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For D to C. Founders try final loop. Completely free, no credit card required. Just visit Finalloop.com D to CPOd and get 14 days free and a two month PnL within 24 hours with all the ecom data and breakdowns you need to crush it. What's up, TTC Pod? Today we have Izzy from shipline on. So, Izzy, why don't you kick us off, tell us a little bit about your background and how you came into the world of ecommerce, shipping and fulfillment.

Blaine, first of all, thank you so much for having me on. I so, so appreciate it. And to anyone who's listening, I really appreciate you taking the time to check this out, and I hope to make good use of your time. So just to kind of jump into my background, I'm a 20 year old guy from New York who was reading an article on shipping costs, ink magazine, about ten years ago in my senior year in high school, as my father likes to say, would come up with a business idea a day. And I kind of read the concept that you can reduce and help companies and businesses save money at shipping. I kind of thought, why not me? So not really a great arbor thesis there and started cutting my evolution into the shipping space. And originally we started kind of working on a service, helping companies get refunds for when shipments became delivered late. FedEx and Ups offer guaranteed services. That's changed quite a bit during COVID and that business does not completely exist in the current forum. Today, some level that does. But over the years, we kind of realized, I started business cold calling in a dorm room. We kind of realized as we built up our client base and built up a book of business, that shipping is just so unique, especially in the ecommerce world, the world that we began to live in is that you can have two customers, both sell shoes online, both shipping about 100,000 packages a year. Very similar profile. And when we were helping them get refunds on their packages, we kind of noticed that, hey, one of them spends about a million bucks a year, the other one spends 1.4. And we said, that's strange, and we kind of dove in a little bit or a lot of bit deeper. However, I realized that the key difference between two companies, or many companies, is a contract that governs the relationship with their carrier, with, you know, primarily in our world of FedEx and ups and that kind of, you know boils down this path where we, our business and our current forum for the last six, seven years exists to help businesses optimize and renegotiate their shipping contracts with their carrier. So that's kind of what we do. We've been so fortunate to learn from a lot of the leaders, you know, kind of the current leaders in the ecommerce world. We feel like we've grown up with them. Ecommerce is young. We're quite young, and it's been a fun ten years. That's kind of how we got into it.

Awesome. And so one thing I'd love to just kind of set the stage here is if you're an ecommerce brand, what do you need to know about shipping? Right? Like you were saying, there's a bunch of different ways to be able to get refunds and ways to be thinking about how you're getting set up. So what's being refunded? What's getting messed up? Where is this journey coming from? And why is there disparity across different great questions.

Yeah, great question. Awesome question. So where we live today from the last seven years is not on the refund side. That's maybe once your precise ship has come late, most contracts do not allow you to kind of recoup refunds. During COVID they paused quite a bit of that. We exist largely, I would say 99% of our revenue is contract driven, where kind of what somebody needs to know is what you pay for. Shipping is governed by a piece of paper that governs your relationship with your carrier. So when someone approaches shipping, that piece of paper is critical, and that piece of paper is going to determine at some level your margin. The average ecommerce we've spoken then we constantly speaking with our clients. The average ecommerce customers shipping, you know, shipping costs as a percentage of of revenue is about 10%. So if you can move the needle on that from the EBITDA perspective, that can really, really impact your bottom line. So from where we sit today, broadly speaking, we look at it as headache when you look at shipping, and kind of, I think, a unique challenge that every shipper faces. If you go into the grocery store today I go into the grocery store today to buy a bottle of milk. Super simple transaction. You have a couple of different brands. You may prefer one over the other. More cream, less cream, just kind of that's your preference and you know what you're paying for shipping is there's vast options from a service perspective that you have and also the pricing is very opaque. High level we've built is a large data set, deep benchmarks for federal CBS employees that we currently work with as well as real time live negotiations as the market changes. But so kind of taking it from the top. If I was an ecommerce shipper kind of new to the market because that's probably the direct answer to your question is kind of a are you at the point where shipping is a major line item for you? That's like step one if you're spending 510 thousand dollars a year, I'd focus on growing your business, on reducing costs and not managing that cost. That's just not going to be meaningful for you or for anybody else in your organization. I think kind of been digging a little bit deeper than that. The way we think about it is this piece of paper is so unique. And the reason why I believe whether with a firm like ours or on your own, any Ecommerce business would be foolish not to focus on this piece of paper is we've asked our customers hey, if you want to reduce your logistics cost your cost by 10% or kind of cost across the board in your organization on the area that's 10% impact for your organization. You can lower people's salaries, you can try to make your employees more efficient. That takes a whole lot of work here. It's take that piece of paper, negotiate the heck out of it and try to achieve net positive outcomes. So I think another key kind of critical point and I think as people enter ecommerce growing ecommerce and their businesses grow is if you work with a small accounting firm for your ecommerce business and you're the lowest paying customer, it's going to impact the service you get. The beautiful thing about being in the world of FedEx, Ups, DHL, USPS, is they route your shipments based on the service you paid for, not the price you paid for for it. So the deeper discount you get does not impact the service you're going to kind of receive. So we always say it's one of those unique areas that hey, you can drive a lot of savings and once those negotiations, as uncomfortable as they can or may be, when that's completed, you're golden. It will not impact your service. And I think kind of the way we look at it like if, you know, the broad statement is the only cost of life is death and taxes. When you're in Ecommerce, it's customer acquisition and the cost of getting a product to your customer. So if we know those two things that exist, they're not going to change. Not today, not ever. I think at a high level. Those are the way we frame it. And then kind of speaking at a high level for a moment, I think is if I was starting out, I think many organizations make this mistake is sometimes they'll align with a FedEx or with the Ups or the Usbs and build their software and their infrastructure around one carrier. Part of your leverage is your ability to move and your ability to change. If a FedEx, a Ups, a USBs knows that your system is built for them and them only, and it will cost you a million dollars to change, you have no leverage in that conversation. So if I was starting out on ecommerce, I'd make sure to give myself flexibility and optionality, optionality equals lower cost in the long run. So that's my high level thoughts kind of going into that.

So what is the kind of infrastructure you need as a brand getting set up, right? So imagine I just start a brand, and I'm sure a lot of brands start where they have their first PO. They've got maybe they're a small little warehouse or out of their apartment and they're just trying to get acquainted with the world of shipping.

Where do they go?

What are the options? And then what are the kind of things that they need to do or have in place once their volume starts to pick up, where it starts becoming relevant to, like you were saying, know what's in these contracts, know what service you're getting, et cetera.

So if you could just walk us.

Kind of like through that little workflow.

Yes, totally. I will say the irony of that question is you're asking a man with the most shipping I do is my wife's returns because we run a consulting group. But yes, this is what we do all day, every day. So starting out, I think you're a Google social way. There's many kind of smaller companies, shippo, easy ship, pirate ship, like that, kind of have rates that they qualify resell and they can use with their software. So obviously you need the ability to print labels, you need the ability to execute their shipments. So when a company's done, you know what, you're spending $10,000. You're not negotiating with CBS. You can sign up for an account. What we recommend, sign up for an account, sign up for that online account. Sometimes you will get a rep on the phone. Sometimes you get a rep to come down and visit you, depending on your volume, your size, and kind of come to your trajectory. And we always take that step, go meet with them. Sometimes you get surprised. And FedEx Ups are focusing on growing their mid, small mid size customer base. That's a huge focus. You don't have to hear that from me. Listen to their earnings calls. That's public information. They're chasing that. So I think starting build out your account, I think kind of what we see in early innings for many brands is Three PL. No. Three PL. Do I go the three PL route. Do I not go the three PL route? Those are like things I know sometimes we deal with the companies that are maturing that come to us with if hey, we're in a Three PL now, we have an issue. But I think early innings is hey, do you have the infrastructure to fulfill that PL? Kind of what's the infrastructure look like. You have the employees to do that. So I think early innings starting out a you can create an account online. B you can use one of the resellers. C make sure you have a sulfur to track manage it at rate shop to select the lowest cost carrier and the tools that are out there versus 15 years ago. The industry is obviously matured and one has the ability to easily kind of get a good enough rate to transact and to do business and to start growing. I will say the way we think about it as a business is when you're a young child, you can get the you know, and you're one years one to years two. Typically you can get a one year old outfit and that works from years one to two. When you're six foot five and kind of your business is shifting and growing, you may need to go for that custom suit. So as you grow, as your business evolves, your needs change and there's massive benefit in having a customized agreement many times. So kind of at a high level from a three BL perspective, AV can help you free up your time as you're focusing on growing your ecommerce sales manage warehousing employees. That's not easy, we all know that. And you can leverage their volume. I think what we've seen with ecommerce companies that are maturing is a sometimes just because someone has more volume than you, you've leveraged their volume to get better pricing to start. If you're shipping a unique box type in the future, that may not be a good fit for you. Another common issue that we run into is Three PL. Number one or three PL, a is not performing well. You're exploring B and C and D. A, you don't own your data because you're using their accounts. B you have no idea how much they're marking up your shipping. And C you don't have the flexibility optionality or it's a couple of steps removed to get set up with a carrier. And then sometimes carrier A does not want to tick off large three PLA and kind of award your contract. We've seen that a few times at some of the larger accounts. So I think starting out, I think there's opportunity, there's endless information outline, there's many options that exist. I think they're all good to getting started. I think as the company grows is when you run into put into actual words. I think when you're zero to 50,0000 to 100,000, you have less leverage. It may benefit you to leverage a reseller. It may benefit you to get an SMB account where you get no attention from a FedEx or Ups. I think once you cross the $100,000 mark, you begin to start issuing up towards some leverage, and then you should start flexing and using it. So I think that's how we see it. Any questions on that one?

No, that makes a ton of sense. My next question, though, is I think when you're thinking about getting set up with the Three PL, one big question is, like, am I working with the right person? Are they the right partner for my product, and are they going to be able to scale with me as I grow? So how do you guys think about that? What have you sort of seen from different brands in choosing the right Three PL? If they're going to work with them, what are the things that you should be looking out for as a brand when you're looking to work with the Three PL?

Sure. Great question. So I think from a Three PL perspective, I think the needs constantly change. I think you should look around. There's a famous saying, as a good Jew that I am, there's a famous saying if you want to know how great a rabbi is, see who's in the leading room with you. So if it's the common folk, he may not be that great. If there's other rabbis, he may be a great rabbi. So I think it's the same thing with three pls. See who they're working with if they have a lot of customers of your site. And by the way, if you're Joe Schwell Ecommerce Company, and you have ten orders a week, you probably don't want to be in the same Three PL as Macy's. Probably a very bad idea. You're not going to get any attention. But if they have a lot of your peers and the folks you aspire to be better are within spinning distance, I think that's a very healthy place to start. I would always ask for tremendous amount of rep, Francis. I would ask them to kind of break out their costs. Are they going to be transparent with you on shipping costs? Is there a set markup? Will they give you access to that? Because many of the Three Pls we've seen, so we typically work more on the carrier sets. I can't say I'm the world's biggest Three PL expert, but with that said, where we've seen lots of issues is where it's just, okay, you're paying shipping, they're giving you a marked up kind of rate card or accordingly information. You have no idea what they paid, and you be maybe 30 points off. And we've seen that. So I think those are some of the things you should consider. I think in my general kind of thesis, always has, always be talking to your peers, because, again, the way we got into this industry, we realized there's opportunity is by just understanding, hey, you can have company A competes with company B doing the same exact thing, or more volume, similar profile, paying drastically different rates. I would assume the same thing applies on the Three PL side, at least from what we've seen. Yeah, that's at a high level from a Three PL perspective. I think one of the other things we've seen in the ecommerce world specifically, is this relates to both three Pls and to kind of interacting directly with a carrier is ecommerce companies are something that's obviously relatively new to the world. It's probably 25, 30 years old versus typical mail order business or typical just general B. Two B business that FedEx CPS are used to. The level of growth ecommerce companies have in a very short period of time is ridiculous. And it's awesome. And obviously a lot of people, I'm sure they're listening to this, have either gone through that or hoping to go through that, obviously in a healthy way, that they retain margins and sustain and grow. With that being said, from our seat, we kind of will bump into people that have contracts that don't support they supported you six months ago, three months ago, 18 months ago, but your business has grown. You have grown up. And that could be either a 3D relationship or a direct carrier relationship. And I just think in the ecommerce world, that's one of those things we work with obviously many other categories, but Ecommerce is a big, big one for us, and we're fortunate to work with just some of the good ones. And yeah, we just seen that become a huge issue where it's just kind of not spoken about.

So my next question is just in terms of the makeup of the space, right? Because I know there's a whole bunch of different options. You can either go the Three PL route you can go with working with your own carrier, and there's a whole bunch of different ways to go from your vantage point. Why don't you just walk us through how a lot of top brands in the space operate, right? Like who's working with three PL. Who's going direct? What carriers are they working with? What experiences do certain types of products have with other carriers? Just, if you give us the inside.

Scoop on that prior to that, can I give you a quick 30,000 foot view on just yes, but please, as an entry to that, I think just to answer your direct question is what are the best brands doing? Well, I'm giving you an answer that everyone's going to be quite annoyed to hear. Well, it depends. We're big believers. A carriers are your partners in ecommerce. You need your carriers. It's kind of this lovely, funny dynamic because their rates are constantly increasing. May or may not be challenging to deal with, but you kind of need them to deliver your product unless you plan on using the Pony Express. It's just like you can't live with them, can't live without. With that being said, it really depends on what you sell and what your product mix is. We've seen companies that if you do a quick Google review on a particular level of service, where for company is a horrible experience. If you're buying we work in the jewelry industry. If you're buying Ecommerce, a $6,000 diamond, you're going to expect to get that fairly quickly and probably overnight. And a diamond company would be very not well served if they used a lower tier service or lower tier carrier. So those guys are typically priority overnight. Today it's not going to be ground versus a company that's selling a couch online. Let's talk about that. We're super heavy in the furniture industry. Industry. They're selling a couch online or bed in the box. We work quite a bit in that space where many times there's a backlog kind of, you know, you're waiting two weeks. There's a production waitlist of two weeks. So your expectations already two weeks out to wait another four, five, six days for a particular service. And that item coming around kind of doesn't matter. It's not going to change the way you view them as a brand where your interactions you waited two weeks, you're probably not going to notice if it's two weeks in two days versus two weeks in one day, in all likelihood. So kind of really depends. I know people hate to hear that answer, and that's why we're a big fan of the custom suit strategy. It's got to be custom for you, for your needs and what your client expectations are. And obviously that's ever evolving, ever changing. The big gorilla in the room is Amazon. And obviously as they change and kind of evolve, our Ecommerce clients are constantly trying to keep up and leverage their carrier partners to keep up with that 30,000 foot view. Kind of before we dive into the specifics of each carriers is if I'm an Ecommerce brand, kind of what is a shipping contract? What is that piece of paper? What does it give me? Because I think that's like a good thing that people we talk to, people like, hey, we have the best rate. So first of all, anyone who's listening to this, if your name is not Jeff Bezos, you don't. So I hate to break it to you. And what is that piece of paper? So that piece of paper gives is a discount off a published rate. And I think that's just important to start high level beer because that published rate constantly goes up. So 2023, they call it Gri general rate increase. The transportation rate went up 6.9%. The average surcharge went up double digits. So what the contract gives you is a discount off that number. So let's just say you have 50% discount on Ground. And ground used to be for these are just random numbers here. They used to be $100 a package. You get 50% off, and so you're paying $50 for that particular shipment. Again, this is totally rudimentary and not grounded in any reality. But if the rate that was 2022, 2023, it went to 110, you still have a 50% discount. So what we find is people need to be looking at these agreements more often than they think, because the rates have got continuously go up, and they go up in complex ways. And we can dive into that even further as we dig in. But I think it's just at a high level, what is that piece of paper giving you? It's giving you a discount off a published rate. And that published rate is constantly rising. So people say, hey, I'm a great contract. I'm like, yeah, if you last revisited that three years ago, probably not that great anymore because the rate has gone up 30 sensitive compounded. So that's on a high level. When I think about kind of an ecommerce brand, if I was an ecommerce customer, it's kind of when my shipping small, medium, large is in my small medium or large. The box sizes, usbs is a great option for the really light. So, like the best of the best for trying to leverage Usbs heat, shell, male elevations, FedEx grant, Economy, these are lightweight services. They're really good subwoofer pounds. And it's kind of low and slow, low price and slow service. So when you think of like some of the larger apparel brands that you've probably heard of that sell direct to consumer online, larger direct server jewelry brands, many of those you'll find, and you can fact check me on this, look at their websites. When you look at kind of shipping that sub tab, they're utilizing service like that. I think mid size, typical mid size packages, ten to 30, 40, 50, as well as not super large, you'll see, and it's not a crazy kind of from a volume perspective, doesn't take up vast amount of space. We always say the best example of that is Bounty paper towel or some cases diapers, where it's just a huge box, takes up a ton of space, you're going to get dim. They're not charging you based on weight. So CBS compete heavily on that. The larger real wheel furniture guys, they haven't built like modular or bed in the box. They're typically using home delivery ltl that's less than truckload. Some of those carriers, one of the things we haven't spoken about, typically for the larger ecom shippers or kind of we're starting seeing where the mid size also leverage that is the regional carriers. Lasership onshrap. There's quite a few that's become quite popular to talk about. We've seen people struggle to implement many of the larger brands that have leveraged that, especially during COVID when kind of demand was at an all time high. That's kind of a high level when you think about your typical ecommerce company, the obvious names come up, like as kind of who that landscape is. FedEx CBS Usbs DHL. And then the larger they get, the worse they're very regionally focused. You'll see those regionals pop?

Yeah, I'd love to talk a little bit about the regionals too. It's like, what role do they play in the ecosystem? Right? Like, what scale do you need to be at if you happen to sell really well in a certain area, is that something you look to tap into? What advantages would they have versus disadvantages? What's the reason that you would use a more regional carrier? Are you getting better rates? Are you getting better terms?

How do you think about it? Yeah, the answer is it's complicated. We've kind of seen people really kind of make some strategic errors in approaching that. I think if you're a sub of 510 million dollars shipper, unless you're constrained in a particular region, it gets really challenging to leverage on the regionals because FedEx Ebay's contracts are built based on tiers, based on the volume you give one. So we've seen people that leverage, hey, we'll get this price here, this price there, cheaper here, cheaper there, and then they kind of work their way out of their tiers and they ultimately end up losing on the macro, they lose. And many of their agents, they'll meet their minimum commitments and it ends up really not working for them. I would say from a typical growing ecommerce brand, we haven't seen sub 5 million. We haven't seen that many people jumping on that bandwagon. The larger brands we work with rather that spend 20 plus million bucks a year. We're seeing a lot of those guys try to post, COVID diversify the carrier base. It's a funky time to do that now just because the economy is contracting, like 2023 is going to be a fun year. If you're a shipper, if you're an ecommerce brand and you're listening to this now, whether with me, somebody else, yourself, go and negotiate your contract, it's a great time. You have a leverage. We haven't had it for two years. So I think for your average, probably someone who's listening to this sub, $10 million, 510 million bucks, I don't know how much value they would get out of that conversation. I think we're seeing a lot of rumblings, and I think it is a concern. I don't know how long it will remain a concern. UBS is going to labor negotiations now that's coming up. That's going to be interesting. It's going to be an absolute wreck for UBS because they're a unionized company. So we've been getting calls saying, hey, should we consider some regional options? FedEx has put in March 31 cut off. I don't know when this will be released. If that's before or after you missed it. Sorry. If they're going to be onboarding new volume, they're absolutely using this as a marketing tactic. But yeah, so I think the Regionals have their place in the market. If you're a California based ecommerce company that's selling a product within California, definitely go use a regional. I think at a high level, what the regionals have done for the ecommerce brands that we work with, it gives them optionality. It takes it from a duopoly, which it kind of is felix, you guys are the majors and kind of gives you robust options and a compelling story and narrative to get a reduced rate. So I think it's a very good thing and we absolutely root for their success when we're able to we route our clients down that road as often as we can at what it's good for them.

Got it. One question that I just wanted to kind of go over in regards to shipping in general. And then I want to talk about how we can kind of get the best rates and what the best practices there are, but what's standard pricing for shipping? Right. Kind of like we were talking before, we know that shipping costs are a major input cost, but let's go through different types of products and what should we expect to be paying to ship various types of products at the different scales of your business, right? So let's talk about maybe some different categories.

Like, all right, so I'll tell you like this and your audience is like, I love this, but this is the reality. The reason the niche that we play in is the answer is there's absolutely no standardized answer to that question. So you can have two customers that ship iPads and sell them online. A depends on the service they need. So that throws you for a loop is if you have A, what you require one day transit, obviously you'll pay a lot more than someone requires lower transit time than that. That's A. B depends on your volume. If you spend $100,000 a year with a FedEx and Ups versus 5 million, you're going to get a drastically different rate. But C, maybe not because if you did a horrible job negotiating your contract, you may be paying $14 a package when your competitor is paying eight. And when that compounds over a year, that becomes a major problem opportunity. So that is kind of what we call the bottle of milk scenario, kind of that we kind of mentioned earlier on the Pod is you go to store, buy a bottle of milk. There is absolutely I can show you direct competitors below your mind. I can't show you because we're under NDA, but below your mind can be in the same space. One of the more recent ones that comes to us. And also, I think more importantly than that, utilizing the wrong carrier for the wrong product. So we had a client of ours that shipped a very lightweight product. They belong with ADHL and they were shipping, I believe they were with FedEx and there was nothing wrong. DHL just has a very competitive ecommerce product. But they were about $3 off a package from where they could and should be. So they did not understand the right carrier, right place, right time. They were just leveraging the wrong partner. That's just easy example there. Then you can have two FedEx shippers bullish shipping, home delivery are very residential ecommerce shippers. One, their average packages $10, the other one's 1350. And from a percentage perspective, like difference, that's huge. Absolutely huge. So I think kind of you asked the question that just not plugging what we do plugging why it's so important to focus on it. Talk to your peers. You'd be surprised. And I marvel because we do business with a lot of people that compete with each other. And I marvel by the folks that focus on it. We can help them less because they have better agreements. The folks that don't or don't even know where to start, they're really, really lost and they're at a competitive disadvantage. And let's just talk about it on the flip side because it's really spoken about when you talk about your cost per acquisition, this is like heckfront special. You'll see that your cost per acquisition is $12. And if they're direct competitor is seven, they're at a major disadvantage. There's no difference when you're shipping zero. Absolutely zero. If someone tells you otherwise, they just don't understand it. So, you know, I think at a high level, I know you asked me a question you're probably looking for, hey, is he tell me he thoughts of can't do that for you because bureau is the opportunity.

Of course. So let's go to the next part, which is more on the negotiation side. Right. How do you do it? How do you approach it? What should you be thinking about as a brand? How can you get the best rate and make sure you're giving yourself you're ensuring you're not only getting the best rate, but you're also not locking yourself into anything crazy as well.

Sure. My step one is know who you are and know what your benefit is. So I think step one is kind of know your product mix. So like at a high level, one of the things we always think about is, and this is some statistics that will probably shock you is FedEx loves the large packages. They love larger bulkier items. They've built their network. They've designed more around that. So typically these are pretty close. At one point they were accurate. So I may be off just this quarter or this year, but Fedex's large package network is about 12% of the network is large and bulky, ups closer to three 4%. So one of those carriers actually focuses on that. The other one actually despises that one of them. It's a moneymaker because of the way they built their network and they designed their warehouse load. The other one is actually a royal pain in the neck. So it's just kind of know who you are, understand your profile, and understand then. Next is know your carrier, know what they appreciate. If anyone has that question, email me, I'll tell you. Just tell me what you ship, what you sell. I'll respond who you should talk to, because one is not better than the other. Depending on the region, you may get better service, and that changes constantly, quarter by quarter. But depending on what you sell, one carrier really may be a better fit. So know who you are. Also, if you're a mid sized ecommerce shipper, I assume that may be a fear math of your audience, that they're not super large, not super small either. You are precious to FedEx and BS. People think off, Only I was Macy's. If only it was X, and I don't mean specifically Macy's. I'm not picking on you, but if only it's X. The mid size is what they love because FedEx, CBS, the folks that spend $100 million plus with them, they have accounting as a scale, they have insane leverage, and they're paying a drastically different price than the only benefit they have for FedEx is the pickup cost. And that's really not a whole bunch large part of the actual shipping cost. So once you get past that, if you're a mid size shipper, your starting point is at a higher rate than them. They love you. They want to talk to you, and they want your business. And both of them you can fact check me on this. They're touting. They're growing their SMB mid cap, and that's the sum 5 million. So if you fit that criteria, you have value. So that's eight. Know who you are, know your benefits, know your carrier. I think moving on from that is understand who you're negotiating, gets your rep, may take you out for lunch, he may take you to a ball game, he may rent the suite for you. He gets comped on your margin. Understand that. Understand that. So clearly we see folks make that mistake. I am super tight with my rep. I'm sure you are. I'm sure he's helped you out quite a few pickles and they're here that they're there that add value, but at the same time, they make money. The more you spend, the more they make. So we always tell folks, understand that when you're going to negotiation. And also understand is that their job is to lead us on between you and their pricing team and the sales leadership there, and you're not just negotiating against them. So we typically sit down with folks and kind of take a real hard look at kind of what they're doing, what they're not doing. And they're like, hey, I'm definitely sharpening them a rap. And they don't understand that these are public yelled companies that do. Their market caps are hundreds of billions dollars, whatever they are today. They have teams assigned not capable teams assigned to figure out how to kind of get the most margin possible out of you, and you move to go into that negotiation prepared. So aside from knowing your benefits, knowing your carrier, know what you're up against, understand your data, understand it. Go, this doesn't take. You don't need a firm like me to do this. Just 80 20, where do I spend my money? Talk to your peers. Does it sound like it's in line? Does it not sound just measure your data. Also look so that's kind of understand your data initially, understand that yours the contract that impacted, if there's something that's not in your contract that needs to be your contract, make sure it gets in there. If you don't have a discount on surcharge you're getting hit with, you need to have that. It's mission critical to have it. So that's kind of at a high level, we just understand your data, you go unprepared, know who your upper is. Rule one kind of going to like we kind of break rule one of the negotiation is expect no. They're going to tell you no because you're not changing your business. You're asking them for something, for nothing in return. You can kind of say, hey, we're going to switch to FedEx, we're going to switch DPS, blah, blah, blah, blah. Ultimately, you're giving them nothing in return. Expect no. FedEx. CBS sales Training they typically say no seven times before they say yes. No commit, hey, we're during peak season. This is not a good time. Negotiation aka no. They just said no to you. You can expect a variation that seven or eight times before you get a yes. So that's rule one. Rule two, remember how your banks money. Rule three, these contracts are complicated. They're typically 12, 13, 14 pages. Make them explain to you in English. And just plain simple. A plus B equals C. Just one, two, three. Just two plus two equals four. If you can't understand that, don't sign it. Then it doesn't work. Rule number four, and we love this one, is every last bit of that contract is negotiable. There's no such a thing as there's something that's not obviously every rule, there are exceptions and there are exceptions at each level of spend. But everything's negotiable. Ask. Ask and you shall receive. Rule number one. So kind of that's how we look. Kind of just high level at a negotiation going into this pod. Blade and again, so grateful for a for you, for having me and for anyone who's still listening is kind of I kind of put together ten or eleven nuggets of like kind of if I was the Ecommerce or what's. Practical takeaways I can take away from this conversation. One, yes.

That part is really helpful and what I'd kind of love to just chat through is.

What those nuggets.

Are, I guess in terms of if you want to give practical advice that are really memorable that people can just take away and start applying to their process when they're going through their negotiations themselves. What are some of those nuggets? What are some of those things that they should remember always to do in a really kind of simple way?

Sure and I will do my best to get that and get it perfectly for everybody here. So first of all, a high level, one very quick point and I'm ADHD times ten. So if something's a little out of out of order, I apologize. But federal CPS love meetings. They love bringing you lunch. Your job where most people are looking to improve their EBITDA, save money and achieve cost savings and ship more efficiently. Don't waste your time with the sales, just powerpoints. Stay focused, stay on mission and get it done. So that's another high level point but kind of let's go through some nuggets and some tricks and kind of I would call more insider things that people don't necessarily talk about all the time is if you're a lightweight shipper, you're listening to this, you sell socks online, you sell lightweight jewelry. You're just starting out. You're the etsy seller. That's what you're doing. If you sell lightweight, you may have the best discounts in the world. You're going to run up against something called the minimum charge. And on your contract you're going to see something called a minimum charge reduction. If it doesn't say a discount next to it, boy are you in trouble. Because FedEx, CBS, you can have 90% discount but they have a minimum charge per package that you will always bump up against. And the time you will bump into that is if you're selling a lightweight product. So if you have a lightweight product and you keep bumping up and the easy way to identify minimums is your problem, is your issue. Take your shipping data, download it kind of format your Excel sheet. If you see that you keep hitting up in today's day, the minimum on ground is $10.10 this year. If you keep hitting that number, you got a problem opportunity go get ask for a discount off that number. And it varies based on your volume. But typically you can sometimes get it as a percentage. Most times it's given as a dollar just depending on volume. So that's kind of if you sell lightweight stop right there. Pause. Go check your contract, check your data. You will find value in that if you haven't done so yet. If you spend a lot of money there, you should kind of raise it to the ceilings because you deserve a discount there. If they're not giving it to you, go crazy. Two large and bulky. If you sell large and bulky items and you don't have a kind of a dimensional divisor in your contract or you're paying it to published of a 139, you got a problem. You got to move that up so that's length times width times height. If they charge that by a volume basis, you can get a it's called a divisor. The higher that number is, the better off you are. That's just an eerie to look at. If you're paying 139, you have a problem. Go ask for an increased dim. Stop what you're doing. Now, if you ship larger boat, you sell furniture, bikes online. That's what you need to be doing. Three, when you hear about a rate increase, first of all, they announce it in advance. They typically announce it three, four months before they roll it out. Go ask your rep. How is that going to impact me? In dollars, not estimates. Estimates. How is it going to impact me? And just know, this past year they announced a 6.9% increase that did not include surcharges. So if you're a larger bulkier shipper like you sell the couches online, probably 30% of your shipping costs have surcharges. The average surcharge will have double digits. Your cost will have a lot more than 6.9%. Get on it, be proactive, go for it. And if you just there's simple ways. We have a free checklist of Sony's help that's just ease go. There's a lot of information online you can find. Also understand surcharges expand. Not only do they go up, so delivery, you know, extended delivery area surcharges, of surcharge if you ship to rural areas. So some of the other ecommerce brands that probably don't typically focus on the urban area, they've expanded the zip codes, the zip codes that are included in extended delivery area surcharge. So not only did the cost go up, the amount of households that are now eligible to receive that surcharge has gone up. Also, how in your app, how has that changed? And they've changed a little on wickets and that's across the board, large and bulky. They've kind of shifted. That what's considered oversized peak. Oversized. There's just 80 20. Go find the top search orders. You're spending money on everything's. Negotiable. If you're spending, just ask, ask push for it. A lot of shippers. Go ahead. Sorry.

On the surcharges note, what are some of those really common surcharges? Are there any surcharges that you see that are really easy to kind of get out of or that you see being applied to a certain type of brand? No one likes surcharges. What are they?

Yeah, it's interesting. Yeah, it's something FedEx EB is grappling with. And by the way, I totally understand their perspective on it because shipping is complicated. They have increasing costs. Give you example, like if you sell we work with some high end luxury brands that sell high end luxury items online. Average order value of $5,000. Plus they're not delivering an item without a signature. Signatures is actually really annoying. It's a cost for the carrier because they many times have to redeliver that item. So we get it as to what we do. Totally understand the surcharge, but every single surcharge if you spend enough money, they will give you a discount. Common for this pod, probably many of your client, many of the listeners, ship to residences, residential surcharge. You're going to see that all the time. Ask for a discount, you deserve it, go get it. It's common. And the gift, you should definitely go for it. I think my next point kind of is tied to this. FedEx and UBS contracts are typically what's known as evergreen. They can extend for years and years and years will many times see expirations on surcharges in those contracts. It's very, very common. Twelve months, 24 months, 36 months. And if you don't renew it or go back, you'll just lose those excuse me, you'll lose those discounts completely. And many shippers that don't focus on that, they may have expired a year, two or three years ago, and they're just paying published on something that they think they have a discount on. And these eras are complex. We get it. That's what we do. It's super complex. And if you don't have the software to dig in, it's just hard to see. So that's something I would say, really look at the next one. I think everyone of us pot, I assume is looking to grow their business. Do not make the mistake I'm about to say, because we've seen people do this time and time and time again. Many folks think the best way to get a great price from FedEx EBS is to mislead them on the volume you're going to give them and say, oh, we're going to be a $10 million shipper. Give us amazing $10 million rates. FedEx CPS have been around the block a lot longer than most of us, and they know that game and they know it really well. Be honest with your volume because if not, they're going to build tiers. The contract is based on tiers. Your discounts are based on tiers. They're going to give you tiers that don't make sense. You're never going to be able to hit them. And you're going to look like a bad customer, bad partner, and it just will knock the wind out of your next round of negotiation. And you'll likely pay more, not less. So that's just a common mistake. We'll see. People will ask them, hey, we're looking at your agreement. Your tears make no sense. They're like, oh yeah, we promised them the moon and they really land back on Earth really fast. So it's really not great. Next thing is fuel. Fuel is derived as the cost of fuel they tackle as percentage. FedEx CPS do you, DHL does it differently. But the primary care of FedEx EPS derived fuel as a percentage of your overall transportation costs. You reduce your transportation cost, increase your discounts, your fuel cost will go down fine along with that. Did I hit time?

No, you're good.

Sorry about that. Perfect. That's kind of on the fuel payment terms. We've seen customers that some people have that seven, it's 14. Ask for terms again, ask that you shall receive. We've seen some customers with very strict payment terms. Some customers in ecommerce, we're always chasing cash flow. We know the game just kind of you have cost of inventory, cost of everything overhead. Try to get payment terms. Ask for the next little nugget is your gri 1 second in terms of payment terms.

What does that typically look like? What are your levers there to pull? How much they want up front?

Just give us a little bit of.

The landscape of the payment terms of the shippers.

Yeah, it's not upfront versus upfront. It's just more some folks you have be required to pay your invoice with the 70s, some 14 we've seen recently, as high as 29. I haven't seen that many. Like there's a legacy shippers that have lower payment terms than that. But we've seen folks at seven that you can easily get 14. It's not a cost savings, it's just kind of maybe though depending on how you run your cash flow, if there's a cost of borrowing, if your business leverage. But I think that's just an easy area to give you peace of mind as you transact with. And for most businesses it's pretty large cost. It's a large cost of doing business, especially during peak. There's no reason if you can get a couple of seven days, just ask, just see what you can get. Next thing is that gri we touched on, we kind of dove. It a general rate increase. Get ahead of it. We always see shippers calling us like the last two, three months has been busy nonstop because shippers do not get ahead of their general rate increase. They wait until they've actually seen new charges on their invoice and they're saying holy cow, we have a problem and great business opportunity for us to come and save the day but totally preventable a look at it yourself. B, call somebody who knows what they're doing but just understand how it's going to impact you in advance because common like if you're a director of logistics or even if you're a founder of an ecommerce company and you're looking at your director of logistics and you're saying hey, I don't get it. We're shipping similar buying to last year of course up 15%. Get it? You just took a rate increase. You didn't do anything about it. Simple. So do something about it. Next thing, termination language. Some contracts have termination language in it. Don't be scared by it. Meaning obviously understand, talk to your lawyer, this is not legal advice but understand what your penalty may or may not be. And just know that most times the carrier wants to build a great relationship with you and just understand it happy. If someone has a question on that, what that looks like, they're exploring another option. Understand it because sometimes it's a percentage of that has to stay with them. Sometimes you may even be out of the period. It or the cost of switching maybe 1%. It may be very well worth it. We're not fans of switching for the sake of switching. We're fans of every ecommerce company especially. We've all learned this during COVID Have optionality. Have it, have it, have it. Don't give it up so quickly because you may really, really need it. I think forward looking ups strike may or may not happen. Having optionality is awesome. And have that backup plan. Last but not least, and so importantly, we see so many sony are the smartest ecommerce guys we know and have built huge, successful brands and let their agreements collect dust. The carriers are very comfortable increasing your rates at least once a year, at least some of this many times. You'll see sections increase biannually, and they're very comfortable expanding what is considered peak. How is the Capitol and just increasing your fees? Don't let your agreement collect dust. That's like step one. Half the battle is go pull it out, find it. And I'll say we joke about it. We talk to companies that spend 510 million dollars a year. They have no idea where their grims are. They don't even understand what they look like. And it has a mitochondria. And I hope my always snarky New York answer is, okay. So when you pay taxes, you don't have an account to look at that every year before. Just if the IRS sends you a bill, you're like, all right, we're not looking at that. We're not validating it, and we're not making sure it's accurate and understanding, okay, what tax bracket we're in? Yada yada, where could we be? And if you're an ecommerce brand that you started five years ago, then you were spending 250,000. Now you're spending 3 million. Your business is matured. Your contract may not have matured with you. And even kind of full circle blame kind of even if you're in a three PL relationship, a three PL partner, a may not be the right partner for you. Your peer group may have changed. You may have outgrown it. B, your carrier may or may not be the right carrier for you anymore. Your product mix may have changed, or kind of the regions you ship to may have changed. So I think all those things are super, super important. But I think it's just step one know this concept exists, knowing how critical it is. I think it's just like, hey, we lowered our cost per acquisition, and then shipping could kind of creep up on you, and you could have an increase in orders. But if your margins are lower than that, it's just not a fun day at the office. Obviously, if there's any way anyone has any questions, just big fan, happy to help. Anyone in the pot? Boy, I think you'll put my email in. Just email me.

Yes, definitely. And that's kind of what I wanted to talk about. It's like you have so much knowledge about the whole shipping and fulfillment side of brands, right? And a lot of what we cover.

On the pod, it's a lot of.

Stuff about brand building, operating, marketing, but this is one of those things that's just so important that people don't really realize a lot of times when they get into Ecommerce, it's like the name of the game. It's like, can you build a good product and can you build a good supply chain and be able to fulfill it with the right input costs to get your product delivered right? That's what it comes down to when you're succeeding in this business.

So you hit the new this is the after, it's the not cool part of the business that's just boring, but just as important.

But yeah, not even the fact that it's boring. It's just so important for brands to get right because of course, you have to build a great product, and of course it has to be something that PR wants to talk about and has all the bells and whistles and is really cool. But at the end of the day, if you don't have your shipping optimized, every product you're getting online, you're shipping, right. That's an input cost to it. Just like you pay for all your other costs to source it, to market it, everything. And when you're able to really know what you're doing, you're like at scale. These are numbers that really become exponential. So I just encourage anyone who has questions about this side of things when they're setting up their business to be able to get in touch with you.

What's the best way?

Do you have an email? Are you on LinkedIn?

Yeah, it's the best way.

Where can our listeners find you?

Lead get email is the best. I love email. Shout it out. Shout it out. Izzy at Ship Lion, as in the animal. Ship Lion.com. So Izzy. I-Z-Z-Y even if you have any questions. I always say we're not a great we're not a good fit for the folks who are good fit for. We're a great fit for for other folks. I'm happy to help if you're not at scale yet. You have a question? Anything you need? If if I can't answer, happy to introduce you to this on I can. I think one of the cool things we've been obviously also maturing our capabilities a lot with the great customers we work with. We started with some companies. One of our best stories is a company we started with. They were spending, I think, about $20,000 a week when they started working with us four years ago, Ecommerce brand. And now they spend about $400,000 a week. And that's like we obviously on that level, we'll grow with them. But I think kind of needs to change. We may not be a good fit early innings, or we may be a. Great fit, but I'm happy to help and happy to direct solid or if they just want an introduction to the right person. And I think what you do with the Pod is awesome. And I'm so grateful to be a part and grateful for anyone that I have a lesson. Sweet.

Well, Izzy, thanks again for coming on. We learned a ton and can't wait to keep in touch. Maybe we'll have to do some breakdown episodes in the future, break down some brands where they're messing up what they did, right? So thanks for coming on.

By the way, we have some good ones. Yeah, I can show you some. We have some good dirty ones in the ear, but yeah, I really appreciate it. Thank you. And thank you, Steven, to listening. I really appreciate you taking the time.

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