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One of the things that’s so cool about the fulfillment network is that, I kind of hinted at this but let me just say it bluntly, a lot of these fulfillment warehouses are actually owned and operated by small businesses in our case. They’re in some town, it’s a family-run business, they’ve been in the family, for like two generations they’ve been doing some sort of fulfillment. And so we actually get to know these folks and it’s working out really well. I don’t think the two are mutually exclusive. I don’t think you have to have a tense relationship with the people fulfilling these orders in order to have affordable two-day shipping. You can do good and fulfill things in a timely manner and affordable price. The two are not mutually exclusive.
Now, again, the other difference is that we care first and foremost about merchants, and other companies, they care sometimes about the end consumer. And so merchants are sort of this annoyance in the middle, but our entire mandate, we care about these merchants here. But to your point, I don’t think you need to necessarily be ruthless with the people that are doing this fulfillment, in order to have great fulfillment.
How do you maintain the cost curve though? Because now you’ve got a lot of different vendors in every part of your stack. You’ve got merchants on one side who are selling things to consumers, you’re in the middle, you’ve got a whole network of logistics operators that the merchants are coming through. How do you keep that all consistent without that level of ruthlessness? Because consistency at that scale tends to require pressure.
Yeah, but efficiency and ruthlessness — you don’t have to be ruthless to be efficient, or to be effective. First of all, consumers, believe it or not, are happy to pay for great shipping, they’re happy to pay for good products. So at first I think the consumer is certainly happy to pay for two-day shipping. I don’t think you have to go beyond two-day shipping, I don’t think anyone needs something within an hour. If you do, you can use something like Instacart or something like that.
Now, speaking specifically about the fulfillment warehouses, again, a lot of these warehouses have been decimated. They had this huge customer like American Eagle or something or Forever 21 or something. And now those warehouses are empty. One of the reasons that we also want to acquire 6 River Systems — which is, again, this robotics company — one of the things it doesn’t do is, it doesn’t replace humans in the warehouse. It just makes a human in the warehouse far more efficient. So in some cases, you’re actually able to get really great cost efficiencies and reduce the cost, because now you’re not running around the warehouse in some random sort of pattern but you actually know exactly where to go, how to go, and what’s going to be the most efficient route.