Webinar Transcription

Perry: Hey, good morning everybody. This is Perry Goldstein. I’ll be doing our webinar this morning. I’ll be hosting Derik Sanders as my guest today. And if you have any questions, there is a question button.

There’s also a, well the raise your hand but it won’t work because we have everybody muted, but you can ask questions. I’ll try to answer them as I get to them. Thank you so much for your attendance. So we’re going to be talking about logistics, shipping.

Let me get to the next, so we’re actually calling this fulfillment and shipping but we’re going to be going a little past that we’re going to actually end with a very new shipping model that allows you to ship to the end-user globally at a very reasonable price. So with that I think we’re going to kind of jump in, introduce ourselves real quickly. My name is Perry Goldstein. I’m an industry expert in e-commerce.

I spent my life in the consumer electronics Industry. It was in the very first meetings with Amazon was all the dot-coms back in the mid 90s. So I’ve spent a lot of time managing e-commerce from the sales side. Derik won’t you give us a Reader’s Digest who you are. 

Derik: My name’s Derik Sanders. I’m currently with APC Postal Logistics as a sales director, and I’ve been in the logistics International Transportation industry for about 33 years. 25 of which was with DHL Express and then about the last eight with APC. So focusing a lot on the business-to-consumer international parcel part of the world. 

Perry: Excellent. And so we’re going to end the webinar with Derik talking a lot about the direct to the end-user at a reasonable, you know shipping price that was not available, probably what maybe a year or two ago? 

Derik: Yes. It’s been alive for several years, but it’s growing tremendously as an alternative to your Express Fand your typical ways of shipping to your consumer. 

Perry: Excellent. So we’re going to jump right in and talk a little bit about what we’re going to be covering today. First. What I like to do is to, this series is called the webinar ecommerce basics. 

Ecommerce basics means we’re covering everything from the ground up or assuming everybody’s got a working knowledge of e-commerce, but we just want to make sure that we’re all kind of on the same page. So I like to start with key terms making sure that when I use them everybody knows what we’re referring to because these terms are interchangeable and have lots of different connotations. 

We’ll talk briefly about the different sales models, fulfillment models, and then shipping models very specifically. We’ll address fulfillment and shipping as two different items. Shipping is a subset of fulfillment; it’s kind of the end process. Then we’re going to introduce you to the direct to the end-user and that has a lot of applications. I think you’d be interested in hearing about, so this would be good for both resellers and manufacturers. We have something for both here. So regardless of where you sit in the ecosystem we have something for you.

Key Terms

So when we talk about fulfillment we talk about the entire shipping process from when that goes into the in “add to cart” box. You pay, you get that immediate notification you bought a product. It’s on its way, all of that from there is fulfillment opposed to shipping is the actual movement of the product from point A to point B. Sales model is how we sell things. There’s a number of different sales methods that you can incorporate. E-commerce platform direct would mean selling to somebody like Amazon or walmart.com opposed to Marketplace would be selling products through their platform. Merchant Direct would be using your own website. So we like to refer to that as Merchant direct. Reseller is somebody that buys product from someone else and resells their product as opposed to manufacturer, you’re somebody that actually makes your own product, your own branded name product, and sells it.

Sales Model

So let’s start out with the sales model. There’s really two basic ways to sell products.

There’s a lot of different subsets again, but two basic ways. You’re either selling direct to the platform or you’re selling, either well… and when you sell direct to the platform you’re selling to them directly or through what we call a master distributor. Distributor that will, you sell your product to and they sell it to walmart.com and the likes. And then there’s direct to the end-user. So you’re either selling to somebody that’s selling direct to the end-user or you’re selling direct to the end-user yourself.

Direct to Platform

So when we talk about selling direct to the platform, we’re talking about it’s like selling to a department store.

You call in a buyer in the old days. Right, you take out your book, you show them the products and then they buy the products. When you sell direct to the platform, your responsibilities and when they take it onto their loading dock from your loading dock. They handle all the fulfillment, all the communications, all the shipping, marketing. You work with them, but essentially you’ve turned all those duties over to them.

Direct to End-User

So when you sell direct to the end-user, you’re selling, you’re taking on fulfillment on your own. You’re taking responsibility and there’s lots of different ways to fulfill and you have two methods of selling direct to the end-user through the marketplace, or your own website and there’s lots of different options within there. I don’t want to go into that because this is not a sales webinar, but that’s really it. You’re either selling through Marketplace or on your own website. 

Through Marketplace

So through the marketplace, I like to say it’s like having a booth at the swap meet or a store in the mall. You’re renting space from somebody else, but you are completely controlling and managing your sales process, your pricing, your content, your fulfillment, your shipping. Now within the marketplace, there’s lots of different options for fulfillment and shipping. 

Merchant Owned Website

And then there’s the merchant owned website, where you take on everything yourself. But when you go to marketplace, you have lots of options there. Derik, you’ve done a lot of this. You want to talk a little bit about some of the options when you go into a Marketplace for fulfillment and shipping. 

Derik: Yeah, tons of marketplaces from the Amazon for the Walmarts, people buy goods through the merchant. I would say in my experience. It makes up 40% of everything that goes International e-commerce for sure. 

Perry: Excellent. Thank you. And then on your own website again, you’ve taken those duties on. You can either have your own warehouse or let a third party do it. This is really an interesting statistic I found the other day. What does it say, 68 percent of retail sales through Amazon are Marketplace. So the vast majority of companies are doing Marketplace, not selling direct to the platform at least in this particular case. And I don’t see any reason why that wouldn’t hold true for most platforms as well. That was really a fascinating statistic, because 68% of the resellers decided to handle fulfillment and logistics themselves at one level or another.

So when you sell direct, when you sell direct to the end-user now, this is really an important point that I want to talk about, and we’re not going to go into this too deep. Selling directly to the end-user and shipping directly to the end-user are two different things.

You can sell directly to the end-user and handle shipping lots of different ways. Or you can actually let somebody else, one of your resellers is manufactured sell to the end-user and you handle all the shipping. So as a manufacturer, and I come from the manufacturing background, worked for manufacture my whole life. The big question is if you sell to an end-user, how does your dealer based feel about it? There’s a lot of retailers, resellers out there that won’t do business with the manufacturer that sells direct to the end-user. That’s a choice everybody makes but that’s what’s out there as a reseller.

The big deal here is the company you’re buying your products from allowing you to ship outside of the U.S. If you’re dealing with an international conglomerate, something like a Yamaha for instance, they have sales offices basically in every country in the world. You’re only really licensed to sell within the U.S. In other cases, you can sell from the U.S. into International Marketplaces. So those are our two models for selling directly to the end-user and that’s really all I’m going to say about that.

Fulfillment

So now we go to fulfillment. So when you fulfill through an e-commerce platform, basically, you’re off the hook. You sold the product, you send them a bill, they pay, you send the product, everything’s handled, it’s TurnKey. There’s advantages and disadvantages to that. 

But when you fulfill directly to the end-user, you can use your own warehouse or you can use a third-party logistics company. Derik, so why don’t you talk just a little bit about what a third party logistics company might do for somebody that’s shipping. 

Derik: Yeah, different sizes of, we call them 3PLs and even 4PLs, but third-party logistics companies are set up to handle the inventory. They’re set up to handle the distribution, and to communicate back and forth to your form of technology so that you know what’s been pulled from inventory and then they give you a plethora of options and how you want to ship.

They control the shipping, typically, and they’ll charge you a marked up fee. On rare occasions you can say hey, I negotiate the shipping on my side and they just charge you their inventory and processing fees. So a lot of different ways that third-party logistics companies work. There’s e-commerce companies that are third-party logistics companies and then there’s refrigerated Goods. 

There’s all types of 3PLs out there that can fit your specific industry. But when it comes to the world of e-commerce and what we think of it, commerce whether it’s apparel, whether it’s you know sporting goods or whether it’s electronics, these guys are set up very well to handle that inventory and get it shipped out for you. 

Perry: So if you have a pretty sophisticated shipping operation, you may want to use it yourself. It’s less expensive. But remember when you start shipping, especially direct to the end-user, that’s one box at a time, do you have enough manpower? Do you have all of the boxes and things you need to go to the end-user? How is your Communication System? It’s, we’re spoiled, you order something online, you get a text within milliseconds confirming that you bought the product and it’s on its way. So you have to be able to have, if you’re going to do it yourself, you have to be able to match the best practices of some of the platforms that we are familiar with.

Derik: The design of a 3PL is to help the retailer or the seller focus on selling their business and selling their products and letting the logistics company manage the things that they’re not specialist at in terms of the actual seller themselves. So that’s the idea behind them providing their services.

Perry: Right, so they’re an outsource. You have to do, I guess you have to have an account and help you out and look at the cost of manpower and all the products, the shipping products in your own warehouses versus a third party. So there’s cost trade-offs. There’s process trade-offs. There’s lots of different things that you have to take into consideration before you make that decision and one of them is what’s your volume, can you keep up with it? What happens if your product takes you know, it’s a good problem to have right, what if your product explodes all of a sudden? If you start getting behind in your shipping, that demand could stop very quickly. So you have to take all those things into consideration. So now we talked about shipping services. And again that’s from your company-owned warehouse. You do everything yourself, pick, pack and ship. You have the fulfillment communication tools that your customers need, but then you can go through the third party shipping. Now third party shipping is different than third-party fulfillment. Derek, you want to talk a little bit about that?

Third Party Shipping

Derik: Yeah, so third-party fulfillment and third-party shipping, if you think about it really comes back to the 3PLs as a third-party shipping resource and people are doing the shipping on your behalf. They’re owning, not owning the property or owning the goods, but they’re moving the goods on your behalf. And it really goes hand in hand, you know shipping from your own warehouse is always a solid approach if you have the resources to manage it, but if you don’t, the third party shipping is the route to go to save headaches, so to speak, and the to allow the companies to do what they do best. 

Perry: So in a third-party shipping instance, you could actually handle all of the fulfillment communications in some cases. There’s sellers, resellers, manufacturers that don’t want a third party talking to their customers or maybe their customer list is confidential. They don’t want to give that up or they don’t trust anybody else or it’s not that they don’t trust, they just want to control that communication. I’ll tell you in my experience the fulfillment common process the communication process and I’ve bought Marketplace and I’ve have bought direct and I’ve seen all different kinds of models and I’ll tell you the communication within the fulfillment end of it is, I would say 90% of what’s going to bring your customers back or send them away after their first experience.So that’s why some companies would really want to handle all of the communication fulfillment and just turn it over to a shipping house. Derik, isn’t that what you guys are more of a shipping house? 

Derik: Yeah. We’re a shipping company and so we don’t store, we don’t inventory, and we don’t process orders that are stored. We simply handle the pick up, the distribution, and getting in the hands of your end-user internationally.

Perry: So that is then the difference between a fulfillment third party and a shipping third-party, correct? So, you see, the challenge here for a reseller is there’s almost unlimited number of combinations of solutions that you can take. It depends on your company’s capabilities, right, and how much of the work you want to do. So what you have to do before you make, if you’re just starting out shipping internationally, and we’re going to talk very specifically about shipping internationally because this is all about global e-commerce. I think shipping domestically is cut and dried pretty much at this point. but when you’re going outside of your own country to ship, I mean, it’s a great big world. And that’s one of the things that CTIC talks about is we have basically a population of 320 million people in the United States. Globally, what 4 billion people? So you increase your market size, but you have to know what you’re getting into and that’s why we’re here to talk about this, but these are all issues that you need to be aware of. So we’re going to go right into this model because this is to me the most interesting model there is and it’s a very unique and new model that gives people the opportunity to sell globally that never sold globally before. So Derik, I’m going to turn this over to you. These are your slides, you got it. 

Shipping Direct to End-User

Derik: Yeah, so, and you’ll notice that I have APC stated in here because that’s who I work for today.

But this particular flow chart would work for any type of carrier, whether it’s going to be a postal economy solution or whether it’s an expedited solution. So the parcels collected from the person selling the product or where it’s going to be picked up from, has the 3PLs from the wholesaler, from the manufacturer, and then the partial gets processed when we bring it back to our facility. If you’re a DHL Express, if you’re FedEx, you bring it back to your local facility, inject it into the systems for the delivery stream and it goes to their National Hub and then into the country out for delivery. In our world, a PCS world, where we’re delivering it postally, most times that partial is tendered to a delivery partner and is processed through customs when it gets to the country, and then it’s made final delivery to your International consumer. Go ahead Perry. 

Perry: So okay, that’s really interesting. So why don’t you talk a little bit, and we’re going to talk about value-added taxes in here. And then we also have in June, and I’m going to cover that a little bit later, in June we have a whole webinar on nothing but value-added taxes, how they are added to the end-users cost and things like that. But when you talk about customs when you talk about value added taxes, Derik, how complicated is that for somebody to do on their own, if they really just want to do this completely in their own organization?

Derik: So there’s two types of incoterms and how you can build your customer and have them pay for duties and taxes. You can go DDU, Delivery Duty Unpaid, where the customer is expected to pay at the time of delivery, or prior to delivery, into that country. And then there’s DDP, Delivery Duty Paid, where your customer, the person selling the product, is paying for the duties and taxes and they’re going to build that into the cart at the time of shipping. So those are your two options that you have within that model.

I would say we’re still probably 65-70 percent of e-commerce goes DDU, where the duties and taxes are being paid by the consignee. But because of the Walmarts and the Amazons of the world, DDP is becoming much more popular. And as far as how easy it is for a seller to do that, it can be very simple. If you want to calculate duties and taxes, there’s software out there today that you can add into your shipping cards such as your ship stations. There are all types of companies that can give you landed cost so that you’re showing your customer everything that they want to see. Here’s how much it costs to ship it, here’s how much for duty and tax. This is a handling fee or anything that you’re marking up for other reasons and you can show that in your cart, or you can keep it as simple as you’d like and just say hey you’re responsible for the duties and taxes. 

You’re paying $12 to ship it or thirty dollars to ship it, and that’s how you can break out your costs. There’s a ton of options within that, it’s a complete sales job for somebody that’s in that business to offer the benefits of how you want to manage your business, and what image you want to provide, and what buying experience you want your customer to have. But today in today’s economy is very easy to do. 

Shipping Internationally for Beginners

Perry: So if you’re a novice or you’ve never shipped out of the United States and you’re going to start, would you say that you’re better off, at least in the beginning, to go to a third party because they’re experienced in handling all the customs? Because there’s also not just duties, there’s declarations of what’s in the box things like that. That’s pretty complicated. 

Derik: Yeah. There’s a lot of fear for people that don’t know International. There’s a lot of complexities to customs and descriptions of goods can be problems. So working with a third party or shipping company that has the expertise and can help guide you and that’s willing to educate you as you go so that you become knowledgeable is a great way to get started. I highly recommend it. We’ve helped just in my business over the last eight years, thousands of clients. Have grown from you know, two or three shipments a week to sometimes 15 and 20,000 Parcels a month. So the growth opportunity internationally is there and it’s not something to be afraid of it’s something that if you get the expertise and the education, it’s not much different than shipping domestically. 

Expedited and Postal Costs 

Perry: So let’s go on to cost. Expedited versus Postal. Expedited would be a FedEx, DHL and Postal is using the post office essentially. Right, right.

Derik: Yep, and there’s different nuances of each, you know expedited delivery has costs for dimensional weight. They have costs for Customs entrance fees. They have out of delivery fees. So you need to be aware of that when you’re shipping Express and you need to be aware of what the cost of your goods you’re selling. If you’re selling a product for twenty or thirty dollars on your cart and the shipping cost is $30 or $40, you’re not going to get a lot of card transactions that go through. They’re going to abandon that cart when they don’t see a lower shipping option, and offering that postal or economy option now lowers that cost to match maybe better your product that you’re selling. If you’re selling T-shirts, they’re going to want to pay seven to ten dollars. If you’re selling $700 guitars, they’re willing to pay a little bit more for shipping.

Perry: So it comes down to what your product is, the cost of it, and we’re at, we actually do have a financial model, a cost model that we’re going to go through in a couple of slides. So you’ll actually get some hard numbers to see what you can expect. But this is really interesting in that, I don’t even, five years ago maybe, the idea of shipping from the United States to an end-user some place in a foreign country was really very complicated probably really expensive, and it’s evolved. I buy a lot of things that end up coming from manufacturers in China for instance. And they’ll sell me, I bought a pair of boots, and it came all the way from China, not from some warehouse here, and it took longer but the shipping was less expensive. But that’s really interesting. So there’s manufacturers that have now decided rather than having warehousing, logistics, and all the different countries that they want to sell to in the world, they can do it right from their own warehouse or their own country right here. So here it is. Here’s that model. So why don’t you talk about this Derik? This is your slide. 

Derik: I just put some basic examples together. If you’re shipping something expedited and you’re expecting it to deliver within two to five business days, typically, and keep in mind that in the world of shipping, everyone talks in business days. The weekends don’t count as days of movement. So if you’re two to five business days, you ship it on a Monday, you’re probably going to get there between a Wednesday and Friday. For an economy delivery, you’re looking at anywhere from 4 to 9 business days. Or to more remote countries, it could be even you know, two to three weeks go into your Africa’s and some of your Middle East and Latin America’s. But you can see the comparison. If you’re shipping a, let’s just use the T-shirt to stay consistent, and you get 2 t-shirts in your cart, that there was one pound $30 to get it to Canada on an Express basis, but $13 to get it there via a postal solution. I always recommend that sellers offer both solutions because you may have somebody wanting to buy their husband’s birthday or their wife’s birthday and they need it there quick, they’re willing to pay the money. But seven, eight, nine, ten times out of ten, they’re going to want that lower cost solution, and you can kind of see as weights get heavier the postal solution discounting practice loses its punch.

So if everything that you sell is 10 and 15 pounds, you may have a better option than going expedited than you do economy, and these are base rates. These are not discounted rates. So if you have volume and you’re talking to a shipping company, you should be able to negotiate discounts off of these types of rates so that you get more of a value that you can either then markup to your customer and make a little profit, or you can pass that along to get the most competitive price out there because most of your buyers internationally are looking for the lowest price.

Perry: So that tends to be the trend now. So the Postal model, which again in the smaller packages, can save quite a bit of money for the shipper. I would imagine this is something that’s just been developing over the last few years and is now coming into a more mature stage in its model.

Derik: Yep, this was actually, this became, around 2008 2009 is when the e-commerce direct-to-consumer postal solution really came alive. And every year since probably 2016, it’s quadrupling in what’s being offered, and what can be done, and the costs continue to go down in a world of rising costs. It’s a very competitive market out there. So you can get an economy delivery and with full tracking so that you know the customer received their package. It was delivered at 10 a.m. on April the 29th, and you have full details from pick up to delivery. And so it’s improved quite a bit.

Perry: So there’s been a lot of, I’ve had a lot of this recently as we’ve been ordering products, that they don’t manufacture in warehouses, that is it, masks. It’s a big deal right now, you know. If you would have told me, you know three or four months ago that one of the most popular products to sell online would have been a face mask. You know, the Asian countries have used them for a long time, but not in America, all of a sudden they’re in hot demand.

You can’t go find one at Walmart right now, and they’re sold out. We order them and it’ll say 30-45 days to delivery and whereas we’re used to that one day overnight from Amazon Prime or from Walmart or from any of the platforms. All of a sudden we’re getting used to getting product direct from other countries and waiting for it. And part of it is there’s a demand and there’s not product, or part of it is it’s exactly what you want and nobody’s selling it here because it’s not something maybe culturally and that can go on the other side. 

There may be products that we make, we have here in the United States that culturally they’re not very popular in foreign countries, but there’s demand and that’s a great market for a manufacturer, to find a niche market where they don’t have a lot of competition inside that country but then they have to take care of getting the product there. And that’s where shipping directly to the end-user comes in handy and then of course costs as well. So let’s, I think you covered this. Is there anything else you want to talk about DDP versus DDU? 

Derik: You know, other than the DDP solution is becoming more and more popular and it provides a better buying experience for your customer. So you’ll find that customers, when they’re shopping, want to see everything included in their costs that’s becoming more and more common.

Shipping to End-Users

Perry: Great. Thank you. So the other one is delivery duty unpaid. So here’s a couple examples of shipping, not selling, shipping direct to the end-user that we want to bring up. I think the most popular, there’s a manufacturer even if you’re not selling directly to the end-user. You may want to open up markets in other countries by allowing platforms to sell your product without having to inventory it or handle the shipping. That’s huge, even here domestically, Home Depots are a really good example. They carry refrigerators on their website that are not in their stores. And sometimes those are being drop shipped directly from the manufacturer. They may or may not be warehousing that themselves. But what they’re able to do is open up their selection to the customer by saying there’s more things that you can buy besides what’s in our store. Online, and our manufacturers are our partners, and they will help us ship it to you at a low cost, reasonable time frame as well. You can open, and this is another great way, to open and develop new and hard to reach markets by telling your reseller you take care of putting the product on, selling it, taking care of the payment, will ship it for you. The other thing is when you’re shipping to other, when you’re doing the shipment, then you’re gathering a database. I’ve understood that there’s a lot of marketplaces and this was kind of no, I just read this the other day. There’s marketplaces that do not share the buyer with the seller. They still own that information. If you’re handling the fulfillment and the shipping and/or the shipping yourself, you will get that information for your own database for your future marketing. I think I’m covering it all, you got any other, anything else I missed on this, Derik?

Derik: No, you’re good. 

APC Postal Logistics

Perry: Okay, great. I think we’re coming to a close. So why don’t you, here’s what I always call the Shameless plug. Go ahead tell us, for your time, we give you the slide. Tell us exactly who you guys are. 

You got it. APC has been in business since 2001 and we help e-commerce sellers get Parcels to their end-consumers very efficiently, cost-effectively, and reliably. So to me, the key is visibility, the key is customer service and we’ve done a really good job of helping customers grow. So if we can help you guys out as you’re starting out, we love working with companies that are small and they grow into companies that do a lot of business. So we’d love to help you out if you ever need anything. 

Closing Remarks

All right. Thanks. So in our closing remarks, I just want to say, you know, make a few points here. Fulfillment process can determine the likelihood of repeat business. That’s really important.

So again, we separate out fulfillment from shipping. Global shipping direct to the end-user can, will extend your market reach, highly recommended it. That’s what CITC is all about, that’s what we’re here for, to help advise businesses on how they can expand into global markets. Direct to the end-user shipping is not necessarily just selling to the end user. We talked about drop ships from a manufacturer on behalf of their reseller.

So again, we like to seperate sales, fulfillment, and shipping. Once a company chooses to sell either through Marketplace or a Merchant owned website, they have chosen to manage their own fulfillment. And if you turn it over to somebody else, you’re still managing it yourself. You’re still really on the hook. So that’s kind of what I would say our webinar library, this webinar and a written transcript of it as well as everything else we’ve done is on our website. You go to resources and you look at Business Services and Videos and you’ll find this right there. Here’s our Shameless plug for our next webinar. We have more than just this. This is from the basic series that I handle, top markets and platforms worldwide. I found some fascinating information on where the largest global markets are and the platforms within those markets. So if you want to go International, this is a really good one to attend.

And on June 24 we’re going to be talking about value-added taxes, customs, all kinds of things like that. So we hope you come back for that.

And with that we say, are you ready and to ship internationally? So with that we wish everybody good health. Stay safe. Stay home. Sell Global, it’s all there. It’s amazing. What’s happened to the world with everything we’re going through and the one market that’s expanding out of all, this is E-commerce. So Derik. Thanks for your time. 

Thanks again for your time as well and everybody be well, alright. Thank you.