 4x growth or like  

 

JARED WARD: Like you would blame yourself for underpurchasing?

 

MITCH SANDERS: A little bit. I'd be like, why didn't I purchase more? I should have seen this coming. That sort of thing. And so that was a little bit difficult. 

 

JARED WARD: Did, did leadership  You don't have to throw anybody under the bus, but like…

 

MITCH SANDERS: Yeah, yeah. No, just go ahead. I won't. 

 

JARED WARD: Did Colby and Kenzie, did they put that on you too?

 

MITCH SANDERS: No. They didn't, honestly. Cole and Kenz have always been so open to mistakes. And so, I don't think there was ever a time where I even had a sit down with any of them and it was like dude, you got to step it up or X, Y, and Z. It was usually, well, we're all learning and we're growing really fast and this is just kind of what happens. A lot of understanding and not much criticism to be honest, and that was kind of the whole team and we still have a long like our executive team is young, and you know, we have experienced a lot but still in the grand scheme of things, a lot of us not all we have more experienced team members now but those that have been around for like since around the beginning were pretty young, and so we all know that nobody's going to be perfect. We're all going to make mistakes. But yeah, that was hard, and I'm naturally hard on myself when the operations aren't going well. And that's still today,  and so I don't even know if I would have benefited from somebody being like, I don't know,  you're doing this wrong, you need to do better, because you can guarantee that I was going home every day, that we didn't have whatever to sell, and I was thinking about it and obsessing over it, and Yeah.

 

JARED WARD: There's a lot of stress to take on, though, I understand, like, Yeah.  

 

MITCH SANDERS: Ah, especially, dude, the  Q4 rushes. I remember at Qualtree, getting the funds,  because you're going to have this massive cash inflow. And then you have this massive output, like Q2 for DTC brands.

 

JARED WARD: And that's when things are slow. Normally, I guess it depends on the brand, but that's when it's slow for us. It was so hard to make sure and then when you over-purchase like it's such a big deal the next year, you're totally right like it felt like at that time. 

 

MITCH SANDERS: It was usually, oh man, we under purchased, but then you would have the times where it's like, oh, we over purchased, and I've got one story, talk about like,  just horror stories, I guess. 

 

JARED WARD: Yeah, let's hear it. 

 

MITCH SANDERS: I can't remember what year this was, I was pretty new and purchasing and everything, and I totally over-bought  some phone cases. 

 

JARED WARD: Oh, God.  Dude, we've had that stuff.  

 

MITCH SANDERS: It's like the running joke. I mean, these are like phone cases too. So sizes come into play. It's not just like a wallet that's fine for a while. But last year, we're selling through. And we probably had this inventory for like three or four years. I totally overbought on this and pretty sure Mackenzie's dad gave us a loan to get us through the tight cash flow cycle until we could hit Q4 sales. And so we still joke about that. Colby and Kenzie, during that time, they're probably like, where's our cash? I don't know. I don't know where it is. Maybe, maybe our CFO's embezzling money. I don't know. Hey Mitch, you wanna go on a street corner and sell those stupid phone cases? Maybe Ryan's just got it socked away. No, that was me. It was me. Um. But yeah, that's kind of the stress of it. It always feels, even now,  and then it feels like you can't get, you can't be perfect. For a long time, I tried to be like,  strive for that perfection, I guess, or always be like, we want to be perfect on these orders. But I think it's important that you just know. You're not gonna be perfect.  Look at the numbers.

 

JARED WARD: Is it better if you're overstocked or understocked? Usually it's gonna be, it's more acceptable when you're overstocked if you're growing. Right? 

 

MITCH SANDERS: Right. But yeah, what are our off-ramps to that? Do we have closeout channels and do you have ways to look at that? Do liquidate we have ways to free up that cash.

 

JARED WARD: Do we have the financing if we need to? To make sure that we've got buffers, I guess you could say.  Walk me through what led to that design. Like, how did you forecast that time, if you can remember? 

 

MITCH SANDERS: I'm pretty sure it was, yeah, I mean, what I was saying, pulling numbers into a spreadsheet, looking at it. I think what happened there is we had just had an amazing summer. I actually remember the lead-up to this. We had a really, really strong summer, and phone cases were crushing it for us, and we ran out.  Towards the end of the summer, and I was like, I'm not letting that happen again. It was a little bit emotional. It was like, I think, man, lost opportunity. I'm not gonna let that happen again. But I was looking at like, it's so stupid in hindsight. I'm like, how did I not like foresee that?  But I was like, yeah, July sales, you bet July sales are going to be the same. And like sales are going to be the same as in September and October.

 

JARED WARD: So let's do it.  So first off, the complexity with threads, again, and ops, it's around, like, we'll dive into 3PL and the supply chain management stuff a little bit later, but let's, let's stay in forecasting. So, you're forecasting now, say you're forecasting for Q4, what are, what are some, like, run us through your thought process, like, what anomalies do you now look for that you weren't looking for before? Who do you ask? Like you ask the wholesalers to like, excuse me, that your sales reps who sell wholesale produce their own forecast and give it to you. Like, how, how does that work now? 

 

MITCH SANDERS: Now it's a lot more collaborative with our team in the past. It was kind of just like me trying to guess what the sales team was doing, I guess. So like, as of like a year and a half ago, we implemented a pretty good sales and operations process, S and O P, where we are syncing. We just had our meeting today for the month. Beginning of every month, we sit down, ops, sales, finance, marketing. Everybody sits down. We have a rolling, usually about rolling 12-month forecast.

 

JARED WARD: Okay. We talk about those forecasts. We analyze the prior month and talk about where did we miss on forecast? Were we over or under? So you're tracking forecasted versus actuals. Every month you're analyzing that. 

 

MITCH SANDERS: Yeah, every month we get together. We talk about it at a product-type level. We'll talk about it at a rep level.

 

JARED WARD: Sometimes forecasting, month to month, is a little bit reactive.  It's not even reactive, that's like a shameful word almost. It's not reactive, it's like, that's the nature of e-commerce.  Yeah, it's like something could blow up overnight and you have to kind of assess that every month. 

 

MITCH SANDERS: Yeah, it is reactive to a point where it's like we're working. We tell, hey, refine your forecast month to month whenever you can. But we're ordering like four to five months out. So from the operation side of things in the inventory, it's like give us your four to five-month forecast and things can change. Like maybe DTC is not performing as well. And so then we are being a little bit more reactive and editing our forecast, but It's a lot more collaborative, we're pulling in historical data, we're pulling in what different marketing initiatives we have going on, promotional stuff. But we're having our sales team tell us that.  So they are the ones that are telling us pretty much. We need this inventory for this time period and we are the ones then going in and ordering the inventory. We split it out by, like, at the SKU level. They just tell us, this is what my top-line revenue number is going to be.  Pretty much, is my split amongst product types going to stay the same? And then we will, is it going to stay the same, or is it going to change? Where are we focusing on marketing? What do we have going on? And then we go in and split it out at the SKU level based on performance and projected performance and stuff like that. And then each month we're evaluating how we did the prior month and using that to inform whether we need to change forecasts if we need to update. 

 

JARED WARD: This is so interesting to me because like, this is why  You know, Stitch Labs or NetSuite or Insert Big Hairy ERP, like.  This is why I assume you don't forecast in NetSuite, like directly in it.

 

MITCH SANDERS: We don't, no. Because e-commerce is just fundamentally different. Your approach to forecasting is so similar to all of the e-commerce companies. Where it's typical what I see is top-down forecasting. If you're a company that does wholesale, you aggregate all of your DTC sales, it's broken down by SKU, like, okay, here's what I sold last year, broken down by SKU, I'm going to stick that over here, then you ask your wholesalers. It's almost like you project out every single one of your wholesale or your reps, like how much you're going to sell, break it down by SKU, I got my wholesale bucket over here, I got my DTC, and then you apply some percentage of growth, You're done. Based on tribal knowledge with like marketing initiative X. Is that, is that a good explanation? 

 

JARED WARD: Pretty good at it. Yeah. 

 

MITCH SANDERS: And we let like our sales channel heads dictate what that growth looks like. Pretty much looks historically. And then just like the landscape and wholesale is an interesting one. We do a lot of specialty right now. So like we've got, I  mean, we've got specialty, we've got regional players, and then we do have some national.  So like specialty, we've got tons of different stores, right? And so that one's a little bit more like you, even within the wholesale bucket, we're bucketing wholesale. And then specialty, and then once you get to like regional, and you're like national chains, then it kind of becomes like a little bit more individualized to those guys. But like each, that's the most complicated bucket for sure. B2C is not quite as bad. And then we have our own retail locations that we forecast out. We've got five sales channels. That we're all doing this. 

 

JARED WARD: Okay. Yeah, that makes sense. So have you ever tried to experiment? Because you have a great environment, have you tried to experiment with a different type of forecasting like bottom-up or like? Have you experimented with anything different or brought in somebody specifically for data analytics and forecasting to try to improve it or? 

 

MITCH SANDERS: So we've got some like data analytics software, just like business intelligence stuff that we use. So we use a NetSuite product.

 

JARED WARD: Okay. NetSuite Analytics Warehouse. Okay, nice. 

 

MITCH SANDERS: And we use that for a lot of this. 

 

JARED WARD: And what does that do, by the way? 

 

MITCH SANDERS: Okay. So it'll aggregate our data. We're able to pull in forecasted amounts and just compare it with actuals. It's primarily just a visualization tool. So we'll show that and each sales channel will have that.  And they are monitoring that throughout the month to see where are my cells for cross-body bags compared to my forecasted amount.  What's my sales for this rep compared to forecasted amount? Stuff like that. So they can make changes. So they're like knowing what to focus on during the month. And that's what we'll get together at the end of the month and look at together and just talk about where do we go wrong? How do we improve going forward? But even within that, there's different machine learning models that we've used in the past to try and apply to our data without much success, to be honest. I'm not a data analyst, like, not super sophisticated, nor is anybody on our team. We know our way around this sort of stuff, but once you get to machine learning and all that, there's so many different models and inputs that you have there, and it hasn't quite been great for us because I think our historicals don't perfectly illustrate what the future is going to be for us. And for us, if we're bringing on new wholesale accounts, no software is going to be able to capture that. Like if my VP of sales is telling me we're going to bring on, X national account in six months.  I mean, you can go into software and like kind of extrapolate that and get your forecast and then just put it in there. But like for this instance, a machine learning model looking at solely historical data is not going to be able to forecast that out. So that's partially why we do it in a more like, I don't know if you call it ad hoc sort of way, we can take into account historicals and we use that to an extent, but then we're also better than reactive. And then we're layering on what our channel heads know is upcoming. And that's been pretty good for us. We've done it for like a year and a half that way. Hasn't been perfect in any way, but. Much better than what we were doing.  

 

JARED WARD: It really is. This is something that we're really curious about with Luminous. Because I think with D2C brands, I mean, the first issue with having a good forecast is okay, you have to have a system of record that actually keeps track of your cogs, your incoming, your um, your inbound, how much you have at 3PL, how much you have at Amazon. So your system of record that actually captures all the data. And then the forecasting tool on top of it, that's where Luminous is really curious about. Eventually, we want to build our own forecasting tool for the modern brand. And what does that look like? Well, kind of like what you're doing. We want to service a client, who does forecasting like that and understands what's predictable for somebody and what's not. And, you know, help facilitate that type of forecasting. Because it's really, it's more common than you might think, um, across e commerce. 

 

MITCH SANDERS: Yeah, I didn't come up with this on my own, it was different mentors that have been around the block and have kind of implemented something similar to this and that's where we came.

 

JARED WARD: That's where we got it from. So I think there's a reason why people do it. But there's also a lot of ways that it can be improved. You know, there's pros and cons to doing it this way. Have you heard of particle like quick? 

 

JARED WARD: I have. Yeah.  

 

MITCH SANDERS: They used to be LUZ. 

 

JARED WARD: Is that right? L U Z? 

 

MITCH SANDERS: I believe so. I've met with their director partner.

 

JARED WARD: You were just bringing up like NetSuite's tool. I'm just curious. It's a forecasting and analytics tool?

 

MITCH SANDERS: Yes. I want to say it's the same guys. I think they rebranded their name, but I spoke to them years ago. They've been around. They were still trying to get a little bit of product market fit, it felt like, but they've got a great product. Last I saw it, but we don't use it right now. 

 

JARED WARD: So you, even back then you still have your ear out for tools. 

 

MITCH SANDERS: Oh yeah. Taking way too many sales calls. 

 

JARED WARD: Okay. So here's a really good question right here. As an operator who didn't have to worry about fulfillment. Um, you could have your ear out on the market for a bunch of tools as, you know and as I know, definitely,  like the supply chain markets and point solutions is so crowded. How do you judge a good or a bad tool? Like what, what led you to, like, for example, not decide on particle or decide on NetSuite or, um, decide on ShipStation? Like, how do you approach tech decisions?

 

MITCH SANDERS: It's a good question.  The kickbacks they give me. I'm just kidding.  I mean, there's a lot. It's like, how easy is this to switch to? How easily can it scale for us?  Does this company actually know what it is exactly they are doing? Or are they still trying to figure out their product?  Cause that's like a pretty quick turnoff for me is if I'm on a call and it doesn't quite seem like they even know what they're trying to do. Or like what their customer is and the value that the customer is going to get out of this, the product. When it just feels like, hey, here's a bunch of features,  and maybe you'll use them. But we don't know how, you know what, does that kind of make sense? 

 

JARED WARD: Oh, a hundred percent. Not very well articulated, but when it's like, Hey, we can do all these things for you, but it's not always clear the value. But this is really cool for like, even, well, uh, two things I want to dive into. Number one,  why I've met so many operators that are head down. Like they don't, they don't even have an ear out for tools. That's my first question. Why do you have an ear out for tools? Like, why do you maintain that curiosity? And why is it important to do that? 

 

MITCH SANDERS: I think it is important. Yeah, I agree. I mean, if you have your head in the ground.  For whatever, if you're not looking for a year or two, things will progress quite a bit without you. I like the stuff we use well enough. There could be other tools out there that are better. I'm never going to say that our tech stack is perfect because it's absolutely not. Like we've had conversations about this and it's not perfect.  I can't expect it to be perfect and there could be something better out there and it's my job to make sure that I'm just putting the company in the best position possible and that could change. It could be different. Our needs could be different a year from now than they are now. So you just, you're, you keep your ear out because the company is ever evolving and so is the tech market and that's what's fascinating about e-commerce is it's like it is ever evolving and a tool can just pop up overnight. That could change your life like Luminous. 

 

JARED WARD: Yeah, like Luminous guys. No, it's true.  Things can change pretty quick. Has there been a tool that you implemented? I'm actually not talking about inventory supply chain. Like what has there ever been? A small tool that just rocked your world, like that was easy to switch, it was easy to use, like it saved time.

 

MITCH SANDERS: The first one that comes to mind is, this is not even fully my domain, but back in stock notifications on Shopify. Downloading a super easy app that just allowed people to put in their email or their phone number and get texts and emails and something goes back and start.  So like, those things are easy, but that's so small. 

 

JARED WARD: Yeah. It's little, these are the little things that operators care about. I don't think it's that expensive. It's easy to switch. You can have it up and going in a couple of days.  As compared to some software, like, that take a year-long implementation.

 

MITCH SANDERS: And that's part of why, though, I'm always trying to see what else is out there. It's like trying to see three years ahead for the company and realize that, okay, if I find a better solution tomorrow,  that doesn't necessarily mean it's going to be implemented that quickly. Like it might be a year before we're seeing value from it and we've still got to figure out how do we get out of our current contracts or, you know, like let that play out.

 

How do we transition over, like, especially with Thread, our business is more complex than it was back in the day. So any transitions we do will just require time for us to make sure we're doing it right and we're not putting the business at risk. And so like when we do evaluate different products, at this point for us, stability is a big factor of it.

 

If we change from this to this, like how much is that going to cost? How much is it going to cost? Like, is there a chance that if we switch this, we're going to just totally mess up our growth trajectory and we're not going to be able to grow? It. Our wholesale business, for whatever reason. 

 

JARED WARD: Has there been a time when you underestimated the cost of implementation and you're like, Oh, damn.

 

MITCH SANDERS: Yeah, you're talking cost. 

 

JARED WARD: Cost, time. The complexity introduced. The mortal enemy of Luminous, NetSuite. 

 

MITCH SANDERS: That's right.  You're leading me into that.  I'm just kidding. If you'll take my hand. 

 

JARED WARD: Yeah, I'll take your hand. We'll go on this adventure.  

 

MITCH SANDERS: Yeah. So we're on NetSuite. We've talked about this and yeah, it took way longer to implement than I thought it would. And you know, it's complex.  And it's expensive. Expensive and complex and it's been good for us.  But even then like if you had told me a couple years ago that there were other solutions that could get us where we wanted to go without the complexity. Like right now it's a good fit for us and we know how to use it well. It's a part of our day-to-day operations. It would be hard for you to get off. It would be hard to get off and it works well for us. And there's a sense of stability of we can grow our company 10x  and, you know, we're not going to have to worry about it. So like that's, that's nice. I like that. The sense of stability. With one of those well-known software that has been around for a while, you're partially paying for the stability. At least that's kind of how I view it. But did we need it? We implemented it, I think we signed implement like three years ago. Took a while to implement. Did we need it three years ago?  No, not really. Like we didn't need everything that it offered. We still don't like to make use of everything because it's so big. But I honestly feel like there was a pretty big hole in the market for us where it felt like we had to upgrade. But we didn't know where to turn. 

 

JARED WARD: Let's dive into that though.  As an operator, because like if you wanna talk about like, big evolutions in the company You guys went to NetSuite. That's a massive decision.  And I love your take on this 'cause like at the time,  this is what Luminous, this is what I preach. It's e-commerce companies. They have a relatively predictable evolution that now, in my opinion, I think there's, there's certain paths that you go like if, okay, if you go the no 3PL path, like I can kind of predict your complexity markers in your business. And so what happens is. You, you hit complexity marker number six, which for thread might've been wholesale and forecasting and, you're just like, man, this isn't working my inventory management system and ShipStation and Google sheets and, you know, maybe like some, whatever tool it's not working for me. I need something better to scale.  When you were looking out of the market, explain that gap. 

 

MITCH SANDERS: I actually want to rewind a little bit before NetSuite. So we were at Stitch Labs and it was really expensive and we weren't getting the most out of it.

 

JARED WARD: How much were you paying, by the way, at Stitch Labs? 

 

MITCH SANDERS: I don't even remember. 

 

JARED WARD: Don't worry, I won't ask how much you were paying for NetSuite. 

 

MITCH SANDERS: Yeah, don't ask. I don't remember we were paying for Stitch Labs, but I was looking for, even then, like, I was looking for a new product. And it was so hard to find. Like,  it was really, really difficult. There was an obvious hole in the market and when you say trying to find something, specifically a system of record that could get your inventory, your purchasing, your cogs, forecasting, that's recordings, analytics, so like an actual system of record, so an actual system of record. And not like some of these ones that kind of will do one or two pieces of that. Like, like Finale or Skewvault. Good, like, good inventory tools. There's nothing wrong with them. So we were with Stitch Labs, and at the time we didn't really need anything too complex. We just wanted to save money. So I was trying to find where can I go to, whatever, like Googling it, who knows, you know, whatever. One day I'm sitting in class, and I open up my laptop to go Google something, and I get served an ad that literally says,  Tired of Stitch Labs?  Finale Inventory, or something like that. It was called out exactly, and I was like,  what the heck? So Finale Inventory, if you're listening, good job marketing person. Luminous tactic there, but that caught my eye and then we went through demoing and everything and we ended up going with Finale Inventory. I just totally changed the topic of what we were going to talk about. Um, but yeah, that was like a funny thing. 

 

JARED WARD: No, no, that was, that's still, you switched from Stitch Labs to Finale.

 

MITCH SANDERS: Stitch Labs to Finale. And then the original question, before I went off on a tangent, was it the transition to NetSuite? You talk about this gap in the market, which is why Luminous is here. And I think you guys have filled that hole well, but there did feel like a gap in the market where we were going from Finale, where we felt like we were kind of getting priced out with their pricing model. We were getting too big, the software itself was fine, but there were some things that we needed it to do that it couldn't do. But it also was getting more expensive.  Wholesale was a big part of it, where we were getting complex. We wanted to bring on reps, like a rep force, and give them a system that they could easily use. They don't use NetSuite, but most of the rep sells software, integrate. So that was like a big reason why we started looking at that, um, but we started implementing it and like pretty quickly it was apparent that we were driving a Toyota Corolla and we like upgraded to a Lamborghini almost.

 

JARED WARD:  That is great. When really we could have gone from like the Toyota Corolla to,  like, I don't know, what's in the middle there? A BMW even. 

 

MITCH SANDERS: Yeah. That's not quite at a Lamborghini level. 

 

JARED WARD: I love your analogy. Like, you went from a Toyota Corolla to a Ferrari. Like a 1990. 

 

MITCH SANDERS: And it's like, okay, I wish I could have just had something in the middle there, like a Range Rover or like that, like something nice.Like you're not, you're not mad to be driving a Model 3 Tesla, a Model 3 Tesla,  pretty high tech.  That's kind of what we felt like we did we went from the Toyota Corolla to the Lamborghini. And then suddenly we're like, Ooh, this is hard, this is weird, this is complex, and it, there was a learning curve.

 

JARED WARD: At that time though,  like you said, you didn't even know anything else that existed that could service you. And at the end of the day,  it's your ass.  If it doesn't work. So like, you're never gonna get fired for choosing Netsuite. 

 

MITCH SANDERS: I hope so.  But yeah, you're right. It's a safe one. 

 

JARED WARD: People think it's the safe thing, but like, yeah,  it's really interesting hearing your perspective cause like that is, that was my perspective of the gap in the market. It's like, there's all of these tools over here. But your actual system of record, there's nothing in the middle. Like there's nothing that feels like purpose-built for the modern brand to upgrade when they hit that moment. 

 

MITCH SANDERS: Over the last couple of years, I think we've really grown into it with NetSuite where we're using a lot more of the features. It's more a necessary part. It's become a part of the business.  But I think that's also just like naturally you're going to grow into something and our team knows it. We morphed to it. We morphed to it. Our team knows it. We've built our processes around it. I mean, that's another thing is. Yeah, maybe we were live on NetSuite after a year or so,  but we still then had to train everybody and get, you know, so,  and we probably could have done that better. I was the only one working on the NetSuite implementation on our team. And so it was a ton of work, but I probably didn't do the best job of preparing my team. So then we launched, and there was a lot of training that still needed to happen. So yeah, talking about a software that we implemented and it was more costly in terms of like time spent.  

Like it consumed a lot of my time and took a while to get up and running.  

 

JARED WARD:  Here's my last question because we're running out of time. But I did want to dive into a little bit. Um, yeah,  your relationship with the 3PL.  And with Shift. So the supply chain management group, so walk me through,  there's some complex conversations that you undoubtedly have had with the 3PL and with Shift. For 3PLs, you're on time percentage, or your mistakes in shipping, like the defectives. Um, you, you're missing this, this X percentage in receiving that shouldn't have gone through. With Shift, like, you're missing these deadlines. Like, what, what were some of the issues as the guy handling those things? How'd you deal with it? 

 

MITCH SANDERS: I mean, both parties in this. And since like we've worked together for five plus years, and there's always the little issues, you know,  and you pretty much listed them all out there that pop up, but  I don't know, it's kind of like just realizing that everybody's trying to do what's best for their company. And if it's a true partnership, they're also trying to do what's best for you.  But that doesn't mean that we've always like, mistakes are made, whatever, but we're constantly evaluating, okay, do these partners have what it takes to get us where we want to go? It hasn't been, and like you talked to them too, it hasn't always been just smooth sailing and five years of blind love and trust. It's a lot of time, just like with software,  I am like listening for what else is out there. What other options do we have as a company? Because it's my duty to. Put the company in the best position possible, right? And I love our partners and they've been fantastic. And we wouldn't be where we are without them,  but that is my duty.

And so just being honest about what our needs current, like always are. 

 

JARED WARD: I really like that. 

 

MITCH SANDERS: And our partners of Shift and Evobox have done a fantastic job of either saying, yes, we can be this for you as your needs are evolving or no, we cannot.  And up until now, like they've been very good at.  I mean, even changing their business model in a sense and changing how they do business to work better with us. Yeah. And like, they've sacrificed a lot for us. And I think that's where the relationship has stayed strong. But for us, it's always been like, we want the best thing for our business and what's going to be the best.  We're going to clearly communicate that to you.  Is this something you can do for us?  Yes or no, like, yes, reasonably, we can do this, or no, we can't. And we will give anybody who comes to us a fair opportunity to win our business. I like that. And they've done that every, like, they've done that along the way where it's like.  They have won our business, not just the one time that we, like, signed on with them. But the five times you've evolved. But the five times we've come to them and said, this is what we need, can you do this? And that's where it's been a good partnership. And I think we have all benefited by going through the growth together of everybody's company. Like, they've kind of done the same thing too, where they've grown. And they come to us and say, Hey, can you do this for us? What's going on? Like, this is what we're seeing. And so that's been really good. And, we try not to take the approach of you did this wrong. Make it right. Or else it's like, Hey, this doesn't meet our expectations. What's going on? Let's collaborate. Here's the problem. Let's sit on the same side of the table together and try to address the problem. Like you aren't the problem. The problem is this other thing. Let's find a solution that works for all parties. We view our clients the same way. And you know, not every client comes to the table like that. 

 

JARED WARD: Yeah,  which is really hard. 

 

MITCH SANDERS: Yeah. If you don't know what your client wants and then they suddenly just leave, it's like,  what should have, you could have given us the chance.

 

Yeah. I and everybody, you know, leave with a sour taste. I like your approach though. 'cause it's not like you're not just forever married to all of those partners. It's like no, they have to continue to win your business and you. Your priority first is the company and the evolving needs.

 

JARED WARD: And if Thread ever evolves to need, you know, feature X from a 3PL, then like, you'll go to EvoBox and be like, Hey, this guy can do all of this and this.  

 

MITCH SANDERS: Yeah, absolutely. And we feel like it's our job to go to our partner from the beginning and say, look, we need this.  You have every chance to give us this and let's see what happens.

 

JARED WARD: That's, I really like that advice. I wish I would have had advice similar to that.  I don't think I've always approached ops back when I was an operator like that. I definitely do now, but, um. 

 

MITCH SANDERS: No, it's hard. I mean, ops is stressful and sometimes it's easy to point fingers. Yeah, it's easy to point fingers and say, you did this wrong. You suck.  Why are you doing this to me? But that's not really usually the case. For the most part, people are doing their best. And a lot of times it's like communication's not there or people just haven't even thought about it. Like it's not our partner's job to always anticipate.  We need to effectively communicate our needs. 

 

JARED WARD: It's like marriage counseling. 

 

MITCH SANDERS: Yeah, and if it's not a good fit, then it's not a good fit. It's okay, like, no shame. It's not, you're not bad, I'm not bad. It's just, it's what it is. Like, we couldn't serve each other. 

 

JARED WARD: Yeah, exactly. And  that way everybody can leave, at least.  Feeling like it was,  like, a fair exchange, I guess.

 

MITCH SANDERS: Yeah that's really good advice. I feel like that's one thing that we've tried to do. We probably haven't done it always the best,  but that's what we strive for. 

 

JARED WARD: Okay, last question, because we're running out of time. You know, you react to the evolutions of Thread. What's next for Thread as far as evolution goes? Like, what are, what are you doing next to keep it fresh? What's changing right now?  You know, really getting into AI and transforming to like digital wallets for crypto.

 

MITCH SANDERS: Oh yeah, that's right. I mean, we're launching new products. Trying to 

 

JARED WARD: When you say diversify your product line, are you like expanding to totally new lines or just like more colors or both? 

 

MITCH SANDERS: New lines primarily. I mean, we're always coming out with new colors, but we're aspiring to be the everyday carry brand.

 

JARED WARD: Okay. So. So bags, backpacks. 

 

MITCH SANDERS: Bags, backpacks, but trying to be. Innovative in the products that we're developing because there's a million backpacks and there's so many bags on the marketplace. So trying to come at it with our own spin and develop innovative products that resonate. That's the next thing. And then, also growing into our wholesale channel, we still see a ton of potential there and think we can get into some big stores. And get a little bit more awareness and eyes on the brand.  More expansion into big bucks retail. Yeah, a little bit more and we think we could be a big partner there and our stuff will sell very well.

 

JARED WARD: Yeah, I think so too.  Last piece of advice, talking to operators who are at old Mitch's level like  million dollars revenue sub one million. You're kind of like handling everything. What would Mitch now tell Mitch back in, was it 2016? 

 

MITCH SANDERS: Yeah, 2018. Nobody has all the answers. I used to be pretty intimidated when I would like go meet with a 3PL or meet with a potential partner or something like that and be like, man, these guys are just going to see right through me. Like  I've got this title that I don't really deserve and I'm not that like, you know, whatever,  but like not everybody knows and more than anything, just admit what you don't know and be happy with that and learn, ask questions. 

Don't act like you've got it all together if you don't have it all together, which none of us do. Yeah, ask the questions, learn, and try and just  Be a sponge. Soak up everything. I've been really fortunate to be at Thread from where we were to where we are today and I've learned so many different lessons through that five or six years or so. And so it's been invaluable, I would say. 

 

JARED WARD: No, that's, that's great advice. And, yeah, last thing I'll say is, I think, we love the Thread team. And, I've met all of you guys individually now. And I can see why. Your brand is still growing and evolving. Like, you can see very much in the culture that Kenzie and Colby have pushed and more specific to this podcast, that you have pushed. I think probably the way that you have dealt with Shift and EvoBox and the humility in approaching those partnerships, is why you've been with them for five years, is my guess, and that's why you guys still remain to have, like, one of the best reputations in Utah, so. 

 

MITCH SANDERS: Well, thank you. Yeah. Yeah, I mean,  it's been through a lot of hard work and just figuring stuff out when we didn't know it. And yeah, we still don't know everything, but it's been a ride. It's fun. It's a lot of fun.