How to Take Advantage of the Changes in Ecommerce Fulfillment | Cahoot

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[Music] Welcome to the sellernomics podcast In today’s special episode we are going To share some great tools and software Available to amazon sellers Special thanks to our sponsor geta did You know you can get four hundred Dollars in free fba reimbursements at sellernomics Now it is time to show us what you got With your host rob stanley [Music] Hey everyone welcome to another great Show on the sellernomics on show us what You got we got a really good one today i Got manish chowdhury he’s going to be Coming on in just a minute from kahoot And we’re going to be doing a really Cool thing talking about how to take Advantage of changes in e-commerce Fulfillment but real quick i’m going to Bring into the room lisa Our amazing other host lisa hi everybody Hi lisa so lisa this is kind of a field You’re familiar with because you kind of Come from this uh whole area of Fulfillment so this would be kind of an Exciting one uh to have you a part of And obviously uh a area that i am not Super familiar with so we’re going to Lean on you for the questions for When he gets in the room here uh so Let’s bring him in and let’s definitely Uh have manish uh enter in and talk with

Hey minis how are you doing Hi rob pleasure to be here thanks for Having me Absolutely absolutely so manisha’s got a Great presentation already lined up for Us so let’s jump right into it and Manish why don’t you take it away and It’s time to show us what you got Thank you rob thank you lisa great to be Here and thank you everybody for joining I want to take you quickly through um A little bit of what’s happening in the World of e-commerce fulfillment uh by Way of introduction my name is manish Chandri i’m the founder and ceo of Kahoot i’ve been involved with E-commerce for over two decades uh Founded uh and built one of the first E-commerce platforms uh out there way Back in 2000 and then more recently uh Founded and built the world’s first Peer-to-peer order fulfillment network So we help Brands and retailers succeed through Free and fast shipping as we know today Half your shopping experience is your Shipping experience Just to kind of give you a little bit of Background as to What’s happened in the world of amazon Amazon you know went into overdrive mode On the fulfillment side when the Pandemic hit you know you all remember When uh

March of uh 20 Um was it 2019 or when uh or 28 2020 When uh Pandemic came in and then most sellers Could not send their products to amazon Because amazon was focused on only Essential goods they were turning away Sellers and that really led amazon to Really triple down in fact amazon spent More in two years over the pandemic in Terms of expanding their fulfillment Footprint than they did in the previous 18 you know by way of simple comparison Amazon built 517 facilities in 2021 You know added you know over 150 million Square feet of space and then we heard In q1 of last year when they announced Their earnings that amazon actually made A loss And uh they had over hired people and q1 And uh you know that uh basically amazon Was focused on profitability amazon Still wants to continue focusing more on Profitability and then we heard two Rounds of fulfillment fee increases you Know one on gen in january this was uh Announced earlier last year fulfillment Fees fbi fees went up you know two to Twelve percent storage fees went up and The removal fees went up almost 100 Percent And it came in uh in two different Tranches basically in uh february one of 2022 this was uh you know already it was

Announced previously you know the fba Fee is going up and why this is Important is just to understand the Background of where fba is headed where The world is headed and then more Recently end of april fb announced this Uh you know fuel surcharge or whatever You want to call it inflation surcharge Or five percent on top of whatever the Fulfillment fees were uh what amazon has Already increased so All of this is taking quite a bite out Of the seller’s profits and something That the sellers need to play pay close Attention to One big change with sellers some of you Are familiar some of you might not be Familiar but it’s a really important Change that happened in january of this Year the change to the small and light Fulfillment program by fba you know Previously It used to be if you’re selling a small And light item which is essentially this Criteria it has to be under 10 The selling price it cannot be more than 18 by 14 by eight that’s on the longest Side the product could not be greater Than 18 inches And um And previously if as long as it was Under three pounds it qualified under The small and light program but amazon Has gone and changed it from you know

Purely weight based to a dimensional Weight pricing and that has created a Lot of stir a lot of challenges for a Lot of sellers and particularly the fba Sellers that rely On the small and light program and just To by way of example if you look at this The salt and pepper shakers a four ounce Item you know previously When dimensional weight pricing wasn’t In effect you could ship it for 253. now It’s 442 442 almost 80 percent increase You look at the christmas ornament it Used to be nine ounce item but because Of the weight or the the dimension of The product now it is using dimensional Weight and now you’re going to pay 519. So just imagine if you’re selling for 10 Bucks and 519 is just the fba fee before The commission and everything else that That’s a big big hit and certain items That used to classify as smaller light For example this marker set is clearly Is no longer Qualifies as small and light and has Been moved to the standard category Which is now priced at 675. so all of This has very large material changes and If your sellers are not already familiar You know they should Fb is great you know i mean this is the Easiest way for fba for amazon sellers Or online sellers to pretty much get in Business you know it is great if you’re

Selling smaller light items If you don’t sell a lot of multiples or Bundles because they’re a pain you know You need to prep them and also if you Don’t prep them then of course the Pricing of that can get uh pretty out of Control because the way fba prices Itself is based on the ski or the asin And if you sell multiples you’ll pay Twice as much and i’ve got some examples Coming up so stick around Um receiving delays you know i know that This is something that the sellers had a Lot of trouble last year especially in Q4 uh long long receiving delays things A lot better now but it’s still you know We are not out on the woodworks there is Still considerable delays that i hear From sellers almost every single day And new product launches yes amazon Moved from Basically acen level inventory limits to An account level limit so it has Certainly eased the pain on um inventory Limits but it’s not it’s not completely Gone ipi the inventory performance index Still in place And when you’re thinking about adding a Lot of new items or new product launches Whether it’s now or q4 or back to school You need to pay close attention to that Because that can have an impact on your Account health and your Inventory restock limits and also if

You’re selling on other channels like Walmart you know walmart clearly Prohibits sellers from shipping the Products from amazon yes they’ve been Somewhat quiet about it but you know That’s you know it’s changing because Walmart is very focused on walmart Fulfillment services and they don’t want A package going out on the prime with Prime branding to a walmart customer you Know yes amazon has a pilot program Where they can do neutral branding but It’s still majority of the items are Still going in fba boxes A quick quick question uh came in on This and i’m gonna kind of summarize it Because it’s kind of long um somebody Was asking about uh I don’t know if you just read recently But there was a whole thing about uh Some of the amazon warehouses either Closing or there they stopped building Them or something like that um which i Just my personal opinion it’s kind of Weird right like they had this whole Thing where they were kind of limiting People shipping items in uh they kind of Were having people take items out of Stock which i don’t know if they were Doing that more for the quality of the Items that were in their warehouses but I remember at one point it was because They were kind of out of warehouse space So they start building all these

Warehouses now i’m reading i think today I even read the article too about them Actually closing or discontinuing some Of these warehouses obviously you don’t Work at amazon but kind of what’s your Opinion on that because It seems like hey Not enough space now we have too much Space So it’s kind of weird How do you think that might affect uh You know sellers yeah that’s a great Great question rob um essentially amazon Just recently announced the q2 uh second Quarter earnings And uh at the end of first quarter Amazon publicly admitted that they had Excess capacity and they were They had decided to sub lease a lot of It is as many many experts got it wrong That people over built thinking that the Pandemic growth is going to continue i Mean you probably heard a couple of Weeks ago shopify laying off 10 of its Workforce Um and like likewise amazon had done two Things that of course over built in Anticipation of um a higher demand and Also amazon’s prime program as you as You probably heard roll out of buy with Prime that that would lead to greater Demand And that the transition of the online Growth will continue to go grow at a at

A pace that’s much higher than what We’re expecting now after the post Pandemic And lastly the biggest reason a Contributor uh for amazon shutting down Some warehouses was excess of excess Labor capacity amazon hired 14 000 Additional workers or some 14 to 26 000 Additional workers in q1 and that was uh Because of the omicron virus the variant That uh amazon’s cfo uh uh brian alaski Admitted that uh they’ve overhired the People so they’re now back to normal Levels and q2 so some of those Warehouses i mean they have shut down However um so i wouldn’t read too much Into it amazon is Such a large organization so uh just Because amazon had a ton of excess Capacity there’s still plenty of excess Capacity um the big picture for the Sellers what sellers need to be focused On is Amazon is going to continue focusing on Profitability They’re going to continue to raise rates As we’ve seen so keep that in mind and Of course having somebody like getta on Your side to find those reimbursements Find those you know missed uh Savings is a big big plus especially if You’re if you’re spending 10 20 more so Overall that is the um that is the lay Of the land rob i don’t know if i

Answered your question That was perfect that’s perfect uh keep Going thank you so much thank you thank You so fba has been great for small and Light as we all know you know uh but if You look at this uh you know cables Great two dollars and seventy cents it’s Gonna be a lot more expensive if you try To ship it yourself or use any 3pl same Thing with this for example the Headphones a 1.2 pounds small and light Item but look at this oversized dog bed You know i think sellers are probably Many of them are misinformed that fb is Is always the cheapest option In this case as you can see five pound Item you could actually ship it for a Lot less yourself uh and and also Not to mention the q4 storage fees at Amazon is three times the regular Storage fees and getting things in and Out of amazon um during q4 is very hard So something to be aware of something That you need to be focused on And also one thing that a lot of sellers Are probably not You know fully informed on is uh mixed Queues orders so if you look at this Example you know if you sell if you’re Selling socks you know you could be Selling anything you know a pair of Black socks and a pair of yellow socks They’re two different skews so you don’t Get the benefit it doesn’t really cost

Twice as much to ship the item however The way fba pricing works is you will Pay pay by the skew you pay by the Ascent by the unit so it can get pretty Expensive And If you’re using fba for multi-channel Fulfillment let’s just take a quick Example you can see from the screen it Is it can really rack up i mean you know We did an analysis for another apparel Brand and we could save them you know Over 50 000 annually and and not to Mention not to deal with the limits and Certainly before counting the storage Fee changes or q4 surcharges so uh if You’re selling four pairs of socks i Mean that can make a big difference Because it can take a nice bite out of Your margin If you’re doing fba multi-channel Fulfillment could be almost three times As expensive something that the sellers Ought to be aware of so as you’re Selling on f say shopify or your own Store or walmart And if you have apparel or these kind of Skew variations you want to be aware of The cost implications And i covered this uh earlier Uh that fbi receiving is still taking Time you know you could uh send by small Parcel like a ups fedex uh in small Boxes you can expect to receive them

Sooner like a five-day receiving Generally speaking but ltl receiving is Still taking at least two weeks and this Is of course we expect the holiday Season to start early this year as as it Was last year so you want to be mindful Of that that receiving delays are still And items that are in transit that are In the process of receiving Also count towards your inventory Restock limit so keep that in mind that The limit is calculated based on the Items that are still in transit or in The process of receiving Finally i want to take you out of just The amazon world and also talk about Some of the recent developments what’s Happening in the world of fulfillment You know the fulfillment war is heating Up Uh april just a couple of months ago Amazon announced this uh buy with prime Program I’m not sure if um lisa rob you’re Familiar with but this is a Very Popular or at least long-anticipated Program that is still In beta it’s by invitation only It’s essentially Extending your fba your prime membership To off amazon channels So if you’re selling let’s say on WordPress or woocommerce or you know

Your own custom store like a big Commerce store Um you can now Install this buy with prime button on The product page on the checkout page And the amazon prime shopper one They get that familiar badge that They’re familiar with they get the date Certain shippings that tells you right On the product page when your product Will arrive And you get all the benefits of Amazon prime free two-day shipping Or without any minimum free returns and Then when you when you log in Basically your amazon account Credentials or amazon account Information will load up all your Preferences will will show up However there’s a big challenge with This while it might look very enticing And tantalizing to use it but the whole Purpose if you’re doing ddc Most sellers that we talk to Want to build a brand they want to build And own that customer they want to own The first party relationship And Uh by introducing this buy with prime You lose all of that because amazon of Course is not going to hand you all the Customer data after the customer checks Out because it’s still the prime Customer um before i move on rob lisa do

You have anything that you want to add Here or any Yeah i just wanted to to get a little Clarification around the buy with prime So like you said it’s invite only it’s In beta right now and it’s it sounds Like it’s for current fba sellers who Have additional channels but they want To be able to fulfill with the same Speed and kind of have the credibility Behind it What if what opportunity if any is there For a let’s say shopify store owner who Has a small and light product like the Headphones or the cables you referenced Before what opportunity is there for Them to use buy with prime if they don’t Currently sell on amazon is there any That’s a great question lisa i mean it Is a buy invitation only program right Now Uh amazon is uh beta testing this and They have Uh they have initially invited mostly The existing fba sellers that have an Existing relationship with amazon that Are selling on amazon but they also sell Elsewhere so the only advice i have for Non-fba sellers and non-amazon sellers Is to join their wait list and we hope That They will invite you soon if you have if You’ve been an fba seller then of course Your chances would be higher and as to

When you’d be invited but right now lisa This is a buy invitation only program And There’s not much more uh the seller can Do except for joining the waitlist Gotcha and and i assume any of their Inventory is going to be subject to ipi And weight and dimensions minimums and Things like that even if they’re not Currently selling on amazon if it’s in Their warehouse they’re going to have to Abide by those guidelines right Yeah so the this is still a very Um New program there’s a very limited Amount of information that is available To sellers and outsiders so amazon is Right now Basically testing this with proven Sellers and they are collecting feedback So they have been Very reluctant in sharing a lot of Information because they don’t want Sellers to have any early impressions of How this would impact their ipi and Others so It’s too early to tell how this is going To affect but clearly amazon building 517 new warehouses with excess capacity It is part of Them to Acquire more customers and more Inventory but we don’t know as much so I’m reluctant to provide advice that may

Or may not be accurate Gotcha no worries there we’ll we’ll all Just have to see how it unfolds i guess However however i’ve done an amazing Webinar actually i spoke at a conference Last month and there is a detailed Information With on buy with prime and how it Impacts dtc sellers so i’d encourage the Viewers if you’re interested in learning In depth go to go to the Resources page and you’ll find my talk There and it goes into great detail About what the implications are and You’ll find some amazing information There Absolutely Cool so moving on you know of course uh Uh april Amazon announced buy with prime that Really created a shock creates shock Waves in the shopify ecosystem you know Shopify as we know uh they’ve been Talking about this shopify fulfillment Network since 2019 but uh you know i Rarely speak to merchants who are Actually using shopify fulfillment Networks so which you know um for lack Of a better word i mean it was mostly it Wasn’t going anywhere and as a result of This amazon buy with prime announcement They they they rushed and they acquired Deliver which is one of the uh one of The services that competes with kahoot

And uh that took place in late april Early may i think and uh amazon and Shopify has been uh has is going to Pretty much re uh rebrand that as a Shopify fulfillment network And uh is a combination of uh and they Call it shop promise which is Essentially The shopify’s version of the prime badge Which of course there is no consumer Component there is no membership so you Don’t get your free amazon videos or you Don’t get uh you know free unlimited Returns um you know there may be they Call it hassle-free returns but it’s Still Um it is basically a very similar Version you will check out using the Shopify account you know you’ll Basically pre-load that information and Then You qualify for two-day delivery but Again it’s still even this is on um on Wait list it’s spine rotation only so Not you cannot a shopify merchant cannot Just go and take advantage of it Immediately so we it remains to be seen How this is going to play out And walmart uh you know walmart has Announced that uh they are you know They’ve been pushing walmart fulfillment Services quite extensively Um i spoke with the walmart uh header Fulfillment and uh they are previously

They were promoting other services like Deliver but they’re now singularly Focused on promoting walmart fulfillment Services and that’s why they’re cracking Down on sellers that are Trying to ship Walmart orders from amazon uh amazon fba So i think they’re going to be doing More of that and they’ve announced some Partnerships with other technology Providers that they will be building uh Four next generation fulfillment centers Over the next three years that would Cover 75 percent of the population and Get speed up uh But there are still a lot of limitations You know walmart of course do not ship International there’s uh um temperature Control you cannot send there’s a hazmat Items are not acceptable so there’s Still a very long way to go i mean by Just Way of comparison amazon put 517 Fulfillments rotation distribution Facilities in 2021 and it’s probably Gonna take walmart uh three years to Build four so i don’t know how that is Going to play out but it’s certainly Something that a lot of sellers are Participating in and uh because walmart Is also handing out some um Promotional discounts but it’s uh it’s Going to be challenging uh but it Remains to be seen

And Just to touch on buy with prime and i Know we’re gonna uh end the presentation Shortly and uh uh it’s it’s really buy With prime is a lot more than just Fulfillment services it’s essentially Check out and as i shared there is a Excellent presentation for those of you Who are interested to go to our website it’s essentially it’s wrapping Amazon pay Payments is one of the most lucrative Pieces of the checkout process it’s pure Margin and that is what All these providers are interested in Because they want you to check out using Their payment services And say let’s say you put an item in the Shopping cart and you abandon that cart You know We know that amazon prime shoppers visit Amazon at least once a week 75 of them Or 40 sorry half of them buy at least Once a week and you’re talking 200 Million Members on the amazon um Prime network so You know you you bet if if somebody Abandons the cart you will be targeted And retargeted on amazon’s site so There’s a lot of implications for the Brand because previously brands were You know you could set up your own Minimum for free shipping like 49 or 69

But with amazon buy with prime it is Basically there is no minimum so Average order value is going to go down So it’s i call it the trojan horse you Know it’s uh something that the Merchants need to be fully aware of So Uh if you’re amaz if you’re an online Seller you’ve got uh What Amazon fba which is great for amazon Sales especially if you’re small and Light Walmart is pushing walmart fulfillment Services and shopify is pushing shopify Fulfillment network Our belief is These are this creates a lot of Challenge for the merchant because if You put yourself in the shoes of the Seller sellers don’t think about you Know each fulfillment service is a Separate standalone they want to take Care of business they want to satisfy Their customer with the least amount of Hassle so What it boils down to is distributed Fulfillment it’s essentially if you want To target two-day delivery you need to Have at least four strategic locations If you Want to target one day guaranteed Delivery using economical ground service You need eight to nine strategic

Warehouses that’s how all these services Generally work so If you break this down you know how There is it’s it might look like rocket Science but it’s not i mean you know we At kahoot do this because we support Amazon prime customers we support seller Fulfilled prime programs so we know Exactly how this works you need to place Your inventory smartly at the strategic Locations It is harder than you think because to Determine what inventory should be Placed where because you don’t want Excess inventory you don’t want too Little inventory so on then you need to Promote this you need to enable the fast Shipping badge so customers know what They’re getting because if you don’t Enable it’s like the tree falling in the Forest nobody knows about it you don’t Get the credit but when you do you can Improve your conversion by 50 Then you need the technology that’s Going to route the order to the right Location so you’re printing or choosing The most economical shipping service That gets there on time and gets there In a guaranteed fashion so customers are Not customers are not disappointed Because if you tell them two days and Your products don’t arrive in two days Customers lose that trust so that is Very essential and then finally

Monitoring to make sure that the Customer’s Experience was indeed good they received The package and uh that is that is how a Typical amazon like fulfillment works Which is what we do at kahoot as well So i was talking about previously If you’re a merchant if you’re a seller You know right now you can’t it’s really Hard for a seller to send their Inventory manage Restock levels you know manage different Conditions for each of the different or Requirements that fb accepts this kind Of acen or fn sku and then walmart you Need the upc Uh for deliver for uh in case of shopify You uh products that are considered Oversized have to come in ready to shift Fashion all that is extremely taxing Because You know your sellers don’t think of That in that fashion they want a Holistic fulfillment they want to be Able to you know manage Um all their fulfillment using a single Simple solution So what are the couple of ways you could Do it you know you could hire you could Do it yourself which would require you To sign leases long-term leases Warehouse rent is an all-time high folks Right now essentially it’s very very Hard to find space and labor labor is

Super tight and then you need to sign a Long-term lease so this plus you need to Do all the daily management Making sure everything everything is Happening that gets very risky and very Expensive for most sellers to manage Four different facilities and you have Little visibility into the future the Other option is to contract with Multiple 3pls because majority of the 3ps two-thirds of the 3pls in the us are Mom and pop operators which means they Have one to three facilities so you’ll Have to Go and negotiate with several of them East coast west coast maybe a upper Midwest in the chicago area then dallas Arizona one of those and perhaps one More You have to then monitor that route the Order you need some technology there is No Easy Routing solution that’s available that Does a fantastic job It might send the order but you know how Will you recover if you find that the Last unit that you thought was there is Not there remember to enable prime like Fulfillment we need to ensure that each And every order is taken care of and and Uh we don’t have there’s no room for Apology to the customer because customer That brand perception that prime has

Created Is because of that fanatical focus that Amazon has to ensure that they take care Of their customers A newer approach is to join a Fulfillment network such as kahoot that Has the technology that can do the Routing they also take care of the Service level agreement to ensure that Uh every order gets shipped out on time Is delivered on time And also supporting both b to b and b to C across all channels because a lot of Sellers sell wholesale so you can’t Exclude that of course you can’t do Wholesale economically through fba Because you don’t want to pay a per unit Fee so these are some options folks you Have and i recommend that every seller Should at least have an fba backup Because Amazon is great fba is awesome but it’s Not great for everything no so the Changes in fulfillment as the topic Rightly suggests is that take advantage Of the right channel the right tool for The right job and just by way of Introduction of kahoot we are a Nationwide one-day two-day delivery Network we provide the industry’s Highest fulfillment standards because we Are one of the very few uh Network that supports amazon seller Fulfilled prime same pricing all year

Long there is no q4 surcharges like Deliver which is not part of walmart Fulfillment services and we can get you Started up and running in less than two Weeks and we can handle both b to b and B to c And we are very thankful to our clients For giving us some amazing reviews and Ratings on all popular channels so That’s that’s all i have i’m ready for Questions rob lisa back to you Yeah that was great thank you that’s Fantastic thank you venesh that was Wonderful yeah like you said i you know I like rob alluded to earlier i come From a supply chain i won’t quite call It background that was my introduction Into the e-com world i guess you can say Um and i 100 i agree like either have Redundancy to your fba or just have the Right solution for the right product Like you said it’s not necessarily it’s A fantastic you know Obviously it’s a it’s a great Fulfillment program but it’s not Necessarily the best fit for every kind Of product and also like just don’t put All of your eggs in one basket for Anything really i mean because that’s That’s just a Kova just opened our eyes to so many Instances in which you wouldn’t want to Have all of your eggs in one basket so That’s 100 true

That’s good that was great information Yeah learned a lot actually from that Like i said that’s not really my area Specialty So that was really good information you Shared there Yeah so if if people are interested i’m Going to put up on the screen here i Want to make sure that everybody knows Where to go Go head on over to or you can email sales For more information or if you have Another question or you’re watching this Video after we’ve done the live and You’re still had a question you can do a Couple things either email uh manish Directly at kahoot or sales or Post it in the uh comment area and i’ll Make sure to send it over to manish and Ask the question and get it posted in The public comments also Lots of good information uh i may have To actually go back and re-watch that at Some point because there was it was Pretty in-depth so that was really good Oh thank you robin and just uh by way of Uh uh you know audits and refunds you Know i mean kahoot when we receive the Item we re-measure and re-weigh every Item and that information if they if They supply those if they’re using fba And they supply that to gatida then you

Could find more discrepancies because That’s one information that most sellers Don’t have so one of the other Uh you know Unintended benefits can be potentially Additional refunds possibly Yeah they’re 100 right because Lisa and i both get asked this all the Time we’re in at trade shows you know What about returns what about returns And we’re like The returns don’t come to us they don’t Come together Or maybe manish and somebody has to you Know obviously take pictures of it uh Document it and then yeah we could Obviously assist in uh trying to submit That paperwork and get a refund back but That is not something that we offer Because obviously we don’t want to start Opening warehouses and accepting returns Like that it would be too much oh we Already have we already have a lot on Our plate at catita and lots going on so But uh Be sure to go over to check Out uh manisha’s website and again if You guys have any questions feel free to Email them sales Or again just post a question manish Great having you on the show i i know it We had a few reschedules to get you here And everything but i’m glad you came on I’m glad you’re able to share this

Information and thanks for so much for Showing us what you got so i really Appreciate it well thank you rob and Thank you lisa for having me i really Enjoyed being on the show and Again if any sellers want to reach out Please reach out i’d love to guide you We could also help with A savings analysis this is something we Do For some sellers completely free of cost There’s no obligation so if you are Selling you know um standard oversized Items and you’re just curious how much You could potentially save You know you want to head out over to fill out the contactless form So at least you know what your options Are Absolutely fantastic Thanks again everybody be sure to check Out and join us again on the Next show thank you Goodbye Thanks for joining us this week on the Sellernomics podcast Special thanks to our sponsor gatita did You know that amazon probably owes you Money for fba reimbursements get four Hundred dollars in free fba Reimbursements at Sellernomics Be sure to join us again next week for More great tips on how to grow your

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