THIS is how you scale both retail and ecommerce!

Transcript: 

 

Jared Ward Host 00:00

All right guys, welcome to this episode of Ops Unfiltered. Today we have a very special guest, alessandra. Welcome to Ops Unfiltered, Alessandra.

Alessandra Szul Guest 00:08

Thank you so much for having me. I was so excited when you guys reached out.

Jared Ward Host 00:12

Yeah, we're pumped to have you, alessandra. She has deep background in operations, especially for e-commerce companies. We came across Alessandra as she was the COO of Healthy Root Stalls. They were a former client of ours and that's where we met Alessandra and I have talked offline. She's interacted a lot with Josh and Brendan, who are head of accounts and our CTO, and, yeah, we have really good things to say about her. Alessandra, can you introduce yourself real fast? Why are you so passionate about e-commerce ops? Where do you come from? Give us the lowdown.

Alessandra Szul Guest 00:53

Yeah, so I'm currently the COO of Healthy Roots Dolls. We are a doll company that empowers and gives diversity to the toy aisle for black and brown girls, to make sure they have dolls that look like them and love their hair. Our dolls are really cool because you can actually wash and style them and do braids.

Jared Ward Host 01:15

That's so cool.

Alessandra Szul Guest 01:16

Yeah, it's a lot of fun. And so I also have my own consulting company, robelink Innovation and Consulting, where through that I will take clients of all sizes that look to me for supply chain strategy, operational process development, and through there I'm right now working with Jang, which is a beverage company, which I think we have a meeting next week or this week because I want to onboard Luminous.

Jared Ward Host 01:41

Thanks for the referral.

Alessandra Szul Guest 01:42

Of course, and so that through there I'm helping the founder kind of get supply chain ops off his plate because he's scaling the business and closing a funding round and his background actually really is in manufacturing and ops. Then I'm a partner and do a lot of fractional work just because of the stage of the company. But for Ginger Snap, it's a ginger water company that my best friend founded yeah, so I like co-founder, co-founder there. But, um, I was thinking about you know how, how am I passionate about e-commerce? And I think it actually is rooted in I'm very passionate about supply chain in general and so I feel like e-commerce is like that. I look at it as like. If you look at supply chain, it's like the last mile right. It's like that piece of getting the e-commerce portion which I'm equally as versed or working with, yeah, as e-commerce. I'm also really passionate about retail.

Jared Ward Host 02:59

So retail is totally different. What year would you say you got into supply chain or manufacturing?

Alessandra Szul Guest 03:07

so, funny enough, my mom and my grandmother and my aunt, my great aunt, in, uh, the late 80s, before I was born, founded what ended up being venezuela's largest like cosmetic salon and brand At their peak before all of the economic turmoil that happened over there. They grew it to about 10 stores internationally Dominican Republic, venezuela, united States and I grew up like in their different stores and under my mom's desk and my mom did effectively like what I do for operations and that's where I, at a very young age, was like, yeah, I wanted to help and so I filed invoices and I would listen to her talk to different manufacturers and negotiate. You know what was going to be white labeled and what was going to be internal and inventory system. So, like in terms of manufacturing, like I remember it, since I was really young, like really young, understanding you know how they structured the, the IP of the brand, and then that was like each store was its own entity and this is like before e-commerce was a thing.

Jared Ward Host 04:20

Yeah.

Alessandra Szul Guest 04:22

So the, the, the verbiage and the way of working was really natural to me. And then, as time went on, um I I went to school for computer science and business and so I was a terrible like engineer.

04:36

Like I suck at coding like I, I really do like I'm so bad I don't have the patience. I like to chit chat and hang out. Coding is kind of like a not chit chat or hang out. So I did product management, which is like a blend of like creating, creating digital products, or sometimes even like physical hardware products that align with, like a business goals, but like what the customer wants, and it has to all be data driven, because you have to like convince all the engineers and you have to convince the executives like why are we going to build this? And at the same time, I started my own trucking company while I was working at a softening company.

Jared Ward Host 05:17

Good old fashioned hustler. That's awesome. I was like why not.

Alessandra Szul Guest 05:20

I actually met someone and like I'll be, like, I'll be very clear, like I met someone who made a lot of money in trucking and I didn't I don't want to say I didn't find this to be particularly intelligent, but I was like if they could do it, I could do it, you know, it was just very clear. So then I got even deeper into like supply chain. That's where I went to like even like I guess the middle part, as I look at it.

Jared Ward Host 05:45

Okay, well, that's, that's awesome. I so what I've noticed, um, what seems to be a common thread in your story is you, if you, if you're paired with like a creative founder that doesn't know supply chain, that doesn't understand logistics, that doesn't understand warehouse operations and and you know outs, doesn't understand warehouse operations and outsourcing to a 3PL and all these things, it's great to pair your mind with one of those creative founders. And that's what you've done at Healthy Roots Stalls and some of the other companies that you have fractional work or that you're a co-founder of. So, obviously, on this podcast, we try to dive into the really messy beginnings and the messy operations that happen with e-commerce companies. So obviously, we know some of the complexities that have happened with Healthy Roots Dolls. I'd love to hear a little bit more from you. What were the complexities in Healthy Roots Dolls operations that led them to hire you, and what have you been dealing with ever since you came on board?

Alessandra Szul Guest 06:51

Yeah. So something that is I don't want to say it doesn't only exist in the toy industry. But, as you know, depending on what industry you're in, you're, you're forecasting and your sales cycles are very unique. So toys holiday season, like you're looking at you know you're honestly preparing the entire year, you're doing all your manufacturing cycles to make sure that you can, like, kill it in winterfall, like that is your boom, regardless if it's retail or e-commerce.

07:25

So, I joined in September, which is like all right, pos are sitting there like you're waiting to fulfill, and I didn't really get the chance to do the operational landscape discovery work that I would normally do, because I'm like we have inventory that people are waiting for. We have, you know, huge POs from some of the biggest retailers in the United States. Like I was so focused on delivery that, um, you know it, it, it. It got a little bit messy and you know we learned at the end there were ripple effects, right to that.

08:09

But the way that I got involved with Healthy Roots Dolls is so my first boss ever at an AI company here in Miami years after I stopped working there. It was like a startup. We had about like $11 million in funding. He ended up becoming a venture capitalist. So he founded yeah, he founded lightship capital, brian Brackeen amazing, amazing fund that serves and helps give opportunities to minority founders, as well as a separate fund that invest in other minority led funds, which is really cool. And he called me and I think, like the way I got here today with my career is like almost everything I've done is through word of mouth, like I just my reputation that I really know I've earned. He called me. He goes, alessandra, I know everything about you, careerized and what you've done. Like, I have a company, my portfolio, that I think could really use your health. Um, what, like? What do you think?

09:12

Oh, so that's how I got into it. Yep, mm-hmm.

Jared Ward Host

09:16

So you said, you said, when you first got there, you, you almost, you totally focused on just delivery dates or delivery times for the open purchase orders for the big box retailers, and you said that that had ripple effects. How did you? So you walk in in September or in the fall, you've got these open POs and you've got timelines that you have to meet in a supply chain that you didn't set up. Where do you even start? So, because, like I'm, what I'm curious about is for any operator who's in your shoes, who just came into a job maybe their director of ops or CEO, and they're, they're, they're running a five million dollar brand. They didn't set the supply chain but all of a sudden their hair's on fire. Everybody's like where's this, where's that? How did you even start? Do you? Do you start talking to the 3PL first? Do you start with the retailers, do you? Where do you even start?

Alessandra Szul Guest

10:18

You know, it wasn't just the operational landscape that was like a big question mark for me. It was also like that was the first time that I had worked very closely or was responsible for EDI stuff and getting into platforms like Partners Online. Partners Online and you know Macy's Net and those things were really new to me because I'd worked like adjacent to them but never to where like.

10:47

I'm responsible to answering for everything, and it was also a little messy at Healthy Roots Dolls because there was a lot of operations were outsourced previously through you know. I guess, like you know, in a way like consulting firms or they would have different vendors that would manage different relationships and they never had an internal ops person that could because it doesn't like you could have one group. That's like managing your relationship with a certain retailer, but they're like someone else is doing the fulfillment and supply chain and if they're not talking to each other properly, there's a lot of like it's not smooth, it's not smooth, so um, no, I.

Jared Ward Host

11:35

So this is. This is actually one of the most interesting things about e-commerce operations and why it's so challenging to come in. Because if you're, if you're, say, you come in as a CEO of a $5 million brand, um, it's so common e-commerce to to outsource every single piece of your operation, because at the beginning you're just trying to get sales, you don't? You don't, this thing could be out of business in three years. So you what that looks like normally is you outsource. You outsource fulfillment to a 3PL, maybe multiple 3PLs. You even outsource big box retail sales to a third party. You outsource, maybe, the product sourcing part to a supply chain person. You, you outs. You definitely outsource all of your accounting. It's fractional work. You might even get a fractional COO. So the problem that you run into is like the. You don't have one person, one single person owning it. That's supposed to like put it all together Like it's it's nuts.

Alessandra Szul Guest

12:34

So that I that was.

12:35

I coming back to your question earlier, like how, how I did it Um, the one thing that I that as I figured things out so you know basic things like doing the training for partners online SPS Commerce was I found out the hard way that, like, once you send a document like can't like unsend it, so figuring out who who to contact about you know, hey, I accidentally sent an invoice with the same, with the same id, and how do you rectify it and the nomenclature and all that.

13:10

Um, the biggest help that I had on making it happen and I can't even like I don't and it's because I don't want to take the credit for it is that, um, I have someone that I've worked with in the past who has 35 years of experience in mostly manufacturing, but new supply chain so well to where they were just a master executor and they like dove in and had a lot of experience in like import and export to where they like knew okay, so there's a system called ship IQ and then the 3PL is going to give you your weights and dimensions and they knew how to contract carriers really well, because I came from the trucking side, which is more like the broker telling you hey, you have this, this is the rate you're going to get per mile.

13:51

You're going to pick it up and you're going to drop it off there. This is the shipper side. You know the consignee side and they knew warehouse operations and timelines. And I am a firm believer in to be a leader, or if you're going to manage something, to grow, you have to know what you don't know, which is like another reason I kind of brought in a micro ERP like Luminous.

Jared Ward Host

14:17

That's such a I feel like that's such good advice, because the thing is, when you're a fractional CO or a CEO of all of these different, I just imagine that You're not going to be an expert on manufacturing, on fulfillment, on warehouse operations, on account. No, you have to know what you don't know so that you can actually get the support that you need to fill in your knowledge gaps.

Alessandra Szul Guest

 

 

 

14:39

Yeah, and that's why it's important to know your infrastructure and that's why I didn't. It's not that I was operating in a place where I didn't know my landscape. I figured it out as pieces went along. But, like the big challenges I had is one year and the peak season like once you even identify where changes need to be made. Like that is not the time to consolidate an employee, that is not the time to change warehouses, that is not the time to onboard new vendors, and also with retail and even with e-commerce, like your customer, regardless of who it is like, you want to be very sure in what you tell them, when it comes to like delivery dates or when it comes to quality or anything like that.

15:18

So it sucked because I knew what needed to be accomplished, but a lot of the times you know like you want to make sure it's done in the best or most efficient way possible. So I was very tight in like we could really cut costs here and like I couldn't make the move to cut costs. So it's like all right, we're just going to run, run with what we have. You know, I think you've heard about my 3PL nightmare, so oh yeah, let's dive into that.

Jared Ward Host

15:45

well, so just to close that loop real fast, when you know as an as a new coo going, parachuting into this new role, you get there's like a phase where you just kind of you, you didn't set the supply chain, so you're just kind of assessing and understanding everything that's going on yeah, and being like why is this like this, like there were some things I'm like why you know?

16:07

And you put out the most urgent fires, you prioritized, you know good delivery times on the outstanding POs and then, once you kind of got your wits around you, then you started making some of the moves, speaking of which 3PLs man, why is it so difficult to find a good 3PL for e-commerce operators? What do you think?

Alessandra Szul Guest

16:35

So a lot of companies with e-commerce. If you have a strong e-commerce business business, a lot of companies will end up or trying to at least get into retailers, because that's where, like in one, in one order, you'll make like quarter million dollars. You know which can really drive and also you're not.

 

 

 

16:59

Your cogs are lower because you're not having all the like marketing expenses and it's kind of just you're not, and you're also not paying shipping, because most retailers will just have a truck come pick it up.

17:08

So why is it so hard for? Okay, here's the thing I think it is. Everybody says that they can do it, and then the companies that are able to you know, if you're in the e-commerce business, you're probably going to Google or get referrals of like who can do what I'm looking for of people, and the ones who, like, can get media coverage or articles or big customers or have like that, that marketing are going to be the ones that are most like it's, it's, they're, they're, they're getting in front of people, which doesn't mean that you're good, it just means that you have the you have a lot of money to get to get customers and if you have a lot of money spent on marketing, that means that you usually have a big operation, which means you have a lot of people who work for you and so rarely are you're gonna get like a dedicated point of contact and also sometimes the bigger companies or the companies that are like just can market themselves in a really convincing way.

18:26

Um it I? I've found that you kind of get the treatment that based on the revenue you bring the business. So we went with.

Jared Ward Host

18:37

So you're a small fish in a massive pond. It's like technically they can do what you need them to do, but you would almost, are you saying you would?

Alessandra Szul Guest

18:47

you would rather be a little bit bigger of a fish in in that 3pl's clientele yeah, or now I've actually in the process of moving to a new 3pl, because um of issues that we've had and it will go go into those two with with the other ones, to where, like I think, especially for e-commerce brands that would use a platform like luminous um, you want to have a dedicated point of contact because, guess what, at your business you have a dedicated point of contact, like if I'm going to talk to luminous, I'm going to know that every time I'm talking to josh, I'm not going through support at blah blah blah, and then there's 24 to 48 hours response time and then it's one person for this and one person for that and you have to repeat your story over and over again with the issue that you're having. Um, and everyone says that they can do it and and yes, I think a lot of people can do it, but what I've had a really hard time finding is a company that can do retail fulfillment and e-commerce at the same time, because there's different requirements Case packing, packaging, kitting, palletizing and then they share SKUs. So you need to have someone who can say, okay, this is the order, this is where it's coming from, because it's going here, it needs to be packaged this way and make sure those inventory counts are accurate and it's just, it's been a mess. But I've actually just, uh, transitioned to a new 3pl. That's amazing. They're called everlasting love fulfillment, based at batlanta.

20:17

We were referred to them from target. They were like hey, this 3pl has a bunch of they. They have, they have a bunch of our vendors, um, or a bunch of our suppliers. They have really good metrics, cause that's another thing. Metrics are important in e-commerce because you want to um, that's how you kind of measure the health of your business or you set certain goals or you can like look at trends. But in retail, your metrics are important, at least for someone like Target, because you're measured on like are you shipping on time? No, we're fining you. Are you sending your ASN in time? No, that's another chargeback. You didn't do the right case pack chargeback where it can really hurt like your reputation, but like your bottom line too, do you?

Jared Ward Host

21:06

think this is a question for you. I'm curious what your thoughts are. Do you think e-commerce, do you think modern brands should wait a little bit until they have their operations dialed in before they go to big box retail? Cause it sounds like you know you can blow your reputation if you don't have your shit together. Obviously, you inherited everything. That was how Healthy Roots Dolls supply chain was set up and the open POs. In hindsight, would you sort of let's cool it for a little bit, like let's get everything set up, let's find a really good three PLs? Do you think that's a good idea for most brands?

Alessandra Szul Guest

21:51

I think for most brands yes, for Healthy Roots dolls like I think we had already been in big box retailers for years, so, like the infrastructure was set up, it was just getting a handle on it.

22:04

But for most brands. So a lot of brands do one of two things they get into big box retailers and they don't realize the additional operational resources that are required. Like now you need to have an accounts payable or accounts receivable department. Now you have to do an audit, like let's say I get a charge back. Let's say it's a really big charge back, like a hundred grand. You have to then go through and be like what happened? How did I get this charge back? Let me open these cases, let me open um disputes and like then you have to manage the fulfillment and then you're managing carriers like it's aside from, like your reputation, like it is just a whole different ball game. And so a lot of e-commerce companies will either be like oh my god, this is so exciting, I'm gonna get into the big bucks retailer. Then they fail, or they can't afford to sustainably stay there and so they'll, they'll drop out because they're like this is actually way more convoluted than we had anticipated. Like you really need a.

 

 

 

23:04

you're a whole person that would just deal with retail fulfillment like it's not like, hey, I'm just gonna get into it or do it, um, and then even trying to get into multiple at once, like. My recommendation for a company is like okay, you're in e-commerce, like, and you want to get into retail, like, start maybe taking on smaller brands that you're just getting your pos through email. You can kind of like easily like specialty, wholesale, yeah yeah.

23:30

and then you're gonna be like, okay, now I'm familiar on like contracting carriers and now I'm familiar on it's like much lower stakes, and then when you're like, okay, I can supply a big one, and then I have the time to do EDI training, I have time to do vendor onboarding, which is hours Like we have a good system that's architected for it. Yeah, yeah, I mean that's right.

23:53

But this week I have like 10 hours of training for you know cause there's new stuff coming out. They're like we're updating our system. We have these new requirements Like and when it comes to like the big big box retailers, you need to show transparency in your supply chain. You have to have very rigorous product testing and safety requirements. You need to know the regulations that you are being do you have to adhere to. It costs a lot to be in these retailers and I think people think it's a great, it's fun and it's exciting. Yeah.

Jared Ward Host

24:30

That was such good advice. It's so true and in fact, we just we just signed on a company called thread wallets. Um, so they're they're a really big company here in Utah. Uh, they're amazing, I they. The way they approached a specialty, wholesale and big box retail was like you were saying, and I think they've done it really well. Like they started out as e-commerce, they nailed the product and then they slowly got into like smaller accounts, smaller accounts, and then they got into shields and then some bigger ones. I think that's great advice. Running an e-commerce company, it's like it's really like cowboy business. It's like the wild, wild west. Just like you throw shit on the website and like sometimes it blows up and it just gets fulfilled and there's like there's no testing or anything. But when you go to big bucks retailers, like it's got to pass a drop test and it has to be is9227, whatever, like whatever certification has a unique flammability test that we have to go through.

Alessandra Szul Guest

 

 

 

25:22

There's like supplier transparency, that's a, and when you're in food and beverage, like that's a whole, like once you're dealing with consumables, like there's all of like you need to have a food testing and safety plan, ethical sort, like both have ethical sourcing, but, um, I mean it, it's just, it's a whole thing and it makes sense that that's why you give that advice, because it's relatively the barriers to entry to do business online very low.

Jared Ward Host

25:55

It's like get a product, throw it up, Somebody pays for it, they send it and like Shopify automatically sends out the tracking number. But that EDI workflow it's old school Like yeah and you can.

Alessandra Szul Guest

26:07

There's like 17 steps, oh and, and some of them are they're all different. Like I'm holding off on onboarding with certain retailers because I'm like I don't have the time to go through to be like well-versed in a whole new system and deal with a whole new way of dealing chargeback and new people. Like I just that's not, I'm not, I don't want to, not there yet to do it. Um, but with e-commerce is, which is also why I really like it is in to kind of contrast. The two is, with e-commerce, you really own your customer and so you can do things like drip campaigns. You can look at kind of you know who you're selling to, which gives you data to improve your product versus retailers which Target is my client.

26:50

So I don't get. And if you're in all the stores like we are, like I don't know who is directly buying the product, I don't get to send them like with our dolls I mean there's their style, there's educational. You know toys to take care of your hair and I don't get to send them. You know an email or a link with. You know tutorials on different hairstyles that the girls can do.

27:14

I don't get to send them promotions on how, what, when new products come out. So it's just, it's very different, you know. And then the costs associated with it, it's just yeah. But e-commerce like operates itself in a very much cleaner way, I would say.

Jared Ward Host

27:31

Got it.

Alessandra Szul Guest

 

 

 

27:32

It's easier to automate more so yeah, it's easier to automate.

Jared Ward Host

27:36

Yeah, no, that's really good advice for brands wanting to get into big bucks retail and wholesale.

Alessandra Szul Guest

27:43

I'm curious. There's platforms like Fair and Air Goods have you ever heard of them? Uh-huh, wanting to get into big bucks retail and wholesale. Um, now I'm curious like um, fair and air goods, have you ever heard of them?

Jared Ward Host

27:47

uh, yeah yeah.

Alessandra Szul Guest

27:48

So fair and air goods, which are like I I think a really cool like middle ground to to getting into big box retailers, because you are getting like wholesale, you are getting special visibility from like I guess there would be specialty or like boutique stores, um, and you're having that like po process because, like, when you're on shopify, like you're not getting pos, you're not sending invoices, there aren't terms, you're not coordinating carriers and I feel like brands go like. If you want to get to that point, a platform like fair and air goods is just another channel that most people like don't even know about. I didn't know about it for a while.

Jared Ward Host

28:28

Okay. So I think to to sum up the your advice for brands. It's um, if you're a brand looking to get into wholesale big box retail, first off, there's a lot of things you're probably not considering. There's a lot of complexities and infrastructure in your supply chain and in your company that you need to think about. So, to get your at-bats, go to platforms like FAIR, start with small specialty wholesale accounts and then slowly scale into the big dogs so that you're actually ready for it.

Alessandra Szul Guest

 

29:02

Yeah, and then once you're in wholesalers like even even on a platform like fair and arrogance, like I probably like my first recommendation, in tandem with making sure your operate, like you're tight on your operations, is like you need to be really tight on your financials. Like you need current cog. You need to. You need to figure out your cogs for each run. If you're importing, it's not like, okay, the dolls cost x dollars to create, like my car. If I look at it's shipping, like during peak season for freight from china, like my cogs are way different than if I'm, you know, ordering, um, you know when, when a cargo ship maybe cost me nine, nine thousand versus like twenty five thousand, so that should drive what you price that Like you will have to take a cut in your margin when you're doing like a company's ordering like thousands and thousands of units, maybe tens of thousands of units, and sometimes it's like can you afford to and at what number does it can? Can you afford to do it?

Jared Ward Host

30:01

Yeah, I've, I've seen that. Yeah, you brought up a good point. There's a lot of times when you start an e-commerce you don't you don't price it with enough margin to go to retail, cause a good rule of thumb is like it's, it's like caught landed costs times like four or five X markup and a lot of people on e-commerce they because it's direct to consumer and maybe they weren't thinking about the business going into big box retail they might have just marked it up 2X and there's not enough room to sell that Because you got to the retailer. From what I've heard, a good rule of thumb is whatever you price to the retailer, they're going to 2X that. So if you to get their margin, so yeah. If you're selling, they're going to sellx that to get their margin, so yeah, if you're selling.

Alessandra Szul Guest

30:46

And they're going to sell it what you sell at. So if our dolls sell online for $84, I need to sell it at a price where they can sell it for $84. Because you can't have different prices for in-person versus online.

Jared Ward Host

30:59

So, to make the math easy for this example, what I've seen is my widget costs $250. It cost me $250 land of cost. I sell it on e-commerce for $5. And I'm like, heck, yeah, I'm getting great margin, amazing. Then I start branching out to big box retail and it's like, well, I mean I'll offer it to them for $4. And they're like whoa dude, you sell for five and you're getting four. Like we have to sell this to eight, at least $8 for us to get margin. And we can't do that because we'll just go to your website and buy it. So it's, yeah, that pricing strategy. You have to think it out. You have to make sure that there's enough room for if you go big bucks retail or wholesale, like your pricing is, is enough room?

Alessandra Szul Guest

31:47

it also drives. Because there will be probably a point where, if you're really making that jump to like huge volumes and even if it's huge volumes in e-commerce and you're really growing, you're I I have found that sometimes there's a part where your margin is going to be tight. But then then, once you're doing huge volumes that can inform you, can go back to your manufacturer and be like hey, I'm actually going to triple my order, what pricing can you give me? Or I'm going to book my freight in advance because I know that I'm going to have a manufacturing run done at this time. What's the best price that you can give me? So then you can optimize internally to make that margin with the big box retailer nice, yeah.

Jared Ward Host

32:29

So always, always leverage, always leverage your quantities like I guess you can. You can use big box retail, big po runs to leverage a lower price to make sure you have some room for margin.

Alessandra Szul Guest

32:40

Yeah, and then thinking about like cash flow, like cpg is, is, I mean, unless you're doing drop shipping and I don't really know a lot about drop shipping because I don't deal like we don't we like all our products are custom, whether it's the drink companies that I work with or the dog company, it's not like we're just kind of white labeling anything. But with cpg companies they're capital intensive. Like, let's say, you get a po that, or even a forecast, like hey, in six months I'm going to make a million dollar order and you, I don't have a million dollars worth of inventory right now, but I want to make that sale. Now you're in a position where, like, okay, you have enough cash on hand to put up. Let's say you, you, you're in a really good position with your manufacturer and they're like half and half. You're like, all right, I need to put, say, your run to make a million, to sell a million dollars worth of product. You need to put down. Let's say it's going to cost you 500 grand.

33:37

Like, okay, cool, 50-50 terms, which is very hard to get, especially in a new relationship that means you're gonna have to wire 250 000 dollars, yeah, and then when it's done usually before it gets to you when it's done send the other 250 pay to get it over here and then so you can fill up here if you don't have the month.

34:00

And if, let's say, your lead time like I need the product and you're gonna sell it in six months you have a four month lead time, like you need to put that order in advance and that capital is tied up until you get it. So it's it's very capital intensive. And so another thing, when you're looking to go into big box retailers like or you're just having an explosion with, with e-commerce, is like you, can you afford to have the capital on hand? But the good thing is, when you're with big box retailers, you can do things like factoring your accounts receivables. You can do things like PO financing where you can say, hey, here I'm going to go to this bank, I have a PO for $150,000 or $2 million. Can you advance me what I need to manufacture to hit it, and they'll be like sure and then they'll charge you a certain rate which you can't really do with e-commerce.

Jared Ward Host

34:51

It's different capital instruments. You just brought up yet another great point on what people don't consider when they go to big box retail. Because e-commerce, like you said, it has really quick cash cycles and cash turns. So they pay the money and then Shopify deposits it or Amazon deposits it two times a month. It's quick turns. You could sell something and fulfill it and you're getting cash the next day on Shopify. So operators get used to not having to plan out their cash flow and then all of a sudden you know you have a net 90 payment terms with target and you got to. You have to front the cash for it. Like you said, something with a four month lead time. So, as an e-commerce company who's operating typically like get the cash immediately and not really plan, it's cowboy, and like you don't really keep that much money in the bank, all of a sudden it's like yeah, we accepted the million dollar PO.

35:45

Yeah.

Alessandra Szul Guest

35:47

You can accept the million dollar.

Jared Ward Host

35:48

PO and then all of a sudden you're like, oh shit, I don't have $250,000 to put down for the product.

Alessandra Szul Guest

35:56

And then how am I going to get it? Okay, cool, let me go try to like factor. Let me try to like finance the PO. Okay great, let factor, let me try to like finance the po. Okay, great, let me go to. Let me go to a bank or a factoring company or whatever they're gonna be like. Okay great, send me your uh last two years of financials, give me your forecast. Um, you know all of these additional documentations like do you have that lined up? Like, do you, do you have what you need to? Like get you can't. Like just the po is not enough. They're gonna want to ask all the sometimes it requires, like underwriting, like a lot of times you will have to like personally guarantee something you know.

 

 

 

36:33

Do the terms make sense? Like are you gonna spend? Like that's why that margin thing is so important? Because it's like all right, like this, it adds an additional cost, like financing affects your cogs too. So it's like, hey, does this make sense? Like what can I afford to?

Jared Ward Host

36:47

yeah, with the interest rates. Wow, this is really killing our margin yeah.

Alessandra Szul Guest

36:52

And then another like back to the margin thing is you can't have super tight like there's. I've very rarely ever seen a run or a sale that you don't have like some charge back in one way or another. Like you need to have that like cushion to know like hey, I made a sale that you don't have, like some chargeback in one way or another.

37:05

Like you need to have that like cushion to know like, hey, I made a sale for 100 grand. Like I'll probably get like 95 back. You need that room for error. It's not like e-commerce where you can be like okay, maybe you can have like some rate of returns, or you can have a policy that says we don't do returns at all and then that's your money and you can fight a chargeback. I mean, and the chargebacks are one off, like per customer. It's not like, hey, I'm fighting $200,000 of chargeback.

Jared Ward Host

37:36

Yes, yeah, so that, no, I, I love it. That was. That was a great deep dive onto the problems that you run into with big box retail and when you go wholesale, because I guarantee you everything you talked about is going to strike such a chord with any of these e-commerce operators, so that was great advice. Now bringing it all together. Obviously this is something Luminous is clearly passionate about, but it takes a special system to be able to merge those two operations Big box retail, edi, specialty, wholesale, e-commerce, plugging into other tools, amazon what is Amazon? Amazon, yeah.

Alessandra Szul Guest

38:19

Amazon, which is a channel that any company can be on. You want to try to get on Amazon.

Jared Ward Host

 

38:27

Yeah, what's been your experience? I know you did, like you did, a big discovery process where I swear you looked at like every single tool. What's what's been your journey? Finding an IMS, an inventory management system or an ERP?

Alessandra Szul Guest

38:44

I talked to everybody. I literally had a week where I just talked to everyone and a lot of it came down to pricing. A lot of it kind of came. I didn't want to get like a Salesforce, you know. I didn't want to get something crazy not that you would get Salesforce.

Jared Ward Host

39:00

Why not something like a Salesforce or like NetSuite, like a massive system?

Alessandra Szul Guest

39:05

We were just okay. So that dedicated point of contact thing was really important to me because we just had such a bad taste in our mouth from the other 3PL, which I do want to touch on before we finish.

39:18

Because I think that every e-commerce operator should know, so they know what to look for before it's.

39:24

They kind of find it find things out the hard way when, when it's not going well.

39:29

Um, we were too small for a lot of the major ones, and I think a lot of the major ones either like cater to brands that are just doing such large volumes, but what I, I guess I would rather focus it on, like what I really liked about luminous, or why it was such a good fit after like evaluating every single one under the sun is the most important, like you guys were honestly the only ones, or one of the only ones, that was able to offer me, like edi integration in like under two weeks. Everyone else is telling me like oh, you need to have a custom development firm or it's going to be like two to three mines and it's going to be $2,000 to $5,000. And you guys were able to like set it up really quickly and test it very quickly and that multi-channel visibility is just really important, like because we have, for each SKU, different bill of materials and costing and lead time and each retailer has different costs associated with doing business with that, like the cost of working on Shopify, right.

 

40:36

You have other fees that go into that. You have shipping right. So let's say you're gonna subsidize part of the shipping with your customer or a company like Target where I'm selling it at a lower price point, and it's impossible without a platform like Luminous, to be able to plan for your business and manufacturing cycles without having this ability. It's like where your money is coming from and where you're making what money Because, like you, kind of want to push into where you're making the most money.

41:06

You know and then let's say you, I mean, everyone has limited inventory. So sometimes for us it's like we are really lucky that we sell out a lot, and sometimes we'll get inventory and I'm like, how do I want to allocate this? How much do I want to make available for e-commerce? How much do I want to make available for retail, because I know I'm going to have these orders at the end of the year?

41:27

And what I loved about Luminous, which I'm sure like other ones did, but it wasn't like a huge selling point for me because of the way you guys do it is because your forecasting is integrated with the lead times and the bill of materials. Not only are you guys able to tell me like hey, you're going to sell out, but it's like hey, you need to order more of this in specific. Or you know, um, you can generate your POs and your invoices from there. So it was like a centralized place where I could see everything and then, like, I have a board to answer to. We have investors like this is I.

41:59

It's not just, oh, I'm taking data points in order to like make good decisions. It's like I have to then go. You know, let's say I'm doing another round of fundraising, like why. Or hey, we're about to make this huge purchase six figure investment, like why. And I can say, oh, you know, this is purchase six figure investment, like why. And I can say, oh, you know, this is. I've also been doing a lot of like fundraising and when you have those forecasting tools, I'm not there manually recalibrating a spreadsheet to send to a bank. Hey, this is what I think my, my, my volumes are going to be or my velocity is is over the next year.

Jared Ward Host

42:33

Amazing, yeah, that's yeah so many people, there's so many operators who are in that in that phase, and it's so difficult to find a tool out there. I mean, that's that was my background in e-commerce operations too. So, no, I appreciate you sharing that.

Alessandra Szul Guest

42:51

And when I reached out to you guys, like I, talked to you, like I- got to talk to the founder.

42:57

And one thing I also thought was really special that you guys have done for us is Josh was always so perceptive on feedback that we'd give to where he'd be like, hey, let me talk to the team and see if we can do this. Or hey, getting the feedback to like inform the development team on what features are you guys going to come out with? Or like identifying our pain points which, like as a product manager, like I really value, because that's how you like deliver great things.

43:33

And that was like not even on the radar for the other companies I talked to.

Jared Ward Host

43:39

Yeah, josh, josh is an absolute stud too. He's, he's amazing.

Alessandra Szul Guest

43:43

Yeah, I'm excited to work with you guys again for um be a drink company.

Jared Ward Host

43:47

Yeah, it'll be good. Um, now I I do want to. I want to make sure we dive into some of the horror stories that you've been through. So, please, please, can you? Can you tell us about this ops horror story with with your 3PL? What, what happened?

Alessandra Szul Guest

44:05

I literally have bad dreams, like I've had bad dreams reliving it.

Jared Ward Host

44:11

Yeah, and let us know what people can can learn to avoid that.

Alessandra Szul Guest

44:19

Yeah, yeah, and let us know what people can can learn to avoid that. Yeah, that's also like why it's so like jarring for me, because I still think about like how could I have like avoided?

Jared Ward Host

 

44:24

this situation.

Alessandra Szul Guest

44:24

So long story short one. You know our best-selling skew, whether it's e-commerce or retail. Retail takes a certain case back, but e-commerce is singles, obviously, so I think maybe it could have been solved if I had set it up a different way. But anyway, when I joined we had within our 3pl um a SKU that's for it's pre-kitted in two packs, and then a SKU that was like for e-commerce and singles. And the way I figured this out is because we factor our accounts receivables. So I get a PO, I fulfill it, I ship it out and then a bank advances me the money for the PO and then they collect it on the backend based on on payment terms, and then they take a cut. So we had a great holiday season. I'm like we killed it, like we had all this money I could use it for, you know, driving more manufacturing. And then the factoring company called me and they're like hey, what's going on with these invoices? Like we're getting paid half.

45:37

We're getting paid like there's these like chargebacks and things like that, and I'm like so like half of the money that you're supposed to get was just missing, like what yeah, and it it sucks because resolving a chargeback is not something that's like next day, like you have to go through a dispute system and you have to, um, you know, gather the right documentation and have all your BOLs and your like all like the paper trail that's associated with fulfillment. And it also sucked because you were, you were advanced that money. So, like, any additional orders that come in would go against the money that effectively the bank is owed. So I'm like what is going on? Like why, like we were doing so good, like why are these invoices being short paid? And um, it took a very long time to figure out and that was also something that I just advised against people going with huge 3PLs because their internal like all the people that they have to engage and the director of this and the head of this and go back to their team and like it. Just, it's not like working with you guys where I get like a response like you know, or like hey, what's going on Like and also, depending on the seniority you're talking to, like each person has only a certain amount of leverage.

47:01

So what I found out is that somewhere during the receiving process of our most recent like manufacturing run. They were taking like, let's say, I had like I don't know two thousand two packs and I had a thousand singles. And I remember when I joined, because, like the warehouse is in california and also we're talking about thousands of dollars, like I can't go into the warehouse and be like one, two, three, like I'm trusting them. That's why you outsource, like because you're gonna tell me the right, you're gonna tell me my inventory is you're gonna ship it and I'm gonna trust you. Yeah, and somewhere along the way, let's say you have like 2,000 two-pack and a thousand singles.

 

 

47:40

And a new order came in. You know a word. They had a work order to stock somewhere along the way they like took the new dolls coming in and put the singles under the two-pack skew. Oh no, and so then you don't know. Your inventory count is suddenly not accurate wait.

Jared Ward Host

47:59

So you were, you guys sent, you fulfilled the retail order.

Alessandra Szul Guest

48:03

That should have been a bundle of two, but you sent ones, you sent singles oh shit and then you just we didn't figure out until, like, we got a charge back from the fromoring company being like, hey, you guys. And then our target metrics were like hey, you didn't fully fill these POs and I'm like, what do you mean? I checked with the 3PL when I joined. Hey, can you confirm that this is $2,000, or is this 2,002 packs, which is $4,000? I had to grind everything, so that was a lot of fun. Um, everything like turned out great. We came to amicable resolutions. Uh, that's how we even target that's good like a new 3pl that I love.

48:46

That is giving like has this? You know, I talked to the founders there and just it's. It's a great experience, but the biggest advice, the only the only like advice I can give that I could have solved this because I had to. Let's just say, it's like something that's like a little bit still ongoing, um, and I asked them like how could have this been fixed? Like what, what were like was I supposed to fly to California and do your guys's job for you? And the inventory counts, like it clearly says in the two packs, do the double weight? The picture shows a two pack. Like what? Like how could I affix this? And they're like I don't know what you mean by that. I'm like okay, right, sorry, you feel that way. Um, the the solution that I've come to is so when you work with a platform like, let's say, you make a twitter account or you know you have to agree to terms and conditions.

49:39

Right, you have to check the box. I agree to terms and conditions. A lot of platforms you can't even work without agreeing to their terms and conditions. Right is that if you have a discrepancy or an issue with a partner or retailer or whatever a vendor, if only one of you has terms like you know shopify or your e-commerce, like you have your terms, your certain policies um, if one party has terms and the other party doesn't, the the party that has terms, they trump regardless.

50:13

It's a very challenging to fight that. So the advice that I've like received is that you should have your own terms and have it very clear in there. If something is done like there are some companies have terms that are like a breach of this, we can only we'll max out at ten thousand dollars. Like even if we breach our terms or we cost you hundreds of thousands of dollars, we'll pay out a maximum of this. And so, looking back, had I known that it's really important to you know that little legal investment can save you like so much money. Like a lot of law firms have like boilerplate terms that you can use, and that's also why I prefer working with like a smaller company, because you can have those like back and forth conversations and be like hey, what? What happens in the event of chargebacks? Who's responsible for what? What if we determine that it's your fault? How is?

51:13

it how do we like fix it versus you know, you just sign up and you're like, yeah, terms and conditions, and there's, there. Isn't that back and forth like self-sign up?

Jared Ward Host

51:21

yeah, it's so, getting a contract to protect you on the fringe cases. And then what if? What if, for example, what if you go to this massive 3PL? You give them these terms and conditions, you give them a contract and they say, no, we're not going to sign this. You just try to find somebody who actually will, where you can be a little bit more protected.

Alessandra Szul Guest

51:44

Yeah, and I think a lot of it is like those big 3PLs, the people that you're working with, like they don't have the wiggle room to make those decisions, so maybe they'll escalate it and you'll have to get like a custom contract, which I have seen done before. But if you don't come armed with that knowledge of like hey, at least go wrong to know.

52:02

I was like you can do that. And they're like, yeah, you can do it. And I'm like, wow, that's not even something I would think about. You know you probably can't do it with like a Shopify, but you can set your own terms within that platform, because that's who you're doing business with. You know it is. But yeah, if you have that knowledge, you can go to a large 3PL and see if it's even an option or what they're willing to like work with you on and you have like your own contract with them. Like that is that is possible. But if you don't know, ask for it. It's not. And you're like okay, I need to, I need to agree to their terms, like be, like we have our own terms, yeah no, that's.

52:42

That's great advice and I how I don't want to spend money on legal usually and I get it I get it. But like you are hiring a 3pl because you, you're not gonna have your own warehouse, you're not gonna have your own you, you're not going to have your own warehouse, you're not going to have your own fulfillment. Like you want to make sure that they're a hundred percent in doing what? Like misrepresenting inventory is crazy. Like it's, I'm selling based on what you said that exists.

Jared Ward Host

53:07

Yes, so it happens all the time.

Alessandra Szul Guest

53:12

Yeah, that's my biggest nightmare.

Jared Ward Host

53:15

I want you to speak, to speak to all the e-commerce operators in the world as, as we start closing down the podcast, what, what pitfalls should they watch out for? As that, as they scale? Like, how would you summarize a lot of these things we talked about? Because you've talked about like learning go and learn your business. And sounds like document, it like put some processes.

Alessandra Szul Guest

53:44

I know that's something that you've you've been really good at um yeah, especially as a consultant, when I'm coming into a company and being like, hey, like I'm not doing things end to end with you, but I want to set you guys up in a way where you can hire other people and make their jobs easy, um, the biggest pitfall I would have, would say, is like, if you don't have and this might just come from, like my more on the more traditional side of my background like you should have a supply chain map. Like I'm a visual person. That's the first thing I do with any of my clients is like all right, so tell me. I want to see end to end, like what's, what are the functional areas of your business? And they're like talking to me and they're like, oh, this too. And I'm like is there somewhere where I can look at it, where you can see, okay, this is like the flow? And they're like, oh no, I'm just you know like how do you do, how do you know what to order?

54:37

they're like oh, I just like feel it and I'm like, yeah, that'll get you, like you can feel it up to like three million dollars like you. You, you totally can, but it's like once you want to be like I don't know anything over three million. Like if you have aspirations of like, hey, I want to exit, either to like, who knows, maybe like a private equity fund, or I want to be, you know, acquired by a lot, a huge player in the space of publicly traded companies. Like you need to. You need to be able to scale, and scaling is like you, if you're hiring, usually like once you're at the point where, let's say, you're hiring like an analyst position or you're hiring like a associate or someone who's like strictly operating, like not really making decisions or defining strategy. Like you should probably give them like a handbook of how do you do your job or what happens in this situation or where are you documenting things how are you?

Jared Ward Host

55:26

consolidating orders like I really like that, because a lot, of, a lot of e-commerce operators they come, they parachute into a business and like where do you even start? Well, that's some good advice. Like just start with a visual map, like draw on a sheet of paper, like I buy from here and then it comes here and then it goes to these places. I agree that's. That's really good practical advice.

Alessandra Szul Guest

55:47

These are my payment terms. These are the carriers I work with. This is where I document and keep by order all of my the proof of delivery, the invoice, the PO, like all of that stuff. Who am I fulfilling? To what platforms and systems am I using ShipStation for this? Where's Shopify? How does pods and pod foods and air goods you know fit into all of this? Am I bringing on DoorDash? Am I bringing on Macy's, like how does that work? And then for each one having like a tutorial of like, hey, how do you contract a carrier? Where do the documents go? Like that's the best way that you can start start growing.

Jared Ward Host

56:27

I really like that. Imagine, oh, you could totally do some cool things. This is my software. Brain is going crazy right now, like imagine if luminous could have a in in. Imagine if I'm onboarding. We had a supply chain map. There's like a literally physical map that showed the flow of goods and then within, within all of those, there's like sops for each one of those flows that actually that's what I do.

Alessandra Szul Guest

56:52

That's what I do for all of my time. So you already do that. Nice, yep, I already do it. Yeah, that's my. That's like the most. It also is cool because it it's relevant for, like, the entire company, because, like, even if, let's say, you're joining us like customer I don't customer experience or like customer support like you should know the business, that, how the business that you're working for like functions and operates, and then you know that it's also a really good tool for, like anyone you bring in, even in marketing, like, hey, this is how, this is how we work, and then that's how you can optimize. You can be like hey, this lead time is actually really crazy, or this is a bottleneck, like, how do we reduce risk?

Jared Ward Host

57:26

So, yeah to start with the whiteboard. Well, um, where, where can people find you? So obviously you've you've talked a little about you have consulting services. How, how can somebody find you and who's a good fit for your consulting services?

Alessandra Szul Guest

57:40

Yeah, so the right now, the best way to find me um is through LinkedIn. I love working with founders that are either like in really early stage growth, so I actually love working with people who are like hey, I just got a bunch of funding, like what do I do? Like how do I deliver? How do I budget? Like what should I be spending on? Like you, cause I thought it seemed like you want to be super lean, like you. You want to be super lean like till you're farther out. And then I also love working with kind of founders that are more on like a mid-stage phase, where they're looking to position themselves for big box retailers or they're like I'm looking to, you know, even on board with amazon, like deciding are you going to do fulfilled by amazon? Are you going to do self-fulfillment, how does their platforms work? Like, what kind of volume do you need to predict for um?

58:30

And in that same vein, just because growth and cpg is so capital heavy like we talked about earlier, like making sure all your ducks in a row for a private fundraising, or if you want to do a friends and family round, like you should be able to speak to, and like what if eventually you want to get to a point in three years you're going to do like a real, like series a or like a real round. Or you want to get like a big loan, like you don't want to scramble. Like you, you don't want to like scramble to get all of your finances in order at the point where you really need the money. Like that should be something you take time doing. So then when you go there, you're like hey, I have everything you need. Like you don't want to do it. When you're like I, I need the money at the 11th hour yeah, yeah.

59:17

So setting things up for private fundraising or financing, um, and just like overall, making, you know, optimizing supply chain more efficient, just like because of my business background and like the type of person I am, like I really care about the bottom line, so it's like cool, we can operate, but like are we actually making money? And my job is to make sure, like we continue to make money, we can even make more money through things that we can control. So, yeah, implementing systems that can kind of let you plan better instead of firefighting, like being able to do forecasting if you hate telling people no because you just don't have the inventory by having systems in place that allow you to like look ahead, you can plan like three or four production runs in advance or multiple seasons yeah, and I think so.

Jared Ward Host

01:00:03

It sounds like you. If you're consulting customers, what you're going to offer is um, you're going to be able to parachute into the business, map everything out, write soPs and help them. Help set them up for success in the future for you as a fractional person running the company, but also when they bring somebody in house, you'll you'll have SOPs set up so that they can actually scale into those roles, and I spent so much time vetting different like vendors or partners, or and I have a lot of like relationships with hey.

Alessandra Szul Guest

01:00:42

Are you considering and getting into this? You know, how do you? How do you sell to a big? How do you approach retailers? Like, what other sales channels are you looking at? You're having all these problems. I mean like, look at, with Jang I'm. I'm like hey, they're like we have this issue and I don't know if we're going to solve for this. And I'm like, have you ever heard of Luminous and the CFO I worked with there? He's like I mean, in my first part of my career I did SAP implementations but we don't need. We're not there yet. I'm like we're not there yet. Like I can bring my breadth of industries and vendors and partners with that like lean operations mentality. Like I'm always gonna like it sounds cheapy, but I'm always gonna try to spend the least possible.

01:01:20

Like I want to spend the least amount of money possible with the max value and like I'm never gonna tell some, tell a client like, hey, we need this and it's 5 000 a month, no, but we really need it. It's really good, like okay, yeah, it might be really good, but like, like you're, you're gonna go on, like you're not gonna, you're gonna go out of business. So founders who are ready to like look at their operations in a holistic way, that want to scale, yeah, I can go in and we can like stabilize things. But I definitely find that I add the most value and also have the most fun when we're like okay, cool we. But like how much do I make in two years? Do you what?

Jared Ward Host

01:01:56

do you?

Alessandra Szul Guest

01:01:56

want to do? Do you want to make three million dollars? How do we get you from like 500 to like?

Jared Ward Host

01:02:02

a million and then that really excites founders.

Alessandra Szul Guest

01:02:05

Yeah, it excites me too, because I love like achieving goals.

Jared Ward Host

01:02:08

So that's cool, okay, well, uh, we're running out of time right now, so, um, last last part is just other than LinkedIn, your, your personal LinkedIn. Is there anywhere else that people can follow you on Instagram or Twitter? X?

Alessandra Szul Guest

01:02:24

Sorry, Honestly, right now, no, which is kind of why I was excited to do this podcast, because I don't have, I haven't been able to spend a lot of time in like cultivating a personal brand, and I'm really lucky that, because of like the relationships and reputation I built, like I've never looked for a client Like I, just people get recommended to me. So no, for now, linkedin is really good.

Jared Ward Host

01:02:49

Hopefully in the future.

Alessandra Szul Guest

01:02:50

You know we can. I'll have something else, but yeah, right now it's just LinkedIn.

Jared Ward Host

01:02:55

Well, you're going to you're going to have some awesome clips from this podcast, but that's something we do with all of our guests is you'll?

Alessandra Szul Guest

01:03:01

you'll just have some really solid looking edited, chopped up clips that that'll make you look really good, yeah, yeah, that's good, and I mean ultimately, like I'm passionate about supply chain and it's not like I'm passionate about like my perspective of how I contribute to, like the economy and how we get goods into consumers. So like I hope I can. You know, my goal is to reach more clients and help impact more businesses and like grow them and make more jobs, and just like that's my, that's my contribution to the world right now.

Jared Ward Host

01:03:32

That's amazing, awesome. Well, thank you so much, alessandra, for joining us on Ops Unfiltered, and we'll catch up soon. Hope we'll have you on again sometime.

Alessandra Szul Guest 01:03:44

Yeah, absolutely.