Planning Inbound Freight Logistics And Order Fulfillment with Paul D’Souza

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Hey, product launchers. Welcome to another office hours. This one's with Paul d', Souza, our logistics on operations and sales expert and all things that lead to revenue and profitability. So let's hear from Paul. Hi, it's Paul d' Souza and I'm with Source Select, a logistics and fulfillment company here that has been helping Kickstarter primarily in Indiegogo, the crowdfunded product companies for quite a few years. We've been around for 20 years, but our biggest feather in our cap is that we help the Pebble Watch company launched their products right from the first campaign to the second campaign and then up to about 2 million units a year until they got bought by Fitbit. That's who I am. And what I'd really like to talk to you guys about today is preparing to do your order fulfillment. And the preparation comes all the way from when you're designing your campaign. If you're going that route or if you're going straight to E commerce. There is still a marketing campaign. I tell people, contact me in advance right from the early stages because I can help you with your shipping strategy. Think about logistics, think about order fulfillment as a primary business concern which impacts customer experience. I see it that way. As a vendor, I show up to take care of your customers, not just move your boxes. So you want to find a logistics and I put the two together because that's my offering. I go end to end and trust me, you want to try to do that as much as possible. Logistics and fulfillment, auto fulfillment. Because guess what? I want you to focus on your marketing and on your sales and on your new product development. Leave the boxes, leave the fulfillment to me. You want that kind of a partner because it really impacts your customers. So I'm going to take a breather right there. You can sort of repeat after me. Fulfillment is a critical primary business concern that impacts customer satisfaction. It's not boring, it's not an unnecessary evil. It's critical. It's a space of possibility, if you would, to impact your market, your customers so that they have a good experience and you have now the space of possibility to go create more sales. The repeat business. I love working with these guys. They take care of me. The product works great and once it didn't work so good, but they took care of me. So guess what? All the way from getting your pricing strategy, helping you not lose money, especially if you go to Europe and with your value added taxes and then to returns management, how you're managing returns, how you retesting and qualifying and evaluating your product that has come back and save your cash flow and create your B stock. That's the kind of stuff we do, that's the kind of stuff you need done. And I'm going to be very transparent here. I want you to be successful. Guess what? There's a lot I can do to help you do that and like all other product companies, but I'm going to speak about the things you have to think about when you start planning to launch because you're doing so much of work, all the heavy lifting when you're designing your product and all the marketing. You spend so much time and money trying to get the right message, identify your Personas, you do all that. But if your box doesn't get to your customer in a nice way, the right customer at the right time without any damages, it's all for naught. You're going to have an upset customer. That's why this is so important. Do not wait for the end. I tell people I mentor with the Founder Institute, I mentor with Plug and Play. I like to get involved in the early stage. One of our clients right now, infravention. This beautiful box, this chessboard where the people, the men move and I can be playing with it where I am, the other person can be playing anywhere on the planet with wi fi on a phone. The chess pieces move on the table. It's very cool. So they're rocking it out. They talked to us for a year from the design stage. We've helped improve and redesign that packaging. Talk to people like us because we can help you figure out the right packaging, the right dimensions. When we start picking the right shipment service, you fall within a certain category. We helped a client in Australia. They were planning to ship out two boxes with one order, a base and a stand. And we helped them redesign it with some feedback, figure out the weight structure, the dimensions, the sizes, and said if you bring it into one box, it still had to be a little bit overweight. It was a heavy machine, heavy unit. But they went from two boxes to one box and dropped shipping costs by $30 apiece. They were up in the 70s and we brought them down to about 40s, $40 to ship on average. Globally. So think about those kinds of concerns, if you would, or issues when dealing with fulfillment. One of my taglines is it's not just about a rate. Fulfillment is the three or four things you want to look at. Fulfillment is about making sure that your product is safe. You've got to get the right packaging. You've got to make sure you can get to your customer. So be very clear, very conservative and do your research about where you should market your product to. I always suggest the first time around, the first campaign, keep it small. Go after a very niche market, maybe just North America. If you're European, just Europe. You can work with me. I've got warehouses all over the world. In the US in Canada, in Ireland, in Hong Kong and Australia. I can cover the planet. I can ship to 180 countries. I tell my customers, pick one of the big areas, one of the big markets where you're strong. Don't go to multiple markets at the same time. You want to test the response, see how your customers like it, get the feedback. Get those testimonials to do more marketing. Because once you get your first hundred customers wherever they are, and we suggest that we will work at very small volumes. I'll work with 50 orders, 100 orders. Get your first hundred fans, if you would. Small orders. I just had a client right now sign up this beautiful heart monitor, Elite hre. They started with a small. They had hundreds, thousands of orders. But no, they just shipped out. 50 here, 70 there. We test it out. Is Shopify working? Is the CSV file that is coming in. When you send your orders to your fulfillment center, make sure you give them the information they need. I need my orders in a certain way. Your orders in a certain way. So it fits into. It's uploaded into my computer system on the back end here. Why? It's not because I'm lazy. So that accuracy. So you want to look at the right product, the right market, so it's not complicated and you can build scalable systems. You want to shorten, reduce the amount of effort it takes to go through a campaign, get the order. So your whole e commerce thing, download that order information and hand it off to your fulfillment center. The fulfillment center has got to be able to process the order, ship the product out. I say I'm not done until that product is at rest. Because if we send it to the wrong address or they don't like it because the packaging got broken, they want to send it back. No one's happy. I'm not done.

Manage the returns. QC a Product, because that's cash. You want to save your product as much as possible, right? And then manage inventory, because again, that's cash flow. A good fulfillment center will try to have as much of that order automated simply because it drops error. When you drop error, you drop duplicity, you drop mistakes, you reduce all that. Profits go up. It's as simple as that. We're in the profit business. That's why my tag is pollytheprophetmail.com by the way, that is one of my email addresses. And I spell profit P R O F I T. When I do my mentoring work, when I do my personal development work, I'm poly. The profit. It's all about profit. That's what we're here to do. So when you move your boxes, when you move your product, make sure you get the right partner. Who's going to help you, who's going to help you keep your products safe, who's going to help you, give you the information you need to grow your business, Give you the communication you need so you can take care of your customers. Take care of customer expectation. Like, I just picked up 900 units from China from Shenzhen. I'm sending a truck to pick them up from Hong Kong because they got batteries. We want to find a partner who can handle batteries globally. It's a big issue. You cannot fly product with batteries out of Shenzhen. So we send trucks from Hong Kong into Shenzhen, pick them up, bring them back to Hong Kong, and then we ship them out. Then we fly there on the ocean or whatever. Guess what? I was up last night checking my email. Climb in sync with those guys in Hong Kong. And this morning I came and told my customer, hey, setting expectations. We'll be picking up the product this evening. It should be in the US Next week, like on Monday. And then it should be in Europe, the rest of the batch going in Europe on Wednesday. You can set the expectations with the customers because we're picking the product up and we'll keep them in the loop. That's what you want in a fulfillment part. Because it's not just about the boxes. It's not just about the rate. It's not just about, hey, dropping costs. It's about taking care of your customer. It's about taking care of their expectations, their satisfaction, their experience. So guess what? You tap into referral marketing. You tap into reciprocity. You tap into them sharing their success. Everybody wants to talk what a great time they had. Vanity is a great thing. Tap into that. Create a tribe. Create that feedback loop. And we'll help you. This is what you want in a partner. Somebody who can partner with you so that you can then take all this creative genius that you've done, put it in a box, and then deliver that experience to your customer. I'll give you the feedback, I'll tell you what kind of product is being returned, where the damages are, what's happening. You want a fulfillment partner who can do that. It's all about that back end. By the way, you cannot rent space. Hire somebody with experience, shipping manager, get reliable warehouse staff, get all the equipment, pallet racking, pallet jacks, forklifts, all the experience, this relationship with FedEx and UPS and get them to come and pick up product every day at the cost that we can give it to you. You could do it, but it will cost you millions, hundreds of thousands of dollars. The experience is really important. Being able to, like me, pick a truck, get a truck to go from Hong Kong to Shenzhen because my client cannot ship a product with a battery out of Shenzhen. I have another client from Italy. A lot of my clients don't live in the U.S. right? They're not here. They're in other parts of the world. And I've got a client in Italy who just had. Well, I snake the deal. They have $100,000 order with Sam's Club. I won the project, told them to do the work with us because we do it entirely. What they have is just a logistics partner. That's just half the equation. That's why I exist. I'm not just the logistics. I do the inbound freight and then I do the pick and pack and then I do the sorting and then I ship to your customer either B2B with EDI. So these guys have a huge project with Sam's Club and Costco doing the EDI integration, and he's bringing 225 pallets. They're in Italy and they could not do. They could not fulfill their order in the US without me, without a fulfillment partner. And that's why the end to end is better for them because we're doing the inbound, we're helping them drive costs in the inbound. We're doing the warehousing and then we're going to ship out to, I don't know how many. 70, I think. Different Sam's Clubs or maybe more. I'm waiting for that order, but it's 225 pallets. So they're sitting in Italy, they're not here. And we're doing all the heavy lifting for them. We're passing customs, we're going through all that with them. We're doing all the import, export, documentation, things like that. Now with the tariffs, there's a lot of issues going on with getting your product in and out. But you want to tie together, keep the handoff, whatever infrastructure, whoever your partners are, make sure that the handoffs are tight, your product is safe, it's not damaged, because you want to be able to set the right expectation with your customers. That's part of fulfillment. A lot of headaches happen after the campaign is complete, after you've done a phenomenal job with marketing, after you've created an amazing product. And then fulfillment. Oh my gosh, how do we get the boxes out? What's the damage? What's the this? What's that? We helped a client reduce cost by shipping costs alone by 40% because the product they were bringing in was too bulky. And we help them redesign the store. We've done that over and over and over and over again. Once the product is marketed successfully and you hit different volumes because you come in, you do the onesies and do the twosies, you shipped all your backers, you got 900 products out. You got a thousand products already got 300 products out, whatever. Then guess what? Your marketing is kicking in. And now you suddenly got an Amazon order. Boom. Now what do you do? We know how to ship to Amazon Fulfillment to Amazon Seller central, vendor central. Very, very different. Now you're doing with ltls. You're dealing with less than truckloads. You're dealing with palletizing. There's a whole bunch of fulfillment type strategies and processes that you have to know to address their guidelines. They all have shipping guidelines. They'll tell you what a pallet should look like. I have another client right now with Costco. Costco says you have to use a certain type of pallet, not any other pallet, because they don't want the pallets breaking. And those pallets, we buy pallets that, you know, we sell pallets for what, 10 bucks, 12 bucks, 15 bucks a pallet? The Costco certified pallets are 40, 50, 60 bucks based on volumes. Uline is selling a pallet at that level for $61 retail. Guess what? We do that for you, your fulfillment partner. Your fulfillment capabilities need to scale with your business. That's key. You start selling internationally, selling into Europe, tremendously different to selling in the US. Here's one thing you'll have to remember if you're going to Europe, every country, in addition to potential customs duties, you have to Provide and pay a value added tax. So what we do is based on your orders, from your backer list orders, crowdfunded campaigns, we identify line by line item and we group your EU orders, European Union orders based on country, because every country has got a different tax and you have to pay that upfront. As the product enters Europe, you've got to pay the tax if it's going to any EU country. If it's going to a non EU country, we can still ship it out of our warehouse, but we have a bonded warehouse in Europe. So when we're shipping to Africa, we put all the products, send all the product to the EU because it's cheaper. You're not paying the value added tax. So all product that goes into my warehouse in eu, but you're only going to pay the value added tax on the product that is going to go back out to your customers that are in EU countries. But we calculate that for you and you pay that before your product gets released. Literally better when it's still on the water or in the air. So when it hits the dock, it's ready to come out. And the value added tax has been, the estimate has been calculated and you have to build that into your business model. You got to build the value added tax into your revenue model. We help you with that. Your fulfillment partner should guess what, if you pay extra, it gets neutralized, it gets consolidated in about 45 days. But doing business in Europe is different. It costs money. It's a cost of doing business. I will take that any day of the week. Or try to sell into Peru or Brazil or the Latin countries or India, where you have no idea about the complexity and, and the fluctuation and the variability of where the taxes and the duties are. And very, very high. 70% tax, 300% tax. Yeah, you heard me right. So by the time your customer gets the product, they're frustrated. They got to pay for the product two or three times before they get it in their hand. You need to know that up front to decide if you want to do business in those countries and put your customers through that experience. We've had a client in Europe, when dealing with value added taxes, thought that they would minimize their customer experience and just add based on the country. Add one value, one retail price that included value added tax. It was a nightmare. We did it for them. It was a nightmare. They lost money because they had to ship two or three times. You have to decide, is that model good for you? Some people do that. What that does is it jacks up the retail price and not everybody realizes the duties, the shipping and the value of the tax is all built in. So why is my product looking so bloated? Because it's all in there. You might lose out on the emotional save, you might lose out on the other marketing related dynamics that kick in when you deal with a pricing strategy. To recap, I've been going on and on, but to recap the key things you want to look at, maybe the top five points of areas you want to focus on when you're dealing with fulfillment, global fulfillment. And I want you to think about your business, that one day it's going to be a global company, it's going to be super successful. You plan for success. So one, you want to be able to understand the pricing around the finances around your fulfillment, all the requirements. When you work with me, I actually give you a unit price. What does it cost to bring this one product from your factory to the warehouse? The pick and pack, warehousing fees, everything out the door to your customer. So I do inbound, I do pick and pack fees, I do packaging material, I do outbound fees, I do duties and taxes. And then I divide it by the total volume. And I say to move one product, it costs you so much. You have to know your numbers. The second thing is you've got to know your demographics. Where are you going to sell? Phase one, phase two, phase three, which is the right market to go into a phase one, phase two, phase three. And you want to look at what's the complexity to do business in Europe, what's the complexity to do business and what's the cost associated with doing business in the U.S. australia, you might have some sort of a market in Australia. What I've seen is that it's not a very big market and it's very costly to move product. I can go directly from Shenzhen to Australia. I can help you with that. But still, shipping, they don't do airfare. Everything is struck in Australia. You've got to know your demographics, your markets and figure out when do I want to scale my business into different markets. The third thing, packaging. Do you have the right packaging? Is this packaging sufficient enough to keep my product safe? Is it aesthetic enough to get people to want it and grab it off the shelf? Is it compact enough to drop and light enough to drop my shipping costs down? You want to think about all those aspects of getting the right box for your product so you can get the product to your customer. It impacts the bottom line. I can help you with that. The Fourth thing is basically communication. Communication. Communication. You want to be able to bring automation and communication to your entire value chain, from your factory to your logistics partner, to your fulfillment partner, to your customer and your customer service team. You see that entire value chain ecosystem has got to be tight. That's why companies come to me, because I remove one of the partners and I go. It's just me and the company and customer service. That's it. Done. Me and their customer service team, we're the only two people. And everybody is on my team and I'm coordinating with the rest of the ecosystem. Right. That's the tightest. You outsource to one company who does moves all your products. I would definitely recommend that model. You can see there's other people that do that, but I'm one of the few people that do that. I do the inbound because that's huge. We can save people tons of money. It's all about the relationships. It's all about the volumes. Are you getting the right volumes in the space? And you can't negotiate it if you're just one person. You got to go to who's got one container. Even if you do have a container. I'm bringing in containers, multiple containers a week. You want to have those kind of partners. The fifth thing I would say it's about the back office. It's not just about a rate. Nine out of ten, all my clients, really maybe ten out of ten, we're doing something. They've got to test the product. One of our better clients that has got a really luxurious product suddenly realized that package insert had the wrong phone number. It's called kitting, testing, rework. You've got to have a company. You've got to be able to develop the resources to do that because it's much cheaper to get the product done, to get the kitting and the testing and the rework done here or in any of the destination countries, compared to moving the entire load back to China to the manufacturer, Indonesia, wherever. We are picking a product from all over the world back to the manufacturer to get a little bit of rework done. That's really, really, really, really, really important. And everybody has problems with it. We just had a customer there. One component was they started noticing an error and there was a batch run with a supplier to their manufacturer. They produced something bad, and these little units were popping and breaking. I had to open up 20 pallets worth of product, take off their MasterCard and open up the product, open up this one unit, test it. And they were so Bad. We put them aside. Now we're going to ship them all back to China. All this product is now waiting because it's incomplete. They got a scramble. You need somebody to do all that for you. I have another client who's done an order with Costco. Costco does everything differently and so we've got to repackage their product for Costco. Another client's got a huge project with Target. Actually same client, but Target wants their product a different way. It's got to be palletized a different way. We got to remove them. Outer curtains have only inner cartons because they don't want to open up two boxes. So we could thousands of products. We literally moved 135 products for them. Each one we had to open up, take out the outer carton only keep the inner carton and put it back on the palace. Those are the five areas that I'd have you focus on. Think about that through the development of your business and think about that early. I actually offer that as a service I can help people with literally logistics and order fulfillment strategy consulting session. We can spend some time on the phone. We can talk through it. But talk about these kinds of issues with your people, with your leaders, with your business partners, with your manufacturing consultants, with your marketing people. Because all of them really work with us, the feedback we give them. With your marketing people with the colors or the palettes. Right. With your manufacturing partner. We're working with all these other people. You come consultants, you work with these service providers. Because the team has got to come together to make sure your product is packaged right. You're sending it right. The fulfillment is done right because it's really the last mile. Right? We are the delivery people. What we do last is the first thing your customers experience. That's why it's so important. I wish you only the best. I've had a fun time talking to you. I hope I wasn't boring you. I'm very passionate about what I do here at Source Select. Beloved, we've been around for 21 years. Website is s select.com I'm sure all this information is there on my profile. But go check us out. There's a video on my get a quote link on my website. Go check out the video. Even if you don't want a quote, you don't need to. But it explains this whole value chain. It's very important. It's an important part of your business and I'm here to help. Take care and God bless. Bye bye.

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